Full text of Commercial and Financial Chronicle : April 21, 1949, Vol. 169, No. 4796

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22 1949

APR

ESTABLISHED 1S39

MJrtt

BUS.

UBftAlW

Reg. U.

Volume

New

Number 4796

169

B. Pat.

Office

By DR. COURTNAY PITT*

And Prospects
By JAMES MUIR*

Royal Bank of Canada

The

Canadian banker

Prominent

views Canada's

re¬

'

problems arising

and postwar abnormal
conditions.
Reports progress in
solving Canada's exchange diffi¬
culties and supports principle of
expanded and multilateral world

{ out of

war

ex¬

By O. K. BURRELL

Traces postwar television technical
developments and contends no other industry has grown with such
amazing speed. Predicts prices of television sets will come down
over period of time, but sees no immediate substantial price reduction since mass production now exists.
Foresees 115 television
stations serving 80 million people within year with greatly expanded

;

Professor of Business Administration, University

Professor Burrell
■■

July, 1937, to June, 1947, and concludes, except for
of 1946,

there

tween

to be very little

believed that low-priced stocks fluctuate within
Its
wider limits than do high-priced stocks. Whether or not this is true
of the
in an absolute sense is not the subject of this inquiry.
It is entirely
automobile, the motion picture, and even radio broadcasting, which
attained great popularity in a very short time in the early '20s. possible that many low-priced stocks have wider price fluctuations
—than
-

Television, today, is the fastest-growing industry in America.

It

is

widely

in the past two years has surpassed the early days

progress

sid

coming before my United
people who talk

of

ity

If

glad to have the opportun¬

am

other

will

tere ste d in

hearing about

tions, connect-

mentary to

in g
these
stations
,into

Canada

that

United

States
so

engrossed

i

n

your

television

for

Courtnay Pitt

problems,
should

invite

this

Muir

bankers

next

from

their views of world

and

the

plays

Canada

part

affairs

in

them.
We

in

Canada

full

know
on page

well

42)

of the

the

a

whole

generation,:

some

industry's over-enthusiastic

prophets

annual

convention

corner."
that

"An address by Mr. Muir at the

of

the

French

Lick, Ind., April

we

corner,

of

one

Association of Reserve City Bank¬
ers.

in

have

telling

been

you

that "television is just around the

(Continued

38th

expenditure

four years.

For

Canada to tell
you

billion

think

I

have

and

are

you

will

agree

finally turned

the

in the early stages

of the most notable devel-

(Continued

28)

on page

Professional military men

Credit

Transcontinental

ican

address by Dr. Pitt before
Conference

of

the

Amer¬

Bankers

Association,
Louis, Mo., March 31, 1949.

Pipe Line

all deeply in his

than we shall ever be able to pay.
have been in the saddle in Wash¬

the

ington ever since Pearl Harbor. This is true despite
fact that that fiasco was as much their fault as anyone else's.

level

many

im

Note

one

consisting

each

6%

a r c

e

reasons

differences

of

Common

Stock,

ity

in

stocks

general
level
of quotations.

Funds,

Bought • Sold • Quoted
available

Prospectus

on

0.

K. Burrell

Differences
in

capital structure may
cause of price
variability.
company has a large
of senior securities in

be a
If a
proportion
its capital

obvious

is

that

we

cannot

keep this

pace

up

indefinitely without weakening ourselves in a way that
in due time will reflect itself in a reduced ability to concontinued on page 33)

St.

Slate and

-

Municipal
Bonds

inc.

A Mutual Fund

October 1, 1949.

,

in

other than the

and

trans¬

ferable only as units until

for

price variabil¬

Franklin Custodian

Inter¬

principal amount)

($50

share

of

.,

possible^

Corporation
Units,

of

They redeemed themselves in the eyes of the public by
structure, its earnings per com¬
winning a difficult war with a dispatch which was thor¬ mon share will necessarily show
oughly to be admired. The popular credit for that victory wider fluctuations than will those
was, unfortunately, in no way dimmed by the fact that of a company of similar size in
the struggle cost us many billions of dollars which could the same line of business but with
an
all common stock
structure.
just as well have been left unspent. Since active hostilities Swift & Co. is the largest meat
ceased military leaders have again shown not the slightest
packer and Armour & Co. is the
understanding of the need of reaching their ends with at second largest factor in the same
least a reasonably near . minimum of expenditures.
(Continued on page 27)
It

*An

the National Consumer Instalment

Gas

Ex-President Hoover has placed us

19,

1949.

t

or

quotation.

T her

;

statesman" will be greater

industry will represent

new

$5

the

•>

es¬

of

that

timate

a

representative

I

ceivers,

own

Many Times $1.5 Billion

■

re¬

the

this

production

for
t h a

little

lute
:

by his courageous, lucid and forceful criticism of the
in which funds are requested by and granted to
the military establishment. Should his words have the effect
of arousing the rank and file to a situation which borders
on the scandalous, the debt that we
shall owe this "elder

add

—

nothing to do

loose way

we

i

with the abso¬

debt

to

business, so
eager to find
solutions

stocks
have

programs, and

own

\

priced

reasons

networks, and
providing
when

your

EDITORIAL

television sta¬

country. It

bankers,

James

that

high

be

compli¬

is

'

the

spent
in building
and equipping

language and are sincerely in-

my

con-3>

we
er

money

States colleagues,
my

bull market

difference in volatility be¬
high-priced and low priced-groups.

appears

——

I

of Oregon

price fluctuations and variability of

measures

high-priced and selected low-priced stocks in period from

selected

|

advertisement utilization.

Hits socialistic forces.

trade.

$5 billion will be spent for

pansion of television industry.

Vice-President & General Manager

Copy

Pticed and Low-Priced Stocks

Vice-President—Finance, Philco Corporation

Dr. Pitt estimates in next four years

a

Price Fluctuations oi High-

What's Ahead in Television?

Canada's Tasks

Price 30 Cents

York, N. Y., Thursday, April 21, 1949

COMMON STOCK FUND

request.

PREFERRED STOCK FUND

Bond Department

BOND FUND

White,Weld&Co.
Members New York Stock

Exchange

Prospectus

40

THE NATIONAL CITY BANK

UTILITIES FUND

INCOME (BALANCED) FUND
on

OF NEW YORK

request

Wall Street, New York 5

Boston

Philadelphia

Chicago

London Mfc Amsterdam

Providence

FRANKLIN

DISTRIBUTORS, Inc.

64 Wall Street,

Montevideo

Bond Dept.

Teletype: NY 1-708

the Government

PACIFIC

Office:

Bell

Teletype

NY

1-395

Wires Connect

Montreal

NATIONAL BANK
OF

THE

CITY OF NEW YORK

Toronto

Distributors of

SECURITIES

Municipal

Derby Gas &
Electric Co.

bonds & stocks

Underwriters and

Bishopsgate,
London, E. C.
26,

New York

THE CHASE

HAnorer 2-0980

CANADIAN

COAST

in

Kenya Colony and Uganda
Head

STREET

New York 5

of INDIA, LIMITED
to

15 BROAD

Private

NATIONAL BANK
Bankers

HART SMITH & CO.

COMMON
Analysis available

upon

request

and
Branches

In

Colony,

India,
and

Subscribed

Paid-Up
Reserve
The

Bank

Burma, Ceylon, Kenya
Kenya, and Aden

Kericho,

Zanzibar

Corporate Securities

Dean Witter a Co.,
Members New

Capital

Capital

otis & co.

£2,000,000

Fund
conducts

£4,000,000

Established

£2,500,000

description
banking and exchange business
every

Trusteeships and Executorships
also undertaken




1899

.

(Incorporated)

of

.••New York
Cincinnati

Chicago

Columbus

Los

Stock

Denver
Buffalo

Exchange

Angeles Stock Exchange

San Francisco

Toledo

Dominion Securities

BA 7-4300

YORK
,

*'

Direct

Wires

6rporatioti

Members Neu) York Stock Exchange

111
WOrth

40 Exchange Place,

New York 5,N.Y.

Los Angeles
Honolulu

Seattle

IRA HAUPT & CO.
and other Principal Exchanges

Francisco Stock Exchange

Honolulu

14 WALL ST., NEW

CLEVELAND
^

San

York StocK Exchange

Broadway, N. Y. •

4-6000

Boston

Teletype NY 1.270ft

Telephone: Enterprise 1820
Private Wire

Boll System

Teletype NY 1-702-3

to: >

Hendricks Sc Eastwood, Inc.,

Phiku

2

(1722)

THE

COMMERCIAL

v

Associate

«

of New York

Thursday, April 21, 1949

Editorial

Editor,

The

Alabama &

r

Minneapolis "Star"

Professor, of Economics, University of Minnesota

♦

Louisiana Securities

After reviewing recent economic developments, Professor

Upgren lists as chief problems confronting
(1) lower prices to broaden and quicken consumers' markets; and (2) new invest¬
ment expenditure to take care of
increasing labor forces. Holds greater agricultural output must be off¬
set by continued high productive and business
employment. Says crucial work for solving problem of
supplying new components of investment expenditures lies with bankers. Urges more housing and high-

68th Consecutive

Quarterly
Comparison <

American economy:

,

request

New York Hanseatic

'(i

Corporation

'way expenditure.

■

120 Broadway, New York 5

Bought—Sold—Quoted

/>■-

Steiner,Rouse&Co.

-

i

vV.v

v.--.: '■

Teletype NY 1-583

BArclay 7-5660

CHRONICLE

By ARTHUR R. UPGREN*

Trust Companies

on

FINANCIAL

What's Ahead for Business and Banking?

Leading Banks and

Available

&

:

■

Members New York Stock Exchange

There is

widespread agreement that the conditions business faced at the opening of
1949 have
changed and are continuing to change from the conditions of the last three years.
Therefore, the topic for this evening, ''What's Ahead for Business and Banking?" is intri-

Rights & Scrip
All

i n g 1 y interesting. It is
always useful
to
appraise

Specialists Since 1917

N. Y. State Elec. & Gas Corp.
Stock

what'sf

o r '

frjC PONNELL & Co.
Members

120

I

New

York

Stock

Exchange

New

York

Curb

Exchange

BROADWAY,

NEW

t

the

e

the

with

Industrials

INACTIVE STOCKS

Arthur R. Upgren

V

of

business

the

close

of

.

can

best

the

war

Stocks

Removed

from

the

New York Exchanges

First,

M«k«i Nat'l Aas'n of Securities Dealers, Inc.
27
1

William

St., N. Y. C. 5, N. Y.

Montgomery St., Jersey City 2, N. J.

TeL DIgby 4-2190

Tele.: NY 1-1055

lifting

incomes from

to

a

a

of

a

level

in

before

years

the
the

two
war,

Co.

Common

Black Star Coal

Corp.

Common

Kentucky Stone Co.
5%

Preferred

1st

Floor, Kentucky Home Life Bldg.
2, KENTUCKY
Bell Tele. LS 186

$34.2

production.
we

Moore-Handley Hdwe. Co.
Dan River Mills

7

I

Tele. LY 83

LD 33

llllllllllllllllllllllllllllllllllllllllllll

have been trying to
since.

When the
business

in

achieved

a

level

of

amounts

war

buy them

ever

to

an

United

end,

dustry for

for

for

—

sys¬

the

less
in

even

small,

actually

was

much

than the small increase

unemployment

we

have

seen

since last November.
After

pleted,

our gross

was

com¬

in

the

the

1944

of

by

con¬
was

the

fact

personal savings
States

$8.8

$25

personal
decline

a

in¬

an

demand

This

than

of

goods by

this

to

1947.

to

was

result

for

of

rate

more

30%

fell

So
of

we

billion

creased

was

a

vestment

savings.

in

the

our

This

desire

national outturn

Annual

b,y Dr. Upgren at
Pacific

Northwest

Banking,
State
College of Washington, Pullman,
Wash., April 8, 1949.
on

Telephone

Teletype

.

RIttenhouse 6-3717

PH 73

saved $25 billion less

by $28 billion.

income

in¬

That adds
was

by

these

incomes,

decreased

sav¬

That credit has

credit.

gained $10 billion since
point during the war.
enormous

drive

the low-

buy
caused a rise in prices because
business could not expand its out¬
put as rapidly as would be neces¬
sary to
meet this increased de¬
without

such

price

Textile Securities

;

[

AND

increased
ex¬

Properties
A. M. LAW & COMPANY

capacity.
But as we know,
only much later does the new
capacity produce an enlarged flow

SPARTANBURG, S. C.

goods.

(Established 1892)

plants.

new

tensifies

It creates boom, in¬
cycle and comes to

the

end.

an

L. D. 51

lamb0rn & co., Inc.

'

,

As money

incomes are thus in¬
creased, there is an inflation-cre¬
ating force resulting.
Only at a
later

time

portion

Teletype SPBG 17

The delay here is the
of gestation" for these

of

substantial

a

as

9 9

WALL

do

pro¬

the

SUGAR

have the increased flow of

we

STREET;

NEW YORK 5, N. Y.

plants are fully
completed and put into operation
goods for which

they

were

Raw—Refined—Liquid

built

in the first place." Then when that

increased flow of goods comes

plants
are

at work

starts

(2)

plant
at

building

its

pleted,

the

not
that

and

are

incomes;
fully com¬

of

consumers'

money

the plants

flow

DIgby 4-2727

(1) The
does

old rate

shrink

to

as

are

in the economy:

of

Exports—Imports—Futures

as

fully

completed,
two deflationary forces

goods and other goods is enlarged
by the full amount of the new

^iimimiiimmiimimimiiiimimii£

I Pointers

Selling |

on

capacity which thus has been com¬
pleted.
This,
I
think,
is
the
change which has occurred since

=

For

clever, helpful hints

=

E

for selling securities read

=

the fourth quarter of last
year.

E

the

=

In

their

Graw-Hill
to

i

new

the

ings and the ability of consumers,
at any "time necessary, to buy out
of a great store of liquid assets or
to buy out of an expansion of

mand

provide

Southern

in

ly, by the number of dollars paid
out by industry and others for

to

spent.

creased

to

capacity, the cost of all this

"period

decline

to $53 billion more which

lifted

billion

Now, in this period when busiwas trying to expand its in-

from

billion, in

personal

a

>

of

personal income from $145.6 bil¬
lion in 1944 to $173.6 billion in
1947.

$30.0

ness

from

hold money.
We were all imbued
with a desire to acquire goods in
face of an increase in disposable

out

to

stream of the economy.
That in¬
come stream
enlarges, according¬

United

annual

of

also

1944

pansion is poured into the income

revealed

billion

This

*An address

OFFICE

Stock Exchange Bldg., Phila. 2

business

in

That
is

rise

a

demand

consumer

reconversion

of

Byllesby & Company

PHILADELPHIA

has been mentioned.

as

1947 and further to $41.5 billion in
the last half of 1948.

continue

achieved

H. M.

"substantially

living after the war
These price rises at
the

were

increases

■

lion,:; in

$55 billion.
He
outlays
from
$110
billion in 1944 to $164 billion in
1947.
This gain grew out of in¬

was

be

new

consumption

hardly percep¬
tively in late 1945 and early 1946.
The increase in unemployment as

equip-:

flow of goods to

consumers could

new, powerful economic
forces.
The total outturn of goods and

dipped

plant and

new

ment so that the

pace

services

Stromberg-Carlson Co.

■

there

of

Haskelite Manufacturing

Hydraulic Press Manufacturing

years. -f->
That force was the outlay of in-:

who widened his expenditures for

out

Dayton Malleable Iron

•

It- was
this
expansion
which
produced the next important force'
causing inflation in these past fewi

Thus, one important force caus¬
ing inflation was the consumer,

States

amazingly

Bausch and Lomb

ii

The New Construction
Prospect

suc¬

most

reconversion

Conference

1856

of

intense

up

came

the

We

branch offices

American La France

*

these

10th

Established

high

very

goods.

extremely

Lynchburg, Va.

new

of surplus liquid assets with which
to
buy many more

reconversion

Scott, Horner &l
Mason, Inc.

by

It also grew because

had

now

replaced

a

our

American

construction, producers,
durable equipment, and increased
holdings of inventories (all for
the
private account) rose from $6.4 bil¬

pricing
getting rid of

about

sumers.

that

not

the

^expenditures

called

free

a

price

brought

which consists in the very
greatly

cessful

American Furniture Co.

These

liquid assets of the American
people and business by more than
$200
billion,
a
large
part
of

were

the

bogey which pervades all Europe
—suppressed
inflation.
It
has
been rampant everywhere there
except in Britain.
/
! ; /

tense

Third, creating a great defici¬
in goods wanted.
This de¬
ficiency grew as goods wore out

Since

be

may

indeed

for

retail

iiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiin

Trading Markets

and

in 1929 and 1940 to

incomes and very large

LOUISVILLE

Long Distance 238-9

while

restoration of

ended.

and

Incorporated

what

cost

ency

BANKERS BOND E

of

the

increased banking resources in the
United States.

aban¬

were

1948.

of

a

,

to

busi¬

"penalty of inflation," That pen¬
alty was the price paid—very much

had

$210 billion in

in

165

the war closed.
The gross
national production of the United
States increased from $100 billion

come as

of

Filter

to

third

$180 billion net national in¬

Second, increasing the amount
Air

"percentage
price

wholesale

desire

for

peak of prices of last August, we
-enlarged"
have seen a repeal of almost oneThese

tem

the peak years of the war.

American

-40

the

price controls

as

worth

cre¬

American
maximum of $85

year

best

very

STEIN & COMPANY

the

billion

war
,;

three in number:

were

That

125

the
had created by that time.
•
These conditions the war

ated

level.*

doned

and the conditions which

Priced

to

price rise lifted the
wholesale price index-from about

Ap¬
the

record

start

about

points"

the

wires

price increase at'

signalled to

genuinely and sub-!
stantially expanded flow of goods.

income

whenwe had
system in 1946,

price

added

n

recent

praising

the

freed

has
i

increases,

time

people

due to price increases.

were

These

which

national

same

ness

output

gains

m a

past

Low

total

useful to esti-

course^

net

a

the

at $255 bil¬

That

.

It is therefore

time.

STOCKS

1948.

of $225 billion.
After our success¬
ful reconversion, a part of these

the present

OIL STOCKS

in

But the

crease.

a

banking'.

past and to fix
its position at

TRADING MARKETS IN
MINING

lion

our

to

embraced

business

Tel. REctor 2-7815

increased

NY l-looi

Orleans, La. - Birmingham, Ala.
Mobile, Ala.

Direct

services and

income

peak outturn valued

ahead

traversed

YORK 5

national

business

and

Bought—Sold—Quoted

of all goods and

St., New York 4, N. Y.

HAnaver 24700

New

g u

Issues

Common

25 Broad

shown

that

annual

survey,

Mc¬

Publishing
Co.
has
it is the expectation

of businesses to decrease this
year

their

expenditures for new plant
equipment by about 6%. This
is the average for the year. Since
and

in¬

-(Continued

on page

26)

Sales-

"Securities

E man's Corner," a regular =
E

feature in

E

day's

E

"Chronicle."

every

Thurs- =

of

issue

the E
=

nilllllllllllllllilllllllllllllllllHIIIIIIIirc

H. Hentz & Co.
We

."members
New

York

Stock

Exchange

New

York

Curb

Exchange

New
,

York

Cotton

Commodity
Chicago

Exchange

Exchange,

Board

of

New Orleans Cotton

And other

*-N. Y. Cotton

CHICAGO

American

Markets

Specialists In

For:'

Over-the-Counter
CANADIAN

INDUSTRIALS

FOREIGN

CANADIAN MINING

Inc.

CANADIAN

OILS

SECURITIES

Trade

Exchange

Exchanges

1
BRITISH SECURITIES

Exchange Bldg.

DETROIT

PITTSBURGH

GENEVA, SWITZERLAND




■

Externals
*

NEW YORK 4, N. Y.

:

Maintain

.1

—

Telephone BArclay 7-0100

Teletype NY 1-672

for 36 Years

•

Internals

—★—

National Quotation

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

Quotation Services

208

South La Salle St., Chicago 4

Tele. RAndolph 6-4696

.

*

-

Tel. CG 451

Bureau]

Incorporated

ZIPPIN & COMPANY

Established

46 Front Street
CHICAGO

*,

1913

New York 4, N. Y.
6AN FRANCISCO

Volume

169

Number 4796

COMMERCIAL

THE

Articles and News *Fluctuations

of

High*Priced

Stocks

v—O. K. Burrell................
What's Ahead in

Television?—Courtnuy Pitt

.Cover

Canada's Tasks and Prospects—James Muir...

''Built-in"

•

7.
8

Dangerous Move
9

11

Emerging Pattern of Wage Demand—Joseph D. Keenan
The National Health Insurance Plan—/. Donald

.12.-

Kingsley\.....'. .\

The Gas

Industry

Peace—H. J. Heinz II....

(1949)—Jumes. F. Oates, Jr..

...

:'//

-■■■■.

Latest Results of Poll
More

»

Dealer

*

..

4=

Comments

of

Economic Club of New York
Stork Price

to

"5% -Mark-Up" i Spread

on

Henry Ford II

Maple

(Boxed)

Stockholders' Meetings

of

Trend Toward

.

j

Urged by

Federation

Activity

Estate

on

'

We

show

on

ballot and
made

28

junk.

Want

on

us

'

'

-

/

ip

//

Planning Announced

our

questions contained

Petroleum lit. & Pr.

the face of the

on

advantage of

mark-up" philosophy has on the mar¬

some more

corporations of the country.

SIEGEL & CO,
89 Broadway, N. Y. 6

of these expressions regardless

composite results ,up to press time

first the

a

poll, along with a reproduction- of the

final

of the opinions expressed,

resume

later issue.

a

series of questions pro¬

the face of the ballot. Editorial comment on the

$35

j

;

;

original
will be

It f Editorial)

j

Total ballots returned--

Cover

'

(RETURNS FROM NASD

-

MEMBERS)

______204 or 21.2%
___733 or 76.0%
U/
i—
27 or 2^8%
(2)
Questionnaire jor Reports on Spreads:
Favoring
I
220 or 22.8%
Opposed
-721 or 774.8%
!;•
•
No opinion
i
—
23 or *2.4%
(3)
Examination of Books and Records Where
;
/
Neither Complaints nor Charges Are Pending:
Favoring
Opposed
No opinion

subscription to the Monday
and

Thursday issues of the

"Chronicle"
ideas

will

galore and

Bookshelf

46 /

Canadian Securities

22

Coming Events in the Investment Field...;

47

Recommendations.

-

Washington Ahead of the News—Carlisle Bergeron

7

Einzig—"'Austerity Continues in Britain"

-

6 '

Indications of Business Activity

40

Mutual Funds

16

^Prominent Personalities in Mutual Fund Business—Henry T. Vance..

16

"Our

<

Favoring
Opposed
No opinion

9

,

News About Bunks and Bankers

Observations--/!.

Wilfred May

»

5

_—

46

Governments

23

Prospective Security Offerings
"Public

;

45

Utility Securities.

Railroad Securities

'24

Securities Salesman's Corner
-Securities Now in Registration

4'4

"The Stdte of Trade and Industry

' 38

Washington and You
Published

1

Drapers'

and,

The

%

COMMERCIAL

and

Edwards

c/o

Reentered

Patent Office

ary

WILLIAM B. DANA COMPANY, Publishers

J;

25 Park Place, New York 8, N. Y.
/ ; / REOtor 2-9570 to 9576

WILLIAM D.

SEIBERT,

RIGGS,

York,

1942,
N. Y.,

Favoring

>

Opposed
No opinion

President

Business Manager

/

Thursday (general news and ad¬
vertising Issue) and every Monday (com¬
plete statistical issue — market Quotation
records, corporation news, bank clearings,
J-Other

Chicago

Offices:

3,

III.

etc.).

135

S.

(Telephone:

the
under

25 Park Place

New York 8, N. -Y.

Salle

State




St.,

0613);

-

Union

Canada,

Other Countries,

$25.00

and

$35.00

per

$38.00

year:

per

We

Note—On

Record—Monthly,

year.

made

in

New

York

—-— —

,

622 -or 64.5%
____262 or 27.2%
80 or 8.3%

-—___————-___

are

on page

interested in offerings of

8)

-

;

/

■>

PREFERRED STOCKS

funds.

/

Spencer Trask & Co.
Members Netv York Stock Exchange
25

New York 4

Broad Street,
HAnover

Members New York Curb Exchange

,50 Congress Street, Boston 8
Hubbard 2-8200.

2-4300

the fluctuations In

remittances for for¬

eign subscriptions and advertisements inust
oe

i--

in

Publications

account of

Incorporated by Royal Charter 1727
HEAD ■' OFFICE—Edinburgh

Teletype—NY 1-5
Albfnv

-

Chicago

-

Glens Falls

-

'
''
Scheneci^dy

-

Branches throughout Scotland

LONDON
3

8 Went

49

OFFICES:

Bishopsgate, E. C. 2
Smithfield, E. C. 1

Charing Cross, S. W. 1

Burlington Gardens, W. 1
Street, W. 1

TOTAL ASSETS

£155,175,898
Associated Banks:

__260 or *26.9%
670 or 69*5%
34 or 3:6%

year.

(Foreign postage extra.)"
/ Monthly Earnings Record — Monthly,
$25.00 per year.
(Foreign postage extra.)
per

—---^

High Grade Public Utility and Industrial

$42.00 per year.

Quotation

Royal Bank of Scotland

11.3%

:_826 or 85,7%
29 or 3.0%

-

(Continued

Eng-

„

.

Dominioh

of

or

B. Dana

/ ;
Rates'

2-9570

64 New Bond

post

.

the rate of exchange,
La

C.,

offiee at - New
the -Act
of March

at

Pan-American

Bank

news,

E.

second-class matter Febru¬

Other

'Every

and city

London,
Smith.

i %•

Subscriptions in United States, tJ. s.
Possessions, Territories and Membersof

Thursday, April 21, 1949

State

&

Subscription

BERBERY D. SEIBERT, Editor & Publisher

/WILLIAM DANA

as

25,

8, 1879.
I

Gardens,

Copyright 1949 by William
Company

FINANCIAL CHRONICLE
Reg. U. S.

I

-"48/".'

Twice Weekly

20:4%

,

109

:

/

i

"

Tomorrow's Markets (Walter Whyte Says)

'

Should Maloney Act Be Repealed?:

(6)

.5

<

Favoring
Opposed
No opinion

Qr

-741,or 76;9%
26 or 2.7%

-—

—

Favoring
Opposed
No opinion

*

26

*

___197

;

Rule Forbidding Discount to Non-Members:

(5)

12 "

*

—~L

-

•

on

liberal

dividends.

t

NASD Trial System:

(4)

20

Reporter's. Report

.Our Reporter

pay

you

— —

9

NSTA Notes

give

1

.•

/

year's

5% uYardstick

-

From

full

Commercial & Financial Chronicle

964

—

18

,

./•Healer-Broker—Investment

a

%

/

,

INVESTED in

LATEST RESULTS OF NASD POLL

32

(!)

Rank and Insurance Stocks

Business Man's

DIffby 4-2870

Teletype NY 1-1942

replies. (The initial ones appeared in the

38

Regular Features

-

piece

Puget Sound Pr. & Lt

REctor

]' As We See

any

to,perform

by Agriculture

Foreseen

Department
Lectures

reproduce

results of the

26

Economic

of

provided for the submission of comments. Further be¬

we

pounded

of

Fortnightly Magazine, Appears

Lower

/

(April 20) of the opinions expressed by both members and

,25

Women Shareholders
"The Reporter," New

F;

noh-members of the NASD on the

23

Company Earnings Forecast by Joseph E. Pogue.

:

■

22

NAM President Wallace F. Bennett

help ourselves-r-we

April 14 issue, starting on page 8.)

20

Industry Should Demonstrate Interest in Employees' Security, Says

Reports

to the series of

of the nature of the

to Manage National Debt Urged by Public Debt' V
Group Headed by W. Randolph Burgess
21

More

to hand since

come

space

low

19
to

can't

just have to bid

question appeared on the reverse side of the ballot, with

17

by Allan Sproul

We
'

.

opportunity to express their views as to the effect, if any,

This
17 /

Deposits Off SI Billion in 1948, According
llarl, Chairman of FDIC

Reduced Oil

/

/

10,

Drop Analyzed in Terms of Yields by Cleveland Trust Co.

Serious Situation

'

.

issue of

our

that the NASD's "5%

8

5-Point Program

A

-

ket for securities of the smaller

Insured Banks'
T.

'

As expected, a considerable number of additional ballots

the

y

Final Mutual Fund Lecture Made by Douglas K. Porteotis
Need for New Investment Stressed

the disadvantage of

ballot, hundreds of the firms that replied took

;

Hear

'

*•

dictates of .the NASD.

3

Effect

on

COMMAND

PERFORMANCE

April 14, on page 3, we presented 'the for
you?
initial results of the poll being conducted by the CHRON¬
Obsolete Securities Dept.
ICLE relative to the attitude of the securities industry with
99 WALL STREET, NEW YORK
respect to the National Association of Securities Dealers and
Telephone:' WHitehall 4-6551
its policies. Ballots containing a series of questions were sent
to all firms, whether members or non-members of the NASD,
the only exceptions being stock exchange floor brokers and
firms doing strictly a municipal bond business. The latter ACTIVE MARKETS
were excluded for the reason that they are not subject to the

swers

*

Securities of Smaller Corporations

AMD COMPANY

previous issue: Allowing for
the latest results of the poll are set forth in
the accompanying tabulations. In addition to indicating an¬

21

NASD.

on

-licHifiiSTtin

as a whole.
Mote
"5% mark-up" philosophy
to

3"

these returns,

19

k

....

on

"yardstick" works

•

have

18

Rig Business Needs Big Government—Sen. J. C. (XMahoney

•

i

;

14

NASD

on

detrimental to the well-

are

13

.."

Aging Population—Louis I. Dublin
to

from firms

_

6

Business Financing—Eli Shapiro

Foreign Investments—One Key

(1723)

smaller corporations and market for their securities.

[

4

Policy of Federal Reserve System—M. S. Szymczak

Our

contend

4

Financing for Utilities—Justin. R. Whiting

Freight Rate Absorption—A
Faricy

on

comments

■

Prospective Steel Supply Ample—Walter. S. Tower

—William T.

being of the securities industry

j

In

The Prospect for

Restriction

I

2

A Defense of the-ITO Charter—William L. Butt

,

NASD and its policies

.Cover

Salesmanship in Securities—■J. Donovan Emery

Sound Rates and

Present and

j
Cover

Wiiat's Ahead for Business and Banking?—Arthur R. U pgr en-.......

,

CHRONICLE

!; Additional ballots reemphasize widespread belief that

Page

Low-Priced

and

FINANCIAL

Latest Results of Poll

INDEX
Price

&

Worcester

Glyn Mills & Co.
Williams Deacon's

Bank, Ltd.

COMMERCIAL

THE

(1724)

A

FINANCIAL CHRONICLE

&

"Built-in/' Salesmanship in Securities
By J. DONOVAN

Prudential Insurance Co. of America

•District Manager,

Instructor of Salesmanship, Boston

.*

ty

>',;/■

;

EMERY*.

Sound Rates and

:

■%,

&lrm

Thursday, April 21, 1949

Financing

For Utilities

,

University

By JUSTIN R. WHITING*

3

his preparation for performance, along with thorough

Mr. Emery stresses personality of salesman and

"

.■

-

this

course

endeavor.

designed for salesmen who sell intangibles, helps narrow down our field of
What do men want to learn about selling in a Training Course? Well, for my

lie

men

well

prepared for the per¬
Preparation
for the
performance
of
selling
means
first of all, a thorough knowledge
pf your product and the ability to
impart that knowledge to the cus¬
tomer.
Perhaps you will have to
hammer it home, but even so, in
the long run you will find that
propounding will do a lot more
for you than pounding. Naturally
the word hammer, in this case,
is a figure of speech like that
where some writer said, "They are
hammering their typewriters into

basic

princ i pies
by
which they
the

do

right thing
automatically

they meet

as

their

custom¬
I

er.

not

am

going to give

fifty
funny formuyou

las

im¬

for

proving

J. Donovan Cmery

it

subconscious.

Then

Sales Talk

<

a man more

up—the

perfect.
perfect
it Is

will

count of it.

a

that

ohrases

we

do

to sell it.

man

we

begin

to

with

tion—Of

a

the

air

is important

air—

vital

import—Industrial

because

.

If you have
gentleman you will
good impression. Practice
that air and perfect that impres¬

air

make

sion.

of

And

a

is.

purpose, practice is
.the considered and consistent en¬
appearance

i

*Three lectures by Mr. Emery,
t
third, fourth and fifth of a series
tin a course on Investment Sales-

by

Boston

University and the Boston InvestClub, Boston, Mass., Febru¬

f ment

ary 15, February
11949.

These

23 and March i,

sell

the

fact

that

pnly

People will always act to obtain
something they want; and there is
nothing in this material world
,;r

that mortal

wants

more

nothing to hope for.
When
their

article by Mr. Emery for the
"Chronicle."

have

one

man

people become

minds
made

become!

\

rt

hopeless
set—they

minds and
their minds will never change—
up

their

■n

STATE AND MUNICIPAL BONDS
CORPORATE BONDS

Robins

EttabUshed 1894
AT 288




Do You Want Articles

\ l

m

nancing,

20% to

refer
briefly to fi¬
nancing first,

v

Let

•

is

it

because

Market Value in

additional
on

page

we

lecture

complished

problem of the
hour through¬

of

1946

try. I have to
Justin

R.

Whiting

the

prodigious
job the industry is confronted
with in raising sufficient capital
to meet unprecedented demands
allude

will

I

to

my

experience, because out of it
generated some of the ideas
will discuss today.

I have

In

the

se¬

dent

Investment Salesman¬

1940, my first year as Presi¬
Commonwealth

of

&

Corporation, our com¬
of all 10 operating

Southern

24

and

31;

April

and 14.)

7

The Boston Investment Club

bined budgets

idvises

that

quiries

indicate

preliminary in¬
that

many

firms, individuals and Asso¬
ciations in the investment in¬

interested in ob¬
taining all of the lectures un¬
dustry
der

4*

ATLANTA ,1, GEORGIA

Long Distance 421

creased construction program en¬

gendered by the war which began
the year before. Last year, the
total budget of the nine operating

companies that were left in the
system amounted to $137,000,000—
over three times as large'. In 1940,
the

one

The

cover.

Club

is

max¬

imum

potential

such

brochure

budget of Consumers Power

Editor.

.

.

,

•

which

with

be

debt

hope—nbt soap.
But
even
though

mits.

sold,

take

or

to those with

profitably, otherwise it's ten-toone

you

wouldn't have bought.

You will'be surprised how you
influence

pfeople once you
have put something in their way
to hope for; millions of farmers,
motivated by hope, are now buy¬
ing seeds, fertilizer, and a dozen
different kinds of power imple¬
ments in the hope of raising crops
which they hope to sell.
The magic life-stuff in
manship1

is' hope;

do

not

be

tempted

-(Continued

sales¬

on page

29)

indenture

trust

Always

have

a

have
of

care

per¬

balance
issued

been

of

which

the inevitable

to

rainy

when conditions are such
that equity financing is not avail¬
able on any practical terms. Do
not be tempted by the combina¬
day

tion

of

low

rent

for the

capital

and the fact that this

form

sale

at

not

We

more

were

not

their
highest expectations, but did sell
the stock to the public at $36 on
a
prospectus
showing
current
earnings at the rate of $2.69 per
enough

obtain

to

share. The book value of the
stock

mon

$15.03

was

The sale of these securities

that book

value

com¬

share.

per

brought

to $17.51 per

up

share.

Again in November of last
we

sold

year

400 000 shares of the

over

company's

to

stock

common

its

The book value

was

$18.50 per share.

interest

of

rent, in the
payments, is a

shares

of

stock

selling
fact, in the
case of many industrial companies
there is little, if any, relationship
common

above book value.

between

book

In

value

market

and

price.

For example, the stocks of
large industrial concerns like In¬
ternational Business

Machines, E.
Nemours, and East¬

I. du Pont de

Kodak sell at over twice the

man

book

value.
stocks

mon

operated

Similarly, the
of

utilities

com¬

of the best

many

in

the

sell above book value.

country
a list

I saw

of 20 utilities the other day oper¬

ating from California to Pennsyl¬
vania representing a fait crosssection of operations on a national
The current market value

scope.

their

of

common

stocks

from 150% to 229%

value.
an

To my

ranged!

of their bodk

mind this is mutely
that underwriters

indication

and sophisticated investors realize
for income
tax pur¬
that the issuing company is being
whereas the rent for your
equity capital represented by pre¬ economically and efficiently;oper¬
ferred and common dividends is ated, that the cost of its plant

deduction

poses,

not

only higher but is not deduct¬

ible

Keep

for

income

tax

purposes.

debt low and expend
your efforts on increasing your
equity."
your

carried

than

In

our

Power

own

An address

fore

the

case

Company,

of

National

its books is much'less

fair

value,

bear

some

and that its
relation to

present values.

Deterrents ta Equity Financing:

Consumers

the

common

by Mr. Whiting be¬

Electric and Gas

on

its

earnings

;

:

*

and' because

which

bonds

no

sell

they were associated. Think
of selling as the act of arousing
the customer's hope-potential, be¬
cause people just do not buy un¬
less they hope.
Recall the last
.ten articles that you purchased,
you hoped to be able to use them

the

$40 per share.

fortunate

of the stock

securities

debt

bondable additions against

merchandising

whom

authorized
than

;
>
Desirable
Th;e sale referred to brought the
Soundly financing such expan¬ book value up to $20.24. The divi¬
a task worthy of the best
dend was $2 per share.
in any of us. On all sides we are
There is nothing unusual about

try to be smooth, you are selling

beneficial to them

sold

sion is

can

soap
you
would
only through the hope of your
customers
that
soap
would be

exceeding 500,000 shares to
at a price which would
realize not more than $20,000,000.
To put it another way, the order
be

$2.74 per share.

to create the rfiaximum amount of

were

ice Commission authorized the sale
of not

.

Common Stock Financing

ease

you

share, with a spread of $2.46, re¬
sulting in a net amount received
by the company of $33.54.
The
order of the Michigan Public Serv¬

operating here in own stockholders at $33 a share
was
$12,000,000.
Its under an order of the same State
capital expenditures the past year Commission authorizing the sale
at that exact amount. The pros¬
were $48,500,000—over four times
as
great. You have had similar pectus upon which this stock wais
sold showed current earnings of
experiences.
'■'

interest in
told that in times like these we
and, accord- should finance
by common equity.
;ngly, requests that inquiries As stated by George D. Woods,
in that regard he sent to Dr. Chairman of the First Boston
Douglas H. Bellemore, Chair¬ Corporation, at Pittsburgh last
February:
man, Economics and Finance
"At this point I would like to
Department, Boston Univers¬
inject a note of caution and a
ity, Boston, Massachusetts.-— word of advice. Because of the
a

November

In

Company
Michigan

are

mxious to determine the

stock.

sold 500,000 shares of

we

company's common stock at
competitive bidding for $36 a

spend no time
telling you of

an

this was ac¬
through the sale

the

out the indus¬

service.

of Book

Excess

ways

was

common

give

in

the

of

of

I

this

One

the urgent

for

29%.

over

us

own

Under One Cover?

can

on-Humphreij;CpmpaTiy

RHDDr.S-HAVERTY BLDG.

Don't worry about

confident, your attitude counts
for or against you—your moraleis in your voice and face.
Don't

{

LOCAL STOCKS

k The

it will help you to chart
your own way.
Adjust your ap¬
proach to the mood and atmos¬
phere of each individual situation.
Creative imagination is essential,
guide the conversation to bring
out the will to hope in the cus¬

than

something to hope for. Countless
thousands have destroyed them¬
selves—not
because
they
had
nothing—but because they had

combined into

were

with

.

:

equity taken at book value, in¬
cluding earned surplus, amounted
to approximately 20% of our en¬
tire capital in 1939. Since then we
have brought up that ratio from

fu-

rates and fi¬

Find out,

.

when they
have persuaded; someone to act on
their suggestion to buy, it becomes
evident that tbSi knack of selling
is the knack ofv getting action;
and to get action we must know
what will make people act.

ithe essentials in salemanship, be-

sponsored

.

.

salesmen

| cause a salesman must attract cus| tomers before he^caiv make sales.

| manship,

let's look at what the

Confronted

| and an attractive manner a habit.
I An attractive manner is one of

Your performance level will depend, to-a great extent, on how

now

The magic life-stuff of
salesmanship is customer hope.

our

deavor to make good

,

life-stuff of salesmanship actually

a

For

,

a-time, but fashions change!

it

first chance.

means

the

1

Ex¬

—

,The poor, tir.ed, sales story may
have been the fashion once-upon-

start

air—but

hot

pression

i

Competition"

makes the impression we receive
in that man's presence.
First im¬

We .will

-

the

upon

tureofour

through sound

you

which

.not

;;

rythmic,

Can

modernization and the Basic posi¬
tion of Sales potentials?

man?.

that.bear

What is the customer's problem?

University,'
transcripts
of
which are being published in
balanced

pansion programs—action of in¬
formed opinion—scope and direc¬

How

perfect

real

responsibility in setting up and analyz¬
that go with today's operations so as to
picture of the rights of both owners and customers.
And I would like to talk in general terms of some of these problems
a

true

a

industry

ries

on-

ing the facts and figures
reflect

Find Out Customer's Problem

On

improved
Describes utility rate-

investors.

more

ship, sponsored by the Boston companies aggregated some $42,that sells the Investment Club and Boston 000,000. We had launched an in¬

and

"Intensified

good product to sell, but
essential that we per¬

good

a

then

give the cus¬
tomer something to hope for and
hope will make him act.
Thus,
the ability to inspire customerhope is the root, stalk, and stem
of salesmanship.
,

imagine a the CHRONICLE. (Previous
customer going to sleep while a lectures
appeared ori page 4,
salesman was talking about some¬
in our issues of March 3, 10,
thing of the utmost importance—

more

fect

Accountants have

this:

Remember

isn't the story
papers—it's the headlines. Make
your sales talk march.
Use live
sentences.

attract

necessary to

Like the newspapers,

it

eventually

It is essential

the

commonplace

more

product the more glowing the ac¬

those and those alone will deter¬
we

His

goods may be commonplace—most
goods are—but his story must not,
be.
His talk must be glamoured

to

what

and if he

in his eyes.
have faith in his sales talk.

Perfect"—but

practice precisely
what we will practice—because
whatever qualities or combination
of qualities we choose to practice,
mine

if he isn't,

truth, it will show
Also a salesman must

We must decide before

begin

we

the merits of his goods;

he can't tell the truth,
doesn't tell the

less

comical.

thorough

a

knowledge of what he is selling,
a salesman must be convinced of

perfect.
But while one
kind of practice makes a man per¬
fectly competent, another sort of
practice will make him perfectly

Or

to

corporate securities, but contends

earnings

show them something

tomer's mind.

addition

In

your

you Perfect what you Practice.
Practice makes perfect—any kind

practice will make

into

hammer-heads

more

unless you
to hope for.

setting the pace—set the pose, be

salesmanship will be "built-in"
oi merely being "brushedon."
A first principle of "builtin"
salesmanship is to practice
correctly.

of

not implement

and

salesmanship.

instead

makes

figurative

any

but
rather I am going to try to build
in you a concept of salesmanship
that will help you operate from
nique

"Practice

'So let's keep

executives' desks."

your

sales tech¬

the

you

formance.

want to learn

stock above book valne. Lands movement to inter-;

common

est small investor in

making basis and calls for rates which will give greater return
investment than utilities must pay for capital.

be¬

I

can

sale of

is

money,
v e

Leading utility executive recounts urgent need for new capital by /
public service companies to meet expanding public demands..
Stresses desirability of more commonT stock financing and defends •

Salesmanship must adhere to basic principles. The fact that

A three-lecture course in

\

President, Commonwealth & Southern Corporation

knowledge of product being sold, as foundations for good salesmanship. Says giving customer hope
land knack of getting aclicn is magic life-stuff of salesmanship. Urges reconciling differences with customers who say "no," and emphasizes value of creating emotional response as well as being original
and devebp.ng a working personality. Outlines Rule of Built-in Salesmanship.

Conference

of

Utility Account¬
ants, Detroit, Mich., April 13, 1949.

Assuming that there
000

individual

are

investors

10,000,in

this

country—the figure oftentimes is
placed much higher than this—
there

seems

to

(Continued

be

no

great

on page

41)

en-

Volume 169

Number 4796

THE

COMMERCIAL

CHRONICLE

FINANCIAL

&

5

(1725)

Lanston Resigns Post
sted Production

The

"

1

With First Boston Corp.

Electric Output

Carloadings
Retail Trade

!

Staie of Trade

W ll Devote Some Time

Commodity Price Index

By A. WILFRED MAY

Food Price Index

and

Auto Production

Industry

,

Certainly there has been much public airing of causes of the
paucity of money being devoted to risk-full investment, "But whereas

most individual

-Movingslightlyupward last week over-all industrial production
lor the United States was moderately above the level of the com¬
parable, week in 1948 when labor-management -disputes. impeded
production;

fractional decline

]tl" A

in

continued

claims

discussions have been narrowly

magazine

"Steel"

'f

demand the ;past week

opinion

with j market

reports,

>:>•'.

.•»'.?'

-

-

as

each person in the United States, or an increase of almost 8% over
1948 per capita output and more than 50% over a decade
ago, the
American Iron and Steel Institute stated on Wednesday of this week.

previously

by

the

Institute,

the

new

A. Wilfred

monthly

8,388,965 net tons of ingots and steel for castings in
March brought the total for the first three months of 1949 to
24,053,181
or

study is interesting in analyzing the effects of the
on the raging "social revolution," on the
free enterprise system, on the stock exchange and security business,
on the gigantic insurance
company structure, and on the nation's tax
system. As such the findings and conclusions, far from having their
interest confined to the theoretician alone, will intrigue many other
citizens, including the individual investor, the investment banker and
security dealer, the manager of insurance assets, the lawmaker, the
voter, the taxpayer, and the labor leader—as well as the lay and
professional psychologist.

9% higher than a year earlier, or'more-than half the average
1920's.

Continued

production at
the
March
rate, averaging
nearly
week, would make an annual total of over 98,000,000
steel, an increase of 10,000,000 tons over 1948 output.

tons of

a

Production is breaking records not only in total
relation to growing population, the Institute

tonnage, but in
said, and the effect of
being felt everywhere in
supplies as the factories of the country are rapidly balancing supply
and demand for their products.
this

greatest

steel

production

In the latest 12 months

in

cycle

steel

more

is

produced than

was

similar length of time. The total of
for the 12 months
ending March 31 was
a

by

the

following
net

figures:
in

tons

From

"We

average

monthly average of 7,074,506
7,377,811 tons in 1948, followed by the sharp rise in the first quarter
of 1949 to a monthly
average of 8,017,727 tons.
•

•

-

,■

f

■

.

•

•

;

•

yfi-

■'

•;

Shoe output for the first

pairs,

9%

or

.

»*»

...

•

'fi

.

quarter of

' '

,

comparable previous period,
hope-for annual production, of 450

with

First National

a

Bank

of

'

-

\

1949 of around 114 million

below the

consistent
states

the

'

to

appears

million

be

pairs,

Boston

in its March issue of the
"New England Letter." Although shoe
prices at retail in early March
showed little change from a year ago, a decided shift toward
prewar

price preferences of
Commerce
at

statement

less than $10 per

retail

sales

trends

consumers

that

92%

of

purchases in 1949 will be made
pair, in comparison with 85% last year. While

indicate

that

more

units

are

being

sold,

stores

face far-reaching adjustments in the composition of their inventories
in order to meet such a trend.
Orders from retailers continue to be

placed

on

making

a

an

'production.

hand-to-mouth basis and prompt deliveries

additional^ burden upon manufacturers'
:-'p.'';;v,''' -y'-v'"!'

are

required,

scheduling
■.

of
y '■

In preparation for the Easter
holiday, shoppers increased their
purchases in the week. Total retail dollar volume was slightly above

the final pre-Easter week of

:
•

sponding week

a

'

in

recent

years,

1948 and moderately above the correPre-Easter mark-down sales, uncommon
were prevalent in many sections.
The response to
year ago.

such promotions was generally very favorable.
As

buyers placed additional re-orders for seasonal mer¬
wholesale dollar volume increased slightly in the week
moderately above that of the similar week a year ago. Ship¬
ments were more prompt than a
year ago and many merchants
insisted upon immediate delivery.
many

chandise,
and

was

the blame

■

offered as a single cause explanation, par¬
ticularly adequate attention is devoted to the psychological factor.
As Mr. Gutman states: Although psychoanalysis is the proper work
for a specialist in that field, people concerned with securities should
with professional assistance make greater exploratory efforts to dis¬
cover
the psychological forces determining investment decisions
With this contention the writer fully agrees, along with the advisabil¬
ity of scrutinizing the various conscious and subconscious emotions
motivating
behavior in the market place.
The resulting investo:
ioibles
manifest
themselves
in
the
processes 1 popularly
termec
"manic-depressivism," "escapism," "hind-casting," and the like. The
subconscious forces motivating buying and selling decisions shoulc
receive much greater attention.
For instance, there is the chronic
"bucketer-ol-the-crowd" on both sides of the market, as well as the
oerpetual bear, who are often really motivated by deep-rooted hatred,
rather than just by shrewd logic.
Whereas likening psychological discovery to the "forward sweep
->£ science" which unlocked the atom may be somewhat tenuous, Mr
Gutman cites various fruitful paths of inquiry.
Iri Simply ignoring
common stocks, at the same time that it is emotionally aroused by
thfe phrase "Wall Street," the public is held to be somewhat less than
no means

tude is

-

..

First

n.

Mr.

the

organiza¬

tion

in

1929

and

has

been

con

tinuously

with the First

Boston Cor¬

poration

Aubrey G. Lanston

1934 when he
sence

ex-

during

leave of ab¬

was on

Assistant to the Secretary

as

of the

ceot

...

,

Treasury to advise the lat¬

ter on the investment of
govern¬
mental trust funds and the deficit

financing of that period.
ecutive
ston

Vice-President

activities

corporate

in
government,
municipal securi¬

and

He has established

rary office at 31
New York City.

Tentative

tion

Lan¬

charge of the First
Corporation's trading and

Boston
sales

As Ex¬

Mr.

in

was

shortly.

business

own

and

process

4

Street,

plans for the forma¬

his

of

tempo¬

a

Nassau

be

may

in

are

announced

It is imd°rstood that al¬

though the new firm will prob¬
ably devote itself to the security
business that consideration is also

being given to activities in allied
fields.
"After

twenty

with

years

one

security firm, I feel I would be
unwise in rushing to decisions as
to my future
plans.
Besides, I
have become intensely interested
in the desirability of eliminating
or
reducing the existing double
taxation of corporate dividends. I
believe it is a subject of national
significance and I would like to
devote a short time to broadening
the

information

with

reform

in

National

in

available

possible

to

connection. '*

this

December

is

that

respect

talk

a

the

before

Mutual

of

Association

tax
Last

Savings Banks I suggested a par¬
remedy for this discrimina¬
tory taxation.
Since that time
tial

Congressman Byrnes of Wisconsin
(Continued

page

on

6)

rational.
Mr. Gutman goes on to

STEEL OUTPUT SCHEDULED AT SLIGHTLY LOWER
RATE
THIS WEEK

t io

r a

lies

The Psychological Approach

Although by

indicated by a Department of

seems

not think

do

entirely with the investment
market machinery, entirely with the government, or entirely with the
investor himself," they say.
"We think that the capital-gathering
machinery of the economy and the economic policies of the govern
rnent (especially in the field of taxation) have not kept pace with the
vast social and economic changes of the past 20 or 30 years, and vv.
think it is time that a lot of things were done about it.
"Many of the matters discussed in this report obviously are
interrelated.
None of them provide the complete answer to the
problem. Other avenues of approach obviously could profitably be
studied.
We do not wish to appear as propagandists for anything
except smooth working conditions for the capitalistic system."

indicated

steel is

raw

Explanation

is also quite unique in avoiding any of the
single-cause explanations for that dearth of risk capital which are
commonly broached.

before

monthly production of
quarter of 1945, output rose to a
tons during 1947 and advanced to

final

the

Single-Cause

serve

Director

The

Lanston j oined

ties.

Avoiding
The Analysts group

more than
90,000,000 tons
1,500,000 tons greater than

in the calendar year of 1948.
The rapidly rising trend in production of

5,951,728

ever

May

to
a

Boston Corpo-

stock

present equity-starvation

annual output of the

1,894,000 tons

devoting their wherewithal to com¬
ownership.
Together with causes as above-cited, the

groups from
mon

record output of

tons,

as

of

ment, deficient salesmanship, etc., the study is
unique in including a section, by Mr. Walter K.
Gutman of Goodbody & Co., exploring the psy¬
chological processes inhibiting the various income

.

announced

ing

usually recognized factors as destructive govern¬
ment policies, taxation, devotion of life insurance
funds to fixed-interest rather than equity invest¬

•*

As

He is continu¬

comparatively brief single publication
Society has achieved inclusive coverage oi
the
important elements obstructing corporate
equity financing.
In addition to analyzing the

velocity of the decline. According to some steelmakers, a levelingtendency is developing, but others, the magazine states, see no
change in the rate of contraction and still others, including sellers
with diversified lines, describe the situation as "snowballing."
•
The record production of steel in the first quarter of this year
was
equal to annual output of over 1,300 pounds of raw steel for

effective

of April 30.

.as

In this

off

Corpora¬

tion

the

the

to

ton

•

■

of

The First Bos¬

compiled and published under the
aegis of the New York Society of Security An¬
alysts.*

-

continued, the

mixed

Executive -Committee

the

of

ican Investor "

forunemployment

\:{*

-

confined to specific

nounced his

phases of the broad problem, a welcome contrast has just emerged in
i' u.\:;
the form of a study, "Risk Capital and the Amer¬

insurance took place in the week ended April 2, but initial claims

advanced by nearly 8%. )'
The downtrend in steel

G.
Lanston has an¬
resignation as Execu¬
tive Vice-President and Member
Aubrey

Unwillingness to Risk His

V.%

te¬

>

Tax Reform Measures

"

The Individual's

Business Failures

...

to

•

conclude that the duality of public atti¬

of Wall Street's most

promising aspects. For if the public
totally indifferent the situation would be hopeless, while now
where there is "hate'! there may later be "love."
one

were

Steel customers this week find themselves in

a dominant
position.
Six months ago they were knocking at steel firms' doors for
future
steel. Now steel companies are trying to
get many of their customers
to make up their minds on their steel
requirements for the third

'quarter, and they are not making much headway, according to "The
Iron Age," national metalworking
weekly.

•

-ii.

This week the steel shortage is definitely

ucts

in

general

better supply
,

balance

than the demand for them.

two

steel firms have

started

to

take

many

will

prod¬

soon

be

in

*"Risk

-

Steel

users

have

one

eye

the general economic outlook.

.

.

•

week

crease

from

on

page

of

a

away

from

Why miss

Time Inc.
[,

Kingan & Co.

their inventories and the other on
Their reaction is anything but placid.

a

McGraw

chance and
•'

(F. H.) & Co.

i

■

■

: ■

Established

the chances of auto companies to hold up their unprecedented
buying of steel in the face of the general business outlook and the

MEMBERS N.

£

,*

4

1838

"

*

Y. SECURITY DEALERS ASSOCIATION

*f

v_-l_

m

-Kl

ir

Bell
.S.T-

^

J'

;

professional and

«

security buyers—and \

individual investors—in

more

t

-

Teletype NY 1-897

communities all

H,ooo

the U« S.

-

;

-

Sljg jNA» fork Simeo
"All
.

.

Wall Street, New York 5, N. Y.

\

^

tion executives,

.'
.

63




v

than

FREDERIC N. NATCH 8 CO., INC.

manufacture; the hesitancy in farm area buying with its lowered in-

(

'

?

over

in cancellations and the slow leveling off in new orders; the
trend in railroad buying and heavy slashes in appliance

35)

them all in The New York Times?

■

Bought—Sold—Quoted

downward

on page

of the finan¬

Because The Times is read regu-

institutional

,

'

any part

larly by banking officials, corpora¬

Continental Airlines

large steel companies had important sales conferences late
a few things they could
have discussed were the in-

(Continued

in The New York Times

47)

and

1

REACH ALL

special

cus¬

come;
•

the public

scares

cial market when
you can cover

on

strike; they still, this week, look like they will take

last

that

trade authority, that al

blanket orders

go slowly on future steel commitments.
A few

money

the American Investor"—Report

(Continued

is this trend tc

Knowing full well that ECA has been approved, that Western Europe
will be rearmed and that there may be steel losses due to a long coal

!

1

losing

study group
appointed by the executive committee of the New York Society of Security
Analysts, Inc., 25 Broad St.
Price $1.
Participants include Lucien O. Hooper,
G. P. Caterer, Moses
C. Ferguson, Orson H. Hart, Walter K. Gutman, Robert
W. Lau, Rudolph L. Weissman, Roger T. Gilmartin, F. J. McDiarmid.
Capital and

tomers, That is an order for general requirements for a long period
Specifications against these blanket orders come through at a later
date.
'■
/
; '• '
'

•

;

So strong

J normal methods of buying steel, states this
least

with

over,

with demand.; Some items

Continuing in the mental process sphere, Mr. Gutman contends
that it is not fear of

the Nev/s That's Fit
it

•>'

1

<

•

■

■

i

Print"

to
*

.

'

'

'

.

6

COMMERCIAL

THE

(1726)

CHRONICLE

ITO Charter

A Defense of the

Austerity Continues in Britain
By PAUL EINZIG

President, SKF Industries, Inc.

Prominent industrialist and former

Commenting

Interna¬

War Production Board executive, though acknowledging

Organization Charter is complicated document, upholds it as an instrument of expanding
international economic cooperation and as being in line with recent U. S. foreign trade policies. Out¬
lines features of ITO Charter and holds, despite its imperfections, it is step in repair of corrosive effect»

tional Trade

The Havana Charter is a

is

only

complicated document and it is easy to understand that there

handful of experts who can claim detailed knowledge of its nine chapters and 106
There are many, however, who while not conversant with every detail, will still

a

articles.

than they can alone

broader

States;

is

the

to

critical

riod;

It

two-thirds of

impairment

of

process

our

of

production* to rouse us to our
responsibility as the world's out¬
standing
industrial nation. The
Second World War completed the

to

the develop¬
ment of inter¬

national

to us
trade

problem.

loss of over

a

fatal

pe¬

and

home

bring

export markets and an almost

our

this

in

to

international

an

took

demo cratic

world

depression

that International

fact

the

eco¬

demonstrating that mem¬

of

will oppose the ITO
^

suspect you
Charter.

...

.

If you

30's

the

of

pblicy
United

the

of

sustain politi¬

It took the shattering

the ITO to the

more

any

security.

cal

significance of
foreign

conditions,

economic

derstanding of
the

believe as I do that peace
security can be achieved only

and

through the broadest possible in¬
ternational collaboration; if you
are
convinced that the objective
of the

foreign policy of the United

States is to

effective

give maximum aid and

leadership to all people
are trying to ex¬

and nations who

economic security

pand
litical

if

means;

you

nomic cooper¬
ation.

bers of the democratic world com¬

ternational

munity cannot survive except by

will collapse like a house of

cooperation.

unless

I propose

to

L.

W.

Batt

the

examine

doing
try to look at the forest in¬

so,
stead of the trees.

begin by observing that
those of us who were privileged
to serve in the War Production
Let

me

Board, observed at first-hand, the
amazing extent to which we be¬
came
the arsenal for democracy.
One saw how American knowhow doubled

ity in

our

industrial capac¬

few years and more than

a

We learned—
and the lesson at times was mighty
doubled

output.

our

can

Mr. Piquet, who was
of my ablest trouble-shooters,
testify—the extent to which

our

highly developed output de¬

trying,
one

as

pended

on

resources

obtained

be

in

that had to
countries.

other

Almost daily we saw how greatly
industrial and agri¬

our enormous

cultural

im¬
ported materials. We realized how
much

relied

output

upon

security depended upon
international
cooperation.
And,
our

International

Expanding

setting of the position
of the United States in the present
in the broad

struggle for freedom, and in

by geometric progression. It was
enough to reach agreement

hard

with

one

nation, much less the 54

that have given their endorsement
the

to

charter.

Economic Cooperation
A

realistic

more

the

formed

base

built

:

cooperation;

the

three decades

past

of economic

center

and

polical gravity has
shifted steadily
away from Europe to the United
States.
We tried to ignore this

The

half

United States has taken the lead¬

ership in expanding the scope a id
of international economic co¬

We have provided the
for

initiative

and

the world
center of

for

business

and
a

was

the

center

of

operating

stable world economy

hundred years. We chose to
follow a line of high tariffs, in¬
a

discriminate

international

such

as

Economic and Social Council

the

which

with

these

agencies

are

closely related.

We have made a
continuous contribution to efforts
world

toward

grants

of

years

international

cently,
called
acts

through
"one

in

of

and,
what

the

has

most

history"—the

re¬

more

been

creative

European

Recovery Program.

in

encouraged retaliation and fanned
the flames of nationalism and
nomic autarchy.
the

have
alone

troubled

proved
create

eco¬

Two world wars,
years

between,

that

nations cannot
sound international

Our

policy is based

tions and

on

the

un¬

negotiation,; which

agreement

54

among

If

the

dem¬

a

approach to commercial
problems at this critical juncture,

it

would

hearted

warrant

whole¬

our

support.

I have heard the

complaint that

the Charter is not perfect and that
there are many things the Organi¬
zation will not be able to do.

lieving

I conclude that perfection

operation.
Of course, some

favor

of

people

international

not

are

cooper¬

They :deny that trade

strictions

are

tion

would

and

re¬

two-way proposi¬

a

have

us

arrange

tariffs

our

cies

revert

the

to

1930-33;

if

good

you

feel

old

days

that

the

•

*An address by Mr. Batt at the

27th Annual Session of the Acad¬

of World

of
fi¬

nancial and political power of the
United States should be used more

positively and drastically to club

of

them

and

have

there

are

that; if

you

Nations

is

been

dif¬
some

following—

people who believe

think that the United

pretty will washed

up

and that the

Specialized Agencies
of the Economic and Social Coun¬
are

with

wholly inadequate to deal

economic

lems; if

you

and

social

prob¬

it

cause

is

agreement, be¬

product

a

of

com¬

believe that political

purchase order for

your

ton

a




,

♦-

——•»—•

-his

intelligence as^ a;';politician.
One,' is inclined to assume r.that

a

electorates

popu-'

can
only be attracted
bribing themWith the aid lof

by

ing

concessions.

generous

concessions
the

to

working/

classes

d

a ri

'

the Con

1931

>

swept

offering
adopting

the

the

In¬

torate

Budget

?

tained

practi¬
Paul

Dr.

con-,

Einzig

pleased with its

minor changes than the poor.
So
far
from
releasing
additional

the

its minor

power, even

by

is

which

.

to be

reason

hot 1 by

mood.

anybody; indeed, the rich have

more

Party

ve

y y- ~

now
again in the same
Notwithstanding the re¬
covery of the country-from its
acute crisis, its chronic difficulties

,'con-

cally/no

i

serva t

c o n"c e s s i o n S-, but by
an austere policy to save
pound.', Quite conceivably;'a
large part of the British elec--

approved

the

factj

matter of

the;; coun 11

by soak¬
ing the rich in

stead,

a

been

instances in;'the
sense.-' For example, in

opposite

*

and

fashion.

As

there have

middle classes

are

than

more

burdens,

new

increase

food

of

bal¬

such

as

prices

brought about by the limitation of
subsidies.

Evidehtly, Sir- Stafford Cripps

are

spending
concern,

middle

classes.

its

owes

largely due-:,to over¬
viewed with growing
especially
among
the

are

to ~ the

The

government

present majority largely

support

electorate.

withdrawn the

the

as

dis¬

may

industrial

concerned,

are

is

support

majority

As far

appear.

laborers

middle-class

of
this

If

they

would vote for the Socialist Gov¬
ernment

in

any

has succeeded in resisting pressure

though they

in favor of

the

to

essary

slightly,
mands

such

cover

relatively

simple agreements.

a

in

defiance

the

of

event,

and

even

am con¬

the-de¬ might

of

view

which

has

reality

in a day
imperative

such
and

no

practical
when there is
for

need

international

more

more

coopera¬

tion.

receive

He

productivity.
strong plea for

increased

also

made

a

the realization that

increased

Some

of

the

those

criticism

whose

cused him of

servative

having made

Chancellor's

The

the

the

first time since

it

living.
area

It
of

on

is

our

curious

our

to

standard

that

economy

the

where

that complaint might be
expected
to
arise—organized
labor—has

supported

Reciprocal Trade
Agreements and is supporting this

Charter.
Some of the criticism
comes

groups

from

more

or

one

less the

hears
same

that opposed the Bank and

the

Fund;

the

broad

Marshall
tion for it

that

went

along with
principles of the

Plan
was

reluctantly

if

the

instead

con¬

considera¬

the

maximum

of

advan¬

tages to the classes supporting it.

occasions

many

these

the

interests

coincided

classes

with

interests, but often they
divergent, in which case the

were
as

unchangeable conviction that
lowering U. S. tariffs is an irre¬

one

it

party politics and class
Hitherto, the govern¬
ment's main concern has been to

On

appropria¬

small

enough; that
accepted the Recip¬

rocal

Trade Agreements Act only
after it had been severely crip¬

former

inflation.

critics

were

made to

■"W■■■';/

■

of

the

base

their

Many

that

to face this rather
austerity and dis¬

abandon

'

•

v" \

government's
objections

on

groundless,- in face of
of increased arma¬

of

secured

is prepared

however,

govern¬

allowed itself
to be guided in the economic and

tions

he

fears.

lies

for

industrial dis¬
It is to the

ensue.

deflation

a

policy indicated by
in the fact that,

new

and

wages

will

putes

of demands for

credit of Sir Stafford Cripps

the

budget

almost

higher

is

a crop

Con¬

significance of the

ment's

supporters.

budget

statement.

comes

views

and

of

ac¬

its

of

bound to be

It

national

tariff policy, while
undoubtedly
sincere, are of the long-standing

trievable assault

so¬

cial services must be paid for.
is no wonder some Socialists

of

from

•

There

no

hope for the working classes
- more
goods through
soakipg • the rich 4 and that any
addition
must
henceforth
come
to

warfare.

of

-

from the

stock and barrel.

lock,

and

sound

porting.

side

of

point

is

govern¬
is worth sup¬

ment endless difficulties

siderations

a

ment

conclu¬

all, this

budget statement, allowed it to be
more

seated distrust of any
organization
which we do not

control,

arrive at the

now

that, after

understood that there could be

national

This is

sion

the presentation of this deci¬
This does not mean
that the
sion. i Sir Stafford Cripps, in his budget will not cause the govern¬

financial sphere by

deep-

a

sup¬

may

budget they

was

assumed: office,

Some of the
criticism, I
vinced, really stems from

•

government's

porters for a reduction.
What is
perhaps
even
more
significant

of

steel, or on your fire insurance
policy, and see what detail is nec¬

Economics, Wash¬ stability can be achieved without pled by amendments.
ington, D. C., April 14, 1949.
solid economic foundation—then I
(Continued on page 33)

emy

for

aspiration, and that through

international

any

Be¬

I do in the democratic

as

be only an

can

be dealt with effec¬

can

tively only through international
discussion, negotiation, and co¬

cil

,

larity by mak¬

almost, continuous

ocratic

process,

derstanding that questions relating
to the international exchange of
goods and services, the production

,

~

grumble about
popular budget and
would certainly
nations at Havana on March 24, in
fully upholding the principles, not withdraw their support.
On
1948. represents in itself the most of
austerity.
Instead of, making the other hand, many members of
impressive example on record of sacrifices to lower the cost of liv¬ the middle classes who were in¬
the democratic process in inter¬
ing,
he
isO actually raising
it clined to withdraw their support
resulted

through

recovery

loans

and

loans,
and
short¬ the rest of the world
into
sighted trade policy—all of which ferent
economic policies than

and

would make

concessions

-

the Bank, the Fund,
the Food and Agriculture Organi¬ national
economic affairs.
zation, and for the development of ITO did nothing but assure

agencies

in

the

ITO purchasing

the

The five years of discussion and
and the two and a

procal Trade Agreements Act, the

operation.

of

you

Havana Agreement

consultation

and other trade poli¬
again as we did so disas¬
trously in 1930—entirely on the
vital fact after the first World
basis of apparent domestic inter¬
War, afthough the change was al¬ est.
They believe that our politi¬
ready perceptible. We tried to cal
security can be achieved solely
escape the responsibilities which
by political treaties and alliances
it entailed. Our policies on trade,
without regard for fundamental
on
tariff, on foreign investments, economic foundations. If
you are
on international cooperation, were
one who is
ready to give up this,
exactly the opposite of those re¬
at times, discouraging
and ex¬
quired by a country in our finan¬
hausting business of international
cial and productive position. They
economic cooperation; if you be¬
were exactly contrary to the pol¬
lieve we have gone too far in our
icies by which Britain became the
tariff policy and that we should

financial

which

government,

anced

1934, with the passage of the Reci¬

area

cards;

rock

then

has

Since

policy.

solid

the

on

cooperation

probably consider
of primary importance.

present

our

political

groundless.

are

ENGLAND—The budget for 1949-50, introduced by;
Sir Stafford Cripps on April 6, confounded all
prophets.. Never in the;
history of budget forecasting have so many forecasts been so wrong
on
so many points.
Everybody anticipated an "election budget"" in

to

will

concept

for

economic

foreign

ation.

During the

deflation fears in Britain

says

-

LONDON,

cession s/

incidentally, I learned for the first
promise, can never fully, satisfy
and distribution of basic agricul¬
time how very difficult that is,
any single party.
If it is to be
tural commodites, the inter-rela¬
even among allies.
I used to say
anything but a series of glittering
tion of currencies, and foreign in¬
during the war that the difficul¬
generalities, it must be spelled out
vestment are international ques¬
ties of negotiations with nations
in detail.
Look on the back of

increased, not arithmetically, but

austerity, and

*

the newly created structure of

economic

Organization

Trade

po¬

through
demo¬
believe that
in¬

stability

cratic

and

job

International

-

.

,

oid

un¬

an

;

on

—

—

have

of;

repudiation of Charter by U. S. would be more of a blow than was rejection
League of Nations.

and concludes

British: Budget, Dr. Einzig sees in it policy of Labor
Government to he guided by national considerations instead of
party
politics. Observes, notwithstanding Britain's recovery, chronic diffiwculties arising largely from over-spending are viewed with
growing
v.
concern.
Gives credit to Sir Stafford Cripps for not abandoning

Contends quota system cannot be immediately; elimi-i

of the economic confusion of inter-war years.
nated

Thursday, April 21, 1949

BATT*

By WILLIAM L.

,

FINANCIAL

&

Such

fears

are,

prospects

ment

expenditure during the war.

Another ground

that

the

budget is

for criticism is

balanced at

a

high level , of expenditure.
Beyond doubt, there is scope for
very

drastic reductions

tions.
tors

Excessive
are,

in many direc¬

But the psychological fac¬

could

hardly be overlooked,
social service charges

as

is

it

at

present

inexpedient

to

bring about their drastic reduce
tion.
Such a policy would cause
grave discontent and would en¬

danger
industrial
and
political
stability. Sir Stafford Cripps has
chosen

a
happy middle way by
introducing a "standstill budget.";

prevail. The

nationalization of the steel indus¬

try /and
service

increase

the

charges far

the country can
ent conditions

social

of

afford in its
are

Lanston

the

pres¬

two

out¬

With First Boston

Now.

suddenly the government
displayed a degree of patriot¬

ism

which
for

come

is

none

having

the

come

less
so

wel¬

late in

its term

of office and in the life¬

time

the

of

After

Parliament.
well-established

present

all, it is

a

practice, not confined to

any

one

country, to become generous with
concessions

tions
Sir

are

as

and when the elec¬

rection.

paid

courage.

that

Many

commentators

compliments
Few,

they owed

if
a

any,

which

incorporates the basic idea

which

was

If

advanced at that time.

possible,

I hope to inspire. a
greater interest in the possibilities
the desirability of a partial
reform, during the present session
and

of

the part of large
firms, large
investors, and all others

Congress,

and

small

and small

on

business

comprise

our

saving classes.

If all of those who

Stafford

Cripps has cer¬
tainly moved in the opposite di¬
have

has

who

approaching.

Borp.

(Continued from page 5)
introduced a Bill," HR 3272,

standing examples of this policy
has

Resigns Posi

bevond what

to

his

realized

tribute also to

fected
formed

be

can

and

legislation

aroused,

can

benefits

of

beyond

the

are vitally af¬
sufficiently
in¬

be

which

remedial

obtained,
would

the

far
seemingly
narrow
question of corporate dividends."
.

go

-

Volume

169

Number 4796

From

COMMERCIAL

THE

&

FINANCIAL

The

Washington

CHRONICLE

(1727)

7

Prospect ior Business Financing
By ELI SHAPIRO

Associate Professor of Finance, Schoal of Business, University of Chicago

Ahead

of the News

Dr.

Shapiro estimates corporate capital expenditures in two postwar years, 1946 48 at $79 billion, of
which 60% was supplied internally and remainder from bank loans, security issues and trade creditors.
Holds in 1949, use of capital funds will decline about 10%, and will be

,

By CARLISLE BARGERON

supplied mainly from retained

One of the most serious
commentaries
in what is called
global

adventure

on

insoiar
t

it

consequences

along.

goes

Hill

If

secret

a

..the

on

forthcoming

Atlantic
get

Yet

effort

to

the

cut

ballot

down

is

it

than

will

ECA

on

and

plant

if any similar situation ever before
Tne
country,
we
are
told," is over-i

be

may

true.

legislators

But

is

far

tlian

at

end

Bargeron

obtained

the

mean

were

either is in danger.

Thej

o

e

Communism.
A

the

I don't

ECA

the

and

of

Pact

will

the

stop

know—maybe they will."

march

of t h

■*???

;

dec¬

embraced

support

Eli

Dr.

AA

profits.

e

Shapiro

;

v

"A,

v

.

funds in order to pre-

equipment.

there

should

be

for

little5

so

equipment

and

stock

this

the

in

involved

argument

about

there.

of

more

members

of

about

Congress,

indeed,

a

Some

stopping; Communism.

stopping

Communism

Communism

in

Asia.

put

much

Certainly
people

Asia, if Communism is our
(from Asia) than from Europe.
-1"

menace

Republican

the

More

in

Senators

have

had

ciation\

if

Marshall Plan to China.

are

worry,

business
and

in-mind the
their demands that we

They have little

or

no

ciation

expecta¬

of the Administration.

There is a question, though, as
the inconsistency of these Republicans,
They are the ones who are continuously criticizing the expen¬
ditures of the government, yet they would add to these expenditures.

of

The difference in

a Communist menace from Europe and a Com¬
Asia, and of spending money to do something
about it, is in the fact that no Asiatics vote in this country. The fact
menace

that millions of

voters

of European

a

tremendous

element

in

mendous element in the

Mr.

origin is

our

They
foreign policy.

are

"

columnist and radio pundits who are continually
that never again will we be removed from Europe's
this is because the world has shrunk, would be much
franker if they said the realization had gradually come to us, after
our participation in two European wars, that our efforts at assimila¬
tion of our immigrants have failed.
Indeed,

reminding
wars, that

I

was

strides

mendous
work of

likely

considerable

War

World

we

were

and

well staffed
our

the last three Presidential
both Democratic and Republican headquarters had

divisions to get the bloc votes of those of foreign origin.

politicians

is

There

fortunes

the

are

thinking of votes among these people when

advance

no

of
of

of immigration.
seen

worn

larged

doubt,

the

as

Europe

are

aviation.

It

pundits

inseparable.
is

because

to

Regardless of their

say,

that

But
we

our

it

is not

were

own

wrong

because

securities

of

Affiliated

Gas

Equipment, Inc. were admitted
to
trading on the New

of

Stock

the

was

wartime

of

higher
evidence

further

pro¬

business

when

we

kept- alive.

are

Exchange, ^n exhibit
products of the company

opened

in

the

firm's




first

Now Listed
floor

offices

on
at

N. Y. S. E.

37

Wall

Street.

earnings and depre¬
provided a larger

money.

about

gave
business'

■

and

funds

pro¬

equal

and

amounts

of

Record corporate profits
relatively small dividend dis¬

tributions

for

made

large volume
0f retained earnings which,
adaed
to
depreciation, reserves,
a

Bank
(including mortgage loans)

continued

billion.
plied

to

supply

,

around

$4

New security issues sup¬

more

since' 1929,

funds than in any year

although the securities
*

,

,

prevailing

by

ployment and

rising prices addi¬

working capital is required
purchasing hnd carrying in¬

increased

level

use

the term

business forecast¬

prefer the more
description "business

I. would

ing.

accurate

guesstimating."
5

Any discussiqp of the supply of
requires as a prelude an
analysis of the demand for funds.
funds

The

principal

order of

expenses.

to finance the construction of pro¬

machinery

postwar years
.

In

and

examine

equipment.
the

uses

of corporate funds

book

value

-

Increases in receivables.

(3)

are

at

present two com¬

prehensive estimates of plant and
of Amer¬
(Table 2).
The
Securities
and
Exchange
Commission survey indicates that
the volume of planned expendi¬
tures for plant and equipment in

i economic
activity.
Plant
i!™.!and^t^ing
volumeand
of
equipment expenditures continued
to rise

although at

a

slower rate;

despite price rises, the increase in
the book value of inventories was
less

in

than

reflecting
and

a

a

either

1947

or

1946,

filling of pipe lines

restoration of prewar rela¬

tionships between inventories "and
The

saies.

same

true of trade

of

sources

receivables.

sources

was

Internal

principally re¬
and
deoreciation

funds,

profits

tained

reserves,

behavior

accounted for 60% of the
Bank loans

1949 will be 5% below the

amounts

breaking
in

Declines

1948.

1949 in capital

pated

by

nies,

the

from

groups

companies.

are

offset to

higher

the

and
some

expenditures

NEW ISSUE

Animal

Foundation, Inc.
400 Units
Consisting of

5 Shares

6% Cumulative Participating Preferred
(Par Value $100)

1 Share Common
(No Par Value)

Price $500.10 per

Unit

Prospectus on-Request

in the

1946-48 (Table 1).

1946, American corporations
$24.0 billion on plant and

equipment, increases in book
value

Street community familiar
with' the activities of the corn-

sion of trade credit to customers.

pany.

About

of

inventories

70%

of

and

exten¬

these funds were

Investment Securities

Members New York Stock

One Wall Street,

other
These
extent

(Continued on page 36)

of the funds.

to

antici¬

manufacturing compa¬
commercial
and

transportation
by

spent

1948

are

miscellaneous

declines

record-

actually

outlays

I

Wall

spent

of

inventories.

and

The display of gas equipment
products was planned to make the

ex¬

.

in

ductive facilities and the purchase

sources

in

are:

equipment

and

Increase

(2)

-

funds

of

uses

importance

(1) Plant
penditures.

general

of

Additional
long-term funds in either bor¬
rowed or equity form are needed
overhead

that

Nmeteen-forty-eight was charequipment expenditures
actenzed by continuing price in- ican business for 1949

of

levels

tional

of

the fact

of

your

theory of the so-called business
cycle; hence, it is rather grandiose
to

There

.

.

view

in
of

current decisions
are tested in the market only with
a considerable
lag.
As you real¬
ize, we have no generally accepted

debt form.

took the

employment,
industrial produc¬
tion,
construction
activity and
prices.
In a period of full em¬

for

Internal
of

sources

results

at

prices
of

creditors.

trade

for funds.

need

the

of

dispositions the politicians

it that their ties with the homeland

Products Shown by Go.

York

in

draw

funds.

to

volume

markedly

want ' to

■/ After

out

and

ventories, meeting payrolls, ex¬
fortunes and tending trade credit, and meeting

thought it would be different with the second and third generations

have

equipment to replace

and

mined

closely associated with

when they contemplate military aid.

the

cilities

addition

on

they vote Marshall Plans for aid to the various European countries,
or

a

our

been

have

campaigns

And

was

for plant fa¬

person

a

ing for votes of the racial strains.
I

there

demand

At any point in a country's eco¬
our
foreign born into the national stream. But very nomic development, business de¬
strides they made were offset by the politicians in appeal¬ mand for funds is largely deter¬

mixing

any

our part just before and
melting pot and of the tre¬
teachers and social workers in the

boasting

I, of how
made by

unprecedented volume

an

preparing the estimate. In
to deficiencies in plant
and
equipment, working capital
requirements to handle the en¬

our

us

There

after

busi-

required by American industry at
war's-end vary from $60 billion
to $150 billion,
depending upon
the
assumptions
made
by
the

tre¬

a

1945

enlarge existing
productive facilities. Estimates of
additional
plant and equipment

one

Truman's reelection.

shaping of

end: of

liquid assets and

duction

of the forces
behind the European spending which the members of Congress are
afraid to tamper with. These foreign-born blocs in our midst were
are

vided

loans

same:

tremendous

those

from

our

had

ness

the

at

to

asset holdings,

j accounted for $15 billion.

,

Thus

too.

munist

the

period

to whether it doesn't show up

of

external

quadrupled between 1939
and net working capital
corporations more
over

from

reserves

volume

liquid asset holdings of

doubled

than

tion that it will be done but their demands do serve to show the in¬

consistency

1945

reluctant

were

their liquid

American

of

bil¬

$79

Bank

forecast

but retained

and

result that

obtained

were

outside the business.

1947, corporations used a rec¬
volume of $29.0 billion. These

down

depletion
reserves
were not used to acquire physical
plant and equipment, with the

primarily

debunking of this Communism argument in
extend

who

the primary purpose, it would be sheer nonsense not to do

were

something
is

few

are

funds

firms

were

retained earnings, depre-

of

ume

There

In the years 1946-48

Summary:

corporations used about

needs.

In

ord

Private expenditures

plant

finance

to

upon

billion.

j

even

or

take the debt form.

'
including mortgage loans, ; j Financing Outlook for 1949
Businessmen
men
are
provided $4.0 billion, new security
always
issue supplied $2.3 billion, while
interested in a forecast.
I am
trade creditors accounted for $3.0 fully aware of the needs for a

small during the war years as the
understanding on the part of the men "who'
government pursued a course of
must and do give them approval.
The explanation probably lies in
action
designed
to
divert
the
the fact that the forces behind the
undertakings are;1 so involved
maximum volume of resources to
that the lawmakers are unable to dissect them and
appraise their
the successful prosecution of the
individual political worth.
The package is unpalatable to them but
war.
In addition to the large volits vote potentialities are uncertain and suggest not taking risks.
j
real

unprecedented

loans,

earnings retention ratio was
high, as business was anxious to

two of the most important under¬

on

the

1946 was
ohly year in which they were

of the

pare for future uncertainties (in¬
AV..A.../. VI'.
movingly of its accomplishments. Suddenly Senator: cluding tax requirements) as well
as to-obtain the means of paying
Vandenberg said sotto voce, "Baloney." He drew up short when;
for
he realized he had been heard and
replacement, ■». modernization
sought to laugh his expression^
off, but there is no doubt that it reflected his innermost thoughts. | and enlargement of plant and

truly remarkable that
this country has ever

despite

sources

spoke

It is

that

lion, of which 60% was supplied
Uncertainty of the business out¬ internally while external sources
look has apparently made busi¬
were
provided principally from
ness
unwilling to reduce its li¬ bank loans and new security issue,
quidity position. • Thirty per cent! with a lesser amount provided by

continuing ECA.

takings

retained

drawn

red

pa

tne

The

few

He

internally:

from

the

large

m

weeks ago, the ECA
Administrator, Paul Hoffman, was:
testifying before the Senate Foreign Relations Committee in behalf accumulate

.

evaluating the prospects for business
came out of the war with a smaller

volume of liquid assets,

ade of the .'30s

appropriations will

say

and to

war

.

,

them.

succeed; any more than did:
or even of the
a
similar effort several
days ago when the vote;
'20s. Dividend
was
on
continuing the authorization for the appropriations.
disbursements
Talk privately with Senators who have
been closely associated
were
small,
with the two items, who have steered them
through the legislative averaging less
procedure, and you will get something like this:
;t f
than
50%
of
"Oh, they

i

$6.5 billion fell off sharply during the.year
earnings, $4.0 bil¬ while the capital markets supplied
lion from
depreciation reserves a total of $6 billion—an amount
and
$6.5 billion from drawing just slightly under that of 1929.
down liquid assets.
I might add These new securities continued to

1941.

of

This

Pact unquestionably will be ratified, and I doubt!
with
seriously that the effort to-shave down the ECA

:

'

■

.

<e>-

of

and

During the
private sentiment of the!
war net
prof¬
being behind either one:
its after, laxes
U: j

the

from

This does not

the Pact.

'v.-':

|1949. American industry

year

equipment

doubt

existed.

of

volume

is

•!

;•

whelmingly behind the ECA and

.

oij financing in the critical

any

appropriations

sharply beaten down.
I

a

:

<

:

-

v- .
...
This article is devoted to examining the manner in which business has financed its

on

thai requirements for funds since the end of the

doubtful

ratified

quantity.

PART I

or-! the

relative handful

a

be

in sufficient

,

But

?

taken

were

expenditures

Pact,

more

Pact

concerned.

are

ECA

either would
votes.

•

the

as

Capitol

Carlisle

reserves. Foresees slight rise in interest rate on capital funds, and reduced
capital expend.ture, should taxes rise. Looks for no rise in stock prices and says bank loans available

*

leadership
for it in Congress. The legislative
body goes along with
Department, grumbling, skeptical and more or less blindly

enthusiasm
the State

^earnings and depreciation

amazing and weird
is the utter lack of

our

Exchange

New York 5, N. Y.

8

(1723)

THE

Present and

COMMERCIAL

FINANCIAL

&

CHRONICLE

Thursday, April 21, 1949

Latest Results oi Poll

Prospective Steel Supply Ample
By WALTER S. TOWER*

•

(Continued from

r

*

.

NASD

on

3)

page

President, American Iron and Steel Institute

Asserting steel companies, expending approximately $2 billion, are completing largest expansion pro¬
gram ever undertaken, industry's spokesman looks for output of 100 million tons of steel ingots per year
by end of 1950. Denies purpose is to create steel shortage and says present supply is ample. Attacks
proposals

for additional government regulations as incompatible with private enterprise, and
Spence Bill, as dangerous to national economy.

It is not
I had

hearing

always

here

come

sort of

some

v

essary

Now, how¬
ever, it seems

various

four years of emergency operation
without let-up were no longer ef¬

scope

tion

ficient

of

steel

t

mo s

any

consum¬

of steel.

er

As

steel makers

expected,

the

so-called steel

well

as

has
proved to be a
••nngjtory. as

phase of
readjustment.

economic

It did not signify any fundamen¬
tal lack of balance in our indus¬

trial system which might call for
drastic corrective measures.
Both

steel

and

automotive

in¬

dustries have achieved remarkable

production

in

feats

this

postwar
period and they have done so in
the face of some tough problems.
Both industries for a time found
themselves unable to produce and

ship

their

their

customers

from

products

would-be

and insistent.
bles

beset

fast

as

wished.

buyers

as

Clamor

loud

was

Grdy market trou¬

both

industries, while

material scarcities and labor
difficulties at critical periods re¬

raw

tarded their output. -,
So far

these
lems

had

is

steel

as

materials
not

;

labor

existed,

prob¬

end of the

motive

45

months

since

the

As for the auto¬

war.

industry, if it could have

received its share of that
missing
tonnage of steel products, and if

it,

too,

labor

could

have

been

free

difficulties, the size

of

of

its

backlog of orders long since would
have

been

of

greater interest to
sales departments than to
produc¬
tion

men.

Automobile
steel

makers

lems in

manufacturers
have

common

enough

for each

and

prob¬

industry

to

the

changed.

pacity

mobile man's
his next
arrive.

could

concern

carload

Steel
to

of

men

the

auto¬

when

over

sheets

would

did all that

eliminate

the

they

famous

"daisy chain" of gray marketeers,
just as automobile people were
trying to fight the zooming mar¬
ket in

so-called new-used

are

still striv¬

their

productive
facilities. When all plans for ex¬
pansion and improvement so far
authorized
been

completed, close to 100 mil¬

lion

1950

produced.

that figure

Against this background of fact
tbat the steel industry and its
biggest customer have faced simi¬
lar problems, let us see where the

tion
of

is

the

By the end of

also

result

of

construction
mills.

and

from intensive efforts

comes

improve technological processes
which step up the efficiency of
existing plant facilities. How suc¬
cessful these efforts have

largest

completing
programs

some

for

production

ever

American

industry.

along
of

the

increasing

undertaken in any

These

pro¬

grams got under way

shortly after
the end of fighting. At that time
the industry had a capacity to pro¬
duce 95,500,000 tons of steel ingots
and castings per year—a record

figure.
With the war's end it

was

nec-

*An address by Mr. Tower be¬
fore the Economic Club of
Detroit,

Detroit, Mich., April 11, 1949.




is

b.y the fact that a year
ago steel production was equiva¬
lent t<? about 95%

of the capacity
In recent months

Available.

it has

been

at

full

a

100

of

an

larger capacity.

even

No

broad

there

accusations

(3)

Then

it

said

;

.

No

(4)

"inflated and overstated." He

the

favorite

dustries.

been

rave

availability
materials,

to

spent

increase

/

(5)

quality of raw
in coal washers and

sintering plants.

>re

lions

have

been

Other

mil¬

spent

on larger
better charging
ooxes, diesel locomotives for plant

and faster cranes,

.ailroads

other

and

items

which

aelp to increase the efficiency of
existing facilities.
The
has

expansion

of

increases

finished

of ingot output

been

course

in

accompanied

the

products.

The

*

of

tonnage

Take,

for

and

strip, and
cold

varieties

ered with prewar.
cold finished bars,
in

has

same

ion

time

to

gone

such

was

not

a

an

oeen

up

125%

in

the

degree in
easy

task.

more

produca

short

To have

would have

virtually impossible, in spite

all

the

confident advocates

expansion.

steel

iew„

mill

.

Orders

of

equipment had to

And

most

important of all, until

months

the

raw
materials
situation did not permit even ex¬

isting steelmaking facilities to be
operated at full capacity.
Instead of being

maliciously at¬
charged with "betting
depression" or "showing little

tacked and
on a

faith" in the country's
future, steel
makers deserve high credit for

carrying out, in the face of
usual

difficulties,

expansion

improvement programs which
have;few equals in any industry.

(6)

14

or

,

7.4% I

Charges Are Pending:

nor

10

or

5.3%

>

or

88.4%

\

opinion __l_——_______1____/12

or

6.3%

/

j

________

_____

_L__1

7

or

3.7%

175

or

92.1%

8

or

-4.2%

:___

6

or

3.2%

177

or

93.1%

v7

or

3.7%

150

or

78.9%

22

or

18

or

11.5% :
9.5%

_________

opinion

—

-

Should Moloney Act Be Repealed?:

Favoring
Opposed
No opinion

-

More Dealer Comments on Effect of

"5%Mark-Up"SpreadonSecwities
Of Smaller Corporations
As

peared

plant for the good of
country.
Events since then
to

that

prove

the

such

not

was

country has increased about 13%.
A great deal of emphasis has been
put on that fact. Over the same

ingot production
per capita.

steel

about

800

In

was

pounds

In

the first quarter of this year pro¬
duction was at the annual rate of

1,300 pounds
worth
recent

noting
growth

due

to

of

hieh,

think

I

that

agree

capita. It is also
that much of this

per

population has
wartime birth
of

most

there

needs for steel

able to accommodate

we are

will be

more

In connection with these

that in accordance with the
some

expressions, it should be noted
option contained in the ballot,

signatures and others replied
With respect to the former, we consider it a

matter of fairness not to reveal their

identity as time does
obtaining individual permission to do so.
Where the comment was made
anonymously, this is indicated
by the symbol (*) appearing at the end of the statement.

not

permit

our

.

BIRMINGHAM, ALA.
There won't be any

even

5%

gain

or

a

possible

market—why should
25% loss—or

money unless you speculate—and

Output Greatest for Peace Year
The

record

and

turned

shows

1948

out

that

than

peacetime year.
ending* March

in

both

steel

more

in

or

is the Security business

ever

period.

before

But

in

that

a

Very little effect.

million tons.

Many
that

persons

all

but

a

•

small

fraction

of

the

huge amounts of steel which
have lately gone into civilian uses
a life span measured in
years.

has
In

capital goods, like construction

and industrial

durables,
ment

or

machinery, the

for decades.

may run

like

In

May do

works

answer
a

to

hardship in the

automobiles, the

large blocks,
a

or

liability

or

pow¬

erful cumulative effect from

of

(Continued

on page

37)

cases.

•

think that the "5% Mark-Up Rule"

of the securities of

many

smali corpo¬

put on the market in

are

should

be

made, in

some

or

manner,

We think

relative

to the

the degree of risk involved.

,.v* v:

■

■

•

-

■

_

LOS

iKills 'em.*

■

>■'

-

.

.1^

-

'

;•

'•

LOS ANGELES,

'

CALIF.

Examples: Utility Appliance Common—8
in

original distribution.

••

.1

ANGELES, CALIF.

or

Only 1 firm maintains

a

9 firms participated

market—make their

sus¬

price.

Max

Factor

Common—Firms—original

steel,

which is too commonly forgotten
.

we

case

MOBILE, ALA.

own

production

harm in few

position taken by the dealer,

None.

quality of material and manufac¬

high

some

through forced liquidation of estates, etc.

differentiation

equip¬

a

v

span

span now

turing skill. Hence there is

^

rations, particularly those whose securities

lengthens with every advance in

tained

question 4,

consumer

household

/■■

•

MOBILE, ALA.
In

'

overlook the fact

spread

Narrows and frequently kills it.*

is

displaced by the rate of the past
three< months with
a
figure of
24

'

.

a

risk

NASD for all business

an

special one?
/
1

for

our money

cannot obtain

BIRMINGHAM, ALA.

like

record

Why not

.

any

made

risk

BIRMINGHAM, ALA.

previous
In the 12 months

even

a

was

we

more—you

if you do, you have to get

to protect ycu and your customer.

31
output
has
topped 90 million tons, more than
was

Others

firms elected to affix their

anonymously.

dren.

1947

of them herewith.

published in subsequent issues.

will
direct

a large
of infants and young chil¬

group

connec¬

April 14 and

you

few

are

from

country?"

A substantial number of the comments
submitted in
tion with this
query appeared in our issue of

period total steelmaking capacity
has been increased about 18%.

1939,

ap¬

.

much

tended

already stated, the following question (No. 4)
the reverse side of the ballot:

on

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

on the
ground that
overbuilt—and that it had

un¬

and

82.1%

and

government

Since 1939 the population of this

for

their turn with equipment
irders from other industries. Con¬
struction labor was at a premium:

;ecent

both

criticism, to put it mildly,
very intelligent.

Production of

also important

No

sources

it had

corn¬

period.

increased it much
if

as

automobile and truck manufac-

;ure,

figure is

160% increase in

a

rolled

1949, the
high.

been

from

labor"?

rate.

die

1,

full

has

cism

Sopn

largest user. Additional and
improved facilities' have produced
a 60% increase in hot rolled sheet

10.5%

or

____2_—___168

Favoring

unreality of the
accepted capacity
evident from the fact

significance of' what
doing can best be
comparison of pro¬
duction and capacity today with
what it was "a decade ago.
It was
then, you may recall, that the steel
industry was under severe criti¬

ex¬

the

or

156
:

______

Opposed

the

measured by a

and strip steel, of
which the automotive
industry is

sheet

"

20

Rule Forbidding Discount to Non-Members:

complete

Jan.

steel

the

and

as

r

too low—not too

have

technological advances, for
example, many millions of dollars

Spreads:

Opposed
No opinion

com¬

plaint that insufficient steel sup¬
ply was holding back other in¬

the

Technological Advances

on

Favoring _i2__^____

expanding

^

repeated

of

10.5% ;

■

not

was

also

on

or

.NASD Trial System:

American Iron and Steel Institute

as

Favoring

I,

that

were

The

opinion

Opposed

as

long ago a prominent union
leader
publicly - stated that the
capacity figures released by the

attack

20

Examination of Books and Records Where

that

criticism

was

77.4%

________

Neither Complaints

.

Not

too

In

take

well

been

measured

be expected in the future.
are

Part

to

'antastic

Steel companies

the

obviously unfounded

so

12.1%

or

com-'

programs,

be/ ridiculous, /', the

may

furnaces

new

steel industry stands today. That
is the best guide as to what

may

steel

or

Favoring __—'

Back

be reached figures is
if consumers want the tonnage. To
that production has exceeded rated
make this possible, approximately
capacity in every month so far
$2 billion will have been spent.
this year.
If anything is wrong
Part of the increase in produc¬ with the capacity figure
reported

cars.

Where Steel Industry Stands
Today

the

announced

their

the industry
enough.

tons of steel ingots per year
be

can

To increase the scale of

towards

have

announced

or

opinion

Questionnaire for Reports

.

increase

to

complications and wo,rries. Steel
men, bothered b,y supply and qual¬
ity problems in scrap and coal,
understand

at

Steel companies

ing

ample,

well

rated

was

annual ca¬
more
than

36,000,000 tons, a new high mark
history of the industry.

oy

could

year

in the

to

be
sympathetic
toward
the
other's special varieties of
postwar

became

By Jan. 1, 1948, the discarded
furnaces had been replaced and

By Jan. 1 of this

Held

they were "refusing" to increase
capacity. When such accusations

modernized.

industry's ingot capacity was
again close to the wartime peak.

after

had

of

Not

continued

were

being installed

were

long

lanies

Meanwhile

than

more

20,000,000 additional tons of fin¬
ished products could have been
made in the

and others

then

concerned, if

and

economical.

or

facilities

now

shortage

inevitable,

an

postwar

production

facilities which

that the ques¬

other

\

out of

take

old

Yet

supply is no
loi.ger vexing
your leading
industry,
nor

Walter S. Tower

to

Output

23
147

:__

Opposed

Steel

after

1

No

190

_

Opposed

more
enduring issues. If
first interest probably would have been in (2)
to the question: when will the automobile industry be able to

steel it wants?

a

Favoring

scores

few months ago, your

a

r

\

5% "Yardstick":

answer
a J i
the$>

.

m

(1)

'

to distinguish between temporary and

easy

even

(RETURNS FROM NON-MEMBERS OF NASD)
Total ballots returned

*Commented anonymously.

(Continued

on page

31)

distributor

and

Volume

Number 4796

169

COMMERCIAL

THE

&

By WILLIAM T. FARICY *

President, Association of American Railroads

the following literature:
Mr.

Faricy attacks prohibition of freight rate absorption by producers and sellers as restriction on free
expanding markets. Says application of theory of FOB pricing will disturb our economic structure

and
Business Activity and the Stock

series

A

copies
available
to
banks, institutions and dealers—
Street,- Scharff & Jones, 219 Carondelet
Street, New Orleans 12, La.
—

Market—Leaflet—John B. Dunbar
&

Spring
Los Angeles 14, Calif.
Co.,

634

South

Securities—List

Connecticut

with

issues

of

records of un¬
payments—Chas.
W, Scranton & Co., 209 Church
Street, New Haven 7, Conn.
long

broken dividend

Utilities
Counter

the

in

Market

Arthur

Warner

—

&

Over

the

-

Economic

of

Recovery

Europe

ernment

bonds of Great Britain,
Belgium,
Sweden,
Netherlands,
Norway
and
Denmark — New
study—Zippin & Co., 208 South La
Salle Street, Chicago 4, 111. -

ysis—Geyer & Co., Inc., 67 Wall
Street, New York 5, N. Y.
Also available is an analysis of
Security

Insurance

Co.

of

New

Haven.

Boston

Real

Trust—An¬

Estate

panies

of

New

March

of

as

Hanseatic

York

31

Pont Homsey Co.,
Street, Boston 9, Mass.

31—

120

Corp.,

Broadway, New York 5, N. Y.

Oregon Power Co.—

Circular—El worthy

Ill
Francisco 4,
&

San

Street,

Co.,

caiif.

Co.,

York

Street,

Broad

25

New

4, N. Y.

Co.—Analysis—Ira

York

City

Comparison

Stocks—

Bank

analysis

and

as

of

Haupt & Co.,
Broadway, New York 6, N. Y.

Also available

are

brief data

on

American Power & Light, Consol¬

March 31 of 19 bank stocks—Cir¬

idated

cular—Laird, Bissell & Meeds, 120

Electric, and Warner Bros.

American

Vultee,

Gas

&

York

Stocks—

Bank

City

Comparative figures at March 31,
1949
First
Boston
Corp..
100

of

—

Fla.

—

erick

Miami

North

Beach,

Memorandum—Paul

&

Fred¬

Co., 70 Pine Street, New

York 5,

N. Y.

Broadway, New York 5. N. Y.
Consolidated
Oil

Analysis with tabulated
comparison of common stocks of
24 companies—Wm. R. Staats Co.,
640 South Spring Street, Los An¬
—

Stock

-

the

-

Index

Also

Booklet

—

recording

stocks—National

anylsis—Ira

tive

Haupt

—

Compara¬
Fernandina
toll

N. Y.

cular—Allen
available

Denver

Rio

&

is

a

bulletin

on

road

Mutual

Investment Funds—Transcripts
lectures

10

fund

investment

mutual
Vol.

by executives

I

of

field

1-5) ready May
10; Vol. II (lectures 6-10) ready
June—$5 per set of two volumes
on

orders

for

1

to

9

sets; lower

prices in quantity—Publications
Division, New York Institute of
Finance, 20 Broad Street, New
York 5, N. Y.

Brown, Lisle & Marshall, Turks
Head Building, Providence 3, R. I

Booklet

ues

of

War

designed primarily for
computing yields and val¬

II

State

of

Louisiana

Veterans'

Broad

Bonus

World
Bonds

(Continued

and analysis—Blair &

Also

available

Chemical Bank

Fort

Co.,

bulletins

are

public

Transit

Worth

Bank

Trust

&

cular—Sanders

it

*

An¬

.

on

&

Co.

Co.—Cir¬

Newsom,

Building,

Also

is

Re¬

Dallas

circular

a

1,
on

Galveston-Houston Co.

Frost

Lumber

re¬

of the

Giant

Industries—Cir¬

Street, Shreveport, La.
Yellowknife

—Circular—A.

G.

Gold

Mines

Edwards

&

Sons, 409 North Eighth Street, St.
Louis 1, Mo.
Also available
on

page

are

Louis

not

shoes

for

Dut other con¬

enjoy

equally
and

trade

Baltimore

move

this

continent,
s

t

now

i

a

n

a

one

T.

William

degree of comfort, at
time could provide no more
the

Chicago

and
City.

Kansas

of

of his

area

barest

perhaps half

for

sustenance

million aboriginal

a

third

Cross-hauling

Faricy

high

than

to

to

offered

is

of

nobody

in

But

do

I

that

know

his

This is
so
long

it.

reason

is

free

a

circulars

on

47)

ASSOCIATION OF NEW YORK

Over 1,200 members

and guests of the Security Traders Associa¬
Inc. have made reservations for the 13th Annua
Dinner to be held on Friday, April 22 at the Hotel Waldorf-Astoria

good
the

as
make

to

up

mind where and how he

own

will

ship and how much he will
charge for his product at destina¬
tion.
And since it is his goods
that

being shipped, and his
that pays for the move¬

are

money

and his privilege to make
profit on the sale of the goods—
he can—and his responsibility

ment,
a

if

case.

there

trouble and pay the cost

shipping

businessman

Freight

individual

each

origin to make it worthwhile to

business

does—for there are so
of them, variously com¬

bined

every

of

Why is freight cross-hauled?
I
don't know all the reasons why—
many

game.

a

go to the

s

nearly
150,000,000 people
in

steaks
steaks

production, and
would do it by the expedient of
prohibiting absorption of freight
charges.
Well, let's see what we
get into if the theorist's philos¬
ophy obtains.
;

rich,

even

City

It's a business and
shipment made there
is a reason, or more likely a whole
complex of reasons adding up to
one
controlling fact, namely, that
somebody thought that the freight
shipped would have enough more
value at destination than at point

The theorist would have each pro¬
ducer
restrict his sales to the

to bear the loss if his judgment

are

is

wrong, doesn't it seem reasonable
to
let
him
say
what he will
ingenious and in¬ ships freight for fun.
Nobody
dustrious
population—but other gives himself the pleasure of crat¬ charge and how be will go about
nations have populations as nu¬
ing it up, and loading it and pay¬ figuring the price?
Shouldn't it
merous, perhaps as ingenious and
ing the charges, just for the fun be his business to say whether he
certainly
as
industrious.
No,
of doing it.
(Continued on page 38)
,
Shipping freight is
there must be still another reason
a

our

numerous,

for

the

reason

in

difference

capacity

reasons,

for most certainly nobody

productive

in

the

is

such

and

plenty

we

there

i

a

reason

First, foremost, and fundamen¬
tally, the difference is in the po¬
litical institutions which

were

unique

tent

and

degree

to

which

thing

governments presumably do that
—but freedom to try ventures, to
make mistakes,
but if to fail,

of

perhaps to failthen to have the
try again.

freedom

would

SUMMARY OF 1948 ANNUAL REPORT

they

provide freedom.
They do not
provide merely a freedom to endeaver to be wise and good—all

But not even this

Year

INCOME:

From

enough

City and, looking a little further,
in
this whole magnificent midresults, America had to be not
only free, but also had to have
the transportation which made it

to

Total

its

unique
a

sources

I

SM00,19O,447

-

$39,85)5,453

divi¬

interest,

—

6,529,817

775,888

D

$39,119,564

$406,720,264

Income

EXPENDITURES:

services and

materials, fuel,

Payrolls,
taxes

$355,196,706

I

$27,941,444

Interest, rents and miscellaneous serv¬
ices

29,365,263

D

1,720,794

$384,561,969

I

$26,220,650

$22,158,295

I

$12,898,914

-

Total

added

1947

pas-

etc

dends, rents, etc

truly united.
America

with

/

To produce such

country.

freight,

of

mail, express,

other

From

to

produce such results as we see all
about us here today in
Kansas

Comparison

15)48

transportation

sengers,

unique degree
be

COMPANY

RAILROAD

vised and bequeathed to us by our
The

BALTIMORE AND OHIO

THE

de¬

Expenditures

freedom,

unique concept

Transportation
by rail, on the highways, in the
air, on the waterways, and under

NET

INCOME:

transportation.

pipelines
—all these are known and used
in other countries as well as ours,
but nowhere else are they known
and used in such abundance.

For

improvements,

other

sinking funds and

purposes

the earth in the form of

Growing out of that fact is the
thing that is unique about trans¬
portation in America. That thing
is the use we make of it.
Use of

in most countries
is restricted by the concept, how
little can we get along with?
In
our country the idea is, how much
transportation can we use to in¬
crease production, to enlarge out¬
put, to cut costs, to enrich life?
Every day in the year the rail¬
roads alone move 12 ton-miles of
freight for every man, woman and
child in the United States.
The

will say
all this hauling is neces¬

theorist in transportation
that not

tion of New York,

sary.

according to James F. Fitzgerald ok W. L. Canaday & Co., President
100 persons prominent in the security business and allied
fields have been invited as guests of the association.

fore




Louis; to

Chicago

ntine nt—

c o

of

cular—Barrow, Leary & Co., 515
Market

St.

move

sas

rich

So,
available

to

the

sources

western

NSTA Notes

About

wasteful

St.

beer to Baltimore; to move Kan¬

transportation

SECURITY TRADERS

is

to

beer to Milwaukee and Milwaukee

Tex.

Special Bond Tables at 3.10%
in

30

California Oregon Power Co. and

Rhode Island Banks—Circular

use

Co.,

Inc., 44 Wall Street, New York 5,
N. Y.

in the

(lectures

Why?

common

Firemen's Insurance Co.—Sum¬

of

enjoy such abundance as the world has never
today. Americans produce more and live better than
One common explanation is the size of the country—

explanation is

chance to

mary

Salesmanship

bonds—Cir¬

revenue

&

4%

Street, New York 4, N. Y.

and Seaboard Air Line.

Retail

Port Authority

Western

Grande

Americans

we

about these institutions is the ex¬

Barney &
Co., 14 Wall Street, New York 5,

as prohibition of
Defends cross-hauling.

progress.

shoes to Boston and Boston

forefathers.

Fabricon Products, Inc.—Memo¬

analysis—Smith.

Also

Ill

randum—Baker, Simonds
& Co.,
Buhl Bldg., Detroit 26, Mich.

Earnings

larger.
other

earth.

on

»

even

And

Broadway, New York 6, N. Y.

to

artificial limit, such

any

on

Co.,

&

and

destroy

or

access

enjoy.;

circular

a

Quotation

Y.

Railroad

is

available

Derby Gas & Electric Co.—An-

Bureau, Inc., 46 Front Street, New
York 4, N.

Co.-

Mass.

Industrial

Counter

10-year performance of 35 indus¬
trial

Rendering

Circular—Schirmer, Atherton &
Co., 50 Congress Street, Boston 3;

Newmarket Manufacturing Co.

geles 14, Calif.
Over

coun¬

tries

Still

City

economic greatness,

use

are

inhabitants.

Broadway, New York 5, N. Y.
New

other people
there

other

u

Central Arizona Light & Power
Ill

New

Here in the United States

which

Gas—Circular—Hirsch

Natural
&

our

resources

California

Sutter

materials, together with abundant

raw

known before, and knows nowhere else

tinents

York—Compara¬

New

tabulation

tive

Milk

of

sources

been fundamental factors in

but

alysis—du
Leading Banks and Trust Com¬

of transportation facilities, have

any

»

American Insurance Co.—Anal¬

and the ultimate effect upon gov¬

Points out unrestricted

markets and to

-

Analysis — J.
Co., Inc., 120

*

by causing unpredictable and uneconomic relocation of industries.

absorption of freight charges, will retard

Broadway, New York 5, N. Y.
*

9

on

firms mentioned will be pleased

interested parties

send

(1729)

Freight Rate
Absorption—A Dangerous Move

Recommendations and Literature
to

CHRONICLE

Restriction

Dealer-Broker Investment

It is understood that the

FINANCIAL

investment

net

B&O

transportation facilities

in

only 4.30%.

On this, earnings showed a return of

3.04%

the

needed

In

earned

in

switchers,
8

equipment,
steam

3

sleeping

new

improved

1947,

is still

but

enough

not

cost

$58,617,947.

including 58

locomotives,

Acquisition

cars.

service and

Of

road Diesel
hopper

5634

of

this

est

reduced

charges

$68,496,743
funded

31,

On
on

debt,

1948,

than

at

roundly
the

$6,000,000.
same

including

15

Company's

a

period.

equipment

$25,654,751.

December 31,

November

the

than $131,000,000.

more

Is

were

funds

25

$43,728,392

flat

has

cars,

was

and

resulted

in

economies.

by

during

this,

equipment

outstanding System fiunded debt, other than

was

provide

to

locomotives, 70 Diesel

cars,

During the ten years ended December 31, 1948,
of

$1,002,642,766.

improvements.

improvements

1948,

invested

in

essential

for

was

This was better than

the principal amount
equipment obligations,

The saving in annual inter¬

Equipment

obligations

obligations,

outstanding

December

This is $4,837,760, or about 15.87%, less

1938.

>

dividend

Preferred

increased

Annual interest charges on total

of

One

Dollar

per

share

was

declared

Stock, and paid December 22.

The theorist will tell you

*An address

the

by Mr. Faricy be¬

Chamber of Commerce,

Kansas City,

Mo., April 13, 1949.

R. B.

White, President

10

(1730)

COMMERCIAL

THE

FINANCIAL

&

CHRONICLE

Thursday, April 21, 1949

issue of not exceeding $7,500,000

Missouri Brevities
An

amendment

to

of

if

the

registration statement filed with the Se¬
curities and Exchange Commission was made last week by Mississippi
River Fuel Corp., St. Louis, increasing the number of shares of com¬
mon
stock to be offered to a total of 633,298 shares.
Of this total,
347,610' shares

offering
of

to

record

basis

of

shares

will

represent

March

stockholders
on the

common

April

each

for

subscription
priv¬
ileges to expire May 2, 1949, and
the net proceeds' to be used for
general corporate purpose.
The
balance of 305,688 shares will be
sold by the United Gas Corp., and
represents that company's total
holdings in Mississippi River Fuel

Dillon;

Corp.

Co.

&

Read

Securities Corp.,

Union

and

of

cents.

period

were

Included

fered

'

.

•

the

Inc.

tures

both

6,

Service

(par

share

were

Cook

•

&

of

1999,

at

Met¬

were

Bros.

Stores,
sales

reports

Inc.,

for

St.

March,

1949, of $6,250,845, a decline of
24.6%
from
the
corresponding
month last .year while for the first
three months of this year they to¬
taled
$15,194,066, or 10.8% less
than in the

period in 1948.

same

per

if

if

City,u participated

I. M.

in

the

March

on

offering

public

Co., first mortgage 27/H% bonds
due 1979, at 101.375% and in¬

and

Barret,

Fitch

Louis,

Co.,

&

Inc.,

terest, and

City.
if

if

public

it

It is

in

expected

that the

Rice-Stix

of

name

Co. of St. Louis to

will

not

intend

as

to

to this effect until

month.

An

Rice-Stix, Inc.

some

to

the

three

the change in

if

Newhard,
Stix
f

&

if

Cook

Co.,

'■

&

April

on

Co.
13

!: offering of 200,000 shares of Il¬

linois Power Co. 4.70% cumulative preferred stock (par $50) at

share, plus accrued,
i dividends from April 19, 1949.
$51.65

per

if

if

of

Chemical

Co., St. Louis, for the first quarter
of

1949

an

increase

amounted

4%.

ended

sales

of 4.5%.
;

v-;./

:

.

A

For the

•

March

31,
$22,604,000,

were

'r.-)

if

-

if

if

:

.

of

with

28

covering

class

those

over

cents

is

expected,
($1

par

R.

Louis.
be

150,000

March

on

shares

stock

of

of

Sho-

be

share)

Kauffmaim
net

The

used

per

will

for

offered

through

&

Co.,

proceeds

St.
to

are

working capital.

to

of

common

the

4,274,965
outstanding on

on

shares

ed

to

Inc.,

Kansas

(against $3.78, adjust¬
of
preferred and

number

1948);

City

Kansas

Kansas City,

Southern

$15.50

(against

Katz Drug Co., Kansas
(against $2.11); Lac¬
Gas
Light
Co.,
91
cents

City,

$1.61

lede

(against 83 cents); and McQuayNorris Mfg.
Co., $2.67
(against
$2.99).

against $147,992,

29

cents

per

share, for the corresponding

pe¬

riod

or

Henry Ford, II

New officers will

be elected for

1949-1950

new

plant.

Louis,

eral

Henry Ford II, President of the
Ford Motor Co., together with Ed¬
mund Ezra

Day, President of Cor¬
nell University, and John Jewkes,
British
o

i

m

econ-

t,

s

;

In

New

concluded

Corp.,

New

York,

N.

private

placement
with
Equitable Life Assurance

ciety of the United States

Vice-Presidents

were

named:

who

is

P.

Beutel,

Division.

elected

an

Carl

if

crease

in

stock

of

"This
stock

will

immediately

to

pany

slate

a

1 94 9-50

season.

The

meeting

will

be

final

the

Henry

of

or

for

Ford,

the

2nd

current

enable

be

the

for

future

if

if

during which Paul Hoff¬
Harold E. Stassen, Herbert

active

1916,

has

if

at

each

of

the

meetings.

the

ported

to

The

if

"■

Financial

Chronicle)

net

a

cents

With
ST.

King Merritt & Cc.
to

The

LOUIS.

Clark is with

Financial

MO.

—

Chronicle)

Plywood, Inc., De¬
for the fiscal year ended
Jan. 31, 1949 were $4,405,853 and
net profits after taxes amounted

King Merritt & Co..

First

Detroit,

group

of

April

5

4%

publicly

1964, at
•• '•

Hurd

.

Members St. Louis Stock
Exchange

filed

has

registration statement with
Securities

and

Exchange

providing
and sale

150,000

$1.

of

for

a

the

Com¬
is¬

the

maximum

a

shares

of

common,

Proceeds

of

such

would

for

made

reimburse




and

-

I,

interest.
,» I

•

...

.'!>.•

&

Lock

Manufacturing
Co. for the year 1948 reports a
net profit after taxes of $74,348,
or 37 cents per share. Operations
in

1947

resulted

$34,688

in

net

a

loss

of

after

the

payment
the

on

new

al¬
fir

Klamath,
additional

in

E.
"At

stated:
see

fail

time

First

of

.

publicly
New

'

cannot

Michigan
who

a

■

Corp.

also

of un¬

group

on

England
Co.

1949."

if

offered

Telegraph

;we

year

if

included in

derwriters

of

President,

why this companyoperate at a good

to

if

amount

Hurd,

this

any reason

should

the

P.

profit during the

fi¬

the

24

March

$35,000,000

Telephone

25-year

&

3%

de-r
1974, at

100.75% and interest, and on
April 13 participated in the pub¬

Supply

L. A. DARLING
Common

Stock

lic

offering of $50,000,000 Com¬

monwealth Edison Co.

ing

fund

debentures

3% sink¬
due

April

1, 1999, at 101.30% and accrued
DISPLAY FIXTURES

interest.
if

if

and
—

Quoted

PRECISION CASTING

Landreth Building
Bell

St.

April

bentures due March 15,

SCHERCK, RICHTER COMPANY
Teletype
SL 456'

due

*".X»

.'.X*

$85,343.
Inc.

plywood
plant
in
Calif., and provide

STREET

.ST. Louis 1,MO.

$10,-

offered

102.25%

•

if

509 OLIVE

a
on

recoverable

Plywood,

company

Southwest Gas Producing

Sold

in

who

1948.

ready,

Southern Union Gas

—

Corp.,

included

were

underwriters

debentures,

was

Rockwell Mfg.

Bought

Michigan

of

Co.,

&

giving
effect
to
prior year's Federal income taxes-

Delhi Oil

investment securities

if

McCarty

of the company and its
predecessor companies for the 12
months'■" period
ended
Jan.
31,

nancing

Commonwealth Gas

if

*

'

year.

if

Watling, Lerchen & Co., all

to

par

Spinning

the

for

000.000 General Telephone Corp.

troit,

George G.

Inc., 408 Olive Street.

share,

compared with $9,182, or nine
share in the correspond¬

of

■

profits

in

income, after in¬
of $4,311, equal to

per

■

and

$376,466,
equivalent
to
71
cents per share on 525,150 shares
of stock outstanding at the end
of the year. This compares with
$3,621,463 sales and $316,796 net

begin

future. The company re¬

Campbell,

.

CHICAGO, ILL. — Charles W.
Hobday is now with David A.

granted.

to

three months ended Feb. 28, 1949,
as

Manufacturing Corp.
if

been

expected

taxes,

come

has

stock

near

four

Net sales of

David A. Noyes Co. Adds
(Special

Avco

four

if

been

Trading is

Inc.,

toastmaster

manufactures

Stock

common

and

dinner

be

notified by the
Exchange that ap¬
proval of its application to list
201,041 shares of its $1 par value
Detroit

stocks

Co.

per

to

liabili¬

current

Harwill

if

Friars

Brewing

($1

Rudy Manufacturing Co., for¬
merly known as Rudy Furnace
Co., which was incorporated in

Jr., Chairman of the General Mo¬

Ale

Harwill,

ent models.

tors

Corp., has served as President
during the season and has been

Co., De-

of

"Aero-Craft" boats in 12 differ¬

Southern Corp., Scotten, Dillon
Co., Parke, Davis & Co., Udylite
Corp.,
Goebel
Brewing
Co.,

appeared

1949.

proceeds

reduce

cents per

Black, Sivalls & Bryson

Co.

net

ing period last

Mountain Fuel

&

to

capital.

McClana-

were:

the

United Corp., Commonwealth &

others,

April 19,

stock

han Oil Co., Detroit Edison Co.,

among

the

offering 50,000 shares

man,

Hoover,

the

in

stock (par $50)
share, plus accrued

from

season,

before the group. Alfred P. Sloan,

on

ties, and for additional working

fi¬

:

if.

most

1, 1949.

St. Charles, at par

used

offering of

company."

March

an

Finan¬

participated

per

are

share),

sufficient

a

the

10

13

C.I.T.

debentures, due
99.35% and ac¬

at

common

Inc.,

is¬

com¬

$2,805,213, and with
201,545. shares, having a dollar
value of $3^347,173, which changed
hands in January.

during

Co., De¬
those
who

April

preferred

$51.65

of

security convert¬

a

'

&

Charles E. Bailey &

of

The

one

date

troit,

new

value

the

Consolidated Dearborn

Stix

at

said:

that

mean

have

if

2%%

1959,

dividends

Prentiss

select

Berkshire Fine

L D. 240

15.

not

will

un¬

Simonds

interest from April
bankers
also

lative

Co.

Chairman,

does

but

sued

shares
be

public offering of 200,000 shares
in¬

Edison

March

on

the

of Illinois Power Co. 4.70% cumu¬
the

the authorized capital

; Brown,

ob¬

of

same

same

The Detroit Stock

mem¬

of

1,

The

#

with

Detroit

if

from
10,000,000
is
15,000,000
shares, approved by the stock¬

of

ST. LOUIS 2, M0.

if

connec¬

Baker,

$50,000,000

Corp.

crued

A.

coun¬

Club will also

The
bers

BUILDING

Teletype—SL 486

legal

cial

of

April

was

Calvin

and

fern's

connection

mission

LANDRETH

the

York

Hotel Astor.

by

,

Co., Detroit.

issue

elected Secretary.

was

In

Gerstacker

Treasurer

CamnbeU

suance

PeltasonJenenbaumCo.

A.

Exchange re¬
ports
that
trading
volume
in
March was 272,914 shares having
a dollar value of
$3,376,662. This
compares with February' trading
of 213,597
shares with a dollar

The
So¬

Dr.

General

the

in

will

Watling, Lerchen
troit,
was
among
publicly offered on

Manager of Dow's Texas Division,
and
Russell
L.
Curtis, General
Manager of the Great Western

holders of

Thursday,
April
28
(7
p.m.)
at
the

the

of

new

on

(Special

Y., for

two

ible into stock would, of course,
first be offered to the stock¬

St.

arrange¬

&

of

150,000

stock

derwritten

Gen¬

A.

stock

Economic Club

The

common

pro¬

purchase

*

action

same

nancing needs. Any

Dinner

ments, through Lehman Broth¬
ers,

the

amount available

will

Meeting of the
of

of the Board and

the

the

be used to

incurred

Manager.

M.

Street, members of the New York
Chicago Stock Exchanges.

Container

has

had abandoned the titles of

holders

season.

Noyes & Co., 208 South La Salle

last year.

Gaylord

LOUIS

with

Economic Club of N. Y.

and

ST.

ligations

pro-

additional

may

prepayment

tion

Chairman

of

op¬

such

with

debentures,

effect

,

of

sale

the

Vice-President

sel,

To Hear

of

named General

shares outstanding at end

the

for

share

a

City, $6.75
common

and

common

5%

Secretary since 1941, was elected
President Dr, Mark E. Putnam, a

for future

Certain

together

ceeds

years

Bakeries,

was

Oil Corp.,. St. Louis, which,

mee

it

A

ceeds,

a

and

terstate

Securities

Exchange Commission

1938

capital

erations.

of

notification

the

Doan,

since

working

the

positions thus filled but in recent

of officers for

$40,893,943,
approximately 6%
Illinois Terminal RR., St. Louis,
the corresponding
for the two months ended Feb.
28,
quarter of 1948.
Net earnings for
1949
reported a net income, after
the period amounted to $4,461,fixed charges, of $123,800, equal to
608, equivalent, after provision
25 cents per common
for preference
share, as
dividends, to 97
•

Vice-President

of

I.

since
1942,
was
Manager. Dr. Dow
had formerly held all three of the

corre¬

decline

a

■

letter

filed

at

if

Monsanto

decrease of

months

John

Sales

of

Leland

and

providing $400,000 for same pur¬
pose);
Falstaff
Brewing
Corp.,
$4.75 (against $2.67 on same num¬
ber
of shares
outstanding)-; In¬

address the

were

the group of underwrit¬
participating in the public

$150,000 for possible inventory
price decline (against $4.80, after

since 1930,

Chairman

elected

Board,

170th

against $23,658,000 for the

among
ers

de¬

1974.

if

sponding period of 1948,

.

and

sales

a

1949

jname were recently approved by
the stockholders.
if

if

15,

Supply Co. (Mo.)
$8,769,000
for
March, 1949, compared with $9,137,000 for the same month last

Dec.

and

&

Western Auto

reports

year,

1974

Telephone

March

if

..

company's charter extending it to
16,

due

.

time next

amendment

$35,000,000

until

amendment

an

England

bentures

the company does

file

of

24 in the

Telegraph Co. 25-year 3%

Dry Goods

effective

become

about June 1
not

change

March

on

offering

New
;

(com¬

was

23

000,000 Wisconsin Electric Power

i

$2.11

London, Ontario, Canada, which also took the lives of his

near

wife and three other persons. Ear.^
W. Bennett, Treasurer

pared with $1.60 in the preceding

$10,-

of

McCourtney-BreckenSt.

Illinois,

crash

if

Stern Brothers & Co., Kansas

Co.,

of

follows

as

Louis, except
American Invest¬

shifts in the top executive staff of The Dow Chemical
Co., Midland, were made April 5 by the company's board of directors
as a result of the death, March
31, of Dr. Willard H. Dow in a plane

„

Co., and

all

of

for

St.

noted):
Co.

year

share

Several

year); Century Electric Co., $2.39,
after appropriation from surplus

Ry.,

it

ridge

&

in

reported

$9.74);

Smith, Moore &

Co.,

of¬

Metro¬

Co., Stix & Co.,

&

of Kansas

•

follows:

as

1,

it

common

fiscal

located

ment

of

Edison

Ohio

$16

April

if

common

at

due

Louis,

of

Co.

$7.50)

an

Co.

&

St. Louis Co., Newhard,

Simon

;

shares

1,000,000

of

Public
stock

issue

13

ropolitan St. Louis Co. and Stix

April

on

who

April

101.30% and interest

issues.

public offering

politan

.

the

V

nationwide

the

underwriters

on

•

Co. 3% sinking fund deben¬

son

Missouri bankers participating
in

•

handle

in

js.vi.;:

if

$50,000,000 Commonwealth Edi¬

as

to

of

group

York, N. Y., have been
principal underwriters
'for
both
offerings,
and
have
iformed
a
nationwide group of
more than 70 investment banking
firms

*

per

latest

(all

if

firms

of

$3,805,588.
*

'•

New

named

a

ended

two

held,

•

31, 1949.
Adjusted earn¬
share for the three months
March
31,
1948 were 84
Net earnings for the 1948

ings

1949

12,

share

one

earnings
the

if

Missouri

Other

where

an'e*

Michigan Brevities

3% notes, due April 1, 1964.

Louis 2»

Mo.

Moreland & Co.
Member

Garfield 0223l.

n

Detroit

Stock

Exchange

1051 Penobscot Building

DETROIT 26, MICH.
Bay City

—

Lansing

—

Muskegon

Michigan Bumper Corp., Grand
Rapids, reports for 1948 a net in¬
come after taxes of $381,809 from
net
sales
of
$4,423,665,
which
compares
with a net profit of
$392,964 from sales of $3,694,619
for 1947, Book value of $7.80 per
common

year

just

shares

ended

for

the

calendar

compares

$6.44 for the previous year.

with

.

Volume

169

Number 4796

THE

COMMERCIAL

&

FINANCIAL

CHRONICLE

of

Policy of Federal Reserve System
■•

By M, S, SZYMCZAK*

v.,

Member, Board of Governors, Federal Reserve System

Federal

Reserve

Board member

characterizes

wartime

;

I

policy

designed to curb inflation. Points

as

requested to review with

was

the major developments in the
Much has happened in the 13

you

field since your conferences first began.
with you here in 1936. My subject then

•

since I met

years

was;the Banking Act of 1935, which had made

a

number of im- *

portantchangFederal

in

es

Reserve

pow¬

ers.

At

time

we

that

throughout the war, the main deviation occurring early
in 1945,
when .yields on certain mediumsecurities

term

The

declined.

that is, 26%, 20% and 14%, respectively, on net demand deposits
of

central
reserve
city, reserve
city, and country banks, and 6%

policy of main¬ on time deposits of all member
working our taining a fixed yield pattern on banks. Central reserve city bank
way up from a
the public debt facilitated war- reserve
requirements were
re¬
deep and pro- I time Treasury financing in several, duced, effective Aug. 20, 1942, to
longed depres-i ways/ In the first place, it fore-' 24%; Sept. 14, 1942, to 22%; and
sion
and
the stalled delay in purchasing securi- Oct. 3, 1942, to 20%, so that
they
were

Board

was

j ties by investors who might otherwise have awaited higher rates, as
during World War I. Secondly, it
in i kept down the interest cost on the

etary

ease

order
M.

S.

to

busi¬

courage

Szymczak

ness

en-

recovery.

There
been

no

hacl

opportunity to

test the
effectiveness of available instru¬
ments to influence the supply of
credit

sion.

during inflationary
As

expan¬

matter of fact, the slow

a

upswing in business activity that
then

was

in

reached

progress

its

government's
vented

debt

war

undue

and 'pre¬

growth of investor

earnings from holdings of public
debt issued to light a victorious
war.
Finally, and most important,
the policy facilitated necessary ab¬
sorption of government securities
by the banking system.
In order
to maintain this fixed yield pat¬
tern the System was obliged to
function

as

residual buyer in the

a

to

no one

fense

activities

of

of the

decade.

transition

blended

in

has

This

that

pe¬

become

minds

our

effort

war

stepped up pro¬
employment toward

and

turn

riod

the

coming
to Europe coincided with

duction

the

how

know

with

so

the

attempt

any

to

separate them would be meaning¬
less

and artificial.
Hence, I shall
begin today by talking about the
effects of war on the policies and

activities

the

of

Federal

Reserve

to

have

up

to

%

Reserve System

/ :

in purchases of gov¬
since
they
any time reconvert them
securities

funds

reserve

the

Federal

the

Reserve

measures

well that

ing

accepted

serve

obligation
ready
the

the Federal Re¬

war

supply

its

as

the

overriding
of

assurance

of

whatever
needed

government

a

funds

for

the

prosecution of the war. The Sys¬
tem
recognized
and
constantly
stressed the importance of financ¬
ing as large a portion of the war
cost

possible

as

out

of

taxation

and

security sales to the nonbank
public.
Nevertheless, it brought
all its powers and facilities to bear

the central

on

that

problem of seeing

lack of funds

stood

never

in

the way of getting essential mate¬
rial

to

As

men.

to member
that

meet the

know, the pivotal
policy of the Federal

serve

the

was

stable

interest

public

war¬

maintenance

debt.

Re¬
of

structure

rate

Even

a

for

before

Pearl

of

l/2

to

of

1942,

the

security
that

event

the

the

to

their

Reserve
rates,

depending

the

on

the borrower, from
U/2% at all Federal

rate

After

banks

October,

advances

on

secured

U.

by

Sf

banks,

and on other ad¬
by U. S. Govern¬
ment obligations and on eligible
paper, 1%. The rate to nonmemsecured

vances

ber banks

advances secured by

on

government obligations was 1%.
Another

in

way

which

in

the

was

by

percentage of
to
be
main¬

required

reserves

reserve

made available

were

reduction

a

tained against demand deposits at
banks in New York and Chicago.

Moreover, Congress suspended
requirements

serve

against

deposits during the

riod.

These
from

loan

war

the

bills

of financial

Federal

when

Reserve

funds

were

pur¬

re¬
war

war

pe¬

deposits

subscriptions, for

gov¬

resources

was

encour¬

aged.
An

inevitable

activity

war

of

consequence

the

was

in¬

great

in the amount of currency
At the end of 1940

crease

in circulation.

By May of 1945
culation

currency

billion.

bank

decline

some

mem¬

the

ratio

banks'

creased

in

the

result of

as a

there

the

It

System's

of 1945 the

reserve

legal
scribed by law.

government securities

be

otherwise

its

had

as

of

V2%

2

structure

principal point a yield
on
long-term Treasury

bonds.

From this rate it graduated
downward to % % on three-month

bills.

Yields

on

other issues filled

between the two extremes in

ac¬

cordance with maturity. The mar¬
ket interest structure was main¬

tained

"An

substantially
address

by Mr.

unchanged
Szymczak

before the 10th Pacific Northwest
Conference

itated t by
would

their

these

were

accounts,

commercial

have

securities

their

Subscriptions for

of yields on government securities
which war financing would

This

had

to

pay

new

facil¬

since
banks

lor their

immediately by debit to

reserve

accounts at the Fed¬

eral Reserve banks.

The elimina¬

tion
of reserve
requirements
against these deposits encouraged

the

use

of

war

loan

accounts.

No

changes were, made during
the war except as to reserve re¬
quirements on net demand depos¬
its

of

central

reserve

city banks.

At the time of Pearl Harbor

mem¬

on Banking, State Col¬
ber
bank
reserve
requirements
Washington,
Pullman, | were at the legal maximum of
Wash., April 7, 1949.
double the statutory requirements,

lege

of




tant

of two

use

impor¬

for curbing expan¬
sion of credit in the private sphere
weapons

of the economy.
As

a

labor,

result

war

the

of

material

facilities

to

diversion

and

of

productive

manufacture

the

of

materiel, most types of con¬
goods were in short supply?

sumer

In

order to

minimize competitive

bidding for the limited supply of
goods, it was deemed

advisable

to

restrict

of credit used

the

amount

for their purchase.

Accordingly, the Federal Reserve
System

place

authorized in 1941 to

was

restrictions;

credit.

on

consumer

this

Under

authority the
W, which
applied to credit in the form of
charge accounts, instalment sales
of a comprehensive list of con¬
Board issued- Regulation

sumer goods,
and instalment and
single-payment loans of $1,500 or
less.
The regulation applied, for

example, to instalment sales of
automobiles, radios, refrigerators,
and loans for the purchase of, and
charge accounts for, nearly all

had

the

respon¬

the

that

amount

banks

advance

can

on

and

given

a

amount
of
stock
exchange col¬
lateral, and the amount that banks

advance

can

chasing

stocks

on

for

pur-"

carrying stocks. During (
especially
watchful of this use of credit, and
the required margin was raised
the

or

war

twice.

the Board wag

The

changed
40%

requirement

in February,
50%

to

of

the

was

1945, from,

value

of

the

collateral, and in July, 1945, the
Board

increased

quirements

to

the

75%

margin
and

re-

made

At the

time, the Board stif- 1
requiring
liquidating
transactions in an'undermargined
account should be used to bring ;
the margin up to the
standard
75% level before any; of them
same

fened the regulations by

could

be

used

transactions.

requirements

finance

to

The

new

*

margin
both bro¬

./

Board's

apply to

kers and banks.

*'

Postwar Monetary

Problem

As you are well aware, the
etary authority has had to
with

more

flation

or

less

since

ever

mon¬
cope

continuous inthe end

,

variation

time

from

to

time

and

(Continued

y*

on page

39)

This is
r,

not an

offering of these Shares for sale, or an offer to buy, or a solicitation
any of such Shares. The offering is niade only by the Prospectus.

of an offer to buy,

200,000 Shares

Pacific

Lighting Corporation

$4.50 Dividend Preferred Stock

pre¬

recommended
legislation
provided for a reduction in
the requirement as to reserves to
be held by Federal Reserve banks
to a uniform minimum of 25% in

that

gold certificates against both Fed¬

The Underwriters named in

eral

subject

and deposits.

the

Prospectus have .severally agreed,
purchase at $100 per share, plus
accrued dividends, any of the above shares of $4.50 Dividend Pre¬
ferred Stock not issuable pursuant to acceptances of the Company's
exchange offer to holders of outstanding $5 Dividend Preferred Stock.

circulation

Under the law pre¬

viously existing a reserve of 40%
in gold certificates was required
against Federal Reserve notes and
a
reserve
of 35% in gold certifi¬
cates or lawful money against de¬
posits.
In addition to the change

to

certain conditions,

to

in

the
reserve
percentage, the
legislation made permanent the
authority of the Federal Reserve
banks to

i.;

Copies of the Prospectus may be obtainedfrom the under¬
signed only by persons to whom the undersigned may legally

pledge U. S. Government

securities against Federal Reserve
in

been

would

gress,

have

expired

re¬

-

addition

the System also made

material

contribution

activities

in

of

the

Reserve

the

1942

a

fi¬
is¬

designated the Fed¬
banks .as

contracts.

/'•

gram

Corporation

William R. Staats Co.

Khvorthy & Co.

& Co.

Bateman, Eichler & Co.

Brush, Slocumb & Co.
Lester & Co.

Hill Richards & Co.

Davis, Skaggs & Co.

Mitchum, Tully & Co.

Schwabacher & Co.

Pacific Company

Wecden & Co.

of California
~

J. Bar'th & Co.

Crowell, Weedon & Co.
In

of
Maritime

and
financing wartime

From the

W. C. Langley

Irving Lundborg & Co.
•

'

agents

Commission in

Army,

Incorporated

banks

With; respect to war contract
An executive order
Reserve

Harriman Ripley & Co.

Stone & Webster Securities

more

nancing.
in

The First Boston Corporation

Dean Witter & Co.

general

specific ways to the problem of
facilitating wartime finance.
Of
particular importance were the

eral

BIyfh & Co., Inc.

Smith, Barney & Co.
these

to

measures,

sued

.

signed by the President

June 12, 1945.

In

.

on

19451 The Reserve Ratio

June 30,
Bill was
on

offer these securities under applicable securities laws.

This authority, which had
the law since 1932 on a

notes.

Navy,

in March, 1342, to

Shuman, Agnew & Co*

April

beginning of this

pro¬

the end

,

of

ernors

in

a ;

that funds released by

(Cumulative, Without Par Value)

notes

.

*

corresponding increase in the mar¬
gin requirements for short sales.

Accordingly, the Board of Gov¬

Reserve

-

the*
merchandise, the principal classes
not covered being food and fuel. war.. Until recently, the demand y
for automobiles, housing and many
Generally speaking, with
some

ratio would be

minimum

of

accomplished.

made effective

have

sibility of fixing margin requirements respecting the use of credit
for purchasing and carrying stock,
(exchange securities.
Under this,
statutory provision, they have lim¬
brokers

public rather
than through bank credit expan¬
sion.
In
addition,
the
System

gold

account

the

1934 the Federal Reserve

ited

the

of

power

than

payments of

by the end

reserves

the

near

Since

authorities

ing

apparent that
inroads in

was

customers.

for

Reserve

down

called

more

one-third.

financed out of the current spend¬

further

were

bor; they agreed

or

Federal

not

decline

System's holdings of

certificates.
if

some

temporary basis and had been

with

the

that

men¬

urged continually that as much as
possible of the war cost should be

combined note and deposit liabil¬
ities.'
The ratio was further de¬

newed from time to time by Con¬

count

tioned

have already

i

regulation
of

their

to

own

structure

I

this

Federal

of

reserves

by commercial

a

expansion.

by

maturities

15 months and

deposits at the Federal
naturally resulted in a

of

Reserve

increase in

their

upon

with

.war

This increase in currency

banks,

ac¬

not

was

throughout
facilitating credit

an-

pre¬

/

in cir¬

ernment securities

for

Reserve

preoccupied

regulated article to

^reached a total of $27.5

United States should be drawn into
the war.
Shortly after Pearl Har¬

either

Federal

entirely

for

agents.

the amount of currency in circu¬
lation
amounted to
$8.7 billion.

to

Vz of 1% at all Federal Re¬

came

serve

arose

for maintaining stabil¬

borrow

to

discount

banks.

member

avail¬

Government obligations maturing
or callable in one year or less be¬

ing
ity

government

1%

Reserve

loan

means

ranged,

character

Harbor, Federal Reserve and
Treasury officials were consider¬

in the
market; in

*

which

in

policy

by investors for other

ber

To assist

Federal

low

buying
needed

Reserve

banks.

the

With

rate.

at

employed

readily

needed

the

of %% and giving the sellers the
option to repurchase at the same

along with

'

credit demands of

customers,

funds

you

time

the

fighting

our

System

were

funds

reserve

established

1942 of buying Treasury bills from
banks and other holders at a rate

to

directed at mak¬

were

established

'During the

through sale

supported price.

Other

banks

Wartime Policies of the Federal

needed

reserves

could at

as

banks

reluctance about tying

no

ernment

able

System.

commercial

more,

rarily idle funds, the Federal Re¬

serve

porarily idle, maximum utilization

purchase government securities

they would automatically be abof war
I sor®ed into, the portfolios of Fedour further efforts to achieve ecof.ra* Reserve banks at the same
nomic recovery after the setback i
Jlying member banks
of 1937-38, and how our own de-! wlth additional reserves. Further
all

You

*

In order to encourage the pur¬
chase of Treasury bills by banks
and other investors with tempo¬

In

other

levels of output.

at least

fiscal

as

consumer

else offered

government securities market.

our

words, if

those for reserve

same as

poses, and selling bills to inves¬
tors when their funds were tem¬

peak about

a year later, without
approaching full employment

the

were

city banks.

one.

!oth6r, the instalment terms

banks

System's

following a
policy of mon-

from

and

scribed

the

and credit

money

services

armed

ized about 7,500 loans, aggregating
about $9 billion, all of which were
handledthrough
the
Reserve

The

out

the

the Maritime'Commission author¬

policy

as devoted to facilitating war financing
inability!to combat inflationary pressures
of bank credit expansion is due to Board's limited authority in
applying credit curbs and, urges, despite
recent decline of inflationary pressures, Board be
given additional poWers to be able to maximize stabil¬
ity of out and employment. Says Federal Reserve is well equipped to offset deflationary forces.

and postwar

1944,

(1731)

20,1949..

"" *Wagenseller & Durst, Inc.
*

^

,

12

FINANCIAL

&

COMMERCIAL

THE

(1732)

CHRONICLE

Ass'n of S. E, Firms

Public

Spring Meetings
May 24-28
Governors

and

Association

of

by

Stock

the

will assemble in Chicago on May
23
enroute to their 1949 Spring

held in
Denver and Salt Lake City, May
24 to 28, it was announced today
by Harold P. Goodbody, Goodwill

be

body & Co., Association President.
James E. Hogle, managing part¬
ner
of J. A.
Hogle & Co. and

Mountain Regional Gov¬
the
Association, is in
charge of arrangements:
While
in
Chicago the group
will be the guests of the Bond
Club of
Chicago at a luncheon
Rocky

of

ernor

which

will

Schram.

be

In

addressed

the

by

Mr.

afternoon

they
will be guests of the Stock Brok¬
ers
Associates of Chicago at an
discussion

off-the-record

trading
floor
of
Stock Exchange.
.Business

sideration

of

the

the

for

industry

will be held

each

on

con¬

problems

of

the

days

is in Denver and Salt

group

Lake

Chicago

the

sessions

the

on

City.

The Denver visit will be high¬
lighted by a dinner meeting, May
24,
sponsored
by
the
Denver
,

Chamber

of

Salt Lake

City visit will be high¬

Commerce

and

the

lighted by a similar dinner meet¬
ing May 27th sponsored by the
Salt

Lake

City

Commerce.

Chamber

of

*

Mr. Schram will ad¬

dress the former and Irving Olds,

Chairman, U. S. Steel Corp., will
address the latter.
The group
Denver

visit

will also tour scenic
environs

and

the

will

and

Utah

Copper mine at
Bingham Canyon, Utah and Great
Salt Lake, the latter as guests of
the Kennecott Copper Co.
At the

ings

conclusion

of the

meet¬

number of governors and
their wives will leave Salt Lake
a

City May 28
Rio

the Denver

on

Grande

Railroad

urely daylight trip

for

over

and
leis¬

a

the beau¬

tiful route of the D. & H. G. back
to

Denver.

-

V "This is the first time the Board
of the Association has visited this

great

area,"

Mr.

Goodbody said,
"and we are delighted to have
the opportunity to do so.
One of
the most serious objectives of the
Association is to tie the stock ex-

change

industry,

primarily

through mutual understanding, to
the industry and commerce of the
country.
Holding
our
Board

meetings in such important
munities

contributes

complishment
We

of

looking
meetings."

ac¬

objective.

our

all

are

these

com¬

the

to

forward

to

Standard Gas & Electric stocks have been fairly strong in recent

PROVIDENCE
R.

R.

I— Royal

Poyton has opened

the

Hospital

Trust

offices in

Building

to

in the securities business

engage

under the firm
R.

I.

Poyton & Co.

conducted
business

in

his

of

name

Royal I.

In

the past he

own

investment

Providence

and

reflecting general gains in the utility market and possible
expectations of progress toward Standard Gas dissolution. Tangible
progress has, however, been somewhat slow. The Company has made
some

Since

the

time

the

loan which

of Nov.

as

30

was

in dissolution.

ideas

the

and

However, since that time the situation has improved
of

the

have

SEC

broadened

somewhat, so that with
their potential "call" on future earnings the 2,163,000 shares of
common stock might be able to participate in a future
plan. v:^:,v
Standard's portfolio may be valued roughly at $100 million.
By
far the most important item is the 97% equity interest in Philadel¬
phia Company (5,024,000 shares); based on the current Curb quota¬
tion of 131/? for the small amount of minority stock, this item might
be worth $68 million.
The Company has a 51% interest (500,000
shares) in Oklahoma Gas & Electric, currently quoted around 35.
making the holdings worth $17.5 million.
There is a c-j% interest
in Louisville Gas & Electric
around

(383,000 shares) selling

the Big Board

on

26, making the holding worth about $9.9 million.

Standard
holds the entire amount of Wisconsin Public Service common (1,375,000 shares); share earnings in 1948 were 960 and 1947 $1.07, which
figures might support an estimated value of 9, making Standard':
equity worth $12.4 million. The sum of these amounts is $107.8 mil¬
lion.
Assuming that the bank loan is now in the neighborhood of
$9 million (after applying net quick assets), its payment would leave
a value of $98.8 million.
Miscellaneous odds and ends in the port¬
folio might bring the net total to around $100 million.
Some analysts believe that breakup of Philadelphia Company U
big holding company in itself) would realize a larger value per share

than the Curb quotation. However, these estimates seem to be based
rather optimistically on increased future earnings and a very liberal
dividend policy for Duquesne Light, Philadelphia's biggest

subsidiary.

The former
pany,

President

of Standard

Gas

and

Philadelphia Com¬

Leo Crowley, didn't want Philadelphia broken

dissolution

order

has

been

carried

to

the

Federal

up,

and the SEC

courts.

Common

ESTABLISHED 1919
N.

Y.

Security Dealers

being paid ir

cash, and the other three exchanged for shares of a new issue of
Duquesne Light convertible preference $1 common stock. This new
stock

would

be

similar to the stocks issued by
Philadelphia Com¬
Public Service Electric & Gas, and proposed for issuance
by Niagara Hudson's merged operating
subsidiary. The number of
shares of Duquesne Light common stock would also be
adjusted to
permit
share-for-share
distribution
to
common
stockholders
of
Philadelphia, thus facilitating the latter's dissolution. These recap
plans for the two companies would, of course, have to be
approved by
the SEC and (so far as
Philadelphia is concerned) by a Federal court.
Philadelphia Company also controls important natural gas pro¬
ducing and. distributing companies and a large transit
company, Pitts¬
burgh Railways. The gas companies are being refinanced and stream¬
lined, and negotiations have been rumored underway to sell part or
pany and

them to some other
large gas system, such as Columbia or
Consolidated Natural Gas. While a separate article would be neces¬
sary to analyze the value of the gas
properties, it is estimated that
they might be worth almost enough to pay off the proposed bank
loan (about $36 million).
Some value might also be salvaged from
of

Pittsburgh Railways, which has been in bankruptcy proceedings for
some years, but this remains a little
dubious.
This situation, also, is
highly complicated because of the unwieldy capital structure and
innumerable details of the Railways
setup. In general it seems a
conyenient assumption that nothing will be left for Philadelphia
Company common stock except the Duquesne, and that one share of
Philadelphia will be worth the same amount as a share of
its

ptoposed

new

shares

common

$1.30.

If the stock paid
$1

about

14and the entire

Duquesne

Duquesne.
earning about

is

and sold to yield 7% it would be worth
stock issue would be worth $74

common

million estimate.
All

'.1

former

and
in

the

cording to

a

out

as

about

allocation




insure

con¬

buying

the

it

seems

near

doubtful

future.

If

whether

the

theoretical ratio such
follows:

)

■

Standard

as

$100

a

Gas

new

million

plan
were

Value

;$7 Prior Preference——.

;__i

$6 Prior Preference

will

be
allocated

all

$131
116

31
_

_________

Regular dividends

were

resumed

arrears on

the

1

*

27

On the

ment.
Joseph

alone, average

$54.25

to

bargaining agreement
providing for the purchase of life
insurance

week, while
third during the

for

profits have increased 100%
and
the income of independent
businessmen and farmers by ap¬

than

ical

wartime, savings,
excessive profits

industry,

and

mental

expenditures

vented

a

defense
and foreign aid have thus far pre¬
long
in

run

trial

about. Obvious¬
ly the most important consumers
of American industrial products

aries

Real

the

must

three

last

has

labor

for

ask

wages
increased.

be

had

choice

no

increases

cash

but

to

to

cash

of

Increasing

means

employee
healthier and

a

security programs

only

cover

changes

jobs

he

is

.no

That
much

is

why organized labor is
concerned

more

development of
all-inclusive

an

about

the

adequate

and

Federal

social

secu¬

rity program including health in¬
One

surance.

the

of

reasons

that

union

negotiators have sought to
supplement social security bene¬
fits through collective barganing
is

that

they have become embit¬

tered and

discouraged with politi¬
conniving and continual sabo¬
prices. After all, an inflated price tage of the Federal Social Security
level as a permanent institution Program. Even today Federal Old
means that insurance policies, sav¬
Age benefits average only $25 a
ings bonds, and maximum unem¬ month while state old age charity
ployment and workmen's com¬ programs average $50 a month.
pensation payments are worth less Adequate
medical
attention
is
when converted into groceries or still available only to the'
very
or

wages

sure

.

they

work

cal

rich

shirts.

This -brings

us

the

to

or

very

poor

on

a

charity basis.
Workmen's com¬
pensation and unemployment in¬

Fringe Benefits
to the so-called

surance

are

under constant attack

in¬ by certain business interests and
creasing number of unions in col¬ their
allies
in
political
office.
lective agreements.; In our large- Actually, if employers are opposed
scale,
impersonal, and
dynamic to private security programs and
economy
the individual worker feel that it is not the employers'
has
become
increasingly-, con¬ legitimate
responsibility,
then
scious
of
his
personal security. they should join with organized
This is a natural and healthy con¬ labor in
pressing for an adequate
"fringe"* benefits asked by

an

>

sciousness.
in

this

The

country

average

makes

worker

$54.25

a

week when he has work. Obvious¬

ly

it is difficult
family to lay
aside an adequate reserve for loss
of wages and, medical
expenses
during extended illness, and for
such

on

for

the

a

head

wage

of

a

all

inclusive

social

gram.

•

security pro¬
"V
li, T

However, until Federal security
programs
have been vastly -.im¬
proved,
employers
may
expect

-

unions

to

ask

for

benefits directly

bargaining.

supplementary
through collective
V"

'

•

;v

the support of himself and his de¬

labor.

were

part of management
Union benefit programs

outstanding features of early
The Union Labor Life In¬

Company

financed

by

insurance
insure

was

AFL

started and

unions

more

companies

many

classes

refused
of

life
to

Wage-Price Question
To

sum

fore

the

American

Association
ence.

1949.

New

Management

Production
York

Confer¬

City, April

13,

the

question
standpoint, it is

whole

from

Labor's

will

bring about

recession by

a

;

w^ge-

hope

our

management

not

that

choose

to

holding

prices

abnormally
high
while
sales, production and employment
drop off.
Employers might well
heed

the

advice

in

last

week's

Kiplinger "Letter":
"The

workers.

*An address byt.Mr,. Keenan be-?

uo

price

good,

prior preference stock
$4 preferred will continue to increase.
on

be

can

group

relations.

ployee

prices.

lower prices, I am
would choose lower

a

longer protected.

narrow

the gap between wages and

for

the particular employees of indi¬
vidual employers.
When an em¬

During

organized

years

it

but

cost

point, and that is that such pri¬
vate

sal¬

and

low

There* is only one serious con¬
cern from organized labor's stand¬

the workers who produce the

products.

at

security

power must come

are

worker to buy such se¬

insurance,

happier work force, more respect
employer, and consequent¬
ly better productivity and indus¬

purchasing

consumer

Individually it is diffi¬

a

for the

proportionate increase

a

domestic

increase.

employees.

the

in

an¬

cult for

done

govern¬

But

age

employer and employee
comparable straight wage

a

curity

for

recession.

the

to

proximately 50%.

the

old

temporarily incapacitated em¬
ployees it means much more both

rate

into

policies,

and for disability, med-i
and
hospitalization benefits

nuities,

prices jumped a
same
period.
During the same period corpo¬

Spending of
plowing back

contribution

5%

a

a

collective

a

surance

•

in
for

wages

security program. Actually
when an employer concurs in a

weekly wages have increased only
14%
since the war peak, from
$45.50

than to

crease

to

side

price

Keenan

D.

unions.

2

and

going at full American workers. But, for some
d u ction reason many employers find it
employ¬ easier to agree to a 15% cash in¬

ac¬

Price

150

jobs

and

than two decades ago because

$170

of se¬

pride

takes

management

providing

economy

an¬

Recent

degree

p r o

,

Common

early this year, but

been

:

$4 Preferred
Ass'n.

now

75-23-2, the results would work

H

.

have

minimum

a

curity for their employees. After

keep

power to

or

for

em¬

ficient
sumer

•

plans

resists

ployer-employee arrangements to

pre¬

ferred would be retired, one small non-callable issue

quite understood

never

management

provide insuf¬

Now that prices are actually de¬
being argued in the District of Columbia court, but the
Company's case may have been weakened slightly by the stand taken clining, it is apparent that unions
by minority stockholders of Philadelphia Company in favor of dis¬ are making smaller cash demands
in the hope that industrial leaders
solution. Strangely enough Standard
Gas, without awaiting the out¬
will lower prices further and set¬
come
of the suit, some months
ago filed a plan with the SEC to
tle for lower profit margins. What
streamline the complicated
capital structure of Philadelphia Com¬
labor wants is an increasing stand¬
pany and thus prepare it for possible
dissolution. Under this plan
ard
of living in REAL terms.
the $36 million funded debt would be
paid off from "available re¬
If Labor had a choice of higher
sources" and a temporary bank loan. Then the four classes
of

HA. 2-8780 *

Teletype N. Y. 1-1397

case

have

why

is currently

nounced

M.S.W1EN&C0.
Exchange PI.-, N. Y. 5

The

I

workers

ican

million per annum.
If estimated available cash were applied
against the bank loan, it might approximate $9 mi'lion.
The Company's two prior preference stocks ($7 and $6) have
a total claim
against the holding company portfolio of $98 million
($100 plus arrears for each share) plus a possible $7 million clairr
for the redemption premiums. The $4 preferred has a second claim
cn assets amounting to $83 million (there is no cali premium).
The
common stock was delisted from the New York Stock Exchange sev¬
eral years ago on the assumption that it could have little or no value

Estimated

40

aries of Amer¬

$2

scrapped,

Bought—Sold—Quoted

Members

$11.6 mil¬

has

company

1

distributing! Many companies, as a part of the
the national open-shop drive during the twen-i
income in such ties,
used
paternalistic
welfare
a way that the
plans to wean worker loyality
wages and sal¬ away from the unions.

million; 3% of this would go to public holders of the Philadelphia pendents in old age.
,r
stock, making Standard's holdings worth $72 million. Since this is
There is nothing new about this
only a little in excess of the $68 million valuation based on the cur¬
concern
for, individual security
rent quotation of
13V2, it seems unnecessary to disturb the $100 either on the

GAS & ELECTRIC
'*

that

1—

resulted in re-i>

realized about $3.4 millior
sale of its entire holdings of Northern States Power, and
used $1.6 million to exercise its rights to subscribe for stock of
Oklahoma Gas & Electric, leaving an estimated balance of $1.8 mil¬
lion applicable against the loan. Parent company earnings after
pay¬
ment of dividends on the prior preference stocks may approximate

On

STANDARD

.

reduction in its bank

lion.

from

was

with Miller & George.

prices have leveled off since last Fall, three years of inflation have

weeks,

all

Royal I. R. Poyton Is
Reopening Inv. Firm

price controls were crip¬
on a losing merrygo-round trying to keep up with rapidly rising prices.
Even thopgh
pled, the wage earners of this country have been

Standard Gas & Electric

Exchange

Emil

which

By JOSEPH D. KEENAN*
Director. Labor's League for Political Education
Since the middle of 1946 when effective

of

Schram, Presi¬
dent New York Stock Exchange,

meetings

Emerging Pattern of Wage Demand

Utility Securities
By OWEN ELY

officers

Firms from eighteen cities accom¬

panied

Thursday, April 21, 1949

production

ment,

.

.

not

consequently less
goods,: consequently

power,

demand

.

is

it points to unemploy¬
which means lower mass

buying
still

slide

for

less

for ;

production

and

profits

around the vicious circle."

■

Volume 169

Number 4796

THE

COMMERCIAL

FINANCIAL

&

CHRONICLE

(1733)

substantial increase in facilities

personnel;
By J. DONALD KINGSLEY*

,

or

preventive medicine.

fundamental
change in their distribution and
utilization unless, some method is

.

Acting Federal Security Administrator

!

found

to

ahy-

or*

enable

your

?-

of

more

*

Modern medical

care.

on the vital significance of
preventive medicine. But I hope,
if you intend to give much atten¬
tion to it in your practice, you

services

In the

of the

development of labor legislation within this country, it has been
necessary, at one time or another, to define what is termed "hazardous employment' I am
not sure but: that the definition should be extended to include a -government official who
course

seeks

talk£—

to

national

o n

health insur¬
before

ance

of

group

a

fu¬

members

ture

of the Ameri-

—

facilities, than any other country
on

earth.

Most

of

hos¬

modern

our

Medical

have
this

found
of

sort

thing less dangerous than
one'; might
Some

suppose.

of my
Donald

Kingsley

enjoy
better

than

to

physi¬

cian-friends

take

me

nothing
the

over

bumps for what they regard as my
dangerous and heretical notions.
But

others

they

are

admit

with

us

on

•hut please don't let

confidentially
our
proposal,
to their col¬

on

leagues.
Still others, who from
long, hard professional experience
have
come
sincerely to believe
there

is

sound

no

national

health

alternative

insurance,

quite willing to stand

up

to
are

in public

and say so.

I emphasize this
diversity of
opinion because it is germane to

the

subject under discussion,
It
is, 1 think, important for you to
recognize that, in spite of some of
the publicity—I wouldn't think of
calling it propaganda—to which
you

may

medical

have been exposed, the
profession itself is split

wide open on this issue.
up

And it is

to you, as

individuals, to form
independent judgments.
As prospective
M.D.'s, you are
facing a considerably different
your own

world

than

of,

cessors

did

you

prede¬

your

generation ago—

say a

concentration

enormous complexity,
rapidly shifting standards and
ideas, and a world of deep social

This

problem
For

I

phase

shall

touch

the moment

focus

on

your

later.

on

should
the

like

to

changes

immediately to

more

profession.

your own

For

I
of

some

which relate

of

one

cine has made

is not so long ago, remember,
the medical profession was
symbolized by the country doctor
with his little
black bag. ' The
general practitioner—both rural
and urban—was

pretty much pre¬
pared to apply most of the known
I medical knowledge to whomever
in need of that

knowledge.
And, for the most part, he ap¬
plied it extraordinarily well.

in

like

State

a

against

Today, however, medical science
has
far
outstripped
the
little
black bag.
Modern medical sci¬
ence is a vastly complicated mat¬
ter.
It is symbolized far better,
perhaps, by the medical center
truly amazing institu¬
tion. The degree of specialization
has f

a

reached

heights.

As

a

our

care

nation,

we

that4 is

to

have
level

diagnosis and medical
the

whole world.
more

wonder" of

We have,

offer,

in

the

probably

terms

of

the

number of highly trained medical

personnel
{

and

"'Address

fore.) the

costs

by

4th

modern

Mr.

Year

doc¬

hospital

Kingsley be¬
Medical

Stu¬

College of Physicians and
Surgeons,
Columbia
University,
New York City, April 9, 1949.
:
dents,




detail the

weak¬

Mississippi

as

pitifully * under¬
under-equipped
public

staffed,

our

also recommends
in

crease

the

little

the

when

And

learns,
for instance that only 4% of the
qualified
pediatricians
of
this

located in

country

are

60% of

our

children

high

seems

one

time

areas

where

living, it
something

are

that

be done.

I could

the

easily devote

an

recommendations

nature
But I

contained

lation

this

All

is

strictly non-contro¬

Everyone agrees we need
build more good hospitals, es¬

to

pecially

in the

rural

areas.

need

to

towns and

Everyone agrees

train

doctors

more

locate

to

try

small

in

them

where their services

am

in

concerned

tion which the

a

the

report.

today wrth

a

ques¬

Ewing report asks

answers—in

—and

possible cost of med¬

ical

most

incisive

anxiety?

how

pay

we

finance

can

the

this

effort

advantages

of

modern

son

we

do

have

not

them.

hospitals
is

And

no

enough doc¬
present is

the

at

way

to

reason

support

those

are

their

are

established

in

our

der-nourished

This,

anxious

to

medically

We

devoted

largely to

an

health needs and

which

our

so

badly

This advertisement is under

for sale,

or as a

The

analysis of
methods by

new

to

hospitals

voluntary

where necessary,
cost of
To

upkeep.

train

First

nurses,

doctor

it.

knows

living

care

at

So

the doctor

As

some

the doctor do?

in fam¬

all.

him

gives

There is

barrier of formidable

a

proportions
doctor

and

which

in

best

today

between

many

cases

makes the

practice of medicine impos¬

sible.

barrier

That

is

a

dollar

barrier^—the costs of medical

a

the

his patient—a batrier

care

unless they are will¬ under an archaic system of pay¬
ing to ask for charity, they get ment.
There are today in this country
little
or __no
medical care—cer¬
none that by any stretch of
imagination might be termed

some

tainly,
the

25,000,000 victims of chronic

diseases—over

one-sixth

of

our

entire

population—the large ma¬
jority of whom simply cannot
Preventive Medicine
afford to pay for the medical care
This is of particular importance they need.
And of these 25,000,when it comes to the matter of
(Continued on page 43)
adequate.

,

no

circumstances to be considered as an offering of these securities

solicitation of an offer to buy

any

of such securities.

offering is made only by the Prospectus.

Corporation

Mortgage 3% Bonds, due 1979, Series L

—

and Accrued Interest

of

and

contribute to the
Copies of the Prospectus are obtainable from the Undersigned.
doctors, dentists,

and laboratory technicians

—needed

well

Where is

winter.

consequence,

Price 100.59%

'

more

for the

hospitals, for

construction

the

a

family on
$40 or $50 a week to get the
money?
He just can't, and the

income is $60 e
less—the
situation
is

Rochester Gas and Electric

instance, the Ewing report sug¬
gests that we enlarge the scope
of the present Hospital Construc¬
tion Act and increase substantially
the
share
the
government will
contribute

needs

facili¬

needs.
more

he

worker supporting a

total

medical

that

instance,

Beach
a

income brackets cannot af¬

these

he has to

modern
hospital or clinic—with all the
trimmings—is only too often like
telling him he should go to Palm

pretty desperate. In fact, I think,
it can be fairly stated that the
great
majority
of
families
in
ford

dilemma.

cases,

$16,677,000

be expanded to meet these

can

or

further

medicine and
warns him against over-working.
population—the For what else, in all honesty,/^an

people

ilies whose
week

our

a

many

thorough going-over in a

The further down the economic

of

with

and

areas

health

present

for

scale you go, the worse the situa¬
tion
becomes.
And
for nearly

70,000,000

does

patient

recognize that the treatments in¬
dicated are beyond the patient's
ability to pay.
To tell a patient,

sick.

September by the Fed¬
Security Administrator, is

eral

faced

A really serious illness is

one-half

the ex¬

scrape

In far too

only too often a first-class catas¬
trophe under a system of paymenl
where the total cost falls on the

submitted to the Presi¬

was

of

disease

hospital bills.
Savings
vanish overnight.
Debts are as¬
sumed which may take years to
off.

the

together the
money necessary for early diag¬
nosis and treatment, the doctor is
to

manage

and

last

dent

as

un¬

is the crux of the
cannot expect any

which is before the Con¬
gress
this
session,
is
firmly
grounded 7 in these assumptions.
The report on the Nation's health,

ties

see

areas.

then,

situation.

so

President Truman's health pro¬

our

fa¬

cilities and personnel we do have

we

source

and

when

Even

budgets, outside those of the com¬
paratively well-to-do, which can
cope with the avalanche of doc¬
tors'

distribute

constant

Sickness

to

pense.

usually strike suddenly and re¬
lentlessly.
There are few family

terms; the (question how we, as a
nation, are to pay for all these
expanded services and facilitiesto

is

care

but also

burden

torss

outside help.

to whom the

this

gram,

which

some

we

the

are

meet the cost of serious

can

illness without

hour to

or

different question. It is the

whom

versial.

health—is just out

picture.
Because of the
what they fear the

expense—or

hard way.

Financing

inequitably distributed |s that
distribution today natural¬
ly follows that of income.
There
is no' point in building new hos¬
pitals unless there is a sufficient
number
of
paying patients to
meet operating expenses.
And the
same
applies to the training of
the doctors, dentists, and nurses

in

the

What, then, about the remaining

of

facilities at their disposal, far too

medicine.

of

80%—the four out of five families
Problem

there

still practicing
black
bag era of

of good

nance

grocery bills—as you your¬
selves will soon be learning the

medical research.

that

are

rent

and

available for

and

doctors

doctor has to pay. his

even a

emergency measure.
With them,
a
periodic check-up—the most
And simple precaution for the
mainter

before and involve fa*

expensive equipment.

more

substantial in¬

a

funds

tors

many

of far greater variety

are

ever

expense will be—they put off see¬
Nevertheless, the blunt fact is ing a doctor during the early
that only one out of five families
health
stages of an illness or disease
departments.
It
states
in this country can today afford when the doctor's services could
clearly what must be done to ex¬
Instead, they
pand our vitally important public anything like adequate medical be most effective.
The
American
Medical wait until they are convinced they
health services so they will reach care.
Association
itself
is on record as are
theh millions of people whom they
really ill —a circumstance
do not now even touch. And it stating that only 20% of our popu¬ which not only adds to the doc-

of

for every 500 in New
York State, is to tell but part of
the story.
For with a minimum
of modern hospitals and clinical

unprecedented

without question attained a
of scientific

for

one

To establish

Complexity of Medical Science

considerable

than

medicalj; science
more
tors and as far as medical care is equitably among the entire popu¬
concerned are getting very much lation; indeed, how we can achieve
the short end of the deal.
the equitable distribution in the
To point out that there is only
first place.
one doctor for every 1,500 people
For the sad fact is that the rea¬

science of medi¬

enormous progress.

that

which is

the

needed.

^ It

stood

starved

Southwest—are

thing, during the past

few decades the

is

"paying patients" are assembled
in larger numbers in these areas,
and partly because it is only in
them that the hospital and other
facilities necessary for the modern
practice of their profession exist.
New York, for instance, is well
stocked
with
doctors—many of
whom, I might add, find the com¬
petition to be pretty tough going.
On
the
other
hand, the small
towns and rural areas—particu¬
larly in
the
great
South
and

of

;; unrest.

wealth

of

greatest. It is here also that the
great majority of our doctors have
chosen to reside—partly because

world of

a

in

nesses

Unfortunately,
much
of this
great progress has been very un ¬
evenly distributed throughout the
land.

———^——

—

pitals and medical centers are lo¬
Association. cated in, or near, our great urban
However, I centers of population where the

can

J.

care

medical science,

*

■

I am sure
medical ^education has* laid

will first check to see that the
on Federal Health Insurance, after describing. growing * complexities and
»
describes proposals for a national health insurance program* Says system can 1 a great deal of money. This is not minimum income of your patients
because, as some people like to is at least $5,OOo a year.
Other¬
be financed by-3% payroll deduction oil annual incomes up to
^,800, to be shared equally by em> ' believe, the doctor is a
money-? wise;-! am afraid you are not
ployer and employee, representing a maximum deduction of {1.40 per employee.. Estimates plan at out- ) grabbing individual who is Out to
going : to -get very far.
-set will cover 85 million people, and benefits will be administered on state and local basis.' Holds admini milk a defenseless public. It is
The great majority of people
istrative costs -will be less than under voluntary insurance, and decries attacks on plan as "socialism." i simply because, today, medical today go to a doctor only as an
costs in

-

-

stress

people to afford adequate medical

Administration's spokesman

13

to

as

tice—the

these

staff

hospitals

for independent prac¬

Ewing

repoit

Lehman Brothers

suggests

similar government aid. It recom¬
mends

medical

government
schools

in

assistance to
meeting costs

of expansion, as well as the pro¬

vision of loans

or

scholarships for

A. G. Becker & Co.

Hayden, Stone & Co.

Ladenburg, Thalmann

Co.

Laurence M. Marks fe? Co.
'

qualified young men and women'
who otherwise might not -he able,
to afford to undertake the long
and

ing.

expensive professional train¬

'

The Ewing report

also examines

Hornblower & Weeks

<

Incorporated

Paine, Webber, Jackson & Curtis
April 21, 1949

'«

-

,1*

'

Schoellkopf, Hutton c/ Pomeroy, Inc.

THE

(17341

14

COMMERCIAL

Our

Connecticut Brevities

CHRONICLE

FINANCIAL

&

Aging

.Second Vice-President and Statistician,

banking syndicate of 50 underwriters headed by Putnam & Co.,
Estabrook & Co. The stock is priced at

a

Metropolitan Life Insurance Company, New York

Chas. D. Scranton & Co., and

Dr. Dublin classifies

$52 a share, plus accrued dividena^
yield 4.23%. Proceeds, together | holders which gained control of
with
approximately
$7,947,121 the company in 1948 when 11 new
raised in March by sale of deben¬ directors were elected. Donald B.:

factors which have increased aged in population as:

as

.

tion; (2) reduction in birth rate; and (3) improved survival.

to

and

tures

added

r

common

to

stock, will be

Derby

was

used

Board

of

and

cash

treasury

of

help finance the company's ex¬
tensive
construction
plan.
The
overall construction program from
to

1948

-

through 1951 is estimated to
*

*

the

of

Southern

Telephone

England

recommended

that

Company

the

value
company's capital stock be
reduced from $100 to $25 a share
par

of the

that

and

four

shares

new

sued for each of the 600,000 shares

outstanding. This proposal
approved by the stockholders
meeting on April

now

was

at their annual

-

will

and

5

the

90% of

About

effective

be

stockholders
:■

i

7-"'

..

•

9.

•

;

*

"

«

'A'["

•"

.•

Several

.

May

,

changes

.'•* ■' '•

Commission

have

been

Company prior to
meeting. Graham H.
President, has become

annual

Anthony,

common

shares,

Proceeds

are

for

improvements

S.

Directors

Havourd, Secre¬

Three

dent.

directors

new

been

appointed,

Golden,

David

A.

/ \#

with

contest

proxy

at

ment

i

who

the

The

1948.

is

board

to

•'

*

'

:

Doman
rated of

its
*

*

new

&

the

'*

j

&'1

and

to

^

basis

Hartford

*

-i

removed

from

that

office

fore

New

of

York

and

Boston

Stock

Nov.

1, 1975 at

Bank

&

Trust

York

J.

Hopkins,

President of
-Company;
stated

Boat
was

anticipated that

con¬

1948

be¬

in

(Special

to

Financial

Chronicle)

CHICAGO, ILL. -y.Wiliam L.
Folds

and

Leo

F.

Garrity

have

become associated with Shields &

7-3191

Co.,

135

Mr. Folds

York:

BArclay

in

other

lines

South
was

La

Salle

Street.

formerly with Slay-

ton & Co. and John A. Dawson. In

7-3542

the past he

System Teletype: HF 365

ber & Co.

was

with

-

Paine, Web¬
//'■

UTILITIES

—

INDUSTRIALS

'

Write for specific
recommendations of issues with
records
of
unbroken
dividend

long

payments.

Chas. W. Scranton & Co.
YORK

STOCK

Hartford

2-4301

New

7-2669




York

all

We

business and

own

of

know
and

commerce

tinue to carry large responsibility
and do it well.
They are any¬

thing but old men either physi¬
cally or mentally. It will help us
to

keep this important distinction

mindf in

in

age

later considerations.

our

/

■
*

K'/v.'
The

Aged Population

v

.

There is another basic fact that
I must

develop somewhat fully in
lay the foundation for

order

to
I

shall

say

further on, and
increasing pro¬

portion of those in the later age
brackets.
Until
fairly
recent
decades, our country was charac¬
terized by the youth of its people.
had

rapidly

grown

through

the
all of

of

effect

over

bring

The

which

chart

this

more

into

and
the

These are survivor¬

which

show

what

countries

of

Europe.

tively

few in

Canal

Teletype NH

6-3662
194

number

and

they

were

readily absorbed into the
family life of our people.
No wonder .they attracted rela¬
tively little attention.
Certainly^
normal

there

was

serious
lem

little

awareness

economic

social

or

arising from

of

a

other

under

current

I

survivorship

mortality

also projected

have

for

curve

an¬

100,000
on
the
basis
of
mortality conditions which will

necessary for them outside of the

poorhOuse for those who could not
provide for themselves
children

or.

other

had

or

relatives

no

who

of them.

care

conditions

have

changed

in the early '20s.
Our birth rates
have declined rapidly and, despite
the wartime resurgence, the out¬
look

is

Then,

to

for

advances

public

further

round
of

health

progressively

out

decreases.

the

picture,

medicine

and' of

have

saved

more-and

more

work

*An

Waterbury 3-3166
Danbury 5600

address

by Dr. Dublin be¬

fore the New York Chapter of the
American
Society of Chartered

Life

Underwriters

Forum,

York City, April 7. 1949.

New

our

present

large, both in

loom

us

num¬

they present to
Old ag6 is. a

for their welfare.

significant period of life and will
be

increasingly

There

which bear

in the future. :

so

;

other considerations

are

on our

problem. Since

the turn of the century, our popu¬
lation
has
become
increasingly

in

conditions.

at

bers and in the importance of-the

of

1900,

industrialized.'

cities

our

towns

and

In

in¬

cluded

only 40% of our people;
1940, the. figure was 57%, and
by 1950, it undoubtedly will be
considerably higher.
Now it
makes

lot of difference whether

a

old people live on the farms or in
the

cities.

when

the

In

we

good old days,
predominantly a

were

probably prevail about 1975.

Ob¬ rural and agricultural people, the
the shift has old were still useful in the home
to which three- and on the farm. They then found
quarters of each group survive. a
ready acceptance in the large
At the beginning of the century,
houses
of
their
children
and
the
age
beyond
which
threegrandchildren. How different the
quarters continued' to live was situation is
today when so many
only -24 years; but, currently, it of them are concentrated in the
is 60 years, and according to the
cities and dependent for a living
he w

serve

in

been

forecast

marked

the

age

for

1975.

it

will

be

67

At the half-way survivor¬

years.

the figure advances
from 58 years at the beginning of
the century to 72 years currently,

ship

mark,

and the indications are that it will
be about 76 years

look

in 1975.

Let

us

on

Nor

is

Mortality conditions in 1900

were

today

such

that

a

tern of

distribution in the
past 50 years. The Census of 1950
will, according to latest estimates,
show
over

our

our

more

65

total

words,

of age,
population.

years

or

the / proportion

it

to

overlookel

be

dependent

have

fewer

of

children

to

than

was

the

case

half a

This,

then,

confronts
and

the picture

is

What

us.

economic

implications,

not

only for the aged themselves, but
also for the nation.
Why all this
discussion

and

concern

about

our

aging population?
The Support of the

Foremost
of

the

nomic

Aged

the

among

problems1

the patent eco¬
difficulties in which large
aged

are

numbers find themselves.

proportion of them

are

material

their

of

In

help

1945, at

the

for

peak

According to Life Tables for United States, 1901,1946 and forecast for 1975
100

that

its social

are

SURVIVORS FROM BIRTH TO SUCCESSIVE AGES
THOUSANDS OF SURVIVORS

century

ago.

7.7% of
In other

older

that

parents

aged

share the burden of their support

age

than 11,000,000 people

it

is, the small, flat is
certainly no place where the aged
parent can be absorbed by chil¬
dren
raising their own family.
as

the

this

the

with

acute

way.

at

industry or trade!
housing problem

in

job

a

And

in still another

old people.

our

65

age

urbanized, and

prob¬

No special facilities were-thought

arrived

have

we

I hope
clearly how

situation, in which people beyond

happens to two populations, each
of 100,000 traced from birth to the
end of life, one under conditions

mortality prevailing at the be¬
ginning of the century and the

aver¬

greater than in 1900.

challenge which

before you

is

illustrates,* in. a dramatic fashion
the changes in survivorship dur¬
ing the last 50 years as a result
of' the improvements which I have

the

EXCHANGE

New Haven 6-0171
London

creative job.

a

by

more
of the population
oider age brackets.

other

the

New

ages has,

The

any standard;- enumerated.
still fresh and ship
curves

materially' in the last 50 years.
Immigration was virtually cut off

Connecticut Securities

NEW

ana

many extraordinarily
who at 75 and 80 con¬

men

But

SPECIALIZING IN

MEMBERS

65

are

For the

at 65, the expecta¬
tion of life is 13% years, about two

age person now

lifesaving. at the earlier

h y si
infirmity

so-called

has also improved.

you can now see more

tury.

1

Not only are more people entering
the threshold of old age, but the
outlook lor living beyond that age

years

of course, been to

c a

.

80%

industry of

could take

PUBLIC

v

has about doubled in the
last half-century, and the absolute
numbers have almost quadrupled,

cen¬

able

stabilized

The

/

persons

of

with
it
any
connotation of

The old among us were then rela¬

Connecticut Securities

Bell

beginning

a

Curb

Hartford and

New

different.
examples in our
very

over

Two With Shields & Co.

Hartford

reduced

the

words, we must dis¬
tinguish between chronologic and
physiologic old age.
They are

We

taxes would be

Exchange

Primary Markets

been

since

other

what

$60 million.

Exchanges
Members New

it

have

does not carry

practi¬

Even tubercu¬
and
influenza

young man 18 years
$4,300,the heavy immigration -of rela¬
of
age starting out on his pro¬
non-recurring in¬
come of
$2,700,000. Net after taxes tively young men and women, and ductive career had a chance of
this,
together
with
should be over $2 million
high
birth one in two of reaching his 65th
against
$598,845 in 1947. Sales were about rates, swelled the propprtions at birthday.
Tod ay,
the
same
the younger ages.
The- effect, of chances of survival are two in
$54,500,000 compared with $26,925,037 in 1947. The 1948 figure course, was to diminish the rela¬ three.
includes some $20 million of air¬ tive importance of those 65 years
Taken together, the three fac¬
of age and over.
Thus, in 1900, tors I have mentioned—cessation
craft and submarine work
actually in a total
population of 76,000,000,
of immigration, reduction in the
carried out in 1947. Unfilled or¬
only 4.1% were in the 65 and over
ders,at Dec/ 31, 1948 were over age bracket, less than in the more birthrate, and improved survival
—have radically changed the pat¬

by the group of stock-

Associate

general mortgage

National

000, including

Tifft Brothers
Members

Company

solidated net income for

stockholders

the

and

C 3 Vis due

John

of the U. S. Finishing
Company, Grant A.
McClatchie

President

first

Electric

meeting
was

are

that is the rapidly

$

annual

Power

Co., Hartford.

pilot and co-pilot up front. The
engine is in the nose of the heli¬
copter below the pilot and co¬
pilot seats.
the

its

series

in the after cabin and

V

In

physiologic
Connecticut

usual

.

few

next

that" this

The

doing

spry and are

has called for payment on May 1,
1949 at 100 and interest $125,000
of

At

the

to

out

between chronologic age and

pected to be flying by September.
The new model, which is an un-

~

for

'

Incorpo-

a

>

return

a

months.

shape and will have a high
weight to power ratio, has been
designated as the L-2A "Pelican."
/The plane will accommodate five

.

trial

a

be

Danbury, announces that
utility helicopter is ex-

passengers

provide

the indicated rate base.

company
plans to operate
under the new rate schedule on

7,y

Helicopters,

on

and

The

a

' ' ' '

,

usually

The commission claims

rate will

new

of 5.2%

in

represent

Gas

action

any

interest

bond

expenses,

dividends.

composition of the

new

believed

friendly compromise
mutually agreeable.
'■

pay

manage-

meeting

Greenwich

80

been

set

aged, that is, those who

at

has

wiped out.
pneumonia

over, are a diverse group.
Some
at *l5, and even at younger
ages,

clearly old by

factors in mortality

as

fever

cally
losis,

dependency.

others

that the increase

new

the

annual

of

%

■

the management did not feel
was sufficient to

but

and

di¬
group of large
engaged in

rectors represent a

stockholders

The

system

paid April 1.
The company re¬
cently received a rate increase,

T.

Goodkind

Sylvan C. Colemap.

its

the preferred dividend

on

have

William

to

Company failed to take

tary, has also become Vice-Presi«

par value.
used to pay

eliminated

at Typhoid

or of
economic

I. Dublin

Louis

Dr.

•

out¬
point

very

,p

are
#

B. Franklin Connor, VicePresident, has become President;
Richard

$20
be

to

and retire short-term bank loans.

Chairman of the Board of Direct¬

and

«

has

ors;

'

the

.

Manufacturing
the

$

granted Bridge¬
port Hydraulic Company permis¬
sion
to
issue
36,000
additional

;./.
/•'.

.

made in the management of Colt's

:

%

Yet it is

one.

necessary

vious year.

present* 12,060

.

*
'

•

birtnday/:
—
——is,
of young lives.
You know how inrant
course, an ar-;
mortality-has been sharply
The children's diseases,
bilrary
divi¬ reduced.
sion, but it is which in the earlier years were
a
convenient devastating, have
been virtually

Connecticut resi¬

are

.

b.,th

This

The Connecticut Public Utilities

dents.
*

&

Corporation,
which
ac¬
quired approximately 84% of the
stock through its offer of $7.50 per
share. The annual report of Bill¬
ings & Spencer reveals that the
company earned $0.29 per share
in 1948 compared to $0.70 the pre¬

is-

be

that it be met before intolerable conditions develop.

clarity and precision, I propose first to define the topic I am to con¬
What do we mean when we speak of the aged? I shall follow what has
by usage, namely, to identify the aged with those who have attained their

sider with you.
been sanctioned

brand

s

urges

For the sake of

limiting the duration of the com¬
pany to Dec. 31, 1954.
The com¬
pany presently is being operated
as a
subsidiary of Bingham-Her-

New

and

Sees need for furlher

Says problem of increasing aged in population is .becom¬

against abuses.

warns

acute

problems of the

among

No

Billings

of

but

more

Spencer have adopted a resolution

C
1

Directors

ing

elected.

was

Stockholders

about $42,637,000.

cost

Committee.

(1) cessation of immigra¬

Says foremost

economic difficulties in which large numbers of them find themselves.

are

old age assistance

named President of the

President

new

aged

Directors and Chairman

Executive

the

Population

By LOUIS I. DUBLIN*

200,000 shares of $2.20 preferred stock, no par value,
of Connecticut Light & Power Co., was offered Wednesday (April 20)
An issue of

by

Thursday, April 21, 1949

A large

in need of

of

support.
our

war

Volume

169

effort, when every hand capable
I-

of

1 monthly, the
1

11

-

work

called

was

into

lAttA

lieve

tne

present limit.

14,

that

1

I

it

would

*

_1

I be-'

country's productive efforts, only

to increase this limit to some

one-tmrd

ure

such

1. 1

desirable

be

fig¬

$35 monthly, and if
were
the Social Security benefits were
then either
employed by
others or
self-employea. The lat¬ generally broadened, no limit need
est available
figures for this year be imposed on persons over age
'show

of

that

those

65

those

oniy

and

65

over

full

over

70.

one-quarter" ei
at

employment

Furthermore, it has been
tax

come

time of

a

as

sug¬

gested that State and Federal in¬

employed.

are

This is the situation

virtually

and

courage

and

laws

revised

be

to

en¬

the extension of private
plans by making income
plans tax exempt. The

close

wish

to

other

people of their own age with
they can spend their leisure.

whom
In

be

recent years, a

ment has

the

expensive

ill

in their

obviously

more

hospital.

the
In

call

for

physicians,

a

visiting

housekeepers.

gestion

that

have

may

nurses

A recent sug¬

merit

in

this connection is that the Federal

Cleveland, for example, the Rose
an

greatly

in¬

plant. In like man¬
larger communities may en¬

ner,

such

gage

tion

counsellors

with

their

in

welfare

connec¬

services,

to visit with and guide older peo¬

and

especially of
type adapted to their needs.

cared

be

But this will

homes.

will leave the

ple in retirement to bring out their
capacities and to aid in their ad¬
justments. Unfortunately, we have

for

people,

also

can

are

ex¬

of

adequate housing made available

Foundation has worked out

general

15

panded and better organized serv¬
ice

old

disabled

or

for

strong move¬

developed to have

(1735)

and Many of the old people who

friends

to

CHRONICLE1

They

their children.

from

away

FINANCIAL

&

COMMERCIAL

THE

Number 4796

Government,

so

long

as

it

con¬

all

few

too

of

present

representatives

at

this useful

profession.
talked with you of the
problems of the aged very much
I

have

philan¬ tinues to subsidize State old-age
remove
the
present as I would to a group of sociolo¬
of its assistance,
tax loss from this source would clients in families where they can prohibition of Federal grants with gists or social workers.
I am, not
be comparatively small but its ef¬ enjoy a wholesome environment.
respect to otherwise eligible re¬ unmindful, however, of the fact
on
proportion employed being about fects
encouraging
pension It has also acquired a number of cipients who reside in accredited that this is a conference of'insur¬
43%.
It is
ance men and that I have a special
interesting to note, schemes might be considerable. apartment buildings which are public nursing homes.
A serious difficulty which those function to point up the part which
however, that more than one- These
suggestions
which
have open to old people, both couples
quarter of these employed men been made by those interested in and single.
The elders have the who minister to the older people you as underwriters can play in
are
in
agriculture.
Apparently, the economic aspects of older peo¬ privacy of their own quarters and have observed is the boredom and bringing order into a situation
farmers stay on the
job after age ple have sufficient merit to jus¬ enjoy common facilities for dining sense of frustration from which which is now far from orderly.
65.
and
recreation.
Outside of
They can thus so many of them suffer. A wider What does the picture that I have
agriculture, tne tify careful consideration.
large majority of the" aged men
Old age pensions sponsored .by spend their time pleasantly with extension of remunerative work painted of the aged suggest as a
are
no
others
of their own age. A trained would
longer in the productive industry are growing apace and
help to solve this problem. program for life underwriters?
high

pension

national

prosperity with a
growing need for skilled workers.
Among men at this stage of life,
the picture is
naturally better, the

forces

of

the

country.

understandably, only
of age

and

over

constitute the larger number of the aged in our
population.
Many of them are widowed and
with

j

only limited skills of com¬
value, they constitute the

difficult part of the
nomic problem of the aged.

eco¬

—

.

are

-C e

i

-i

-

plans is not large.
It is, therefore,
w,
AAV-rt
not

_0

.

ing offsets to these economic handicaps.

First, there is the Old
Age and Survivors Insurance fea¬
ture

of

Social

our

Security

and of limited numbers of

number

provisions

of

by commercial and industrial
organizations, through which over
of their

retired

of

a

to

retirement

almost

In

approximately

from individual
from

plans,

is

possible

Th#>

latter

considerably

from this

than

source

the insured under the Federal
as

and

more

quite

all

larger ben¬

number of States.

a

equivalent of the old poor
law and
places the undesirable
stigma of "indigence" on their re-

65

persons

old
uiu

and

over

were

age assistance.
assistance.

instituted

The
ine

dif-

very

the

Old

Age

and

Survivorship

Insurance

15 years ago.

At that time, it was
Federal program

program

that the

subsistence

i

|

iha 1

lo

modern

C"The'orovisions

receiving

sums

for

the

The

aged.

trend in recent years has been al-

under

the Social Security Act
by grants
from the Federal Government and
States

assist¬
times that

age

IV2

of
old
«jx
uiu
cige
ueneius
wouia
oe
age
benefits
would
be
a
sound scheme providing minimum

i

the

other

movement of

Unless

way.

more

and larger

football

enormous

ome

of

politics

financial
If

areas.

we

and

do

not

living, it is desir¬

to

for

need

do about it?
that the

me

more

able

totally

inadequate

the

conditions,

under

and

Where

they have
avocation or

idle¬

their

■;

abilities.

are long,
is needed to

lists

much

Those

>vho

are

no

funds

As

the

last

strength and skill will add greatly

however,
meet

the

insti¬
generation

people with limited or
compelled to go.

were

might be expected, old peo¬

particularly prone to sick¬
and accident.
About one in

are

eight of those 65 years and over
suffer from some form of disabil¬

More

adequate

serve

a

as

discussion,
Congress -may

for

the present
make
important

pension plans to
ployees

in

There is

try.

more

cover

commerce

and

and
render

their

happiness

and

as

underwriters

meeting the needs of the aged.
They will inquire into the ade¬
quacy

the local facilities—fa¬

of

cilities for

recreation, for the de¬
velopment of hobbies or for the

older people. Professional interest
will also call for your active par¬

ticipating in the development of
policies in the extension

sounder

of

our

Social

Security

health

This

NEW

appears as a matter of record only and is under no circumstances to be construed as an
offering of these.Shares for sale or as an offer to buy, or as a solicitation of an offer
to buy, any sucli Shares.
The offering is made only by the Prospectus.

ISSUE

200,000 Shares

tions Among the Aged
The

well-being

the

of

conditions

are

aged

The Connecticut Light

and Power Company

$2.20 Preferred Stock, without par

well

front

them.

•

We

have

scarcely

Price $52 per

value

anything in particular to provide

j the kind of housing old people

Copies of the Prospectus may be
this issue

Blyth & Co., Inc.

will

that

permit

old

the

those

age

a

revised

who

id

statute

have

tired to receive their benefits

though they

earn

more




re-

re-

even

than $15

require.

unhappiness

•

for

all

concerned,

Few wish to live'as boarders or in
institutions.
The great majority
wish to have a home of their own

Share

plus accrued dividends from May

hoped

our

em¬

indus¬

large field to be

a

developed,

trations

Putnam & Co.

in

a

Secondly, you will, ■ I
am
sure,
wish to participate in
spreading Group insurance and
program.

program.

*

Living with children or
tirement program in the direction i relatives is no solution, although
of meeting these and other inade-. many are forced to do so with the
quacies to seine degree.
It is consequences of much friction and

revisions

such

ity, and the older they get, the utilizatibn of the talents of older Finally, as good citizens in your
higher the sickness rate.
They people. Such an organization will respective communities, I would
suffer particularly from a variety see that old people are visited by urge you to be interested in aged
of chronic diseases, such as heart kindly neighbors; that they are persons and to act on community
disease, kidney disease, diabetes made much of on public occasions projects which are concerned with
It is logical that
and cancer. Our few hospitals for and given places of honor.' All of their welfare.
insurance men should play a part
chronic diseases are filled to over¬ this Will help to encourage the
in such efforts, a§ you do in so
flowing, and many patients are feeling among oldsters that they
many other local Activities.
Your
kept waiting until beds are avail¬ are still useful and wanted.
participating along the general
able.
Employers who have older peo¬
lines Lhave indicated should ma¬
There is, accordingly, need for ple working for them can aid in
terially aid in the solution of the
much thought and action to meet this connection. Personnel depart¬
problem of the aged.
the medical needs of old people. ments can assist in preparing those
In closing, let me remind you
Some services can be rendered by who are about to retire to meet
the
official health
departments. conditions that will confront them. again that we are concerned with,
a problem which
is becoming in¬
But the largest measure of care They can arrange for classes and
creasingly acute. The number of
must remain in the hands of pri¬ clubs where those who will retire
older
people will continue to grow
vate physicians and an increasing in a few years may develop such
to large proportions.
Now is the
part should be left to the minis¬ hobbies and talents as will keep

average

and

will

insurance

foundation

a
useful public
improve you can
their health.
The great deside¬ service. Such group plans cover¬
ratum is a community organiza¬ ing a larger section of our work¬
tion
of
public-spirited
citizens ing population will provide ail
which' will
be
concerned with additional pillar of security for

to

Personal and Social Considera-

scratched the surface of this phase
monthly payment per aged ben- of the life of older people. Housing
eficiary being only a little more >. for elderly people is particularly
than $22.
These facts are very j distressing under present condimuch in the forefront of legisla- : tions. Few communities have done
five

the

that

genial

Secondly, the benefits under aware of the serious emotional
Old-Age and Survivors Insurance and health disturbances that conpresent

to

adequate coverage

ice.

are

present

attention

in

with current

serv-

a

you

directs

take

those

domestic

for

can

seems

an

burden

among
us
involves much more
than the correction of their economic difficulties. Those familiar

in

It

situation

-

a

benefits, it is generally agreed, are defective on
several counts.
First, they do not
cover
about 25 million gainfully
employed workers primarily in
agriculture, the self-employed and
engaged

senile

exist

survivorship

What

of the local
voluntary them interested and useful during time to meet the situation. Unless
we
do so, intolerable conditions
agencies. A pressing ne¬ the period of their retirement.
age
assistance
benefits
is
cessity is for a larger number of Large plants can well' afford to may develop a decade or two
checked, it promises to become beds for aged invalids and semi- employ an old-age counsellor who, hence, and it will then be much
primary source of support of invalids. A special type of insti¬ in conference with the individual more difficult to make the neces¬
0ider people
in many
is at
parts of the tution is evolving, different from employees, will help in their ad¬ sary adjustments than it
lJ
country.
It is already becoming the old custodial institution and justment to the time when they present.

together

foricar.e we may 6PPr0ach something
I akin to the ill-advised Townsend
fare "f the aged leave much to be i Plan which Ior a period at least
desired. The Federal old age and |held the sta«e 0( publie discussion,
which

«!?

and

ness

are

hoped

.

the

waiting

they

who

ship under present conditions of
high living costs. About 2,000,000

the

than

terent from the intention of those

.

made

receiving old
more

this direction is

--

friends and relatives, and two and
one-half million receive old-age

work

do not wish

when they

or

qualified can engage in social or
This type of subsidized housing,
community ser vices of one kind or
especially designed for the care of another; some can help in the pub¬
older
people,
fortunately,
is lic libraries or in the hospitals; in
spreading to other
cities. New the care of children at play; even
York, for example, has made some their hobbies can often be utilized.
progress
in this direction.
The Any work that is suited to their

ple

of

older
people, namely, close to40%, suffer from economic hard-

persons receive their support from

others

older persons are

dulled the senses.

ness

of the beneficiaries of the Federal
old age insurance
program, and

addition, Thus, in Louisiana, toward the end
half mil¬ of
1948, more than three quarters

in spite of these provisions
made possible by official and
pri¬
vate old-age
plans and by per¬
sonal' thrift, a large fraction of

way;

million)

efits in

Yet,

assistance,

and

more

own

of

Scramble for

annuity contracts.

.

come

Security

with

pay

only part of their costs, and
pay nothing at all.
But all

where old

receiving
"" ! ici.civing

•

,

meet

tutions

13% in this age category, received
,

has

Social

against $22.
in
lact, the development of old
age
assistance
has
become
a

one and a
lion at ages 65 and
over, or about
it,.-

their

to

when

even

longer capable of remunerative

work,

Many of the old

more into the
foreground.
As al¬
ready indicated, the number (2l/z

are

three-quarters

million persons.

the

plan, namely $41.50

Federal, State and local, provide
income

people

nursing

and to replace the

larger

employees are receiving support.
Other pension
schemes, including
those in the railroad
service, the
governmental

is provided.

and

demand

ance

able

quarter-million

under

ance

private pension plans made avail¬

a

private

pensions plans, that old age assist¬

pro¬

This, however,
is designed
only ■ to provide for
minimum needs.
Second, there is

ever-increasing

surprising

OUlpiiOAlJiS

benefits under Old Age Insurance

;

ceiving benefits.

*

pro¬

under current conditions of small

gram, under which one and a half
million aged persons are now re¬

the

now

tected under such private
pensions

definite and encouragJ*

is

the fraction of workers

.♦

To be sure, the
picture is not as
dark as it appears at first blush.

There

no

some

mercial
more

But

Medical

arise.

some con¬ through life insurance of the large
activity to number of the gainfully employed
preserve
their morale and thus in our nation. We must more and
Social Security, they should meet
the essential requirements of the are on the same footing with re¬ have the feeling that they are still more emphasize personal respon¬
large majority of those who reach spect to service and accommoda¬ useful to themselves and to others. sibility and individual thrift as a
the retirement age in those cov¬ tion?]. How different from the old Old people can make a fine con¬ means of
building up sufficient
ered
industries.
The limitations poorhouses where the normally tribution when suitable arrange¬ assets during productive years, to
alert aged were thrown together ments
are still
are
developed to utilize meet the requirements of old age.
very real, however, since

qbO"*

women

plans

many

them solve the various difficulties

currently at the
rate of $48 monthly.
When sup¬
plemented by the benefits from

still at

average

placed

social worker is available to help

care

The

This

program.

has

thropy

benefit under

these

must not forget that

we

an important branch
private life insurance bus¬

teresting

that

65

remunerative wo»*k. nard"

9%, and

become

Df the

iness.

women

are

such

.lave

Quite

relatively

a

small proportion of the
years

lor

as

may

legally

The First Boston Corporation

offer

1, 1949

obtained in any State from such dealers participating
these Shares under the securities laws of such State.

Chas. W. Scranton & Co.
Harriman

Ripley & Co.

'

in

Estabrook & Co.

Smith, Barney & Co.

Incorporated

April 20, 1949

Drexel & Co.

Kidder, Peabody & Co.

U

(1736)

THE

COMMERCIAL

FINANCIAL

&

CHRONICLE

Thursday, April 21, 1949

Pzominent Personalities

Mutual Funds

(Fifteenth of

Senior Partner, Vance,

Price-Dividend Ratio Lowest in Generation
Prospectus
your

upon

NATIONAL
RESEARCH

or

1199443876807

from

SECURITIES

&

"It

course,

impossible to arrive at

any

precise

answer

tantly to the development of the business
he

this

connection

we

think

will

readers

be

interested

cial and civic leaders.

FUND
f/hi.iton
"Prospectus upon request

Putnam Fund Distributors, Inc.
50 State Street. Boston

(Dow-Jones Industrial-Stock List)

High for

Average

Year*

Dividends

381.2

$12.75

1932_

88.8

4.62

1933_

108.7

and Girls' Camps. Inc.

Ratio**

Henry,

29.9

194.4

8.78

22.1

158.4

4.98

31.8

7.06

133.6

7.59

Henry T. Vance

17.6

119.7

6.40

18.7

1943

145.8

6.30

23.1

pretends to know all the
reasons

for his
is

152.5

6.57

23.2

6.69

29.3

answers,

212.5

.7.50

28.3

186.9

9.21

His attitude toward the business of managing investments
is well expressed in his observation relating to the
operation

193.2

11.50

20.3

•

and

16.8

of

authorities

estimate

that

It

HUGH W. LONG & CO.
inco«»0**ho

41 WAIL
tol

is

estimated

that

totaled 6,550,087 kilowatts

compared to

the

expansion program as budgeted will
increase expenditures to around $2 billion per year or an aggregate
of $6 billion as compared to $3.4 billion for the past three years,

(Continued

STREET, NEW YORK .5, N Y

anofks

years

total of 18.479,520 kilowatts budgeted for the years 1949-51.

on

page

17)

American Business

Shares, Inc.
THE

Custodian

traits

of

character—integrity,

patience.

and

Given

courage,

those

approach shot."

every

He knows that

perience and

sailing is

an art requiring long years of ex¬
won't find him trying to outsmart the old

so you

salts, who race their crafts off the Manchester shore, north of
Boston, where the Vance family resides. Instead, Henry's
sailing is confined pretty much to in-shore excursions, fre¬
quently with all

or

of the members of his attractive

some

family, which includes Laurie, his wife, Susan and Sally,
daughters, age 10 and 9, and son Tommy, 3.
V
Henry

great future for the mutual fund business but

sees a

he also believes that if the industry is to

realize its tremen¬

means

for

ing

extravagant idea of what

an

do—and for

thing avoidance of "over-selling," that is, giv¬

it

as

bought

slips

Relieves

than* the

giM h

investment company

can

always be at the top of the list and

can

even

little

a

way

dissatisfied.

become

that any reputable fund will do a far better job

average

or

even

investor.

above average

perfectly good lily in face of the

sure

So why

knowledge that

when the gilt wears off, it's not going to look as it was rep¬

Lord. Abbett & Co.
New York

Certificates of Participation

Chicago

—

as

down, shareholders who

performance"

"comparative

on

an

another, avoidance of "comparative performance"

selling—no fund

He

COMPANIES

one

resented to be.

Funds

to

philosophy and of life generally. You can see it in his golf
game, which is consistently good for the time he devotes to
it, but he "doesn't drop the ball two feet from the pin on

upon request

LORD-ABBETT

INVESTMENT

follows:

traits, along
with common sense and seasoned judgment, you will
have a management that may be depended upon to produce satisfactory results "

soon

Prospectus

director,

a

as

dous possibilities, it must avoid the mistakes of the past and
it must follow sound selling methods. By sound methods he

chicago

eystone

the

That kind of careful approach is typical of Henry's business

.

the

solid

responsibility

yU;:

magnitude of the problem, of raising additional; equity
capital is indicated by the amount of new generating capacitv added
in recent years as compared with the budgeted increase for the near
future," the booklet states. Figures quoted show that capacity added
during the oast three

knows all

of that Fund's pieces of literature

one

those

are

"The

Investment Dealer or

one

management of Boston Fund, of which he is

•

'

no

achievement of spectacular results.
In my opinion the
qualities which dependable management should possess

Stocks

...

that

aware

respect

even

Bullock.

quite

.managing investments. Management should above all be
dependable, and you cannot place dependence upon the

;

.

number

he's

"I have always been wary of spectacular success—the bold
stroke arid the rich reward—especially with

Although the economic outlook for the utility industry appears
fundamentally favorable, the possibility should not be overlooked

Calvin

that

especially in the investment business. *

appearing in
on

though corporate
earnings may be somewhat less in 1949 than in 1948, dividend pay¬
ments will be about the same; and on this basis, in relation to the cur¬
rent level of the Dow-Jones index of thirty industrial stocks, the
price-dividend ratio would be about 15.3. This is at the lowest rate in
the past generation."—From Vance, Sanders' "Brevits."

a

fact, one of the prime
high regard in which he

195.8

that over the near term the price of utility stocks may be affected
by the unprecedented amount of equity, financing overhanging the
market, according to the current issue of "Perspective" issued by

your

for the

1944__

Outlook for Utility

Prospectus from

In

answers.

and

1945__

"A

N

success

is held

daily closing prices and not on high for the day.
"Represents the rate at which dividends have been paid in relation to
the high point for stock prices in each year.

Investors Inc.

quickly becomes known

meet

and a prodigious capacity for high-speed,
intelligent work. This doesn't mean that he either knows or

21.6

.

he

as

who

him, has two readily
recognizable traits—a pleasant, engaging
personality that responds understand¬
ing^ to the other fellow's point of view

32.0

152.8

all

to

19.2

■

3.40

-

other such civic projects. He is a director
of the YMCA and a trustee of the Boys'

Price Div.

1942_

'Based

Fundamental

He has been active

Community Fund work and has held
top positions of responsibility in this and

1929

PUTNAM

won

regard and sincere respect of
of Boston's most important finan¬

in

Prices and Dividends

Seorye

heads but in addition he has

high

many

the

in

historical record of stock prices and

a

dividends since 1929:

£7/ie

now

the

payments.

following table which contains

highly competi¬

tive investment banking training ground,
he not only has contributed most impor¬

to

this question; but in any attempt to evaluate common
stocks, it has
always proved helpful in the past to give careful consideration to the
current
price of stocks in relation to their probable dividend
"In

in New York City's

over

is, of

; f

ing to Boston from Racine, Wis., via the University of Penn¬
sylvania's Wharton School of Finance, with a nine-year stop¬

stock prices.

CORPORATION

120 BROADWAY, NEW YORK 5. N. Y.

:V

Sanders & Co.

Still in his early forties, Henry Vance has put a lot of im¬
portant milestones of solid accomplishment behind him. Go¬

"The current decline in business activity and the general uncer¬
tainty with respect to business prospects, coupled with the action of
the Federal Reserve Board in lowering margin
requirements, have
brought forth a number of conflicting views as to what is in store for

request from

investment dealer,

Series)

a

VANCE

HENRY T.

l!y HENRY HUNT

—>

New Orleans

—

Los

Angeles

V

Henry ought to know what he's talking about inasmuch
his

organization

than any

has

distributed

more

mutual

fund

as

shares

other in the business, and because the oldest

mem¬

in

bers of the Vance,

INVESTMENT FUNDS

investing their capital
IN

Sanders selling group are still among its

largest producers and are also among Vance, Sanders & Com-

A

Diversified Investment Company

oany's best friends.

BONDS

New York Stock

Exchange
Weekly Firm Changes

(Series B1-B2-B3-B4)

PREFERRED STOCKS
V

The New York Stock Exchange

(Series X1-K2)

has announced the

INVESTORS STOCK

COMMON STOCKS

Transfer of the Exchange mem¬

(Series S1-S2-S3-S4)

FUND, INC.

PrmfHtint from

Dividend Notice

bership of Mortimer W. Loewi to
Charles H.

your

local investment dealer

or

of Boston
Congress Street

Prospectus
your

may

record

May
of

as

E.

or

be

consid¬

Exchange on April 28.
Major B. Einstein retired from

partnership in Waldheim, Piatt &
Co. April 1.
Harold H.

April 30, 1949.

be obtained from

local investment dealer,

on

Gross will

ered by the

quarterly dividend of

21, 1949 to shareholders

E.

CRABB, President

Principal Underwriter and
Investment Manager

Boston 9, Massachusetts




a

fifteen cents per shore payable on

Keystone Company
50

^

The Board of Directors of Investors Stock
Fund has declared

Tke

following firm

changes:

Woollard, Jr. will re¬
partnership in Weston
W. Adams & Co. May 1.
tire

from

Paul

Linz

will

withdraw

from

,

THE

PARKER

CORPORATION

INVESTORS DIVERSIFIED SERVICES
Established 1894

ONE COURT STREET. BOSTON 8, MASS.

..

as

Investors

Syndicate

Minneapolis, Mihfifsota

,

|i

partnership

Carl
M.
Rhoades & Co. April 30.
Lester J.

in

Alexander will

fromiSartorius & Co.

on

Loeb,
retire

April 30.

Volume

169

Number 4796

THE

COMMERCIAL

&

CHRONICLE

FINANCIAL

(1737)

17

"The apathy of Ihe stock mar¬
ket in the face of increased

Mutual Funds

ings

(Continued from page 16)
booklet

saying that

McEntire, of the SEC,
considerably greater proportion of new

a

in the future will

have to

from

come

boom.

ness

Commissioner

says.

the sale of

dividends

and

has

earn¬

been

a

is

quoted as
money raised
stock

common

or

stocks

-Some

have

swings; but compared with past
performances, the action of the
market

as

whole

a

called

to

on

on

for

some

time to

come

it added.
market will be

the

absorb not

only a three-fold increase in the budgeted
amount of equity financing by the
operating companies but also
a large amount of holding
company sales for cash," the tx>oklet said.

Combine Organizations

In

Chip Number 31

attractive new folder, Hugh W. Long & Co. compares the
performance record of Fundamental Investors, "Blue Chip Number 31,"
chips comprising the "Dow."

with that of the 30 blue
It

points out that only

one

listed

stock in

five

out-performed

the "Dow" during 1948.
Yet, during the past 12 years, only one stock
out of IV2 among the 30 "Dow" issues has out-performed Fundamental
Investors.
With

the

size

this
of

folder, Hugh is giving
silver dollar with the

a

"Fundamental

Investors"

Gene and Willie.

the

on

dealers

numeral

other.

souvenir

a

"31"

Keep

.

on

the

up

blue chip,
side and

one

good

work,
y^

.

been most in¬

formative,

Co.,

structive mile¬

Inc., April 18.
The change

stone in the ex¬

followed

Fund

stock

"Bulletin" states:

<S>—

"In terms of their

yields,
stock prices in March

below

price

year

a

in

ago.

of

March

were

The average
dividend-

all

paying common stocks traded in
on New York Stock Exchange was
times

13.2

the

average

of

their

these
selling at 14.8 times

dividends, while

"At

com¬

the

tury

stocks

common

yield only
which

price

little

a

means

was

sold

more

that

to

than 4%,

their

nearly 25

cen¬

average

times their

dividends.

Then the ratio drifted

downward

for

until

during .the

almost

20

years

prosperity in
1917 stocks sold for only 11 times
stocks were
their dividends.
That ratio for dividends.
They rose after the
March of 1949 was only fraction¬ war, dropped again to 11 times
ally higher than that for Febru¬ dividends in the depression of
ary, which was at the lowest point
1921, and then rose for about eight
for more than six years. Over the years until they reached the top
In 1939, at the begin¬
past
50
years
dividend-paying in 1929.
common stocks have sold on the
ning of World War II in Europe,
average at 17.1 times dividends. stocks were selling for about 22
The ratio has usually exceeded 15 times dividends.
They declined,
times and has quite frequently as they did in World War I, until
been above 20 times.
In only 11 they were selling again for 11
of the past 50 years, however, has times
dividends in 1942.
They
a year ago

it dropped
"In the

line

the

below the current level.
diagram given below,
shows at quarterly in¬

tervals,
ended
with
February,
1949, during the 50 years from
1900
of

into

1949, the average price
dividend-paying common

all

stocks

regularly
York

traded

Stock

on

Exchange

the

made

to

were

Brailsford

&

lecture

brought
about by the

The

t, Walter

Brailsford.

F. S. Yantis

was

LaSalle'

Street.

Larger

been

was accompanied by rapidly
declining business to a level of

depression,

in

1948.

this

1946, the average yield of the

common

stocks

prices to $100,000, the result
was entered as 25 since the prices
are 25 miles as much as the divi¬

gram was

dends.

a

of the

When

postwar
business boom got under way* early
in

ord

used

3.62%.

in

the

dia¬

Last fall it was

6.93%, and in February, 1949, it
was

7.63%—which

compares

with

50%

and

dit,

Trading De¬
v4: :■>:$*■;•

the

will head

partment.
facilities

"The
the

and

of

services

complement each

firms

tWo

talking

much

as

as

the

pros¬

Do not make more than
three calls on a prospect. Use ex*
pect.

newspaper

stock hibits, use a pencil and paper in
reprint making your own diagrams. There

other

item

is

prospect, or some
interest is a good

of

a

difference

marked

between

objective," said Mr. Porteous
order to obfain interest it
is desirable to talk in "terms oi
benefits and advantages to the
"In

such as income every

buyer,

r

Subsequent to Mr. Porteous' lec¬

ture, the aims and objectives of
the New York Institute of Finance

9C

discussed

were

by Albert E.
He extended
the success of this

under¬

phase of the
interview is the appeal to reason

lecture

This is not neces¬
sarily lengthy; in fact it must be

tributed in printed form.

has

been

primarily

an

writer of securities and has head¬
ed

ed

syndicates which have market¬
numerous
offerings in past

Brailsford & Co., which is
the outgrowth of a Chicago in¬
vestment
house
established
in
years.

Yantis

Mr.

number
Chase

is

a

director

of

a

companies including:
Candy
Co.,
Atlas Film
of

Corp.,
General
Bottlers,
Inc.,
Black, Sivalls & Bryson, Inc., and
Chicago
and
Eastern
Illinois
K.

W.

Lineberry,

Vice-Presi¬

director of Black, Sivalls
& Bryson and Atlas FiJm Corp.
Mr. Iverson is a director of Athey
dent, is

Diagrams

three-tenths

and hears.

sees

of

what

gain,

a

/

buying
'greed'

buyer

as

Chicago, and Cul¬
Corporatidn, and Mr. Burke

Dallas

in

1312

at

will
Gus
Rounsaville, Jr. will be resident
be

resident

and

partner

manager.
Mr.
Gassaway
was
formerly in the firm's Jackson¬

ville, Fla. office. Mr. Rounsaville.
was with the Dallas Union Trust

prospective
enjoying the satisfac¬

picture

office

branch

Main Street. Owen Gassaway

or

need, or a want; explain how a
Fund will satisfy these desires;
then

-

TEX. —Thomson &
McKinnon, members of the New
York Stock Exchange and other
leading exchanges, has opened a

'fear' of loss. The
salesman's objective is to make
the buyer want your Fund and its
results. Draw attention to a lack,
for

se-r

dis¬

be

DALLAS,

"To stimulate desire it is neces¬
sary
to understand the
motive — which is either

this

Opens Dallas Branch

he

and five-tenths of what he

sees,

and stated

lectures will

Thomson & McKinnon

usable, for the average man
remembers one-tenth of what he

are

hears;

course

ries of ten

through facts.

concise and applicable.

Director.

thanks to all on

conviction

"The

a

Railroad.

your

Co.

Products Corp.,
ver

Harrison

"RETAIL SALESMANSHIP

of

Conover are directors

and Mr

Company,

Wholesale

OF

Chicago. Mr. Conover is a direc¬
Style Industries, Inc.

tt

tor of Portis

MUTUAL INVESTMENT FUNDS

50-year average of 5.86%.

TRANSCRIPTS OF 10 LECTURES

McManus

&

Co.,

>

39

admit Christian H.
Hobbs to partnership on April 28.
Mr. Hobbs will acquire the stock
exchange membership of Jqseph
V. McManus. An employee of the
New York Stock Exchange since
March 1920, Mr. Hobbs has been
Assistant Manager of the Depart¬
ment of Floor Procedure for the

By Executives in the Mutual Investment Fund
VOLUME I (Lectures 1 thru

5)—Ready for mailing May 10

VOLUME II (Lectures 6 thru

10)—-Will be mailed in June

Price"

two
One Order

mimeographed

For:

volumes

1 to 9

PLAINS, N.

JEu-

R. Farney is engaging in a

securities business.

sets—$5.00

10 to 24 sets—. 4.00

Order Now—Check

or

Money Order to:

■

j—.

f

-. >»

•

*

;

'

NEW YORK INSTITUTE OF

FINANCE

Publications Division

25 to 49 sets— 3.50

Eugene R. Farney Opens
MORRIS

set of

per

50

gene

Field

will

past 11 years.




to

Salesmen should do about

success.

Squier,

change

X#

A sin¬

ticket

days, peace of mind, a living an¬
nuity, etc.," the speaker continued

Joseph

06

like to sell

first

worthless

"A
the

to

is the

smile

other," Mr. Yantis said in his an¬
nouncement.
F. S. Yantis & Co.

Broadway, New York City, mem¬
bers of the New York Stock Ex¬

04

their ap¬

initiating an interview with
prospect it was urged that the
salesman make a brief comment
a

like people

in order to be successful.

In

interest.

in the family; try to
joint interviews.
Sell
direct, too," Porteous con¬

women

"It is necessary to
and it is necessary to

a

certificate,

in other words in
always consider they'll

men

arrange

plication in a salesman's personal
conversation with his prospect.

and Mr. Burke and Cecil O. Con-

Admit Christian Hobbs

02

the

cere

of

closing

as

influenced by the wife or by

be

"close" were each discussed
the standpoint of

from

of
of
techniques

subject
subject

.

woman,

tinued.

a

the

'offering' and 'selling'; study 'The
Five Great Rules of Selling' by
opener. The question-opener is, of
Church formerly with Brailsford, course, the best for it gets the Percy H. Whiting (McGraw Hill-*
will head the sales department other man to disclose his thinking 1947)," he concluded.

Joseph McManus io

4900

a

selling

conviction, desire,

interest,

tion,

and

"Never underestimate the power
of

women

letter.

at home or

The

explained.

Apprecia¬

handed

points.

decline in the ratio since

has

were

likened by Mr. Porteous to an

sales

delivered

office?"

contrasts

in a stimulating
that salesmen not

'■ v'
technique of selling Funds

effective
and

the

comparisons

Douglas K. Porteous

urged

Burleigh, a member of the Yantis
organization since 1934, becomes a
Vice-President.
Garrett
S.

extensive sales organization both

while the drop
adding for each month total divi¬ since 1946 has been accompanied
dends paid
in the previous 12 by rising business activity which
a
new
peacetime rec¬
months on the common stocks and reached

dividing that figure by the sum of
quoted prices of the same stocks.
That
is, if the total dividends
amounted to $4,000 and the total

merly Vice-Presidents of Brails¬
will hold similar posi¬
tions in the Yantis firm. Frank O.

1910, has also been an active un¬
derwriter and has maintained en

The difference is that the 1929-32

deep

M. Burke, for¬

and Edward

when they

sharp, and has
about equalled that from 1929-32.
drop

planned

selling for almost 30 times here and at various out-of-town

"The
1946

at

through modern sales tech¬

niques.

or

certificates

Porteous,

them

death

of their Presi¬

over

it

merely "offer" Funds, but instead
make definite attempts to "sell"

Co.

are

as

field.

Mr.

rapid advance thereafter

dividends.

as

multiples

a

war

the middle of 1946

of the dividends paid.
The computations were made by

New

the

an

000,

con¬

a

initial acquisition of $10,would you prefer to make
$5,000?"
"Do you have your

with

pansion of the

ford & Co.,

beginning of the

as

of

South

prices, based on dividend yields over the last 50 years. Com¬
menting on the current situation as contrasted with past periods, the

mon

well

dissolution

n

Trial "closes" were suggested*
by Mr. Porteous, such as "Would
you like to start your Trust Fund

has

Yantis &

later on
issue of "The Business Bulletin," published by the
when space becomes available.
Company, Cleveland, Ohio, furnishes an analysis of
Roy Iverson, Hubert S. Con-

Cleveland Trust

it

Co., Chicago,
joined F. S.

de

dled, especially desire."

voiced

that

&

speaker was Douglas
keynote expression, is

steps have been adequately han¬

great

Brailsford

quarters

current

series,
was

expanded
organization will have offices in
the present Yantis quarters at 135

period, but earnings in latter period declined,
while current earnings have risen.

fi¬

the

of

satisfaction

members

The

1929-1932

is

this

At

The

whose

tions. The desire step is the most
important of the five steps of sell¬
ing, yet it Is the most neglected.
The act of closing a sale "is rela¬
tively unimportant if the first four

the

the organization of

of

R.

The

officers

Finance.

funds,

,

nale

in ratio of stock

that in

in

moves in LaSalle Street
in several years is disclosed in the

the

of

of

presence
o f
the
prospec¬

largest

that

Institute

retailer

a

wasted."

"Business Bulletin" of Cleveland Trust

Company points out decline
prices to dividends since 1944 has about equalled

York

client

—

emo¬

Finance

not

tive

recent

Analyzes Stock Price Drop in Terms of Yields

New

Porteous,

"Time

spent

buyers. .Squier explains
Institute's objectives.

rang down on Tuesday, April 19, on a series of
the Retail Salesmanship of Mutual Investment Funds

on

time

and

an

the

K.

selling techniques; for meeting

prospective

curtain

One of the

CHICAGO, ILL.

announcement

'Blue

The

he gives

of

wants

10 lectures
at

finale

course

tional

price

Yantis and Brailsford

."Hence, from here

At

individual

wide

had

since the fall
industry will deteriorate.
of 1946 might be described as a
Competing with the operating properties for the limited amount
cautious crawl."
1
;
*:
*
of equity capital available are large
aggregates of common stock that
must be sold by holding companies to pay off bank loans and satisfy
the need for working capital, the booklet states. In addition the mar¬
ket will be called upon to digest substantial
holding company non¬
the financial structure of the

cash distributions which will take time to
season,

Porteous Winds Up Fund Lectures

notable characteristic of this busi¬

or more

sets.

3.00

20 Broad Street

Ne# York 5, N. Y.

"includes tax
and

postage

"Where Wall Street Goes To

School'*

18

CHRONICLE

FINANCIAL

&

COMMERCIAL

THE

(1738)

Thursday, April 21, 1949

Foreign Investments—One Key to Peace

Bank and Insurance Stocks

By H. J. HEINZ H*

■

; ,
President, H. J. Heinz & Co.

y

'

By H. E.

JOHNSON

Fire Insurance

Stocks

Asserting "a dollar abroad is democracy in action," Mr. Heinz
U. S. investment abroad in support

Company is one of the oldest and

because it is one of the most

1810 and

industry, brief comments on the annual report
just ended are made at this time.
~
company v/as influenced by the general trends present in
the industry. Written premiums continued to increase but at a slower
rate than in 1947. The increase for 1948 amounted to 14% as against
itable companies in the

to stockholders for the year
The

24%

a

"■

•

;

t-kW %/' 'V *

t'l

~

^ ^ Mi,

-

f'

tr

,

'

•

r

.

of

urges

aiding world economic

progress anh

peace.

(4) increasing output of strategic materials abroad; and (5) insuring U. S. business against
foreign currency depreciation.

resources;

We have in

earlier.

year

..'v,-

.

Discusses "Fair Treatment Code" for foreign invest¬
ments as proposed by International Chamber of Commerce, and advocates as
implementation of Tru¬
man
"Point Four" proposal: (1) creation of business "climate" attractive to private investment in
foreign countries; (2) sending U. S. technicians abroad; (3) using government loans to develop basic

companies in the country. Its history dates
influential and prof¬

fire insurance

largest
back to

.

l

Chairman, U. S. Associates, International Chamber of Commerce

This Week—Insurance
Hartford

The

'■

f

•

common

our

working lives

businessmen. We have in

as

organi¬

common

improvement and with a zations dedicated to
fostering some phase of business interests. And in my opinion we
gain in premiums earned of 17.6%> Hartford Fire reported a profit work for
business interests because we believe that prosperous, profitable businesses are
from underwriting equal to $8,404,045 as compared with a loss in the
the best means
<vprevious year of $1,575,981.
and

loss

The

ratios showed

expense

results reflect the v$ry

Investment

conservative policies of the

income after expenses was moderately
higher increasing over 1947 by 7.1%. A larger volume of funds and
higher interest rates as well as some increases in dividend payments
accounted for the gain.
These various factors are summarized in the following com¬
Investment

management.

.

Underwriting—
Written
in

Reserve

1947

Earned

Premiums

$
101,206,071

14,692,558

15,535,727

100,744,327

—

—

Change

$
115.436,885
Premiums

Unearned

for

s»

+14,r 0.815

Adjustment Expenses,

+15,073,983

85,670,344

Underwriting

2,929,571

2,947,918

44,279,504

38,120,955

.,

_

Expense

843,169

—

46.177,451
Less

will take

"

:■■■■

" "

■

'

•

'

replacing
cold

or

;

i

\

1,046,245
18,347

—

—

real

V

and

Investment

♦Net

Dividends

Expense

Investment

v
-

Income

_

us

begin

the

we

to

do

have
to¬

gether by ex¬
amining the
live in.
H. J. Heinz,

in

live

We

II

of

world

87,246,324

+

5,093,953

+

9,980,026

v;

;

emergencies. We have temporary
to

5,578,750

+

440,406

these

handle

emer¬

gencies.

.

„

—742,264

—651,867

+

90,397

5,276,892

4,926,884

+

tions

years,
tNet

Operating

♦Betore

i„j

Income..,

extraordinary adjustments.

After

the

■

+10,330,034

3,350,903

13.680,937

tBefore Federal

taxes.

Income

As

European

the

Na¬

European Re¬

subject to annual approval.
effective

an

trade

step

toward

have

we

the

Reciprocal Trade Agreements Act

indeed encouraging.

—now
before Congress for what
able, another good year is expected in 1949.
amounts to a two-year renewal.*
'Of particular interest to investors is the use of new funds by the
These are two American efforts
Hartford Group. Long known for its conservative investment policy,
at
supporting
world
economic
the company continued to use most of its available funds to buy
progress
and
therefore
world
government obligations. Of the $72,626,885 invested last year $61,trade,
and
world
peace.- The
229,313 or 84% was used for this purpose.
<
' ; : r
United
States Associates of the
Preferred stocks having a value of $5,463,354, bank stocks of
Interriational Chamber ofe Com¬
$1,247,096 and common and other securities of $4,687,123 were also
merce
is on record in favor of
purchased.
!
j
these two measures.
This distribution of purchases was similar to ihat of the previous
But
these
are
not
the
year with government bonds and high grade preferred stocks pre¬
only
means
dominating.
by which we seek tem¬
In the public uitility preferred stock group some of the purchases
porary solutions to our problems.
for 1948 by Hartford Fire included Kansas City Power & Light Com¬
The Supreme Command of Al¬
pany 4%, Pacific Gas & Electric Company 5% first preferred, and
lied Powers dominates the trade
Southern California Edison Company 4.88%.
In the common stock
picture in Japan.
No one knows
group of public utility securities, transactions included the sale of
how or when China will be effec¬
part of the holdings of American Telephone and Telegraph, Philadel¬
tively restored as a world trading
phia Electric and Pennsylvania Water & Power. Purchases included
power.
Throughout the world to¬
Peninsular Telephone and Potomac Electric.
people are living, in that
Additions to the bank stock list were made in Chemical Bank day
sense
of
insecurity that stems
& Trust, First National Bank of Chicago and J. P. Morgan.
from
principles
and
practices
Principal industrial preferred stock
.

.

•

.

purchases

Cork

strong

Paraffine

3.60%

4%

included

Arm¬

convertible, Monsanto Chemical $4 convertible,
convertible, Reynolds Tobacco 4.50% and

Companies 4%

whose

of

the

more

stock

common

additions

included

American

Chicle, du Pont, General Electric, Gulf Oil, Humble Oil,
Business Machines, Kennecott Copper,
Phelps Dodge,
Pittsburgh Plate Glass, Sherwin-Williams, Procter & Gamble, Stand¬
International

ard Oil

of

California, Standard Oil of New Jersey and Texas Gulf

•Sulphur.

J. A.

Hogle Acquires

those

job to
prin¬
which form

practices

and

our

economic

the bed-rock of honest

living. We

have

Hogle

members of the New York Stock

New

SPOKANE,
&

WASH.

Co.,

York

'

—

members

J.

of

A.
the

Exchange, an¬
they have' acquired

nounce

Davidson,

the firm of E. J. Gibson & Co.,

in

Spokane,

A.

York

with

office.

Mr.

the

firm's

Gilder

in

the past was an officer of Ameri¬

Trusteed Funds.

that

and will

continue the business of

Washington.

Larson and R. E.

whom have been
the

Comparison & Analysis

Alfred

Nolting, each of
associated

with

Gibson

organization for the
past 20 years, will join the Hogle
company and manage the Spokane
office.

19 Mew York City
Bank Stocks
March
Circular

31,1949
on

Request

Members New York Stock

120 BROADWAY,

Telephone:

Exchange

NEW YORK 5, N. Y.
BArclay 7-3500

Teletype—NY 1-1248-49

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




of

fail

world

can

much to world

peace—functioning

.^contribute

so

Associates, Inc., Great
Falls, Montana, will continue as
correspondents of J.

will be

A.

Hogle &

connected

the Spokane office

with

through wires

of the latter company.

to

The

Financial

BOSTON, MASS.

—

Chronicle)

Ernest P.

off

than

neighbors that those of

our

us

been

not

cannot

engaged,

are

dangers

part

we

realize

the

of

failure, nor the full
play in thwarting those

dangers.

perish. Let us see if we
can quite simply analyze the case.
Most people are agreed that if the
free governments of the world do
we

not

succeed

in

establishing

environment

in

which

communities

can

an

prosper¬

flourish and

peoples advance materially
spiritually—the peoples will
to

turn

Communism,

of

form

!;:An

or

totalitarianism.

some

Com-

address

by Mr. Heinz be¬
Export Managers Club,

Lombard is with Amott, Baker &

fore

Co., 10 Post Office Square.

New YorK

the

City, March 22, 1949.

was

cer¬

form of statism.

some

or

There¬

will

have

the

Russia

may

the foundations of peace.

real

Our

lies

strength

War

III—and

the

productive facilities and the free
people who

those facilities.

man

Political policies can be

effective
only to the extent that they are
backed

by

of

resources

and

men

goods, and not by opinion alone.

If you doubt this, remember
that the major political and diplo¬

;

matic

has

yictoHes yvh
since

achieved
been

the

at

war's

have

end

nations

of

expense

we

do,

we

that

pray

economically sound world will

They will be the
World

after

were

World War

third

a

War

have

the

meet

to

they

II,

and

The resources

after World War I.
we

problems

will change and

diminish, but not
the problems themselves.
Every today had its yesterdays,
and the problems we deal with
today
are
the result of some
mighty sorry yesterdays—yester-4
days of isolationism, instead of
world

blinded

of

responsibility,

selfishness instead of enlightened

self-interest,

instead of informed action.

The

of

matter

standing

upon

certain

is

It

attitude.

that

It

Russia.

whether

doubtful

is

Western European

17

could

do

nations

Together with the

so.

bind

that

now

engaged

together

hope

this

Pact.

Defense

Atlantic

North

we

preparing

in

unity

developing

free nations

world has failed

Kremlin stop,

look and listen now.

divide

must

she

and

con¬

All the advantages—ma¬
spiritual—rest with the

quer.

terial and

nations.

free

of

75%

the

than 80%

of
world's shipping, and most of
world's oil—more importantly,

world's
the
the
as

250

satel¬

Russia and her
have

We

.more

against

million

people—450
lites.

have

We

steel,

free

a

proved

people we have already

we

outfight

more

can

any

outproduce and
enslaved
people.

United, the free people
conquerable.
should

I

live

like

of

element

in

steps

today,

we

to

may

are

un¬

mention

one

Paul

responsibility

through

to

Hoffman

took

the

words,

Soviet

Russia

courses

open

live in
peace with the rest of the world,
accepting some of its premises of
political and commercial freedom;
(2) to play a waiting game and
spread Communism in economi¬
(1)

to

is

of

United
official

the

American

International

States Asso¬
representa¬

business

in the

of

Com¬

Chamber

merce,

The

International

Commerce is

ganization.

Chamber

of

world business or¬

a

Its

purpose

is to be

broadly representative of and to
encourage
better
understanding
between businessmen and business

organizations of the world; to de¬
termine
and
express
the con¬
sidered

judgment of world busi¬

nessmen

nomic

international

on

questions;

effective

and

to

eco¬

secure

consistent action in

and

improving world economic
ditions, thereby promoting
ing peace.

con¬

last¬

membership of the Inter¬
Chamber is composed of

national

icies and recommendations
nomic

to have three

her:

the

Now,
ciates

ciations in many countries/ Its pol¬

"a bet on peace," and
"a gamble we have got to take."

seems

informed

and

action.

before suggesting
take to make the

program as

other

self-interest

ened

of world
enlight¬

thousands of businesses and asso¬

job of Economic Cooperation Ad¬
ministrator, he referred to the

In

our

we

picture brighter.
When

of

organization

the

program

The

world

the

in

a

The Kremlin knows that to suc¬
ceed

utterly to grasp

represent is asking you to co¬

tive

Advantages With Free Nations

the

that

prosperous

y; w

Substantially,
operate

and this free nation of ours

that is making the

a

significance

of the
yesterdays.
any

I

among

be

an

are

Western Eu¬

of

believes
can

thriving nation in the midst
impoverished and hungry

and

the
It

Poverty

Whoever

of

Midst of

in

Nation

United States

United States they must do so. To

is

Thriving

World

no

single nation of Western Europe
could successfully withstand the
concerted
onslaught
of
Soviet
the

No

governmental "get tough"

a

of wishful thinking

to

up

dependent

same

as

than herself.

Russia is not altogether

we

problems of achieving

economically smaller' and weaker
;t

or

World

have

don't

we

don't—the

after

in

the political needsj of
lead to World War

But " whether

remain.

are

In

that.

to

answer

spite of everything we can do to

an

political agreements—-

turn

.

Number Three—nobody

As for
knows

fore, sound world economic poli¬
not

temptation to

no

Communism.

to

cies

—

that their people

their economies

whether

controls, and, finally, in a
counsel of despair to Communism

more

A moment ago I said that if we

and

(Special

better

abroad, have
not seen first hand the struggle in
which the peoples of the world

ous

With Amott, Baker Co.

much

have

who

fail,

Gibson

Co., and

so

world

and

ropean

we,

can

mental

million for

Hemisphere,
particularly in the United States,

their

Laird, Bissell & Meeds

channels

we

trade—which

are

Stock

announce the
association
of Harwood Gilder and Thomas C.

Jr.,

the

If

Germany,

given

aid in helping Eu¬
nations so to build up

time,

III.

do not have to settle for a hell of

expediencies merely because Uto¬

one

up

progress

that

game, and

this

prevent it,

the

We of the Western

Shearson, Hammill & Co., 14
Wall
Street,
New
York
City,

Exch.,

than

•

by 1952 we may perish.

Shearson, Hanuniil Go. E. J. Gibson &

Bell

deeper

no

.

pia is not to be had.

Gilder, Davidson With

can

are

opinion it is

for

ciples

to

New

my

work

in

waiting

unemployed turn first to govern¬

rope

In

important

roots

"just for now."

and Sterling Drug 3%%.

Some

hoping for Number One,,
on Number Two. We
betting that she is playing a
are

betting

tainly a major contributing cause
in* the case of Russia.
Millions

Plan—scheduled for four

world

freer

unsatisfactory results of 1947, the above figures are
With the fundamental factors continuing favor¬

have

we

covery

350,008

_

Western

17

For

economic

Hitler's

kind of world
we

lies

thing:
is the
main support of peace.
Political
collapse
follows
economic
col¬
lapse. It does not precede it. That
was true in
Mussolini's Italy, in
points

future,

that

the

of

fact, how¬

realization

its

much

ever

explora¬

job

a

.6,019,156

__

and
are

This fact, for it is a

Investment—
Interest

Progress—Main Support

the

peace.

Let

6,158,549

+

8,404,045 —1,575,981

92,340,282

Loss.—

cally weak and tottering nations;
(3) to precipitate World War III.

of Peace

with

war

measures

Profit

Underwriting

in. Communism

We
Economic

J
■

move

over.

living

—and hence

tion

COMPARATIVE OPERATING STATEMENTS
1948

munism will

stand¬

of

ard

our

included in. the figures.

Premiums

raising the

world

(

parative operating statements for the Company. Results of Hartford
Accident and Indemnity Company, the casualty subsidiary, are not

Increase

of

learn

to

matters

on eco¬

guidance
for the governments of the world,
either
directly or through the
United
an

has

provide

Nations.

organization

For

the ICC

as

of

businessmen
been awarded top consulta¬

tive status with the Economic and
Social Council of the United Na¬

tions.
.

It is in

category A.

The U. S. Associates

ber

of

ICC

as a

mem¬

with the
international organization by ex¬
pressing American views on inter,

cooperates

(Continued

on page

22)

Volume

169

Number 4796

THE

COMMERCIAL

Sprout Stresses Need for New Investment

r

In

Report of New,York Federal Reserve Bank

for

growth of productivity and substantial volume of
interrelated

are

v.,,'-.

1948, he

for maintaining
prosperity.
business slump.

*?.

The Gas

r

^Discussing

side.

rent

that

on

to

cur¬

nomic

business

the

prospects

an

thus:

c r e a s

it

attitude

The

prospects for regrowth in productivity and
sustaining a substantial vol¬
ume of new investment.
The two
newed

are

of

at

the

noted
and

in

worthy

mentioning the

inducement to cost reduction

pro¬

vided by a return of buyers'
cost

as

the

mar¬

competition

increasingly

keen,

in¬

manufacture

of

new

products, and the imaginative
exploitation of new and more
efficient

by
tion

should

processes,

An

private

a

be

interesting survey
organiza¬

research

suggests that before the end

of 1948 business was already plan¬
ning ahead for an increased em¬
phasis upon investment of this

type.

While investment for plant

expansion,

such,

as

expected

was

to fall off

markedly over the five
years front 1949 through 1953, vaccording to the findings of this
survey, cost-reducing investment
appeared likely to take its place

to
I

a

substantial degree.

"The slower growth of produc¬

tivity (as distinguished from pro¬
duction) during the war and early
postwar

left

years

considerable

additional

for

room

cost-cutting

investment, especially in the dur¬
able goods

industries.

While the

necessity of using marginal labor
and marginal plant and the delays
in production caused by material
bottlenecks

work'

or

lag in pro¬
ductivity, certainly part of the
explanation lay in our inability

the

civilian

for

civilian

The

of

produc¬

labor

force

new

1948

news¬

such

'the

before

been

war

considered

And there

'props'

evi¬

within

were

the

many

economy

which, while in some instances
creating rigidities that might ob¬
struct

also

corrective

readjustments,

>

provided
of

measure

considerable

a

a s s u r a n c e

repetition

of

the

against

extremes

of

cumulative contraction reached in
the

early thirties.
Price supports
agriculture, maintenance of
orderly conditions in the govern¬
ment securities markets, the pro¬
portionately low volume of in¬
for

debtedness
culture
the

in

in

tories,

the

to

agri¬

turnover,

balance

in

availability

inven¬

of

liquid

the

to

reserves

business'-and

relation

existing

banking* system,
deposit and unemployment insur¬
ance,

the

likelihood, of

government

spending

enlarged

if

unem¬

ployment appeared to be.reaching
major proportions—were among
the

leading buttresses of an econ¬
omy that was in itself essentially
strong and resilient."

Haupt Announces Y

Additions to Staff
Ira

department.
joined the

Walter E. Sullivan has

bond

department, .,and
Seidlitz, the mutual

M.

department.

Eliot

R.

»n

rate

of the

|

equal to that

|

.

demand

should

designed to cut costs,

States

would

be

was

decline

not

the

United

materially

the

On

strengthened.
there

in

stability

Norman

Lewis

J.

associated

are

the stock department

as

regis¬

tered representatives.

record,

yet any evidence of
capital outlays

in total

(i.e.,
including
expansion
and
modernization) at the end of 1948.

dollar volume than the actual dis¬

bursements

made

for

Marx & Co, lo Admit

Wineman & Weiss
Joseph

M.: Wineman.

of the New York Stock
and

member

Exchange,

Benjamin Weiss will become

oartners

the

in

New

York

Stock

Exchange firm of Marx & Co., 44
Street, New York City, on

Wall

May

1.

Both

partners in
Wineman, Weiss & Co., which is

being dissolved

as

of April 30.

;

Kalb, Voorhis

to

Admit

Kalb, Voorhis & Co., 25 Broad

Exchange,

in

CarolineC.

Thus, there

was

also

a

pessimistic




must ad¬

dress
to

law¬

gas in

In

study

Standing of
James F. Oates,
Jr.
changingbusiness methods,
ever expanding legal
restrictions,

jwhich arise
advance

different

and

new

the

as

of

the

industries

result of

natural

the

sciences

and the "accompanying increased
exploitation of the natural re¬
of the nation.

sources

admit

partnership

Abraham

Peoples Gas Company

first

of

"January,

on

the

1948, I have
found in the gas industry a vivid
illustration
of
the
principles I
have just stated and once again,
now
as
a
lawyer in business, 1
find myself in constant and, I may
say,
agreeable
association with
the companion profession of in¬
vestment banking as the gas in¬
dustry and the investment fra¬
ternity join
hands
in
seeking
solutions

sound

.

the

for

problems, presented

creasing

current

by

discovery

the

and

in¬

produc¬

tion of natural gas and the mount¬

ing demand by the public for such
fuel.<*
v
>

gas as a

rNatural gas is not a new prod¬
uct

the

its

but

daily

significance in the
of large numbers of

lives

American

public is of most
is now of great
importance.
Natural gas

recent origin and

been

used

to

thousand

in

than two

more

and

years

extent

some

the Old World for

used

was

distances

far

at

point of production.

in

from

.

its

'

,

ily in importance

as

a

in the past 27

energy

1920 it

source

of

In

years.

occupied only 4.3% of the

distribution

sumption

of

in

total

the

energy

United

con¬

States

in

and

1947, this figure had al¬
ready reached 13.7%.
The utility
of

natural

increased

gas

gas

1925

1943

to

feet

according
cently

increased

have
from

to

to

by
of

Bank

of recoverable

reserves

natural

175

over

from

trillions

23

of

trillions,

data

published re¬
Federal Reserve

the

,

Dallas, the authority for

various statistics of national scope
to which I shall have occasion to
refer.

address before the Invest¬

an

on

petroleum
said:
-

-

in

a

American

Gas

release dated

Association

March 7, 1949,

estimated the natural gas reserve
of

Dec.

trillion

with
of

31,

cubic

165.93

Dec.

31,

,Towner; to

on

May L

limited

They are both
in the effort to make effec¬

and

1948, to be
feet

trillion

1947.

as

173.87

compared

cubic

In this

feet

as

connec-

address

the

by Mr.

13th Annual

of the Central States
Investment
of

Bankers

Oates be¬
Conference

Group of the
Association

America, March 17, 1949.

natural

gas

purchaser

of

the

natural

transmitted in the line and

as

substantial stockholder. On DecY

a

16,

1948, the Peoples Gas Com¬
increased its stock owner¬

pany

ship in Natural Gas Pipeline from
27%

to

100% and simultaneously
all of the outstanding

acquired
stock

which it

did not then own
of Texoma Natural Gas
Company.

Texoma is

natural

a

ing

company

gas

acreage

gas

produc¬

owning or controlling
approximately
132,000
acres
of
ated

in

Texas

and ^leaseholds

the

Panhandle
Amarillo

near

chasing

situ¬

field

and

of

pur-.

of its gas from other

some

producers.

'YY/'YY^- ;;

•

large

Texoma

provides

ap¬

a percentage basis the gas
produced in 1947 represents only

3.4%

ported daily by Natural Gas Pipe¬
line. The remaining
gas
is ac-Y
quired by Natural Gas Pipeline

i

"On

of

the

of

8.6%

The

of

rate

the

the

reserve

current

which

as

withdrawal
reserve.

is

being
amply exceeds
consumption and is
gas

present

rate

of

expected
rate

oil

an

at

at

nomic

current

to

compared

under

conditions

for

at

possibly ten

favorable

eco¬

to

such

least

exceed

some

years—

twenty years."
It is, therefore, apparent that
we are
dealing with a commodity

of

will

or

substance

some

play

and

that

one

a

There is much glamour and ro¬
mance attached to the natural
gas
•

and
as

It is

its future

growing business

a

has

promising

been

by

both

accepted
investors

and.

consumers. Although natura
constitutes only a small per¬
centage of the natural fuel re¬

gas

of

serves

the 'United

States, the
natural gas pipe line
business, a
relative
has

infant

reached

in

terms

prodigious

of

contracts

with

Natural

other

Gas

pro¬

Pipeline

is"

operating at virtually 100%
capacity.
• <
*
7 •
)
Typical Problems
In view of your interest
vestment bankers in
this
and growing industry, I

in-

as

would

you

like

to

hear:

a

:

respecting certain typiproblems now faced by gas

?

age,

size.

In

public utilities and interstate gas;
lines incident to the eco¬

pipe

nomic

and sound acquisition of
additional supplies of natural gas
for distribution

great con¬
suming markets. The situation of
Peoples Gas Company may be in

lems of this

Jn

the

utility.

.

■ ■

v

'

first

place, the public '«
utility companies—such as Peoples :
;

Gas—now find themselves with
demand for gas far

a

exceeding the

capacity of the utilities to deliver.
The demand is largely for gas for

to

nation
the

7%

or

railroad
about

and

total

oil

it

is
of

mileage in the
67%

pipe

than

more

line

mileage.
pipe
totaled $650,000,000

1948

course

than

more

on

gas

predicted' that
the

in

next-three

the

years,

$1,950,000,000

of like additional
expenditures will be made.
/
The

Peoples
Gas
Company,
operates, within the city
limits of the city of Chicago as a
which

manufacturing and distribut¬
ing public utility, has more than
gas

a

normal

interest in the growing

natural gas

industry. Since 1931,
Peoples Gas Company has
closely identified with the
natural r gas
business.
At
that
time, Natural Gas Pipeline Com¬
pany
of America completed its
the

been

first

field

in

Texas- and

the

Chicago area. This was the first
long-distance high-pressure pipe
line of large diameter ever built
the

natural

purpose

On

gas.

of
or

transmitting
about Jan; 1,

1949, Natural Gas Pipeline
pleted the construction of. a

Pipe

line each

Ever since the inception of the
project, the Peoples Gas Company

had

Natural

a

very

Gas

real

Pipeline

interest

both

as

in
a

*

sequence

1
*

required in the public
of

curtailment

-

con¬

of

the

send-out to the great body of gendomestic customers and to

j

eral

avoid

the. shut

tries, dependent

down

of

indus¬

during
by
severely cold winter weather. Because
of inadequate supplies of
the

gas

peak

upon

periods

gas,

the local utilities find them-

selves

in

.

occasioned

the unwholesome

,

posi¬
being unable to provide to ■'
the public the service which the
public demands.
This
situation
tion of

cannot be tolerated and must and

will
not

be solved
easy,

as

but its

solution

I will undertake

is

to

demonstrate.
It should be made clear

initially

that the plight of the utility com¬
panies is not of their own making.
The
great demand for gas for
space
heating,
particularly
of
family residences in great metro¬
politan areas, has arisen during

steel

day of

are

interest to avoid the serious

and

the year.

has

orders

com¬

000.000 cubic feet of gas can now
be brought to the markets of Na->-

'

state

utility commissions,
including the Illinois Commission,
orders limiting and prohibiting the acceptance of additional
space-heating
customers.
Such

com¬

pletely powered dual pipe line
system with the result that'484r

Gas

the

for

pipe line between the Pan¬

handle

;

respects typical and I, there- ?
fore, will undertake to outline '
briefly certain of the basic prob- .;

heating residences; This situation
has required the utilities to appeal

251,330

Y

some

such lines in the United States to
total

4

/

in the

1948, 8,500 miles of natural gas
pipe lines were authorized by the
Federal Power Commission which
will
bring the total mileage of
about

*

great *

thought:

that

C£l

•

industry..

under

ducers.

1

now

our

Natural Gas Industry—a Growing
.'
Business
...

of the 484,000,000 cubic feet of gas
being trans-

comment

significant part in
etonomy for years to come.

tural

*An

between the life led

lawyer.

proximately 50%

for

The

Y

;

Analysts Club of Chicago on
Dec. 2, 1948, Ralph E.
Davis, a
nationally prominent consultant

and

Natural gas consumption in the
United States has increased stead¬
•

fore

and

Chicago

gas

reserves

1948 in the amount of 6.01

found

Having practiced law for some
twenty-five years before joining
the

trillion eubic

ment

under-

and

9.77

additions to

trillion cubic feet.'

himself

the

and

of

These

should be compared with the esti ¬
mated net production of natural

Street, New York City, members

Beck

decline.

yer,

as

will

a

the

which

cubic feet and by
previous estimates in

of

amount

were

of the New York Stock

suggested

the

banker,

like

cubic

1948, although forecasts for later
year

ment

that

out

reserves,

4.13 trillion

feet.

invest-

estimated

plant and
equipment in the first quarter of

the

revision

sales

Anticipated expenditures for the
first quarter of 1949, furthermore,
were
more
than 5% greater in

of

225% between 1932 and 1947. The

promote

prospects for peacetime eco¬

nomic

a

'real'

subsidence of postwar

investment

the

in

growth

least

employed labor force.

"If the

excess

of

at

and industrial

life. The

constantly
shifting.
The

points

in

place in 1948 was accounted
by discoveries in. the amount

for

scene

release

in

ductivity,

a

rcial

c o m m e

the

increase

lines

Stephen

Frankel, James Goldsborough and

investment

our

expenditures

methods, was considerably less.
A sustained rate of growth in pro¬

ogy,

the
took

in

The

Richard

sumably have required, short of
revolutionary changes in technol¬

tion,

developments

tities

I.

Co.,

it affects his

as

<♦>

be made available in large quan¬

Exchange,

Harrington
and
Kovacs have joined the

Gregory

funds

pre¬

tive and profitable the new

an¬

Stock

Coke

engaged in the implementation of vital business decisions and

that Dr. Thatcher C. Jones,

York

and

industry, particularly

gas

the

alternative

would

Light

lighting more
than one hundred years ago, but it
has only been in the last 25 or 30
years that natural gas has been
recognized as a fuel which can

municipal

however,

Gas

gas

the United States for

Haupt & Co., Ill Broadway,
York City, members of the

nounce

Peoples

h

has

Ira

Industry—1949

It has
many times occurred to me that there is much
similarity
in these
busy days of grace by the investment banker and the

current

1948; the physical growth
of capital equipment, measured by

possible

in

were

demand for

is

a

1939 to

the

late

because

firm's Y institutional

of

or

not ap¬

was

1949

employed in manufacturing indus¬
tries rose by more than 60% from

any

not

are

of normal adjustments and
in a robust competitive

economy.

vestment-per-man-employed
(in
terms of physical plant and equip¬
tion).

of

rarity through
of
surplus
demand.
not Y" even
reached

years

dence

New

rates

prewar

used

effects

.turnover

New

ment

re¬

justification for

They
had
scale, which,

in-

continue

kind

events had been

stoppages

also contributed to the

to

this

largely

would have

stimulated.

the

press

in

been suggested in

for

lead

beginning of 1949.

the

early

a

vestment

and

state of mind

a

necessarily interrelated. The
basis for an optimistic outlook,
linking both factors, has [already]

For

swiftly

scattered instances of layoffs
sales
resistance
frequently

and

*

for

becomes

meant

underlying eco¬
Unfortunately,

economic

parent

Allan Sproul

ngly
important
to

kets.

per¬

curtailment,

the

occurrence

such

in-

the

of

prospects.

"The

i

examine

a

susceptible to precise analysis
to prediction.

"As surplus
demand
dis¬

appeared,
became

if

and

inflation

of

substantial

gardless

economic

and

end

tne

depression, it could

his

expressed

views

always

are

vading conviction should develop

supply,"
Sproul

Mr.

consumers

subject to change,

mand toavail-

able

and

developments in

recent

notes heavier

The spending plans of busi¬

nesses

n

own company, Mr. Oates
heating has outrun the vast increase in natural gas. Tells of difficulties
in providing additional
pipe lines and storage facilities and problems arising from unfavorable load
factor in home heating. Points out need
for rate increases as well as market for
off-peak interruptible
sales during warm
seasons, and concludes solving these problems will determine whether
public utiliI
ties as private enterprise can endure.

,

pressures

roughly

Chairman, The

■

.•

,

Discounts
.

(1739)

By JAMES F. OATES, JR.*

York, covering the year
tion, discusses the outlook for economic stability as well as the na¬
tional economic trends.
Commenting on the lessening of inflationary

q u a ted de¬

CHRONICLE

says

Report of the Federal Reserve Bank of New
1948, Allan Sproul, President of the institu¬

through

FINANCIAL

investment

new

essentials

7

In the 34th Annual

e

&

been

since

the

war

at

a

time

of

shortages when pipe has not
readily and economically

available,'This demand has been

greatly aggravated by the anoma¬
long recognized
a
superior fuel because of its
efficiency, cleanliness, reliability,
and ease of handling, is now sell¬
ing pursuant to regulated rates at
a price
substantially less than the
lous fact that gas,
as

(Continued

on page

24)

20

CHRONICLE

FINANCIAL

&

COMMERCIAL

THE

(1740)

Cleveland "Plain Dealer" of April
4 \

'(

>

)

which

.15,

I

News About Banks
NEW BRANCHES

kinson, who retired a year ago as
the
Central's
United
branch
but
continued
on
the
v

.

sjc

#

„

'•

April 14 the election of Louis
Katzman as Vice-President.
Mr.
on

Katzman, formerly a Vice-Presi¬
dent of the Public National Bank,

will be

the Chanin

ac

ton, D. C., announced on April 13
two additions to its advisory board

Jr., Vice-President of
the United Clay Products Co., and
Donald
E.
DeVeau,
SecretaryChewning,

Avenue
for

Bank

at

Street,

23rd

\

■

begun the erection
to provide for

New York has

of

branch office

a

community growth in that section.

building
frontage of 25 feet on Sec¬

will

It

with

be

a

one

a

anticipated

is

It

Street.

story

100 feet on 23rd

ond Avenue and

new

office will open for

this

summer.

President of the National Bank

to the Washington

15, from which the

business

*■

Ralph
elected

the

of

trustee

a

been

has

Gensel

C.

Queens

Mr. Colton was
bank's directorate
James M. Johnston of the

firm of John¬

ston, Lemon & Co.
Mr. Colton, the new

Arkwright, Inc., and President of
Syndicate-Arkwright Trading Co.,

ings & Trust Co.
A native of Washington, he is a

Inc.

veteran
*

a

the banking field and

in

ILLINOIS NATIONAL
TRCST CO. OF >

ILL.

resources-

Deposits
and

and

Loans

358,103, 789

458.734,636

19,839, 942

19,052,614

profits

7;;;7
Total

Cash

with National

with the institution,
having entered its service in 1885
as a
clerk at the age of 18.
He
has served in many official ca¬

trust department at

added:
Authorized

creased
value

from

to

The

;

shares

in¬

were

40,000

$10

at

par

at the same par.
shares will be avail¬

50,000

new

64th

year

Loans

years,

current market value, on
of

one

held.

Subscription

Baltimore,

mailed

out

rights

were
stockholders
on

to

bank
have agreed to purchase all shares
not sold under the rights.

April

12.

The

Directors of the

capitalization of $500,-

new

000, with a surplus of about $265,000, will become effective June 23.
Present capitalization is $400,000
with $210,000 in surplus.
•

*

♦

*

Harry L. Derby has been elected
the

to

board

the

of

Montclair

Trust Co., Montclair, N. J., it was
announced
New

April 14, said the

on

York

"Times"

of

April

went

Mr.
the

1946, he

'

'

'

*

*

1

to

sale

the

of

new

April

11

stock, t according

of the

bulletion

.Office of the Comptroller of the

Currency.

.

''f

1923.

activities

Mr.

the

of

who

Peterman,

association

-

'

J

.

-

'

•

' *

■+*

ment for

the

with

some

profits to the cap¬

$500,000 of

action, there will be

of

$300,000

and

surplus

$250,000 of undivided profits.

in

The bank currently
of $28,000,000.
«

years.

■

,

organization,
500,000.

now as¬

.

•

has deposits
-1

j

-.

deposits

•

*

i'f

■

Bulletin

of

the

de¬

April 11

Office

of

the

Comptroller of the Currency that
First National Bank

of

Rip¬

ley, W. Va., has increased its

com¬

capital stock from $70,000 to

$100,000

by

stock

a

As

dividend

of

•

result

the

James

Powell

lawyer
was

NEW YORK




A.

its

the

of

• ;.

«
/'V'

of

new

;

*

Falls,

sale

Texas,

common

,

elected

Weeks,

personable
executive,

on

April 14

a

director

of Central National Bank,

land,

O., it is

learned

Cleve¬

from

the

Gov¬

«howed

little change during 1948;

the ratio

to "risk assets" declined

during the year.

from 27% to 24%

that

Mr. Harl reiterated
now

to

in the fifth year

are

we

without loss

depositor of an insured
This, he pointed out, estab¬
new record for depositor

any

bank.
lishes

a

safety.

'fe

'

Hear

on

Advertising

:

CHICAGO, ILL. —On Monday
evening, April 25, at the Cordon
Club, La Salle Street Women will
hear

Mr.

"What
From

Marshall

You

Get

Advertising"

a

tell

Cutler

B.

don't

(and

get)
their

t

monthly dinner meeting at 6 p.m.

During his thirty-five years in
Mr. Cutler has cov¬
of the business,

advertising

ered every phase

obligations ;dropped

during

$7,000,000,000

000

Relative to
total assets, United States Govern¬
ment
obligations
receded
from

shoes at retail

44%

opinion, is the advertising man's
master key to professional suc¬
cess.
For four years he planned,
created and placed all the retail
advertising for the Cutler Shoe
Company. - From
: Cutler's, . he

the

Bulletin

of

of

the

in¬

*

♦

its

common

caoital stock effective

April 1 from $117,000 to $136,500

by sale of

new

stock, it is learned

from the Aoril 11 Bulletin of the
nffice

of

Currency.

the

Comptroller of the

1948,

while

growth in loans took place in

first

Ac¬

half

and
as

rose*

again

in 1947.

in

a

Three major types of loans ex¬

panded

slowly during 1948
1947. Commercial and

more

than during

the

»

during

40%

the second half,

industrial

Comptroller of the Currency.
r

to

year-end.

During
Cutler

eight

his

to

learned

derstand

selling

years

State Street Mr.

on

know

people,

which,

and

un¬

in

his

moved to the J. P. Smith Shoe Co.

where

he

in

was

full

charge

cordingly, total assets declined in advertising for. twenty-five

capital stock

the'. Office

the

at

the second half of the year.

Bank

has

word remain the same.

obligations took place in the first
half of the year, while most of

$250,000, according to the April 11

•

business

in¬

bank

States

ings of United States Government

$4,™

The Old & Third National Bank

and

of

$4,000,000,000, reaching
an
un¬
precedented total of $42,000,000,-

effective April 6, from $200,000 to

on

April 6.

United

Most of the contraction in hold¬

.

were

Wichita National

Wichita

creased

■

*

♦.

a

stock

■

rv

i

.7

:

•

commercial
in

loans increased from 25% to 28%.

At the
time of its
|

'

of Union City, Tenn., has increased

&

ernment

most

Mr. Motz has been with the Safe

mon

Kenney

Harl

vestments

ital stock account. After the trans¬

his

company

loans, rose 15%. The ratio
surplus and other capital ac¬
counts
to
total
assets,
which
amounted
to
9.4%
on
Dec. 31,
estate

Total assets of the insured com¬

Mr.

capital stock was reduced to
a stock dividend of 25%

capital,

began

Deposit since 1930. He is

First National Bank
West Pointy Ga.

April

time the $100 par

same

000,000,000 at the year-end. Total
assets amounted to $14,000,000,000,

year-end, while interbank de¬
posits declined from $13,000,000,000 to $12,000,000,000.

In'sufed

the

from undivided

.1927, has been in the trust depart¬

The

City Title Insurance Co., N. Y.

and

Bank

during 1948, reaching about $13,-

al¬ although his special promotional
1948; field is shoes. He believes, how¬
voted, payable June ,14, also these
investments
amounted
to ever that whatever the product,
subject to stockholders' approval. $61,000,000 000 on Dec. 31. Loans the basic principles of effective
•The bank will transfer $100,000 and discounts expanded more than salesmanship through the printed

company's

It is learned from the

Casualty, Reading, Pa.

Mercantile

be

to

deposits of the 193 insured
savings banks rose 5%

mutual

was

with the, com¬
in 1920.:- In addition to his
he is now directing

■

:

is

holiday,

$25 and

duties

trust

•

Amer.

At

-

sociated with the investment

(Ohio) Sav. & Loan

Mr.

-

new

Mr. Grasty came

partment.

Akron

bank

the

,

w

war,"

value

public-relations department.

the

the

to $152,000,000,000 on Dec. 31, 1948, com¬
! pared with less than $153,000,000,000 at the beginning of the year.
"Although there was relatively
little net change in total assets,"

12, it is learned from the Kansas
City "Star" of April 13, which also

Motz, who was for¬

000 effective April 1, and the same

stpck from $20,000 to $80,000 by

1933

called

merly Assistant Vice-President.
Mr. Brigstocke has been con¬
nected with the company
since

the

capital

beginning of

E.

and John

pany

common

the

since

time

any

June 14.

capital stock from $50,000 to $20,-

day increased its

1948

C. H. Peterman,
formerly trust officers,

were

four

named

has

board

who

." '

common

than at

ing

C. C. Grasty and

1

ler, N. J., has reduced its

sup¬

Vice-Presidents, J. K. Brigstocke,

15,

The First National Bank of But¬

the money

between

\ mercial banks amounted

of

following

here

Trust Co., directors voted on

Butler also announced that

Mr.
the

Cyanamid and Chemi¬
Corp., New York.

'

..

consolidation

a

Insured Mutual Savings Banks—

Total

demand

stated, "seasonal fluc¬
added:
tuations during 1948 were wide,
The
change is subject to
a &nd important changes took place
stockholders' meeting to be held in the composition of these assets."

American
cal

the

since 1932, succeeds
position the late W. R.

of

institutions

four

Hubner.

President of the

was

outgrowth

Vice-President of

a

*

*

Banl^and
Trust Co., Kansas City, Mo., the!

company

that

in

which added: Until his retirement
in

Opie,

bank from the legal

to the

The

assets,"

"risk

to

the reduction

the

He

directors.

The Mercantile-Home

to say:

on

in

decline

Co.

of

board

*

department, according to the
April 15, which

did

1948

decline in the first

department of Sinclair-Prairie Oil

comes

Baltimore "Sun" of

last half of

the

offset

to

Bradshaw.

E.

bank's

President of

the

in

Savings and time deposits of in¬
dividuals and business amounted

Mr. Huff has been elected Vice-

April 14 that R. S. Opie has been
named by the board of directors
as Vice-President in charge of the
trust

rise

1947, the
: these
deposits

unlike

But

$34,000,000,000 on Dec. 31,1948,
a rise of
1% during 1948. All of
the growth took place during the
first
half" of
the
year;
United
States
Government deposits
in¬
creased
by <rabout $1 000,000,000
during 1948 to $2,500,000,000 at

A.

Trust Co.,
announced
on

Md.,

year.

capital

6.4%

however, declined from 20.3% to
19.3% during the same period.

and

Harl pointed out.

widely recognized
exponent of trust affairs, was an¬
nounced on April 15 by President

and

Deposit

Safe

the

the

1947

ply and the supply of goods dur¬

complete

President and trust officer by the

Thomas B. Butler,

share for each four shares

was

balance

a

and

attorney

*

*

*

7,712,432

*

National Bank
of Tulsa, Okla., under the execu¬
tive
direction of Roy M.
Huff,

able to stockholders at $15.50,

the
the basis

231,508,406

8,458,037

The establishment of

shown

has

the bank
steady growth.
33

219,791,302
*.

leadership in the past

his

600,518,487

disc'ts

profits

•

pacities, from Assistant Cashier in
1920 to Vice-President in
1933.
Under

591,228,272

The contraction
personal demand

both

of

of
which
$8,000,000,000
were
de¬
United States Government obliga¬
in cur¬
tions and $4,000 000,000 were loans.
rency
in
circulation
occurring
Investments in obligations of the
simultaneously with record levels
United
States
Government
de¬
of
production by industry and
clined 5% during the year, while
agriculture, resulted in a better
loans and discounts, mostly real

360,776,195

320,161,474

ratio

1948
confined to the first part of

"This

se¬

curities

Maple T. Harl

and

in

posits and

due

banks

Govt,

S.

improved during 1948 from
on Jan. 1 to 6.7% on Dec. 31.

com¬

haif.

1,157,531,329

„L_

and

from

U.

Dec. 31, '48

1,225,802,863 1,276,482,959
1,208,312,934

resources-

Deposits

increased 25% by unanimous
of more than two-thirds of

special
on April
12, Luigi Scala, President, an¬
nounced, according to the Provi¬
dence "Journal" of April 13, which

8,

31,

business

not

Apr. 11, '49

&

a

$10,000,000,000 at the end of 1948.
The ratio of capital to total assets

Dec.

during

DETROIT, MICH.

Undiv'ed

outstanding shares at
meeting of stockholders

$82,000,000,000

seasonal
NATIONAL BANK OF DETROIT,

of the in¬

sured commercial banks exceeded

deposits

bills

discounted

Undiv'ed

.

Total capital accounts

amounted to

in

Chairman, has served as President
of the Bank of Washington since
3936.
In June he will mark his

the

674,453,774

583,354 ,764

se¬

after having declined sub¬

stantially in 1947.

on

hold'gs 1,076,869, 865 1,132,234,194

securities increased moderately

in 1948,

$84,000,000,000
Dec. 31, 1947.

due

Govt,

S.

curity

on

These

1 9 4

$

guaranteed

first

since

pared with

Savings & Trust since 1933.
Mr.
White,
the
new
board

vote

Dec. 31, '48

ac-j

sharp rise in
by the Com¬

a

modity Credit Corporation. Loans

1,919,952, 947 2,159,926,637

banks

from

U.

loans

by

1948

2,118,893 603 2,356,427,993

Capital stock of the Columbus
National Bank, Providence, R. I.,
was

the

for

counted

de¬

in

These loans reached

$3,000,000,000 at the year-

Most of this growth was

end.

mmercial

deposits

s

Total

National Sav¬

and director of the

had been associated

#

*

was

19% in 1947.
almost

on

President,
Vice-President

formerly

re¬

the

by

time

•

County Savings Bank, New York.
Mr. Gensel is Vice-President of

••

AND

CHICAGO,

the

to

was

BANK

Cash

investment banking

*

♦

Frank
board

addition,

In

elected
as

depositors.

J.

succeeds

Chairman.

Savings is New York's oldest

savings bank and has over 200,000

CONTINENTAL

following was

White who was elevated to

dividuals

ported

for

*

*

April 11, '49

Colton

Mr.

H.

A.

—

loans, however, expanded more
?nan 72% in 1948, compared with

1937.
*

1

deposits (excluding savings

posits) of bus¬

clined

the bank.

"Post" of April

also taken:

Bliss, Assistant Comptroller of the
bank, will be in charge. The Bank
for

special meeting on April 14 of
board of directors, according

the

time

banks

the Vice-President and

Washington, Washington, D. C., at
a

mutual savings

and

de-

c o

Hummell is
Cashier of

Carl

commercial

below the all-time peak of Dec. 31,-1945.-

13,419 insured

Jacob Stagman is the

and

President

of

insured

billion at the close of 1948, Maple T. Harl,

inesses and in¬

board

Lyons, is Chairman of the
of directors.

all

Deposit Insurance Corporation, announced.
$1 billion below the total at the beginning of 1948

about

was

and

without

been

surplus of $10,000 and a reserve
for operating expenses of $15,000.
Theofil Bulat, who is Mayor of

Colton was elected

L.

Barnum

has

of

Insured Commercial Banks—Demand

capital structure of $75,000, which
includes capital stock of $50,000,

,*f

■

that the

Albert

Mr.

ty

*

of

This

and $5 billion

banking
facilities since 1931>: It has a total
which

deposits

banks amounted to $153

Chairman of the Federal

community

late in May to serve a

April 14.

The

in the City

Savings

Total

Ogden Avenue, Village of Lyons.
The bank expects to be open

Sons, Inc., construction firm, ac¬
cording to Washington "Post" of

*

O.

Cooper on April 17 at Springfield,
111., issued a 99-year charter to
the
Bank- of
Lyons, 8011
West

Joseph H. DeVeau &

Treasurer of

On the southeast corner of Sec¬
ond

They are E. Taylor

branches.

of

Building Branch.
sfc

Washing¬

Riggs National Bank,

Bank and

The Sterling National

Trust Co. of New York announced

in 1948.

.

Benjamin

'

*

$5 billion.

•

#

Auditor

State

CAPITALIZATIONS

decline from all-time peak of Dec. 31, 1945, has been
Banks' investment in U. S. bonds dropped $7 billion

reports

'

board.

Bankers

and

ETC.

Deposits Off $1 Billion in 1948

Maple T. Harl, Chairman of Federal Deposit Insurance Corporation,

...

REVISED

New York,

Wil¬

C. A.

veteran

head ,.of

CONSOLIDATIONS

NEW OFFICERS,

Insured Banks'

Mr. Weeks

said:

also

the

succeeds

Thursday, April 21, 1949

...

■

amounting
to
$19,000,000,000 on Dec. 31, 1948,
reflected a rise of 4% during 1948,
loans,

His

present connection is with
Illustrators, Inc;,* an
advertising
agency,
where • he
heads the advertising service de¬
Commercial

His articles haveaoregularly in the leading

partment.
peared

publications

profession.

of

the

advertising

-

compared with 29% in 1947.
loans

estate

Real
$11,000,000,000 at

of

years.

of

increase
with
31% in 1947. .Consumer loans to
individuals at $7,000,000 000 ex¬

the year-end
of

15%

panded
with

>

reflected

an

Sterling, Grace Admitting
Sterling, Grace & Co., 50 Broad

in 4948, .compared

20%

40%

in

in

1948. compared
Agricultural

1947.

Street, New York City, members
of the New York Stock Exchange,
will admit Morgan H.
to

partnership

on

Grace, Jr.,

May 1.

*

169

Volume

Number 4796

COMMERCIAL

THE

Committee on Public Debt Policy, concluding three-year study of
problem, advocates: (1) control of budget; (2) debt reduction;

.

.

,

A

stiff

of sound, American

dose

common

is

sense

Public Debt Policy has concluded after a
the

(1741)

21

U. S. Senator from Wyoming

Holding it is not: 'short-range picture that should give us concern, but long-range outlook, which is
of change in level of production and employment when;
/ permanent peace comes* Sen. O'Mahoney Defends 4 Big Government" as a means of regulating "big busi¬
and this
ness." Sees^nodepression around the corner" and concludes capitalism must face chailenege of mainy
Commit¬
study of ■■taining stable economy.,.
\

successful'management of the burdensome national debt
be translated into a five-point program for action, the
on

/•'

three-year

/

/ clouded by, heavy national debt and prospect

for

needed

can

tee

CHRONICLE

By HON. JOSEPH C. O'MAHONEY*
•

(3) its wider distribution; (4) restoration of flexible interest rates,
and (5) nourishing of a dynamic economy.

t

FINANCIAL

&

•

problem.
-

-

The

peacetime output and has raised
standard of living to new

Com-

•:

mittee / on
Public Debt

our

Policy

other countries from

heights.

is

mittee

Randolph
Burgess,1

National

Bank

supporting

Executive

New
t i

iiy
ex-

t

p e r

from

s

business,

possible

by

education.

and

studies

have

the

warning

methods.

be

five

basic

steps

recom¬

tonight

by the Committee are:
(1) control the budget; (2) reduce
the debt; (3) distribute the debt
more widely;
(4) restore flexible
interest rates;

(5)

nourish

asserts,

dy¬

a

Two

recent

ments
tee:

economic

in

measured

catching

dollars,

has

Carrying

which

(2)

have

to

proves

been passed,

studies

de¬

phases

flationary policies to force reduc¬
tion
be

in

the

a

the

I

states.

Pending a clearer view of the
trend, the Committee expresses
the opinion that because of the
large powers the government al¬
has,

ready

grants

new

drastic

monetary

flation

control

wise.

'''

of

for in¬

powers

':V//.;//

be

to

appear

more

un¬

1

"This country has the power,

wisely

used,

the

same

the

Committee

time

American

again

if

to meet its foreign
obligations and at

domestic

and

studies

supply would
Committee

money

mistake,"

a

the

debt,"

concludes.

"The

master

people

shown

have

their

time

out a comprehensive
control the national

ular, according to the Committee
has reviewed, revised and
coordinated the findings of seven

in the money supply, and
inflationary
pressures
are
weakening. "If the inflation peak

crease

book

dealing

with various
question.
These
have been put together in
published today (April 21)
the

of

of

done."

April

Impact

of

World

that

been

made

world

since

the

"The

vanished,"

ensuing

year

will

be

elect¬

and

other

business acted

by

is

war

"The

out.

still with

us

the

and

making huge expenditures

are

for

armament

and

for

economic

aid to other countries.

"Another
has

price
volume of

great
for

development
inflation.
The
money

created

has affected the
economy, as was feared,
in the
old familiar pattern of inflation.
war

purposes

;"As

against

events,

there

these
is

a

unfavorable

brighter

side.

inflated national
income we have made a beginning
at reducing the debt.
It has been
drawn down from $279 billion to
$252 billion.
Part of this was
First, out of

simply

.

using

to

ances

an

pay

accumulated bal¬
off debt.
But the

rest of it has been the solid excess
of

government receipts

over

ex¬

"Again
the

we can,

take satisfaction

country's

It

Hemenway

cently
pointed

Committee

a

of

Directors

and

cers

for

on

economy

has

through the first postwar
adjustment with far better pro¬
come

duction and employment than was

western

lief

to

re-

-

members

and

Chairman,
Raymond V. Con¬

don, B. J. Van Ingen & Co.; Floyd
W.

Sanders, Smith, Barry & Co.;
John
S.
Weatherston,
Stone
&
Securities

Webster

George
Bank,

B.

Wendt,

announces

nominees:

Corp.,

and

First National
the following
„

;

Charles F. HemenIllinois Co.; Secretary,
Hugh W. Blair, Halsey, Stuart &
Co.
Inc.;
Treasurer, > Milton
J.
Hayes, American National Bank
President,

way,

the

-

Directors:

that

P.

Jamieson,
Glore, Forgan & Co.; Walter Cf
Cleave, Blyth & Co., Inc.; Walter
C. Lyklema, A. C. Allyn & Co.;
Robert B. Pelton, F. S/ Moseley &

Our industrial machine! Co., and Arthur ,Tresch, B. J. Van
promptly from war to Ingen & Co./Inc.

'

and

every¬

saboteurs

the

capitalist

can

world

take effective

to

in

their

result

in

the

would

be¬

is

steps

judgment
triumph of

to

the

why

reasons

for

terest

need not fear

we

no

spend

lions

two of

or

able

are

ordinary and
living, when it
longer be necessary for us
billions

maintain

to

cooperation, bil¬
in¬

•

one

more

the

for international
'

recite

live

to

restored,

armament, billions for the occu¬
pation of foreign lands, billions

That

that

means

we

here

of

the

in

shall continue to

the

payment of the

the national debt.

on

this

should
of

food and fuel, raw ma¬
terials, semi-finished products and
machinery for export to Europe.
According to the February report
produce

debt

is

compel

the

that

now

which

fact

organize all

to

us

forces

our

maintain

civilian

may

we

Re¬

of
high level production and em¬
ployment when the peace comes.
We
must
provide
a
substitute

Program authorizations ol
$3,707,000,000 was
spent in the

market among the people for the
market which is now created in

United

large

62%

of

the

total

European

covery

States.

Agricultural

its

materials and fabricated
totaling in value $2,300,000,000 were purchased here
ties,

raw

commodities

in

United

the

a

economy

part

by the government in
put the cap of per¬
manent peace upon the figure of
victory.

com¬

modities and industrial commodi¬

effort

The

States. That make.1

to

furniture

dealer

in

dealer

consumer

the

or

goods of any

business. It will continue to make

A

make

Add to this the fact that here at

home

shall

we

for national

defense.

Add

the fact that other billions of
lic

funds

construction

the

for

states

pub¬
being spent by the

are

ing the income

of

government

the

in

war

the

defense

of

of peace.

Without us, western Eu¬
rope would be an easy prey
to
Communism.
Consider only
the
fact

that

well

as

in

private funds

organize the
the people
will be able to produce at a suf¬
ficiently high level so that the
government,
through
taxation,
may have
the income necessary

for

to

and

high level. Billions of
are being expended
expansion and development

running at

a

the

war.

This

creates

market

the

for

all

debt.

necessary

the

the

United States.

all

to

of

the

reduce

na¬

More

for

for the false, unstable standard of
production
in
the
living built up on the production
in February, 1949.
of commodities to be destroyed in
still running at a hieher level
war.

Industrial
United
was

as

than

in Germany there are

al¬

true

Italy,

to

so

than that, it is
the government to
organize this production for peace
just as it organized production for
war.
Only the government can
provide the plan under which
agriculture, labor and industry,
working as partners, may develop
a new permanent high standard of
living, the necessary substitute

employed and are drawing com¬
pensation at better rates than be¬
fore

carry

tional

More than 57 million civilians are

in France

,

meet

It is the task of

that

creates

freedom and for the establishment

is

economy

buildings and for public purposes
of various kinds.
Add, also, the
fact that the civilian economy is

depression here would render
goods and services which are pro¬
fruitless everything that
duced by and distributed among
have done abroad during and
the
civilian
population
of
the

after

it

unless

necessary to

the installments.

utterly
we

contract,

certain that the pur¬
chaser has the capacity of produc¬

that

to

the

reasonably

spend $15 billion

purchasing power which, in turn,

Communism.

States

either 1946

in

in

that

1948

or

ji

It is

1947.

we

modern
production must have mass

Everyone

allowed

mass

agrees

that

ready substantial communist prices to reach by far the highest
markets.
Every
business
man,
minorities, tough and well dis¬ peak in history whether measured
manufacturer or retailer, knows
ciplined, ready to take over with in the wholesale market or in the
that prosperity requires purchasall the ruthlessness they have al¬ consumer market. They have deJ.
ready exhibited in Czechoslavakia, clined somewhat in 1949, but this jng power, but not everyone has
VUlluUlllVX

satellite

Hungary
nations.

and the other
The
hope
of

decline
level

XAJIC** nv V|

has

which

A

brought
is still

T

us

v

V*"-

(

-

address

*An.•

O'Mahoney at
Retail

tional

tion,

turned

1949.

a
<

Senator
dinner of the Na¬
by

Furniture

Associa¬

Washington, D. C., April 5,
■

I-

|

i

:

.

1

;

_

learned yet that the biggest mar-

only to a

far above

kets

the

are

brackets.

in

the

There

low

income

so

are

many

when
we were
all screaming about the people receiving less than $2,000
high cost of living. This explains ; a year that they have three times
why Doctor Nourse, head of the! more money to spend than all who
Economic Advisers to the Presi- receive over $25,000 a year;
The
levels of 1947 and early 1948

expected.




their

which,

Poland,
James

Europe

prevent depression. They have

lapse

the fiscal

Co.,

the

thought, therefore, that by ob¬
structing the processes of recovery
they can hasten the economic col¬

ap¬

1949-1950. This Committee,
composed of Nathan
S. Sharp,
Republic

else

unwilling

year

Central

that

clear

me

work. They have acted in the

Nomi¬
list of Offi¬
-

to

seems

of economic chaos in the countries

of

& Trust Co.

penditures.
that

Board

Directors

nations to propose a

adverse

been

accord¬
with the

desire to stop

we

policy of Moscow ever since the
end of the shooting war has been
directed primarily to the creation

Con stitution.

Chas. F.
we

In

will

been

once

about

go

want

we

has

spread

upon.,/;/' where
ance

people

which

kind who sells upon the install¬
of Communism, our business
throughout next year be¬ ment plan knows that the install¬
important first step is to cause it will
continue to create ment
buyer is pledging his future
make
certain
that a depression
the
demand
for
United
States income for whatever
period within
shall
not
occur.
Capitalism,
to
products no matter what happens Regulation W the purchase con¬
protect
itself,
must
prevent to the
purely civilian economy.
tract may run. The dealer will not
another depression.
the

Of¬

the

peace

when

most

-

points

it

4:00

at which

ed

vision of 'One World' has

threat of

at

p.m.,

rectors for the

studies

begun in 194-3.

were

tel

time

Events

difficult

more

the

Ho-

ficers and Di¬

•/

recognizes, how¬
effective action has

events

United States. If

Roosevelt
in

prevented

military aggres¬
sion from the Kremlin, the Rus¬
sian secret weapon is the hope that
a
depression will develop in the

the

Morrison

Room

The Committee
ever,

in

1949,

29,

and

/\,/;:;../

Chaos

is the secret weapon by which we
have

Chicago will be held on

Friday,

in

when

Corner

.

me now

United States

CHICAGO, ILL.—The Annual
Meeting of the Municipal Bond

willingness to overcome difficul¬
ties if they understand what has
to be

Wants Economic

Winston

Chicago Election

and

ability

Moscow

Municipal Bond Club

Club

world

American

Churchill, speaking the
under the title "Our National other night in
Boston, declared
Debt—Its History and Its Mean¬
that if it had not been for the
ing Today."
possession of the atom bomb by
the United States, western Europe
by this time would already have
been taken over by Communists.
Let me say that if the atom bomb

Of

range/outlook and

War inflation resulted from the
that a depression is just around
system the
corner, why we should
not fact that we were producing goods
of free competitive enterprise. I
mistake a little decrease in the and services for destructive pur¬
am talking about the preservation
cost of living as the beginning of poses and paying for them, not
of opportunity for the masses of
a
slide into recession. The Con¬ with other goods, but with gov¬
men and about the stabilization of
gress is presently planning the ex¬ ernment IOU's. The government
a
high standard of living for all. tension of the Economic
Coopera¬ was buying up almost 50% of all
I am talking about the individual
tion Administration Act. The only the goods and services that were
and the growth of Big Govern¬
real debate now taking place in produced and hurling them into
ment. I am talking about the ap¬
the Senate has been whether the the bottomless pit of war. To do
pearance throughout the world of
authorization should be reduced this we incurred the greatest debt
a
new
form of dictatorship and
5 or 10 or 15%. Congress, like the in history. More than $252 billion
about the responsibility of busi¬
country,
is convinced
that
we it still is. It is a mortgage on all
ness
and
political leaders with must continue to
future
support the eco¬ the
production
of
the
respect to it.
nomic
basis of western Europe. United States. The very existence

debt will be neither easy nor pop¬

with the wartime in¬

up

to

• •

•

and the pres¬

peace

of the

ervation

to

program

been

The
i'

Let

of

We must think of the longof the sort of

cern.

Depression Is Not Just Around

not

Effect

No, it is not the short-range
picture that should give us con¬

to
prosperity

of

and

National Debt

O'Mahoney

the

talking about

"every

Significance

here in the United States.
Sen. J. C.

near-future, but about
the long-range outlook for our
country and for the world. I am

minded."

by the Commit¬
country's economy,

the

(1)

develop¬

noted

are

about

so

exerted

namic economy.
"V

time like this, when na¬
defense and international

a

maintenance

the

to let.
things drift.
I am talking

much," the Committee
effort should be
keep down Federal
spending in other directions. Our
vast current budgets offer great
opportunities for economy if only
government and the public are so

mended

a

content

$3 billion could be effected.

aid take

normal activities of

must

we

that,

merely

tional

to

but

rather

assuming the continuation of
present governmental func¬
tions, annual savings of at least
"At

Pittsburgh.

The

estimated

was

ment is to devote every energy

our

economy,

It

leaders in business and in govern¬

lifted

provements in governmental ad¬
ministrative organ iz a t i o n and

,

not

have

from

situation.

that

pres-

sures

been

force''

inflation", to describe the present,

military aggression against us,

deliberate plan of has¬
tening by every means in- their
power
the
capitalistic
collapse
which they believe to be inevi¬
table.
Since
a
prosperous
free
sconomy in the United States is
die
essential key
to the whole
druggie for the maintenance of a
free world, the supreme duty of
our people and particularly of our

tionary

reports pointing the way to sub¬
stantial
economies
through im¬

Maurice and Laura Falk Founda¬
tion of

a

Russia is riot based upon any plan
of

but upon a

that the infla¬

all

made

from

"task

is not

the

from

living
signal

of

cost

even

the

of

been

grant

a

in¬

evidence

Commission

Hoover

York,
o n a

W. R. Burgess

debt

of

recognized

n a

national

of

includes

and

banking

Federal; budget

City

of

Committee

Committee's

the Com¬
slight de -,
President':/
crease
in the

the

the

the

surance,

1950

examines

proposals
submitted to Congress last Jan¬
uary, with a view to suggesting
where unnecessary spending
might be trimmed down. It cites

Chairman

that the recent

In its final summary,

headed by W.

The

In addition, we have fed
our surplus.'

///Donotmisunderstandthe title of this talk.. There is no depression just around the
On the contrary, all iindications point to a continued high level ox
prosperity for
several years to come. I shall undertake presently to make plain my reasons for
believing

corner.:

W V

VV vi V

UAl

QVA

VV«* V

I

dent, has coined a new word, "dis- i

_

(Continued

I

_

on page

34)

•

22

(1742)

THE

COMMERCIAL

&

FINANCIAL

CHRONICLE

Thursday, April 21,

t

Several

A Serious Situation

Canadian Securities

make reference to favorable statistics of the immediate past.

figures
the

covering

seller's

luted

the

market

barometer

a

past

that

did

not

register the present deteriorating
state of the economic

However

as

soon

statistics

as

are

available which relate unquestion¬

ably to the

Official

of the

period of the buy-'
er's market, there is likely to be
new

"The

circumstances.

new

The

changed

which

reference

made

is

to
now

t

During 1948 excep¬
favorable economic con¬

ditions

the

and

ly the

principal

clear

are

that

also

In

Canadian

exports

order

relieve

to

the

the

on

can

likely to

develop

the

as

economic trend becomes

high

are

took

high
and

.

of

s

pro¬
ac¬

thinking is in
reliance

a

hopes

for

achieved

v

upon

peoples

develop

what

be

can

by

and

their

skills.

own

re¬

need

for

The

private capital in

is

the

less-devel-^

areas
is recognized.
So :.is J
desirability of getting Ameri¬
business to participate in the '.,

oped
the

in
the

can

long-term program.
of

this

Just how all

be achieved

can

is still

in

;

action

unclear.

j

_

That is why the U. S. Associates
-

people-

tax increase this

a

the

: sending
American
technicians abroad to help foreign

feels that business

make

; *

;

can

contribution to the

a

-

and should V

ning and devising of this

-

plan¬

program.

Many businessmen dislike seeing
John

Taber

government

taxes—local, State and

programs

37% of the total spend¬
people. The impend¬
ing increase resulting from the Administration's
spending policy will hoist the tax take to over 40%."
—Representative John Taber.'
over

many-

able income of the American

Whatever the

ap¬

■during 1949 of grain, meat, for¬
estry products, and base-metals parent,. there would appear to be
will encounter increasingly com¬ only one solution—devaluation of
At
petitive conditions. Thus in com¬ sterling* to a realistic level.
a
level in the neighborhood of
parison with the trade figures of
1948, a year in which there ap¬ slightly above $3 the pound should
peared many exceptional non-re¬ again as on past occasions regain
as
an
interna¬
current export items, the present its respectability
tional currency. The urge to con¬
year's showing is likely to appear

on

Federal—amount to

present

more

spending,

count

year.
"Total

is

that

all-time

an

direction

sources

is reversed the American

natural

pound

pressure

bill

increasing. :I have
repeatedly
that
the
dangerous and unless it

trend is

source

now

hitting

warned

capable

of exchange controls gave

of dollar
meeting serious
buyers' resistance. It is now quite
revenue,

this

of

Some

government-to-government cred¬
its. In other official quarters there

momentum is

exercise
sterling
Already the Canadian trade fig4 a veneer of
respectability at its
rres for February released by the
overvalued level.
In the period
Dominion
Bureau
of
Statistics
ahead the artificiality of the $4.03
show
an
overall
trade
balance valuation
will be increasingly ap¬
with 11 countries of only $1.2 mil¬
parent. The millstone of the huge
lions as compared with $28.1 mil¬
total of blocked sterling balances
lions in February 1948 and $15.2 in will become
increasingly burden¬
January of this year. British ex¬ some; efforts to convert into hard
ports of automobiles, previous- currencies will be redoubled.
abrupt change of outlook.

an

that

unvarnished •' truth

peacetime

clearly exist.
tionally

the

that the present Administration

conditions
was

tion.

ommendations.

would provoke reconsideration of
the currency question in the light

atmosphere.

is

$216,000,000 out of the Treasury
over and above the
budget rec-

oft-

era

consti-

thus

The tact

studying specific 1

now

posal might be carried out in

which the majority presented a
report indicating a
savings of $25,000,000 below the oudget estimate.

Adamant unwillingness on the part of the Canadian and British
authorities even to consider currency adjustment as a desirable alter¬
native to Joss of foreign markets has been bolstered by the ability to

government\depart¬

are

ways in which the President

"Perhaps the outstanding example (of 'juggling
figures') is the agricultural appropriation bill, in

of
By WILLIAM J. McKAY

ments

1949

must somehow

not to say

if

details, here is

be corrected if

we

officials

government

charge
to

are;.

of

imperialism.

that

us

both

It

seems

extremes

-

be

can

avoided and that Point Four em¬
bodies a long-term objective of
real worth which

can best be real-,
ized through both government and
private effort.

survive—as it is well within

we are to

into

of giving too much support
to business abroad because of the

to prosper—

are

further

any

wary

situation which

a

go

touching business, while

.

into

vert

our

Foreign InvestmentsOne Key; to Peace

prices.

based

on

must

take

inferior.

rencies would

British competitive ability

is further

impaired by the throt¬
effects of socialization and

tling

nationalization of industry; Cana¬
dian freedom of action is likewise

impeded by the continuance of the
wartime

system of artificial
strictions and controls.
The

official

tenance

of

for

case

the

the

re¬

main¬

pound will
therefore
ring increasingly hol¬
low as the present economic trend
$4.03

exerts its inevitable influences.
year

ago

pressure

A

when there was strong
in the direction of a de¬

valuation

of

sterling it did not
require the cold logic of Sir Staf¬
ford Cripps to prove that condi¬
tions Jhen did not justify such a
In

move.

the

British

official

denial of intent to devalue issued
at

time

that

however
from

a

which
the

that

it
a

seller's to
would

mentioned

was

definite
a

change
buyer's market

cause

resistence

to

With

sterling devaluation

a

of

20% it is logical that the Canadian
dollar
would
find
its
historical
natural level midway between the

pound

and

the

U.

dollar.

S.

At

90 cents to the dollar the Canadian

dollar would

again merit absolute

international
confidence;
since
July 1946 when the parity of the
Dominion

raised to
par with the U. S. dollar the for¬
currency

eign investor,
the

as

behavior

New

York

funds,

at

official

was

demonstrated by

of

the

for

time

no

valuation.

in

market

Canadian

free

endorsed
As

in

the

remove

wartime

change

restrictions

imposed

cratic controls that

the
of

and

ex¬

bureau¬

lateral

world

and

multi¬

convertibility of currencies.

During

the

of

were

offerings

the

week

the

but

bonds

trade

bond

also

external

market

inactive.
in

ness

of

futures

in

but

Canadian

free

dollar; the

probable supply of free funds in

MUNICIPAL

connection with the imminent

re¬

demption of the Dominion 4V2S of
November 1959/49 will probably

CORPORATION

provide
Stocks

a

more

potent

factor.

with

John

A. E. AMES & CO.

the

Whitney Director

WALL STREET

N. Y.

Mr.
in

Whitney
the

is

New

a

general

York

Exchange firm of Riter

& Co.

Stock
He is

Director of United Cigar-Whelan

Stores

Corp. and of the Security
Banknote Co., and formerly was a

1-1045




<

the,

i

i

i

trade

the

as

and

is

better

no

than

to

way

of

to

ex¬

these

or¬

our'

discuss

efforts to bring about a free flow

private capital investment.
As exporters you are interested

in markets.

You

will

agree

with

me, I think, that if you are to
have markets, capital investment
must be back of those markets.

tant items
the

Code

the

on

of

Treatment

for

Foreign Investments.
The

procedure

will

be

agrement to the code
of

the

32

national

on

to

seek

code

to

the
and

respective governments for adop¬
tion in bilateral or limited multi¬
'

v
-

it

will

materialize

is

to

be

hoped
—

the

that

they

Economic

Recovery Program will fade out of
the

picture in

1952.

Before

this
31

other

ing

If

rather

than permanent.

the other

hand, if

an

inter¬

being

given

simul¬

nations, that it contains
which

business

of

in when

move

in

be

Adoption of the

ICC

Code

of

Fair

measures

Treatment

a big contribution here.
(2) By sending U. S. technicians

abroad

on

carefully selected proj¬

ects.

,

,

.

(3) By using government loans
to develop basic resources in such
a
way as to increase the opportu¬
nities

for private investment
borrowing countries.

the
;

in for¬

eign countries.

;

(5) By selling some form of in¬
to U.

surance

the

S. business to

noncommercial

risks

cover

pri¬

on

vate^ foreign investments, chiefly
in the field of currency
This report

converti¬

a

po¬

the Mar¬

dealing with the im-'

plementation

Point

of

will

Four

be made public next month.
•.
>;$ /'
In
devoting so much time to

foreign investments I have ne¬
glected to mention some 15 to 18
other

fields

which also
of

study

of

economic

come

by

policy

within the scope

the

International

Chamber and the U. S. Associates.

in

But

opinion

my

any

discus¬

sion of foreign investments is put¬

ting

first

base

of

things

the

is

the

things that

can

first.

good

It

:

come.

and customers are essential to

the

works

must

concluded

be

What does

Now
the

What else does

has

another study

un¬

it

abroad?

goes

and

it

It creates customers,

Our continuing
perity is essential to world

in addition to taking par'
ICC program, the U. S

Associates

dollar do when

a

abroad?

prosperity.

'

Implementation of Point Four

in

in

(4) By increasing the produc¬

tion of strategic materials

in

a

our

pros¬
peace.

dollar do when

It brings health,

skills,

With

and hope to people.
basis of security they can

a

find socially useful

derway regarding the implemen¬

go on and

tation of Point Four of President

poses

Truman's

chologists tell us that social use¬
fulness, the sense of producing
needed goods is one of the real

Inaugural

Point Four

policy

we

Atldress.

have

an

Ir

economic

in the

making of interna¬
importance, but one which

tional
cannot

properly come within the
of an international organi¬

scope

zation since it is of purely
can

Ameri¬

origin.

You
dent

will recall that the

said, "We

bold

new

benefits
and

vances

must

program

of

our

Presi¬

embark

or

making

for

scientific ad¬

industrial

progress

for

their

lives—and

A dollar abroad is

democracy in
containing

action.

It goes beyond
communism.
It is
an

against

communism.

that in

of the cold
more

slack, then the Mar- world

and hieher production ex's

as

dev^oped
well.
,

areas

of

the
Jt.

-U.

must—

relatively short time our
budget,
our
expensive

a

defense

turned to

We, at U. S. Associates, feel tha'
opportunities for increased invest¬

offensive

We

this year—get more of our dollars
abroad.
If we do, we may find

growth of under-developed

'

psy¬

ment.

measures

areas

pur¬

human instincts that needs fulfill¬

available for the improvement and

in

to

to

is to

this year.

foreign investments

ready

this

submit

governmenl
agencies. We shall

is

bus-'

a

attractive to private invest¬

more

■goes

take up the

are

(1) By working to create

shall Plan goes out of the picture
treaties to put foreign investments

the

barriers

to
foreign invest¬
they don't, much of the
accomplishment of the Marshall

On

of our

use in speed¬
the flow of capital invest¬
And it goes without saying

up

sition

the

temporary

to

ob¬

iness "climate" in other countries

delegation
one

proper

that if business

a

be

be

provisions

ment.

that

a

will

Code

those

substantial number of gov¬
ernments should have let down

Plan

Quebec,

Truman's

bility.

taneously to the governments of

of

Next, these national Com¬
mittees will take the code to their

and

ins

be able to point out to them that

ICC.

lateral treaties.

American

will

acts

officials

the part

committees

the

lead to the achieve¬

President

jective:

feels will be of most

agenda will be

Fair

first

of

ment

sub¬

interest investments

returns from

Exchange.

1

for

means

will make

is

private and public loans.

operation

ganizations
of

fixed

Governor of the New York Curb

<

history.

this Code

best

ment

i

real

a

mitted it will have been in prepa¬
ration for two years, and will have

national climate prevails in which

i

the time

When

the

ments.

a

NY

for

By

■

been

of

There

plain

Inc.

partner

WORTH 4-2400

initiative

Capital

Whitney has been elected
member of the Board of Direc¬
tors of Bendix Home
a

Appliances,

YORK 5,

the

Toward Free Flow of Private

time

John

INCORPORATED

NEW

the belief that Americans-

The

also attracted investor attention.

TWO

own

importance of this action
exception of the
golds were mostly dull and ne¬ can be easily understood when one
looks
at
the deadline of the Eco¬
glected.
The
senior
golds con¬
tinued in steady demand and min¬ nomic Recovery Program.
ing issues with uranium prospects
According to present plans —

CANADIAN STOCKS

I

of its

program

in

enterprises as well as public util-1
insuring peace and (d) i t i e s
or
enterprises connected
explaining the way in which a.
therewith; (2) Equity investments
private
competitive
enterprise in
company
shares and similar
system fosters and safeguards all
holdings; (3) Credits and advances
of our freedoms.
A
to private and
public borrowers5

re¬

markably little sympathetic effect
the

a

multilateral

means

the

New York free market has had
on

has

fort will come next June when it
holds its 12th Biennial Congress in
Quebec.
One of the most impor¬

demand

creative force

ICC, however, the American;

The ICC contribution to this ef¬

So far the weak¬

sterling

of.

feel may

we

ment.

questions/ shall Plan will have
program

was

by
their absence. Both the corporatearbitrage rate and free funds were

slightly easier.

the

Internal

conspicuous

were

above

and

been through several drafts. In¬
support of (a) the flow of private
vestments covered by the code in¬
capital
investments;
(b)
world clude the
following types: (1) Di¬
trade as a two-way
street—im-i rect
investments in real property
ports as well as exports;,(c) the
natural resources, commercial, fi¬
necessity
of
having
expanding nancial, agricultural or industrial

constitute

now

greatest obstacle in the path
freer

section

PROVINCIAL

the

the

the currency

of

steady

GOVERNMENT

Over

economic

case

at a natural
level, it would then be possible to

absorption of British exports

CANADIAN BONDS

(Continued from page 18)
national

of Britain with the official valua¬

tion

chosen five

study and recommendation which

group

alarmingly

Recommendations
We have

apparently harder cur¬
disappear, the Brit¬
nor British costs
can
be pared to any appreciable ish competitive position in world
degree. Indeed the gradual elimi¬ markets would be immeasurably
nation of the wartime food sub¬ improved, and foreign willingness
sidies in both countries is tending to invest freely in the Sterling
to offset the natural decline in the area, although entirely lacking at
the $4.03 level, could become a
cost-of-living level caused by the
world-wide trend towards lower potent factor at $3.25.
almost

Neither Canadian

do.

power to

It
to

is

give

either

an

world—or

it

we

now

that

be

uses.

we

seek

best capacities to the

our

building of
that

war—can

productive

economically strong
is

begin

never.

an

It

is

now

earnest support

Volume

169

Number 4796

of the United Nations

THE

by creating

lost.
is

that

now

pledge
go
the long road,
struggles and dis¬

ourselves- to

whatever

its

couragements

Wallace F. Bennett
ers'

that leads

be,

may

1

wherever he may be.

Only by thinking together,
working together, and taking the
time

to

understand

efforts,

can we arrive at and

port

a

consistent

and

action

achieve

the

sup¬

body of policy

which
peace

will

at

all

we

of

the

Western

New

fork

desire

Bond Club of Phila.

Committees for 1949

tries

the

pointment

Bond

of

club

the

of

all the
that

State,
Inc., the Man¬
ufacturers As¬

sociation

of
ap¬

committees

Wallace

Bennett

F.

Buffalo

the

Elective

^

Committee:

Raymund

J.

Kerner, Rambo, Close & Kerner
Inc., Chairman; Arthur S.
Burgess, Jr., Biddle, Whelen &
Co.; C. Newbold Taylor, W. H.
Newbold's Son & Co.; Raymond L.
Talcott, Drexel & Co.; Osborne R.
Roberts, Schmidt, Poole & Co.

Publicity

Committee:

R.

Con-

Committee

of

industry,

that

Biddle

& Co.; Frank L.
Jr.,
Newburger
&
Co.; Raymond H. Gage, Jr., Paine,
Webber, Jackson & Curtis.

Attendance

Committee:

Harry

B. Snyder, Yarnall & Co., Chair¬
John K. Acuff, Brooke &
Co.; John C. Bogan, Jr., Sheri¬
man;

dan

Bogan Paul & Co., Inc.; John
H. Derickson, Jr., E. H. Rollins &
Sons, Inc.; John E. Fricke. Thayer,
Baker

&

Co.; Freeman G. Grant,
Dolphin & Co.; George L. Morris,
Hornblower & Weeks; Samuel K.
Phillips, Jr., S. K. Phillips & Co.;
Lawrence
M.
Stevens, Graham,
Parsons & Co.

Committee

Arrangements:

on

Edward M. Fitch, Jr., A. W. Benkert & Co., Inc., Chairman; Wil¬
liam
&

H.

Co.;

Arnold, Eastman, Dillon
William

D.
Buzby, Jr.,
Sherrerd;
L.
Paul
Close. Rambo,
Close & Kerner,
Inc.; Paul Denckla, Stone & Web¬
Butcher

ster

&

Securities

Corp.; Russell M.
Jr., Stroud & Co.. Inc.;
Raymond
H.
Gage,
Jr., Paine,
Ergood,

Webber, Jackson & Curtis; Jacob
Halzbaur, Jr., Halsey, Stuart &
Co., Inc.; Arthur Horton, Periington, Colket & Co.; Samuel K.
Phillips, S. K. Phillips & Co. \ Outing
Committee:
Gordon

Crouter,
Crouter

DeHaven & Townsend,
Bodine, Chairman.

&

f

Anthony J.

associated

Miller has become

with

the

Trust

Co.

of

Georgia in the office of the New
York

representative,
15
Broad
Street, New York City. Mr. Miller

was

formerly

an

officer of

W. K.

Morton & Co., Inc.

tion

outing of the

Bond

troit will be held

17,

at

the

on

Grosse

Club

of

constantly

there,

Golf

When

(Special

to

The

CARMEL,
Yates

has

Financial

CALIF.—George
formed

Yates & Co. to engage

George

in

ties business.




a

V.
V.

securi¬

in

their

t

-

,

who

women

lives

work

No

it

not

As

ex¬

one

basis

tor

elections,

other

promises.

product

are

of

It is futile for either individuals

nations to expect to find secur¬

or

ity in laws, money, contracts, po¬
power or atomic weapons,

litical

he

thought of security
a Maginot Line,"

once

wall

a

as

said.

Bennett

fort;

or

"Men

observed.

like

that

"Security is not a law. We once
had a law relating our currency
to gold, and men thought that was
a

foundation

sound

But the law was

for

security.

repealed.

.

/

security is money.
that money is, not a

say

but only a symbol
be
manipulated
and
Inflation, which weak¬

thing,
can

destroy the value of

is to much
be denied.

factor in

a

money,

lives to

our

It proves that

security

is not money."
Still

others,

Mr.

Bennett

promise that security
ten

into

tract

is

a

contract.

only

an

But

a

The

necessary

(

own

added,

be¬

asking,

"Who among us can even guaran¬
tee that we will be alive tomor¬
You

cannot

contract

for

security."
The

NAM

conference

President

that in

a

told

world

the

"rav¬

in

whether

which

us

trie

necessary

seems

to

be

.

.

.

from

maturities

institutions

that

the

.

eligibles

have

are

either

taken

stepped aside temporarily from the longer bank

issues

changes in the eligibility
The longer maturities
the defensive for the time

to he

appear

on

being until something definite is done

and

of

reports that

the

restricted

.

.

to confirm

issues

will

be

deny

or

rumors
available to

made

the deposit hanks.

spiritually secure/'

UNCERTAINTY NOURISHED

$238,000 Belgium Bonds

It could be that the authorities will just let these

j

and do

Called foi

through the sinking fund,
$238,000 principal amount of these
bonc}s have been drawn by lot for
redemption on June 1, 1949 at
1071/2%. Subject to the provisions
Executive

Order

No

8389.

be

MICH

—

commencing

one

Hours will be 9

The

p.m.,

except

hours

will

be

to

restricted

issues

that

bonds

to 2:15

because

To

.

.

when

there will

well

institutions, dealers and

bought by

possibilities of

quick

price appreciation.

or

if there is

no

certain of the restricted bonds,
.

.

.

...

believe

until

Chronicle)

that

2s.

.

.

.

obligations

four-to-seven-year
Loans

are

still

on

will

the skids and

this

be

used

means

for

the

that bank

seeking investment will continue to be sizable but most of
probably be put into the near-term maturities at least

will

rumors

way or

about

the other.

The

west

BOSTON,

many years.

be
the

■

financing continues to be in the limelight, with some money
looking for short securities to be used to take care
of these maturities.
On the other hand, there are many who now

these

Wainwright & Co. for

to
of

'

the earlier restricted

June

funds

Mr. Robertson

'

.

JUNE FINANCING IN LIMELIGHT

Robertson, Jr.
Opens Office in Boston

formerly associated with H. C.

r'.

,

probably be less demand for these obligations.

a.m.

MASS.—Kenneth D.
Robertson, Jr. has opened offices
at 60 State Street to engage in a

•'

change in the eligibility of all

Kenneth

is

banks, the

.

be sure, it is an "iffy" proposition because

June

securities business.

.

going

are

traders

25,

Starting May 28, the Detroit
Exchange will adopt a fiveday week for the Summer months.

Financial

a

For the time being it seems as though

Ex¬

Stock

The

in

bonds,

•

market followers

to

sympathetic trend with

move

...

non-banking institutions shifting from the eli¬
gible 2V4S and 2V2S into the shortest restricted issues.
The 2*/2S
due 1962/67 are also being used for swaps from the
longest eligible

tions.

(Special

commercial

doubt

become

.

Change of time is due to daylight
saving time becoming effective in
New York Stock Exchange opera¬

„

to

bonds

be sizable with many

April

11:15

are

for purchase by

.

Saturdays,
9

restricted

especially the 2Vas due 1959/62 and the
eligible in 1952, are in the favored spot
because of rumors that eligibility of these securities will be
changed
soon with the deposit banks to be allowed to
purchase these ineligi¬
ble obligations.
Demand for the 214s has been and continues to
other

Trading

a:m.

the

of

RESTRICTED IN FAVORED SPOT

.

1949.

no

all

or

as

hour earlier,

Monday,

If prices of the longer eligible taxables

eligible

issue.. /;•"

the Detroit Stock

change will start

...

down, because certain

made

of the taxable bonds.

prices

After Aoril 25
on

be

to

partially-exempts will

Open Hour Earlier

DETROIT,

knocked

are

Detroit Stock Exchange

sessions

.

some

of the taxables.

amended, the drawn oonds will be
paid at the office of J. P. Morgan
& Co. Incorporated, or at the prin¬
cipal office of Guaranty Trust
Company of New York.

To

is

.

.

question about the future price trend of the
taxables, this has an influence upon the partially-exempts, be¬
cause these bonds have a
price and yield relationship with those

that,

of

.

.

If there

1, 1955,

<

continue

rumors

a

.

sncj

i

j

nothing to bring them to

head, because they have a fairly
effective market control measure in these
"Open Mouth Operations"
which has been used rather
successfully in the past.
By creating
uncertainty about the longer eligible taxables, which the powers that
be do not have too
many of, they can for a time at least keep these
issues from getting out of hand.

Redemption

was

wonder that the basic need

now

:

.

intermediate

| of the bank bonds

|

employee working for

an

feel

can

or

and

buying

.some

.

aged by terror and confusion" it
no

market
;

,

pending clarification of rumors about
j: status of the restricted obligations.

atmosphere already ex ¬
our plants—the atmosphere

ists in

short

getting

\ profits

we must
policies to de¬

con¬

agareement

he

men,

can

said,
be writ¬

divided into three parts

,

to¬

day think security is an airplane,
a guided missile, an atomic bomb.
But security is not physical.

amounts, the government securities

<

classification puts together all of the restricted
bonds, from the 2*4.5including the 2V2S due 12/15/1967/72.
,

J. P.

candidates,
Security is not
political power

I

the

or

made eligible in limited

due 1959/62 up to and

spiritual

t;

other

...

,,

security;

our

termine

...

,.

But tomorrow there

else.

other

the

,

definition

vicious

financing.

these stories that either specific issues

j
The short- and intermediate-term eligibles, those up to and
including the 1952/54s, constitute one segment of the list.
Another
group is the long eligibles, both taxables and
partially-exempts, which
takes in all the obligations
maturing from 1952/54 on.
The other

and

that it residesm P°~

is

result of

a

MARKET MOVEMENTS

Morgan & Co. Incorporated
Guaranty Trust Company of
New York, as Sinking Fund Adlitical
power,^ he said. The can~ ; ministrators, are notifying holddidate says
vote for me and I: ers!
of Kingdom of Belgium Exwill see that you are taken
care; temal Loan 30-Yea.i Sinking Fund
of, no matter how it harts some-. 7^ Gold Bonds due June
•

.

.

,

The most

security

•

j entiro group of restricted bonds will be

that
understand the spirtonly

to

come

ual

desert it or

ever

is

examine

its power to provide secur¬

ity for him will
oppose it."

at least the time of the June

a

who

one

of

part

a

.

'

holders, made jittery byt
/Open Mouth Operations," decided to take profits or moved to thet
sidelines pending developments which
are expected to be clarified
by

,

done,^ continued

best.

economy.

.

the

he

.

Rumors and reports that the
2l4s due 1959/62 will be made eligi¬
by commercial banks in the near future seems to
have put a
temporary roof on the longer eligible taxables and partially-exempts.
■./These securities came down from their
highs of
Ihe year, under some
selling pressure as

production

people,"

our

wavering

a

.

to be in the cards to help cushion

seems

ble for purchase

difficult

is

"It

City, business leaders-will
be
"truly
demonstrating
the
American
individual
enterprise
feels

of

.

.

RUMORS AND PROFIT-TAKING

since security, after
spiritual experience.
If
we are to provide it, we must have
the capacity for spiritual leader¬
ship that also is constantly ex¬
panding.
\

all,

we

is

maintain
of

...

that prices

.

always keep pace with
expanding number and de¬

more

,

„

Lake

senses

be

with

and support

"The responsibility for spiritual
leadership offers security and is

do to maintain their

system at its
himself

to

seems

in the money markets

I

4t-,_

.

mands

carefully and
have our plants

this

through minor trading flurries.

<

put the

Operations" are very much in the
forefront
reports of what will be done to
change the status of
the restricted
bonds being the focal point of attack at
this time.
... Business remains on the defensive and
this leads many money
market operators to look for
the lapsing of legislation on June 30
that upped reserves of
the member banks.
Continued ease

industry

own

some,

Action of the author!-

.

plained.

Bennett, who also is President
paint and varnish manu¬
facturing firm of Bennett's. Sail

row?

Chronicle)

to

the

meet

the

of

tween

Geo. V. Yates Co. Or>er»s

in

best

will

the

Mr.

and

Committee Chairman.

demon¬

answer

we

that

physical productivity."

ens or

Country Club. Frank P. Meyer, of
First of Michigan
Corp., is the

women

the

management,
to
rate
and
variety

security in action fov

we

as

,

.

"Open Mouth

agam

•

plan

and

men

that

Friday, June
lie

can

to

demonstrate
the

-hanged.

De¬

clearly

can

must

creating

bond market.

pressure on the money markets has tended to

...

"The physical answer lies in the
ability of our plants, under our

the leaders

control," he said.

and

"We

valid

DETROIT, MICH.—The annual

American

in everything else in life,
said, the question of security
answers: one physical and
the other spiritual.

is increased government interven¬

forgetting

Hold Annual Outing

are

affirmative

an

"Others

Detroit Bond Club to

who

question

"Men

Trust Go. of Georgia

is

As

challenge of the alternative, which

Mr.

Anthony J. Miller Willi

we,

.

None¬
of Treasury obligations
direction, although the technical posi¬
tion of the market is considered
strong.
Buying opportunities
are
being watched for by many institutions that
still have sizable
funds to put to work.

has two

provide security is uppermost
minds of many men and
women in American industry, the
NAM President pointed out.

strate

Newburger,

and

men

ours

A;

NAM.-

the

and

Falls

the

&

Miller, E. W. & R. C. Miller
Co., Chairman; Carl Necker,

Niagara

question

"Only if

keeping

in

theless, the feeling

can

i

.

Will not move too far in
either

pre¬

They cannot be expected to trust
it except on the basis of their own
j experience with it."

of whether the
free individual enterprise system
in

,

government bond market

he

The

over

Moncure

the

Committee,

ties

NAM'S

is to

traditional

Satisfaction

of

Jamest own,

.

for 1949-50 as follows:

the

.

tant developments in
caution in the government

system, not
only theoretically or historically,
but the system in which they can
find the greatest happiness and

New

York

Club

announced

longer maturities.

j
"In order to do this," Mr. Benpett continued, "we must prove to

Indus¬

ned

that

objective

volume is
has been a lowering of
quotations of the*
The next month will, no
doubt, bring impor~r
the money markets and this is
.

.

was

by the Associ-

of

.

way of life by strengthening free
individual enterprise,

The

sponsored

-

the

serve

Confer¬

ence.

explained

war

hot.heavy, although there

thing in the minds of most people.

Indus*-

'rial

co

PHILADELPHIA, PA.—Loring
Dam, of Eastman, Dillion & Co..

loan calls have again
temporarily tightened the moneymarkets and this has caused some
selling of Treasury obligations,
especially the shorts.
Activity has been slowed and

for security is the most important

He

Governments

on

By JOHN T. CHIPPENDALE, JR.

Heavy

power.

fundamental

23

Says

challenge of increased government intervention and control
can be met
by leaders of industry only if they demonstrate "security
in action'
to their employees, Wallace F.
Bennett, President of the
National Association of
Manufacturers, declared in Buffalo on April 5.

meeting

President

for their physical productivity.

as

Reporter

carefully for work¬

as

The

!ing

las

which will restore world
trade to the benefit of us all.

Philadelphia,

security

plan

to

security is not product of political

,

spoke
at a
dinner
meet-

and

.

.

.

employers

urges

(1743)

Our

Mr. Bennett

omer's

eacn

economic

1

v

to prudent and creative

use of our
material and human resources for
the
benefit
of; the
individual,

CHRONICLE

Security

must

we

&. FINANCIAL

NAM President Urges
Industry Demonstrate
Interest in Employees'

economically sound members—01
the
opportunity may be forever
It

COMMERCIAL

2s

the

due

been

cleared

up

one

-

1952/54

which

banks,

bonds have

restricted

...

have

have been under accumulation by

large

of

amounts

mid¬

funds that must he

'

put to work.
the

.

.

.

Switches from the bank 2p£s due 9/15/67/72 into

214s due 6/15/62/67 helped to knock the longest bank-eligi¬

ble out of its high and mighty

in

evidence

in

the

taxable

Profit-taking has been
1956/58 and the 2Hs due

position..

214>s

due

.

.

1956/59 with the proceeds going temporarily into shorts.

,

COMMERCIAL & FINANCIAL

THE

(1744)

24

demand

heating

coldest

the

on

75% of the annual capacity
liius provided would not be used
during the year by the spaceheating
customers. This means
that either the space-heating cus¬
tomers must pay in rates for their
day,

gas

There

the

has

considerable

been

over

operating performance of the Gulf, Mobile &
The uninspiring background of the properties making up the

continued

Ohio.

good

showing particularly commendable. The present
system represents the consolidation through lease and merger of
four relatively small roads, three of which had been in bankruptcy
or receivership.
The only one of the constituent properties that did
not succumb to financial difficulties during the depression was the
system makes the

old Gulf,

Despite this background, the various
an important and highly efficient

Mobile & Northern.
have been

elements

welded

into

railroad property.

largely end-to-end, re¬
sulted in the creation of a new mid-continent through north-south
route from Chicago to the Gulf of Mexico at Mobile and New Orleans.
The last segment, the old Alton, was acquired just about two years
ago. One of the major benefits has been the increase in revenue and
the reduction in costs incident to the substantial increase in the
The

various

consolidations, which

length of haul over system
administrative

lines.

were

There have naturally also beer,
through consolidation.

economies

maintenance

and

amortization

struction

comment recently

favorable

Finally, and perhaps most important, there has been the sharp im¬
provement in operations through dieselization.
•
As of the end of last year approximately 97% of freight tonmiles and virtually all of the passenger mileage was being operated
with diesels or motor cars.
More than 75% of yard switching was
being handled by diesels. With delivery of additional units now or
order, virtually all services will be fully dieselized. The benefits
from this diesel program are best illustrated by the ability of the

sufficient

amount

an

clude

Gulf, Mobile & Ohio

in¬

to

the

of

capacity,

heating season.
The Peoples Gas Company has
in excess of 900,000 customers in
the city of

Chicago. Of this num¬
ber, somewhat less than 50,000 use
gas for space heating. To further
illustrate, approximately 470,000
Chicago families live in one, two
and three family dwellings. We
thus have an enormous potential
space-heating

market
but
one
cannot
be
economically

by
alone.

supplied
pacity

Our
if

that

indicate

saturate the

line ca¬
computations

pipe

new

to

were

we

produced

space-heating load in

containing

many con¬

factor.

Our

present

space

is 7 cents per therm.

ers

Over and

sis would be the increments to be

products

that

order

these

be

recovered, the
producers are required to erect
gasoline extraction plants, which,
oy the way, are not inexpensive.
A plant capable of handling 50.000,000 cubic feet per day costs
approximately,
$1,500,000.
Be¬
cause of the necessity of regularly
operating such extraction plants
X)

load

heating rate to domestic consum-'

propane,

butane,

as

In

may

provide for the amortization of

added

the

by

distributing

suming public.
Need of Adequate Rate Policy

These problems are accentuated
where there are a number of util¬

ity

company customers each

served

by the

where

each

of

these

wishes to share in
Federal

asked

by the producer not
only to agree to pay for minimum
quantities of gas but to agree to
penalty provisions pursuant to
which the dedicated gas reserves
will be lost to the purchaser pipe
line company unless the same or
other minimum quantities are ac¬

tually taken each day.
This type
of a request may be absolutely
unacceptible because it means, of

commitments

the pipe line
to

exact

to pay

company

comparable

Power

companies

proposed in¬

a

cremental additional

not

being

pipe line and

same

the investment represented there¬

been

com¬

pany for transporting the gas from
the point of delivery to the con¬

by, the purchaser pipe line com¬
panies have in certain instances

When

the cost of
lines, and a

which

gasoline of great value to the

course, that
is required

consider

gas

per therm, an aggregate of 6.25
cents per therm for gas purchased
on the basis of the space
heating

above the price to be paid for ad¬
ditional natural gas on such a ba¬

densates such

Chicago, it would be necessary to
build
10
additional
pipe lines.
you

pro¬

to the surface

comes

in wet form

producers.

complicated by the fact that the
gas constituting the unneeded 75%
will not be available during the

which

Much of the natural
is

and

or

the

Producer-Distributor Relationships

pipe

the 75% of the
gas not used by the space-heating
customers must be profitably solo
for other purposes. The problem
of such other sales is obviously
line

of

interests

necessary

ducers.

con¬

entire

the

of

cost

Thursday, April 21, 1949

CHRONICLE

supply.

The

Commission

has

determined what its rate pol¬

icy will be in such circumstances.
Traditional concepts of rate prin¬

ciples
that

might

costs

result

the

in

view

resulting from the in¬

cremental

supply should be re¬
flected in increased average rates
for the

entire supply for all cus¬

rather

tomers
block

than

which

rates

permit

to

the

reflect

higher incremental cost in higher
rates

applicable

incremental

illustrate:

To

sales

to

of

the

supply.

and to take

.

If

Companies A,
from the distributing utility pur¬
speeds. Last these 10 additional
minimum
would
be one billion chaser at the other end of the B, and C are taking gas from the
year the company handled 54,855 gross ton-miles per freight train
X pipe line on the basis of rates
The utility company
hour, compared with 48.586 a year earlier. Comparable figures for dollars, it is perfectly obvious that pipe line.
now

company

to handle heavy tonnage trains at high

38,462 in 1947.

all Class I carriers were 39,905 in 1948 and

the

;

which
is a highly important factor under present conditions. It affords a
cushion against any further increase in unit expenses and the inevit¬
Gulf, Mobile & Ohio's transportation costs are quite low,

able eventual decline in traffic.
ratio

Last

the road's transportation

year

basis.
and in 1947 it

32.1% and in 1947 it had been 32.7% on a pro forma

was

The ratio for all Class I carriers was 39.5%

last year

Gulf's
ratio was among the lowest for any of the major Class I carriers.
Only a few of the heavy duty coal roads and Kansas City Southern
Aside from being well below the industry average,

40.0%.

was

of transportation expenses to gross.

have had lower ratios

Despite the higher
freight rates and the fact that passenger business held up well, there
was a -modest decline in gross revenues for the first two months—
from $12,642,254 to $12,333,354.
Maintenance outlays were reduced
just about in line with the drop in gross. Transportation costs, how¬
ever, were more rigidly controlled. The transportation ratio was cut
from 34.3% to 33.6%.
It is this ability to keep the transportation
expenses under
strict control that makes many rail analysts so
optimistic over the outlook for the road and its securities.
the face of

In

in revenues the company re¬

the modest decline

pects, it seems likely that earnings again this year will be in the
neighborhood of $5.00 a common share. Maintenance of a $0.50 an¬
nual dividend distribution also appears likely. Equipment and serial
bond
maturities
will .continue to dictate
conservative financial

the
to

expected

during the non-heating season.
Solving The Problem

The

problem must be solved, in

addition

the

to

further

pipe

line

be

must

given

by

capacity,
procedures:

Serious

First:

of

construction

three concomitant

consideration

operating

the

by

utilities and the regulatory agen¬
cies' to the possible increase of the
rate for space

heating in order tc
integrity of
utility companies, to further the
welfare of the consuming public,
and to* prevent the untoward ex¬
haustion of natural gas because of
rates which
are
uneconomically
protect the financial

low.

the

When

current

high cost
of incremental flow gas is con¬
sidered, the basis for this adjust¬
ment

policies.

addi¬

pay rates for the gas needed for
heating in an amount sufficient
'o amortize any such gigantic in¬
vestment and it seems highly im¬
probable that a market could be
found for any great portion of the

year ago.

ported net income of $625,097 for the two months through February
1949 compared with $535,604 a year earlier. Common share earnings
were up from $0.33 to $0.42.
For the full year 1948 common share
earnings were $4.92 and in 1947 they had been $2.66. With the start
that has been made this year, and on current general traffic pros¬

be

not

of

Certainly

lines.

pipe

oublic -could

Traffic

The favorable showing has continued in the current year.
has been running below the level of a

construction

mere

tional

gas

•

problem cannot be solved by

the

in

becomes

rates

quite

ap¬

parent.
Second:

The Gas

Industry—1949

(Continued from page 19)

costs of competing
oil and reasonably good

unregulated
fuels

—

grades of coal.
the

In

costs

city of Chicago it
approximately $119.00

year

to

with

gas,

heat

six-room

a

while

with

No.

now

per

house
3

fuel

oil it would cost $185.00 and with

reasonably good

a

grade of

coal

$142.00. Under these circumstances
you can readily imagine that the
daily life of the officials of the
Gas Company is not a happy one.
There must be 25,000 citizens of
the city of Chicago, each of whom
states he is

an

intimate friend of

the Mayor, or a prominent Judge,

the

or

Chairman

of

Illinois

the

Commerce Commission—and each
whom

of

has

heart

trouble

and

petitive fuels, being unregulated,
have
increased in price
in ac¬
cordance with general economic
conditions

to

point where gas
is
by no means a "luxury" in
terms of price.
This anomaly not
only encourages an unwise overexpansion in good times of the
natural gas business by efforts to
meet the demand- of the public
for gas for space heating, but also
carries
best
be

with

risk

the

of

the

that

public

the
may

placed in jeopardy because of

the

characteristic low load factor

of the

space-heating requirements.

The

American

now

engaged in

the

Gas Association

economic

parity

in

religiously held the line and daily

on,

a

of

between
*

'

is

careful study of

effect

cost

ether fuels.

subjected to the unpleasant
experience
of
declining to do
business with the American pub¬
lic, which public is the public

it

interests

must have gas, yesterday, to heat
his
home.
We
have, however,
are

a

*o

the

system.

This

An Aggravated Demand
/

the

*

The

anomaly to which I re¬
ferred, is the fact that gas, the
superior fuel, is now in aggravated
demand since its price has been

year.

enly

In

25%

of

our

Chicago climate

this

questions raised incident to
interpretation of the Natural
and

aggregate

-

an¬

nual amount is

the

jurisdiction and
of the Federal Power Com¬

mission,

that

the

have

serves

luctant

of

gas

re¬

timid

and

re¬

owners

been

to

dispose by contract of
natural gas for fear of price regu¬
lation even of arm's length trans¬
actions under which gas is sold by
the producers in the field to pipe
line companies in which they have
no interest.
Certain of the major
oil

companies

retain their
or

have

have

reserves

returned

formation

after

preferred
for later

the

gas

to
use

to the

must




size

to

meet

a

given

space-

vored

nation"

clauses

designed

to

and

other

protect

the

MCF

The tremendous present interest

industry and the current con¬
of numerous large pipe
lines to the consuming markets
has, of course, resulted in rapidly
mounting prices being asked by
the producers. It wasn't so very
long
ago
when
gas
could
be
bought in the field for relatively
gas

struction

cents

thousand

a

cubic

cents

in

this

about

area

2.5

therm (25 cents per
This price, being on a

per

100%

load

furnish

factor

basis, does not
of the problem

measure

a

respectively, of
If com¬

the present low cost gas.
cost

gas

is taking 50% of the low
dedicated 15 years ago

only wants 25% of the new
high cost gas, it is obvious that the
public in the community served

by company A would be paying
part of the cost of the new high
priced gas going to companies B
and C if the overall price of the
a

the new gas was sold

old gas and
to

A at an average rate.
subsidy of the communities

company

This

companies B and C can
extremely prejudicial to the
public relying upon company A.
It is hoped that the regulatory
authorities
will
recognize the

served by
be

equity in these situations and per¬
that each of the

mit block rates so

customers will pay only
high price for the new

utility
the

new

gas

delivered to it.
now
to the
steps
by the Peoples Gas

Returning

taken

being

an
operating utility
consuming market, to

Company,

serving

a

problems here indicated,
I would like to quote a significant
statement recently made by Com¬
missioner Leland Olds of the Fed¬
eral Power Commission in con
nection with the order entered in.
solve the

the

of

matter

application
Convenience

Commissioner

Certificate

a

and

emphasized the need for better.
planning in the natural gas indus¬
try
to
obtain
"the
optimum;

light

whole." He added:

of

($3.80

the

by

of

factor

space

25%.

current

pipe

line

costs,

per
thousand
capacity and 12.5
MCF commodity charge)
the average price on a 100% load

feet

a

the

1.25

capacity charge ele¬

total of 2.5 cents.

four
per

factor

On

a

25%

basis ((the

element

and

hence

is

capacity
multiplied by

becomes

5

cents

therm, the commodity charge

element

as

a.

/.'-'The

ment, and 1.25 cents as the com¬
modity charge element, per therm,
or

regions

of

requirements of the Appalachian
area are producing a demand for

factor basis would consist of
as

requirements

month

cents per

cents

of trans¬

use

portation, storage, and gas manu¬
facturing facilities to meet the*

of

per

cubic

of

The,
statement

Necessity.
this

in

coordination in the

load

Eastern

Texas

a

for

heating
Assuming a
reasonable combination of capac-^
ity and commodity charges in the

presented

percentage

same

taking,

now

pany A

in the development of the natural

the

high cost gas as they

new

and

by law or made
prohibitive by the subsequent im¬
position of taxes.

companies A, B, and C

if

the

gas.
The
problem arises
acci¬

it would be merely

each wanted

later

forbidden

pipe line

same

additional

the

of

because

are

com¬

obtain

delivered cost of 25 cents per

utilities must be protected against
the enforcement of engagements

devices

com¬

a

to

procured and

additional gas to be

transported by the

regulatory
authority,
that
no
utility can contract contrary to
the public interest and that all

in

monopoly, whereas the

wish

now

of

is

only under short-term
containing
"most
fa¬

each

dental

charge

sold

panies

utility must of necessity be sub¬
ject to the proper exercise of

have

contracts

ing 11V2 cents per MCF for that
delivery, a very serious

seriousness of the

the theory that the Gas Company

gaso¬

by the Fed¬

gas upon

should be observed in passing that
all contracts made by a public-

load

extracting

years ago

at

that the gas so taken
either be sold or stored. It

means

line and other condensates. Others

a

space-heating

some

Power Commission and pay¬

eral

This

actually used dur¬
ing the year. Space-heating gas,
therefore, has only a 25% load
factor. In other words, if pipe
line capacity were built sufficient

held low because of regulation, on

needed to meet

reserves

fixed

problem arises if those three

MCF).

the

power

means

all

during
many
future
winters, it must agree not only to
pay for, but also actually to take
gas during the off-peak
season.

of the

and

quantity is available; if sup¬
entirely by pipe line ca¬
pacity, each of the 365 days of

the

customers

line. The producers of natural gas
have their problems, too. In view

gas

plied

retain

to

the demands of the

little—3

The

order

important

delivered

Gas Act

<his

utilities' boss.

in

provide

dis¬

to have available
the coldest day of the winter
an
adequate quantity of gas for
use
on
that coldest day by the
space-heating customers attached

thereby placed in the position

utility companies
feet or less. Now the asking prices
other means by
of the producing companies in the
storage or otherwise to meet peak
winter heating requirements and great undedicated producing re¬
serves in Texas and Louisiana run
thereby lessen the enormous in¬
from 8 cents to 12 cents.
When
vestment
in
pipe line capacity
these prices are coupled with de¬
which
would otherwise
be
re¬
mands for contract provisions ol
quired if the undesirable limita¬
the type just described, it is read¬
tion orders are to be lifted; and
ily seen that the utility customer
Third: Markets for off-peak and
at the market end of the pipe line
interruptible
sales
of
the
sois required to face man-sized eco¬
called
valley gas must be de¬
nomic questions
and do some
veloped and encouraged.
heavy head-scratching.
Before referring to the efforts
To illustrate: Recent estimates
now
being made by Peoples Gas
in these directions, I should like indicate that, on a 100% load fac¬
tor basis, natural gas transported
to refer
briefly to the problems
through a new pipe line will cost
oresented at the source of the pipe
should

this

It is necessary

is

where

continues

at

1.25

cents

increasing

space

Southwestern gas which

.heatings

is grow--

ing faster than it can be supplied
by
the
expanding
capacity of
three of the country's major pipe
lines.
the

.

.

.

Specifically applied to

decision

in

the

instant

pro¬

ceeding, this means that the New
Jersey companies now receiving
natural
gas
for the first time'
should not rely upon the service„

herein

authorized

as

a

first

step

.Volume 169
toward

Number 4796

all na¬
service with the eventual
changeover

a

tural gas
abandonment of the
factured

of manu¬

use

the

On

gas.

to

they should plan for

contrary,

efficient

an

THE

approximately
cubic

one

to

600

loot

nearly

to

of

600

1.

COMMERCIAL

That

liquid is equal

cubic

feet

of

This initial unit will take
the extreme peak loads

on

proximately 11 days in the

service,
with manufactured gas plant con¬
sistently maintained and modern¬

ter.

ized

reserve

assist the interstate pipe¬

to

line

in

carrying the expanding
load, particularly in winter. Simi¬
larly, it means that future re¬
quests for shares of additional

tion.

been

Peoples

companies

line

well,

as

carefully considered by

cost of such

tities

that

Gas

Co.

The

be

to

be

of

material

mission in the light of the extent
to which such distributors have

cance

seems

to

render

gas

facil¬

of

ground storage to assist in carry¬

age

ing the growing peak loads."
The

philosophy

thus

stated

sense

in

policies

and

considerable

make

appropriate cases. It is
that
the
Peoples iGas

believed

Company by historical fact as well
as
current planning
is in basic
conformity with this philosophy,
both

in

erating
to

with

connection

our

in

practices and

op¬

respect

plans for the future. The

our

policy stated by the Commissioner
in

cannot

be

fairness

applied

to

those companies who are

without
adequate manufactured gas facili¬
ties

have

and

been

therefore

re¬

quired to convert to straight na¬
tural

in

gas

order

to

eco¬

serve

nomically the growing public de¬
mand. Nor should the policy be
applied to require the addition of
manufactured gas facilities, which
characteristically
involve
high
costs, in order to meet future de¬
mands.
In

is

the

now

Gas and

first

effort
being made by Peoples
its affiliated corporations

obtain

to

place,

every

incremental

an

of additional natural
the

vehicle

of

a

new

which, it is hoped,
structed

the

in

serves

the

from

supply
through
pipe line

gas

will be con¬
producing re¬

southwest

the

to

Chicago area. While progress is
being made, no program has been
agreed upon and no Certificate
has bepn issued by the Federal
Power Commission. While the
serves

dedicated
will

it is

which

be

the

to

re¬

hoped will

proposed

be

line

adequate to supply, per¬

much as 500,000,000 cubic
feet a day for a period of 20 years,
only aoproximately 77% of this
quantity can be expected to be

haps,

as

made available for the markets in

the

Chicago

supplied by

area now

Natural Gas Pipeline.

high

in

signifi¬

this

unsatisfactory.

mated that

ities and, where available, under¬

quan¬

required

order

cedure

high

capacity in the
would

should be considered by the Com¬

developed manufactured

It

pro¬

is

esti¬

100 million cubic feet

pressure natural gas

stor¬

capacity would cost $4V2 to $5

Since
for

with

even

higher

rates

heating gas the peak
day need of these markets is far
in excess of the quantities to be
supplied by the proposed new

pipe

Chicago area,
plans must be made to meet
the anticipated requirements.
These plans include the develop¬
ment of natural gas storage facil¬
line

the

to

other

ities. In several

areas

of this coun¬

try the gas utility companies are
blessed by the
of
exhausted

convenient location
natural
gas
fields

available for storage in
mer

of the

where
the

it

off-peak

is

winter

or

available

to

meet

the sum¬
valley gas

for
the

use

in

$6 million.

its

Gas

Co.

has

the

years

augmented

capacity for the storage and
of

liquefied petroleum gases,
particularly butane and propane,

to the

point where it now has ca¬
pacity for storage of approxi¬
mately 682,000 gallons of butane
and
738,000 gallons of propane.
The

usefulness

these

of

is

gases

limited because their introduction
the

into

mixture

gas

cannot

go




under the

1947

the

to

gas

public

Chi¬

of

In the first place, in addi¬

cago.

tion to continuous

of

use

coke

our

maintain in good oper¬
condition and actually use

ovens,

we

ating

during part of each year our other
production facilities which

used

substantial

very

a

which

and

their

during

should

useful

life

adversely affecting the quality of
the

from

gas

customer

the

standpoint

utilization.

of

For Peoples

liquid petroleum gas stor¬
capacity, therefore, cannot be
relied upon to meet increasing
peak demands.
An
increase in
such

capacity would merely make
the liquid petroleum gases useful
on

greater number of days in a
because increased quantities

a

year

cannot be used in

any

day.

one

in

progress.

pipe line gas. We keep our
personnel alert and up to date in
the changng and improving techupon

nques

have

Peoples

prior to

Gas

1931,

for

many

the

to

public of Chicago solely manufac¬
tured gas. It now distributes mixed
gas of which approximately 80%

of

a

substantially in the
pipe line failure and

will

the

be

available

day should

natural

nation

gas. We
available
which

gas

if

and

-

when

come

of

reserves

the

inadequate to supply
increasing flow of
reliable energy.
We also, through
the supply of mixed gas, maintain
the quality and characteristics of
the gas upon which the consum¬
ing public in this city has come to
depend and for which the more
than one million appliances are
now
adjusted. * Incidentally, we
are

this heretofore

estimate that it would cost
where in the

some¬

neighborhood of fif¬

teen million dollars if

in thermal
ural

heating value is nat¬

or

obtained

gas

Natural

from

Gas Pipeline Co. and the remain¬

ing 20% is manufactured gas, al¬
though in the future, with in¬
creased

quantities of natural gas
available, the natural gas percent¬
age will increase and the manu¬
factured gas percentage will de¬
manufactured

The

crease.;

consists

primarily

gas and

water gas.

coke

of

gas

oven

The coke ovqn

batteries at Crawford Station and
also

is

purchased

companies in

Chicago

South

carburetted

The

area.

steel

the

from

the

water

gas

of from 550 Btu to 800 Btu

is, pro¬
duced during the peak load season

in winter.

the

in

gaged

Peoples Gas is now en¬

construction

Crawford Station of

a new

at

its

battery

The
cost of this plant, which is in ef¬
fect a replacement of ovens which
have been in operation for over
consisting of 51 coke ovens.

be approximately
It is expected that
the new ovens will begin opera¬
tion during the summer of 1949.
20

will

years,

$4V2 million.

In this connection it is

different

interest¬

burning

hav¬

character¬

istics.

Leveling Off-Peaks and Valleys
The

Peoples

Gas

Company

through its sales organization will
continue every effort to develop

interruptible mar¬
gas use classifica¬
tions have been developed in. the
industry which are of real assist¬
and

Various

First there

the so-called

are

interruptible sales which are made
at a1 low rate to large industrial
consumers
at
times during
the
when gas is not needed by
Company's general customers.
sales in the large volume

year

the

These

industrial fields produce revenues
which
mate

operate to reduce the ulti¬
to the general cus¬
who uses gas as a fuel for

charge

tomer

heating, cooking, or water
heating.
Somewhat
similar
in
nature to this type of sale is the
space

been most

cessfully
In

by

used

our

Company.

Such
is

use

industry.
Is essential if the public

have

to

and

reasonable
rates, for heating more homes in
this community. The progress of
a

direction

the

in

is

business

the

at

gas,

constant

of

effort

leveling

off-

and valleys to counteract
vagaries of temperatures and

peaks
the

the weather

By

man.

providing storage facilities
the maintenance and con¬

and by

by the new battery at a cost of
$4Vz million cost the Company in

facturing gas facilities, we believe
that we are serving the public

the 1920's

interest

of

accumulated

original

cost

on

the basis

replace

to

cur¬

rently retired plant but this is
whole
not

new

permit

a

subject and time does
its discussion here.

Suffice it to
tion reveals

say

that the illustra¬

the great importance

of retained

earnings.
is favored by our
Company for several reasons. In
Mixed

gas

addition to the fact that

by serving
in substantial

our

Com¬

pany,

manufactured

gas

quantities,

thereby reducing the drain
tural
line

gas

and

facilities

natural

gas,

is

on na¬

limiting the pipe
required to supply
all

in

accordance

and

minimum

the

that must,

in

in
It

would

believe

be

reducing
to
the
high investments

any

additional

event, be made

facilities.

pipe line
unfortunate

and

we

unfair if the existence

of

manufactured
gas
be prejudiced or
delay the ability of our Company
storage

and

facilities

should

obtain

to

the

now

minimum

tural

gas

in

and
of

which

the

future

additional

is

and

will

na¬

be

needed.

In

applied to the

as

return

utility busi¬

gas

in this and

ness

of

rate

a

of. 1947

the

and

other states

certainly not exorbitant, hav¬
ing in mind the financial needs

are

of the

Company. It, of course, goes
without saying that we will never
seek authority to charge rates one
cent

than the amount

more

neces¬

to maintain an efficient op¬
eration, sufficiently profitable to
attract
the.
necessary
capital
needed for the expansion and de¬
velopment of our business to meet
sary

the public
We

live

need.
for

the

combination

a

of

day when by
the
methods,

above discussed, our area can be
supplied with gas at reasonable
rates for any purpose demanded
by the public. The achievement of

with

the

development

just

25

expansion

and

mentioned,

no

financing program has been pre¬
pared or approved by- the Board
of

Directors.

third

pipe

Until

line

plans

for

further

are

a

de¬

veloped,

any program of financing
be kept
sufficiently flexible

must

to

raise

the

the

capital

markets

required

in

existing at the time

the additional funds

needed.

are

Our great satisfaction
comes,

of
first, the
knowledge that a great and daily
human need is being supplied to
a large
segment of the American
course, from two sources:

population, and second, from the
knowledge that as we succeed in
our

endeavors,
the
privately owned, privately operated public
utility will be recognized and ac¬

cepted

as

feature

vital

a

of

and

permanent

American

gentlemen

will

life.

recognize

You

that

a

public

utility
privately
owned
subject to public regulation
typically American enterprise.

and

is

a

I have been in the
gas

industry,

but little more than one year. Tfie
experience to date has been fasci¬

nating; ;The industry does
work in its

a

great

public service and this

feature brings satisfaction beyond
all others. It is fortunate that thisis

because the operation of pub¬

so

lic utilities

by private

enterprise

must

stand firm, not only for the
benefit of the large number of

stockholders and security holders
to whom the

utility managements
responsible but because if free

are

enterprise succeeds in operating
efficiently and acceptably the
public utilities of our nation, the
vast unregulated industry which
has made America great, is safe
from the successful encroachment
of

collectivism.
would

I

been

like to quote what has

advertised as the
financial, greatest, shortest book which has
ever been written.
It reads in its
legal, and business problems ol
considerable stature. It is my be¬ entirety as follows:
"Democracy makes a fairly
lief
that
the
American
public,
through the good offices of you equitable distribution of the goods
and wealth that it creates. Com¬
gentlemen, will provide the nec¬
munism makes unequal distribu¬
essary capital which is needed to
construct the new pipe line, the tion of the poverty and misery it
new
storage
facilities,
and
to creates."
We in the gas business, at this
maintain and develop the manu¬
factured gas plants. We trust that important juncture in our affairs
when
we
face problems
which
you approve our philosophy and
will bless our endeavors. We are sometimes appear insoluble, feel
old
who,
willing and anxious to compete like the prophet of
for the investors' dollar and we while repairing the walls of Jeru¬
pledge the soundest and most ef¬ salem was subjected to the efforts
this result will not be reached to¬
It

morrow.

correctly

presents

his

enemies

who

sought

to

ficient

of

are

beguile and seduce him from his

management of which we
capable.
Future Capital Needs

While it is obvious that Peoples
will

required to obtain
funds in con¬

be

capital

Predicts Reduced

task, and to whom he sent the
reply which has rung in the ears
men
down through the ages,
"I am doing a great work and I
of

have not time

to come

down."

Earnings of Oil Companies

Joseph E. Pogue, Vice-President of Chase National Bank, holds,
however, because of reduced capital expenditures, dividend rates
can

be maintained.

luncheon meeting of the Investment Association
in New York on April 14, Joseph E. Pogue, Vice-President of the
Chase National Bank and
an
expert on petroleum developments,
Speaking at

that the

stated

a

earnings of oil companies in 1949 may be 20 to 25%

below those of
that

earnings

of 1948

are

h

s

s

been

tion

of

said

will

meet

ern

oil,

has

Mi\

construction

been

ditions.

Mr.

Joseph E. Pogue

expenditures

1948,
could

a

....

.

,.,

by 20%

in 1949 than in
decline in earnings of 25%

be

absorbed

without

im¬

pairing the funds needed to main¬
a

in

Such

relationship would result merely
reducing

the

percentages

of

earnings retained in the business
from 73 to 64%.

Mr.

Pogue

pearance

on

by

changed con¬

He said that

oilx like our
in general, apparently is
undergoing a serial or piecemeal
adjustment
instead of suffering
from an acute recession.
Residual,
economy

stated
that if capital
less

curtailed

the petroleum
displaying remark¬

for

able adaptability to

Pogue

are

been

Pogue cited

industry

requirements
have

Produc¬

Venezuelan oil, which

about 15%.

urgent

met.

of

he
growing competi¬
tion in Europe from Middle East¬

urmounted

and

development

lines to distant markets.

ortages

have

drilling and
major pipe

further

await

must
the

necessity, Mr.
Pogue pointed
out, now that

declared

substantial entry of Cana¬
oil into the world markets

a

dian

not

economic

an

of oil supply, but

source

But the

1948.

high

tain recent dividend rates.

Illinois
wisely acted in the
public interest toy entering an
order restricting the attachment
of additional space heating busi¬
ness beyond
the limits expressed
therein. We are proud of the fact
April

Commission

if

gas.

by

convenience

the

of

comfort

fuel

tinued development of our manu¬

reserves

limits of

proper

valley gas must be sold on an
interruptible basis for large vol¬
as

heat¬

account

nection

(1745)

suc¬

this connection, it seems obvi¬
that substantial quantities of

use

into

In this con¬
nection the earnings of People^
Gas in recent years and antici¬
pated for 1949 are well within

ous

ume

space

suggested,

take

delivery
supply of natural

Gas

months which has

to

its

prices incident to the
of an incremental new

additional

fall

and

summer,

be

may

the

ing to note that the ovens replaced

something less than $2,000,000. This fact vividly illustrates
the
inadequacy of depreciation

rate

a

rate
that entirely
of

revisions in the

proper

off-peak sale made to commercial
and industrial customers during

spring,

engaged in

now

study

structure to the end

ing

help

ance.

careful

necessary,
the higher

wnich

ing

Peoples Gas is
very

of manufacturing

would

kets.

years

distributed

'

Study of Rate Structure

facilities

off-peak

The Problem of Gas Mixture

cus¬

6,233. On Dec.
29, 1948 the Company obtained a
supplemental
order
from
the
Commission permitting the
at¬
tachment after April 30, 1949 of
8,000 additional like residential

public. We re¬
tain flexibility which cannot ex¬
ist if entire dependence is placed

and efficient use of this fuel

without

order. These

numbered

service of the

the

age

point

served

be

Gas Co.,

certain

a

tomers

be

to

heating customers. These numbers
are
not overwhelmingly impres¬
sive by they represent substantial

in¬

Peoples Gas
should go to the distribution of
straight natural gas and be there¬
by required to readjust all of
tiiese appliances for the economic

beyond

during
1948 Peoples
Gas
made gas available to all of the
remaining single-family residence

facilities and in its service of

mixed

the

During the past few
Peoples

peak

house-heating load. Such is not
the case for Chicago. We have no
conveniently
located
exhausted
natural gas field in good condi¬
tion.'* We
have,
however,
de¬
veloped in our laboratory on ,'a
pilot model scale, a newly' de¬
signed and improved liquefaction
storage plant which works. Our
Company
has
embarked
on
a
project which, unless delayed by
the countless technical problems
continuously arising, should be in
operation by the fall of 1950 pro¬
viding for the storage in liquid
form in a first unit of approxi¬
mately 400,000,000 cubic feet of
natural gas kept at approximately
250 degrees below zero. This gas
is mostly pure methane, nearly all
other
components
having
been
removed in a fractionating still.
It is stored at a space ratio of

gas

its

the

entitled

when

cost

use

of

in

customers

storage plant capacity is estimated

liquid

to

objectives

that

manufactured

event

is manufactured continuously
by the company in its coke oven

space

other

maintenance

million whereas the contemplated
400 million cubic feet of

gas

Storage Problems

philosophy expressed by
Olds,
Peoples

Commissioner
serves

feasibility of high pressure lepresent
(steel bottle) natural gas storage vestment
the

pipe

with the

FINANCIAL. CHRONICLE

gas

The

has

the

on

ap¬

against the consequences
pipe line failure of short dura¬

of

part

deliveries

line

of

win¬
It also provides in its
400,000,oUO cubic feet of
storage a muchneeded
and
excellent insurance

of all existing customers, not only
of
Texas
Eastern but
of other

pipe

gas.

care

and economical combined natural
gas and manufactured gas

is

&

cited

Canada's

ap¬

the scene as a rising

fuel

oil

has

undergone

such

a

sharp decline in both demand and

price
be

that

its

adjustment, should

nearly complete.

Middle dis¬

tillates

sucl^ as Diesel oil and
heating oils are in an intermediate
position in the cycle.
The de¬
mand for gasoline has been well
sustained and the rate of supply
is ample for
hp said.

all anticipated needs,

26

(1746)

THE

COMMERCIAL

FINANCIAL

&

CHRONICLE

What's Ahead for Business and

Securities Salesman's Corner

(Continued from page 2)

creased

the first quarter of 1949 has con¬

tinued at

an

experience in the field of intangibles. He told me he was sure
that the one thing that he got out of being a salesman which meant

extremely high rate,
the decline by the end of the year
will presumably be at a consider¬
ably faster rate than 6%.
Housing starts for 1949 appear

almost

to be reduced

By JOHN DUTTON
The other day I was talking with a successful salesman of
many
years

much to him

as

the good living he was making, was

as

that
only through his work did he find the secret of self mastery.
There
a good many lectures, and also articles
written, on this idea
of how a salesman must master himself. You know how they go—you

have been

are

your

own

knock off.

boss, if

the

smart

1948?

But the point that my friend made about this self mastery busi¬
that appealed to me was that I believe that he has the secret to
in the securities business today.

10%.

or

what lower

is

because

year

CONSISTENT work

decline in

leads

new

as

well

habits.

Keeping at it—constantly following up
old customers, and continually developing ideas

as

that FIT EACH ONE OF THEM.

If you will look back on your own personal

experience you will
consistently at least
five full days a week.
First, your mind will become keen and your
ability to convert interviews into sales will improve. Selling is like
any other art—the more you do it the better you become, and the
easier it is to make sales. Secondly, you will stop worrying about bad
business, because first of all, when you are out creating business your
mind is constructively occupied, and secondly you have the satisfac¬
tion of knowing that you are not quitting and that you are doing your
man

That is the best builder of morale and self confidence that any
can

than

last

houses

This

year.

built

after

the

satisfied the "high priced de¬

war

mand."

Thus, there

which

tors

be

may

three fac¬

are

expected

to

reduce

housing expenditures this
by almost 25%.
Once the
the

of houses

cost

has

become

find.

■
,

-

Against

ihese

declines

in

the

amount

income—the

investor

who

also

takes

an

occasional

flyer—and the speculator.
When you meet people and
keep on meeting them you are bound to find some who like you—who
take to you and you to them.
You find out what they own because
they will tell you. You catalogue their securities. You start to keep
them posted by mail (news
iten^is, etc.) or by a telephone call. You
wait for a spot. A new situation comes along. A bargain in a good
bond, a new issue, a low-priced stock that looks better than some dog
they are stuck with, where you can make a trade-out. You call them
for an appointment, you see them, you PRESENT AN IDEA TO
BETTER THEIR POSITION and you make a sale.
You keep this
up,

five days

the

a

week. You pick out an evening to make some calls on

office when you can find them home. You
will succeed. You cannot fail. I believe that
few experienced men in the securities business who would

telephone from

your

work like this and you

there

are

disagree with
But

this program and its effectiveness.

me on

as my

1949-50

from

were

1945

as

to

(1) The

present readjustment
be welcome.
As

of prices should

ward

readjustment of prices brings
additional groups of con¬

large

into

sumers

broadens

the

markets.

markets,

That

enlarges

out¬

put and is the most desirable way
to v expand
output
to
maintain

.

income
their

of

cost

will

the

in

the

calendar

precisely

occur

Federal

good weeks, in big weeks, in weeks that are slow and disappointing.
means at least this much we should give to our job—eight full hours

It

day five days a week.
That isn't too much to ask if today, a man
could go out and make real money selling securities. And this is pos¬
a

year 1949
receipts of

as

Government

sets,

levels

in

and

relation

high holdings of liquid
be fully satisfied.

may

to
as¬

In

such

a
case, the industrial plant
capacity in place for production
may
be called "adequate"
and
"complete." Therefore, no addi¬

decline^ tional investment component ex¬
both from the heavy payments of
penditure is likely to be found'in
the first quarter and decline as
such fields.
Holding our industhe result of the tax reduction!
and
particularly our con¬
bill Of 1948.
-j" '-Br-., rr struction workers
fully employed
v:,vV.':;,'
ft*/?''"'
'•

1'

:,

•

It

is

necessary

upon

in¬

declines

the

in

older .'^in¬

vestment

expenditure* w-cQpatiQn-

ents."

is

It

necessary

!even!-4<X

expand the total volume oLput&ut
and

the

on requires finding new com¬
of

expenditure

to

take

'th^plgce of the old which, so to
•caQ.>.W04:^alc>;'Tiave
"run down."
7!—.
Those

Only in thiff-my

offset

J

ponents

component^#!, expen¬

new

diture.

fo^.-banking

government tq^cQme.

business and

volumii^'of%

total

I components

JfOpme from

imjpdrtaat Ty¬

of

taxes,

$nd if

we

business and

if

or

liberal,

expenditure

private industry if

we*lower corporate,

&xHse
Thbre

sons:

we

arrange

widespread

credit

make advances in tech-

(1) An expansion of the-inyp&tcomponent

dustry is
industry

for.r|>nvate in¬

As I see it, what the American
society is determined about is that
the resources which can produce
the; magnificent industrial plant,
which the United States has today,

required ii¥-v^d^4hat
continue'to invest
the average of a boutu
per
worker
to
provide
tools.. .wan<y. and which has been the salvation
equipment for the annual net.'kd-* of'Western Europe, shall not in the
dition to the labor for^ which in future, for any extended
period ol
turn now reaches almost 700,000 trine at all, run idle nor be
wasted,
net new workers per year. " Inso¬
dF wither and decay.
far as industry is responsible. Jor
For those of us in agricultural
get the habit of loafing—of making BELIEVE that we are working— the
improvement of wages of all af&as this non-waste of resources
of going through the motions. How do I know? I've done it many
workers, additional investment in ojp our great plants and of our
limes and so has practically everyone who has ever been in the selling
plant and equipment is needed to
ability to add new plants, congame. And I've tried the other way, too, and I know that it works." increase the
productivity of .the slrifction and public works, is im¬
worker.
His productivity depends
portant for a very special reason.
in part on his personal-efficiency
In- our Northwest area we

sible, making good money today, I know it for a fact. I have letters
from men that are doing it right now. In small towns, too, as well as
large. But they are working intelligently and regularly—they like it,
too—and they are not knocking themselves out. You don't have to do
that either'; Just get the HABIT and watch it grow.
Three solid
months of it will put any security salesman so- far out in front today
that he wouldn't quit doing it under any circumstances. It is easy to

Urges More Reports of Stockholders' Meetings
of Women Shareholders in

Federation

American Business, Inc.,

of 70% of privately held wealth, should be
kept informed of happenings at stockholders' meetings as means of
says women, as owners

better stockholder relations.
of

Federation

The

Women

Shareholders in American Business,

post meeting

reports to stockholders, together with the "historical
own first post meeting report, giving the history of its

organization. FWSAB is a non-^
profit,
nonpolitical
membership women resent this type of cover¬
association of women.
age,"
but
reminds
them
that
"Women, as owners of 70% of "humor sells and industry uses the

be comics to educate."
The eight-page newsletter, titled
informed stockholders and better
the privately held wealth, must

corporate citizens if private enter¬
prise is to survive," the report

with

states,

"We do not need
control.

FWSAB

the

more

We do need

credo:
government

more

stock¬

holder interest."

"Women and Wealth—What Every
Stockholder Should Know About
the

Post

Meeting

Report,"

calls

reviews

of

post
meeting
reports will result in better stock¬

woman

investor."

it would show "economic democ¬
racy

at work."

has

to

on

treat

quired

of

the

woman's

angle humorously and that "some




MECHANICSVILLE,

N
Y
Carriero has opened offices

engage

ness.

in the securities busi-

industrial Aproqessesi"

costly.
T^ere is^re.r
businesses an element

call "capital

may

fication"

which

intensi¬

use

further'lo

adds

the investment component needed
for the maintenance of high level

productive
United

(2)

employment

Each
in

vance

in

the

States.

there

number

and in the levels of

is ain"ad¬

of

avoid

increases

more

In other

in

unemploy¬

words, $10 billion

goods must be produced and
year

unemployment.
there

are

each

year

market.

to avoid
This

600-700,000

a

is

new

rise in
because

workers

coming into the labor

Their contribution to the

economy, if they are to be use¬
fully employed, would be about
$2.5 billion.
The total economy

nually
can

its

by

an

productivity

an¬

that

now

amount

be expected to be at least 3%.

Applying this 3 % to the total pro¬
duction of society indicates that
the

same

produce

amounts

of

supply of meat. The abilities

-products such as poultry, Wash¬
ington quality of fruits and vege¬
tables, and dairy products, is al¬
most

wholly

question

of

of

a
income

the

of

the

consumer

expect to buy them.

If that

consumer

is

engaged in

industry—with all these typically
paying wages of about $40 a week

■^rthen he has
of these
make up

products

which

55% of all farm incomes

other

United States.
On the
hand, maintaining invest¬

ment

expenditures,

construction,
the building of plants and equip¬
ment, and also constructing pub¬
lic works in large amounts pro¬
vides many high wage jobs in the
United States.
Such high wage
jobs rather typically pay not $40
a week, but $70 a week.
At this
latter high wage level, the con¬
sumption of animal products by
workers'

families

greater than
tion

families.

in-

low consumption

in, the

number of workers will

billion

a
animal

of

the

the
low

is

two-thirds

meat
wage

core

of

unemployment in the construction
and

machine-making

which

the

are

high

industries

the

indus¬

wage

most

important
ture's customers.

therefore

of

agricul¬

IV

f-

Conclusion
In

conclusion, I

point out that in

would

like

to

earlier day I

an

consump¬

workers'

•

thought economists, such as my-self, should find the answers to
the question of how we can
bring
in

new

components of investment

expenditures

to

hold

both

economy and the number of

jobs

wage

at

high

levels.:

-

the

high
I

am

much more modes is my
appraisal
of what the economists can do to

find

this

to

answers

question.

Next, I

thought that the busi-.
nessman, for example through the;
field organization of the Commit-]
tee for Economic

Development in.

which I

active for

was

than:

more

three years, could find the answer.
Much as I think the businessman,

help, today I believe the cru-.
solving this problem;

can

rial work for

must be done

aid

and

and

men

both

business-.'

That is

be-,

issue

not

or

of

economists..

it is my view that the cru-'
in the task is whether,

cause

rial

by bankers with the!

advice

be

sound

a

devised.

bankers.

financial plan

That,

So

is

can

work

for

I

charge today the,
community in America,]

banking
directly for the welfare of them¬
selves
and

their

and

institutions,

own

indirectly through their ad-,

vice to all others and consultation,
with all who invest money: to de-

J

vise sound financial plans to give]
us a fair and reasonable share
of;

public housing, which can
well-financed as has public
housing in England, to find new
plans to bring forth very greatly
new

as

increased

amounts

of

private ]

housing (which

may consist of the
residential part of the task of ur¬
ban redevelopment we have ahead

of

us

the

in the United

remainder

of

States for all
this

century).

This residential part of urban rede¬

velopment, I think, should all be
done
with
private capital, and
that
emphasizes once again the
important role of bankers and the
financial

community.

needed.

consumers
to
purchase that meat and, as well,
other high-grade agricultural

about

$7.5

similarly

great hard

a

ani¬

og^ agriculture's

level

past

pro¬

From that comes a

%4£low-wage" enterprise, in a lowefficiency: and wage
service, or in a "soft goods"'

output at today's prices needed

to

substantial

mal products.

Huge

stand

unemployment, and

Next, I think new sound finan¬
cial plans for the construction of
new,
fine
highways
is
badly

workers--

productivity of all workers. Re¬
cently Prof. Sumner H. Slichter
placed at $10 billion the expansion
of

duce

we

year

the

increases

John Carriero Opens
j0hn

to

are

sold each

the "woman's
angle" of annual meeting coverage, the report notes the tendency
been

These

for the modern

holder relations.

Commenting

modern

our

But it

in recent years

automatic mechanizations of

upon

ment.

gives the history of the post
Soss,
President of
FWSAB, was a former associate of meeting report and some instruc¬
the late Harry Reichenbach who tions as to what the stockholder
instituted the motion picture re¬ should look for in a good post
view, says she believes that an¬ meeting report, pointing out that
nual

even more

the post meeting report of the an¬
nual
meeting "required reading
It

Wilma

may

willingness to work.

we

Inc., released to its members and the press a review of corporation
edition" of its

and

depends

cannot stand

be

tfogical developments.

ment

cannot

of

.

ment for two very

friend said, "It means at least five full days a week, in

expenditure

components to take the place of
old. As new plants are
completed,

budget outlays expand)
increased

States

cores

and

We in the.

in agricultural areas

we

downward
readjustment of
prices takes place, it practically is
a repeal of inflation.
The down¬

of the Federal Government (as its
cover

hard

the

spent for new housing
construction, in the expenditures consumers' goods output increases
plant and equip-I in many lines.
A part of this in¬
ment, and in the expenditures for crease
may
represent
genuine
increased inventory, there is to be
"catching-up" so that consumers'
placed the increased expenditures demands, even at their new
high
to

industrial

tries of the nation, and

of producers for

tures

thing that will happen is that you will begin to build
backlog of potential customers. The securities business roughly
be divided into three major categories as far as prospects are con¬
for

in

investment

can

The next

investor

we

v

up a

The

continue

as

productive

United

fully realized,' there can high level employment.
be every expectation that demand
We should steadily search
will thereafter expand.
" '
for new

rearmament,
and other enlarged outlays. These*
increases in government expendi¬

cerned.

to

are

indeed, is a most im¬
portant reason why our high, pro¬
ductive agriculture must insist on
business employment.

•

find out that this is what will happen if you work

best.

time

same

the value of the average house to
be built this year will be some¬

He put it this way. Most of
us will admit that we do not put in enough work, both in the field
seeing people and in following up our calls by the proper mailings,
and second and third approaches if necessary, on new customers. He
brought out the fact that successful selling becomes a matter of
success

At the

we

Banking?

Here,

high

Here, then, are the problems
confronting the American econ¬
omy.
What
are
some
of
the
things we should do about them if

sufficiently to lower housing costs
by 8%

that

A Resume of Problems

can

These things are true.
And most of us are human.
We
have all been lazy at times, diligent at others, optimistic and pessi¬
mistic, and so it goes.

and

Ill

•

through the next,

etc., etc.

ness

by from 10% to 12%
1948, according to estimates
Department of Commerce.

from
of

output,

much,
too, must be sold if they are all
to remain employed.

The cost of construction, happily,
is expected to decline this year

want to work you can do so, or you

you

If you have a good week you can loaf

Thursday, April 21, 1949

These

soundly

should

financed,

be

as:

where

heavy
traffic makes that possible, as the
Pennsylvania turnpike which is
covering almost two times all in¬
terest

its

on

debt

amount of money

and

that

the

upon

was

granted

in the public interest to make pos¬
sible
its
construction.
Where
there

is

less

traffic

and

less

cost

well, bankers should study the
great gains of improved trans¬
portation and devise plans and
proof which will bring support to
as

its

construction

rates
waste

we

have

which

running

as

public

a

With the high

provement.

today, there is

is

to

no

costly as the
of American

so

waste

labor-power

im¬

wage

which

create

can

these fine improvements for all of

The

task

evening
these
to

''•;■■■

'

us.

I

is

new

'•

-V ;

•

lay before you this
how to bring forth

investment components
full employment, to

maintain

increase the
fore

wages

efficiency and there¬
of labor, and how

these investment components may
be safely financed at a steady rate
to
the

achieve

the

American

standard of

great objective

people

living,

useful productive
an

ability

to

a

—

a

of

high

high level.of

employment and

continue

assistance

to the rest of the world.

Volume 169

Number 4796

.

THE

COMMERCIAL

of
(Continued from first page)
industry.
These two companies

differ

ital
;

principally

structures.
ahead

cap¬

has

Swift

servative structure.

The stock of

Armour

shown

much

a

&

Co.

this

more

has

con-

fact

io-attribute

that

Armour

; traded at

stock

lower price level than
did that of Swift.
Size is perhaps a factor in stock
certain

ficult to

demonstrate

in

to

up

point.!; This would

a

reasons

do

with * the

We
is

difficult

to

that

have

v

arises

to

level

answer

an

to

low-priced

and

The

this

It

"

is not the

inquiry to

purpose

It is sufficient

that there is

a

some

tionship. r

stock price variability is the
•degree of marginality, the extent
to which a
company is or is not
the "marginal producer" within
its industry.
In boom times there

is

business

cost

nies,

profits

and

well

as

but

under

It

of

competition the high-cost
or no profit.
profit variability is much

greater in the

case

of

high-cost, or
This greater

marginal companies.

.profit variability of the marginal
concerns

e s:

inevitable

a

price variability of their

greater

stock.

common

Eastern
.

k

m a

The

Illinois

chiefly

Chicago

Railroad

Co.

&

although

operating
the

there

1947-1948

of

range

the

some

ih

3%-9.

was

of course,

levels

of

the

two

in

the

to

Two

full

major split-ups

stock divi¬

or

to

established.

the stocks selected

cases

as

in

an

course,

be

the lowpriced stock in half of the pairs
by the high-priced stock in

and

the other half.

of

shares

able

of

each

stock

by $100 in July 1937

be suit¬

rarely em¬
business

or

are

larger

than

what

are

18%

80

High

Liggett & Myers Tobacco

16%

400

Farm

Low

Deere &

29%

140

Except for the bull market of

Machinery

High

International Harvester

Aircraft

Low

Lockheed

1946 there appears to be
very lit¬
tle difference in volatility between

High

Douglas Aircraft

Low

Certain-teed Products Corp.

^Company

19%

(N. J.)

Company

15%

.

Aircraft

Masonite Corp.* 1
'Continental Can Co.

;

;

2,000
v
•

40
9

24%

375

None

28

None

32

15%

27

15%

31

30%

205

stocks

in each

stock

^

in

millions

and

or

'

,'v

of

bonds

dollars

of assets.

long-term

to

total

such

book

stocks

'['.'.yy''
;

6 Pairs

5 Pairs

112.55

114.88

144.46

130.51

126.72

115.61

110.06

as

mid-1946

because

pricedness

are

of
not

pricewise than high-priced stocks.
(2) Even in such a boom period
as

low-priced
their

more

mid-1946

doubt

stocks

low-

as

are

pricedness
wise

volatile

than

there

to

is

whether

considerable

low-priced

because
more

of their lowvolatile
price-

high-priced stocks.

Computed Averages of High-Priced and Low-Pziced Stock Groups, July 1937 Thiough June 1947

issues.

-ISO

-

150-

-

-no

—

—

ISO

-

140

-»

—130

—

120

—

WO

-

-mo
—

relatively

!

::

115.25

following conclusions can
200 now be stated, subject, of course,
200 to the adequacy of the sample.
320
(1) Except
in
boom
periods

50%

debt

Tobacco.

7 Pairs

The

42%

,

4

111.90

250

20%

machinery.

Chemicals.

8 Pairs

35%

preferred

Aircraft manufacturing.
Farm

116.46

Republic Steel Corp.
Youngstown Sheet & Tube
Cyanamid Co.

seven, six, and five pairs.
The pairs eliminated in the order
of elimination are:

group.

9 Pairs

Low

Dow Chemical Co.

of the two groups with nine,

Averages With Various Numbers of Pairs, May 1946

260

American

67.40

;

25%

*

____

eight,

Conclusions

American Can Co.

Higli

age

monthly value of each group was
divided by nine, the number of

High

may,
asso¬

*Leverage

r:

High-priced
Low-priced

"

be

be

19%

expressed

seem

can

period was then calculated. • The the graph appears to indicate a
accompanying graph reflects the much more greater variability for
the low-priced group. As a mat¬
listed changing market values of the two
ter of fact this divergence is al¬
groups of stocks on the basis of
an
initial investment of $100 in most entirely accounted for by
fSize each issue. In order to express three of the nine pairs. The fol¬
600 the data in terms of 100 the total lowing tabulation shows the aver¬

might
'

Sherwin-Williams Co. (Can.)
Lorillard (P.) Company

fSize

lines

and

High

' High
Low

Low-priced group

de¬

Low

capitalization.

the

come:

was

Tobacco

of

where

case

diverge the difference

accounted for by the behavior of
one of the nine pairs.
In Septem¬

purchas¬

21%

♦Percentage

varia¬

in

High-priced group
68.86
in nearly all termined and these figures were
cases the high-priced stock in the
It is even doubtful whether or
used as constant
multipliers and
pair is that of a larger company applied to subsequent quotations. not there is any significance in
than that represented by the low- The
market
value
of
the
two i the wide divergence of the lines
1945-1946.
priced issue.
In all cases, how¬ groups on the first market session in
At
the
point of
ever, the companies represented of each month for the ten-year greatest divergence in May 1946

accomplished,

The only

to

This could not be

Glidden Company

High

questionable

difference

high-priced stocks were substan¬
tially higher than their related ber 1941 where the lines show a
pairs.
The July 1937 prices of wide divergence the actual aver¬
low-priced
stocks
ranged
from ages are:
12% to 53 Vfe, and averaged 29,
Low-priced group
86.14
The
July 1937 prices of highHigh-priced group__—
75.90
priced stocks ranged from 50 to
But if one group (aircraft man¬
137, and averaged 90%.
An investment of $100 in each ufacturing) is eliminated and an
stock was assumed at the begin¬ average taken of the eight re¬
maining groups the averages be¬
ning of the period. The number

Standard Oil Co.

Low

certainly
the

in the period up to 19451946
is
statistically significant.
Except for -the 1945-46 period in
every

was

High

v:

low-

and

group

bility

high-pricedness

Low

;

is

whether

cise standard of low-pricedness or

Paint & Oils

v;:

It

dends during the period were ex¬
cluded for the reason that such

Socony-Vacuum Oil Co.

Chemical

However, since the earnings rec¬
ord of the Chicago & Eastern Illi¬
nois is decidedly
more
erratic
than that of the Virginian, it is
much more likely that the dif¬
ference in variability is due to the
differences in the marginal nature
of the business.
The Virginian
serves
the
relatively
low-cost
West
Virginia fields while the
Chicago & Eastern Illinois oper¬
ates

that from

Low

ciated with the differences in the

price

some

high-priced

by the study
July 1937 to June
price cycles are
included in this ten-year period. gree of variability. But, however
Stocks were classified as high- consistent, the variability of the
priced or low-priced according to low-priced group was only slightly
the prices at the beginning of the greater than
that of the highperiod. Stocks that were subject priced group.

was

Group

"ft J *.

This dif¬

variability
have been partly

be

of

»

the

group.
It is true that in
the period up to 1945-1946 it was
the low-priced group that demon¬
strated a consistently greater de¬

Industry

Virginian
while the

price

to

industry to have stock outstanding
of high unit value.
It would have

rela¬

involves the selection

'

27

priced

Oil

Steel.

the

of

of

appears

Containers

Chicago & Eastern Illi¬

common

ference

It

"pairs"

■:v.

However,

-

28V\-45,

was

range for

nois

price

stock

Railway

are

differences.

common

that

Materials '

way Co.
The capital structures of
the two roads, are generally sim¬

ilar.

the

The measurement of that

Manufacturing
bituminous
Building

so

appeared

tendency for the largest unit

been desirable to have the largest

would,

is

carrier of
is the Virginian Rail¬

a

coal; and

there

items, each • pair termed "critical size."
being essentially alike in all par¬
The pairs selected
ticulars except the one character¬ below:

operation shows little

Thus,

perfection

Arrangement

Data

The period covered

In all

is not

attain

and

a
split-up serves to change the
price range of the stock. No pre¬

company represented by

of

-normal

the

on

possible, of course, to
in pairing.
In
the matter of size, for
example,

high-

variability of these two

cause

studies.

compa¬

conditions

of

tional statistics, but
ployed in economics

for high-

low-cost

as

be

Marginality of operation.
Listing on a major exchange.

able is that of "pairing."
This is
a
method widely used in educa¬

•to

as

to

method

"

so

Nature of industry.

the

Pairing

causes, is not as simple.

Another factor which is related

;

to

selected

Capital structure.

cause

degree of rela¬

The application of the method
this study involved the selec¬
were

Studied
of

1947.

Size.

variability presumably due to one
only, and excluding other

company.

merely to point out

the

except

groups of stocks without reference

simple.

the effect

measure

-of size on the stock of
.

of

(1747)

.

of

measurement

tive price

•

"be-low.

Method

constant

These

of

priced stocks that is related solely
the price factor.
The

remain

Period

have

being studied,

similarity in the pairs
following points:

For

example, in electrical manu¬
facturing, it would be high; but
••in operating
utilities, where ser¬
vice is supplied to an area of diversified "'industry, it might well

this

to

tial

to

determine.

By

possible

pairs

difference in price variability

a

is

tion of nine pairs of stocks.

there

not

or

review.

it

essentially similar in all respects
except the price of stocks.
An
attempt was made to attain essen¬

nothing to

relative

seeking

are

between

Moreover, the critical size
be

one

and

that

question of whether

statis¬

tical fashion,'and there are un"deniably exceptions to the general
rule.'

tors

price

low-priced

stocks

for

*

•would

the

prices, show greater price varia¬
bility than do high-priced issues.

be dif¬

a

of

CHRONICLE

reasonable assurance that all fac¬

of

purpose

measure

under

method,

price variability. It
is entirely possible, for
example/
that in general; low-priced
stocks;

a

price variability, at least

istic

be related to

this to the

common

in

their
"low-pricedness" or
"high-pricedness" alone, and ex¬
cluding other factors which may

much

price, variability than has
that of Swift. & Co., but it would
be absurd

it is the

to

FINANCIAL

High-Priced and Low-Priced Stocks

differences

as

from

more

:

study

variability
high-priced

while

common

i

has

other words,

a

;

factors

size, capital structures, and mar¬
ginal nature
of
operation.
In

of senior securi¬

the

of

their

Armour

large proportion
ties

in

other

&

high-cost

Illinois fields.

During boom times demand is
sufficiently great to provide prof¬
itable business for all units in

industrv,
must

competition

as

the

operate

profits,

—

but

intensified

-

an

marginal

at

greatly

or even at

a

is

reduced

loss.

too

—.
—

IOO

—

units
-90

-

-90

This is

clearly evident in the automobile
industry.
Both General Motors

-ao

-

60

-

-

and
a

Chrysler have demonstrated
greater price stability than have
"independents"

such

baker.

Willvs,

Packard

or

be due to
ences.

Stude-

as

Kaiser

Hudson.

-

-70

This cannot

-GO

HIGH
-50

industry

ably alike.

It is unlikely that this

in

is

insofar

as

size

with

is

a

size

and

-

-GO

-

50

-

-40

-•

measure

' the

of

low-priced

-

LOW-PRICED GROUP

-40

-

-30

-

-30

relative

stocks

so

price

-20

-

-20 -

stocks
far

as

-

\0

—

—

variability is related to the level
of prices, and

excluding such




-

•*"

this inquiry

high-priced

PRICED GROUP

factor

marginality.

variability

-

-

remark¬

are

associated

It is the purpose of

to

-

for capital structures in the

difference

-70

capital structure differ¬

automobile

except

-

Frazer.

I

I

I

I

IO

—

28

COMMERCIAL

THE

(1748)

FINANCIAL

&

What's Ahead in Television ?
mainstay

(Continued from first page)

economic

opments in the country's
history.
In television

'

r

'

public for
-

Commercial

television

of

Prices

receivers

;

with

a

the

tube

set

a

cathode

ray

26-square inch pic¬
ture up to more than $1,000 for
flying is the ultimate in transpor- modern television industry really
started as recently as March, 1947, some radio-phonograph-television
tation.,
j
:
v>' y' ' ' y '1
It is not surprising, therefore, to when the FCC, after very thorough combinations.
The most popular sets are those
decided that color tele¬
observe that tremendous excite¬ study,
vision
was
not
ready and that giving from 61 to 52 square inch
ment and public enthusiasm have
much development work still re¬ pictures for about $350 plus instal¬
been aroused in many parts of the
mained
to
be
done
in order to lation, and those with larger tubes
country because television is al¬
giving from 90 to 74 square inch
\
;'
.
ready an accomplished fact. When perfect it.
That cleared the way for black- pictures for about $440 plus in¬
we think back to the early auto¬
just as

giving

one

in January,

cost is borne by

1949.' NoW, there

are

chain T. V.

way

fitem Boston

gets under way, andv then by the ',
sponsor, who provides the enter¬
tainment so that he may have a

programs

from less than $200 for
seven-inch

with the Eastern

all the

That is

to St. Louis.

Prices

range
.

and

television

Receiver

Television

to

to come.

many years

Commercial Television

have the ulti¬

we

communications,

in

mate

.

the

of television service

Thursday, April 21, 1949

CHRONICLE

a

tremendous

a

-

much

than

few minutes in your home to dra¬

troit, and Milwaukee, as. well as
Chicago and St. Louis, all indi¬
cate
that the network hook-up

why you should buy. it.^.v

has

past 12 months.

interest in

greatly increased

those cities.

>•\

there will be

years

/

s-,

within

that

believe

We

-

three

connection

a

with the Pacific Coast

public.
*
Television
was
ready in the
•summer of 1941, but before many
sets could be made and sold the
first offered to the

iuced

about

Japanese attacked Pearl Harbor.
While the war held up all direct

Last year,

on

Cathode ray tubes, on
„

As

time.

first

the

ceivers,

country will be linked to¬
gether for outstanding programs.

v

great strides

America

has

with

grown

of

Some

dously advanced during that pe¬
riod.

dous

success.

A great many

ilies

insisted

on

radar

equipments.

although the tele¬
vision industry was out of peace¬
time production for four years,
Therefore,

art

television

the

tremen¬

was

v,}

Postwar

of

Problems

;/ '

Development
When the

receiver

be

to

standards

set

vision
the

right

Most of
believed that

industry

television
same

color

for

still

was

at

in
FCC

in the '30s.

was

A

tele¬

the

elevision

.hey

ready to
dependable, high-qual¬
service under ; average home

ity

On

toest technical

the

basis

of

Because

those in

as

so

cause

it

can

will

those

use

be

new

least

at

to

tubes; So

another

four years before there is color
T.
V.
broadcast service in this

Recently

you

have

probably

references to the possibility
having television in the ultra
high frequency band (475-890
of

MCpat

future date.

some

Today we are using the very
high frequency band. All the T. V.
stations in operation
this
-

are

in

Philco

field

tests

made

by

engineering organiza¬

tion indicate that commercial ul¬
tra

high

The

in

believe

that

payment

nake

the

banking
unit of sale is sub¬
and the purchaser will

sure

he

keeps his account in

jood standing with
will be able to

ample, where
vision

see

you so

that he

all his favorite

In Philadelphia, for

programs.

ane

gentle¬
profession.

you

average

stantial,

service

of the

have

we

for

smaller

frequency

broadcast service,

television

now under con¬

ceivers

for

had

several

years,

al¬
re¬

with

very
most en-

It

teusiastic

this

business.

other

television

banks

ommunities
ob

table model television

and

in
are

having

is

doing a similar
similar experi¬

and

and

vide

it

will

not

obsolete

present-day television sets.

tests, in the opinion of

These

our

tech

meal people, also indicate that the

present television frequencies and
stations

will

continue




to

be

the

good business and

a

by Mr. Roger Steffan,
Vice-President of The National
Oity Bank of New York, that over
>0% of all their appliance paper
n

iet

New

York

was

our

for

markets
to

in

problems

getting

installation

facilities

to

the

of

and

the

meet

industry's

Realizing the importance of this
phase of its operations, Philco
trained approximately 7,000 inde¬
pendent dealers and servicemen
handle

to

television

installation

and service yast year.
It is important for the consumer,
when he purchases his T. V. re¬

ceiver, fo obtain it from a com¬
pany that he knows will be able
o
provide I replacement
parts
when and

life

as

and

needed

the

over

the

on

re¬

kinds

that are
stations within

programs

the

b,y

programming, tre¬

mendous strides
the

last

Most

programs

than

the

on

you

are

ex¬

from

can

50-yard line.

a

Boxing

and

wrestling are both outstand¬
ing on television.
Beauty Queen contests are of

and

natural

a

course

for

television,

Philadelphia
merchant
combined such a beauty contest
with a campaign to sell expensive
fur coats on our station during the
a

the

to

summer

edification

audience, and with
gratifying sales results.
Then

have

we

the

the

of

V.

T.

very-

Tuesday

Night MUST—Milton Berle of the
Texaco Star Theatre—the increas¬

ingly

popular

Arthur Godfrey,
and Wednesday
showing for Lipton's Tea
and
Chesterfield Cigarettes—and the

with

all

Monday

a

too

infrequent

televising of
Metropolitan Opera perform¬

the

Symphony.

Then

'there's

J This .year, we believe that T. V.advertising
expenditures * will
show

a"

still

small

to the

thousands
ters

ap¬

youngsters—literally,
received

in

period

after

three-week

short

a

its

in¬

ception.
million

Ten

dent Truman

people saw-Presi¬
inaugurated by tele¬

vision—more than the total

There

are

about

now

news¬

this number

of

com¬

as

small fraction

a

a

1,000 ad¬

V.,

T.

pared with only

ago.

year

V.

sales effectiveness of T.

is about 10 times as great as radio,
and it represents an incomparable

advertising medium, combining as
it does the sound appeal of radio
broadcasting and the eye appeal of
the printed page and motion pic¬
tures.
Television

today directly em¬
and women, and

ploys 50,000
a

men

great many other thousands

are

employed in glass factories, tube
plants, etc., and this number will
grow rapidly as new stations go
on

the air and receiver production

is stepped up. By 1952, it would
not be surprising to see direct em¬

ployment

television

in

exceed

100,000 people and perhaps 200,000
will have jobs producing
component parts or providing pro¬
others

television

grams—so

tain to become

seems

cer¬

important new
employment opportu¬

of

source

an

nities.
Conclusion
All of

num¬

ultimate

yond

our

from

New

York

inauguration
could

not

be

night of the

stations

served

by

away

as

that

the net¬

events

of

they

are

best be put,

that it offers

into

world

the

at

your

moment

very

taking place.

The

engineers
and
scientists
have given us this wonderful new

discovery,

and

it

is

up

to

to

us

make the most of it and realize to

Television programs, like
owner

We still have
can

sure

the

the Pacific Coast

Advertising

Be¬

unequalled opportunities for the
enjoyment of sports, drama, news,
and
many
other
exciting
pro¬
grams, and
it brings the great
home

inauguration b,y T. V. only
24 hours after it happened.

be

can

own

the

cost the set

to which it

audiences

television

works—and

far

the

for

spe¬

flown

and

of living.

ways

we

made

invention—the

much to learn about television and

but

were

new

communications.

question, television is
going to have a great effect on our
culture, our art, our politics, and

augurations.

addition, 51,000 feet of

in

any

uses

films

living today have the

us

unusual privilege of participating
in the growth and development of

the

as

to

magazines, and radio, T. V.
advertising
is showing a very
strong growth curve.' »

ber who witnessed all previous in¬

saw

compared

•

thousands of let¬ this wonderful

upon

were

In

While

three-fold increase.

papers,

the

Howdy Doody Show—with its

cial

we es¬

on

and Toscanini and the NBC

ances

peal

Last year,

T.;V. time and program
talent by advertisers.
spent

The

football, for example,
follow the ball better by

television
seat

made

In

you can

,

,

by leaps and bounds in the

grown

year.

sports

cellent.

been

nave

/

-

Advertising interest in T. W has

ft.

vertisers" using

reception range.

In the art of

in

television

a

depend

types <af

broadcast

use¬

•

of

value

will

that instrument.

of

The
progress
of
television
broadcasting has
been
no
less
spectacular than the manufacture
of

The

re¬

growth.

radio,

nothing., Their

the fullest

extent

ise it holds out to

the

rich

prom¬

us.

receivers.
A year ago

ating

only

limited

a

Most of them

on

a

Today

were

eral

hours

nost

of

60

are

good

day.

every

oper¬

stations

In

been

in various

plications
tions

are

issued

65

more

which

and

stages of progress.
for 322 additional

pending but

the

present

are

Ap¬
sta¬

frozen

were

time,

million people—40%

to

permits

temporarily by the FCC last
At

al-

addition

teese stations, there are
which
construction

year.

over

of the

Reporter," edited and published by Max Ascoli, issued to fill
"serious and dangerous gap between news magazines and magazines
of opinion."

60

coun¬

Under publication date of April 26, a new
magazine, "The Re¬
porter," edited and published by Max Ascoli, made its appearance.
According to Mr. Ascoli, the purpose of the publication is to fill "a
serious

and dangerous gap between
magazines of opinion." The iirs.<$issue

of

quarto size contains 36
comprising 14 short un¬
signed articles and an editorial.
Among the editorial and contrib¬
uting staff are listed Llewellyn
White as managing editor; Leland
pages

try's population—are within reach

Stowe,

of

Richard

television

service.

If

take

we

four people as an average
family,
that means there is an immediate

potential market for about 14 mil¬
lion television receivers
above

By

•

the

the

believe

30

1.5

that

stations
million

million

beginning
there

in

or

and

in

use.

will

1950,
be

operation

over

we

about

serving

half of the

na¬

population, and the poten-

;ial market for
crease

over

now

of

by

receivers

several

will in¬

million

more

families.

>f

important milestones
T.- V. history was the linkinr
the

Middle

Western

network

as

European

editor;

also,

Donovan, William Harlan
Hale, James M. Minifie, Glaire
Neikind,
Gouverneur '.i Paulding,
Theodore A. Sumberg, and David
Wills. According to the prospectus
"The
Reporter" is going to be
quite principled when it comes to
political fundamentals,, .and quite

pragmatic when it

comes to \ eco¬
nomics. The greatest effort will be
made to take the sting out of the

eternal

debate,

economic
economy
every

One of the
n

Fortnightly Magazine Appears

"The

sev¬

programs

for

have

on

pretty restricted basis.

there

New

num¬

were

serving 33 major cities with

television

financing. (See "Chronicle" of
March 31, page
11.—Editor)

a

want

available

receivers

adequate

service

tion's

come

a

over

all

we

television started has been to pro¬

presented

does

It is

as

more

thej major

115

it

down

come

time,

families, but there
are no shortcuts to achieving this,
for we are already enjoying the
economies of large-volume, mass
production techniques.
A television receiver is a highly
complex instrument, and one of

growing business, and it was very
nteresting to learn from the data

when

will

of

make

more

ences.

and

including hardware, 280
components, 27 tubes

Prices

period

sideration by the FCC, is
unlikely
years,

com¬

(including CR tube), and 10,392
ieet (alipiost two miles) of wire.

for

several

set, which

mechanical

692

electrical

ex¬

gratifying results.
Other

his with what it takes to produce
a

tele¬

banks has

consumers

about

electrical com¬
tubes. Contrast

37
six

components,
ponents and

mechanical

the air.

ready financed 2,500 television

Extensive

the

today

band.

,

set

be¬

time

of

table-model

average
needs
87

area—and

opportunities for

men

country.

radio

An

ber of television stations

there—I

financing

*reat

it.

into

move

it

as

price of the re¬
by what goes

the

are

aurchases of television sets offers

or

seen

keep

tee

three

Basically,

programs

as

their

much

as

ceiver is determined

re-

the set is in the home,
heaven and earth

once

hey will

television

a

use

ice and then to build transmitters
that

open

family is

average

soon

in

cost

why tele¬

they do, and when and if prices
are
coming down.
;

ful

the

as

available

today to
provide color T. V. broadcast serv¬
common

that

is

anxious to have

jeiver

much power

as

dreamed

never

doors
would

ple of low and moderate incomes.

information, it will

times

many

opening

lot for the wealthy—but for peo¬

the

take between three and four years
to develop the transmitter tubes
with

is

The great appeal of television is

That is still the situa¬

today.

even

able fashion.

a

conditions.

tion

ex¬

enabling them to
participate in the great events of
aur day and age in truly remark¬

it before it would be

on

but

urgency,

them.* It

'or

great

deal of work remained to be done

provide

and

same

intensified, in the case of
To people who are not
wealthy, who cannot afford to
leave home whenever they want
entertainment, or shows, or sports,

pbint that black-and-white

television

that

sense

income.

asked

receivers

vision

quirements

;elevision.

us

about

housekeeping

more

in
color

away.

and
*

we

citement

group

the

industry

even

Today

fam¬

getting a radio
before they had all

equipment.

Before this could

however, one
requested

done,

the

may

of

their furniture

ended, television
ivas
ready and the industry was
anxious to get commercial pro¬
war

duction started.

you

early days

often

are

them to do to broaden

remember
radio as I do.
Radio
gave
the people of this
country something in the way of
entertainment that they wanted
very much. They had never had it
before, and radio, because of the
wants it satisfied, was a tremen¬

the

available

their

We

in the history

ever

this amazing speed.

similar in both television and

very

:

ponents,

No other industry

of

Programming

ceiver

and,, explain

product

that the

so

entire

your

Up to certain limits, where the
picture gets too big for the room,
most people want as large a tele¬
vision
picture as they can get

that by the end of next

homes,

American

usually determines

car

receiver will cost.

contains

more

television

components which are

electronic

so

motor

a

re¬

or

there will be over 6 million
sets
in daily use in

year

produc¬
of the complex

tion costs of some

million

increase to 3

reducing

in

made

supply of cathode
is available—and by
production and sales should

1950

the number of cylinders

as

price, the size of the television
picture determines about what the

tubes

ray

Also, because of the large vol¬
ume of radar apparatus manufactured during the war,

receiver

million—if the

cost

and $60 before the war,
they are now down to about $25
and over the next year or two
should decline even further.

were

in

This year, the industry expects
'o step up production to over 2
nillion receivers, valued at $600

tween $50

'

increase

1 million
television sets, with a retail value
of about $350 million in 1948.

result,
be¬

a

tubes

10-inch

whereas

in

with

than

was more

sold approximately

and

quantities by
the Army and Navy, and the in¬
dustry learned how to turn them
out, on a mass production basis,

for

of

Dutput and the industry produced

the face of

great

in

there

five-fold

l

which you see the television pic¬
ture in all direct-view sets, were

(required

value

retail

a

re¬

nearly $100 million.

television, it indirectly
advanced the art a great deal.
work

Those

production.
had

pro-

receivers in
of real com-

1947—the first year
ceivers

of

short

industry

180,000

*

nercial

Just

his

matize

timate '.that about $10 million was

stallation.

its

television

The

started,;

the past two

been ; little

years
has
amazing.

more

any

the progress in

and

appli-

realize that television
highly perfected
of them when it was

we

ances,
was

and-white television to get

refrig¬

T. V.

as

step forward, and the reports from
Buffalo, Cleveland, Toledo, De¬

,

mobile, vacuum cleaners,
erators and other elefctrical

the station

our

tries,

*

or

situation

country, or foreign

we

shall

much economic

versus

plgnned
laissez-faire. In

versus

concrete

own

socialism

liberalism,

the

freedom

About

and

bear and how

can

economic
make

magazines

news

planning

is

the

much

needed

to

political freedom effective.

planning,

we

always

shall

try to see how the planning is
done, at what levels, for what and
by whom. Planning can mean

anything and lead to, anything. It
can

be the necessary condition for

both honest
resources

economic

planning
level in

accounting of national

and for the madness

of

self-sufficiency.
done

at

the

Much
national

European countries

some

(with accompanying socialization)
simply that the profit sys¬

means

tem

has

loss

system.

been

replaced with the
the other hand,
one of the
greatest guarantees of
political freedom everywhere is
in planning
done at the inter¬
.

On

about

national

coun¬

—like, for instance, the Economic
Commission' for Europe
or
the

try to see how
planning political

ERP.

or

intercontinental

level

Volume

169

Number 4796

THE

(Continued from page 4)

tion to

personality, instead of
seeing and analyzing their own.
.

Customers

Traders

K

traders

Oliver

Wendell

said, "Every
mind

Holmes

and then

now

is stretched

and

by

shrinks

never

a

back

TRY

THIS

such thing

face

ONE:

as

is

no

you

one of you two—

ing to sell.
Either

sell;

sell

the

cus¬

supposed

are

he will sell

or

,that

will

you

what you

to

the customer is the

better

salesman if you have let him sell

you the idea that he will not buy.
THINK

THIS

OVER:

The

doorway,

customer.

takes

and

The

he

cus¬

firmer grip on the

a

door-casing and

says,

"No, I'm not

interested"; but being

extro¬

an

objection—

every

does

the

save

to look at it," or something

way

•

v

.

Playing

Customer's

on

Emotion

knows that while he

vincing
the

all

sold

and

has

them.,

experienced

Of

salesmen

if

the

customer

had

the

customer
center

off

his

"Assumed

"Factual

'

"Relax and Recommence."

make

sure

you

is

another

Before

you

doubt,

were

list

a

of

"stretcher":

hired,

were

let the customer get
away
Nerve you say?
Not

required

seemingly

you,

to

perhaps

irrelevant

:;.;Viv/w/-/ ,,vf;V4

But

how

rated, had

would

you

\?s

successful

they

have
been given an at¬
you

do!

they

cept for will do than the George
Cohan

philosophy: "Live a
honest, extrovert life; get

clean,

your work

in

done."

direct

roundings
enormous

The extrovert

touch

with

his

sur¬

and
understands
the
influence that environ¬

ment exerts

on

the

mental, moral
and
physical
responses
of
a
people.
He is prepared to meet
them

on

common

ground.

clean

he

is fit

meet

to

Being

them

and

they will be willing to meet him.
And begin honest, he will do an
honest day's work, so of course
he will get his work done.
,1 en¬
dorse that kind of
trovert

gift

salesmen

philosophy. Ex¬
seem

to

have

and

one

to

big

man

a

for

handling personal rela¬
tionships.
Probably it is because
they see and analyze their cus¬

reason

leaving results to chance,
chance.

a

the

us

One

is because in¬

success

same

Fate

chance

offers

which the

takes—a chance to do

our

best.

Another

reason

why

some

men

become successful salesmen is that

always on the spot when
something good happens; and the
reason why they are
always there
when something happens, is be¬
cause they make it
happen!
The
are

"built-in"

type of salesmanship
automatically proceeds with the
of

action

In

persuading

v

Having

attention,

won

the

describes

or

shows what he is selling and tells

something

interesting

about

it;
just what
the customer will gain by owning
the particular article he is demon¬
then directs attention to

strating.
a

chance

He
to

gives the

ask

customer

questions and to

•

his objections (the louder
objection the greater the in¬

terest often

The
argue

times).

salesman

never

because he has

a

to

needs

reasonable

SALES CHART

Mutual's

Agency,

Forrest

San

J.

Francisco,

on
my
selling experi¬
the most important part of

sale

found
may

is

minutes

pect

"close."
entire

the

I

wants

and

to

then

push

the

pros¬

off and

you

forget the whole thing.
"I

have

interview

smoothly until the last

run

few

the

that

'

always agreeable in any
selling interview until the closing;
I may agree on all that a prospect
says; but when it comes to the
close, I am as stubborn as a mule.
I

am

determined to have him

am

things

see

my way.

is

"It
for

worth

if I

do

of

all

not

call will be

effor,i

my

succeed, my next
difficult for me."

more

Saleman's "No-Man's Land"

Sales management has definite¬

ly determined through capful sur¬
by the best research and test¬
ing devices that many salesmen
veys

bogged down in

are

Land"

between

a

"No Man's

the

point where
admittedly con¬
vinced and the spot where he is
actually motivated to buy.
the

is

customer

A

scientific

that,

rather

devise
the

ways

and

salesman

means

to

through this bog, it

bridge the

This

has

achieved
by
sales engineer¬
element
of
old-

been

common

the

first,

overlaps

or

the

now

constructed

so

convincing, section
final, or activating

section.
Or put it this way.

The sales¬
begins to prepare the cus¬
tomer to buy- before telling all
of the good points about what he
is trying to sell.
Call it bridg¬
ing the weak link in the psycho¬
man

logical

idea

is

the

This will require practical

same.

applied psychology.
Phycholin the near past was defined
a
study of the science of the

or

y-

chain—the

ogy

FAIR

as

mind,

and

fortunate

indeed

was

the student who did not find him¬

1
:it!/

self

POOR

maze

of

bewildered

in

a

metaphysics and theoreti¬

cal concepts.

There is

tendency
of late, however, among practical

SALES CHART

imiw
t.

hopelessly

■

a

psychologists, to get out into the
open,
and instead 1 of giving us
and

more

more

of

less

and

less

about what

we already know, they
really trying to help us to a
understanding of what we

are

better

FAlA

want to
tors

SALESMANSHIP IN A NUTSHELL
When the
goes

corners

in the

of the

same




salesman's

direction.

mouth

point downward

Practical instruc¬

define

psychology as a "sci¬
entific study of human behavior."
Many
experts
in the field
of
thought term it social science.

pooff

salesline

know.

The

his

The

Psychological
most

Moment

important

in¬

which

en¬

to

close

sale

part

moment.

psychology for the salesman is the

or

to

isn't

the

exact

co¬

is necessary.
actuates the

buy.

voice,

your

how.

/ .-/'' ■':' •/./

logic and

prospective
uranium
mine, ' the
with, possibilities which-stagger-the-imagination!
"Paved With Knowledge"

The

road to salesmanship is
paved with knowledge—the blocks
;

square,

the

course

your

the

is straight and

way

is level.

But salesman^

ship must be vocational, because
in salesmanship depends

to

a-

far greater

realize

extent than most

the

on

attitude toward

salesman's

his job.

"I'll try it"

If

a

man

your

takes the

know-

has just about struck out without

'/•>

What do you

I'd

sort

are

appearance,

your

were

but to take care of
speculative itch, I'd let him
buy a few low priced shares in a

people

to

I

of his money;

Emotional

depend on which
(feeling)
responds
to

If

his

customer's

Likewise emotional

counts.

a yen for
sell him nothing
but the best likewise—to take care

changes in
the best

An

that

speculation,

at

alternative

swinging.

the aver¬
customer's emotional reaction
suppose

complex

He

is

attitude, he

afflicted

than

worse

with

a

wallflower^

itis at his college dance. If a man
Think takes the "I'll try it" attitude, he
this over—but first take a good has purposely left the gate to fail¬
look at yourself.
Stand before a ure open; and before he may real¬
well lighted mirror and see how ize it all the
reactionary forces of
many different ways you can say h i s
undisciplined
subconscious
"good morning." Also I might tell mind will have sneaked out
you
what to wear and how tc through the opening (which he
wear it, but how much more good
prepared).
These
reactionary
it will do you if you tell me why forces shout "You can't
sell—you
you should dress like a banker if don't want to sell—let's quit this
you happen to be selling invest¬ selling job."
*
•
age

is

when he first

you?

sees

ment securities.

;

How different the

Having dressed
the built-in
salesman, we must give him the
"good word." If someone were to

the

takes

man

position

start when
do

it

or

a

die"

bearing—he therefore

or

notice

serves

"I'll

his

on

subconscious

ask me,

what's the "good word," I mind that he
is
going
to
go
probably would say originality or through with this choice to a
perhaps organic; anyhow, the word definite end. Thus he establishes
would
stand
for
something
in the difference between his even¬
which the pulse of life was beat¬
tually arriving at Success Metrop¬
ing!
There are a number of books olis or
winding up at Hobby Cor¬
on
salesmanship, that are good; ners.
and
many
others which are no
Importance of Working ,
good because the author failed tc
vitalize

the

same

stomach

personality—he

tissues

sonality to work.

of

a

just

cow;

to

Value of Originality

irresistible

drawn

that

has
men along the road
traveling,-and some

many
are

we

leadership

have kicked up a lot of dust, while
the others were beating their sales
route into

It

landing field for

a

has

who

been

win,

said

profit

suc¬

that

by

the

finding

have done and

men

how they did it;

following in the
footsteps of those who have gone
I don't like that.

before.

a

I believe

making pew tracks. Stake out
new claim, even though you do

have

to

little., Don't
tailings of a worked out

prospect

follow the

The salesman who develops

mine.
his

ideas and thesis is artistic;

own

the

a

who

one

works

according to

others is archaic.
Get

originality into your
work; generally speaking, it is the
some

that

unusual

There

is

attention.

attracts

curiosity con¬
cerning the mystery of something
new; and a world-weary indiffer¬
always

to motives which do not mo¬

ence

tivate.

You

to

an

get

obviously
in

a

have

all-out

to

order

all out—

go

And
be impressive

response.

you must

impress

to

anyone.

Knowledge is all right, but don't
try to know everything; particul¬

arly
isn't
ideas.
know

avoid knowing
so,
such as old
One

thing

a

you

can

well—because

too

lot that
mildewed
it

never

is

so;

what

people want most of all is
someone
who. will help them to
build or maintain a good opinion
of

the

themselves.

Deliver

me

from

represent."

who con¬
at the door with "I
Why doesn't he comb

that out of

his whiskers and say

type

of

you

salesman

work¬

.

forking

this?

An

a

ing personality.
You have per¬
sonality — we all have — but the
built-in salesman has a

as—and often achieves
designation as — defunct

tripe!

in

A built-in salesman has

are

inspiring
the

Personality

which

of

substance

composed. When the ma¬
terial and composition of a salestalk is without vitality, it is as un¬

they

fronts

of

a

tactics

out what other

sense.

It

—it's the size of the idea with the

the

men

Sales talk is

words.

size of the business with the idea

success

ing

an

original aphorism into

an

500

each

response may actuate the customer
to refuse to buy.
The causes of

cess.

with

an

timing

instantaneous

to

combining adroit
fashioned

EXttuwr

will

attempting

to
help

have

of

selling

study of this prob¬

than

is better all around to

EXCFUEWr

SALES CHART

them

lem has resulted in the conclusion

"No Man's Land."

fAiir-5

ables

Bach, of

"Based

ence,

voice
the

Karl

says:

buy.
"built-in"' salesman

Penn

sense

you;

be?

salesmen

fixed

emotion

Chance."

Currey

strategy

response

•

*

salesman

the

to

someone

;

closing how stubborn should

the

a

salesmen?
a

take

they

-There is perhaps no better con¬

is

are

stead of

1

titude test? This is the difference:
A suitable aptitude means can do;
but a correct attitude means will

M.

a

only thing that is final in sales¬
manship is the sale. What makes

answer

questions—an aptitude test.
You
did well with this quiz, stood high
and
received
a
good rating in

•^aptitude.

just

salesman's mind that the

no

with it.

absolutely—
fixation in* the

finally

"Last

says

"No," but he would be amazed if
anybody thought he/intended to

have enough of it

that you and not the customer
will do the selling!

so

Here

customer

a

and

own

.

/

idea and

date the fellow who had

imaginations on fire.
He
that when he creates

ordination of time with emotional

.

"Decision Assist."

the

to

just

their

emotional¬

:•"■■;■/ ':M

.

set- fire

sales

their

response

narrative

doesn't

outstanding fault
talks today is lack of
originality—get at least one new
with

selling securities, I'd sell only the
highest grade; but to accommo¬

make

consent."

without

when

fire,

on

lady that I've
today"—get the im¬

The

business

possible

"Choice of Alternatives."
ized."'

he

Built-in

This may take the form of any
of the recognized closes:

not said

surprised

coattails

emotional response.

emo¬

cus¬

No, he would have bought
any
"selling."
The ex¬
perienced salesman is not at all

plication?

a

psychological moment.
of psychology
in
salesmanship is the orientation of

sufficiently to

nothing to sell except
an idea—and
yet you bought!
Hereafter when analyzing the
significance of sales resistance,

tomer had

his

see

you

clothing. 1 There is a
against that, but there is no
law to prevent him from setting

The

him to decide to act;

cause

but in the region of fact—the fact

that

When

the fourth

are

interviewed

customers'

his

con¬

by appealing to his
(logic), he must, to close
sale, do or say something to

push

the customer says, "No." ?We are
not in the realm of opinion now

being

made.

29

law

customer

tional dead

thing—and

is

reason

saying

same

with

does

after he has convinced

or

vert, the salesman sees him say¬
ing it—he has seen many others
the
ahead

man

course

of the sort.

the

know that the time to sell is when

sales potential to sell him.
And

the

sees

course

just don't have enough

you

the

are

"You

when

Remember, a salesman creates his
own
psychological moments.
Of

and

he

and

customer

sales

psychological

the ^time

cus¬

each

also

in

the

sees

the
is

tomer's face by saying, "That's a
good question"—"Yes, that is one

he

gone

the idea

you

prepared

answer

knows what to do about it because
tomer

either you or the customer—is
go¬

tomer

differ¬

of

moment—that

Being a student of human na¬
ture, he knows that the customer
is more or less logical and
poten¬
tially emotional.
The
salesman

extrovert

braced

its

sale—when

no

customer,

a

There

the

themselves

They know how
get together and make a sale.

to

The

former dimensions."

(1749)

that is the psychological moment
to sell him a "fire extinguisher."

for

-

idea

to

CHRONICLE

'

once

new

reconcile

can

and

their customers.

man's

a

extroverts;

between

ences

may
-

are

diplomatic

or

although

Reconciling Differences With

inspire hope.

REMEMBER, no man is too big
to put all he has, and all that he
acquire, into salesmanship.

FINANCIAL

Salesmanship in Securities
tomer's

your customer will not buy with¬
out hope you can't sell unless
you
have the ability and determina¬

&

significance

uBuilt-in"
■

COMMERCIAL

Just

the

with

by

many

which

has

put,,fris perHow qljd he do
giving expression
appealing qualities

we

are

all

endowed.

Many occasions arise in
which

in

.

>

business.

old

the

expression
"build
up
your
personality" is
strongly emphasized.
Go ahead!
Build it up!
But don't forget dur¬

ing

your

construction to work that
already possess.
You

which you

ask rightly enough, "Does
personality play a big part in
salesmanship?"
Our answer ip

may

"Yes, it does" in fact

sales

some

authorities say it rates as high as

75%. How does this compare with
that required in other industries?
A recent report from
a
rather

unexpected

source

explains

the

-

significance of ethical, social and
industrial habits.
the

A committee of

Society for the Promotion of
Education estimated
relative
importance of the

Engineering
the

various factors that make for

suc¬

in

engineering.
Over 5,000
practicing engineers participated
in the investigation and they rated
knowledge of fundamentals and
technique about 25%.
The re¬
maining 75%
was
accorded to,
various qualities of good
social
habits.
When
young
graduates
are being interviewed today they
cess

are

asked

first

about

behavior)

(social

their

s.b.

second

and

about their

petence.

using
the

a

i.q. or technical com¬
Develop the habit of
good personality.
After

habit

is

set

s.b.

will

come

As Rousseau said, "No
one, not even a child, likes to take
unnecessary
trouble."
There¬
fore, if the habit is established,
naturally.

good personality will come natu¬

rally and easily.

(Continued

on page

30)

■.

30

THE

(17501

COMMERCIAL

&

FINANCIAL

CHRONICLE

Thursday, April 21, 1949

amounts of

"Built-in"
(Continued from
The

A

29)

page

which affected them).

plaining the

Sales Talk

tures

good personality helps us to

get

a

ing the farmer.
cific

con¬

the

who

worked

individual

ticular

ing is to

There

would make the motion of throw¬

idea

sell the

preconceived idea

a

customer

exact

have

it, pure and un¬
simple, much — very
much—too simple, because'timing,
a most important factor, has been
omitted; we just can't throw this
we

doubtedly

talk

sales

at

the

customer,

we

Of

course

the

are

have

the time

father's

of

sense

a

the

from

two

different

believe

to

someone

to

—

lieve,

,

We

to

used

hear

lot

a

resistance."

The

tance

he

rates

encounters

it.

.If

saleman

a

resistance,
he
What happens is that

deserves it.
the

salesman

and

persuade—he

how

to

convince

confuses

handle

doesn't

the

know

lines

two

of

persuasion (convincing and actu¬
ating) at one and the same time,
the result being that the salesman
has the prospect
believing but
not acting; this is customer in¬
ertia; and will, unless the sales¬
man

make

ability to get the other
participate." This can

person

either

mentally.

physically

is

of

possessed

cernment

of

nice

a

dis¬

is appropriate

what

know

or

this

it frequently

be

with

is

understood
a

men

do—but

sales

talk

to

fit

idea

of

agents

their

than

to

you

you

ers
to
motivate
themselves by
implications which angered them
(not at him but at conditions

or

"salesman"

so

many

in

is

The

tip-off

is

to

be

its widest

different—

sense

means

is; something
like the
woman
who, being unfamiliar with fire¬
arms,
just shuts her eyes and

But don't forget that it isn't what

shoots!
doctor

a

all

his

often

salesman

thought

has

and

brings

most

to

him

that

likely

gone

a

brushed

they
long

in

on

things

reads

little, knows

that

but that too

insufficient

of

Show by

physical

habit.

a

when

tary, but most people would not.

act

So

taken

demonstrate

by moving
path.

the

your

.Then

rotary
hand in a

by, moving

of

to

his

the

is

He took

paradoxical

ality, too?

tion

and

,

f

,

that

cal

You

enough

he

not

developed

him

He

line,

one

had

learned

that,

habit, that,

a

mind.

he

So

that

put

it

power

in—and

used

sponse.

This

article

taken

is

thinking mind to think with. And
when his mind

vS

plain

Items" published in

freed to think,

was

reduce abstract sell¬
r v

^ Fiiie Art

Built-in

follows

explained in
from

to
his.

auto¬

make

set

of,

(selling in his case) is largely
care of by the subconscious

work—built

explain.

therefore if the mind

certain

a

help

salesman

they

so

the habit pattern "Yes," it is eas¬
ier to elicit
another "Yes"
re¬

logi¬
think it

with his present circumstances he
will not be moved to
buy; and
had

gestures

the

the "Yes Mood" psychol¬
help get action? Yes, thinking
follows
definite
pathways,
and

If the customer is satisfied

over.

built-in

to

Does

his

you

lineate

a

ogy

will find this

when

in

attention

what he tries to

greatest
opportunities stem from sales re¬
sistance.

fro

and

call

The

matically

-

promoter of dissatisfac¬
knows that

to

you

practices

sales¬

a

hand

■

all

with it until it became,

act becomes

an

making

prevent

character.

salesman

reverse.

and stayed

mechanical superiority of the ro¬
you

effort

a

fellow-

by

up

lack

fact

bewildered

built-in

this in

for

in

is

finally winds

The

and

He

and

deterioration

none..

understands

haws

and

efficiency.

and

but

lot but can't apply

a

hems

confused

Suppose you are selling
airplane motor built with a

the

succeed;,

finishes

and

much

it—then

know

not

consists of the type

or

"seeing is believing" and that is
why showing is more convincing
than telling.
Elocution embraces
not only style and grace of voice
of gesture.

do

The brushed-on salesman starts
many

He

mind

who

which is "built-in."

The Elocution Aspect
bear

those

depending
upon
whether
their
salesmanship potential is merely

selling his product.

let's

are
necessarily two
salesmen; those who do

of

ing problems to human terms.;

It

we

toward

path

way to explain
by comparing them
is well and

a

My point is

it, he will have

circular

easy

is

for example.

and

he began to

an

is

er,

knows

there

kinds

stroke.

cus¬

class of prospect—the farm¬

that

ego—instead

he

fa¬

waste of power at the end of each

man

some

that

way

motion

illustrate

that simile

reason

something which
generally known. !

particularly dislike "how-tosen" articles which give a sales¬
man
general advice on selling to

to
on

sincerely give the

can

the

the

good

very

to

I

he

would

that

sale.

salesman

tomer might have a bit of person¬

occur

if

sub-*

a

make

to

vorable decision you're aiming at."
The
implication is quite clear

that what most

once

give him

you

desire

the

technicalities

and

the

the

happens

concentrate

own

But if you have won his

conscious

rotary motion instead of a recip¬
rocating movement. An engineer

means.

means

his

a

the

course, on

he

doesn't
up

make

or

to

sales talk with metaphor and
simile?
The answer is "Yes" for

provides

perhaps worried about his person¬
ality; but we wonder if it didn't
ever

any

you nearer a

Should

patients

studied

any

his

alike?
The

by

off, but what the customer
understands by any means which

medicine composed of a little bit
this and a little bit of that,
dosed

by

express

you

What would you think of
who prepared a jug of

then

thought

He

an

pays

of

and

of

gations.

confidence,

gesture.

expres¬

sion

salesman

Also

associ¬

is to study language—which

way

of

I

don't be typical—be different. One
in

sale

a

resistance

some

involving himself in future obli->

broken and the salesman

or

rate

term

people's minds

more

closing

he's

point, the sale is about to be

that

is to the

favorable

a

decision, helping him to make it
by encouraging him to realize that
buying rather than being

in

something
him

get

Being human, he will natu-.

impression

with peddler, vendor, etc., that the
wall goes up too high
immediately.

customer—

Sizing Up Your Customer

salesman who caused his custom¬

"agent"
ated

readily

people want above all is a good
opinion of themselves. He knows

make

the

agreement.
"From that point, you can

trap
security—

make

com-*

yet, but will win his

as

exhibit

he realizes at

general rather
to what you are

Generally

to

decisions that don't

him

sold.

building

in

or

logical
mit

work.

same

or

can

rally

be.

old bugaboo, buyer
(sales resistance), will
give you less concern if you know
that often the resistance

'yesses' from the prospect.'
get him in the 'yes' mood
by throwing in his direction small

to work

will

will

dis¬

type

in

ly is "Give 'em the works!" This

to do, become sales resistance.
Contrast this with the securities

don't

proceed

noise, depending, of

That

sense.

and

that

they

it

You show

will either make

reluctance

to

prepared sales

the

if

nods

You

the set of the

principle is the

case.

made

beyond dispute. And
psychological factors

sales

him

job

your

satisfied because he does not pos¬
sess
that particular article.
At
this

to

customers

the

and

decisions; but ideas, no
how interesting, will not

offering.

it

but

either

are

influence

•

making

done

power

the

is

job

is supposed

convince

the asset behind the

or

buy—easily—

Your

some.

are

which

customers whom they have never
seen.
The general idea apparent¬

about

sales

there

"The very essence of
influence lies in the

many
make
the
strategic blunder of preparing a

better

frequently encounters sales resis¬

premises

as

talk to fit your product—all sales¬

convince someone to be¬
having persuaded

then

matter

Now

him to do.

"sales

customer

and

You won't have to worry

Behavior,"

will have to have

without

schools of salesmanship have long
since concluded that if a salesman

this

"causes."

or

(b) to cause someone to do
something.
By stressing the word "or" the
implication becomes clear; that
you can

and

the other

to make

comes

summarization

be made easier if it has been
pre¬
ceded by a series of affirmative

basic

You show him

much

with emotional re¬
mechanisms, rather than a
listening post. As H. A. Overstreet
explains it in "Influencing Human

employ

cause

something

the

can

the

or hawking mouse traps. You
must show the customer how one
or

convince your individual customer
how easy it is to buy.
Certain

person

Politicians

First viewpoint

words

customer

your

he

"When the time

he

left to

ties

Give your¬

about creating desire—
people
desire
everything
their neighbors have or may get

all power to

areas.

(a)

other

her par¬

or

most

sponse

clock.

word

real

a

grands

Furthermore,
if
selling is persuading someone to
buy, then we must have a clear
understanding of what persuasion
consists of.
Technically persua¬
sion means two things as we look
at

In

salesman treated

handling and what it is
for, but to sell, a salesman must
we

too

sell

that

safely.

was

sale.

sell

buying power and re¬
The biggest part of sell¬

sources.

tion, at the mention of vanishing
wages, this salesman would close

will tell him what

we

his

environment.

to

customer's

mentally
accom¬
panying him in the throwing mo¬

must feed it to him.

how

on

in

resistance

anything

principle underlying
all
successful
salesmanship
is
practically the same whether you
are
handling high grade securi¬

self the advantage of dealing with
the
realities
of
the
individual

ing and say "out the window";
when it got to the point where the
customer

The

We do want spe¬

instruction

by a line of
reasoning and clear logic
expressed
in
correct
language.

general terms

•

securities, he
referred
to
men

sales
have

not

buy with.

don't want general advice on sell¬

ex¬

hard, deposited their sal¬
aries in their checking accounts
every week, only to have the sur¬
plus, over and above that which
went for necessities, vanish. And
to dramatize the disappearance he

to

;

While

desirable fea¬

many

his

of

tinually

good sales talk.
A
sales talk to fit the product is in
across

Salesmanship in Securities

would

made

art^-by doing one's:
moment, then per¬
trying to improve that >
best as
a
man
goes, along—be-:
cause
in
the
human
equation.
nothing is final.
the

at

sistently

William

an

writer News," June 1948:

be

can-

fine

a

best

"Let

"Equitable

"Life Under¬

>

salesmanship

James

no

said:
have

about the upshot of his

anxiety'
education,

whatever its

be.

man

line

may

If he

The Best Sales Talk Will Forever Be Factual Narrative Emotionalized
.

% j.

Because Emotion Is Timeless in the Nature of Man

,7

1

-

Smile

Arrest Attention

Personality is three-quarters
of

You

selling.
can't

over-do

sincere

friendliness.

hy adopt¬
ing friendly habits of pros¬
pecting and selling.

Don't try to he terrific.

to

talk.

early to enhance
pect's well being.

Observe
and

a

mono¬

logue.

Describe and tell interesting

we

measure

product.

Portray

benefits to he en¬
joyed from its purchase.

Be sincere.

•

have

the

you?"

fitter

Suppose
and

you

put

take

your

along here.

my

name

pen

answers

Make action

tives

are

to

That's

why I
busy execu¬
turning more and
this plan.

The

Help the

easy.

his

heel.

Give strong

reasons

Keep

•

prospect in

three




"Yes" mood.

"You's"

Review main

charge

you

prefer

yob

to

'■...'...S

.

•

alterna¬

it

do

or

cash plan?"

a

every

"Will you wear them

"

or

shall

them for you?":

^

~

and

of superiority.

12

Close

selling pointers.

Part Friends
Plan

feel

he is

does

deciding

himself.

quirements

best.

own

ing

satisfaction

not

buy

will

sale

now.

Show

Get

reference

names.

Plan for repeat
'

"•

re¬

to

-

basic needs.

Don't be

business.
•

'

.

hit-and-run sales,

a

man.

Relax and

recommence.

If

testimonials.

>

gain by buy-

now.

Appeal

if

possible loss if he

how he
v

for

made.

is
to

Last chance.

Coypright 1949, J. D. EMERY

V.

two

tives.

special needs.
Refer

Show wisdom of purpose.
Exhibit

of

11

customer select for

own

Admit he knows his

points

for Close
j

choice

appeal.

Institute Final

proofs.
Show

Give

I wrap

Special inducement.

busy?

called.

selling
and/or

~

for

buying.

central

User logic

point.

Use

10

reason

Make Try

right

Help Customer Decide

very

the

emotional

,

9

more

Look for the Achilles

Stress

Strive to Close

the

Strengthen Desire

"Will

Let him

objections.

Close

consent.

8

Too

Air his views and
opinions.

Learn his

Assume
"Shall

Use human interest pointers.

of customer
accordingly.

Endeavor to

,:/'v
wants.

Now Review Answers

as

not

to Interest

needs and

pros¬

type

act

"Yes, but"—use his

}

-

on

Learn his

facts about the

Be impressive.

Ask Questions

A sales talk is

Latch

do or show some¬
thing novel, new and in¬
teresting.
say,

Offer

Build personality

Get him

Ask,

sale

is

not

gracefully.
save

Pave

made,

way

for

lose

Let

prospect

next

call.

face.

1
/

Volume

169

Number 4796

THE

COMMERCIAL

&

FINANCIAL

CHRONICLE

(1751)

31

keeps

faithfully busy each hour
the working day, he may
safely

of

leave the final result to itself. He
can
on

with

perfect certainty count
waking up some fine morning

to find himself
tent

whatever

his

pursuit
-

James tells
Your

exactly what to do.
must be "singled

us

pursuit

out." Single means
suit.

Keep

one,

faithfully

one

pur¬

each

hour of the working day; and you
will wake up competent.
Why
of

course

tion

in

will

you

would—there

is

these

few

lines

of

5%

and

if

pose

And,

a

will wake

you

single

up

not-

some

ping in the treasure house of life.
A

salesman

be

following
rules of built-in salesmanship

the

if

will

he

practices

daily the sum¬
reproduced below.
the material used on

marization

(This

is

the Emery rule of "Built-in Sales¬
The Rule of Built-in

ship

is

conclusion

of

printed

is

this

article.

It

J-

:

:;

Salesmanship

V

•

vorable

some

builds

harping

great many of your readers. Don't you realize that the
industry has the choice of regulating itself via the NASD or of letting
the SEC do it for us?
Personally and without any expressed or im¬
a

criticism

NASD do the

of

the

SEC—I

Ruins all

interesting human interest state¬
ments about it and portrays the
benefits- to

be

purchase.
with

derived

from

Probably

salesman

knows

his

customer's desire

The only dealers hurt (or

some

see

dealer

if

pay

in

he

"No" instinctively
surprised at first
He knows that "No plus

investment dealers will continue to
get along on the cream
market for securities they

the salesman for his hire.

Creates

a

more

than 5%

on

a

riskless trade

action

by
helping the prospect sell himself.
\ The Built-in Salesman is mature,
ethically, emotionally and intel¬
suggestions.

He

gets

Of

course

TOPEKA, KANSAS

Very little.

a

of

man

and

action.

He develops

friendliness, depend¬
ability and integrity. He employs
tact and has good work
habits.
wears

benefit

tries to

well
the

he

because

buyer.

"Terrific."

He

sells

"no

a

market"

competition dictates prices in
little value of any yardstick.

knows

profits most who

serves

auction market

an

we

can

see

WICHITA, KANSAS
Hurts.

am

Gives the big corporation the
advantage.*

WICHITA, KANSAS
No

noticeable

Bad, not in the public interest.

ing the smaller corporation of the country without
This all

means

no

Very detimental.*

,

.

I

-

offerings of the large dealers.

selling job can't be maintained
NASD

a

5%

mark-up

per

on new issues is not obligatory and
a '
on a $10 stock
strikes us as being a very
general trading items. We find it profitable to

share
on

j

operate

Encourages long-term funded debt financing rather than to seek
equity capital. Large underwriters are not interested in placing small
issues, yet the small security dealer is hampered by the rule.
In¬
cidentally, the smaller dealers have consistently done a better, selling
job than the big boys, because they have moved a good portion of

r
•

margin

generous

COLUMBUS, GA.

the

j

NEW ORLEANS, LA.

profit of 50c

<

ORLEANS, LA.

None.

None,
ATLANTA, GA.

NEW

■

j
\

reason

.

ORLEANS, LA.

Very detrimental.

requirements are needed the dealer interest may
of their being no supported secondary.
No
dealer interest—No underwritings—No additional
capital for small
corporations—No more small corporation.
by

I

NEW

j

'

.

any sponsorship
dealer support of smaller corporation markets. If

additional capital

not be found

„

effect.

LOUISVILLE, KY.

firmly convinced that the 5% rule has and will continue to
security houses into the Mutual Fund business—thus leav¬

more

on a much smaller margin.
After all, most of the stocks i
selling under $10, and particularly those of the small
corporations, i

must

be

considered

speculative

and

feel

we

dealer's discount is

absorbed by the market,
satisfied is the client.
Large discounts on

that

the

sooner

the j

i
markups, therefore, just X
the happier and

more

delay the attainment of that level and thus postpone the time when
the bid side of the market is
equal to the client's cost.

For this the small dealers have
as

on

fell from the "first table."

such

a

NEW ORLEANS, LA.

A

basis.

operates to the benefit of the large

firms,

No

squeezes

the

serious

effect

except

to

curtail

the

j
selling

efforts of

the

salesmen who market its securities.*

smaller.
NEW

SAVANNAH, GA.

j

NEW ORLEANS, LA.

CHICAGO, ILL.

Discourages trading in securities of doubtful merit; has

Naturally not helping them.*
on

sound securities.

».•

,

CHICAGO, ILL.

best."

ORLEANS, LA.

Beneficial.*

Adverse.*

never

He

be

that "he

As

ST. PETERSBURG, FLA.

real

is

a

TOWN

None.

MIAMI, FLA

had to be content with such crumbs

understanding

«

the dealer just won't do much to make

SMALL KANSAS

promotion stock and additional issues from
being marketed profitably.

lectually. He tries to increase his
He

,

market.

I believe it prevents

knowledge,
wisdom.

nourishment

more

WATERLOO, IOWA
Not much.

we

LAUDERDALE, FLA

limited work out market—in fact

very

No, plus No, plus Yes equals Yes."
He plans to turn No's into Yes's
by offering a complete series of
proofs and evidence or claims and

they sell and properly

Remember, there is

milk.*

DES MOINES, IOWA

real headlines in the "Chronicle."

some

not

refusals.

maybe

Nothing.*

say

is

then

and

situation.

I

people to

farm,

WICHITA, KANSAS

drive

causes

his

they want to really broaden the

the

complaining about the 5% policy) ;are

charged you

FORT

to feel

protection

to

he

the long shot boys whom we don't need in this business.

important is a most powerful urge
So he sincerely tries to give the
prospect Ego Recognition with
Big U and little I. He does not
prolong the sale unduly but tries
to
close early.
He knows that

pocketbool^

drive

must emulate the companies whose securities

Mark-Up does not apply to the underwriting of securities so
should not hurt smaller corporation. We think 5% is
ample on riskless transactions.

studies human nature.' He knows
that the

must

It curtails and limits the distribution and sale
of their securities.*

emotional type he

He

*

DENVER, COLO.

,

might

product and adheres to the policy
and traditions of his company. He

to

securities

DAVENPORT, IOWA

He handles objections

more

~

on the
back 80, and after that be
prepared to discuss the
affairs of day even before getting down to business.
The securities salesman can sell the farmer but
for the time

DENVER, COLO.

If

suggestion.

uses

He

the

find him

"Yes,"

With the

1

city is done on the telephone, but not with
the farmer.
To begin with he is on a
party line, and so not ac¬
customed to discussing his personal affairs there.
That means that

Makes it impossible for them to finance.

and tact and

So

?

Much business in the

but

-

restrictive in this type of financing.*

very

is cautious.

The

this rule!*

pretty good business
meaning of risk and is willing to take it, but he

and knows the

man'

puts in doing it he can make more money for himself selling
feed, appliances or even insurance, and only because he is not
paid proportionately.

sponsorship.*

use

afford to go after it?
The farmer definitely has idle funds
now, and is a good prospect
for securities in limited
amounts, but he must be cultivated. Whether
the metropolitan boys know it or not he is a

stock

DENVER, COLO.

its

but with technique
diplomacy. He builds
desire
by convincing the more
logical
customer
with
reason.

industry via the
■

fa-

He makes

the

DENVER, COLO.

■■

pect is looking at it).

have

DENVER, COLO.

We don't

describing the
though the pros¬

prefer to

job.

the

by

(even

■

We would be delighted if

try and do something constructive for the busi¬
away on a theme song which has become very

you

instead of

tiresome to

cream only.
Think that
nourishment in the milk part of a bottle of milk
cream.
There is much more
milk, but who can

more

than there is in the

:S

RAPIDS, IOWA

restricts the investment to the

There is

over.

cases.*

good effect—5% is ample pay.

Why don't
ness

by asking, sayshowing something
interesting.
He
then

interest

product

stifling effect.*
CEDAR

could approach 5% cn our volume—most of it
is far below 5%.
don't think the 5% "Rule" has done
any harm at all to any legitimate
dealer; it has of course been an obstacle to the "fly by nights" who
were and would be
again—if they could—the curse of the business.

or

and

new

^

corporations.

on

much.*

enforced.

we

attention

ing, doing

would

SOUTH BEND, IND.

v;".DENVER, COLO.
A very

The

secures

ROCKFORD, ILL.

Very little—Too much talk about taxes

Not

DENVER, COLO.

Probably hurts in

is

Built-in Salesman first

I

damaging effect.*

very

The 5%

the action of
someone to buy. The

^■persuading
w

Exchanges are neglectful in this.
they disappeared from the picture.*
ROCKFORD, ILL.

A

ANGELES, CALIF.

undoubtedly hinders them—even though it is not

shown

: as

without the stipulation of how

The

client

share; cost

A very

The Rule of Built-in Salesmanship

r.

Often
a

nuisance profit)

a

profit.

DENVER, COLO.

the

as

first and

paragraphsare

below.

Salesman¬

here

reproduced

formula
final

at $200 better.
selling between $1 to $7.50

Individual

(at least

your

ROCKFORD, ILL.
LOS

plied

manship.")

I

penalty of
jail and a $10,000 fine if the rule is violated.
I feel
provision should be made where listed business could

Has killed the markets.*

pur¬

morning to find out that
have been but window shop¬

shares.

company

of his clients—after the NASD is
abolished.*

the other hand,

on

investment

cases.

not miss the NASD if

higher than 5% mark-up. What other ousiness operates
mark-up over cost? The State Corporation Dept. can still
have jurisdiction by
reprimanding any dealer who takes advantage

the

so-fine
you

provide

you

do not have

you

stocks selling

on

some

much

market.

in

years

some

5%

a

will with perfect
certainty become one of the com¬
petent."

Mark-Up o.k.

ouys $200 to $500 securities
of operation

philosopher to wake up an army.
If
selling
is
the
pursuit
you
choose, single it out and pursue
it; follow it up, "keep faithfully

busy

interest—limited

Stopped Offering
Issues—99% in investment trusts—6% and no censure.

anybody
inspira¬

—

enough

specializing in regulated

profit in

that

(Continued from page 8)
others—lost

on

busy

am

forced to do this because of the lack of

was

10

Of Smaller Corporations

v

Think of it—no anxiety, perfect
certainty—one of the competent.
Isn't this just what we are striv¬
ing for? And the best of it all is:

I

offerings and the fear of
The NASD does not provide a
thing con¬
structive. When a message arrives from them it is
something of a
critical nature with the usual admonition that there
is a

generation in
he may have

singled out.";

PEORIA, ILL.

►

over

of the compe¬

one

of

ones

Moze Dealer Comments on Eiiect oi

!

no

effect j

.

SHREVEPORT, LA.
None.

Should not apply on the small issues.

;

,

BANGOR, MAINE

Ed.

Doherty Opens

NYC

m

Edwin

Doherty has opened of¬
fices at 40 Wall Street, New York

City, to

engage

.

Just

no

market

in the securities

member

Formed

R.

fices

at

25

York

City to engage in a

John

ties

Chicago

in

unquestionably. In business in Chicago 25
Stock Exchange and afraid to sign firm

Nice Situation! !*
_

R.

Marple has formed
Marple & Co. with of¬

business.

Broad

Street,

I,

New

CHICAGO, ILL.
Lessens the scope of the market.*

securi¬
U




dealer

interest

but

in

many

cases

the

practice

is

|

We believe it is hurtful because of the additional work involved \

CHICAGO, ILL.
Limits market

John

created

unsound.

SMALL MAINE TOWN

business.

John R. Marple Co.

Has

CHICAGO, ILL.

for them.*

*

Commented anonymously.

.

distributing small corporation securities.

years,

feel

name.

above

that

we

can

afford to spend the

In many cases we don't
time and travel necessary on

spread.
SMALL MAINE TOWN

Restricts distribution in small amounts to
customers,
where personal calls are necessary in the

particularly

country. Time and travel
expense too great in proportion to profit on 5% or less
mark-up.

(Continued

on page

32)

.

32

COMMERCIAL

THE

(1752)

&

FINANCIAL

CHRONICLE

OMAHA, NEB,

Sees Trend Toward

More Dealer Comments on Effect of

Lower Economic

Activity
Board of experts

of Agricultural

Department also foresee further
decline-in prices and consumer
income, but decry danger of "a
sharp drop." Look for decreased
farmer income of not

"5%Mark-Up"SpreadonSecnrities
Of Smaller Corporations

Situation," pub¬

and Price

lished

by the Bureau of Agricul¬
Economics of the United

tural
the

is

statement

toward

trend

a

that

indicates

NEW YORK CITY

BATTLE

CREEK, MICH.

NEW YORK CITY

None.*

It

SMALL MINNESOTA TOWN

,

-

of recent

years,

in prospect.
Slightly lower employment would
probably be reflected in smaller
earnings and some contraction in
expenditures.

consumer

£uch

Under

circumstances, the domestic
for farm products also

make

weaken

somewhat

in

them

have

judgment and

to

use

their

own

selling investment

now

:

,

silly!
the

same

fee?

Five

per

$1,000 is not

cent

No doubt

narrows

SAN
To hinder their

Five per

cent on

Has

CITY, MO.

I think 5%

the

•

•

•

ated."

be

LOS ANGELES,

v

"

LOS
'

:

M.

Shelton

is

Y.

or

resuming the in¬

172 Linwood Avenue.

Shelton

In the past

conducted

his

The

smaller

the

Tends

LOUIS, MO.

corporation

the

more

harm

to them.*

this

rule

will

i

spread

on

May 1.




the

ANGELES, CALIF.

market

and

causes

distributors

to

lose

-

The market for unlisted securities is
broad and we do not believe
spread should exceed 5% when NYSE operates on
approximately
l/o (round lot basis). In many instances of unlisted issues the
spread
should be brought down to between
2% and 3% instead of the 5%

The

so-called

both from the

ANGELES, CALIF.

yardstick is the ruination of the business*

"5%"

people in the business and new blood coming in.

the

LOS ANGELES,

BEVERLY HILLS.

distribution

Curtails

'

,

There are
where unconscionable charges have been made to retail
pur¬

chasers.

It

seems

we

cannot, without

some

dealers to be reasonable.

regulation, trust

some

the

-;V

liquidity!*

GREELEY. COLO.

ST. LOUIS, MO.

defintely limits market support, for in most instances, the
dealers must take positions which will not permit a 5% net when
declines in markets occur.
Without some reasonable limits some

ST. LOUIS, MO.

dealers may

It

abuse the "mark-up."

it

MIAMI, FLA.
The whole thing

ST. LOUIS, MO.

affected

us

for

SMALL

get that amount, except once
in a while on some
trifling sale, where the amount involved is $1.00,
$2.00, $3.00 or $4.00—sale of some rt or cat or dog. If we only aver¬
aged xk of 1% we would be tickled to death.

LINCOLN, NEB.
far as

we are

concerned.

flow

of

of

capital

the market—increased discourage¬
(private) into smaller corporations when

just the direct opposite Is so greatly needed.
DETROIT. MICH.

important factor in making venture capital for smaller corpo¬
ration practically non-existent.*
An

.

SMALL NEW MEXICO TOWN

.

LINCOLN, NEB.
Restricts the

TOWN

ILLINOIS TOWN

Resulted in the drying up of

ment

we never

IDAHO

Very poor.*
U

SPRINGFIELD, MO.
never

stinks.*
SMALL

Very detrimental, especially under existing conditions where the
of business has increased
tremendously.

as

enterprise

DENVER, COLO.

practically impossible for dealers to go out' in the
country and sell to people who live at grass roots.*

Has

small

-,

Definitely hinders the sale of the securities.

Retards the market.*

It makes

CALIF.

worthwhile

Very helpful to them through maintaining ethical practices ini
industry.

ST. LOUIS, MO.

It has killed

many

DENVER, COLO.

I think each case
depends on circumstances involved.
cases

of

equities.*

ST. LOUIS, MO.

CALIF.

Markets have all but disappeared.*

allowed under the
"mark-up" rule. Original distribution of securities
should continue to allow
mark-up in accordance with caliber of the

markets—definitely.

tend to dry-up market for securities of small corporation.
cases these securities should not be sold publicly.
Believe

It may
In most

rule

keeps

a

lot of undesirable securities off the market.—What
work and lots of it at 5%.

securities business needs is

New York City, members of
Stock Exchange,

CALIF.

fprPci

-

Jos. Faroll to Admit

New. York

ANGELES,

be

ST. LOUIS, MO.

Joseph Faroll & Co., 29 Broad¬

nership

n

to

LOS

own

will' admit Henry. Mintz to part¬

CALIF.

tendency to hinder trading in same.*
LOS

ST.

None

the

ANGELES,

-

.

SMALL MISSOURI TOWN

business in Buffalo.

way,

a

None.

Arthur

vestment business from offices at

Mr.

LOS

financing of small corporations.
Has

accentu¬

—

■■

.

Doubt if it affects it much.*

Shelton Resumes Business
'

CALIF.

Keeps the market stagnant.

:

Definitely stymies the market

cost

N.

CALIF.

PASADENA, CALIF.

<"*v

■

BUFFALO,

to

ST. LOUIS, MO.

de¬

drop in prices, production and

employment1 could

Has helped

is enough and the profit should be less most of the

ST. JOSEPH, MO.

Good.

reduce their, purchases in antici¬

increased unemployment,

legitimate financing.

None.*

and business should substantially

or

for

chiselers who have hurt the investment industry.*

.

On the other hand, if consumers

clines

FRANCISCO, CALIF.

SAN FRANCISCO,

KANSAS CITY, MO.

major uncertainties for
opposing directions. If
the international situation should

price

SAN

market

time.*

"The

widespread

hurt

not

clean up the

'

1949 lie in

of

FRANCISCO, CALIF.

KANSAS CITY, MO.
None.

issue.

pation

SAN

Questionable.*

PASADENA, CALIF.
KANSAS

Unimportant, compared to other factors.*

pated, the downtrend in prices and
production might be reversed and
inflationary pressures reinforced.

FRANCISCO, CALIF.

financing.

None.

Federal, State and local govern¬
h a v e expanded
rapidly
during 1948 and are likely to re¬
main high through 1949.
United
States exports in 1949 are likely
to be maintained slightly above
the level of the fourth quarter in
1948.
Business expenditures for
plant and equipment are expected
to be large in 1949, though moder¬
ately lower than in 1948. A good
year
is generally expected for
residential construction, although

require larger government expen¬
ditures than are currently antici¬

CALIF.

Adverse'.

analytical

ments

ago.f

V"

•

ANGELES,

None.*

expected. There are many strong
forces which are likely to main¬
tain a high level of activity dur¬
ing 1949.
The expenditures * of

year

*

LOS

Problematical.*

Ruinous.*

a

.

PASADENA, CALIF.

sharp drop in the general

lower than

<

ANGELES, CALIF.

Harmful, not good.*

ST. PAUL, MINN.

level of output and prices is not

probably hot up to 1948. In total,
expenditures of these magnitudes
give some indication of a fairly
high level of domestic activity and
demand for farm products in 1949,
although probably somewhat

markets.*
LOS

market.*

Concerning the impact of the
situation, the review states:

salesmen

and

PHOENIX, ARIZONA
Diminished their

MINNEAPOLIS, MINN.

not be much different from 1948."

dealers

the detriment oftentimes of the customer's best interests.

companies'

hot.

so

small

^

$100,000 deal is wonderful.

on

the

into selling
(like oil royalties)
in which they can make a much larger mark-up.
In other words
they are forced to sell something that gives them a fair profit to

mark-up makes no allowance for years of experience.
beginner and the old timer are put on the same basis.
How
Do the big corporation lawyer and the young attorney charge

lor

"A

ceased

are

drive

to

The 5%
The

from

present levels.
Foreign demand
farm products in 1949 may

and

shares..* ;;.

demand
would

markets

powers

tends

type of security or so-called investments

some

'

those

reason

no

required to sell a small unknown company's equities
to the public very often involves more time and expense than war¬
ranted by a 5% spread.*
.• v

during the re¬
Tends to destroy such markets.*
. ; the
DULUTII,
MINN.
average for the year as a whole
Tends to make them less marketable.
may not be much below that of
1948. While the adjustments in pro¬
MINNEAPOLIS, MINN.
duction and prices currently un¬
In our opinion! the dealers are more apt to not work in the
derway are not likely to be of
major proportions, they will prob¬ smaller companies because of the risk involved and the 5% rule.*
ably be reflected in slightly lower
levels of employment than in 1948.
MINNEAPOLIS, MINN.
A large widespread wage increase,
It has ruined the markets on them. Many dealers who used to
to

see

Sales effort

mainder of the year. However,

similar

But that opinion is

only a guide,
why it should affect adversely the market for the
security of small companies.

.

Limits the market for small inactive issues.*

incomes

<ioes not appear to be

pronounced effect.

conditions in Omaha, Neb.

on

NEW YORK CITY

we

'

also decline

may

OMAHA, NEB.

Since the 5% Mark-Up is not an arbitrary rule but

BOSTON, MASS.

activity for 1949

consumer

excep¬

BOSTON, MASS.

"the
somewhat lower

level of economic

How¬

risk-free transactions should be ample with few

tions.

based

that

made

on

Bad.*

Agriculture,

States Department of

5%

ever

I doubt that it has any

BOSTON, MASS.

In the March issue of "The De¬

most

tight for small sales of low priced stocks.

difficult for the smaller corporations to
capital for either expansion or as newly organized businesses.

Definitely limtis their market.*

industries where it is

OMAHA, NEB.
The rule is too

It tends to make it very

obtain

many

needed and where the function of the investment dealer in unlisted
securities is paramount*
'

BALTIMORE, MD.

10% in 1949.
mand

Retarding the flow of capital to

(Continued from page 31)

than

more

Thursday, April 21, 1949

OMAHA, NEB.
^

Has hurt the market for small companies' stock
offerings.*
*

Commented anonymously.

v
,

.

U

OKLAHOMA CITY, OKLA.

Very bad—which makes it
get their securities marketed.

impossible for small corporations to

Volume

169

Number 4796

COMMERCIAL

THE

PORTLAND, ORE.
As

far

as

of

measure

we

(1753)' 33
normal

PORTLAND, ORE.

ment?

detrimental, especially to securities selling in lower price

Of course,

many

categories.*

it

fashion, but there

ERIE, PA.

may

about

reason

be doubted whether

retained

But

"they

and

now

pos¬

quotas,

from countries with balance-

came

these

things in quite so bald a
be little question that such con¬

can

be

sibly for several years to come.
The most serious objection to im¬
mediate
elimination, of

great

a

economic

be eliminated.
countries insist that

many

population, then why should there be any particu¬
larly valid objection to waste in the military establish¬

of

are to

must

the

PORTLAND, ORE.

instrument

policy

our

None.

Most

CHRONICLE

largess to the farmer, by giving incredible amounts of
goods to foreign countries, by paying out huge sums
to veterans, by subsidizing this or that other group in

concerned, we simply try to be fair about
Can't say that we think much about the rule.

are

profit.

FINANCIAL

&

of-payment difficulties.

As

coun¬

tries like Britain and France

ex¬

"

Stifling!

"*

•

siderations

'

PHILADELPHIA, PA.
Bad.*

;

■

in this fact dire

YORK, PA.

and

plained

deal of the
thinking about these and related matters—and

current

•

influence

govern

convincingly, how¬
ever much
they might adhere to
the principle of
eliminating
quotas, they could not do so in

good

a

peril lies concealed.

practice at the present time with¬

•

If the

securities have

merit, 5% should be enough.

Danger of Waste
The

As We See It
duct
and

modern

a

is

as

Yet

war.

has

as

long been suspected,

made quite clear by

facts presented by
Mr. Hoover, the military establishment (or should we
still say establishments?) is today as insensitive to such
now

considerations

it

as

was

when

it

win the war—and count the costs
costs

have

to

say:

"Let's

afterwards."

Those

been counted—and few doubt that the

now

ends

same

used

could

have

been

accomplished with very
substantially less outlay. A long, hard war of attrition
could never have been won in any such way—and it is
certainly not beyond the bounds of possibility that some
day we may have to fight just such a war, and what is
more, every dollar that is simply wasted in this or any
other way is a dollar taken from the
supply of the good
things of life which are the end and aim of the work of

of

things expend them for items which do not make any
or
lasting contribution to economic welfare, are all, and

enemies. This is the basic fact. It is the
"general case," as
the mathematician would say, of which waste in the
military
establishment is a "special case." The latter is not likely
to be remedied

effect.

f

at

ness

present,

(both

terms

are

not

ours,

Mr.

construction

granted this
from

thousand

a

houses

than

more

Alaska

in

for

well

Yet,

properly;

hundred tanks which it did not possess.
And

so

the

less

event

going

story

Of

goes.

obscure

than

As things

on.

course,

such things

go

at

present, precisely what

stand,

now

to

quote

the

ex-

President, "Congress allocates billions without accurate
knowledge as to why they are necessary and what they
are
being used for." In such a situation, Mr. Hoover

department,

reform,

nor

what

economies

can

neither

the Congress,

the
nor

the exnenditures
be

President,
the public

really

are

nor
can

the
un¬

and where

applied."

The Voters Must Act
So much for the
ver.y

real contribution of Mr. Hoover.
Of course, much more is
required than accounting reform.
Moreover what is needed is not
likely to be forthcoming
in the absence of a
radically reformed attitude on the part
of the men who administer the
military establishment—and
such an attitude on their
part is unlikely without some very
severe
pressure from without.
Such pressure can in the
nature of the

case

be

applied effectively only through Con¬

gress and the President. Neither the President nor Congress
is likely to do very much about it in the absence of
pres¬
sure from the voters of the land.
The voters can scarcely
be expected to arouse themselves fully so
long as emotions
rather than cold reason are predominant the moment inter¬
national relations

are

under consideration, and

when the

bor is

possibility of another
being considered.

Neither
•

those

holding

examine

plished

is

long

there

likely

war or

to

;

;

If economic

as so

be

very

much

accom-

welfare

many

can




be

promoted by the grant«o£

of

well knows, it is

to eliminate

place

Havana

in

the

plead

that

views
re¬
light of the

changes
that
in the world.

Charter

have
The

at

these

has

and

to

multilateral

now

ITO

of

pair

corrosive

the

effect

confusion

and the destruction and
dislocations caused by the war.
It

cannot, of itself, create "a cli¬
favorable

mate

abundant

and

sustained

investments."

That

done

years

the

revival

the

to

of

foreign

only

can

be

by restoring
production and political and
monetary stability in the indus¬
trialized countries, and improving
the

over

economic

balance

underdeveloped

the

in

countries.

not—force governments to change
their

methods.

purpose

United

or

tell

us

how

of

Government.

certainly would resist
to

not

intention

the

States

is

That

to

fairs.

That the

fleet

substantial

its

agreement

am

important fact.

the

Charter

the

of

indeed

competence—to dwell
details of the Charter, but I
of them.-

You

and
through

open

it

trace

the

broad

purposes

developed,

are

growth

of

one

the

of

main principles and study the ef¬
forts made there to keep the quali¬

fications from

destroying the
principle.

value of the

One of these main sections deals

with

quotas,

quantitative

or

In

Article

re¬

it

20

is

that quotas
shall be eliminated.
If applied to
the letter, this would mean that
agreed

principle

in

country would be permitted to
the practice of limiting
product that

a

its

can

in

borders

particular period of time.

a

Actu¬

ally'that would be impossible to
do

dvernight, for quotas

used

are

now

by all countries—even by the
States in connection with

United

system to

onerous

manently

mn

or-break

up

kind

one

and

another,

prob¬

ably constitute the greatest single
barrier

international trade to¬

to

realistic
aspect of working out the Charter.
agree,

how this

we

54

get

into the

countries

with

enthusiasm,

.peiv

managed

varying degrees
that
quotas* as

seeming

reduction of quotas,

its effort toward prevent¬

ing their increase and setting
for

formula

to

of
a

up

their

gradual
21, the
member nations agree that coun->
a

elimination.

Article

In

tries whose monetary reserves are

threatened by balance-of-payment
difficulties may impose quotas on
all

part of their imports.

This
ration
its expenditures for foreign goods.
However, no new quotas or in¬
crease
of present quotas may be
made without consulting, with the
or

allows

such

to

country

a

ITO, and all such quotas must be
reviewed

Organization in

by the

<

danger,

is that some countries,
might use quotas as a matter of
national policy even when their
present balance-of-pavment diffi¬

however,

culties

when

were

over.

To

determine-

this stage is reached

viously

is ob¬

technical problem. Theof it is to give exclusive

a

solution

authority under Article 24 to the
International Monetary Fund to
determine the bets about a mem¬

If the Fund deter¬
maladjustments justi-

ber's reserves.

mines that

quota have been removed,
of
the quota must be.
terminated.
After March 1, 1952^
fving
the

a

use

discriminatory quotas are per¬
except " as
soecFically
authorized by the Organbation.
It seems to me that thb js a

no

missible

pretty good working solution of
an
extremely difficult problem.
is' also a democratic solution,

It

toward a
while taking such

consistently

working

goal

situation

detours as the practical
requires. No one steam¬

rollered

anyone

necessary

else

into agree¬

ment, but agreement was

day.

The

itself

resolved., The U. S.

cases,

common

of

fix

the postwar world,
the-Conference en¬

us see

was

agricultural program—quotas,

our

allow this admittedly

and

its first two years.
The real or imagined

I
might be worthwhile to

think

Here

,

my

not unmindful

which

continue

on

the

example of the technique

an

effort the amounts of
our_aL. enter or; leave

It is not my purpose—or

on

As

under

no

It would be
tragic mistake to allow concern
over adjustable details to obscure

within

into

differences

Main Principles

the

principles in which we believe, is
major triumph, both for those
principles and the negotiators who
lad the responsibility of defend¬
ing them during the years of

this .very

out

their

democratic negotiation.

any

arrange

mem¬

bers, and, most important, per¬
haps, bring their commercial

We

Charter does #e-;

to

means

a

strictions.

The ITO will not—indeed, can¬

obligating
barriers

equal treatment to all other

inter-

the

in

the

of

a

up

procedures to eliminate

problems
re¬

agree¬

delegation, seeing no hope of im¬
elimination or even, in

of controlling
preferences, elimi¬
restrictive practices, extend

solve
once

by

reduce

quotas

Effectiveness

no

possible; that either

mediate

improve customs methods,

trade, reduce

The Charter cannot at

that

many

all hope of getting around

up

turned
Charter sets

trade

to

of

nate

remarkable

It must have

the United States delegation must

designed to promote
long-term objective of freer

as

showed

tenacity.

ment could be

many

recognized
this fact.
In order to gain the
adherence of the largest number
countries, it had to make con¬
cessions at many points, based on
the pressures under which most
countries are operating.

reconcile

to

/v

seemed

code of rules

establish

countries

tirely.

know that the

trade,

insisted*,
Charter.

no

other

how

was:

Havana

skill

' *

members

had

we

In working out this difficult and
technical problem the negotiators

waste, and reduce the toll

the

If

world?

quotas"

particularly
another Pearl Har¬ alengthy negotiation.

of the people can be led to
believe that great virtue lies in public spending as such.
so

these

them

war years

root of economy in this department.

very

facts.

problem

give

•'

earnestly

me

ing lies at the
such

us to have insisted on a
rigid ap¬
plication of the principle of elimb*
nating quotas in the face of these

desirable principles with the pres¬
ent realities of a
war-shattered

(Continued from page 6)
Let

economic

derstand

at all events the course that general

man

•

have been foolish for

would

not possibly accept such a
principle without gravely endan¬
gering their economies.
So the

A Defense of the ITO Charter

is certain that "radical reform of budgeting and account¬

Without

Question of Quotas
It

Now let

taken

deeper than accounting systems, and more sys¬
tematic record-keeping and data presentations could
help cure it only because they would make clear, or at
all

ever

by extensive use
quotas.
So have many other
countries in the same boat.
•

could

The general course of busi¬

really sensible

as every

tremendous

much

is

or

re¬

testimony was available indicating
currently available than could be spent
the Army wanted to modernize upwards of a

re¬

of

impasse

over

search when competent
that more funds are

to

made

It has done this

Some

tions in government.

Hoover's),

billion is desired for

a

been

there would have been

pursuing at present, tends directly
more difficult to
cure, and
will without much question render it the more difficult
to get the expenditures of the military establishment
more closely and effectively in hand.
Officialdom, long
screaming about deflation, is now getting definitely
"jittery" about the prospects of a depression. It is ap¬
parently still dominated by the spending philosophy, and
hence is not very much interested in economical opera¬

the next fiscal year as" it was
the Air Force apparently would build

house;

per

had

Britain's

up the road

to purchase many items
abroad that they might want, but
which were not vitally needed.

during

year;

disaster.

people

hard

old, old story.

an

since the New Deal

ever

render this situation the

to

prevalent in the demands of the military establishment. more vital than
of government.
The Army wants more - than seven times as much
money

far

course,

established itself in Washington toward the end of the
first half of the 'Thirties.

now

not

is, of

It has been at least sub-acute

Hoover, carefully defining the term "savings" to
"attaining the same ends for less expenditure," goes on
record with the
charge that perhaps as much as about 10%
of current military
outlays could be saved merely by the
adoption of the orderly and understandable bookkeeping
employed everywhere today in the business world. He not
only makes such an astounding assertion, but gives a few
examples of the "padding," or to employ a more euphemistic

$58,000

the former is left to have its full

as

This whole matter

Mr.

for

long

so

business appears to be

looseness

inviting

covery

all alike, wasteful, and certain in the end to weaken not
strengthen the nation in any really hard struggle with its

mean

term,

out

long hard pull

be found in the fact, which

course, to

real

Startling Facts
;

is, of

possible
will not face, that waste, subsidies, the purchase of
by carefully husbanding its re¬
votes, or any of the other practices which have the effect sources
and
foreign
exchange;
of
apportioning current earnings to those who have done spending precious dollars only fo*
bare essentials, and forbidding its
nothing to earn them, and who will in the normal course

the world.

•r

answer

many

(Continued from first page)

I

very

reached.

probably know that Con¬
gress had two representatives at
Havana:
Reoresentative ;(James
You

G.) Fulton, Republican Congress-

(Continued on page 34)

:r*

34

COMMERCIAL

THE

(1754)

(Continued from page 33)
from Pennsylvania and Rep¬

man

resentative

(Jacob K.) Javits, Re¬

publican Congressman from New
York.

The ofticial

report of their

tem' with the help of

which pow¬
capital can become
complete master in the field of
international trade and gradually

Congressional sub-committee said
of this controversial section of the

the

Charter:

tions."

Havana
will

of

real

the

it

balance

quantitative

at in

arrived

Charter,

limit

is
of

-

-

restrictions

the

of

an

hardly

would

to

forced

tries
con¬

the
at

views

our

Charter

by
we

had

insisted

that

eliminate

said

all

coun¬

critics

Some

have,

tries

what

other

on

Havana.

at

out

actually had

we

least, suggested

we

na¬

have

point

need

Russians

payment

sult, to have its monetary standing
and its financial policies reviewed
by the representatives of other

of

indirection
If

do this.
other

state

coun¬

trading

(despite the fact that most prac¬
it to some degree today)—if
had insisted on outright and
immediate elimination of private
straint
upon
any
government cartels (even though they have
which
might otherwise wish to been used in many countries for
impose
quantitative
restrictions generations)—if we squelched all
the desires of the "undeveloped
capriciously."

governments,
and of having
to
justify its actions in the light of
the
obligations of the charter,
should prove to be a powerful re¬

This

same

pattern

follows

through most of the Charter. The
main principles or goals were pro¬
posed largely by the United States.
They were ideal goals, if you wish,
a

sort

of

beacon

a

for

return

to

multilateral, non - discriminating
trade, which would result in the
^greatest possible international ex¬

two-thirds

population),

number

a

of

qualifica¬

had

ment

difficulties

regarding balance-of-payquestions or demands of the

think

can

I

am sure

such

So

course.

a

Charter

the

as

hope

The

of world trade,
seemed

restoring

of

the

And

restoration

which might have

laudable but unessential

a

objective before the

The

but

of

pressure

be

the

ITO

exerted

flexibly toward keeping mem¬
from resorting to unilateral

bers

don't

could

think

have

better

any

been

tactic

followed at

The
gram

gamble, in

now

pay

produced

to stem

feel

that

by
the

concessions

there

of

are

strictly

made

other

of those

one

S.

were

viewpoints
am

compromises

U.

delegation
to
"selling
America
river," that too many

amounted

down

the

the

the

countries.

who agrees

many

from

to

our

details

point

I

view,

could be

improved. Let's not for¬
get, however, that any democratic
agreement

requires

goods

compromise.

no

feeling that the bill
he would have written it.

one

is just as

ITO Charter Close to U. S. Ideals
So

might

it

is

with

have

Charter

if

the

Charter.

written

it

had

a

We

different

simply been

a

war

we

dared hope,

Europe is pulling

objective of ERP, to restore Eu¬
rope's productive capacity, will be
achieved.
is

an

important

victory,

never

be

forgotten, that it is only the start

be

the

larger goal—world
To date we have been

with

tion of

the

most

critical

production, it is doubtful if

stored.
trade

Without

been

restoring

re¬

world

it is certain that rebuilding

European production will
futile palliative.
It does

answer."

The

the

Charter is

a

to

rebuild

enemies

to
this renuncia¬
international responsi¬
encouraged

our

prove
no

that great
sweeping the

not fail

to

that

see

population is a

a

good

the

factories, fill the
warehouses, clear up the ports, if

bills

the

intro¬

Con¬

to March 30 reveals that
132

which

offered
eral

all

Senate in this

than

less

no

of

the

in

gress up

titles have

involve

been

the

Fed¬

directly or in¬
in
activities
affecting
private enterprise. There are no
less than 12 separate bills setting
government

directly

forth

complete program for gov¬

a

ernment

and supervision
Government
subsidies for aviation or for ship¬
support

of air transportation.

seething turmoil of economic and

ping

political emotion out
of which
anything can come.
We cannot
stop it and we cannot avoid it. We

and

occasion

seem to

those who

even

in

surprise

no

are

frequently

for the
expenditures
are
themselves
the
sponsors
of
may, God willing, affect its direc¬
tion and shape its end.
We shall measures which can only result in
not do that, however, by hiding increasing Federal expenditures./
There are 15 bills having to do
our heads in the sands of the past
with financial assistance to educa*
or beating our breasts in a frenzy
tion in various forms. Nine bills
of righteous indignation.
Today we have the initiative. In
of

words

the

prophet, "It is
candle than curse
let us light this

better to

light a
darkness,"

economic

international

of

flame

order; watch and tend it patiently

wisely, praying that it make

and

such contribution as it may to

voluble

most

calling

reduction in Federal

with

concerned

legislation to
Ten bills
propose
Federal
housing
pro¬
grams, principally slum clearance
and
the
improvement of rtaral
housing. One of the most striking
proposals is the bill which pro¬

are

public

improve

vides

health.

to

housing needs of low in-,

families.

come

loans

Federal

direct

for

meet the

with

world.

ourselves and the

of

the

living, and thus the safety,

better

high

our

duced

dealing

bill

One

industry would

aviation

the

put the government into partner¬

ship
not
a

(Continued from page 21)
under

$2,000

income

of

have

group

than

more

$35 billion

compared with less than
billion for everybody in all
above

total

receive

income

ties

of

$25,000.
of all

and

the

receipts of the little fel¬

lows who

Why
It's

not

less than $2,000.

earn

risk

another

the

business the

the

market it

needs, but
power
of
the

purchasing

at the bottom of the

masses

they

their

lose

its

market

the

out

jobs;
and

,

scale.

business

prosperity

window.

We

must

have

prosperity if we're going to
beat Communism.
Surely it is
cheaper to have prosperity on a
rising standard of living than it
is to have another

war.

The

greatest

establishment
is

the

in

fear

freedom

of

talk about
moment

big.
in

of

mass

the

will

so

government for just

a

show what makes it

American

who believes

principles of the Declara¬

tion of Independence or the Con¬
stitution of the United States de¬
to

established

see

authoritarian

here

government.

grows,

with

only
the

not

influence

ment

the

more

upon a

the

efficient.

It

is

based

proposed statute by which

Congress will delegate to the
the

President
the

Congress

which

power

now

only

possesses

to

define the form and the organiza¬

tion of government
a

bureaus. It is

proposal to place in the hands
full

power

changes he
mines to be desirable.

deter¬

the

of

President

make

to

the

any

would be absurd

to

say

that

President Hoover wants to estab¬
an

authoritarian

of such

magnitude that this seems
by which the
task can be accomplished.
be the only way

to

Had

to Grow

growth of the Federal Gov¬
ernment and the expansion of its

bears no relation to any
partisan division, past or present.
powers

been

no

control compel

first

case

understand

both

created indiscriminately by
Republican and Democratic

administrations.

The

Commission

Power

of

atomic

en¬

Federal
was

estab¬

lished

by

gress.

It simply had to be cre¬

a

Republican

Con¬

ated because the electrical and gas

industries which

ergy, for example. The appropria¬
tion for the Atomic Energy Com¬

ly

local

national
and
out

There is

no sense

these

about

of

measure

it

once

were

mere¬

enterprises had become
with

transmission

lines

pipe lines extending through¬
the country, across public and

just

are

government is grow¬

bigger and

make

calling
are

merely the
great and growing

a

The

nation.

we

trying to

are

because

efficient

more

and industry
business bigger, than

invention

science,

made

have

' V..
in getting mad,

things
or
They

They

plain facts.

it

.

about them.

names

before.

ever was

National and international busi¬

had little or no in¬
shaping the economic
lives of men when George Wash¬
which

ness,

in

fluence

President, now con¬
determining factor in
all the economic issues before the

ington

was

stitute

the

Congress. Little business and local
business, and particularly retail
business, operate on an altogether

plane from that of the
aggregations
of
capital

different
great

try

trade and

dominate

the

in

national

indus¬

and interna¬

tional field.

Industrial Concentration
The

meaning

of

illus¬

is

this

by the statistical fact that
of about m million business

trated
out

in the United States,
eight-tenths of 1%, em¬
ploy more than 52% of all the.
workers.
Of
these
29,000 busi¬
enterprises
29,000,

or

than 5,000, or to be
have
so
many
workers each that their employees
less

nesses,

4,900,

exact,

constitute

The

transportation

air
\.

government

yet it must be clear that a
grant of power to the President
to reorganize the whole Federal
Government by executive order is
a development which results only
from the fact that the problem is

assume

world-wide

ing

man¬

financial,' if
managerial, responsibility for

which

New boards and.commissions have

anybody
public affairs

expansion of government. To
the people in the driver's

Take

Yet,

because

keep

seat, we must
why this is so.

Hoover.

in

change our system, but
because
stern
facts
over
have

President

Government

to

we

government.

an

De¬

all the name-calling one
sees in
print or hears in debate,
the government here in Washing¬
ton

of

all, it is clearly not a
plan'to demobolize Big Govern¬
ment, but to make Big Govern¬

and

the

the

reorganize

to

branch

after

market

I want to

Commission

Hoover

into Washington urg¬
ing the Congress to approve the
reorganization plan submitted by

lish

government

the activi¬

Letters pour

the

to

threaten

business;

and

No

the

a

that

doing

so

obstacle

that is
illustration.
Very

private

single

a

to

monopoly.
say,

consider

plan

executive

It
What Makes Big Government Big?

us

the

former

depression?

purchasing power of
wealthy
that
will furnish

the

proper

let

the

$10,000
annually, is $15 billion less than
the total

a

well,

than

more

not

will

someone

$11

as

who

But

total

a

with

agement

Big Business Needs Big Govt.

which

Without Euro¬

have

demoral¬

This is the time to take the

trade in the world.

could

Our friends

and

bilities.

wants

trade

irrefutable argu¬

an

us

half of the world's

"America

any

confused

our

issue: production in Europe. Now
we must turn to the
long-run one:

world

who say—and

advantage of

spite

pean

Those

many—that

have

would

world trade.

towards

a

Let

world.

the

sires

But it must

of

more

ment to back them up.

particularly when we remember
that Europe
is the keystone of

of Mining up 54 nations
saying,- "Boys, this is it. Just
sign on the dotted line.
We've
thought this all out and here's the

question
and

dam¬

itself along the road to recovery.
It seems likely now that the main

This

even

trade

backs

our

of

most

broad tide of change

—would have

consumer

are

Every bill of Congress represents prosperity.
a
large measure of compromise, concerned
with

sense,

a

now abundant enough
unrest; the morale of the
people is much better, More than

that

which,
of

Pro¬

invest¬
It was

large

a

moving once more;
is being repaired;

age

world

turn

the

of life is possible.
Let us not overlook

the

goes

but we are
able to see it beginning to
off. The factories in Europe

are

cans

Recovery

world

which

in

a

of a

preservation

way

policy,
they
don't know where they're going"

If

ment toward this objective.
a

Ha¬

made

measure on

m

European
represents

vana, and I don't believe any bet¬
ter
document
could
have
been

at this time or in the
foreseeable future.
Some Ameri¬

War.
are

doesn't

loses

constantly

free

rejection of the
League of Nations after the First

war,

European Recovery Program

will

methods that lead up a blind alley
for themselves and others.
I

once more,

failure

or

our

brackets

getting the world's goods flowing

therefore

than

the

fairs, depends in large

were provided
exceptions, ana
wherever possible, a time limita¬
tion was placed on their practice.

blow

Indeed,

for removal of the

by the Latin American

led

on

re¬

limited, procedures

tries"

coun¬

for

some

the

states, qualifications of the main
principle were closely defined and

"underdeveloped

for

and

suddenly to
it, would be

income

a

Charter is

have

we

trade.

that

best

could have been achieved in

best

need

world

of

promise

greatest

end—the

good

Risk and

caution.

few

a

long as we believe in democratic
procedures, we must accept the

world.

the

thinking American

no

desire

success

a

be

the

holds

become

failure will

or

law,

take

is an ab¬
solute
must
for us
today.
Our
whole structure of foreign policy,
our
entire position in world af¬

so-called

trade

things that would have
been more utterly self-defeating.

in

whether

of

ance

few

nor

world

cases,

I

success

as

has

American project,

an

leadership. For us,
having worked, negotiated, argued
for years for some basic accept¬

ized;

got

deci¬

our

American

rep¬

have

Charter

as

considered

things that would have destroyed
our
democratic leadership more,

alistic

all

But

to.

tions through the Charter, such as
the one I have just illustrated. But
arose

its

for

simply because they thought they

Havana

required

might

we

endangering

identified

world's

countries to sigh up anyway,

some

degrees must

caution,

they

the

of

be

ship.^ The

World

could

With

would

we

sive economic and political leader¬

there

resent

of ITO Means

By repudiating the Charter

we

countries" (even though

would be heading.

we

What Repudiation

tice

change of goods. The fact that the
U. S. is probably the only impor¬
tant
trading country that could
move
relatively quickly toward
this goal, while others in various
move

of where

danger are there, of course—they
lie on any road today; our prob¬
lem is to choose that one which

and

the

necessity
obligation to

other

most

about the ITO if

financial

fact

of

economy

I

hands control of

own

believed,
cases

out wisdom and

erful American

take into its

"The formula

road.

check

A

We shall not choose it with¬

by

prove

this thinking and fail to ap¬
the ITO Charter, we at least
ought to have a very clear idea

A Defense of the ITO Charter

Thursday, April 21, 1949

CHRONICLE

FINANCIAL

&

These

of

40%

employers

all

worKers.

these

and

em¬

ployees are engaged in interstate
and foreign commerce, the regu¬
lation of which was committed by
the

Constitution

That

is

the

why

reason

to

reason

the

the
and

Congress.
the only

government-> at

Washington has been expanding.
It had to expand or else the regu¬
lation
of
the
economy
of
the

people

vate

have

would

doned

aban¬

been

by their elected represen¬

tatives

into the hands

of
which

managers

corporations
tremendous

a

of the pri¬

the

private

carry

segment

on

so

of all; the

mission this year will be about
business, trade and commerce of
private lands without regard to
goods have nowhere to go.
the United States and of the whole
three-quarters of a billion dollars.
mountains, rivers or state bound¬
Only by undamming the flow of That will be a sum
world.
greater than
aries.
Back in 1931 there were
than
those of almost any other world trade can Europe and the was ever
expanded by the Federal
That,
of
course,
is precisely
handled
by the Commission 64
country.
Most
other
countries rest of the non-Soviet world hope Government in a single year prior
what
happened
in Europe and
have made large concessions to to attain the prosperity necessary to World War
applications for the construction
I, except during the
brought on the Second World War.
our
viewpoint, concessions that to make them economically and Civil War in the years 1863 and of about 864,000 kilowatts of new Government surrendered the con¬
hydroelectric capacity. Now there trol of the
ITO
is the 1864. The nature of atomic
they might have a hard time de¬ politically secure.
economy to the man¬
energy
are 91 such applications for more
fending politically on their home only international instrument for is such that
everybody in Con¬
agers of the
world cartels" who
than 5 579,000 kilowatts. With a
grounds.
It is interesting to no¬ achieving that goal within the gress agreed that its
failed to prevent depression and
development
six-fold expansion of this single
tice that the Russians, who did not framework of the United Nations.
could be entrusted only to the
then the people let the dictators,
attend the Conferences in
aspect of the electrical industry, Mussolini and
And what if we reject the ITO? government
London,
although the whole
Hitler, take over
the Power Commission had new
Geneva and Havana, must have There is a considerable
movement project is managed fr<jm the top.
both the cartels and the govern¬
duties to prevent the imposition of
sensed
this, for they cut loose on foot to do just that. Some rec¬ This was not because
ment.
anybody in
their heaviest propaganda against ommend that we
repudiate it out¬ the government wanted to give unreasonable rates upon consum¬
The Constitution gives the Con¬
the
ITO
to
exploit
this
fact. right; others say we should nego¬ the Atomic
Energy Commission ers. Without this Federal agency gress the power to regulate com¬
"Pravda,"
the
official
Russian tiate a more "satisfactory" Char¬ the
extraordinary power it has, there could have been no effec¬ merce. George Washington was
paper, didn't lose any time before ter. Since the latter is impossible but
the President of the Constitutional
only because nobody in Con¬
tive regulation in the public in¬
it
said:
"The
Americans
have from a practical
political point of gress had the slightest idea how
Convention
and
he
signed
the
worked out a broad plan creating
view, these amount to the same else to handle the new scientific terest, for the states are without Constitution. He was the first
a

truth

is

lot closer to

'world trade

and

that

our

currency




the

ideas

sys¬

thing.

Should Congress be moved

fact.

authority in interstate

commerce.

President,

so

nobody

can

deny

Volume

that

it

169

is

THE

Americanism to
.Federal ^ government

regulate commerce. It must do

.if the people are to be kept
ployed, earning the wages
salaries that

will

enable

em¬

to

business and

weakening
ment

and

power

to

the). Federal
thus

spot

in

come

an

economy. The
could not operate

certain

that

nor

•

•

.

.

•

end

the

merely

that

merce.

the

recognize

steel

ingots

be provided
will
v

It

.

Dare

Not

Only the
can
j
;

no

.

Depression

<

leaders

we

there

for

shall

that

leaders

prevent
to

-are

munists
r
•

and

win

must

war

peace

on

high that all the

•

,

<

.of

free

to

•

free

was

fought,

world

copy

If

is

peace

we

have lost faith in

beat

,

But

it

here

we

ended

Dun

more

when

by peaceful

101

All

of

Board

of

Directors

of

Avenue Transit Corpo¬

subsidiaries, according
.Hodes, President. Mr.

to

James

Leavitt is
York

a

member

Stock

of

Exchange,

the

New-

the

Chi¬

Board of Trade, and other
security exchanges.
He is a law.yer -who
received his Ph.D.
in
Economics from Fordham Gradu¬
School in

in

JYork

Turner Barr, Jr., part¬
Brothers & Co., New

Barr

City,
sixty, after

died
a

at

the

age

month's illness.




of

a

week

bales,

77,246

against

the

week

before.

For

the

current

to March

net stock

in the hands of the CCC of 4,391,477

Rains

and

weather

wet

continued

a
quiet week
weakening.

to

prices for print cloths

and

bales.

retard

crop preparations
Carded gray cotton cloth markets had

in many sections of the belt.

Aside from occasional small lots

showed

of fine

and

further

a

slight

medium wools

re¬

ported sold in the Boston market, business generally continued at the
slow pace of recent weeks. Contracting for wools in western states

lower levels.
RETAIL

AND

SLIGHT

WHOLESALE

TRADE

GAINS

PREVIOUS

OVER

CONTINUED
WEEK

TO

AND

REFLECT

YEAR

AGO

DUE TO EASTER

As Easter shopping continued

to increase, the dollar volume of

consumers' purchases in the week rose

the previous week.

It

was

ago

and

was

in the post-Easter

noticeably above the level of
slightly above the pre-Easter week a year
,

was

The

last

demand

with

week

was

cars

occurred

holiday
preceding
were

Failures continued well
313 failures in the same week

respectively.

there

were

declined to 152
Small
$5,000 dipped to 32 from 55; they were

numerous

in failures

trade

to

a

in the corresponding week of

construction

except

groups

1948.

reported

occurred

to 31

in

the

Middle

Atlantic

States

a

where

in the East North Central States where
in the East South Central States
Contrary to the over-all decline, ini

from 17.
reported in four

areas.

In the Pacific Region failures

postwar high of 52.

were

mixed,
on

declines predominated and the index
April 12, from $5.78 the week before. This

less than 1% above the 28-month low of $5.66 recorded on Feb. 8,
and it represented a decrease of 15.5% from the $6.76 of a year ago.
The

index

represents the

sum

total of the

price

pound of 31

per

moderate

increases in the sales of

did

not

many

shoppers limited their purchases
;

of

1948.

Sea-food

and

dairy

products

requested

frequently.
slightly above the
The demand for candy and holiday
novelties rose seasonally with most shoppers seeking such merchan¬
dise in the lower price ranges.
were

The sales volume of canned and frozen foods

was

similar pre-Easter week last year.

The usual pre-Easter lull in the demand for furniture and house¬

the

occurred

wares

week and
that of the

past

a consequence, total volume
corresponding pre-Easter week
last year.
The interest in home decorating materials and garden
supplies rose slightly during the week.

moderately

was

below

as

Retail volume for the country in the period ended on Wednesday
was estimated to be*from unchanged to 4%
above that

of last week

of

a

ago.

year

Regional estimates varied from the corresponding levels of
year ago

by the following percentages:

west

1

up

to

5, East and Midwest

up

was

a

New England and North¬
up

2 to

up

6, South and

1, Southwest unchanged to up 4.

slightly in the

rose

moderately above that of the similar week

a year ago.

the

holiday approached, the number of buyers attending many
wholesale markets declined moderately and was noticeably below
the level of the comparable week a year ago.
As

Department store sales

on

a

country-wide basis,

as

taken from

the Federal Reserve Board's index for the week ended April 9, 1949,
increased

with

by 7%

from the like period of last year. This compared
of 7% (revised) in the preceding week.
For the
April 9, 1949, sales decreased by 5% and for the
to date by 4%.
increase

an

four weeks ended
year

in general use.

'>

considerably from that of the pre¬
ceding week.
Partly because of Lent, the demand for food was
moderately less than that of the similar week a year ago. However,
it was approximately even with the comparable pre-Easter week
vary

The total dollar volume of wholesale orders

was

foods

volume

week and

comparatively steady over the past month, the
wholesale, food price index, compiled by Dun & Bradstreet, Inc.,
fell rather sharply last week.
Although movements of individual
commodities

on

and

Food

SHARPLY FOLLOWING

holding

dropped 1.2% to $5.71

centered

substantial increases in retail volume of women's

Pacific Coast down 3 to up

COMPARATIVE STEADINESS
After

were

in moderate demand, but
shirts, ties and hats.

49, and

from

considerably

being

were women's short-length coats
pastel shades, medium-priced navy gabardine suits
and moderately priced rayon dresses.
Millinery, blouses, hosiery,
skirts and costume jewelry were very popular. Men's worsted suits

white

during the week.

declines

were

as

increase

shoppers

many

Among the best-selling items

in

or more

but exceeded the 86 reported a year ago.

as

of

were

casualties

Although

interest

to

men'c apparel were reported.

25,233 trucks

and

the

continued

apparel

and children's apparel, while

units and

104,761

for

furnishings and accessories.

combined

' * v.V

involving liabilities of $5,000

Retail trade in New York for the past week chalked up small

COMMODITY PRICE INDEX

THE

PAST WEEK REFLECTED

advances

FURTHER EASING IN

THE

GENERAL PRICE LEVEL

volume

There has been

Thomas T. Barr, Jr. Dead
Thomas

for

1933, and is widely

.known in financial circles.

ner

ago

year

of 102,359

FOOD PRICE INDEX OFF QUITE

cago

ate

59

and

they dropped

State Mediation Com¬

the

mark

high level of the last two weeks, they were consider¬
numerous than in the comparable weeks of 1948 and 1947

industry and

Sharp

;

;

rose

ration and

1949

Inc., reports.

failures fell to 39 from 69,

Director

the Third

from

moderately above the correspondnig 1948 week whicli
period last wear, states Dun & Bradstreet, Inc.,
in its latest summary of trade, f

of 133,335
preceding,

revised total of 230 in the

a

Bradstreet,

than twice

decrease

means.

mission during Governor
Dewey's
first term, was elected as a mem¬

new

a

output consisted

failures with liabilities under

can

Ezra G. Leavitt. member of the

New York

during the past

unchanged
less active.

was

31, loan entries amounted to 4,993,683 bales.
With¬
drawals during the same period aggregated 602,206 bales, leaving a

Matured -by overtime at almost all

andfiaS

1941, 99,945 units.

175 last week,

creases

ber

was

divisions

where they fell to 6

a

quotations about

closing

Trading in spot markets

61,496

States and Canada

(revised)

131,970

to

April 14 from

&

Casualties

must not risk another de¬

Leavitt

•••••:

1939.

from

pression.

r

in the United

trucks

and

below the pre-war level;
of

pattern

We

week's

week,

more

man.

cars

Motors

week

ably

losophy, suited only to those who

;

years

down from the

defeatist phi-

a

with

was said to be at a practical
standstill. Reports from most foreign
primary wool centers indicated prices were holding steady at slightly

CONSECUTIVE WEEK

Commercial and industrial failures dropped to 184 in the

until, in the
world, economic dictator-

Communism

at

to

will want

our

noted for British and Netherlands East Indies

was

showed

Reported sales in the ten markets totaled 104,800 bales for the
week, against 122,500 the previous week and 163,400 last year. In¬
quiries were fairly numerous but mill demand was limited in volume
with buying confined largely to covering nearby requirements.

BUSINESS FAILURES FALL IN PRE-EASTER WEEK

Com¬

the

compared

Last

the authoritarian state.

.

ore.

built in the United States and 5,743 cars and trucks in Canada.

) ship first started the trend toward
.

11th

with

manner

a drop of
Vi cent for the week with cocoa
continuing strong under absence of pressure from producing coun¬
Lard and vegetable oils continued weak with price of the
former falling to within a fraction of the low for the season.

pre¬

11% above
reduced by

or

were

forUl^-corresponding period two

Output in the similar period

govern¬

the

of

This week's record

:

government

modern

loadings

when

past week again established, a new postwar high

for the like week of

Business

to copy our pattern of democratic
economic organization, just as it

.was-trying

74,850 cars,

1948,

cautious

a

tries.

Ford, Lincoln and Mercury output, Ward's said.

production
for
standard of living so

a

increase of

in

buying
Coffee

There
;

organize <

•

the

General

lies

depression.

a

Some

season

units,in the week
according to "Ward's Automotive Reports." -> •

be

way

in

confound

for which the

week

in

Repossessions of loan cotton continued to exceed entries although
margin was considerably smaller than in early March. Entries
into the loan during the week ended March 31 totaled 58,583 bales,
against 66,215 the week previous, while withdrawals were placed

prewar year.

4.4% above the
loading of coal and

to heavier

continued

the

and

ago

STRAIGHT WEEK

units,

traditions of freedom, must unite
to

year

to

ago,

or

cars,

trade

.

ment, both activated by the
great
now

principally

of the output reported

■

for

in-

and

economy.

and

due

Production

Government

national

a

-

month

'•

.:§/).>

a

Capitalism is facing
its greates challenge.
It must sta¬
the

compared
a

AUTO OUTPUT SETS NEW POSTWAR RECORD FOR SECOND

requires that

bilize

increase of 32,161

an

represented-.an

excess

world chaos.

.

industry,
or

flour

power

ago.

Federal

depression

entire

distributed by the electric light
industry for the week ended April 16, was estimated at
5,342,731,000 kwh., according to the Edison Electric Institute. This
represented a decrease of 17,230,000 kwh. below output in the pre¬
ceding week, 255,905,000 kwh. or 5.0% -higher than the figure re¬
ported for the week ended April 17, ;;1948 .and 682,411,000 kwh. in

tcrnational business in the public
interest and the public interest

:now

,

The amount of electrical energy

quarter of the

Risk

regulate

also

and

*

.

Domestic

earlier.

freight*f6L:the>week ended April 9, 1949,

revenue

ELECTRIC OUTPUT DROPS FOR

country, -fv. -./■ f
We

for-the

better demand and

buying limited to small lots for immediate shipment.

94%

the
the
coal mining holiday, but a decrease of 55 cars, or 0.01% below the
similar period in 1947, when there was a partial stoppage of coal
loading.
:,.:v v
):/•*• )'■

promote
investment
arid
stimulate the development of our
every

was

corresponding

the incentives which

resources, in

This

ceding week,

It
is
the
in which the growth
of arbitrary Big Government may
be avoided, in which there
may

.

having

757,784 cars, according to the Association of American Rail¬

roads.

curity without danger from either
monopolistic business or monopol¬

/

castings

week ago, 1,863,800 tons,

a

^Loadings of
totaled

which little business and
business can operate in se-

way

steel-companies

firmer under

were

Cotton prices were generally steady and firm

HEAVIER COAL AND ORE LOADINGS

mate in

government.

of

rate

Oats

to market.

corn

week

CARLOADINGS CONTINUE TO RISE IN LATEST WEEK DUE TO

together to promote business, pro¬
duction and employment.
This is
the simple way to create the cli¬

istic

of cash

light country movement.

Steel1 Institute announced this week

101.1%
and 1,442,000 tons, or 80% of the: old capacity one
1,281,210 tons for the average week in 1940, highest

and must be subject to
the rule of order under which
all,
groups of our society may work

simple

and

operating rate is equivalent to 1,814,000 tons of

and

1,828,800 tons

Every

organization,
whether it
be a >. corporation,' a
trade association, a labor union cr
a
cooperative, which carries on the
commerce which,
according to the
Constitution, is to be regulated by
Congress is an instrument of that

local

Iron

operating

This week's

corporation is
instrument of com-

commerce

•

country offerings were light and prices rose slightly for
Corn developed a weaker tone in late dealings.
The
easiness reflected expectations that there would be a large movement
week.

account.

off 83^ a gross ton-to $22.75 a gross ton with

was

large actual and prospective supplies.

but

the

some

come.

of thesteel-making capacity of the industry will be 98.4% of capacity
for the week beginning April 18; 194^, as against
99.2% in the
preceding week, or a decline of 0.8%. " '
;

modern
an

reflecting orders placed

are~

leading grain markets continued to be irregular last

the influence of

The undertone in wheat remained strong and demand was fairly

indication when the leveling ofLweuld-.be completed.
The American

Big
Government

must

we

however,

indication of What is to

are no

composite this week
no

•shall have the
arbitrary power to
.tell, the people what to do.
.I
To this

They

The scrap market was still vulnerable this week with the trend
down but not as sharply as it had- been.
"The Iron Age" scrap steel

neither

Big

Present operations,

time ago.

in

April 1 forecast of the Department of Agriculture placed
winter wheat crop at the near-record total of 1,019,686,000

new

good

was no sign in the
industry this week that the ingot rate
ready to go to pot. The rate this week is off one-half a point to

99%.

es¬

our

world

(Business

that

35

bushels.

There
was

by
Busi¬

or

without it, but it should not be
per¬
mitted to swallow up Little Busi¬
ness. The one
thing needed is to

-

(1755)

under
The

current

Washing¬
by many whose predictions on the steel shortage just have not
true, "The Iron Age" pointed out-.^-f >'-•> .'

ton

govern¬
its

people
•attempting to destroy Big
ness, for Big Business fills

week

the
on

4

destroying

the

Industry

Conditions this week in steel should L-ave made
unhappy reading
Washington who insist on more capacity and more pro¬
duction. From here on out the law cf
supply and demand will rule
the ingot rate and not
"long term" tread charts made up in

government, not by

serve

Trends

for. those in

.

We shall solve our problem according to the American ideal of

make

CHRONICLE

steel demand.

y

modern

FINANCIAL

(Continued from page 5)
impact of capacity operations in the past three months

and

them

,

sential

&

The State of Trade and

so

purchase all the marvelous
goods,
including furniture, that modern
industry makes.
j

COMMERCIAL

good

the

nave

Number 4796

gradual but steady easing in the general price
level since the end of February. ..This is reflected in the Dun &
Bradstreet daily wholesale commodity price index, which fell to
252.97

on

represents

April
a

12

a

255.89

from

drop of

2.7%

from

a

week

The

earlier.

the Feb. 28

latest

index of 260.04.

figure
It is

only slightly above the year's low of 250.73 recorded on Feb. 9.
The
current index compares with 286.14 on the
corresponding date a
year

ago.

-

.

-

'

'

•

a*

.

•

....

■

•

"

'

•

•

'

'

1948 with the estimate

at

which, however,

'

for department store sales

about 5%

was

above the like week of last
ill the post-Easter period.

year,

Reserve Board's index, department
City for the weekly period to April 9, 1949,
advanced by 4% from the same period last year.
In the preceding
week an increase of 9% (revised) was registered above the similar
According

to

the

Federal

store sales in New York

week of 1948.

6%

was

For the four weeks ended April 9,

reported below that of last

volume decreased by

■

•

over

placed

5%.

year

1949,

a

decrease of

and for the year to date

36

COMMERCIAL

THE

(1756)

FINANCIAL

&

Thursday, April 21, 1949

CHRONICLE

Treasury bond yields has widened over the
and
IV2 year past year, thereby making stock
notes.
In August the certificate financing even more favorable. It
rate rose from lVs to \lk', the IV2 is unlikely that bond yields will
normally tend to restore greater j high. It should be mentioned in
year
notes went to
1%. Bond rise sharply in 1949; hence a re¬
competition among sellers, one passing that some estimates—exyields were about the same at the duction in the spreads will have
form of which would be to in¬ tremely pessimistic—say this fig¬
to corne from a rise in stock prices
crease ..credit
terms
and
credit ure may be negative. If this were year's end as they were at the
What are the
beginning. During the first half- (reduced yields).
sales.. At the moment there is a to occur inventories would be a
prospects?
conflict between
the sales and source of funds rather than a use year weaknesses appeared as in¬
stitutional investors went out of
In the main the investment com¬
funds.
Currently
inventory
credit departments in many firms. of
providing retailers long-term governments and into munity explains the low level of
It is difficult to forecast the out¬ run-offs ' are
bonds.
Stock
yields stock prices by:
with funds, and the increase in corporate
; '
'
'
come of this internecine warfare.
started the year auspiciously by
The business failure rate is rising, total business inventories repre¬
"(1)
High
margin
requirements.
and
if this continues the credit sents
involuntary
accumulation falling steadily through May, after Will the recent reduction in mar¬
which market price declines raised
by
wholesalers and to
departments may win out. This mainly
stock yields.
The fall in stock gin requirement cause stock prices
will
tend to reduce receivables. some extent manufacturers.
to rise?
Past evidence indicates
Without
attempting to assign prices was accentuated in Novem¬ that the movements of stock prices
Another cross-current which will
ber after the elections. By the end
affect the volume of receivables definite values,
it appears that
and increases in rates on

for Business Financing

The Prospect
(Continued from page 7)

,

planned

electric

the

in

and

gas

industries and the railroads.

and

Tne otner estimate of plant

for 1949

equipment expenditures

piesently available is that prepared by McGraw-Hill (Table 2).
•Estimated expenditures* for 1949
are 5% below actual expenditures
in
1948.
These figures tend to
substantiate the SEC estimate of

•

sustained

plant

equipment

and

expenditures by railroads and the

The major de¬

^electric utilities.

cline is forecast for the manufac¬

industries.

turing

is

survey
of the

45%

about

that

indicates

The

control

there were
payments

down

over

credit

If

W.

Regulation

no

finance* com¬
actual expenditures in 1948 were
panies and banks would carry cus-r
for expansion purposes, whereas
comers' paper instead of the seller;
only 3u% of anticipated expendiEven with relaxed credit controls
and

1949 are for expansion;

tures for

,

will

that business will have
larger volume of re¬
ceivables than would be true if
no controls were exercised.
It is
it is likely

expenditures

the remainder of the

to

for replacement or mod¬

be

ernization of plant.
McGraw

The

cession
■

estimates

Hill

-

before the

made

were

SEC

survey

great interest that despite the

dif¬

ferences in the date of these

sur¬

recall, American
industry came out of the war with
a low ratio of inventories to sales.
tories.

will

assume

this

of

plant and equipment expenditures
in 1949 compared to 1948.
Any
further reduction in these expen¬
ditures

therefore

will

the

reduce

than

to

estimate

An

1948.

1948

in

than

less

10%

for discussing
1949.

funds in

of

of

be useful

may

the setting

lay

sources

Any discussion of the sources of
funds
for business in
1949 re¬

for

this

funds

Any attempt to forecast the im¬
mediate future of short and long-

precarious because
strategic role of the gov¬

the

of

customers.
On the basis of past
relationships
between
compiled
receipts of business and receiv¬
ables

for

it

would

funds

credit

will

extended

smaller

be

any

of
tod

for

1949,

tion

the

postwar

certain

years.

about

however.

of

buyer's

of

1948

this

The

I

longer

no

were

inventories

to

at

no

higher than $1,000 000,000, and in
view

of

forecasts

the

of

stable

prices v/ith sideward to downward

am

factor

drift,

restora¬

markets

additions

of

in 1949 than in 1948, which in turn
had the smallest requirement of
not

end

that need deficient in size and composition."
of
trade
Most estimates place the value

appear

account

on

the most

"For

the

Commerce
stated:
part, inventories at

maximum of $3,000,000,000

a

for the increase in the book value

would

inventories

of

TABLE

in

1949

appears

1

In

aggregate the supply of

the

the demand

funds will be equal to

only slightly higher
major source of funds
will be retained earnings and de¬
The

preciation reserves. It is interest¬
ing to note that three of every
four respondents to the McGraw-

•

'

24.0

Plant

and

equipment—.;.

New,

-

_
_

Used

_______

Inventories

_______

(Increase

43.5
41.5

1.1
7.5

.7
'

-■

7.2

5.4

•

5.9

4.5

.2
—

_

Sources:

23.5

Internal
_

Funds

retained

from

operations.^

_

;

-

earnings

—
—

29.0

7«.H
10.8

15.4

10.4

15.1

4.1

net

.1

—

•

'

Depreciation
tRetained

.2

.7

4.5

26.5

79.0

16.1

48.3

16.3

41.8

5.0

13.6

11.3

28.2

'/

10.6

,6.3'

_

.8

$6,000

External
Increase

securities..

__

In

bank

loans—

Short-term

_

-

tax

come

to

6.4

.3

.2

6.5

6.7

13.6

10.4

30.7

3.3

—

2.9

.8

7.0

1.9

1.6

.4

.3.9

1.4

1.3

.4

3.1

The

available

in¬

including
the
very
opposition
of
Senator
George (Democrat, Georgia), in¬
dicates that the proposed increase
in corporate taxes will not be en¬

rates

long-term

depend

on

the gov¬

ernment's action in managing

the

probably be adhered to. The in¬
stitutional investors, after moving
out of

of

governments in the spring

1948,

are

stantial
eral

back in as sub¬

now

buyers.

Reserve

In fact, the Fed¬
System
is selling

long-term governments at present
to

falling

keep yields from

lower.

If the

flation

the

and

future

portends in¬

the

flow

increased

of

savings

to foresee

it is therefore difficult

serious rise in long-term bond

yields.
Question 3

in

trade

debt

available?

The

major

of

source

w;ill undoubtedly be equity

supplied by retained earnings and

markets will continue

supply

period

the

below

1948.

figure

in plentiful supply.

The fact that

the business loans of the

the Council of Economic Advisers

March

16

declined

3.1

4.6

9.1

weekly decline, is

1.3

1.1

3.3

of

making
the

mand

in

Other

1

tutional

investors

purchases

whose

equity

severely limited by

are

law.

(5) Double taxation of corporate
and individual

incomes.

(6) General domestic uncertain¬
ty about the business outlook.

(7)

international

Tense

situa¬

tion.

It would appear that with the
possible
exception
of
the first

■■if

item,

of the reported

none

of low stock prices

causes

will disappear

that stock

prices will

re¬

main

relatively low (and stock
yields high) thereby continuing
the resort to debt financing by
business firms.

Summary:

Outlook for

j

/

Financing 1949
The

will

aggregate supply of funds

be

ample to meet the needs

of business with little

material

any

The

funds.

prospect of

in

rise

the

possibility of

short-term

is

rates

of

cost
a

rise in

than

greater

upturn in long-term rates. The

an

major

of

source

the

reflection not

supply of, but of the de¬

for, funds.
position to

capital

tive

form.

permission to accelerate de¬

preciation

The banks

on

External

be

used

funds

will

be

form.

sources

of

funds

will

supplement corporate
These external sources
likely

This

is

a

issues

security
Bank

loans

ii

will

debt

also

be

available in sufficient quantity. In

plant.

to

$11,000,000
savings.
consecutive will most

ninth
a

corporations and also administra¬

reporting

member banks in the week ended

X .9

.7

be available

should

$1.4

7.2

comparable

month last year.

2.2

.8

of

percentage

persons who place
their funds in the hands of insti¬

However,

12.4

1.8

the

among

was

.8

2.4

a

the have prepared "blueprints" for the equity
obtained
from
retained
higher than depression.
and
depreciation
re¬
Two
relevant pro¬ earnings
1948, v/hile the February figure posals are to permit administrative serves. External sources of funds
was considerably below the same
be
reductions in the tax burden on will
large, particularly new
in

January

5.7

2.4

increased

savings

by Congress this year.
depreciation .reserves. It is note¬
Unless there
is a pronounced
worthy that companies replying to
bull movement
in stock prices, the McGraw-Hill
survey indicated

.8

3.0

toward

movement

acted

4.4

—2.5

The

equal distribution of income

clusion

In what form will the funds be

funds

re¬

this year, thus leading to the con¬

be

in

general, management is perturbed
by
the
growing debt-to-equity
ratios.

the debt

unfortunate

from

the point of view of business man¬

are

agement,
which
is
manifesting
their
growing concern over the increas¬
net sources
.7
.5
1.2
reserves
as
needed
by running
Discrepancy (uses plus or minus sources
.5
—1.0
.2
.3
ing debt-to-equity ratio. What is
down their portfolio of govern¬
"Excluding bank3 and insurance Companies.
potentially of greater danger both
ment securities.
tIncludes depletion.
1948 profits partly estimated.
for the firm and the economy is
tEstimated.
the increasing ratio of short-term
Source:
Department of Commerce.
*
*
Question 2
'
debt
to
gross
national product.
j. At what price will the funds be
TABLE 2
Should a deflation get under way
made available?
To answer this
Plant and Equipment Expenditures of U. S.
the banks can call their loans,
Business, 1948 and 1949f
Increase

has

This does not ap¬

into the institutional investors, and

any

have

groups

supply of venture capi¬

may

particularly in view

likely,

pear

formation,

.6

1

(4)
more

even

be removed
by institutional inves¬
increase, thereby causing
peg

yields to rise.
of

income

tal.

sales

tors may

The heavy surtax rates on

higher

duced the

governments at par will

on

a period of
taking uneco¬

over

risk

makes

Maintenance of the

Federal debt.

floor

gains and losses

(3)
of

course

will likewise

strong

2.3

"

income taxes
$25,000-$30 000

All

classes.

Bank loans
ernment

stock

if

words

progressive
income
taxes
with
limited opportunities of averaging

in short-term

15.8

16.9

16.7

other

In

ances.

prices rise, increased use of mar¬
gin purchases is encouraged.
It
appears therefore that purchasing

rates.

money

one-third

78.7

that/

lead
changes in customers' debit bal*

nomical.

2.0

26.7

roughly parallel. Closer examina¬
tion,
however,
indicates
changes
in
stock
prices

years

20.0

28.0
15.0

valuet

the

income

personal

rise

government
with a

.2

Total

and customers' debit balances are

hiked

5.3

1948

14.3

_

book

1947

10.5

_I/I_> ZI__

in

on

in

rise

be

that investment plans would be
substantial sums
of expanded if the corporate income
money
to corporations although tax rate were reduced or if accel¬
debt
will
be
the
predominant erated depreciation on plant and
form.
Judged by the first two equipment, say within five years,
months of 1949, new capital se¬ were
permitted. You may have
curity issues are running about read in the papers recently that

11.6

Receivables

a

to

(Billions of Dollars)

Uses:

point—planning to distribute the
increase between corporations and

will

corresponding

at present or
rate.

short-term

on

securities

Question 1

the capital

Sources and Uses of Corporate Investment Funds, 1946-1948*
1946

is

rates

term

,

of

stocks were

on

5.26.

of

rates

sires?

true that actual

partment

yields

compared with the May low

course of prices reverses itself and
community de¬ rises, it is entirely possible that

It

year.

6.57

(3) Will the funds available be
the type that the

Hill Survey indicated that they
is ly, thus further increasing the dol¬
lar needs for inventory.
In 1948 plan to finance their 1949 capital
expenditures since
the end of 1945 have run above the value of new inventories was expenditure almost entirely from
about
$2,600,000,000,
compared this source. If the President's pro¬
the estimated expenditures. How¬
with
$2,700,000,000 and $5,000,- posal for an increase of $4,000,ever, it does not follow that this
behavior
will
continue.
Since 000,000 in 1947 and 1946 respec¬ 000,000 in taxes were enacted this
70% of planned expenditures are tively. The book value of all in¬ might serve to reduce capital ex¬
ventories rose by $6,000,000,000 in
penditures
from
the
estimates
for replacement and moderniza¬
1948 as compared with $8,100,000,- given
or
require more external
tion they can be readily postponed
000 and $10,700,000,000 in 1947 and lunds
than.
presently
contem¬
if the recession turns out to be
1946. In its annual review of 1948, plated.
real and serious.
»
found
in
the
*.
You
will
recall
that
February,11949,
"Sur¬
Another important use of funds
(the Presi¬
in 1949 will be credit extended to vey of Current Business," the De¬ dent was unusually vague on this
need

of the year

quires answers to three questions. ernment in determining the course
(1) Will the aggregate supply of rates. If the government con¬ securities on margin is not an
of funds be equal to the demana tinues its policy of allowing the
initiating cause of changes in stock
lor funds?
bill,
certificate and
short-term
prices but tends to reinforce a
note
rates
to
rise,
we
will
surely
(2) At what price will these
movement in stock prices once it
funds be available? As you know, get higher interest costs on open
has started.
and
bank
borrowings.
supply is always equated to de¬ market
Will this happen?
(2) High
levels
and
steeply
mand by price changes. .
If the present

pat¬

peacetime

to

production was not smooth
and goods in process frequently
piled up. The normal inventory
patterns had to be restored, thus
requiring large accumulations of
inventory.
Furthermore, in the
transition period prices rose sharp¬

in

reduction

5%

a

you

terns of

I

article

As

Reconversion

the conclusions are virtually
purposes

of funds

postwar era was the in¬
in the book value of inven¬

the

crease

same.

For
•

entirely this year
materialize.

The third important use
in

break in

veys,

that controls will

impossible
abandoned

be

mid-February,

the

a

should the recession

was reported in
after
the
sharp
commodity prices which
had occurred in the early weeks
of that month.
It is therefore of

the

carry

not

re¬

evidence, while

and

talk

recent

terms,

1949 will be less

of funds in

uses

certificates

bills,

augment

—

EDITOR'S
first of

piro

two

NOTE:

articles

problems

on

nancing.

This

by

of

is

Dr.

the

Sha¬

business

fi¬

The second article giv¬

ing

a long-range view of business
financing will appear in a subse¬

■

quent

issue

of

"The

Chronicle."

.

■

.

'

question

(Millions of Dollars)

.

,

Secur. & Exch. Commission
®

1943

Manufacturing

8,340

Mining

800

Railroad
Other

transportation

Electric

and

gas

'

%

'

"

'49 to'48

7240'

—13

820

650

2,680

3,130

5.39G

5;010

19,239

*

18,310

*

Percent

1949

1,450

700

utilities

Commercial and miscellaneous

■tfjt

T"

1,320

.

1 McGraw-Hill Survey

'

1948

1949

8,160

7.200

3

765

760

4-10

1,345

1,520

7

1,900

1.780

4- 17

2,680

2,870

•+

—

^7'"

!®*clr,deP
3

Bus i net s

14,350

14,130

Figure? do not add to totals due to rounding.
Week."

Jan.




22,

1943

—12
—

1

4-13
___

4-

4

7

need

-

review

to

thereby forcing distress sales and

downward
movement in prices and economic
Money rates in 1948 continued the
activity. Technically, this danger
rise that began in the summer of
can be offset by the power given
1946 and is due to:
the Federal Reserve System (by
(1) Large demand for funds in the Banking Act of 1935) to accept
excess of. current savings.
• v .
any paper- for discount. If the cencausing

a

of

(2) Monetary and fiscal policies tral bank does what it is supposed
the government.
to do in emergencies, this cumu¬
.

Short-term

rates

rose

in

1948

lative

due to the rise in rediscount rates

deflation, need

The spread
.

ujf*;

Doremus Co. In Phila.:
Francis

cumulative

.

"Estimated.
;

Percent'49 to '48

we

briefly developments operating in
the capital and money markets.

F. X. Martinez Joinsr

between

not

in.

set

and

stock
•

■

Co.

X.

in

their

as

head of the

lic

Relations

tinez

Martinez

hasbe¬

associated with Doremus &

come

was

Philadelphia office
Publicity and Pub¬
Department.

Mar¬

formerly with the Asso¬

ciated

Press, Philadelphia* "In-*
quirer," and during the late war
he

was

Nelson

on

the

publicity staff of

Rockefeller

in

the

of Inter-American Affairs.

Office
,■>'

•

rt

Volume

"

169

Number 4796

THE

■'

(Continued from page 8)

Auto Production Equal to Demand

Ability of

steel industry to

our

turn out

great tonnages of quality
products year after year has be¬
come

much

so

that

most

that such

do

only

granted

not

economic

an

realize

blessing is

the

by

Nowhere

States.

for

taken

people

possessed

else

United

does

steel

production approach the American
level

either

in

total

tons

or

per

capita.

The output of 88,500,000 in
this country in the calendar year
1948, for instance, probably rep¬
close

resented

to

55%

of

Steel made in the world.

parison,
England
16V2

record

new

a

last

net

all

By

tons

the

In the

automobile industry pro¬
to have caught up
with demand
except, perhaps, in
a few lower
priced lines. The oil
industry already has seen forced
duction

close

were

to

pro¬

Russia's production is not

seems

curtailment of output and is

freight

Coal is in

peared.

So

is

lumber.

20

laid off.

Farmers

restriction

to

Even

the

much

almost

steel

20

times

capita as the
people who live elsewhere. Even
per

For

other

goods

make

for

Last

and

services

comfortable

been in

ever

of

number

the highest,
peacetime. The

employed
touched a new top.
Payrolls set
new records. Industry after indus¬
try turned out a greater volume
persons

of

products than ever before.
In
spite of the fact that steel supply
could not satisfy everyone at once,
it must be obvious that industrial

activity
last

seen

such

on

scale

a

could

year

as

was

have

never

happened
critical

if there had been
shortage of steel.

any

these

the

a

great
performance
month, both by mak¬

their

of

products, the words
"steel shortage" are still heard,
although a bit less loudly, imply¬
ing that the country has been and
continue

will

Most prominent

the

are

for frqight

programs

armed

forces.

from

cuts

and for

cars

It

is

not

un¬

of the programs

some

will be

dropped before the present
expires next September.

In

the

hard to

face

of

such

facts, it is

how anybody can be¬

see

to

be

starved

for

steel.

sions of steel supply have

played

possible

up

of

added demands, any
it was claimed, might
tight condition. Promi¬

which,

prolong

so

a

nent among

these

require¬

were:

ments under the Economic Recov¬

ery Administration; an expanded
defense program; a substantial in¬
in

crease

spending;

general
government
large-scale program to

a

Western European nations.
These are the facts: current ECA
rearm

allotments aggregate less than onefifth of some early estimates, and
not

expected

to

increase

to

as

steel output continues
rise; the armed forces in recent

months have left unordered
stantial

sub¬

a

the modest ton¬
nage set-up in their voluntary al¬
location program; general govern¬
part of

ment

spending does not seem like¬
ly to jump; and the matter of re¬
arming Western Europe is still in
the

short of actual

is

little

demand and there
to

reason

situation

will

be

hope that the
better next

any

year or

the year after.

eastern

steel

barons

Today the

are

opposed,

they have always been ■ to any
substantial
enlargement
of our
as

capacity to make steel. These men
of little faith

of

in constant dread

are

depression which might leave

a

them with 'too much' steel."

discussion

stage.

Unfair

so

long

a

somewhat accustomed to unfound¬
ed and unfair attacks
and

actions.

on

its

motives

This time, hQ w'eyer*

there have been
signs that' tjhte
campaign against steel is'^jppre
than just political ranting',' 'and
that

is

it

not

directed

at

steel

alone among American industries.
Behind the barrage of speeches,
statements
one

and

may

legislative
see

propo¬

American

great

the shadow of
industries
no

Rad to pay attention.
In a more
recent statement before a Con¬

private
enterprises
but
properties of the state. Imitation
of British experiments still seem
to appeal to the so-called "liberal"

gressional sub-committee he said:

thinkers.

"It;'is knowh that shortages of

Now

longer

many- critical and essential min¬
and? metals exist,, as. evi¬

denced

by /

steadily

increasing

prices, failure to meet stockpile
requirements and production botof

tleneblts. 4

The' extent

shortages-

f^oWever, is not known

and

Wt

exists

there

present
for

framework,

;

these

their

no

measure¬

ment.".
>

We

left

are

what

wonder

to

petition/with

tween December and March. Then

itself.

revealed
million

a

shortage

tons

March it had

no

ing shortages.
On the charge

has

been

of

about

of

steel, yet in
way of measur¬
-

>

■

'

-

••

that lack of steel

holding back other in¬

dustries, let's call the roll of some
of them that use a lot of steel.




are

of

private

In

some

of "steel" gets

economic

do riot contain

of these the

name

specific mention.

True enough,
and

industry

upon the recommendation
investigatory boards selected
appointed by the government

happened to the crystal ball be¬

10

catch

seized upon as evidence that steel

the industrial plans
panaceas proposed
specific mention of

government ownership or nation¬
alization of industry. Instead they

Consider,

the

alluring

ests

the part of private inter¬

on

fall in with official ideas.

to

industry for

industry.

Spence Bill provoked no storm oi
objection from the public or from
the Congress itself.
A number of
sharply critical newspaper editor¬

to

ials did attack the proposal for £

were

nearing the end of

ment's

But

that

"cold

war"

recently

the

govern¬

on

pace

we

a

seems

what

to

should

Introduction

study

once

preliminary

litical rostrums and sidewalk soap
boxes have now grown more pur¬

be

of

ment

of

the

of

actual

or

the

with

radical

groups

have

been

revived, made more
dangerous. Sponsorship for such
legislation, directed against busi¬
generally

ness

fined

to

Even

is

longer con¬
few, but is found
increasing
number.

the
an

no

administration

support

is

lacking.

Because much of this legislation
is skillfully phrased to obscure its

possible

there

scope,

danger that
without

some

always

it may pass
understand¬

of

general

any

is

ing of its significance.

Yet I be¬

lieve it is true that only a minor¬

ity of the people would knowingly
choose to

live

under

trolled, industrial
tial

offset

state

a

economy.

A

con¬

par¬

this

to

danger may be
found in greater efforts by com¬
panies and by whole industries to
present

simple

economics

of

facts

the

about

business

the

world.

suggested,
the

supply

for

program

munities

well

as

across

as

sive

situation

not

always
for the

sharply

a

an industry. The
begin with relatively
regulation usually described
and rather generally accepted as
in the', public interest.
It is an
early
part
of
the
concept
of
"a planned economy" or the so-

mild

_

qalled
ment

state."

"welfare

phase

appears

financing,

stimulate
build

Another

in offers of govern¬
on easy

terms, to

desired expansion or to

uneconomical

plants.

Plau¬
sible reasons are easily found for
advocating allocations of materials
and
controls
over
wages
and
prices. And so by successive stages
the way be opened for govern¬
ment entry into a business, under
some
such guise as a yardstick
operation, followed by more and
more government operation until,
eventually, the government is in
and private industry is out.

field.

?

Last month
introduced

signed
tion's

to

a

of

stee

the

Administra¬

gress

in January.

to

Yet

start

almost

Spence Bill
it

backed

down

road

a

That bill would

give the Presi¬

the national
offer a tempting bait of public economy, including the power to
welfare, promoting maximum em¬ formulate production requirements

a

Industry
progres¬

industry.

Its

policies with respect

operation

are

determined

not

.1 make

"full

on

heels

the

of

sure

the

of

with a so-called
employment bill" which

-

would

provide $15 billion for the

to finance

of

a

dition,

loan of $65 mil¬

to

further expansion

will

holds

great

into

steel

implications

American industries.

conceivable

that

such

way

inquiry

government
prestige and
propaganda behind it, any such
inquiry is bound to be difficult
for private industry to refute be¬
fore the public.
A recent editorial in the Wash¬

ington "Post" commenting on this
matter, said in part:
.

impartial legislative in¬

of

national

government
hands-off

a

should
attitude

proposals that entail in¬
cursions into the operational field
of industry."
to some people that
of shift in economic

It may seem

trend

for

has

largely remove any reason

concern

ment

the

action.

about

But

such
so

vital

source

of

its

Outing

of

New

.

York

will

annual outing on

June 24, at the West¬
Country Club in Rye, New
York,
Stanley A. Russell,
Jr.,
Blyth & Co., Inc., President of the
association,
announced.
Sydney
Duffy of Blyth & Co., Inc. has
been appointed Chairman of the
outing committee.
H. Grady Black, Jr. of Morgan
Stanley & Co. is in charge of a
special activity for the outing.
Arrangements for the group's
annual golf tournament, feature of
the
day's sports activities,
are
being made by Jerome Burke of
Blyth & Co., Inc. Tennis competi¬
tion
will
be
directed by
Erik
Reinders of Kidder, Peabody &
Co. and "games after dark" will
be in charge of William S. Goedecke
of Smith,
Barney & Co.
Hans Schuyten of The First Bos¬
ton
Corporation
is
arranging
transportation to the outing.
Originally known as the Junior

as
some
recent eco¬
have been tail¬
political promises. Yet

the

industrial

chester

with

an

the

Friday,

all

nomic arguments

"If

in

hold their third

supply

a vehicle for publishing
predetermined conclusion, in the

ored to fit

Unless government

stopped, this nation

The members of the Investment

merely
same

lose

be

To Hold Annual

It is not in¬
an

for

NY Investment Ass'n

demand

for

force

great economic strength.

might be conducted on a preju¬
diced basis, dealing not with facts
but
with
theory.
It could
be
a

can

Association

Administration's

inquiry

forward

That tra¬

powerful

protect it.

field

steel."

an

that

encroachment

openly inviting the socialization
The

are

progress, is definitely threatened.
Constant vigilance will be needed

plant which had
been built during the war with
government funds, contrary to the

for

area

best American tradition.

blast-furnace

a

flourishing industries

Detroit

industries, built by the
vision of private initiative, in the

to loan to public or private
agencies for industrial expansion
Almost simultaneously
came
an
lion

this

looking

RFC

application for

that you will agree with me,

because the

Texas Congressman

a

that statement, gentle¬
with deep conviction. I feel

men,

up

recent signs

dent vast powers over

no

ment.

privately financec
expansion and im¬

might lead to nationalizing
the steel industry.

towards

set forth by the
President in his message to Con¬

is

on

which

bill

as

There

provement.
And they 'evidently
thought that Congress would be

Congressman Spence

cover

policy,

people.

just a little gov¬
participation in industry.

reluctant

quate,
de¬

which provides

considerations of profits alone
but with the best interests of the

not

of

programs

maintain

(H.R. 2756)

the

expansion, production, prices,
marketing and all the other phases

the

intrusion of

impor¬
be

to

familiar
in

system

the

nation.

continuation of

Dangers of Government Intrusion
is

would

country clearly in mind. Under
private ownership and direction,
the steel industry is
performing
for the country a better service
than could possibly be achieved
under any other form of manage¬

of

course

methods

Steel recognizes its
basic position and its
responsibil¬
ity in the industrial life of the!

seriously con¬
cerned.
They seemed to believe
that an honest study would pro¬
duce
findings favorable to the

to

There

all

of

/ Steel is an alert and

It is unfortunately true that when
industry does not speak for itself,
recommendation of interested gov¬
its story goes untold. The steel in¬
ernment agencies. Commenting on
dustry, fully aware of this truth,
the application, a leading business
some time ago greatly intensified
paper said: "To make RFC money
its program of public information,
readily available for pork barrel
to reach into the steel plant com¬
industrial expansion is tantamount

country.

and

But the most

An Alert and Progressive

firs

was

all

ernment

Congresi

people

many

actual

were

result

inevitable reluc¬

ideas

safe formula for

con¬

seemed to welcome the proposal.

this

and

freedom, opportunity and benefits

facilities

additional

But various members of

When

Unswerving adherence

new

economic

industry as £
possible govern¬

financing

struction

so-called

Proposals for hamstringing leg¬
islation that orginally found favor
only among the representatives of
extreme

nation¬

a

relinquishing forever of the only

the

steel

to

to

would arise.

made, and

poseful and pointed.

now

industry would be

of government like the

tradition

tance

how much.

have been stepped up.

What were
only empty shouts from po¬

economic

to become

were

arm

disappear.

tant

Last year there

of

tance

as

hoped

steel

a

like if it

detriment of the national economy.
In one form or another various
attacks have been launched
against

who

label

One could speculate at
length as
to what

to

years.

the ease
anti-inflation pro¬
virtues under

new

stabilization.

program could hasten the
wilfully restricting output of
products, and thereby out¬ end of private enterprise by im¬
put of industry generally, to the posing the decisions of officialdom

many

example,

an

acquires

gram

own

were

for

with which

Post Office Department. Initiative
and the spur of competition would

Such

was

its

basic

They

be temporarily dormant, but
they are far from being dead.

alized

any

Congress
resolutions'; some

of certainty that the
ideas have been abandoned.
may

expect that government opera¬
tion would result from any reluc¬

of

and 1

bills

the

ing

37

to

merely

before

which, if enacted into laws, would
subject industry to government
restrictions and regulations com¬
pletely incompatible with any rec¬
ognized concept of private enter¬
prise. Others could put the gov¬
ernment virtually into direct com¬

and

it

period

quiry should reveal the existence
goods shortages that endanger
security, it may became
necessary for the government to
Various American industries al¬ assume the risks of expansion pro¬
ready have had the experience of grams that private industries are
travelling part ;way along that unwilling to shoulder. But until
road.
Some,.,like electric power the evidence has been assembled
companies and fertilizer! makers proving the need for more rapid
now meet actual competition from
expansion and unless there is a
government operations. Bills now demonstration that alternative and
before Congress can open the door less drastic means of satisfying
to
similar ventures
into almost specific requirements are .inade¬

.

erals

This

government into

Attacks

been

target
for demagogues that it has become

sals,
absurdity of such thinking
has been demonstrated so empha¬
tically that even the man himself

levels.

process may

Steel has

(1757)

to meet the people's
welfare; to
impose compulsory priorities and

industry was struggling to
up
with demand has been

defined

>

The

when

not

months most discus¬

CHRONICLE

Ample

possible

dustrial
activity
and
economic
prosperity in this country.

Late last year,

for example, the
Assistant Secretary of the Interior
said:
"Steel production this year
(1948.) is about 10 million tons

est

among

many

FINANCIAL

allocations; to make loans to pri¬
ployment, increasing
production vate industry, or to state or local
and maintaining
purchasing power. governments, for increasing in¬
The implication—if not the ac¬ dustrial capacity and production;
cusation—is that industry,
citing to reduce or defer payments either
steel as an example, has not acted of interest or on account of prin¬
in the public
welfare, that is has cipal for such loans; to expand ex¬
not
worked
toward
raising na¬ isting plants or build new plants,
tional
employment,
production ostensibly for private operation.
and purchasing power to the
However, there is every reason
high¬

lieve that the production of steel
has been or is now hampering in¬

are

of steel and by most consum¬

ers

quotas have lately

European

Despite

month after
ers

covered by
has placed orders

been announced.
among

time hardly

some

cuts in

reasons

For

was

allocation

monthly quotas, some
far short, and for these

fallen

nave

living.

total industrial activ¬

year

ity in this country
it has

which

too

industries

programs

law

refrigerators, and simi¬
larly imposing percentages of the

voluntary

of the

of our steel

and

new

which

likely that

biles

facing
against

longer need all the tonnage
producers had volunteered

no

Britain, with one-third as many
people, has less than one-fifth as
much steel. It is largely because
supply that American
people have four out of every five
radios in the world, five out of
every six of the world's automo¬

guard

being

are

programs, skillfully administered
under the Secretary of
Commerce,

for the full

use

are

a

abundant harvests.

Only 7% of the world's people
live in the United States, but that
small part of the total has avail¬
its

sched¬

lessened

such

for

Production

being cut to match
demand, and workers

million tons.

able

supply.

durables

to furnish.

about

excess

ules for many consumer

one

at

has'-disap¬

are

estimated

1948

"crisis"

car

officially reported, but it has been
for

con¬

fronted with over-production. The

com¬

set in

was

when

year

million

duced.

\

&

Present and Prospective Steel Supply

when demands have gone unsatis¬
fied for any long period.

as

COMMERCIAL

Investment

Bankers

and

Brokers

Association, the Investment Asso¬
ciation of New York was founded
in the Spring of 1947. Its mem¬
bership is now approximately 150.

.

WithA.
(Special

to

C."AlIyn
The

Financial

& Co.
Chronicle)

OMAHA, NEB.—Robert J. Fer¬
guson

has joined the staff of A. C.

Allyn & Co., Inc., First National
Bank Building.

George M. Griffiths Dead
George M. Griffith, Manager of
the Newark office of

Harris, Up-

govern¬

far nothing

happened to justify any feel¬

ham
age

&

Co., died A.pril

of 74.

18 at the

38

the

At

Tomorrow's

It

Whyte

looks

now

if

as

the

spots occasioned by the first

have been eliminated,

group

and the obstacles in the latter

By WALTER WHYTE=

nibbled

been

have

group

Sjc

Emergence on upside now a
matter of days.

tf

would

if

nice

be

a

bell

(Continued from page 9)
will

There is still the time

ele¬

remaining, though even
seems to be running out.

that

or

part of the

a

be

will

and

seen

holding of stocks waiting for panied by an
action to bring you losses or
various stocks

profits.
•

timing

Unfortunately,
hasn't

reduced

been

to

any

such

simple system. It still
requires careful tape watch¬
ing, plus a preconceived no¬
tion of where certain obstacles

exist and

approximately how
long it will take to negotiate
them.

*

A
ous

though the market as
At the

a

a

whole

same

by and large,

in

normal market that

Inasmuch

formulate.

my eggs

saw

your eggs

prefer to
basket

in

one

if

if

stocks

Your

movement.

For

of

most

the

except when and

where

parthave

we

lation, or of conspiracy and com¬
bination, have intervened—busi¬
nessmen
in making prices have
been

activity, out¬
couple of bursts occa¬

sioned

free

29.

of

prices.

—Walter
[The

Whytc

expressed in this
article do not necessarily at any
time* coincide with those of the
Chronicle. They are presented as
those of the author only.]

into the making
been
than

Estate,

on

been

of the prices

:<c

sjc

if

written, the by¬

June

18

nual

Summer

York

to

22

City.

Session

Even now, no one

seriously

pro¬

to restrict this free method

poses

of selling as

general practice in
business—except

a

conduct

of

transportation costs

as

the

into

prices.

may

determination

The seller

—insofar

may

of

continue

the theorists in trans¬

as

portation are concerned—to make
his prices in relation to the sup¬

ply and demand of his product, to
the prices of his raw materials, to
the cost of

manufacture, to taxes,
insurance, interest charges,
overhead of every character, and
he

in

an¬

New

The program is de¬

passing ' period seems about signed for mature lawyers, trust
over, and an emergence on officers, and other qualified per¬
sons engaged in estate work. The
the upside is indicated. There
discussion is on an advanced level
are various
things that point and will concentrate on arrange¬
to it. A couple of months ago, ments for the most effective dis¬
the steels and motors showed

position of estates under the
ent

reaction

potential to certain
levels.
Subsequently came
news of
price cuts in metals
and autos, and stocks slowly
gave way.
At present these
stocks are about where they
showed they would go, and
selling has dried up.
a

tax

the

laws

and

to the

transportation charges

his inbound

on

pays

instruments.
The
sweeping changes effected by the
Revenue

tax

Act

of

1948

will

lectures

tate

problems.

consists

of

also

present
es¬

The course, which
two-hour lectures,

14

meets

Monday

from 9

a.m.

to

through

ma¬

raw

1 p.m.

and 2:30 to

Friday when

non-profit

institu¬

tion organized and maintained

by
practising lawyers for the benefit
of
their
fellow
practitioners
throughout the country.
All its
available

are

veterans

war

under

of the GI Bill of

to

the

lawyer
benefits

DETROIT, MICH.
of Watkins

name

Penobscot

—

The firm
Inc.,

& Fordon,

Building,

.has

been

changed to Ralph Fordon & Co.

New York Curb Exchange (Associate)
San Francisco Stock Exchange

Chicago Board of Trade

COrtlkndt 7-4150
Private Wires to

A. J.

New York 5, N. Y.

Teletype NY 1-928

Principal Offices

San Francisco—-Santa Barbara




Kilpatrick, Jr. Opens

AUGUSTA,

patrick, Jr. is
as

an

fices

Monterey-—Oakland—Sacramento
Fresno—Santa Rosa

As to whether he
subject to suit if he

actually

absorbs

'freight charges, on his
without
conspiring
with
competitors, not only the lawyers
but also the government officials
themselves disagree—there is al¬
most a confusion of tongues, so to
speak, on this subject.
own,

If

it should turn out to be the

law that

systematic absorption

no

freight

charges is to be per¬
mitted—and that delivered pricing
of

individual

in

even

subject to risk—the
structure

the

would

Under

of

upon

economy

such

a
system,
there
unpredictable reloca¬
industry on the part of

would be
tion

effects
the

of

is

instances

profundly disturbing.

be

an

businesses

which

say,

un¬

equivocally, that without some
sort
of
freight absorption they
cannot,
operate
present
plants,
which

built

were

not

to

serve

merely limited and restricted local
markets

but great sections

country,
tion.

or

the

even

of the

whole

na¬

'

The structure of

Ralph Fordon & Co.

Members

14 Wall Street

must
the

the

economy

of

this country traditionally has been

Now

New York Stock Exchange

is

Rights.

Pacific Coast Exchanges

Schwabacher & Co.

collusion, and

freight charges.

those

educational

of

let the consignee worry about

Friday

Practising Law Institute is

courses

on

the

careful consideration of other

a

Orders Executed

make

problems especially important.

The

The

Securities

of

suspicion

necessary

4:30 p.m., except on
it closes at 1 p.m.

Pacific Coast

pres¬

the drafting

was

GA.
now

individual
at

138

Kildoing business
—

A. J.

dealer from

Eighth

Street.

of¬

He

formerly a partner in BothKilpatrick.

well &

its

abundant

dant

of

use

founded

upon

restricted
to

sources

the concept of

un¬

markets

and

access

of

to

raw

materials.

It

The

use.

transportation

production,

mass

not

be

without

sustained

producer to

has

been

is

cheap,

so

law

tal

national

come.

In

Those

who

testing

.

distance and at too great
be

to

soon

ceases

That,

incidentally,

is

cost,

a

producer.

a

the

of

one

great efficiency advantages of the
private enterprise way of getting

things done, in comparison with
government-controlled
way.
Under the private enterprise way.
repeated and habitual mistakes of
judgment are corrected by fail¬
ure; under the government con¬
trol way, too often they are per¬
petuated through the involuntary,
and sometimes unrecognized, sup¬
port of the taxpayers.
the

But

to

limit

artificially—as

is

proposed from time to time—the

which

within

range

than
particular

operate, is to do
merely to limit that

more

may

business.

business

a

artificial

Such

limita¬

tion would result in the economic
loss

of

junking

great areas.

serve

plants built to
It would create

both economic and social disloca¬

ties

create uncertain¬

It would

tions.

would

what

to

as

what

and

is

in

used/

in-'

or

/•'//yv;...

•

-

'

would ; artificially;

consumptio

lenting

it

production

•/' ...■<■

,

correction

unre¬

figures*

operations, we have applied^
of increasing returns—'
doing more and more for a smaller
and smaller proportion of the to¬
the

;

results—the

keeping

transportation,

individual instances, there may be
wasteful hauls.
If so, they are

of

Bureau

tion

con¬

a

tinuation of national markets.

Interstate.

abundantly.
And the converse ig
equally true.
Transportation in"
this
country is produced more
cheaply because it is so abun¬
In our transporta-/,
dantly/used.

has

this in¬

and

the

the subject.

America

abun¬

ties for producers and nationwide
choices
for
consumers.
These

in thi&

less than they

Commission's

Because

only
nig¬

limit the usefulness of transporta- '■
tion as a great tool, a great bal-i
wheel

ance

of

and t

production

would—if they

n,

%

should

succeed—sharply reverse
They would do so, no ^
doubt, with high motives and good
intentions.
They would do so in T
this trend.

the

honest

conviction

that "some /

commission,
some
-board,
body with the compulsive

some

;

power'

of

government, could make the ?
right and the wise decisions in;"
the- multitude

tions.

-

such

of

daily

Some

may

body,

removed

a

transac-'t
that

contend

,

the

from

of responsibility for re- V
suits, would be wiser in its actions

pressure
than

the

who

his

businessman

common

has

to

shots,

his

make

and

stand

But I can't

quences.

:■

call

guess,

the

conse-

see

it

.

that

firmly believe that prooffreight
absorption
would undercut the very foundations of the system of production
and exchange of goods and serv¬
I

way.

>

hibition

ices

which

have

v

;

America

made

;

what it is—the great foundations 'S
of

freedom

and

the

of

of choice
of

use

and

action, >;

transportation

productive tool. That would
be a high price—a tragically high *
price—to pay for the 'testing out '
as

a

of

„

theory

some

of

compelling .'

business enterprises to ignore one
of the fundamentals of value

and '

price—that is, the cost of putting ;
the goods where the buyer wants
them.
It might even be that man- '
kind Ought to be willing to strive
^
and struggle, to plan and sacrifice, •
,

would

permitted

be

not

under

policy of artificial limita¬
of transportation.
It would

such

a

tion

limit

the

freedom

of

of choice which is the

action

and

basis of

our

without the incentive of the hope

•

of profit—for which, incidentally, >
large-scale production he takes the risk of loss.
But •
widespread consumption.
r
»that's not the way the American ;

American
and

limitations upon
transportation would,

Such1 artificial

the
in

use

of

time,

would

do

bring

more or

even

about

They
the atrophy,

more.

less complete, of the very-

transportation systems which are
one of the secrets of our national

and the economic free-

economy,

dom which is the

sustaining force

behind

freedom,

all

our

*

were

1

the

5

built.

whatever

And

merits of
the

an

be

may *

economy

managed by '

and
strength.
The strongest muscles, whatever may be the faults of the
when not exercised, wither and free system of abundant hauling '
decay, and the complex mechan¬ of goods, even cross-hauling if you
ism
of
transport, if not
used, please, I'll take the latter.
would rust out.
This is not to
I have not tried today to tell

transportation just to be
transporting things—but then that
suggest

doesn't happen

to any significant

government,

what railroads

you
sas

of

powers

mean

What they

City.

vious—almost

to Kan-

mean

obvious

too

-

is ob¬
to

V

degree because, and I repeat, no¬

mention.-

body ships freight for fun.
But
it is a fortunate fact that in our

midcontinental development, rail¬

daily peacetime operations we do
ship, by the various means of
transport, enough to keep our
transport
agencies
in vigorous

fact.

working order.

—just as the railroads, in turn,'"
depend upon the continuance of •-

It

is

a

cumstance

further
that

the

fortunate
cost of

cir¬

using

our

transport facilities is so little'.

Of

course,

the words
judge how far he should reach, high freight rates — sometimes
either to secure his materials, or pronounced
almost
as
if
they
to distribute his product.
It has were one word, highfreightrates
been up to him to make the cru¬ —but actually the cost of trans¬
and
particularly
of
cial decision as to where, in each portation,
individual case, he might reach rail transportation, in this country
is
neither
high nor burdensome. It
the point of diminishing or van¬
is true that rail freight rates are
ishing returns.
Under this con¬
higher
in
dollars and cents now
cept, the country has grown and
than they were before the recent
prospered as no other country in
has been left for each

tistics

national opportuni¬

made possible

a

The FOB Price Theory

even

of its

part

as

transportation
compulsion of

of the market
By that testing there is an
The whole process has been one place.
almost
automatic limiting factor,
of free meeting of the minds—
with both buyer and seller taking in that the producer who habitu¬
into account all of the tangible ally overreaches in seeking new
and intangible factors which enter markets, or who habitually brings
his raw materials from too great
into the making of a bargain.
satisfactory.

Planning Announced

As this is

the

wah, but

are

since

Transport Economics and Sta¬

on

gardly necessity, but on the basis

rent,

Lectures

of

use

under

else what prices would
costs; the buyer has the result of errors of judgment
selfsupposed to be able to say which are subject to the

whether any or none
offered
him
were

of

built—not upon the basis of

the

the

been

Commerce

great

his

by news, it looked like
terials—but, according to ' these
period would take longer
theorists, he must not take ac¬
An
intensive five-day lecture
to hurdle.. In fact, hurdling
count
of
the
outbound
freight'
course
on
Techniques of Estate
was
hardly the word; by¬ Planning will be given by the charges upon his finished product.
According to them, he must sell
passing would be more like it. Practising Law Institute from FOB mill, if he is to avoid the
this

The

of

before

were

have

ity.

of

average

postwar period

secur¬

dustrial marvel of the world could

anyone
cover

enter

views

dispensable to the national

have been free to
and all the ele¬

any

value of the goods
transported, rail freight rates are
not
only lower now than they

been

judg¬

own

Tne seller has
to know
better

supposed

insofar

Thursday.

has

which

But when measured against

.

the

achieved under this concept is in¬

have created the American marvel

their

use

which go

ments

the

More next

to

ment.
They
give effect to

Cooper

are:

capacity

war.

indus¬

been

Bessemer at 28 (now 32) stop

as

there wasn't any
a

I

basket.

one

never

old

putting

never

was

,

side of

I've

that

to

if

it

appraising events to come and
trying to evaluate them prop¬
erly.
During a period of
stepped up market activity, a
pattern takes about ten days
t6

subscribed
about

lot.

the

27; Dresser at 21V2, stop 18,
time other stocks and Bristol
Myers at 31, stop

Taken

was a

point in jumping

no

see

over

trial

the

that

shown

place, and freedom of

lacklustre fashion.

seemed headed for lower lev¬

els.

but
all

has

of

freedom

.

I could add to the list

weeks.

couple of weeks ago vari¬
stocks
looked
higher,

acted in

if

and watch it.

$

V

emergence of
the upside.

You now carry three stocks,
bought in the past two-three

keep all

;

accom¬

on
if

#

-f

-

be

wars

the market

freedom

on

off at specified pe¬
Summing it all up it looks had price supports or their oppopeople when to like the
long awaited change sites, price controls, or where
buy; another when to sell. It in market action will shortly questions of public utility regu¬

would eliminate the tiresome

the history of the human
race.
Moreover, the experience of two

choice,
judgment, freedom of

based

tell

riods to

on

productive capacity
of this country has been built—
and the transportation plant has

The American economic system

is

would go

all

absorb

freight charges or pass them along
in tneir entirety to his customer,
if he can, just so long as he does
not conspire with his competitors
to fix prices?

t'fi

ment

Thursday, April 21, 1949

Freight Rate
Absorption—A Dangerous Move

sore

Resting period about over. away.

It

Restriction

higher but certain ob¬
stacles, clearly apparent in
tape action, held them back.

Says—
'

there

which

stocks

CHRONICLE

FINANCIAL

&

looked

Markets
Walter

time

same

other

were

=

COMMERCIAL

THE

(1758)

we

hear

roads

and

the

are

is

It

makes

all

In

the

upon

their

very

is reciprocal,

*

revenues

life.

which

-

The process

the obligations mu- ;
apart.

We live together, not

tual.
But

which

maintenance ■'

activity of production and

distribution for the
are

essential >■

service

of all the other :
which you depend

operation

all this

tremendous

central,

their

possible

services

this

together

we

shall

live

bet¬

ter—and America will go forward
more

which

*'

securely—and the world in "
we

live will be safer—if

we

;

this American way of
using our transportation as a tool ►
of production—and a foundation ;
of unity and freedom.
„
.
preserve

.

Volume

169

Number 4796

THE

COMMERCIAL

&

FINANCIAL

CHRONICLE

Policy of Federal Reserve System
(Continued from page 11)

other

goods

ceeded

would

has

consistently ex¬
available
supply.

the

inevitably develop, par¬
ticularly if the wartime controls

were

But

Spending from current income has
been

by

substantially

drafts

supplemented

accumulated

on

liquid

sayings and by rapid expansion of
private

credit.

This

condition

of

excessive demand backed up with
ample cash resources has inevi¬

prematurely removed.

of

held

policy
of
borrowing
implication for

reliance

yet

on

another

the problem of stabilization in
the

postwar world.
grew

Our national debt

during the

to

war

$275

billion, a figure of astro¬
nomical-proportions by prewar

tably forced prices upward. Ad¬
vancing prices accompanied by

standards.

expanding

widely distributed and its interest

further

pattern

had

of

into

whole asset

money income led to
price increases. As a result
these inflationary pressures be¬

tween

mid-1946

trols

when

price

con¬

initially

were

terminated,
and August, 1948, wholesale prices
rjbse 50%, consumer prices 31%,
and

total

incomes

personal

ex¬

in the

debt

Our

inflation

postwar

initi¬

is

product of our wartime
financial policies.
The war cost
around

us

$320 billion.

of

This huge
was
fi¬

expenditures

•

in part out of our current

nanced

income,

through

tapped

taxation

and sales of securities to the

pub-

lie; and in part through expansion
supply brought about
by borrowing from the banking

of the money

system.
'

We

couldn't

expect

finance

to

wartime expenditures entirely
through taxation. There are seri¬

our

obstacles, essentially

ous

nonmon¬

etary in nature, that place a defi¬
nite upper limit to the tax burden

that

be

can

time.

As

imposed

the

in

even

burden

tax

war¬

grows,

particularly when itvgrows rap¬
idly, the interrelated problems of
administrative feasibility, equity,
and

incentives

-

*

ingly difficult to handle.
More
safeguards
against - widespread
evasion and its generally demoral¬
izing, effects have to be devised.
Numerous special adjustments are
required to maintain a general
consistency with the community's
standards
of
fairness,
without
which no tax system can long sur¬
vive

as

effective instrument of

an

policy.

And, finally, a rapid step¬
up of the tax bill may, at
in the short run, have ad¬

ping
least

effects

verse

and

ing
■*;

thereby interfere with achiev¬
maximum wartime output.

a

We

just
that

determine

cannot

exactly

that upper limit
is, but it is safe to

where

taxation

a

incentives

effort

on

of
say

fell short of it by too wide

we

margin.

Less than

the funds raised
between

the

the

of

end

middle
1945

of

came

balance

the

sources;

one-half of

by the Treasury

by borrowing,

1940

and

from

tax

raised

was

y

and

liability

economy. Confi¬
market value of the

almost

was

stable

a

synony¬

financial

or¬

to

maintain

stable

a

to

fulfill

buyer.

the

role

This placed

tions

the

on

of

residual

limita¬

severe

usefulness

of

tra¬

ditionally powerful techniques for
controlling the volume of credit
and deposit expansion.
As a res¬
idual

buyer the

System

Federal

became
funds

serve

a

Reserve

by

offering

securities
received

for

own

sale.

Banks

additional

sold

nonbank

each dollar of

to

And with

reserve

also

funds

reserve

securities

Reserve Banks.

tional

vo¬

government

involuntarily whenever
.investors

re¬

commercial

banks could tap at their

lition

of

source

which

banking

a

vides the basis for

system,

funds pro¬
manifold ex¬

a

supply.

security

of

processes

,

commercial
extensive
funds

longer had

no

for

the

finance,

war

banks
need

from

borrowing

Federal

Reserve

Banks.

Adjustments of reserve
positions could be achieved in¬

stead

through security sales in

supported

market.

As

a

result,

a

except for whatever psychological

impact it might have, the redis¬
count rate

lost its effectiveness

as

The

the

by

means

banks could offset in

which

some

that

pressure

meas¬

might

be

brought to bear on their reserve
position through a rise in reserve
requirements.
In
consequence,
relatively small changes in re¬
requirements

relied

strictive

could

have

to

on

be

not

severely

of

sig¬

restraint,

important

in

the

factor

of

postwar

Treasury from taxes and other

by

exceeded

total

of

its cash

outlays

about

$14
This surplus has exerted
a

erfully
ly
on
and

contractive

the

billion.
a

effect

pow¬

direct¬

expenditure-income
the

on

supply of credit

Without it the

money.

ward

pressure

prices

on

up¬

would

re¬

effect.

While
larger
requirements could
effective weapon, they have

retire

Reserve
of the

debt

Banks.

This

surplus is the

sistent with

held

by

the

disposition

one most con¬

commercial banks.
also exerted

from

came

the

banking

system

including commercial banks, Fed¬
eral

Reserve

Banks

savings banks.
war

finance

mistake

we

of

and

mutual

Therefore, in

made the twofold

little
borrowing from the banking
tem

too

As

a

our

taxing

too

and
sys¬

much.
consequence

of

our

war¬

time "financial policies we entered

the postwar period with an econ¬

characterized by an exces¬
sive degree of liquidity.
Govern¬
ment securities held by commer¬
omy

cial

banks—their

highly

Thus, under the
that have
the
war,

available

the

to

Federal

Treasury

influencing money and credit
developments
in
this
country

commercial
of

all

billion in June 1940 to $91
by December, 1945. They

sented

the

and

insured

From
of

end

industrial

commercial

the

1948,
loans
banks

doubled,
an

which
repre¬
absolute increase of ap¬

some

Reserve

held

of the deposits that had

—control

over

and control

in

stock market credit

over

ment credit.

tilities

instal¬

consumer

Since the end of hos¬

mid-1945,

margin

re¬

quirements for extensions of credit
listed securities by banks and
by brokers and dealers have not

been below 75%, and for the year

ending Japuary, 1947
level

of ,100%.

were at

Bank

loans

purchasing and carrying such
curities

at

are

relatively

a

Regulation of

the
for
se¬

low

instal¬

consumer

credit, in the periods it has
force since the war, has

also

been

influence

an

in

over

the

war

period

of

liquid assets—cur¬
rency, bank deposits, and govern¬
ment securities—held by individ¬
uals and businesses including in¬

increased
approximately
threefold.
Over
this same period the gross national
surance

companies,

product only about doubled. Com¬
bined with a heavy backlog of
unsatisfied
real
demands,
this
high

of liquidity meant
inflationary pressures

degree

that strong




real

while

by

estate

loans

increased

approximately $6 billion. Fi¬

nally, the increase for the period
in the

consumer

loan category of

insured banks amounted to almost

$41/2 billion.
As

to

early

as

in:its annual report

Congress for

1945

and

subse¬

quently, the Board pointed to this
siuation and suggested legislative
remedies.

Recently we have had an inter¬
ruption of the inflationary course.
In an increasing number of areas
supplies have caught up with, and
in

lines, exceeded de¬
prices.
Indica¬
changed situation are
declining prices, moderate slack¬
numerous

tive

at

current

of the

goods

and

business

increased

and

ply

inventories,

supplies

of goods,
of which Were in tight sup¬

a

year

and

Average whole¬
prices have

ago.

consumer

directed

postwar

went
forward at a sharply in¬
creasing rate. Since September of
1948, when the regulation was re¬

instated

on

the basis of

nearly $200 million a month.
Last
month, as you know, the

Board

modified

the

somewhat

September terms of

consumer

in¬

stalment credit.
The System has also used care¬

fully

its

influence

over

interest

To raise the cost of reserve

rates.
funds

to

the

encourage

banks, and also to
banks and non-bank

investors to hold
term

government
and to

unload

on

to the short-

securities

they

buy more rather than
on
the System,

them

short-term market rates and Fed¬
eral

Reserve

discount

have

rates

been permitted to rise.

Rates on

Treasury bills have risen from %
of

1%

in mid-1947 to

today.
to

Reserve

Yields
have

more

on

than

one-year

increased

from

1%%, while the Federal
Banks

have

discount rates from

raised

1%

to

their

Wz%.

The System has applied more
vigorously than the banking com¬
munity has desired available stat¬
utory authority to regulate mem¬
ber
bank reserve
requirements.
Prior to the legislation enacted in
August, increasing member bank
reserves was a possible course of
action only for the New York and
Chicago banks, since for all other
classes, of
banks
requirements

toward

inflationary

stemmed

sumer

goods, and the early aban¬
of price and
rationing
However, the System has
been hapidicapped by the ineffec¬
donment

controls.

tiveness of such traditional credit
controls
as
raising
rediscount
rates and

by its limited authority
reserve requirements.
Moreover, in order to maintain
confidence
in the
public credit
the System has had to act as a

to increase

residual buyer of government
curities, thereby nullifying the

its

sales of governments
credit expansion.

wholesale prices
prices are down to

average

consumer

about

the

Prices

level

Average

ago.

products

other

and

somewhat

than

foods,

above

prices

farm

while

their

of

still

levels of

a

have been virtually un¬
changed since August, with prices

year ago,

traditional

The

a

year ago.
farm products are below

on

year

of

most

commodities

in

their

generally
remaining stable or drift¬

System's

to

combat

arising
bank

by

credit

the

decline

a

from

the postwar

peaks.
I

certainly hope that there will

not

be

further

have

we

learned

this review

System

that

sharp

rise

equipped

be

to

cope with whatever
problems we may be

Reserve

fore

System today is
equipped than ever be¬
help offset deflationary

to

forces

should

velop.

they

actually

de¬

A major deficiency of the

banking

system

that

has

aggra¬
vated business contractions in the

past—the inability of the central
bank to provide adequate funds
when needed by the market—no
longer exists.The System has

virtually unlimited means of sup¬
plying the market with additional
reserves
through
purchases
of
securities.

government
serve

Banks

billion of

and,
legal
the

at

the

on

gold
its

The

Re¬

present hold $23

gold certificate
basis

reserve

System

double

reserves,

of existing
requirements,
more
than

strain

outstanding

note

ital

Further, when other lend¬
not available, the System

Finally, the Sys¬
always contribute
to

purposes.
can

monetary

been

suf¬

postwar

in¬

debatable question, but

of

inflationary

pres¬

to

re¬

expan¬

ended.

The problem of
country's economic

the

view of

a

maximizing

of

output and employ¬
continuing one.
If it is
to be successfully resolved, there
must be wisdom, forethought, and
the authority to act when action
ment is

a

is called for.

In Serious Condition
William

is

Ladd

F.

condition

in

Palm

in

serious

Beach,

self-inflicted

from

Fla.,

g u n-s

hot

wounds. Mr. Ladd, a former mem¬
of

ber

the

New

York

change, had been in
for

time

some

vised

that

and

had

had

he

Stock

poor

Ex¬

health

been

not

ad¬

much

longer to live, it was reported.

-

With Cruttenden & Co.
(Special

generally by a re¬
duction in reserve requirements
and in special areas through re¬
laxing instalment credit and mar¬
gin requirements.
ease

to

The

CHICAGO,

Financial

ILL.

—

Chronicle)

Emory

H.

Wilder has become affiliated with
Cruttenden

&

Co., 209

South La

Salle Street, members of the New
and

York

Chicago
Stock
Ex¬
was formerly with

He

changes.

Herrick, Waddell & Reed, Inc.

Tate With First Securities
(Special

is empowered to make direct loans
to business firms for working cap¬
tem

monetary ac¬

have
the

adequate authority
inflationary credit

has

stability

and

authority provided by the
Banking Act of 1935, advances can
now
be made on any assets of
member banks that are acceptable
to the Reserve Banks as security.
Thus the supply of funds will not
be undesirably restricted by the
need
to
adhere
to
"eligibility"
are

such

could

ing

ers

check

a

guiding

liabilities.
Moreover, as
result of the liberalized lend¬

rules.

in

accompanied the
most prices since

should not be interpreted to
that the System's need for

more

sion

deposit
a

in

forces with

far better

increase

would

relaxation

mean

times

of

clearly evidenced

Whether

to

pressures

expansion

by the System of fuller authority
to curb credit expansion would
have, imposed
greater
restraint
upon
rising prices.
The recent

anything from
all

under

cannot deny that the exercise

one

sures

at

is

has

alone

if

But

it is the fact that the

should

monetary
facing.
The

inflation.

on

<

inability,

the

rapid

credit

flation is

been

curb

as a

inflationary

from

substantial evidence of increasing

Though empolyment has continued at gen¬
erally very high levels there has

market

open

authority which it pos¬
during the postwar period,

sessed

ing down. Retail sales have shown
resistance.

se¬

use

the limited

ficient

consumer

greatly

a

expanded money supply, an enor¬
mous
backlog of demand for con¬

In

fact,

curbing
pressures

from

declined from their August peaks.
and

sowed

inflation.

Following the termination of
hostilities,
the
System's
efforts

of

re¬

straining, the increase in this type
of credit.
As you know, Congress,
in mid-1947, terminated this au¬
thority effective Nov. 1, 1947. Sub¬
sequently expansion in this credit

%%

that

strong fiscal policy.

in

$1 l/i billion

stock

a

expenditure

the seeds of postwar

which

on

1%

mated

government

tion

certificates

the

upon

mid-1946.

tural loans of these banks
over

upon

expansion and of the

need for

fiscal

a

heavily
inflationary borrowing than
taxation in fancing wartime

of

proximately $9 billion.

It is esti¬

urge

successfully.
However,
policy that relied more

were

commodities

billion

loans and investments.

to

resources

authority required for its
and aided by wartime
price and rationing controls, it is
fair* to say that the System ac¬
complished its wartime objectives

Congress and the public the
importance of restraint in credit
upon

by using for retire¬

Federal

constituted the bulk of total bank

Agricul¬
rose by
the same period,

informational

With the

either

to

to

Finally, the System has used its

the public debt to

on

purpose,

group other than metals

own

expansion.

1945

re¬

39

curbing credit expansion in the
private sphere of the economy.

The System has vigorously used
its relatively modern accessories

siderable

of

reserve

interest rates

counts of commercial banks.

were
either ineffective, inopera¬
tive, or near exhaustion.
Mean¬
while, the volume of credit ex¬
tended to private borrowers dur¬
ing this period underwent a con¬

end

raised

-

reserves

been
permitted
to
accumulate
previously in the war loan ac¬

Reserve

for

almost

—

circumstances

existed during most of

period since the close of the
the traditional instruments

grew from

secondary reserves
$17

liquid

the upward side.,

Board

serve

a

5f

debt

The

of

on

the basis of the

quirements by 2 percentage points
on demand
deposits and
per¬
centage points for time deposits
early last Fall.

similar pressure on

discretion

from

Federal

On

temporary authority granted by
the Congress in August, the Re¬

a

mid-1940 to the
end of 1945 more than two-fifths
Treasury

the

banks.

cago

sale

only from the
general income stream, but from
the commercial banking system as
well, thereby bringing pressure to
bear on the reserve position of

Reserve during most of
postwar period
because of
practical exhaustion of statutory

to

last

requirements on net demand
deposits at New York and Chi¬

drawal of funds not

the

available

of

serve

many

inflationary kind. Of
the total amount borrowed by the

most

been

not

June

year, the Federal Reserve Board
raised by 2 percentage points the

policy of monetary
restraint; for it results in a with¬
a

of the

an

in

ening of investment in producers'

to

have

be

legal limit. In Janu¬

again

used

rely very heav¬
ily on borrowing to finance the
war, but we relied on borrowing

Not only did we

in

and

mand

authority
granted in the special session of
Congress,
consumer
instalment
credit has increased only moder¬
ately, although prior to that action
it had been expanding at a rate

variations

at their

ary,

unquestionably have been more
severe.
Further,
a
substantial
portion of the surplus has been

been

serve

most

sources

ment

easy

been

period
has been the Treasury cash sur¬
plus.
For the calendar year
period 1946-48, cash receipts of

fered

ure

elements

restraint

Finally, sales from their hold¬
ings of government securities of¬
an

have

level today.

instrument of credit control.

an

nificant

ment

holdings that the
banking system acquired through
the

There

without which the situation would
have been decidedly worse.

bank

Moreover, because of the abun¬
dant

tary policy has been entirely in¬

the

pansion of private credit and the
money

suggest that
postwar anti-inflation mone¬

frac¬

reserve

'

to

mean

stream and

order

market for government securities,
the Reserve System was obliged

increas¬

become

integrated

ganization.
In

ally the

volume

with

was

our

public
mous

ownership

become

of

dence

panded by 24%.
*

the

structure

Its

Monetary Policies

not

effective.

peak of

a

do

our

wartime

our

heavy

v

.

Postwar
I

were

(1759)

to

The

Financial

Chronicle)

CHICAGO, ILL.—Earle W. Tate
has

associated with

become

Securities

Co.

of

First

Chicago,

134

South La Salle Street, members of
the Chicago
Tate

was

ford &
an

Stock Exchange. Mr.
formerly with Brails-

Co., Detmer & Co., and

officer

of

Commonwealth

was
In¬

vestment Corp.

Summary and Conclusion
Throughout
the defense and
war period
1939-1945 the Federal
Reserve

directed all its
efforts toward
facilitating gov¬
ernment financing of military ex¬
penditures.
Its activities during
these years ranged from the main¬
tenance

With Merrill Lynch Co.

System

of

a

stable

structure

of

(Special

to

The

CHICAGO,

Financial

ILL.

—

Chronicle)

Homer

P.

Hargrave, Jr. has joined the staff
of

Merrill Lynch,

& Beane,

Pierce, Fenner

Board of Trade Building.

40

THE

(1760)

COMMERCIAL

&

Thursday, April 21, 1949

FINANCIAL CHRONICLE

Activity

Indications of Current Business

statistical tabulations cover production and other figures for the latest week or month available (dates
either for the week or month ended on that date, or, in cases of quotations, are as of that date) :

The following

shown in first column are
STEEL INSTITUTE:

IRON AND

AMERICAN

Equivalent toand castings (net tons)

Bled ingots

Previous

Week

Week

Apr. 24

—

Year

Month

Ago

Ago

98.4

99.2

101.1

1,814,000

1,828,800

1,863,800

Apr. 24

(percent of capacity)

operations

Indicated steel

Latest

80.0

OF

1,442,000

Total shipments

output—daily average (bbls. of 42 gallons each)
Apr.
Crude runs to stills—daily average (bbls.)———
—;
Apr.
Gasoline output (bbls.)——
—
Apr.
Kerosene output
(bbls.)
—
\
Apr.
Gas oil and distillate fuel oil output (bbls
Apr.
Residual fuel oil output (bbls.)
—
———
Apr.
Stocks at refineries, at bulk terminals, in transit and in pipe lines —
Finished and unfinished gasoline (bbls.) at—
Apr.
*
Kerosene
(bbls.) at
—,
APrGas oil and distillate fuel oil (bbls.) at
Apr.

-

17,176,000

17,635,000

17.267,000

2,040,000

1,959,000

2,093,000

6,410,000

6,658,000

7,325,000

§2,472,000
§7,419,000

7,954,000

8,351,000

8,125,000

§9,168,000

9

127,522,000
17,878,000

127,769,000
17,915,000

18,517,000

§111,589,000
§11,438,000

48,920,000

48,556,000

51,804,000

§33 121,000

58,510,000

58,710,000

59,297,000

§49,228,000

9
9
9

BANK

Apr.

9

(number of cars)__—Apr.

9

757,784
606,908

725,623

709,326

682,934

583,210

623,037

588,288

BOARD

—

FEDERAL

THE

303

2,581,592

$109,735,000

$89,806,000

$107,636,000

$126,862,000

$134,178,000
51,495,000

$150,959,000

10,305,000

12,261,000
10,547,006

OUT¬
BANK

RESERVE

of March 31:

YORK—As

NEW

SYSTEM—

ACCEPTANCES

DOLLAR

STANDING— FEDERAL
OF

303

Imports

-

50,574,000

Exports
Domestic

shipments

Domestic

warehouse

shipped

and

foreign countries

RECORD:

construction

Total U. S.

——

.

municipal.

and

Federal

—

————

Public construction

State

Apr.
—Apr.
Apr.
——Apr.
———Apr.

—...

construction

Private

—.——

——

14
14
14
.14

$144,579,000
89,086,000

$158,193,000

$178,242,000

$127,282,000

74,882,000

89,664,000

59,828,000

83,311,000

67,454,000

55,493,000

71,436,000

88,578,000
71,977,000

38,090,000

42,944,000

11,875,000

16,601,000

29,364,000

12,549,000

BUSINESS

FAILURES—DUN

INC—Month

:>;■

coal

Bituminous

lignite

and

."

Pennsylvania

anthracite

'>

Beehive coke

(tons).:

(tons)
(tons)

...;

Apr.

9

11,260,000

'9,660,000

10,350,000

2,475,000

Apr.

9

962,000
148,900

960,000

700,000

850,000

"114,200

149,500

11,800

Apr.

—

9

Retail

Total

service

—

STREET,

PRICES:

Apr. 12

:_—

(per gross ton)

Bcrap steel

METAL PRICES

Apr. 13

Apr. 13

at———;

—...Apr. 13

—

lead (New York) at
Lead

(St.

Zinc

(East

Louis)
St.

Apr. 13
Apr. 13
Apr. 13

——

at

Louis)

3.75454c

*$46.82

*$46.82

$40.11

$26.17

$35.58

$40.33

at

D. 8. Government Bonds
•

—Apr.
Apr.
Apr.
——Apr.

.

—

S.

exports
(net

and

To

South

America

To

Europe

To

Asia

23.200c

21.200c

23.425c

21.725c

103.000c

94.000c

ERAL

15.000c

15.000c

19.500c

17.500c

As

14.800c

14.800c

19.300c

17.300c

15.000c

15.000c

17.500c

101.64

101.63

19
19

101.71/

112.19

117.60

117.00

117.20

115.43

Crude

112.19

112.19

112.19

112.00

Refined

Baa""——————-———-——————--——————————Apr. 19
Group
:
—
Apr. 19
Public Utilities Group
—————Apr. 19

105.00

Deliveries

104.66

104.83

104.66

108.16

108.16

108.16

106.92

113.89

113.89

113.89

113.89

117.60

117.20

117.40

116.22

Apr. 19

2.38

2.38

2.38

2.44

.—Apr. 19
Apr. 19
—Apr. 19
Apr. 19

3.00

3.01

3.00

3.05

2.70

2.71

2.70

2.11

2.79

...

...

;,

Apr. 19

...

S.

Government

Bonds—.

coroorate—

Average

———————

—

Aaa

—

-

Aa

——

A

-

......—

—_

Baa

—

Railroad
Public

Apr.
—--Apr.
—
Apr.
Apr.

—

-

;

Group—

Utilities

Industrials

-

Group—

Group

MOODY'S COMMODITY

INDEX

2.80

2.79

2.88

3.05

3.05

3.05

3.06

19

3.45

3.47

3.46

3.47

19
19

3.27

3.27

19

FERTILIZER

ASSOCIATION—WHOLESALE

(tons

U.

In

(tons

FORGINGS

Kilowatt-hour
month

of

month

Revenue

to

lbs.)—_——

ultimate

*;

-Apr. 16
Textiles
Metals

ultimate customers at

of

HOUSEHOLD

2.96

ARD

2.84

FACTURERS

SIZE

sales

—

>V

219.1

236.6

216.6
151.5

276.3

Disability

235.3

258.5

Annuity

payments
Suirender
values

Policy

310.1

357.4

206.0

206.2

200.1

275.7

230.4

235.0

235.1

241.8

222.6

226.3

233.5

228.6

311.0

166.9

166.6

165.8

174.8

189.1

:189.0

190.3

214.1

183.9

184.6

187.8

164.9

-Apr. 16

213.6

215.2

215.8

227.3

139.5

*137.9

142.5

156.7

142.9

142.8

142.9

137.2

150.5

150.5

143.7

155.7

155.7

155.6

138.5

207.0

208.5

209.5

220.5

•

_

Apr.

173,654

178,967

158.333

163,880

Apr.

159,449

149,918

162,692

193,572

;

—Apr.

77

75

80

103

Apr.

287,725

271,986

278.632

434,430

at

DRUG

REPORTER

AVERAGE=100

PRICE

INDEX

—

1926-36
133.3

134.1

NEW

SERIES—U.

S.

DEPT.

OF

—Apr. 12

/ ,157.6

158.0

137.3

146.6

MALLEABLE

Farm

Textile

and

Building
,

metal

For
For

producers'

Orders

booked,

of

66,733
18

$257,000

'$268,000

$311,000

111,217

124,582

116,676

539,717

570,665

630,860

96,085

*76,941

83,909

88,165

80,275

110,886

113,972

98,611

122,983

70,682

83,841

68,582

21,830,832

21,645,106

20,267,419

$398,466,500

$390,128,300

40,870,573

40,721,988

$362,407,000
38,599,687

309,897

241,267

355,415

$117,839,000

$123,024,000

$113,860,000

38,101,000

46,076,000

35,496,000

7,825.000

8,580,000

Unfilled

(DEPT.

-1

.

•———

(short tons)

use

less

cancellation,
of

end

■

•

7,111,000

24,207,000

18,014,000

40.654,000

31,425,000

46,239,000

54,399,000

44.694,000

$269,380,000

$296,940,000

$250,600,000

OF

;___

own

orders,

17,630,000

February:

—

month,

66.744

71,876

75,225

25,074

38,040

42,670

31,670

33,836

32,555

26,999

26,948

46,253

118,313

126,393

209,447

sale

for

tons)

(short

sale

for

tons)

20()

.«•"

171.1

Railroads

(200)

SOFTWOOD

187.9
175.7

148.5

Production

(M

Apr. 12

140.2

141.2

144.0

149.9

Shipments

and

8.39

5.89

6.06

6.09

5.96

4.66

4.70

4.60

3.27

3.33

3.40

6.66

6.85

5.57

of

March_

,088,000

£5,430,000

£11,200,000

%-in.

132.8

134.5

131.1

173.5

174.0

175.1

157.1

Stocks
of

196.5

197.2

200.4

193.9

131.0

130.7

131.1

136.0

Apr. 12

165.4
206.1
227.3
180.9

OF

(DEPT.

143.180

*118,284

156,666

133,192

*107,837

155,873

84.534

*75,894

COM¬

MERCE)—Month of February:

132.5

12

Apr. 12

I__Apr.

8.31

IN GREAT BRITAIN—

Ltd.—Month

PLYWOOD

170.6

151.2

'

5.53

7.12

162.7

162.9

Apr. 12

:

6.88

—

ISSUES

Bank,

171.5

Apr. 12

I

(10)

yield

164.7

;

._

(25)

(15)

Average

)

OF

Mar.:

(25)

149.7

;

of

(125)

149.4

;
products

158.4

STOCKS—Month

COMMON

Industrials

YIELD

AVERAGE

WEIGHTED

MOODY'S

164.2

materials

AH other.

5

foods.

products
and

;

CASTINGS

IRON

—Apr. 12

Apr. 12
than farm

Fuel and lighting materials
Metals

—

(short tons)
sale (short tons)

—_-„Apr. 12

products

Foods

commodities other

30,991

41,746.000

—

COMMERCE)—Month

Midland

All commodities

All

—

Shipments

NEW CAPITAL

LABOR—

1926=100:

.

:

—

—

—

Insurance

Apr. 15

—

PRICES

WHOLESALE

50

99~8U

ASSOCIATION:

(tons)

AND

;

payments

dividends

Banks

PAINT

345,617

12

LIFE

OF

——

144.0

Utilities

OIL.

412,423

274,449

31,264,000

TO

PAYMENTS

endowments

236.8

-Apr. 16

(tons)

Percentage of activity
Unfilled orders (tons)

305,452

238,139

81,937,000

February:

of

benefits

Matured

144.2

-Apr. 16

-Apr. 16

PAPERBOARD

received

Production

337,950

105.392,000

102,200,000

MANU¬

units)

(no. of

INSURANCE—BENEFIT

LIFE

(short

Orders

26,422,000

106,000,000
94,024,000
128,296,000
28,950,000

ASSN.)—Month of March:

234.2

150.5

NATIONAL

99,502,000
98,178,000

418.1

369.7

—

machinery.

$17,481,000

STAND¬

CLEANER

(VACUUM

31—

Jan.

CLEANERS

VACUUM

3.34

2.96

—

•

Farm

$27,567,000

of

customers—month

January

2.78

315.2

Cotton

—Apr. 16

$97,444,000

consumers—

omitted)—_____

(000's

ultimate

3.27

218.8

—Apr. 16

-Apr. 16

1,883,000

INSTITUTE:

sales

from

Number

Death

Grains

896,000

March:

of

———

_

January

2.96

354.5

(short tons)

2,000 lbs.)
of 2,000 lbs.)

INSURANCE—Month

Livestock

957,000

65,048,000

stocks at end of period (tons

lbs.)

2,000

of

2.79

COMMOD

oils

3,714,000

2,476,000

OF

(DEPT.

——

(tons of 2,000

A.

copper

2.77

349.5

-Apr. 16
and

5,728,000

3,018,000

customers—

to

S.

Refined

of

2.96

ITY INDEX BY GROUPS—1935-30=100:

Fats

1,684,000

7,269,000

YORK—

NEW

OF

POLICYHOLDERS—INSTITUTE
NATIONAL

$9,243,000

3,458,000

Copper production in U. S. A.—

Factory

Apr.
Apr. 19
19

.

,—

$15,009,000

5,034.000

—__

._

omitted)——

INSTITUTE—For

COPPER

EDISON ELECTRIC

U.

DAILY AVERAGES:

YIELD

MOODY'S BOND

$17,075,000

100.85

117.20

Industrials Group......

47

477

OUTSTANDING—FED¬

Shipments (short tons)

113.12

......

44

685

COMMERCE)—Month of February:
'

119.00

Railroad

;

BANK

(000's

STEEL

COMMERCIAL

——

—

.

PAPER

March

112.93

—

tons)

tons)

!

tons)—

(net

tops)

RESERVE

of

118.80

——

(net

(net

America

Central

(net

COMMERCIAL

113.12

Aa

89

849

anthracite

Pennsylania

of

tons*

North

119.00

—

43

MINES)—

(BUREAU OF

To

19
19

—
-

-

63

129,620,000

—

Unfilled orders at end of month

corporate

Average
Aaa

57
194

77

Month of February:

U.

23.175c

12.000c

—

(lbs.)—

—

EXPORTS

103.000c

DAILY AVERAGES:

PRICES

BOND

(lbs.)

23.175c

22.950c

90

318

MINES)—

OF

(lbs.)
stocks

103.000c

J'

MOODY'S

136

102
366

February:

of

Producers'

3.28244c

3.75197c

22.950c

liabilities

(BUREAU

(lbs.)

;

Electrolytic copperDomestic reiinery at

„L

;

liabilities

BLACK

Exports

QUOTATIONS):

(E. & M. J.

Export refinery at
Straits tin (New York)

101

210

$46.66

$23.58

•

liabilities
service

Production

3.74887c

Apr. 12
Apr. 12

—

!

liabilities

Shipments

COAL

(per gross ton)

Pig Iron

—

liabilities

Month

•5,086,826

5,495,769

*230

184

Apr. 14

(per lb.)

Finished steel
-

5,359,961

number———i—

liabilities

Wholesale

Total

5,342,731

BRAD-

&

INDUSTRIAL)—DUN

AND

—

AGE COMPOSITE

IRON

Apr. 16

(in 000 kwh.)

(COMMERCIAL
INC.

FAILURES

170

i.

298

256

301

320

9

Apr.

—

__

—

Manufacturing
Retail

ELECTRIC INSTITUTE:

Electric output

$241,195,000

215

—

number

number

CARBON

EDISON

$228,229,000

,

—

—

number

Construction

Commercial

RESERVE SYS¬

STORE SALES INDEX—FEDERAL
TEM—1935-39 AVERAGE=100——-—

$215,121,000
BRADSTREET

&

number

number

Construction

DEPARTMENT

17,461,000

March:

of

Manufacturing
Wholesale

Commercial

(U. S. BUREAU OF MINES):

COAL OUTPUT

1,639,000

13,550,000

—

NEWS-

ENGINEERING

—

5,605,000

13,697,000

between

_

Total

CONSTRUCTION

ENGTNEERING

CIVIL

13,096,000

,

48,323,000

1,593,000

:

goods stored

on

10,738,000
11,657,000

credits

exchange

Based

,r

GOVERNORS

OF

RESERVE

(in thousands)

Month of March

BANKERS

126,188,000

135,955

*2,675,482

303

2,569,712

freight transported (tons)

of

DEBITS

OF

119,235

110,034

reporting

carriers

motor

of

Volume

Dollar
——

received from connections

Revenue freight

115,067,000

4,916,050

RAILROADS:

(number of cars)

freight loaded

Revenue

5,377,400
§5,568,000
§16,569,000

9
9
9
9

9

Apr.

at-_

OF AMERICAN

ASSOCIATION

.

(bbls.)

oil

fuel

Residual

5,123,350
5,452,000

5,072,400
5,269,000

9

Crude oil

r-

ASSOCIATION—

of February:

Number

PETROLEUM INSTITUTE:

AMERICAN

Ago

(thousands of pounds)—

TRUCKING

Month

Year

Month

of February:

COMMERCE)—Month

AMERICAN

Previous

(DEPT.

PRODUCTS

WROUGHT

ALUMINUM

Latest
Month

ft. %-in. equivalent)—
consumption
(M
sq.
feet,.

sq.

equivalent)
(M

sq.

ft.

.

%-in.

equivalent)

month

at end
.__

Consumption of logs (M ft., log scale)
Stocks.(M ft., log scale) at end of month

39,323

70.595

*58,011

69.597

254,133

*314,369

171,906

Special indexes—
1

Grains 7

-

Livestock

Apr. 12

Meats

Apr. 12

'

—:

Hides and skins
•Revised

basis of

figure.*

Ulncludes

reporting in California.




:

332.000

Apr. 12

barrels

of

foreign

crude

runs.

164.1
205.1
225.9
184.6

§Not comparable with other periods

161.5

222.1

207.1

224.6

RECT

222.2

248.2

OF

17JL9

which

Principal changes exclude cracking stock from distillate and residual fuel oils.

192.9

are

on

new

TREASURY MARKET
AND

TRANSACTIONS

GUARANTEED

Net

sales

Net

purchases

"Revised

—

'.iL

IN

DI¬

SECURITIES

U. S. A.—Month of March:

*

$1,750,000

,

,059,000

—

$106,764~000

figure.

i

Volume

Number 4796

169

THE

COMMERCIAL

&

FINANCIAL-CHRONICLE
states

Sound Rate s and Financing for Utilities
practical degree if the

(Continued from page 4)

.

investors

thusiasm among them for the pur¬
chase

One

of

that

reason

this

stocks

common

today.

attributed for

is

lethargy is the high personal
taxes that stockholders,

income

,

be

can

and

rates

small

same

acquainted with
practices

policies, know the policy of provided that

the

State

in

business

which

the

in¬

many

The Federal Power Act of 1935

company

could

ascertain

mate

cost

the

Commission

the actual legiti¬
property of every
public utility, and, as a corollary,
provided that, upon request, every

operates and the basis of its regu¬

of

particularly those of consid¬ latory processes. With this knowl¬
erable means, have to pay. A pro¬ edge they may have faith in the
posal is being discussed at present business and the regulation to the utility should file with the Com¬
to amend our tax law so as to give extent that they are willing to risk mission an inventory of its prop¬
rheir savings and become a part
erty and a statement of the origi¬
credit for dividend income to the
of it.
nal cost thereof.
You gentlemen
individual, as it used to be. If a
are all familiar with the
shareholder of sizable income is
adoption
Improved Earnings Necessary to
to reap the reward of the ctiviby the Federal Power Commission
Attract Capital
of its Uniform System of Accounts
dends received from his stock, this
Now if a utility corporation is and the litigation that followed
double taxation should not be as¬
to
improve
its
capital structure before the utilities of this country
sessed.. It is a distinct deterrent to
the marketing of common equities. during this present period, as all conformed. A similar question had
and

,

_

;
.

regulatory authorities seem to de¬ arisen under the Communications
^Then, in addition, many of;these
sire, then of necessity earnings Act. In the case of American Tele¬
a belief: in Our
must be sufficient to attract capi-r phone and Telegraph Company v.
-capitalistic system, but thermartal.
In today's market securities the United States, decided in 1936
kets of today indicate that;they
in other industires can be
bought (299 U. S. 232) the point had been
I are
not / willing
to.; bet : ;large
which yield as much as 10% or made that if companies were re¬
amounts
of
money
on -it^ (The
more.
At the end of the year
1948, quired to set up on their books of
>

investors; profess

-

whole

-

of

-

-

trend

be

must

causes

in the sale

'Back in

^generating

fear which

a

overcome

-securities.

socialization

Of -the

industry

-As

9%

capacityt the publicly-

I

recall,

represented
industry.

whole

the

of

Price

the.figure today

is

about 20%.

is

Security

Owners

Poor's
of

and

Daily

50

than

more

in

sell

to

shares

more

of

stock at reasonable

competition

with

of

securities.

Thirteen

families had

our

ago

years

annual

not

been

able

to

keep

income of under $1,000, 10% from

today

about

$2,000 to $3,000, and only 4% from
$3,000 to $5,000. In 1947, which is
the last year for which I have

would buy ten years ago.

these

sound rates?

figures, the families whose
was
under
$1,000
had

this

will

buy

brings

branch

of

to

the

in¬

The group from

Most

$2,000 to $3,000 had gone up to
24%, and that from $3,000 to $5,000
was

to 26%.

up

the

earns

This last group

largest

national income.
is

larger

now, as

since

up

'47.

relatively in
tion

to

as

the

people

net income
of

bulk

of

are

favored posi¬

a more

who

groups,

the

of

income has gone

These

those

than

percent

I suspect that it

after

higher

taxes

income

purchased
securities.

formerly
corporate

No

one

rule

which sound
at.

It

sound

sire

so

second

do

are

of

rate

a

cost

of

utility companies.

our

should

be

porate

securities

is

Much

to

if

interest

the

small

corporation securities.

in

Our annual

through simplified state¬
ments, graphs and pictorial repre¬
sentation, are setting forth the
reports,

business done and the problems of
the company in a way that the
of the street and the widowed

man

wife
men

and

understand.

can

understand

You

gentle¬

balance

sheets

financial

statements/ along
with all their technical terms, but
.

the

ordinary

with

accounting

familiar

not

person

securities

and

will not take time to try to under¬
stand them. Merrill Lynch,
Pierce,

Fenner and Beane have been

rying

on

an

car¬

educational program

to advise the small investor of the

meaning of stocks and bonds and
all the
I

things that

noticed

on

in

last

"Time"

week's

that they

magazine

with them.

go

are

carrying

classes in finance in California

for

women

of

who desire to educate

a

of

de¬

thing viewed
The application

of return to

original

an

is merely an arith¬

It has been said

their

by

purpose

of

one

to that end.

up

tell

of

the

The

that he

That

The

can

rate base

a

adjustment to

return.

Federal

Nelson

you

for too low

upward

is

the

just not

Chairman

of

the

•'In the event

that

an

orig¬

inal cost valuation is used in

com¬

bination

with

is

rates

.

.

rate

a

adjusted

price changes
of

.

of

.

.

.

rying

on

along

these

educational

lines.

'

to

of

return

allow

for

public suspicion

the

return

which

appear

computation directly in terms of
reproduction cost rate base and

a
a

the

financial

vestors and sell them

statements

our

securi¬

the

a

circumstances, to repre¬
investment which the ac¬
has

company

assets of

made

assets

ticable

course

than

lower valuation and

the

-

exist

to

are

binding

as

the Commission in
dealings with the com¬
The

.

construction

now

administrative
affixed

to

the

contested order devitalizes the ob¬

jection
tween

the

that
present

cost

is

tion

as

difference

value and

withdrawn
a

be¬

original

from

recogni¬

legitimate investment."

decision

seven

the Hope Gas Case.

But

in

later

years

decision does not go,
cost

that

even

as many

as¬

to the point that
depreciated should

original
be the
upon
which

base
be

fixed.

Justice

majority

opinion

"The return to the

should

on

use

a

Commission

cost.

able return upon the present
value of its property." This
to be

the

fair
has

because in the gas branch

so

business, when the

Com¬
given
jurisdiction
over
gas companies it was pro¬
vided by the legislature that as
to the rates and charges the Com¬
mission should possess the same
measure
of authority as it then
possessed to regulate and fix rates
and charges of railroads. Our rail¬
mission

road

was

rate

always

of this state have

cases

considered

value.

fair

present

'

business,

act

provides

the

shall

consider

all

the

Commission

and reasonable rates

including:

Reasonable return

fair value.

on

Depreciation and obsolescence.
Risks of the business.

the

to

connected

load,

hours

is the basic law
regulation in this
satisfy this
law, in my judgment, to make
a general statement that all these
which

rate

the

case

In

Power

sumers

process

of

We

have

1949, did this.
application for

25,

filed

an

stated; namely,
original cost less depreciation, applying thereto what may be

erroneous

that

the

have

to

word

go

Michigan is :an original
;

'•

"

.

If

utilities

-

are

willing to

pay more

mission

to

value

and

well

then

base

predictatod
derlying
value
erty
supporting
fiscatory.

sued,

cost

it

the

authorize

stock

common

just

1948

Development of Original Cost

Concept
The concept of

This is not true and its ad¬

page

116 of that report there

listed 32 states, the District of

Columbia,
Hawaii

and the Territories of
Puerto

and

Rico

under

a

centive

book

tion

termination Generally Applied for

vestor

Measuring
ritories

ing

of

Method

are

Fair

Value."

Of

this

listed under the head¬

"Prudent
Investment
Applied."
California is

listed

under

Cost."

Six

"Reasonable

states

are

Historic

listed under

This

can

only be done to a




vocacy

can

only lead to unsound

"All Elements Considered." Seven

in the world today? It is whether
the principles of Western civiliza¬
tion

and

be

is

to

If

sale

for

are to
whether the world will

dominated by

Now,

if

establish

a

of

rate

mind

the

away
men

the

all

is pur¬
the in¬
operate

the

economies

the

means

war, the vitality and future de¬
velopment of the electric and gas
industry is a necessary comple¬

attainment

the

to

we

of

that

take liberties with

property,

principles

we

economically in this period of

are

problems

which are

You

gentlemen who are devoting

your

talents to accounting and fi¬
affairs
clear

can

do

much

to

these

and

explanations,
wherever
they

up,

analyzed, I believe the rank and
of the people will share oue
views. And so, in closing, let me
file

con¬

who

to prevail in
problem,
whether
of peaceful
through the means of

over-all

through

largest industry. If the problem is
truthfully presented and clearly

upon the un¬
of
the
prop¬
that
stock
at
my

the super-state.

are

we

and play their necessary
in our scheme of things.
Failing in this, as I see it, we
unconsciously, within the fabric
of our own governmental regula¬
tion of which we are so proud,
take
another
step towards the
future socialization of our second

book

above

that policy

takes
of

private property

or

prosper

that what we do in this.period*
industry will cast its
over the operations to be
carried on by the men of the next
generation who will succeed us.
May it be on the basis of continu¬
ing a virile and growing industry;
which, when called upon for the
services demanded, may produce
say

in this great

shadow

in¬

recognizes and, if carried
along far enough, is bound to
result in declining earnings, in¬
creased cost of capital, and the

all that is needed in the future as

forcing of issuing senior securities it always has in the past—and not
at a
time
when equity capital
be chargeable with "too little and"
should be sold. Of necessity this
too late" of that which is so esruns
counter- to the
interest of
sound
rateV and
financing
in' sential to our well-being.
'

ties.

Rights
What is the paramount question

part

companies to do a good,, eco¬
nomical job. It makes them realize
that they are not given considera¬

table of "Method of Rate Base De¬

number, nine states and two ter¬

~

to the end that businessmanaged tax-paying utilities may

.

are

petition.

come

For the Com¬

book value.

many

in

Necessity of Preserving Property

whenever

than if the basis of their
return
is
predicated

money

upon

that

the price of their product is com¬

make

for their

the

.

fixingrates look at all elements, includ¬
ing/today's fair value, and fix
rates
accordingly., In this way
utility companies may compete in
some degree with other issuers of;
securities whose only regulator of

nancial

allowable

that

of

than

stock

common

has

Report

to

value, it necessarily follows that
the companies pay less for their

to my desk and I notice

Yet their

continue

to

operate efficiently and economi¬
cally to the point where investors

book

itself.

are

know

authorities

simple of explanation, and'
the
great tendency is to play
politics with economics. Yet, so
long as we live under the profit
system,
the profit derived in¬
directly controls in the fixing of<
fair rates and sound
financing.

rulings. In the meantime, it is

out

present-

not

the matter to
of the Michi¬

final clarification

gan

28th

Commission
Annual

should

regulatory

These

pending.

now

We expect to pursue

of

men whose
duty it is to see that the facts and
figures are known to all who care
to read have a responsibility that
exceeds that of your predecessors
in days gone by.;

Company gas rate
in its opin¬

rehearing which is

less
runs

lems of the day. You

Con¬

recent

our

Commission

March

ion

a

a

original cost and in ho

value.

sense

value

gas and electric power civilization
is one of the most essential prob¬

original

an

Such

base.

deals with

on

case

Operation

the formula

kets

and

considered and then

are

today's

transgress and violate

state rests. It does not

elements

resting
of

economical manner, it is high time
that investors in the nation's mar¬

of

This generally

determine the

base

values

that
the rights
undermine within
our
own
governmental processes
the rights we seek to preserve, f
believe this stupendous task of
building the plant of this industry
so
that
we
function
efficiently

of

service and quantity used.

upon

rate
on

determination

fundamental

en¬

con¬

The

end. And if

consumer.

The

a

of

day fair value is out of the field
accountancy. We are required
to employ the services of engi¬
neers to give us this
result, but
when continuing property records
are maintained the
job of arriv¬
ing at today's fair value is a sim¬
ple one and can be readily arrived'
at without delay. But at a time
like this, when the public welfare
and, indeed, perhaps our national
security, demand the building of4
plant in the most efficient and*

ment

service

the

of

at

part

half

processes or

Cost.

investments in other

assure

large

our

lawful elements to determine just

Basis of Efficient and? (Economical

should be sufficient to

arrive

in

survive

As to the electric branch of the

a

r

book

on

Commission, how¬
ever, in the Michigan Bell Tele¬
phone Company opinion of Sept.
28,
1948,
stated:
"A
Michigan
utility is entitled to earn a reason¬

re¬

emanates from the Federal Power

qf

case

with

having corresponding
That return, moreover,

risks.

on

rate

present

equity owner

be commensurate

terprises

is

electric

an

to

of

cost state.

■

turns

it

the

cost

the Federal Power Commission to

sume,

Michigan the rate-mak-.
has become confused.

utility's proof on pres¬
ent-day fair value consisted of a
"horseback" appraisal. The Com¬
mission found the proof to be of
no
probative value and specula¬
tive. It then proceeded to fix the
rates on an original cost rate base
less
depreciation.
Since
then
several cases have been presented

construction

upon

its future

panies.

on

fixed.

before

to

growth

counter to sound economics.

process

The

perennial

fronted with stupendous construc¬
tion and the resulting
financing,

than

where the

re¬

this declaration

accept

administrative

the

under

...

"We

a n

or

listed

are

Back in 1945 the Commission had

Value

tired;

come

..."

Here in

continuing value will be

cease

states

Michigan Rule

ing

the

utilities have always had.

for

"Original Cost," and this includes
Michigan—which is not correct, as
I will explain.

in

relatively low rate of return (as¬
claimed to be a reasonable rate of
suming rising costs of construc¬
return.
Of course,
this concept
tion) seems a safer and more prac¬

original cost has
that go with them will do much been developed step by step by its
for our. industry in advising the advocates to a point where many
people of our problems and the in¬ people today have come to believe
that the cost to the person first
herent worth of the business.
Underwriters will have to get devoting property to public use.
less depreciation, is the universal
back
to
the practice of having
basis upon which rates should be
salesmen who can go to the in¬
and

is

would

mystery out of the sale of securi¬
ties

(which

probably go far to¬ fidence in the financial integrity
of the enterprise, so as to maintain
ward defeating any such
policy
during periods of rising cost, in its credit and to attract capital."
Despite this, it seems to be gen¬
spite of subtle economic argument
stressing the necessity of high re¬ erally thought by many people
that
the
universal
and
present
turn.
If present opportunity costs
method of fixing rates in all cases
are to control rate regulation their

high

programs

Taking

.

of all the

said:

result.

both car¬

deemed, after

.

100.5)
that
are
fair consideration

our

Commission, Mr. universal rate
Smith, put it well in rates should
written
in
1932, "Fair Douglas in the

the

are

as

Power

Return," when he said:

which

100.4

account

Lee

book

construes

It was a long step from this ad¬
Whether that is ministrative construction of simi¬
not, it is cer¬ lar rules of
accounting to those of

or

means

will

nractical.

his

as

industry.

an

rate

it

count

higher rate
of return to produce an identical

Exchange

in

be arrived

exercise

themselves in these problems. The
New York-Stock Exchange and
Curb

.

to further public ownership

our

make

investor

by

that many of the advocates of this

cor¬ tainly a
issuing theorist

being done these days

exact

fair

metical process.

buy

the

is soundly financed.

company

to

educated

They

the

rate base

ways

the payrolls

on

are

Base

process

can
an

from long range.

the

to buy Government bonds.

for

in¬

provisions of
(the) order
.meaning that amounts included

same

Seven

retained in that account until such
an

judgment backed by

to

formula

war

rates

calls

this and

Commission

the
as

470

And

Practical

lay down

can

did

the

of

nications

with

Rate

He

statements

behalf

forms us that the Federal Commu¬

sent an

arithmetical

or

They have been educated during
Many of them

Commission.

his

in

aris¬

;

Value

reduce

"Fair meeting

41

Original cost accounting has a
Adjusted" by adding 5 very definite place in the scheme
reproduction value.- of things. But when one is con¬

Cost

10%

of

writing

counting
Rates—Present

of

course

have

income

dropped to 16%.

the

says:

to

to

...

new

subject—what
f

General

done

what

the

in

derstanding and to give adequate
assurance to
the companies as to
the practice to be followed, we re¬
quested the Assistant Attorney-

deflated dollar

me

opinion

being
original cost.

over

we

costs

pace

a

consideration

Cardozo

"To avoid the chance of misun¬

these other

rising costs since

an

the

prices in

dustries.
Our industry has
shifting of the wealth of much in the way of reducing
this country into different groups through the construction of
has raised another problem which plants.
However, the savings
has to be considered in the sale ing from this development

original cost, it would

no

Our

com¬

The

53% of

Justice

earnings like these
with.

in

given to value

divi¬

earnings must be improved if
are

result

industrials

6%

must compete

we

account the

Stock

13% in earnings. It

over

yields and

that

mon

Prospective

&

Index

yielded

1932; based on dends

owned electric utilities

about

of

Standard

nal
to

company's

under
^

financing in

the

listed

are

Value." Ohio under "Reproduction
Cost." New Mexico under "Origi¬

stances.

and

(1761)

42

COMMERCIAL

THE

(1762)

&

FINANCIAL

from

Canada's Tasks and
far

(Continued from first page)
that" there

is

fact

no

in

history,

no

the

that

know

welfare

North

of

America

depends upon re-estab¬
lishing Europe on a sound eco¬
nomic foundation. During the war
you had your Lend-Lease and we
had our Mutual Aid Programme.
After the war you inaugurated
that grand evidence of the good
heart and good sense of your peo¬
ple, the Economic Recovery Pro¬
gramme, and we made loans and
gifts' to European nations that
even exceeded in value per capita
those
which
you
were
then
-making.
You and
because

able to do this

we were

rich store of

our

terials and

this

make

raw ma¬

industrial capacity

our

continent the< produc¬

Canada's

national

production
has increased every year since
1945, and in 1948 it was three
times higher than in 1939. Sala¬
ries, wages and supplementary la¬
bor income rose from $2,550,000,000 in 1939 to $6,910,000,000 in
It is true

1948.

income

that out

of this

paid

$717,000,000 in
income tax last year, compared
with $61,000,000 in 1939, but over
the same period we increased our
personal savings from $320,000,000
to $1,146,000,000.
These facts are easy to look at.
They seem to show progress, and
to those who, unlike yourselves,
are satisfied to consider only the
present, they are quite satisfac¬
tory. You, however, will place
them (with your own boom) in
"their
proper
perspective.
Our
joint prosperity then appears as a
single highlight against the dark¬
est background of world affairs
we

mankind has

ever

,

year there were 43;000
agriculture than in man¬
ufacturing, and last winter there
were
64,000 more persons em¬
ployed in manufacturing than in
all the primary production
sec¬
tions of our economy: that is agri¬
culture, forestry, fishing, trapping
and mining.
/■.
I tell you this, not to load you

down with

statistics, but to indi¬
our
economy
is no
longer preponderate^ rural, and
that our problems both in banking
cate

and trade,

ment.

numbers

stories

about

our

been

domestic

situ-

ation floating around south of the
border which are completely new
to

in

us

Canada.

For

there is talk here about

a

example,
big new

farming

areas opening up around
Toronto and Montreal, and I have

asked

expected to
ation.

whether

help

these

Well, gentlemen,

we

situ¬

have

not

felt the pinch of famine in
Canada since the days when raid-

ing Indians used to drive
tlers from

the

rifle

as

hoe.

a

he
In

was

fact,

set¬

every

quick with

as

a

industrious with
our

production is such
to

our

fields, and

settler had to be

as

agricultural
to allow

us

export great quantities, either

on

sale

or

as

gifts, to less food-

wealthy countries.
Cash

income from the

sale

of

farm products in 9 months of last
year
was

stood at $1.8 billion, which
an all-time record 37% above

the figure for the same months of

1947.
to

The increase

was

heavier

due both

marketings
and
to
higher prices. Farm prices in 1948
were
20% higher than in 1947,
while the prices of things farmers
bought went up only 16.4%.
You may be assured that inso¬




both

develop¬
back

few

a

countries

our

customer to other

is lost

as

tions.

That is

can

a

and

nonsense,

it in every year of

see,

na¬

you

that

which

buy an increasing amount
of new machinery, equipment and
service parts from you.
Handin-hand with industrialization go
increased wages and incomes, giv¬

rise to higher standards of
living and a huge market to ab¬
sorb your consumption goods.
ing

•Our industrial

tinues,

I

was

opportunity

expansion con¬
pleased to have the
of
seeing
an
an¬

nouncement from

one

of

our

gov¬

ernment departments recently
which announced that American

capital invested in
excess

of

Canada

$5,000,000,000.

investment in Canada.

is in

This

is

foreign

From your

point of view it is significant that
in recent years more than 25% of
all the income you received on
States direct foreign in¬

United

vestments

has

been

earned

in

turn the other side of

the penny we find that Canadian
capital investment in the United

States,

while

naturally
much
smaller in bulk, is in excess per
capita
of , your
investment
in
_

,

:

at nearly

$2,700 million

Canada.

,

in

branch

The

your in¬
plants in
has, been

growth
steady, apd the increase since the
war

ended

has

been

about

$400

million.
Problem of Export Markets
I must say that all this invest¬
ment raises problems. Canada has
never

before had

so great a capi¬
boom, but while
our
industry is expanding our
traditional foreign
markets for
manufactured goods are contract¬
ing.

tal

investment

This

ac¬

in

ourselves

an

the

aside. We
hole fi¬

indivisible. They cannot

peace are

be

other, nor

from each

divided

can they- be split individually be¬
will readily admit that
nancially.
Our reserves of gold tween nations.
Countries t'hdt
all this is perfectly trpe about
and United States dollars fell from
were once remote are now near
Canada.
Let
me
say
that
in
$1,508 million in 1945 through $1,neighbors; and many have become
greater or lesser degree that cata¬ 245 million
in 1946 to $502 million
accustomed to a state of prosper¬
logue of causes and effects ap
in late 1947.
Our imports from
ity
and material r comfort they
plies to every country on earthi
you
had reached the unprece¬ would give up with reluctance.
If we do not import, we do not
dented total of $2 billion, giving These two factors demand a
great¬
export; if we do not export, we
us a trade deficit of $900 million,
er
exchange of goods than evOr.
cannot produce profitably; if we
and to that we had to add large before if
happiness and satisfac¬
cannot produce to the capacity of
interest and dividend payments tion and
peace are to be-achieved.
our factories and farms, we can¬
and high transportation charges.
As- you may have gathered; JI
not
attain .or
live
up
to the
We didn't benefit as much as we am rather
proud of Canada, and
standard that world trade makes

possible.
I

ciations

are

wide

awake

the

to

ho^ed by the invisibles, such as

since I

tourist

I can

because
while we were very happy indeed
to have your people come up and
spend $235 million in our country,
our people liked you so well they
came down here
and spent $152
million of it right back.

pleased to see that your
government officials, newspapers,
businesspeople and trade asso¬
was

expenditures,

implications. They have joined in
what might almost be called a
crusade to convince Congress and
the people that a continuation of
We were forced to take drastic
the
current
prosperity in thi$ action, as you may well imagine.
country is based upon a widening By economic self-discipline in the
of your trading policy.
form of prohibition of certain im¬
I cannot emphasize too strongly ports and
rationing of others, and
how important such a spirit1*!s to by
restrictions of various un¬
Canada. We have a small popula¬ palatable kinds,
and by selling
tion
relative to
our
productive more goods to you, Canada has
capacity. Because of our ability;{recovered to the point where re¬
to
provide
commodities other serves totalled $998 million on
nations want, we play a relatively Dec. 31
last, and $1,065 million in
large part in the international' March.
; '
economy

and

dependent

upon

profoundly

are ;

.j

it.
•

Exchange Difficulties
As this audience

the

war

trade

S

knows, before

Canada used to settle her

deficit

with

the

The 4 short-term. problem has
Jaeen met.
The ideal long-term

55l.

f : icure is restoration of convertibil¬

"

United

ity between sterling and dollars.
fomedy is for
we

transferring to you th
convertible exchange earned in that—or for

to buy less from

.us

not want ito

do

you

do

to buy more from

her trade with other countries. It Us—a- situation greatly to be de¬
sired. -I think I cannot do better
nice

arrangement, a triangle
which was not of the" squabbling Sfon this point than to quote what
the Governor of the Bank of Can¬
family kind. We have tried to
keep it up, but somehow we just' ada said at a Vancouver meeting
was a

can't
any

seem

to make it

^equilateral
longer. In fact, it has, of fate

years,

assumed

a

Extent of

"All

our

of

to the full

us,

one

of

I

freely than per¬

our

first settlers.

occasion

took

to

'

say

to

our

shareholders at our annual meet¬

ing last January, and I sincerely
believe it to be true,

that no coun¬
earth has a future that
promises to surpass ours. I went
on to say: "Do not misunderstand
me—I am not preaching narrow
nationalism or formulating a pol¬
try

on

icy to lead to the creation of spe¬
cial fields of exploitation for a
few. What I am after is a greater
Canada, always completely master
in its

household and follow¬

own

procedures which
goal first and

and

plans

ing

must have for their

last the advancement of the well-

being and up-building of the pros¬

perity of all Canadians."

*

•

I believe that the future of Can¬

ada, like the future of the world,
rests upon

uals and
groups

people both as individ¬
they work together in

as

with high ideals.

.

-

The Battle Against Communism
And Socialism

And

that

brings
closing remarks.
There is

should guard

powers,

more

haps would be seemly if the eu¬

;

me

to

my

battle going on, led

a

by communist and other.socialistic
unequi- ffcgainst-the mentality of restriction

most

lateral appearance.
The
trouble
started,

in March:

not a native-born son

am

speak

logy came from the descendant of

Until that happy event occurs, the
ou—and

States by

-

1

•

/

and

-

contraction,

and

should

seek

forces, to seize and dominate the

minds
of
free
Americans, free
liquidation df^her development which come from en¬ Britishers, free Canadians, and
free men everywhere.
'
I
foreign investments when she^Was terprise and expansion."
We free men will not win this
standing alone against Germany
The effect of bilateral, discrim¬
and
was
hard
pressed for the inatory deals is to restrict and battle by loud shouting, but neither
necessities of war. Then, when
ujscontract the whole volume of for¬ can we win it by quiet disdain.
the
Our side must move in a positive
fighting was over, we i
eign trade, and thereby to reduce
Canada wanted to see the- Eu¬
and constructive way. It must in¬
e living standard in every coun¬
form
and instruct. It must demonropeans get back on their feet as try.
Bankers, like scientists, would
strate beyond possibility of doubt
quickly as possible. We startedi j
with

I

think, $that greater wealth and greater

Britain's

goods

against

vertible currencies and

on

j#ke

to

wipe

out

blockade

the

incon¬ "which restricts interchange,
credit..

one

hand of ideas and

on

on

the

the other

the advantages and
free way

I

might mention incidentally-that of goods. It was trade that sought
our credits reached $1,845 million,
*»nd found and levelled out the
equivalent on the basis of relative roads that lead from
my country
gross national product to some¬ to
yours, that established between
thing in the neighborhood of $30 us the bonds of
friendship, which
billion if the United States daad
tSklre-so precious to us, that fostered
been doing it.
~
inventiveness and ingenuity
By diverting goods to Europe; wfilch set this continent
apart from
we
deliberately reduced our po-,
eWmhefs;'
tential earnings of United States^
Canada Supports Multilateral
dollars, and we fell back for set-p
^

tlement of

our

accounts with

yoif

virtues of

of life.

our

y.

I believe that in this battle those

of

who

are engaged in banking
particular and responsible
part to play. We are men of af-r
us

have

a

fairs,

with

clearer

most into the

economic

touch,

on

the

tries

which

our

insight

than

and effects of

events; we are in closest
the one hand with the

with

Trade

causes

in the street and

man

great
are

on

the other

little

and
the

indus¬

backbone

of

economic

system; we under¬
Canada has been one of the stand the need
for, and the lim¬
of
phief supporters of efforts to pro- itations on, the work of govern¬
We had, in 1945, what looked likfc
jiabte multilateral trade. We have ment.
'
'
Comfortable balance of $1,508
thrown our weight behind the va¬
As good citizens not only of our
million.
But our people wanted
rious organizations in the eommore and more of what you had to
city, state, province and nation;
'fhercial
field
sponsored by the
we
bankers are believers in de¬
sell. The industrial boom of which United Nations.
Canada was host
I spoke earlier created a demand
mocracy.
As good citizens of the
fb the first session of the Food and world
we can be an effective cre¬
for huge amounts of coal, steel;,
Agricultural
Organization,
We
oil, cotton, and all the rest of the participated in the formulation of ative minority, pointing and lead¬
goods needed to start and carry the Bretton Woods Agreement. We ing the way to sane practices and
on
manufacturing.
We
needed (are a member of the International helpful deeds, and to co-operation
for the preservation and advance¬
tools and machinery to replace
Monetary Fund. Canada was one
wartime accumulation
gold and United States dollar^:

upon

our

has Serious
implications
only for Canada»but for other
countries, because the price of any worn-out equipment. We had be-*
country's imports is its exports. A come accustomed to using your
nation very richly endowed with consumer goods, and we wanted:
raw
materials, inventive genius more automobiles, refrigerators,
and productive energy might live radios, and all kinds of things
largely to itself. I know of only frpm the heaviest equipment down
three such countries: the United to little 10-cent gadgets.
So we
States, Canada and Russia. We in went in the hole.
Canada have nearly everything
Let me, in a spirit of patriotism
absolutely necessary to sustain and pride, say that we need not
life on a moderately good scale. If have gone into that hole: We could
we
tried to do that we should have lived comfortably and reaped
have to resign ourselves to doing huge profits by selling our food¬
without oranges, lemons, grape¬ stuffs
and
other
short-supply
fruit, tea, coffee, cocoa, cotton, goods in the United States market,
at
,^i)k, hemp, and a hpst of other
prices higher than we received
not

That little boast is
found

~i

The most fiecent estimate places
vestments

become

Now you

shipping
we

have

we

Can¬

we

irti-

what I believe to be the most

Britain and Greece and the others

customed.

adian-United States trade. Expan¬
sion of Canadian industry means

are

food

our

still

nation becomes industrialized it

'

been

industrial
are

in

Canada, •„•<{.

have

apparently

indus¬

an

who profess to believe that when

find it difficult to keep up purchases. While our domestic situ¬

Industrial Production

'

There

When

There

those of

are

trial economy.
The main reason why Canada is
the best customer you have in the

Canada.

Canada's Farm Products and

-

that

Trans-Atlantic countries

ation appears rosy, it should not
i lull us into complacency.

,

last

son

fewer in

about 70% of the total of

seen.

World trade is still gasping for
breadth, in danger of being stran¬
gled by nationalistic barriers and
bilateral
agreements*
Many of
Canada's important customei• s
have been! forced to adopt import

controls.

In the peak harvest sea¬

culture,

world is this

tion centre of the world.

-

Prospects

our own use

and for export is concerned/ Can¬
significance of tomorrow,
ada is fully capable of living up to
so important to us as our relation¬
all demands made upon her and
ship with the United States.
all the opportunities she can find.
We have problems in common,
Now let us look at industry, an
and I am glad to be able to say
area in which most bankers, per¬
that we approach their solution
haps, are more at home than they
along the same broad lines. We
are on the farm.
may differ on details, but our ul¬
An indication of the importance
timate objective, the welfare of
of industry
in our economy is
our people, is the same.
Consider our approach to the given by the employment figures.
In 1947, for the first time, the
worrisome matter of the state of
numoer employed in manufactur¬
Europe. We both wish well to the
ing exceeded the number in agri¬
people over there, and we both
and

But we felt that

Europe.

portant duty before the free world
today I would reply: Press for the
were bearing the brunt of the war
things. We should be seriously for democracy, and we resisted expansion of these agreements and
short of gasoline, in spite of our every temptation in order that we facilities, relax trade barriers, and
knit the people of the World into
new discoveries. Even though we might send, in the first place, help,
need not starve or suffer cold, we and then, after the struggle was a great market and a great bojdy
'
should find ourselves living less over, goods to help in reconstruc¬ of suppliers.
I
believe that prosperity and
graciously than in the manner to tion.

ability to produce ample

as our

farm commodities for

Thursday, April 21, 1949

CHRONICLE

,

ment

of

Of the "big, three" in the delibera¬
tions at Geneva and Havana. At

that

are

Geneva

man

life.

tensive

we

undertook to make

concessions

to*

the

ex¬

con¬

tracting parties, and we received
the promise of extensive conces¬

sions from them. We
to

extend

are

concessions

half the items in

our

virtues

and

values

worthwhile

in hu¬

.

In so

as

a

doing we shall be
stabilizing force in a

world where

men

have advanced

their

environment;

their

social

skills.

'

so

fast

that

knowledge has not
about quite kept up with their material

prepared
on

acting

the
most

list of tariffs.

I

•

•

-

;

believe, honestly and sincerely,,
Bank, the Fund, and the ITO we that we bankers have a unique
have the framework of a system opportunity and mission.
I pray
of universal trade carried on un¬ that We may seize our opportunity
der the auspices of free, untram¬ with eagerness and discharge'our
melled and unregimented private mission not only adequately but
enterprise. If I were asked to say gloriously.
i-. <
That

is

a

good

start.

In

the

Volume

169

THE

Number 4796

(Continued from page 13)

000,-

a

considerable

very

COMMERCIAL •&

disbursed

number

through all these vol¬
plans, during 1947, was

untary

would

less than 10% of the total amount

tive

spent on medical

probably be well and ac¬
today, if they had had ef¬

fective

diagnosis

early stages.
I

■*

treatment

and

while their illness

still in its

was

i

.

mention; these

victims .<of
merely as one
For beyond that there

chronic

diseases

might

been

have

the

skills

we

possess.

saved through
knowledge which

and

-

.

National

;

whose 'lives

people Just had

people.

of

means

It

care

all

recognizes

our

that

until

adequate purchasing power is

pro¬

vided for; medical services in this

country,

adequate

personnel cannot
distributed

And

it

facilities

be

where

and

provided

most

cannot

power

or

needed.

recognizes that this

chasing

be

pur¬
mar¬

shalled; effectively except

under
nation-wide system of pre¬
medical care under which

some

paid
the'

economic, risks of illness

spread over the whole
and

the

the

individual

man's

costs

ability to

to

care

related

are

are

population

medical

of

to

a

only

pay.

costs

of

earning

healthy

by which
ily,

the

the

the sick in

our

be

and

able to

his

fam¬

quality

of

he

The

not

panies

which

have

We

mew.

insurance

"have

long
com¬

the

found

writing of health policies to be

degree

only

was

e

out

come

now

d

the

a

leaders

de¬

were

voluntary plans

as

"communistic, leading to revolu¬
tion."

*

,

exceedingly

profitable

business.

have

rapid—and
admirable — develop¬

seen

altogether

the

of

a

very

so-called

insurance plans.
But these are not

insur¬

plans. ; Their nremiums

are

not, therefore, based

upon ability
to-pay and they cannot aspire to

universal, coverage

later

be; raised

?

when

funds

facilities permit.

think, however, they were on
much firmer ground when they
made a further analysis of these
plans and came to the following
conclusion—and

I

and

\

1

__

Dental, home nursing, and aux¬
iliary services would be included
the

extent that

facilities,
able.

and

Children

tentative

speak

the

funds

personnel,
avail¬

were

would

be

given a

one

can

definitely on the subject
until Congress has taken action.
Administration
As

to the administration

plan, this will be
local

basis.

on

of the

state and

a

There"^will be

na¬

a

quote—

form of

some

.

.

.

.

.

;

the

among

low-income

working together

zens

These

with
Root of the Matter

get to the root of the
For unless health insur¬

we

matter.

is

established

on

nation¬

a

wide basis, we cannot spread the
risks on a fair and equitable basis

a

local

committee.

classes unless it is compulsory."

Here

as

committees

the

doctors

plain fact

is

as

beyond the
the compara¬
The vast ma¬

are

tively well-to-do.

much

so

for

for,
delivering

say

an

a

ical

care;

-

remainder

The

varying degrees
protection.
But

even

000,000

if

very

partial

accept the 50,-

figure, it will be well

100,000,000

remember; the
have

of

we

have

no

protection

at

all.

to

any

substantial

lower

inroads

into

visit,
office visit, so
tonsillectomy or

brackets.

income

Furthermore,

as

a

vidual

earns.

•

:

This last factor is of tremendous

importance,
practical

since

is

it

the

one

that full protection
against the costs of illness can be
brought within the reach of the

of

in

this

audience

I
assume,; acquainted with at least
the broad outlines of the project,
in general, we are proposing a 3%
payroll deduction on annual in¬
are,

negotiation—on the number

patients for whom

a

responsibility

assume

doctor

can

under

the

plan.
A

way

Those

This will mean that a
earning $50 a week will pay

operated.
man

plans
that

provide,
the

total

I
,

may

amount

ent

upon

have

point
of




public

their

assistance

insurance

could<

premiums

paid for by various public or pri¬
vate agencies.
Later, we hope to
find

the

means

complete

In
a

100%

of

achieving

coverage

out

money

for

return

wage-earner

of

a

our

these

would

payments,
be entitled

to receive needed medical care for

himself,

his

pendents.

mately

comment on

the partial protection which these

of our

national

his

patient will be free to choose
own

now,

he

so

doctor

just

as

he

does

and to change his doctor if
desires. A doctor will simi¬

larly be free to reject

any

patient

he doesn't want. No doctor will be

required to practice under the
plan; He can continue in inde¬
pendent practice if he so chooses,
or he can combine an independent

to

family, and his de¬
This care should ulti¬

cover

all services necessary

prevent, diagnose, and cure dis¬

by

a
general practi¬
specialists, hospital
laboratory service, X-ray,

ease—care

tioner and by
care,

statement—be

an

employee of the

against the

average of 12 or 15% required to
administer the present voluntary

health plans.

The main emphasis of national
health insurance is

on

for medical services.
ment
to

has, I

try

to

assure

tell

a.

the payment
The govern¬

you,

doctor

practice his profession.

no

wish

how

to

Under our

social

The total cost of the plan can¬

start

with

national

our

people

now

spend¬

ing
$6,500,000,000
annually
on
personal
payments for
doctors,
hospitals, and related medical

Payroll deductions should

penses.

be

sufficient to,meet the

part of these costs.
ference
ment

ex¬

greater

Whatever dif¬

involved, the

was

would

make

up

govern¬

as

under¬

writer, though definite limits to
this

obligation will
be set by Congress.

the plan go into opera¬
there will inevitably be an

period^ of trial

adjustment.

•

and

error

But in the final

analysis the costs of the plan will
be
determined
by the medical
profession itself. / For it is only

we

er

have to

dig down

to fill their

a

little deep¬

prescription, I think

in

the

in

its

broadest

country is not
already made a
providing our workers
our own

We have

at

unemployment.

But

the* hazards
large
people.

of sickness and disease bulk

in the minds of

our

Abraham Lincoln

once

said that

it

is

to

do for the people what they,
individuals, cannot do for them¬

as

the

business

of

government

selves,
I

or cannot do as well. And
think the responsibility of pro¬

viding
icans

ilies

at

comes

secure

they

afford,

can

proposals

our

the

socialism

of

cry

against
sence,

cost

a

within this description.

The

;

-

directed

is,

in

es¬

argument used 100

very

to try to defeat the idea

years ago

of

whereby Amer¬
adequate medical

means

a

can

for themselves and their fam¬

care

undoubtedly

Should

tion,

exists

some
sort
of
protection
against the hazards of old age and

The

economy.
are

which

security
and

sense,

not, of course, be determined with

on

our

today. Througout the globe
an increasing demand for

immune.

accuracy until the system has been
in operation for some time. Broad¬

high standards
whole popula¬

same

for

unrest

there is

free

public school education.
during the past century the

And

tactics have been employed

same

in trying to defeat every piece of
sound social legislation which has
been

advanced.

Such charges were poppycock

1849.
cock

And
in

Certainly,
cratic

they

still

are

in

poppy¬

1949.

way

our American demo¬
of life has survived—<

and has been

enormously strength¬

ened.

It will, I am confident, con¬
feuding and fussing. Few things tinue to survive and prosper long
after
national
health insurance has
in this wOrld are more important
become inscribed on the statute
to an individual than his health.
we

shall

And

a

do

few

portant to

so

without too much

things are more im¬
nation than the health

a

of its citizens.

;

A young doctor

setting forth in
the
practice
of
his
profession
should, I think, be able to look
forward to

a

constructive and

ceedingly useful
tional

health

thing,

he

rather

more

ly the

case

first

will,

government.

cial

imately 5 to 7y2%,

American

answer

thing more, I spoke earlier
shifting ideas and standards
times, and of the deep so¬

world

after

the wages which an indi¬

One
of the

the

health insurance would be approx¬
as

no

tion.

that

I should say
operation
of

of

these

tentative

the cost of this, insurance protec¬

And

the

cost

a

make

available

social

under

tion to

bring down the total costs to
manageable proportions. Furtner-

who population.

having skimmed off the cream of
the market, it is highly unlikely
that the voluntary plans can make

costs, they

As

are

the over-all health problem of
the United States. Our aim is to

to

a baby, and so on.
Instead
of
fee
payments, the the physicians who can decide
physician may, if he chooses, elect what medical care—and how much
medical
to be paid on a strict capitation
care—are
necessary
to
basis—so much per patient. It will meet the needs of the people. They
be up to the individual doctor. will be—if I may coin a term—
There will be some limit set— the doctors. And if, as a nation,

and

75 cents a week. If he earns less,
jority of people—those who need he pays less. If he earns more, he
insurance protection
the most— pays more, up to the maximum
just can't afford to pay them.
It limit of $1.40 a week.
is no accident; therefore, that the
On .the basis of present social
distribution
of voluntary
insur¬
security coverage,
we
estimate
ance policies follows the national
that health insurance would apply
income pattern in the same man¬
at the outset to some 85,000,000
ner that the distribution of med¬
people, including families and de¬
ical
facilities
does.
Voluntary
pendents of the wage-earner.
If
insurance fails to increase pur¬
social
security coverage is ex¬
chasing power in the medically
tended by Congress, as we hope
under-nourished areas.
it will be this year, to include the
There are some who claim that
self-employed, farm workers, do¬
50,000,000 people are now covered
mestics, and certain other cate¬
by voluntary
health
insurance. gories, health insurance will apply
The figures show, however, that at its
inception to some 124,000,000
only some 3,500,000 million are to 130,000,000 people.
Those un¬
entitled, under their policies, to able to work or who are depend¬

anything like comprehensive med¬

estimate,

and

home

—

obliged to charge

.

initial

much

established

security insurance.

the plant to determine a fair scale

that

reach of any except

already

of fees—so much for

a

built to meet the demand—as

tively well-to-do,

Costs

would be much less than might be
imagined, since we could utilize
the existing wage records that are

consult

will

participating in

a
result.
they cost comes up to $4,800—to be shared and an insurance practice just as
tqo much. .For anything approxi¬ equally by
employer and employee he does now with the voluntary
mating complete medical care, the —on the same
He will in no
principle that old- insurance plans.
and
I
underscore
the
high fixed premium rates they are age and survivors insurance is sense

The

Administrative

As to administrative

.

aged and sickly, if accepted, will community operation itself will be
raise
the
cost to
a
prohibitive in the hands of the local people
point
Sickness insurance can¬ —doctors and representative citi¬

ance

are

of most

voluntary and cooperative plans will be inevitable under the sys¬
up to date has shown that this
tem—the end result will be to
danger is highly over-rated. Be¬ raise the standard of medical care
sides, as you well know, plenty of throughout
the
country. • High
hypochondriacs are really sick — standards of medical care which
mentally—and in need' of some are, as now, at the almost ex¬
sort of psychiatric attention.
clusive command of the compara¬

ly speaking, however, it would in¬
volve no major increased burden

Plan

tional
committee
of
prominent
compul¬ physician? and other citizens to
sion, voluntary insurance fails of advise with the Federal Govern¬
its objective
The young and ment on broad standards and prin¬
healthy will not join, and the ciples of operation. But the actual

"Without

ness

will be heavy. But, as more doc¬
tors are trained, more hospitals

purely

a

No

summary.

,

I

voluntary millions of our lower- and middleincome people.

social

limit of 60 days on hospital cases
generally, except that this might

to

possesses

maximum

a

irony, since it
priority on dental care.
short years ago
All this, of course, is

same

nouncing

There would also be

of

few

a

that these

an

And during the past 10 or 15 years

ance

d

own

commercial

ment

have

n

Medical

really needs on
ability to pay. more, it is only through such a
insurance principle is, of plan that we can effectively adjust
care

course,

we

American

circumstance

be

can

over

will

man

the basis of his

had

and

himself and

amount

medical

the

It is the only method

a

for

secure,

as

the

of

certain

man's working

a

well

as

care

years

population.

which

by

medical

-

out over

spread
and

method

Even the

conservative-m i

somewhat

leaders

na¬

not distribute the burden of sick¬

The social insurance principle is

the

proposal for

tional health insurance.

This

problem of bringing medical
the

know, this method is being
widely advanced as an alternative

43

tem. And the experience

sweat

Insurance

//, National health insurance is a
simple and logical answer to the
within

to

vociferously -in its favor.

Health

would

hospital

upon

(1763)

learn how to deal with this prob¬
lem even under the present sys¬

they have always done.

as

Association

.

limit

it the responsibility of the individul
•
states); and there would be a 30I have dwelt at some length on day limit on mental and tubercu¬
voluntary insurance because, as losis cases in a general hospital.

the

out

to the President's

others

considerations

some

throughout the whole coun¬ benefits. The plan would exclude
the remaining 90%. of services in a mental or tubercu¬
their doctors' and hospital bills, losis institution (which are now

thousands of children who fail to
live through their first
year—and
of

Practical

place

For

you

thousands

unusually
expensive
medicines,
special apliances, and eyeglasses.

year

try.

example.,
still thousands of mothers who
dig unnecessarily in childbirth—

are

during that

care,

FINANCIAL 'CHRONICLE

career

ex¬

under na¬

insurance.

For

one

will

probably make
money than is usual¬
when a hopeful M.D.

hangs out his shingle. There
I assure you, be plenty of

patients, and all bills'will be
promptly.
another

For
health

insurance

of

our

Republic.

Connecticut
Preferred

on

Utility
Market

Offering of 200,000 shares of
$2.20 preferred stock of The Con¬
necticut Light and Power Co. was
made April 20 by a banking syn¬
dicate of 50 underwriters headed

by Putnam & Co., Chas. W. Scranton

&

The

Co., and

stock

is

Estabrook &

priced

share

plus accrued
yield 4,23%.

at

$52

dividend

Co.
per

to

Proceeds from the sale of the
thing,1 national
will, I think, preferred
stock,
together
with
practice, approximately $7,947,121 raised in

serve

to encourage group

with

all

the

met

books

facilities

of

modern

March

through

the

sale

of

com¬

continue to medicine at the disposal of the mon stock and convertible deben¬
group—not only in the large cities, tures, will be applied to financing
any way he saw fit,
increasingly
in
the
small the company's extensive construc¬
providing he lived up to the stand¬ but
and
rural
areas.
And
I tion program begun in 1948 and
ards set by his own medical asso¬ towns
ciates.
In/actual operation, the suspect a great many of you would extending through 1951. This pro¬
chief difference between national look forward eagerly to such an gram includes construction to re¬
health insurance and the present opportunity.
establish the normal capacity re¬
system would be that the doctor
Beyond that, some of you, after serves of the company by 1951
would collect his bills from the
you
have finished your intern¬ and to meet the greatly expand¬
government instead of having to ships, may well continue on the ing demands for electric and gas
chase down his patients. I might staff of
some
modern hospital. service.
almost say, the doctor would col¬ For I think the
The new preferred stock with¬
tendency of na¬
lect his bills—period.
tional health insurance will also out par value, but having a stated
proposal, he
practice it in

could

practicing under be to foster the development of value of $50 a share, is redeem¬
be involved in hospital clinics, somewhat on the able at the option of the company
precisely the same degree of red- order of Johns-Hopkins, the Mayo at any time at $54 per share on
tape, and no more, than he would Brothers, or. the Lahey Clinic. And or before May 1, 1954, at $53 per
be in working with the voluntary in this way there will be an op¬ share on or before May 1, 1959,
insurance plans.
That is to say, portunity for more and more doc¬ and thereafter at $52.50 per share.
under either system,
he has to tors to engage in the practice of
The
Connecticut
Light
and
submit
itemized
statements
of their profession under the most Power
Co., incorporated in 1905,
services rendered, and endorse his exciting and satisfactory of aus¬ is
engaged in the production, pur¬
name on the back of his insurance
pices.
chase, transmission, distribution,
reserve fund checks before he de¬
Those of you who fear that na¬ and sale of electricity and gas for
posits them in the bank.
tional health insurance may result residential, commercial, industrial,
He would have to deal with the in the deterioration
of medical and
municipal purposes in the
malingerers and hypochondriacs, standards are advised to put aside State of Connecticut. The com¬
precisely as he would have to deal their qualms. Undoubtedly, at the pany also is engaged in furnishing
with them under voluntary insur¬ outset, the pressures on an ad¬ water service for domestic and
ance.
But a good doctor has to mittedly short supply of doctors commercial purposes.
A

the

physician

plan

would

44

THE

(1764)

COMMERCIAL

Securities
•

Alabama

Gas

(5/2)
March 29 filed $6,000,000 first mortgage bonds, series A,
due 1971. Underwriters—To be determined through com¬
Corp.

petitive bidding. Probable bidders: Halsey, Stuart & Co.
Inc., White, Weld & Co., Kidder, Peabody & Co. and
Stone & Webster Securities Corp. (jointly); The First
Boston Corp.; Salomon Bros; & Hutzler and Equitable
Securities Corp. (jointly). Proceeds—To pay off $4,000,000 2%% notes and the balance for construction and
working capital.

Expected about May 2.

•"'%

Consolidated Mining Co.,

Alaska-Pacific

•

Seattle, Wash.
April 12 (letter of notification) $100,000 of 4% cumula¬
tive notes and 300,000 shares(10 par) common. Corpo¬
ration

wiii

3

oner

shares ot

common

at

100

share

per

with each $1

erty
a

of notes. No underwriter.. To place prop¬
operating basis and for working capital,

on

Expedition, Inc., New York
April 18 (letter 0^,notification) 2,000 shares of 6% cumu¬
lative preferred stock (par $100). Underwriting—None.
Price, par. To finance expedition into the Oriente sector
American

Research

&

Development Corp.

(4/25)
filed

30

166,500 shares

to be offered at $25 per
& Co. and Harriman,
eral

par) common stock,
Underwriters—Estabrook
($1

share.

Ripley & Co.

corporate purposes.

Proceeds—For gen¬
V

y

i

Arkansas Power &

Light Co. (4/26)
March 18 filed $8,300,000 sinking fund debentures, due
1974.
Underwriters—Names to be determined through
competitive bidding. Probable Bidders: Halsey, Stuart
& Co. Inc.; White, Weld & Co.; The First Boston-Corp.;
Lehman Brothers and Stone & Webster Securities Corp.
(jointly); Equitable Securities Corp.; Union Securities
Corp. Proceeds—Reimburse treasury for funds expended
in property additions, payment of short-term notes, etc.
Bids—Bids
at

for purchase of the bonds will be received
2033, 2 Rector Street, New York, up to noon

Room

(EDT), April 26.
©

Atkins

Popcorn Co., Inc., Wilmington, Del.
(letter of notification) $300,000 5% debenture

April 11
bonds.

Underwriter—D. F. Bernheimer & Co., Inc., New

Yoik.

For

operating capital.

Baldwin Co., Cincinnati, Ohio
April 7 (letter of notification) 3.000;, shares of common
capital ($8 par),
Price, at market.
Underwriter—W.
D. Gradison & Co., Cincinnati, Ohio. To pay estate and
inheritance

taxes.

•
.

©

Boston

April

13

Fund, Inc.
filed 500,000 shares

Price

at

market.

*
stock

common

Underwriter—Vance,

$1).

(par

Sanders

Co.

&

Brass &

Copper Sales Co., St. Louis, Mo.
(letter cf notification) 7,500 shares ($20 par)
5% cumulative preferred stock.
Price, par plus divi¬
dends. No underwriter.
To increase working capital.
April 15

Cambridge
March

29

filed

(Mass.)

$2,750 000

Electric Light Co.

(5/4)

25-year notes,

series A, due
through com¬
petitive bidding. Probable bidders: Halsey, Stuart & Co.
Inc.; Harriman Ripley & Co.; The First Boston Corp.;
Kidder, Peabody & Co.; Otis & Co. Proceeds—To fund
presently outstanding borrowings.
Expected May 4.
1974.

•

ADDITIONS

PREVIOUS

SINCE

ISSUE

Underwriters—To

be

determined

Cincinnati Gas & Electric Co.

April 15 filed 249,334

:

•
Crispo National Market Service, Inc., New York 1
April 14 (letter of notification) 48,000 shares of common
stock (par 200).
Price—$5 per share. Underwriting—
None.
Expansion of business, principally furnishing ;
market news to fruit and produce industry.

and to acquire leases.

;

Detroit

(Mich.) Sulphite Pulp A Paper Co.
(letter of notification) 1,000 shares ($10 par)
common.
Price—$15.50. Underwriters—Wm. C. Roney &
Co. and Ferriss Wagner & Miller, Detroit, Mich.
Pro¬

April 1

to

selling stockholder.

Coast Electric Co., West Point, Va.
(letter of notification) 13,125 shares ($10 par)
common, to be offered initially to stockholders at $15,
East

-April 7

share in ratio of one new for each eight shares held.
Rights expire May 3. Underwriters—Woodcock, McLear
& Co., Philadelphia, and Scott Horner & Mason, Inc.,
Lynchburgh, Va.
To reimburse treasury and provide
funds for construction.

-

Family Finance Corp. (4/27)
April 8 filed 50,000 shares of 4V2% cumulative preference
stock, series A ($50 par). Underwriter—Merrill Lynch,
Pierce, Fenner & Beane. Proceeds—Funds will be added
to company's cash balances to reduce outstanding bank

•

commercial

and

loans

Frantzhurst

paper.

Rainbow-Trout

Colo.

Salic'a,

Co.,

April 14 (letter of notification) up to 250,000 shares of
capital stock (par $1).
Price, par. No underwriter.
To
pay outstanding notes and to provide working capital.
Frontier

Refining Co., Denver, Colo.
$600,000 5% first mortgage bonds, series
of 1949, $150,000 of 5V2% debentures, due March 1, 1954,
and 5,000 shares of 7% cumulative preferred stock ($100
par). Underwriters—Peters, Writer & Christensen, Inc.,
and Sidlo, Simons, Roberts & Co., Denver, Colo.
Pro¬
March

ceeds—To

be

added

to

general funds to retire current

bank loans and for other purposes
sion of facilities.

including the

,

,

1 v>•

.

'•

u-

Inc., L.

(4/26)
Nov. 3 filed 480,000 shares (par 250) class A stock. Un¬
derwriter
Cantor, Fitzgerald & Co., Inc., New York
Price—$1 per share. Proceeds—To develop, exploit and
—

television innovation.

a

•
Hunter Mountain Mines, Inc., Pateros, Wash.
/
April 14 (letter of notification) 200,000 shares of common
(par 100).
Price, par. No underwriter. For working
capital.
p ■
•

Hydrocarbon Chemicals, Inc., New York
April 13 letter of notification) 100,000 shares of common
stock
(oar $1).
Underwriter—Hautz and Engel, New
York.
Price—$3 per share.
Proceeds—Lease of plant,
construction of commercial unit capable of producing
cresal and high aliphatic alcohols, to purchase, manu¬
facture and instal

Idaho

plant equipment and general expense.

Power

Co., Boise,

Idaho

(4/25)

April 5 filed 10.000 shares ($100 par) 4% preferred and
common stock. Underwriters—

Indianapolis Power & Light Co. (5/9)
April 12 filed $8,000,000 first mortgage bonds series, due
1974 and 107.226 shares of common stock (no par). Un¬
derwriters—Bonds will

bidders:

Probable

be

sold

at

competitive

Halsey Stuart & Co.

Inc.:

bidding.

Eauitable

Securities Corp.;

Blyth & Co., Inc.; Hemphill, Noyes &
Co., Drexel & Co. (jointly); Union Securities Corp.,
Lehman Brothers, The First Boston Corp. and Goldman,

construction

of

Sachs

opera¬

Co.

&

tions.

offered

•

record

May

shares

held.

Industry, Inc., Hoosick Falls, N.Y.
April 18 (letter of notification) 2,000 shares of common
stock

(par $50).
Pyice, par. Underwriting—None. To
attract industry to Town of Hoosick
and Village of
Hoosick Falls, N. Y.
©

Consumers'

April 11
stock.

Materials,

Inc., Chehalis, Wash.

(letter of notification) 980 shares of common
per share. No underwriter. To acquire

Price, $100

for

scribed

ding.

11

at

rate

will

be

bidders:

Consolidated

on

apply

for

and

Kansas

Private Wires




to

all

offices

Area

Development

Assodation/ lnc..

Spokane, Wash.
* ,\j
April 14 (letter of notification). 45,985 shares? o & common stock (par $1).
Price, par. No underwriter.To putlimestone deposits into production.
^
Liggett & Myers Tobacco Coi:;
shares of common,stock (par $25).
Offering—Offered

Underwriting—None.
tion

subscrip¬

for

by stockholders of record April 13/in-ratio of one
share for each four shares held at $50 per shares

new

expire April 29.
Proceeds—To reduce shortoutstanding under company's credit) agree¬

Rights
term

notes

,

ments.

.

•

Link-Belt

•

Lorain

'".

.

•

;

~

Co., Chicago, III.
April 18 filed 11,196 shares (no par) common. Offering—
To be offered to a selected group of officers and em¬
ployees of the company and its subsidiaries. Price—$55
per share. No underwriter. For working capital.
•
■"

April

(Ohio)

11

(letter

common.

Price,

of

Telephone Co.
notification)

$20

each.

7,500 shares

(no

par)

unlerwriter. To reim¬
additions.
/

No

burse treasury for outlays for property
•

Manila

,

Mine

Development Corp., Chicago, liL
April 14 (letter of notification) 20,000 shares of-capital
stock (par $1).
Price, par. No underwriter. For busi¬
ness development.
'
;
r
;
,

Merck &
March

31

Co., Inc., Rahway, N. J. (4/22)
filed 70;000 shares (no par) cumulative

con¬

vertible second preferred stock. Underwriting—Goldman
Sachs & Co. and Lehman Brothers, New York. Proceeds
—For

capital expenditures, working
corporate purposes.

capital

and

other
\ i

(Minn.)

Gas Co.

30 filed 109,039 shares ($1 par) common stock.
Offering—To be offered stockholders at rate of one ad¬

ditional share

Kalman &

for

&

ot

unsub¬

bid¬

Co.,

Inc.; Lehman
(jointly): W. C.

Expected May 9.

$750,000 of bank

y

•

work

''

and

and

Underwriter—

Proceeds—To
finance

pay

additions

to

off
its

operating

12 at the

and

Bids—Bids for our(EDT)
April' 26 at Room 1901, 60 Broadway, New York.
.

Corp.

(4/26)

633,298 shares ($10 par)

Offering—327,610 shares will be
subscription by stockholders of record April
one new share for each 2 shares held',

305.688

shares

will

be

sold

by

Gas

United

Corp;.

Underwriters—Dillon Read & Co., Inc., and Union Secu¬
rities Corp., New York.
Proceeds—Company's share will
be used for general corporate purposes.
•

National

■;

j

.

Airlines, Inc./

April 14 filed 76,013 shares of capital stock-, ofj-which
66,013 shares will be sold to Bessemer Securities Corp.
at $6.50 per share and 10,000 shares will be issued to
company's attorney in
over past three years.
National

payment for

Distillers

services

rendered
■ .«•

Products

Corp.

(4/26) '

April

5 filed $40,000,000 sinking fund debentures/ due
April 1, 1974. Underwriters—Glore, Forgan & Co. and
Harriman Ripley & Co. Inc.
Proceeds—Prepayment "of
$25,000,000 2i/2% promissory notes; prepayment of $6",-

000,000 short-term bank loans and balance, together with
other funds, to finance cost of construction by National
Distillers Chemical

Corp. (subsidiary),1 of a metallic
Ashtabula, Ohio.

so¬

dium and chromium plant at

©
National Farmers Union Service Corp., Denver
April 13 (letter of notification) $250,000 4% 10-year de¬
bentures. No underwriter. To lend money to or acquire
title to cooperative enterprises.

Nielsen Television

Corp., New York

Feb. 24 (letter of notification) 4,000 share of 6% cumula¬
tive non-convertible preferred stock (par $25) and 10,000
shares of

common

H. Drew & Co.,

units of

Underwriter—Charles

Offering—To be offered in

preferred share and 2Vz common shares at
unit. Capital requirements.
._r .*v».
*'•

one

per

stock (par 250).

New York.

Power

purposes.

Fuel

rate of

cap¬

{Chase-of the bonds will be received up to 11 a.m.

River

capital stock.

offered for

filed

for other corporate

loans and to

Mississippi

'

& Light Co.
(4/26)
$10,000,000 first mortgage^ bonds, due
1979.
Underwriters—Names to be determined through
competitive bidding. Probable bidders: Halsey, Stuart &
Co. Inc.; White, Weld & Co.; Glore, Forgan & Co.; Equit¬
able Securities Corp.; Blyth & Co., Inc.; Union Securities
Corp.; The First Boston Corp. Proceeds—To reimburse
company's treasury for capital expenditures and for
meeting, in part, the costs of future capital expenditures
25

shares held.

10

March 30 filed (by amendment)
common

$25,625

Mining Co., Chloride,

development

each

Co., St. Paul, Minn.

the option to buy the Mohave Lead & Zinc Co.,
on
the option to purchase Jubiter Mining

.

March

Chicago

Lewiston

(letter of notification) 100.000 shares of com¬
(par $1). Price, par. No underwriter.
To

_

"

©

stock

claims

Cleveland

ditures.
.

Arizona

ital.

Pittsburgh

Blyth

sale

of

of
10

each

by competitive

Proceeds—For construction.

Jubiter

apply

San Francisco

determined

for

Goldman, Sachs & Co.
Co., Shields & Co. and White, Weld & Co.,

&

(jointly).

to

Boston-

share

new

be

stockholders

common

one

and

T.pnoriev

mon

Philadelphia

of

will

Offering—Stock

Underwriters—Terms

Probable

Brothers

•

(jointly). Stock
subscription b.y

shares

April 11

New York

apply toward further construction expen^,
Expected about May
;
v,
?\;

struction and

utility properties.

Mines, Inc., Ontario, Ore.
April 13 (letter of notification) 178,000 .shares of com¬
mon stock
(par 100). Price, par. No underwriter. For

Committee for

Proceeds^To repay loans for con-

Bros. & Hutzler.

Minneapolis

I. City

Gold

roadway and to finance mining

(jointly); Shields & Co. and-Salo*«

der, Peabody & Co.

March

Hotelevision,

construction and repay short-term borrowings.

Cobalt

-

expan¬

•

©

Probable bidders:- Halsey, Stdart> &"'Cai

bidding.

Inc.; Glore, Forgan & Co. and Lehman Brothers (jointly);
Union Securities Corp., Harriman Ripley & Co. and> Kidr #

filed

7

Proceeds—To finance construction program.

Proceeds to two stockholders.'

tive

March 21 filed 784,235

Blyth & Co., Inc.; Lazard Freres & Co. and Wegener &
Daly Corp. will underwrite common; Wegener & Daly
Corp. will also sell preferred.
Proceeds—To finance

Detroit.

Underwriters—Names to be determined through competi- ;

mon

Deep Well Oil Corp., Fort Worth, Texas
/
April 14 (letter of notification) 275,000 shares of com¬
mon; of which 25,000 shares will be "bonus/' at $1 per
share.
No underwriter.
To drill oil and gas test well

(par $8.50). Offer¬
ing—To be offered for subscription by stockholders of
record May 12 in ratio of l-to-9.
Underwriting—None.

Clayton & Lambert Manufacturing Co.;'
Louisville, Ky.
:wb.,.
April 13 (letter of notification) 10,900 shares°($4 par)
common
stock.
Underwriter—First of Michigan Corp.,

March 31 filed

,

200,000 shares ($20 par)

common shares

Kentucky A West Virginia Power Co. (5/3) :
$10,000,000 first mortgage bonds, due 1979, ;

pumice deposit, buy equipment and provide working
capital.
'
\
*

a

distribute

Proceeds—For investment.
©

Registration

in

per

of Ecuador.

March

INDICATES

ceeds

Amanda

Now

Thursday, April 21, • 1949

CHRONICLE

FINANCIAL

&

mwmmmtms

-

•

-

*

.

COMMERCIAL *&

THE

Number 4796

Volume 169

Ripley & Co.; Lehman Brothers;' The
Corp. and Smith, Barney & Co. (jointly);
Proceeds—To redeem outstand¬

First Boston

NEW ISSUE CALENDAR
April 22, 1949
Preferred

Co

American Research & Development

Corp._Coimnon

Idaho Power Co.__—

—Pfd. & Com.

capital class A stock.

ing bonds and short>term borrowings.
Bids—Bids for
purchase of the stock will be received up to noon (EDT)
May 3 at Room 2601, 61 Broadway, New York.

Rocky

.

.

Texas Electric Service Co.,
jv

11:30

—

Class A Stock

Equip. Trust Ctfs.

RR

Distillers Products

a.m.

(EDT)

Corp

-Bonds
Common

Corp

Proceeds—To

Shomee Oil

Preference

.

•

_______Bonds

•

Mines, Inc., Wallace, Idaho
(letter of notification) 750,000 shares of com¬
Price—20b per share. No underwriter. For

Bonds

expenses.

Carolina

April 11 filed

•

Equip. Trust Ctfs.

Gas Co.
stock (par $4.50) to be

subsidiary
'"

$4,000,000
1969.

Bonds

and

Common

—

•

■'

5%

sinking

debentures, due March 1,
off notes and for working

fund

No underwriter.

Suburban

To pay

Gas

Service, Inc., Ontario, Calif.
March 31 (letter of notification) 4,000 shares ($25 par)
series B preferred and 20,000 shares ($1 par) common—
issuable upon conversion of preferred. Price—Preferred
$25 per share. Underwriters—Wagenseller & Durst, Inc.,
and Lester & Co.
To buy Antelope Liquid Gas Co.

Inc., New York
April 18 (letter of notification) 25,000 shares of common
stock (par $1). Underwriter—Ackerman, Conte, Mattielli
& Co., New York. Price—$1.25 per share. Working capi¬
tal, etc.
•

Olamont Mining Co., Butte, Mont.
: ;
April 12 (letter of notification) 100,000 shares of com¬
mon
(par $1).
Price, par. No underwriter.
For the
equipment and operation and development of mining
,.

property.

•-■'"V

•

Sunnyhill Coal Co., Dormont, Pa. •
April 15 (letter of notification) 2,999 shares of common
stock (par $100). Price—$100 per share. Underwriting—
None.
Corporate purposes, y ' :
jy^y

1

.

-

Electric

Texas

Pacific Gas & Electric

Co., San Francisco
April 5 filed 1,500,000 shares of redeemable first pre¬
ferred ($25 par) stock. Underwriters—Names by amendment (probably Blyth & Co., Inc.). Proceeds—To finance

Underwriters—Names

•construction.

Co.

Peerless

March

28

Casualty Co.,

filed

shares

50,000

March 22 filed

petitive

($5

par)

common

stock.

Offering—To be offered to stockholders about April 19
[at the rate of five new shares for each 16 shares held.

Bights expire May 4. Underwriters—Herrick, Waddell
«& Reed; Geyer & Co., New York, and Townsend, Dabney
Tyson, Boston. Proceeds—To increase the company's
capital surplus.
V
A v
•

Peninsular Telephone Co.,

Tampa, Fla.
April 20 filed 42,448 shares (no par) common stock, to
foe offered stockholders.

Underwriters—Morgan Stanley

Co., Coggesnall & Hicks and G. H. Walker & Co. will
purchase unsubscribed shares after officers and em¬
ployees have chance to purchase same. Proceeds—For
general corporate purposes.

Plywood,

♦.

•->

Mich,
March 28 filed 150,000 shares ($1 par) common stock.
>
Underwriter—Baker, Simonds & Co., Detroit. Proceeds
Inc.,

Detroit,

i

—For working capital to finance inventories and opera¬

tions and for other corporate purposes.
•
•
Potomac Electric Power Co., Washington, D. C.
April. 14 filed $10,000,000 first mortgage bonds, due 1984.
Underwriters—Names to be determined through com¬

petitive bidding. Probable bidders: Halsey, Stuart & Co.
Inc.} The First Boston Corp.; Lehman Brothers, Stone &
Webster: Securities Corp. and Union Securities Corp.
(jointly); Merrill Lynch, Pierce, Fenner & Feane, White
Weld

&

Co.

and

Salomon

•

Bros.

&

Hutzler

(jointly).

Proceeds—For construction.
•'

Potomac Electric Power Co.,

Rochester Gas

Washington, D. C.

"T
&

Electric

Co.

(5/3)

•

May 26, 1947 filed 50,000 shares ($100 par) series G; cu¬
mulative preferred stock.
Underwriters—Names to be
determined through competitive bidding. Probable bid¬




Co.

(4/25)

$8,060,000 30-year, first mortgage bonds.

bidding.

determined

be

to

through

com¬

bidders:

Probable

Halsey, Stuart &
Inc.; The First Boston Corp.; Harriman Ripley &

,

Inc.; Hemphill, Noyes & Co. and Drexel & Co.
(jointly); Blyth & Co., Inc. and Kidder, Peabody & Co.
(jointly); Union Securities Corp. and Glore, Forgan &
Co.
(jointly).
Proceeds—Net proceeds, together with
$4,000,000 to be derived from sale of additional 2,000,000
shares of stock to parent (Texas Utilities Co.) and from
other funds will be used to pay short-term notes and
for construction of new facilities, etc.
Bids—Bids for

purchase

of bonds will be received up to 11:30 a.m.
(EDT). April 25, at Room 2033, 2 Rector St., New York.

Thompson Industries, Inc., Boston *■
March 31 filed 120,000 shares ($1 par) convertible pre¬
ferred stock.
Offering—32,214 shares' are to be offered
to holders of present $6 cumulative preferred stock at
the rate of

one

new

share for each one held

change basis. .The remainder

man

Westchester Lighting Co. (5/3)
April 1 filed $12,000,000 general mortgage bonds, due
1979 (guaranteed unconditionally as to
principal and in¬
terest by the Consolidated Edison Co. of New
York, Inc.).

Underwriting—To be decided under competitive bidding.
Probable bidders include: Morgan
Stanley & Co.; Halsey,
Stuart & Co. Inc.; Merrill Lynch,
Pierce, Fenner &
Beane; White, Weld & Co.; Stone & Webster Securities
Corp. and Lehman Brothers (jointly); Harriman Ripley
&

Co.; The First Boston Corp.; Salomon Bros. & Hutzler.
Proceeds—To be applied toward retirement of
$10,000,000
outstanding bonds and to
11

a.m.

are

on

to be offered

an

on

(EDT), May 3, at Room

1628, 4 Irving Place, New York.
•
Wyant & Sons Paper Co., Atlanta, Ga.
April 15 (letter of notification) 250 shares ($50 par)
5% cumulative preferred stock and 250 shares ($50
par)
common.
To be sold in units of one share each at
$100
per unit.
No underwriter. To acquire additional lines

of

paper.

©

"

'

'

.

.

Yankeedoodle

Publications, Inc., Corinth, N. Y.
April 13 (letter of notification) 500 shares 6% preferred
Underwriting—None.

Print¬

1

Prospective Offerings

•

American

Telephone & Telegraph Co.
April 20 stockholders voted to authorize a new issue of
10-year 3Ys% convertible debentures, to be dated June
20, 1949, and to be offered to stockholders of record on
May 6 for subscription in the ratio of $100 of debentures
for

each

amount

a

ex¬

pro

six

shares

the

of

stock

held

on

date.

The

stock

beginning Sept. 1, 1949. From that date until
20, 1951, they will be convertible at $130 per share,

June

payable by

surrender

of

$100

of

ment of $30 in cash for each share

debentures and

pay¬
of stock to be issued

upon conversion.
On and after June
be convertible by the surrender of
and

that

is

expected to be approximately
Debentures will be convertible into com¬

$395,000,000.
mon

of

issue

the

payment of $40 in cash.

not be callable

20, 1951, they will
$100 of debentures

The

debentures

will

until June

20, 1951, but will be callable?
thereafter in whole or in part on 30
days' notice, the
initial redemption price being $106.
Each stockholder
of record on May 6, 1949, will receive
rights to sub¬
scribe to

the

subscribe

or

new

issue.

These

rights may be'used to
They will be sent
May 16, and subscriptions
will be accepted
by the company up to and including
June 20, 1949.
to

may

stockholders

be assigned

on

or

or

sold.

about

•
Bangor Hydro Electric Co.
April 17 company announced it will file with the SEC
a
registration statement covering 4,840 shares of pre¬

ferred

sto^.and 54,304 shares of

M.

Graham, President,
rights to^subscribe to
value.,

added he

common stock.

said that
new

Edward

it is hoped that the
shares will have

common

expects to work out arrangements

with

security dealers whereby stockholders who don't

wish

to

subscribe

to

new

shares

may

dispose of their

rights. Proceeds will be used to finance
expansion program.
®

California Water &

April

16

reported

current

plant

Telephone Co.
is arranging

the sale of
$1,000,000 3%% bonds to provide part of funds required
to meet 1949 construction program which calls for ex¬
penditures of over $3,250,000.
company

&

Co. Inc.; The First Boston Corp.; Glore, Forgan & Co.;
Harriman
Ripley & Co.; Equitable Securities Corp.;

volves sale of 80,000 preferred shares for $4,000,000 and
issuance of $4,000,000 first mortgage bonds.

basis

to

other

holders of

stock at $15 a share.

$6 cumulative preferred
Underwriter—None. Proceeds—To

modernize restaurant operations?,
Toledo

(Ohio)

Edison Co.

'.

•

<

»/?*

(5/9)

March 1$ filed $2,500,000 first mortgage bonds, due 1979.
Underwriters—Names to be determined through com¬

petitive

bidding,, Probable

Bidders:. Halsey,

Stuart

Union

Securities Corp., and Salomon Bros. & Hutzler
(jointly); Kidder, Peabody & Co. and White, Weld & Co.
(jointly); Lehman Brothers and Bear, Stearns & Co.

(jointly).

Purpose—To provide part of the new capital
Expected about May 9.

Trenton Chemical

Co., Detroit, Mich.

<

March 30 filed 131,841 shares 6% cumulative convertible
class B preference
($2 par).
Underwriters—Straus &

Blosser, Chicago; Carr & Co., Detroit, and Lester & Co.,
plant and 'to
replace working capital used for capital additions. [Un¬
der a previous registration statement (No. 7637), which
Los Angeles. Proceeds—To build chemical

became

effective

shares of

$97,108
March

6%

and

21,

Sept.

24,

1948,

company

sold v43,159

cumulative preferred stock for a total of

removed

1949.]

131.841

shares

from

registration
^

~

•

indebtedness owing
Bids—Bids for purchase of bonds
repay

•
Central Arizona Light & Power Co.
May 9 stockholders will vote on authorizing an issue of
200,000 shares of cumulative preferred stock (par $50);
on reducing authorized
$1.10 cumulative preferred from
300,000 to 160,000 shares (par $25) and changing author¬
ized common from 1,500,000 shares (no
par) to 2,000,000
shares (par $5),
New financing proposed for 1949 in¬

rata

required for construction.

April 14 filed 592,250 shares of common stock (par $10)
Underwriters—Dillon, Read & Co. Inc., New York; Auchincloss, Parker & Redpath, Washington, D. C.; Alex.
Brown & Sons, Baltimore. Offering—To be offered for
subscription by stockholders on l-for-5 basis. Proceeds
—For investment.

.

Service

Co.,

Keene, N. H.

Expected

Waltham, Mass.
(letter of notification) 18,000 shares ($1 par)
Price at market. Underwriter—J. & W.
Selig& Co., New York.

'

Novel Appliances,

construction.

April 12

y' ':"

,

«

including

Waltham Watch Co.,

No underwriter. To
whole owner

become
.•/'/■••
" •'

...

System, Inc

corporate purposes,
about May 2.

pre¬

capital.
v*yy' ':yy
•
Stanley Works, New Britain, Conn.
April 13 (letter of notification) about 5,660 shares of
common.
Price—Approximately $53 per share. No un¬
derwriter. For general corporate purposes.

May 24, 1949
Columbia Gas

y

bidding. Probable bidders: Lehman Brothers
Bear, Stearns & Co. (jointly); Halsey, Stuart & Co.
Inc.; White, Weld & Co.; Harriman Ripley & Co., Inc.;
Salomon Bros. & Hutzler; The First Boston
Corp. and
Blyth & Co., Inc. (jointly); Otis & Co.
Proceeds—For

Price, par.
ing plant equipment, etc.

Co., Keokuk, Iowa

Spreckeis Companies, San Francisco, Calif.
April 15 filed 125,000 shares ($10 par) capital stock and

1949

Public Service Electric & Gas Corp...

(5/2)

petitive

Consolidated Edison.
will be received up to

•

Bonds

Co._

May 10,

&

common

Price—$10 per share.
to

thereof.

Bonds & Corn.

Indianapolis Power & Light Co
Edison

loan

make

and development work.

Light Co.

stock (par $50).

South West Box

ferred stock.

Toledo

Electric

issue of

an

April 15 (letter of notification) 15.000 shares of 60b

May 9, 1949

&

common

No under¬

and

,

tion program.
i

—

*

•

for subscription by stockholders.
Number of
shares, record date, and subscription price by amend¬
ment.
Underwriter—Names by amendment.
Probable
bidder, Peabody & Co.
Proceeds—To finance construc¬

May 5, 1949

exploratory
Power

share.

per

March 15 filed $3,000,000 first mortgage
bonds, due 1979.
Underwriters—Names to be determined through com¬

of

*

...

offered

Notes

.Equip. Trust Ctfs.

Chicago Great Western RR.,
(CDT)

>

-

,

.

South

May 4, 1949

noon

->

April 11 (letter of notification) 500 units of the Syndi¬
cate. Price, $25 per unit. No underwriter. For general

Corp.,noon (EDT)__Pfd.

—

Underwriter — John R.
For working capital.

Minnesota

Kentucky & West Virginia Power Co.——Bonds

__—

Co.

Sourdough Prospecting Syndicate, St. Paul,

—

Cambridge Electric Light Co._

&

Corp., St. Louis, Mo.

mining operations.

Chicago Rock Island & Pacific RR.,
noon
(CDT)
Equip. Trust Ctfs.

Chicago & North Western RR.,
noon
(CDT)

Drexel

stock.

/

(EDT)

and

Silverore

April 11
mon

a.m.

Sons

research

laboratory and
Possibly April 26 or 27.

new

Price, par.
Co., St. Louis, Mo.

Kauffmann

Light Co

Lighting Co., 11

a

(par $1).

common

May 3, 1949

Westchester

Pleasant,

March 28 (letter of notification) 150,000 shares of class A

-Bonds

—

Rochester Gas & Electric

&

Brown

construct

for other corporate purposes.

1949

_____

Gas Corp

Utah Power &

Mt.

For

Utah

Price—250

45

common.

Underwriters—Alex.

May 2, 1949
Alabama

,

Refining Corp.,

5harp & Dohme, Inc., Philadelphia (4/26-27)
April 7 filed 208,373 shares (no par) common stock.

Common

April 27,

&

stockholder.

Debentures

Sharp & Dohme, Inc

Family Finance

Oil

notification 1,050 shares (no par)
common.
Price—About $8.50 per share.
Underwriter—
F. Eberstadt & Co., Inc., New York. Proceeds to selling

(EDT)_—Debs.

Hotelevision Inc.
Kansas Power & Light Co., 11
Mississippi River Fuel Corp.-

Roosevelt

Michigan
April-13 (letter of

Arkansas Power & Light Co., noon

National

•

April 26, 1949

•'

Central

(EDT)_Bonds

a.m

•
United Development Co., Helena, Mont.
April 15 (letter of notification) 250,000 shares of

writer.

Mountain Life Insurance Co.,
Albuquerque, N. M.
April 15 (letter of notification) 7,415 shares of common.
Price—$25 per share. No underwriter. For capital and
surplus.
f
,
'

April 25, 1949

(1765)

Union Securities Corp.

•

Illinois

CHRONICLE

Harriman

ders:

Merck &

FINANCIAL

.

,

•
Chicago Great Western RR. (5/5)
Company will receive bids up to noon (CDT) May 5 at
its office, 309 W. Jackson Boulevard,* Chicago, for the
purchase of $7,020,000 equipment, trust certificates, dated
May 1, 1949, due $260,000 semi-annually Nov. 1, 1949rNov. 1, 1962." Probable bidders:
Halsey, Stuart & Co.
Inc., Salomon Bros. & Hutzler, Harris, Hall & Co. (Inc.),
Harriman Ripley & Co. and Lehman Brothers (jointly);
The First Boston Corp.
•
Chicago & North Western Ry. (5/4)
Company will receive bids up to May 4 for the purchase
of $6,210,000 equipment trust certificates.
Bidders at
the sale are invited to submit alternate proposals for
[certificates maturing In l-to-10 years and,for the same

(Continued

on page

46)

.

46

THE

(1766)

COMMERCIAL

FINANCIAL

&

CHRONICLE

The certificates will be dated May 1,
1949, and are to mature semi-annually from Nov. 1,
1949, to May 1, 1959.
Probable bidders: Halsey, Stuart
& Co. Inc.; Harriman Ripley & Co. and Lehman Brothers
(jointly); Salomon Bros. & Hutzler; Harris, Hall & Co.

•

(Inc.); The First Boston Corp.

Chicago Rock Island & Pacific RR. (5/3)
Company will receive bids at its office, Room 1136, La
Salle Street Station, Chicago, up to noon (CDT) May 3
for the purchase of $3,528,000 equipment trust certifi¬
cates, series D, dated May 15, 1949, due in 24 equal semi¬
annual instalments from Nov. 15, 1949-May 15,
1961.
Probable bidders:
Halsey, Stuart & Co. Inc., Salomon
Bros. & Hutzler, Harris, Hall & Co. (Inc.), Harriman

Columbia Gas System,

April 20
additional

Keller

•

(5/24)
that it plans to

sell

an

share for each ten shares held and

Columbia Gas

share

Corp.,

Seguin,

through

Cantor,

Texas

Fitzgerald

;

•

Co., New York.
to repay advances and for devel¬

Public

Service

Electric

indenture

an

than

mortgage bonds due
sale

and

of

what

the

they

will

bonds

less

arbitrarily turning
on

used

break

months

writing

has happened
has

given

bankers- the

in

ful

flotation

of

Rochester

Gas

Electric Corp.'s $16,677,000 of

30-year first mortgage bonds
terday.

&

new

funds

which

do

for

the

mit

that "one

ingly,

were

able

were

quick

to

announce

oversubscription.

But

drooping spirits of the
writers and dealers.

under¬

Could

Be

Should

the

and

its

cess

stances

on

West

Help

Reason for their apparent satis¬
faction lay deeper than just that.
The successful group had paid the

away

attendant

suc¬

circum¬

company a price of 100.07377 for
the bonds with a 3% coupon on

several

a

unsold portions of

a

num¬

ber of recent new issues.

There

unsold

are

issues

portions
wnich

of

offer

yields of only three to five basis
points under the foregoing bonds.
Among them Commonwealth Edi¬

of

turity, and a return of 2.95%.
Offerings still available, dealers
report, are C.I.T. Financial Corp.'s
ten-year 2%% debentures; Gen¬
eral Telephone Corp.'s 4% deben¬
tures on which the price was cut

2.97% to maturity.
close
to a
approach

basis, has not in the

Even

3%

this

yield

recent

past

been sufficient to break down the

apparent reluctance of the major
institutional
buyers
to
shade
their ideas of what they consid¬
ered

a

satisfactory rate of return.

But in the
ester

Gas

3s

of the

case

it

Roch¬

developed

that

Co.'s 3s, with a 50-year ma¬

from

102Vt

to

100; and the re¬
cently offered securities of Ohio
Public Service

Telephone

two of the so-called "Big Five"

ated

Insurance companies had come
into the market with orders for
sizable blocks.

Central

&

And

more

than

that,

additional

amounts

of

the

preferred

Hudson

Gas

&

Thus

and

far

it

is

a
as

difficult

ments.

bill

to

greater

are

latitude

savings
exercising
the

under

recently signed by Governor
Dewey.
Some

Underwriters and the "bureau¬
as the bankers have dubbed

report

improved

evidence

grade

of

of

inquiry

an

for

crats"

bonds just off the legal grade,

the hard-bitten institutional buy¬
have been at odds for many

not go below "A" quality

months

railroad

ers

now

on

the

matter

of

prices mid yields.
The bankers naturally have been

guided in their judgment in buy¬
ing new issues on their "feel of




—

of the

reprinted

from

Economic Condi¬

tions in Italy"—Banco di Roma—

representative, 37 Wall
New
York
5, N.
Y.—

Street

Paper.

11

noting that buyers who would
in. the

now

list

for

Our National Debt—-Its

History
Meaning Today—Commit¬
tee on Public Debt Policy—Harcourt, Brace. & Co., Inc., 383 Madi¬
son Avenue. New York 17; N. Y.—
and Its

Cloth—$2.50.
Partners in Production—A Basis
for

Labor-Management

standing

—

Under-

Labor Committee,

$1.50.

1

biThe
allows

the

"Baa"

stock

common

&

of

Co.

shares

share

one

at

New- York

is; being

of .five

of

$500.10

of

an

in

preferred

unit.

per

represents ; the
of

City.

offered

of common, and

offering

is

The

unsold

made

on

•

...

The company intends to use the
proceeds from the Sale/of' this
...

stock

to

purchase

■

~

,

f

Messrs. Armstrong and

purchase

machinerv

Duffes, to

from

balance

vendors, and the

other

will be

used for organization expense and

cash

working capital.
in

has

January

shares
stock
for

of

this

year,

commenced
business, as
Its principal interest is to
acquire Maritime Milling's dog
food business, including the Hunt

Club

brand
and

to

and

name,

Continue

the

manu¬

of

sale

$5 dividend preferred
share-for-share exchange
$4.50 preferred up. to t«he

new

close

of

business

Blyth &
all

group

Co.,

the

on

May 4.
An
headed -by
Inc.," will purchase

underwriting
$4.50

stock

All

be

unexchanged

called

about

for

June

9

$5

•

will

stock

redemption
$100

at

taken

not

under the exchange offer.

or

on

share.

a

Upon completion of the exchange
Offer

and

the

redemption,

capi-^
will

talization

of

consist

300,000 shares of $4.50.
stock ■ and *1,930,357
common
stock.
Divi-'

of

preferred
of

the- company

dends have been paid on the com¬
mon

not

facture

of
a

shares

Animal Foundation,
Inc., organ¬
ized

Lighting Corp.

-The Pacific
Lighting ' Corp. is
offering to holders of its 200,000

inventories,

machinery and good will from the
Maritime Milling Co. Inc., to pur¬
chase a plant in Sherburne from

in every year since 1908, the

rate

present

being

at

the

yearly,

rate of $3 a share.
I*

'

*■'.

1

^

M

>

Chester B. Blakeman Is

the Hunt Club brand from another

manufacturing location in Sher¬
burne, N. Y. The principal changes

(Special

from the present operation of the
.

Hunt Club business lie in the

re¬

location

of
the
manufacturing
plant and the installation of new

management.-

'

Salesmanship

*

to

The

Financiw.

ATLANTA, GA.

Blakeman

has

—

Chronicle)

Chester B/

opened

offices

an-

.

of Mutual

Funds—Transcripts of

lectures by executives
investment

mutual

Vol.

I

(Lectures

fund

1-5)

in the
field—

ready May

example

are

(Lectures 6-10),.f ready

10; Vol. II

umes

on

lower

set

of two

vol¬

tional

for

1

to -9

sets;

Lynch,

stitute

quantity—Publi¬

in

Division,
of

New York

York

In¬

Finance, 20 Broad

St.,

New

5, N. Y.

;

-

.

Trends in Collective Bargaining

—S. "T.

Williamson

and

Herbert

category.

Harris—Twentieth Century Fund,

,

law signed by the Governor

savings banks to invest

up

330 West

42nd

18, N. Y.—$2.00.

Street, New York

Dept.

Rudolph J. Chval has been ap¬
pointed manager of the Institu¬

per

prices

cations

Rudolph Ghvat Heads
Merrill Lynch

orders

June—$5.00

looking at issues which fall

into

coming with Merrill Lynch.

and

yet.

to the extent to which

banks in the State

stock

behalf of the company on Feb. 25,
1949.

New York

ten

Buying?

get
definite opinion among dealers

their

Harbinger

ciani-Turroni

Investment

bonds to round out their commit¬

A Hopeful

Interest Rates in Italy—C. Bres-

Retail

Banks

specialist for Moody's In-;
vestor Service for 15 years before

Electric

preferred.

dealers

reported evidence of their partici¬
pation in the open market in quest
of

—

Co.; New England Twentieth Century Fund, 330 West
Telegraph; Associ¬ 42nd Street, New York 18, N. Y.—

Telephone

Savings

Through

42nd

Y.

"Review

And the reoffering price was set
at 100.59 for an indicated
yield

son

Productivity

Street, New York 13,
Paper — $3.00 to June 1,
1949 (thereafter $5.00 per copy to
non-member firms.)

N.

Rochester Gas

signal

Greater

Analysis of Company and Union
Experience—Ernest Dale—Ameri¬
can Management
Association, 330

Big

of

stock

priced

Labor-Management Cooperation-

change, it could
mighty helpful in clearing

prove

Tuesday.

»,

side.

it

not

the speed of 'the sale
alone that served to refresh the

still

bond

Shares Offered

and

not

does

,

Cohu

units

and, accord¬
the cautious

swallow

Summer"

insurance companies, banks,:
charitable - - trusts
and
private trust
funds, was chief

colleges,

Pacific

The

willing to ad¬

were

with

Foundation, Inc., as a
speculation, is being made by

tending to force their

But bankers

yes¬

of.

/

.

Animal

offering

operation and sponsoring bank¬

was

of

preferred

400/shares

to

up

•

•

re-i

■

portion

a

ers

backing

substantial portion of the
used for the acquisition

,

Market

on

convertible

the

seemed

to

capital assets.

of 2,000 shares of
6% cumulative, participating non-

in- '

big

but

be

expected

Offering

vision of their ideas.

make

an open

of

a

is

Stock

qualify
staid "legal list."

hand and bring about some re¬

and shut

This proved

,

ranks

available,

bank loans, and at least

not

for the

reason

heavy

was

respect

Co.

rrainder

Animal Foundation

issues

new

assumption

that

be

they

success¬

the

was

general

under¬

"lift"

grasped from the highly

in

vestors

in

Biscuit

surplus in
they consider satis¬
other directions but

v

No immediate

United

to the amount of their

yielding less than 3% return. The
tug-of-war had developed recent¬
ly into pretty much of a stale¬
mate.

with

sisting of 80,000 shares to underwriters for distribution'
public. Goldman, Sachs & Co', is expected to
mqn-'
age the public offering.- A registration
statement is ex¬
pected to be filed shortly with the SEC.
Proceeds will
be .applied; to the payment of
$3,000,000 of short-term

Co.

Proceeds from the proposed
(1) to pay at maturity

be

factory

shoulder"

Gas

$75,000,000 of first and refunding

1979.

bonds which

or

&

indentures and the issuance there¬

or

more

Big portfolio men, on the other
hand,
have
been
regarded
as
"cold

plans

May 18 stockholders will vote on authorizing an issue of
110,000 shares of preferred stock (no par)/
Company
plans to selLan initial series of the preferred stock con-:

(5/10)
April 18 stockholders empowered the directors to author¬

thought it would take.

more

present

shares, but it believes such"

to the

•

The company has issued invitations for bids to be re¬
ceived April 26 for the purchase of $5,520,000 equipment

recent

•

sold, the proceeds, together with proceeds of 150,000
of common stock now in registration would be
used to repay obligations incurred in purchase of new
plant.
Traditional underwriter:
P. W. Brooks & Co.,
Inc., New York.

under of not

a

no

the issuance of additional

shares should be available for future
corporate purposes/
such as to provide additional funds for
company needs,1
the acquisition of
properties, or the issuance of stock'1
dividends to the stockholders.
*
/.
»

Plywood, Inc.

ize

market"

Co. of California

Management said it has
to

&

shares

(4/26)

the

Standard Oil

on
a proposal to increase
the authorized capitalization to 20,000,000 shares
(no par).'
Present capitalization is 15,000,000 shares
(no par)" of
which 13,654,150 are outstanding,
including shares which'
will be issued upon conversion
of outstanding scrip.1

Annual report states that additional 5% debentures may

additional shares.

Nothing that

•

be

RR.

Co.

May 5 stockholders will vote

opment of properties.

Deep Rock Oil Corp.
April 19 stockholders voted to increase authorized capital
stock to 1,000,000 from 400,000 shares (par $1).
They
also approved a proposal to waive pre-emptive rights to
acquire any additional shares that may be issued. The
company said it has no immediate plans for issuance of
Illinois Central

Oil

Proceeds will be used

•

•

bidders:

Norma

System.

Gas

of one new share for each ten shares held.
It is intended
that the money received will be added to
working capital.

April 13 expected the filing with the SEC through letter
of notification at an early date of 300,000 shares of
capital stock (par 40c), which will be offered at $1 per

privilege to subscribe to a larger number of shares, sub¬
ject to allotment, out of the shares not taken by other
stockholders pursuant to the primary subscription right.
The proceeds from the sale of the stock will be used to
finance part of the 1949 construction program of the

Southern Natural

tations late this week or early next week
for some
$10,000,000 to $11,000,000 in equipment trust certificates.

company

Department

of

Merrill

Pierce, Fenner & Beane,
Pine Street, New York City,

70

members of the New York Stock

Exchange, it

was

announced April

19

by Winthrop H. Smith, manag¬
ing partner. Mr. Chval,.who has
been

with

1944,

succeeds

Merrill

since

'

'

Chval, %who will supervise

Merrill

Lynch

'

•

Chester B. Blakeman

I.

Wilson,
Merrill Lynch's

Francisco office.

Mr.
all

Lynch

Eberle

who has moved to
San

?

May 4 stockholders will be asked to increase authorized
capital stock to 2,000,000 common shares from 1,500,000..

Halsey, Stuart & Co. Inc.; Harriman
Lehman Brothers; Salomon Bros. &
Hutzler; The First Boston Corp.; Harris, Hall & Co. (Inc.).

additional

an

•

on

The company proposes to offer
approximately 142,000
additional shares for pro rata subscriptions in the ratio

Probable

91% over-subscribed. While the offering will
underwritten, the corporation plans to pay se¬
lected security dealers a fee for soliciting subscriptions.
Stockholders will receive a primary right to subscribe
one

be paid to the company therefor.
Probable
Halsey, Stuart & Co. Inc., The First Boston
Morgan Stanley & Co., Kuhn, Loeb & Co, and
Lehman Brothers (jointly).
Bids expected to be opened
May 10.
;■ '
j '■ u ••
.
//" : "

Corp.,

Ripley & Co. and

was

to

bidders:

New York Central RR.

be

for

price

increasing authorized
750,000 to 1,500,000 shares.

April 20 reported

ing satisfactory, the offer will be made on or about
May 24, 1949, and will be substantially similar in form
to the offering made by the corporation last October,
not

]023/4% of their principal amount,
Such bids will spe¬
cify the interest rate to be borne by the bonds and the!

probably will send out invi¬

•

common

November, 1949, $28,455,800 of prior lien
pay in advance of maturity $20,000,000'

Competitive bids will be invited for the purchase of the
bonds, at a price not less-than
100% nor more than-

cer¬

Electric Co.

from

common

a

which

McGraw

to

bank loans due Sept. 10, 1950, and (3) the bal¬
will be added to the general funds of the company.

ance

Corp.,

May 16 stockholders will vote

stock pursuant to
subscription offer to its stockholders.
It is presently
contemplated that, subject to market conditions remain¬
1,345,300 shares of

Motors

and

(2)

2-2V4%

Huntsville, Ala,
April 11 corporation plans public offering of 5,000,000
shares common stock proceeds to provide capital to en¬
gage in volume production.
Underwriter, Greenfield,
Lax & Co., Inc., New York.

Inc.

announced

company

Bids for purchase of

June

bonds,

tificates will be opened April 26.

Ripley & Co. and Lehman Brothers (jointly),
•

in

trust certificates.

Probable bidders:
Halsey, Stuart & Co. Inc.; Salomon Bros. & Hutzler;
Harris, Hall & Co. (Inc.); Harriman Ripley & Co. and
Lehman Brothers; The First Boston Corp.

(Continued from page 45)
certificates maturing in l-to-15 years.

Thursday, April 21,, 1949

associations

the First National Bank Building
to

engage

ness.

with

in the

securities busi¬

Mr. Blakeman

was

formerly

Hoit, Rose of Troster.

-

Number 4796

Volume 169

-

-

THE- COMMERCIAL

■

from

little-realized

new

into business ventures.

Management-Stockholder

of

Factor

The

Ore

contributing

reason

Relations

investor

to

inhibition

issues, in the opinion of this columnist, is the undermining
in management.
Arising from widelyr

stockholder ^confidence

of

CHRONICLE

specific cases of abuse, it embraces distrust of the cor¬
system as a whole with its separation of ownership from
control. Certainly the current dramatized rumpuses at stockholders'
publicized

Spring

Meeting of the Board of

of

Stock

to

route

en

spring meetings.
24-28J'1949

May

(Denver,

Association1 >of

Colo.)

Stock

meetings are accentuating the individual's sense of his helplessness
rattier than security—despite even the rushing of the ladies' con-

Annual Field Day at Sleepy Hol¬
low Country Club, Scarborough.

has. been furthered recently by the publicity widely given—extend¬
ing even to nationally-circulated magazines—to the fact that the
shares of
tho

so

of

many

industrial

our

concerns

selling far below

are

quick liquidating value and replacement cost.

In the first place
about the efficacy of management, whether un¬
justifiably (as in cases of inadequate earnings return),
in "the second place, it incites doubts about respective directorates
/where- they permit unsatisfactory situations to continue without perirhfting actual liquidation or other remedial measures warranted by
u

this

breeds

justifiably

doubts

or

the interests of the

shareholders.

Hence

June 6-7,

1949

management

aid

turn's corporate financing problem by being extra
about putting its house in completely ship-shape order.

in

the

meticulous

(Cincinnati, Ohio)

Co.,

209

South

Salle

La

Street,

^commendations

i

Bond Club of Los Angeles field
June 10-12, 1949

(Minneapolis,

m,I Literature,

H.

-

Rollins

&

Sons, 40 Wall Street, New York 5,
N. Y.
;
" •
.;
...

(Continued from page 9)

,

Ltd.

and

■!

-

Mine* Ltd.

•

"

Giiunell

LaLux

■

-

Warren

!

>

Corporation—Circular!

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

Bros.

Co.

—

Memoran¬

dum—Amott, Baker & Co.", Inc.,
150 Broadway, New York 7, N. Y.
Also available is an analysis of
Public Service of Indiana.

Lake.

—rowel

&

Club of

Bond

York Field Day at

Country

New

Sleepy Hollow

EVENTS
ucts Co.

In

Special report — Stifel,;
Co., Inc., 314 North
Broadway,. St. Louis 2, Mo.

Investment

Kjngwood

Oil

Co.—Circular—

Louis

2a Mo.

Missouri

dbj
Pacific

■

,

Circular

—

Security Traders Association of

dinner

Oil

—

Securities^ Corp., Ill
New York 6, N. Y. v

Pennsylvania

-

Broadway,

Cement—

Analysis—Goodbody & Co., 115
Broadway, New York 6, N. Y.
Also available are an analysis
of. the senior obligations of the
New

York

leaflets

Central

System

on>Admiral,

Power

&

Light,

General

and

Electric

June 21-24,1949 (Canada)

Investment

Oil and U. S. Steel Corp.

Pennsylvania Salt Manufactur¬
ing

J 5wO

Co.—Circular—Drexel & Co.,
Walnut Street, Philadelphia

1, Pa'.
■

;

Philip

v' \

■

Morris—Memorandum-^

A. M. Kidder &

Cojl Wall Street,

New York 5, N. Y.'

Also

available

Mutual Funds.

,

is

leaflet

a
.

,

monthly

the

Cordon

April 28-29, 1949
;

Texas

(Houston, Tex.)

April

1949

Bond

Club

Chi¬

of

annual meeting and election
at 4 p.m. in the Roosevelt Room
cago

the

Morrison Hotel.

annual

on

May 6, 1949

St. Louis Municipal Dealers an¬
nual

outing
at
Country Club.

May

outing at the West¬

Club

(Toledo, Ohio)

Norwood

<

Hills

7-8, 1949
Va.)

Toledo

of

15th

an¬

(Colorado Springs,

1949

As¬

Lumber

Corp.—Late
analysis—Russ & Co., Inc., Alamo
National Bldg.,
San Antonio 5,

cil at The Homestead.

Pittsburgh

Analysis—William

A.

Fuller




&

Securities

Traders

Association annual outing at
Hills Country Club.

South

the

to

Beeken

staff

has

of

been

William

S.

Co., Harvey Building.

DIVIDEND NOTICES
AMERICAN

METER

COMPANY

Incorporated
60

EAST

New
A

42ND

York,

dividend

($1.00)

per

declared

of

June

15,

1949,

the

on

JOHN

been

Capital

Company, pay¬
of

record

1949.

1

NORDEN, Secretary

•

May 19,

VAN

1949.
Dollar

has

stockholders

to

at the close of business

20,

One

share

Stock of the

able

STREET

April

THE

GAMEWELL CO.

4

At

a

meeting

of

the

Board

of

15,

$.25
per
share
payable
May
16,
stockholders of record at the close of
May 6,
A

the

1949
.

,

end

May

16,

close

to

business

1949.

year

able

of
1949,

Directors

The Gamewell Company held on April
the following
dividends were voted:

dividend

of

$.75 per share pay¬
to stockholders of record at
business May 6, 1949.
1949

of

W.

C.

BECK.

Treasurer.

scaled

at the Holly-

Wood Beach Hotel.
*

Pittsburgh

•

Pennsylvania

,

April

-

18,

1949

Board of Directors have declared for quarter
ending June 30, 1949, DIVIDEND of ONE and.
ONE-HALF
(iy2%) PER CENT
share on PREFERRED STOCK,

or
$1.50 per
payable July
1949 to stockholders of record July 6, 1949.
Also declared a DIVIDEND of FIFTY CENTS

20,

share

per

the

on

NO

PAR

COMMON

STOCK,

Siyable
ay- 11, June
1949. 1, 1949. to stockholders of record
G,

F.

Cronmlller,

Jr.

Secretary

r

the

Of

purposes.

HARBISON-WALKER
REFRACTORIES COMPANY

total

operating revenues for 1948,
approximately 64.5% was derived

IOWA SOUTHERN

the electric department, ap¬

proximately 28.2%

the

from

UTILITIES COMPANY

gas

produces and

also

and

other

by-products

connection with its gas opera¬

tions,

credit

the

resulting

from
such
residuals
produced
being
credited
to
gas
production ex¬
penses. The major part of its bus¬

of

•

approximately

and

7.3% from the steam department.

Delaware

Dividend Notice

'

.

The Board of Directors has de¬

clared
on

dividend of 250 a share

a

the

Common

Stock

the

of

Company payable June 1, 1949
to

stockholders of

record

May

16, 1949.
EDWARD L.

SHUTTS,
President.

Morgan & Go.
Appoints V,-Presidents
Whitney, President of
J. P. Morgan & Co. Incorporated,
George

that

announced

has

the board

officers

Alfred

Vice-Presi¬

Assistant

have

been

dents.

;
Haskins, who has been with
,

the bank and its predecessor firm,
P.

Morgan

in

1930

TIDE WATER POWER
NOTICE OF DIVIDEND TO HOLDERS OF

Co.,

&

and

after

five

ORDINARY STOCK.

years

NOTICE
Directors

their

recommended

Roanoke, Virginia,
NOTICE OF

ORDER

Rusham

Stockholders of

three years.

reoord at the close of business

April 22, 1949, will be entitled to vote at 6uch
meeting.
By order of the Board of Directors.
L. W. COX. Secretary.

7"

the

September
Ordinary

of

G.

tax

who

Treaty

and

credit

the

the Common

de¬

Stock

of

the Company, payable May 15, 1949
to holders of record
April 29, 1949.

WARREN W. BELL,

April 18, 1949

President.

Wo odall Industries; Inc.

A regular
quarterly dividend of
3iy40 per share on the 5% Con¬

may

be

entitled

of

the

Section

Internal

131

by

Double

of

Revenue Code

the
can

.

dividends.

payable

June

to stockholders of record

1,

1949,
May 14,

1949.

XIII(I>

mentioned

of Directors has

quarterly dividend of 15c
on

vertible Preferred Stock has been

application to Guaranty Trust Com¬
pany
of New York obtain certificates
giving
particulars
of
rates
of
United
Kingdom Income Tax appropriate to all
above

share

a

declared

BOARD

by

the

Board
a

day of March, 1949.

between
the
United
United Kingdom, to a

under

United States

clared

THE

LANGFORD, Secretary.

Article

Taxation
States

OF

House, Egham, Surrey.

Stockholders
virtue

of Nor¬
will be
held, pursuant to the By-laws, at the principal
office of the Company In Roanoke, Virginia, on
Thursday, May 12, 1949, at 10 o'clock A. M.,

Stockholders

dividend

the 29th

The

the

have

(subject to the
same
being sanctioned at the Annual
General Meeting to be held on the 6th
May next) on and after the 30th June
holders of Ordinary Stock Warrants must
deposit Coupon No. 204 with the Guar¬
anty Trust Company of New York, 32,
Lombard Street, London, E. C. 2, seven
clear business days (excluding Saturday)
before payment can be made.

MEETING

The Annual Meeting of Stockholders
folk and
Western
Railway
Company

that

Report

tenpence
per
£1
of
(free of Income Tax).

To obtain this

April 1, 1949.

ANNUAL

OF STOCKHOLDERS

the

to

ol

1948

Stock

BY

RAILWAY

Annual

Stock for the year ended 30th

E.
WESTERN

Dividend Notice

payment on
the 30th June 1949 of a
Final
Dividend on
the issued Ordinary

Meeting Notice
AND

HEREBY GIVEN

IS
in

DATED:

NORFOLK

COMPANY

STOCK WARRANTS TO BEARER FOR

S.

Lathrop S. Haskins and
McElroy, all of whom

B.

■

BRITISH-AMERICAN

The newly

are

April 20, 1949.

TOBACCO COMPANY LIMITED

electecf three addi¬

tional Vice-Presidents.

David

of

FINANCIAL NOTICE

COMPANY

May 17,. 1949 (Pittsburgh, Pa.)

Public Service Co. of Indiana—

industrial

in

al

Investment Bankers Association

Convention

prices

at

State, in the business
of generating, manufacturing, pur¬
chasing, transmitting, distributing,
selling and supplying electricity
and gas for lighting, heating, com¬
mercial, industrial and other pur¬
poses, and steam for steam heating

Dec. 4-9, 1949 (Hollywood, Fla.)

ton

•iSpring meeting of NASD Board
Advisory Coun¬

the

as

BEACH, FLA.—

Tucker

•

York

coke

to elect four Directors for a term of

Tex.

New

May 14-15

of Governors and

the

Co.,

Trust

4

redemption

company

Convention

•

Pi -kering

struction costs.

The

Annual

•

Association Annual Outing at Mt.
Diablo Country Club.

Bankers

department
Traders

Security

since his
Southeastern Group of Invest¬ graduation from Harvard in 1926,
ment Bankers Association Spring has been active in its bond and
investment departments.
Meeting at the Cavalier Hotel. ^
Mr.
McElroy is head of the
May 9, 1949 (New York City)
bank's
municipal
bond depart¬
New York Stock Exchange an¬
ment. He graduated from Prince¬
(San Francisco, Calif.)
iSan Francisco Security Traders

with

sells

J.

nual election.

R.

preferred

new

sum of $16,677,000
bond sale will be de¬

The Broadmoor Hotel.

Mr.

(Virginia Beach,

known

PALM

the

ture

and

Colo.)

Foote,

'

of

trustee, under the mortgage
securing the bonds, and

as

from

elected

party.

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

,

meeting at

outing at Inverness Country

directors

St. Louis Municipal Dealers an¬
nual cocktail

added

from 103.59% to 100% and at spe¬

County Club; Rye, N. Y.

Oct. 5-9,

has

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

WEST

Benjamin

a

the

the

J. P.

(Chicago, III.)

Allegany,

applied,

be

An¬
cial redemption prices under con¬
Spring
ditions described in the mortgage
ranging from 100.59% to 100%.
The company is engaged, within

Lodge, Ontario.

of
Investment
Association 14th Annual

29,

sale

toward

posited

for

Association

Dealers

Group

Meeting at Shamrock Hotel.

in

done

The new bonds will be callable

Club.

Public

CtilHies, Pepsi-Cola, Sinclair Oil,
Sk elly Oil, Tide Water Associated

;

at

111.)

will

proceeds

cost, incurred
since Jan. 1, 1947, of the com¬
pany's construction program. Spe¬

*

of New Jersey

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

Annual

of

Dixie

'

nual

Club.

Bankers

Circular—Aetna

Club

Bond

sociation

(Chicago

meeting

Municipal
Noranda

annual

June 17, 1949 (New Jersey)

National

—

Sutro Bros. & Co., 120 Broadway,
Ne w York 5, N. Y.

Detroit

of

Club.

Country

New York dinner at the Waldorf-

La Salle Street Women

Laclede Gas Light Co.—Memo¬
randum—Edward D. Jones & Co.,
309
North
Fourth
Street,
St.

(Detroit, Mich.)

Club

Bond

Bond

McCulloch, Fort
Worth
Astoria.
National, Bank
Building,
Fort
Worth 2, Tex.
April
25, 1949
' "->■
' ■ •
by \
■

1949

17,

outing at the Grosse lie Golf and

nual

April 22, 1949 (New York City)

Net

with funds to be received from

June

chester

&

Rochester Gas and Electric Corp.

short-term notes, which represent
indebtedness
incurred
for
con¬

Outing at the Concord
Country Club, Concord, Mass.

—

Nicole us

is offering pub¬
licly today (Thursday) $16,677,000

Annual

June 24, 1949

Field

is

Livingston, Wyoming

With William S. Beeken Co.

pur¬

provisions, and thereupon
applied to the payment of an
equal face
amount outstanding

York

international Cellucotton Prod¬

a

withdrawn pursuant to the inden¬

(Boston, Mass.)

1949 (New York City)
1 Investment Association of New

COMING

business

Genesee District.

indenture

Club.;

June 24,

Co., 453 South Spring

and

chase group that

from

(New York City)

of Canada :33rd annual

Street; Los Angeles 13, Calif.

neighboring

Group Offers

Lehman Brothers heads

cifically,

June 10, 1949

Minaki

Hoffman Radio Corp.—Circular!

electric

Counties of

Rochester Gas Bonds

stock,

City Security Traders As¬
sociation Summer Party at Gull

»

Guyana Mines

and

and

villages, and in the
adjacent area, and certain of its

career

planned

Minn.)

Southern Advance Bag & Paper

Co.—Circular—E.

of

Rochester

towns

with the Farmers
Loan and Trust Company and its
successor,
City
Bank
Farmers
Trust Company. In 1941 he joined
J. P^ Morgan & Co. Incorporated

June 10,1949 (Los Angeles, Calif.)

June 17, 1949

Chicago 4, 111.

of

P.

Municipal Bond Dealers Group first mortgage 3% bonds, due 1979,
Spring Party.
Cocktail series L, at 100.59% and accrued
party for out of town guests June interest. The group was awarded
6th; outing June 7 at the Kenwood the bonds at competitive sale on
Country Club.
its bid of 100.07377.

Municipal Bond Club of Boston

safer-Broker invest,

banking

J.

graduate of Yale
1928, began his

a

class

to

came
1935.

in the Roches¬

on

District, consisting of the City

Annual

Municipal

constructively

can

Foote,

the

in

Co.

iness is carried
ter

--

..

corporate

25th

York

Twin

discouragement of course is also increased by instances
cf unfair dividend policies—the actual cases of real abuse here again
being exaggerated by the propaganda of government and labor in¬
terests,
r
!.
'
v,

New

of

,

Investor

.

Club

Bond

N. Y.

of confidence

Mr.

&

Lehman

June 3, 1949 (New York City)

sense

City Bank of
City Bank Farmers

47

Exchange
Central Republic Co. Adds
Firms spring meeting in Denver! where he has been active in in¬
(Special to The Financial Chronicle)
vestment advisory work and more:
and Salt Lake City.
OMAHA, NEB. — Emerson A.
recently in the bond departments
May 27, 1949 (New York City)
;
Link has become associated with
Toppers Annual Outing at Rock
Central
Republic
Co.,
Farnam
Country
Springs
Club,
West
Building.
Orange, N. J.

porate

ihvgent to his rescue.
Such undermining of the individual investor's

National

Company,

Morgan
in

,

Exchange

Firms' members assemble

Trust

'

(Chicago, 111.)

(1767)

New York and

Governors at the Greenbrier.

May 23, 1949
Association

The

with

Investment Bankers Association

•(Continued from page 5)
stocks, • More money is put into horse-race betting every day than
into the stock market,, despite the stacking of the odds by the pari¬
ng utuel machine or bookmaker to a greater extent than by the brok¬
erage commission and tax impost. This choice of the track is ascribed
by Mr. Gutman to the clearer definition of risk, tied to the chancejbkers liking for defimteness and simplicity.
Further indicating that fear of loss is not the crux, is the present
money

FINANCIAL

May 18-21, 1949 (White Sulphur
j+
Springs, W. Va.)

Observations

'wibingness of people to put

&

A regular

250

quarterly dividend of

on
the Common
Stock has been declared payable

per

share

May 31, 1949, to stockholders of
May 14, 1949.
*

record

M.E.

GRIFFIN,

Secretary-'Treasurer.

48

FINANCIAL

&

COMMERCIAL

THE

(1768)

Thursday, April 21, 1949

CHRONICLE

the dollar area and opportunities

BUSINESS BUZZ

for

exportation of surpluses of

its merchandise and capital. The

backward

on...

developed

areas,

Western

Europe,

will

by

provide

that outlet which will make pos¬

from the Nation's

-

JL If 11/

l/li/

XJL&

of

One

facing

C.~Administration spokesmen have indi¬
cated that shortly there will be a great deal of chatter about tighten¬
ing up on the antitrust laws. This all came out during the course of
a secret meeting, almost a month ago, of Democratic members of the
House
Judiciary Committee on^
*
This
plan, it
is now fre¬
the Walter proposal.
This is the
quently
asserted,
was
simply
plan sponsored by the conserva¬
concocted to answer a political
tive Rep. Francis E.
Walter of
need,. of how to make
good
Pennsylvania for a quiet, careful,
D.

WASHINGTON,

;

study "by

President

Truman's

Congressional
.lawyers of ways to bring order

campaign

promises

non-headline

hunting
and

government

and cordination of

.antitrust laws.

that

se¬

meeting has just belatedly
to hand. One of the first

cret
•

which off and

titrust

Congress

two

over

about

is

laws,
with

forth

for

on

the

ommendations/' This
*-'3t

was prom¬

-

Another feature of the meeting

it

that

/the

reported to be
opinion of the

was

unanimous

government lawyers, that what
.the Administration wants first is
cither the Kefauver bill or some¬

thing like it, bringing under the
Clayton Act verboten the acquisi¬
tion of assets
trol

well

as

stock

as

con¬

of

competing
companies,
acquisition of assets
would tend to lessen competition.
such

where

session
It is

the

expressed

might
on

opinion that the

fear

the

the

Kefauver

general,

the

year

lawyers

associate

the

ward

keeping

Taft-

of

most

the statute books,

on

1950.

that

Under

will

vary

the vot¬

and help out a

between

90%

ing, Rayburn would assure them
that NO civil rights legislation

tion

to the surplus of the com¬

this

ministration

the

by

backed

be

would

modity.

bright

Ad¬

to

no

Justice,

Depart¬

Herbert

It
D

was

also

indicated

that

the

of J may come up

in the near
future with proposals regarding
"patent and cartel aspects of the
antitrust
were

Specific

laws."

.

details

not made available.

the

recalled

last

flexible

sions

that

Presi¬

for

asked

price support provi¬

analogous
those

to

the

twice

year

if

the

of

actually

not

law.

Aiken

virtually all of Commodity
Corporation's funds likely
to
be
committed in supporting
1949 crop prices, the Administra¬
tion hardly could be expected to
want even, the 90%
supports to
stick in 1950.

'•

•

~~

.

*

Hence, by taking the apparent
of proposing the direct in¬
come
subsidy,
the
Administra¬

Rayburn

one

backing.

Southerners,
like

to

rather

indication arising out
meeting was that the CEA tion has in practical* fact not
will have specific ideas on how. risked greatly having its- entire
to control the expansion of "big fiscal
outlook
thrown
haywire.
Another

business" and that these ideas may

prohibition of mergers

en¬

tirely.

Nevertheless, the Administration
may have harvested a net crop of
some size in political support from

though they tend
Rayburn, were

Speaker
inclined

they would

the

to

view

that

like this intelligence
and in writ¬

from Harry Truman

ing.

'

'
*

risk

of the

include

Mr.

course,

Point

'

*

IV

January

inaugural

slated

have

to

a

*

.

...

President's

the

of

message

slow

and

is

rela¬

tively unspectacular growth.
Its
development will be piecemeal
and
evolutionary.
Hence,
one

Administra¬

this prospect for operation of the

rule out the possibility that
on
some
given day some indefi¬
nite time in the future, the Ad¬
ministration - will send a pretty

to

Aiken flexible supports next year

package to Congress and call this

the studious, careful approach of

is

the

Mr. Walter. So long as the Ad¬

hind

In

the

door

course

that

the

it

squarely

was

ministration

can

closed-

the

deliberations

apparent
tion

of

farmers.

became

opposed

make political

/

The only

that

thing that might

the

House

resolution to continue

a

existing

90%

hay with the Kefauver Bill and
the CEA report, it has no objec¬

would be hard to stop
ate and embarrassing

thereafter

expresses

any

opin¬

ions the legislators might have.
'

Crack

'monopolies

first;

study

afterward, that is the Administration idea.
*

,*

*

*

After several days of hearings
proposal

to

*

a

*

proposition
in the Sen¬
to veto.

$

the

of

U.

to

of any

kill

off

as

Hartley Act
Just

much

as

before

of

the

S.

Democratic

existing agencies, such as the Pan
American Union or the agencies
of the

of

the

talks,

Depart¬

ment in backward countries

prob¬

ably will be worked out unspectacularly through bilateral nego¬
tiations between the ,U.
S. and
those
countries having political
suzerainty over the heathen

lands.

Presumably some kind of govern¬
ment

ments
are

guarantees for those invest¬
will be worked out, but

reported thus far to be a long
from concrete terms.

way

Here is

going to be the sales

line for Point IV when, as, and

has passed in

if

going: After
deadline for the termination

it

the

of U.

sides, the ITO might not get ap¬
proved. It is poorly regarded in
Congress.

The

outcome

finally

lay action on the other ingredi-**
ents of the foreign program and
to diminish their popularity.
Yet
were

year

State

the

if

hold

to

back

Department
until next

make only a per¬
appeal this year for

to

or

functory

approval of ITO, all the foreign
nations which it has been ca¬
joling these last few years into
going into the ITO thing, would

probably
lot

say

"humph"—and

S. economic aid to Europe

1952, "and it will
stop then," say officials, West¬
ern
Europe
still will require
sources of raw materials outside

flect the "behind the scene" inter¬
pretation from the nation's Capital
and may or may not coincide with
the "Chronicle's" own views.)

Trading Markets:
Ralston Steel Car

Oregon Portland Cement
Riverside Cement A & B

Spokane Portland Cement
LERNER & CO.
Invesment Securities

10 Post Office

Square, Boston 9, Mass.

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Office*

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Easter

a

sub-

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NEW YORK 5

All Issues

r

a

more.

gets

FOREIGN SECURITIES

was

in¬

of

the ITO ingredient at
this time might well be to de¬
jecting

Tel. WHitehall 4-4540

House

slation,. Rayburn quietly . called
for/individual

State

votes in the Congress. Be¬

(This column is intended to re¬

UN.

Arrangements for luring pri¬
vate American capital into invest¬

Teletype—NY 1-971

Taft-

local CIO and AFL boys on
what is what with labor legi¬
in

places will be mobilized
through numerous

and distributed

ence

Firm Trading Markets

vacation and reckoning with the

,

to the far

possible.
the

the

at

ferment

character whatever

sent away for its 10-day

•.

reports.

Instead the technical help to go

HAnover 2-0050

matter, then the President is will¬
ing to junk all "civil rights" legis¬

farm income directly rather than




an¬

ment

is the
agent of President Truman in this

subsidize

indirectly through subdizing farm
prices, it, is being said at the Capi¬
tol that this plan is not and was
not intended to be taken seriously
for legislative action.

the

If Speaker Sam Rayburn

lation

and discussions of the spectacular

Brannan

Such

year.

for

supports

may

blueprint for American initia¬
tive in bringing the enlighten¬

might get be¬

other

tion if the Judiciary Committee

mar

the

alphabetical gov¬
according

machinery,

year.

Credit

of

the

of

is

dent

of

new

ernment

With

B.

organization for supplying
assistance in the de¬

backward coun¬
tries. It is planned to avoid cre¬
ating any
"Office for World
Backward
Areas"
.or
other

sup¬

on

is the method

technical

velopment

law

60%, roughly in inverse ra¬

It

little

developed

be

and

Southerners would come around

into force

go

Chronologically the first thing
to

close

FTC, Walter

vision.

.

the

Bergson, and John Stedman, an
attorney for the antitrust di¬

the

the chief of the anti¬

division

ment

-

so far as they
Republicans to¬

going

with

A.

trust

.

their

to be virtually

and

general

Oceania.

reported, made a positive com¬
mitment
that if some
of the

ports

Be¬

Rayburn

Democrats,,

the Aiken-

now

this

time would strain all the

capacity

party to the heathen savages of
Africa,
South America
and

conservative

stantial number of

were

case

plunge the ITO addition¬
into

same

ment to win friends and influ¬

explained,
of
couldn't stop some of
the boys hot for civil rights from
talking and trying to get some¬
thing done, but the Administra¬
tion would give such enthusiasts

of

counsel

Wooden;

;

prove

home—he travels

B. M. T.!"

the

on

Hartley. The Speaker, members

in

sides Mr. Kelley, others present

included

To

ally

puts it on when he Roes

*'He always

legislation at this session of

law,

ex¬

investigations.

gressional

position of Congress to row over
foreign: affairs.

plan

automatically will

lack of faith in Con¬

a

farm

pre¬

than their share of the dis¬

more

in

result of

end

the

on

Congress. In that

reported,

was

government

pressed

no

proposal.

it

well

may

study

this

action

debate

questions will

controversies will burn up

These

told the boys there was no sense

the

express

four

great deal of the time re¬

ing of the present session July 31..

Southern

Congressmen concerned with

a

maining before the tentative end¬

with its large po¬
tentialities for throwing the budg¬
etary and tax outlook for a loop.

aid program.

arms

empt

assume, mem¬

legislation

has
At¬
of the

question

the

pact,

These

least this year,

investigate
that

laws,

preclude

In

t

to

undertook

antitrust

the

an

that the Administration
could figure pretty well that the
plan WQuld not be enacted and it
was "politically safe" to advance
this
proposal publicly
without
fear that it would be enacted, at

farm

The

pressing also for the approval of

bers say,

that if the House Judiciary Com.mittee

had it con¬

in only
if the
Congress is prolonged.

of

pur¬

mansion.

new

out

go

into debt for the

a

he

so

or

to

proposal to extend the life of re¬
ciprocal trade. In the near future
State
Department will be

It is simply too con¬

fairly safe to

month

the

troversial to be disposed of
a
few months, and even

/ In fact William T. Kelley, gen¬
eral counsel of the Federal Trade

Commission,

session.

a

bankruptcy,

of

lantic

into legislative form, is a
practical impossibility so late in

the

about

man

actual appropriation tacarry„fqr^
ward the EC A program, and the

Capitol that
plan,

Brannan

„

who knows

a

Department currently
before
Congress the North

Brannan

the

for

as

State

the

/

if Mr.

jured

was

chase

however,

farmers,

of

enactment
even

,./

by

send

agreement at this par-

and plunge

program

if he meant that

even

It is asserted at the

Fair Deal economist of
the CEA, who represented - the
President's Economic Council in
the meeting.

Bran¬

this

seriously

voting

ised "within weeks" by John D;

Clark,

that Mr.

meant

impressed.

subject, including "specific rec¬

the

sensible

should take it seriously and be

to come
on
that

report

its

sure

taken

be

to

been studying the an¬

years has

feel

for ap¬

ticular time, it would be about as

fact

never

ITO

the

Congress

If the department were to
down

in

more

to

proval.

lower

the

have

weeks

submit

to

agreement

will

nan

things it revealed was that the
Council of Economic Advisers,

;

planned

that

they

come

three

Some

passed since the department had

study the Brannan

testimony,

problems
Department is

toughest

State

creating the proposed Inter¬

plan and the Secretary of Agri¬
culture's

the

the

national Trade Organization.

prices and higher incomes

of Congress

,

on

ment

for farmers. The more members

policy into the

reliable report

A

food

a

what it should do about the agree¬

conflicting

of

over

period of the economic
progress of Western Europe.
long

y/^ff

Capital

maintenance

the

sible

Behind-the-Scene Interpretations

CHICAGO

BROADWAY

Tel. Mctor 2-2020