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APR 2
ESTABLISHED 1S39
Volume
167
New
Number 4692
Inflation Endangers
Why I
Economy : Tinman
President
,
grave
economy,
,
Chairman of Education Department, New York University
and pleads for enact¬
to
menace
our
President, Board of Higher Education, NEA
.
of his 10-point program
presented to Congress. Cites tax
reductions and, proposed ERP
along with greater defense costs,
like spirit.
Contends UMT would impose heavy tax burden on
people and remove a million young men annually froin ^
productive effort, thereby impeding production essential to provide
aid to Europe and combat inflation in United States.
at
the
So¬
of the
Annual Dinner
Newspaper Editors
Washington, President Harry
ciety
in
S.
of
V
reit¬
Truman
1
'
erated his de-
mand, already
;■
i made to Congress, for
|;; stand-by
au-
thority
*
wages,
out
pointing
•'
military
we
that
ence
short
possible contribution toward solution of present
l^
trained
on
not
military
enlisted
and
details.
the
Estate Planner was compared with
draft a general plan and work out
Nevertheless, I realize that there probably are some
^questions still
viduals
180,000
the
for
adoption of
effort
UMT
represents
the part of the Presi¬
on
re-
J cent develop-
dent and the War
Department to
as
exact
the
of
nature
from
men
plans required
Wisdom
The campaign
train Umties.
indi¬
to,,*
of many
military duty in order that they
may
minds
the
in
EDITORIAL
should
we
divert approximately
officers
general discussion of Estate Planning in .an article in the
;a
"Chronicle" of June 5, 1947, the
an architect who is required to
prooiems.
manpower
are
an
;
no
In
n-r;.
Military Training because its adoption at this
personnel at this time,
audi-
his
to
time could make
/•
to
prices
control
:
fand
I oppose Universal
Panic in Defense?
vs.
|
/
For a good while past the thoughtful citizen has had
good cause to wonder whether the authorities were pro¬
ceeding in wisdom or in panic in matters that have to do
At times
and to
handling insurance proceeds. Notes progress in educat¬
ing public and better co-operation with legal profession, regarding
;~-v "•/
estate planning,
'.y-1; y
t '
American
April 17
on
and other tax liabilities
Gives consideration to. Federal
method of
*
intensifying inflation.
formal address
a
as pub¬
Chronicle," outlines procedure and
equipment required in planning estates under various situations.
his discussion of estate planning,
lished in previous issue of "The
military training proposal because it would not
army's manpower problems, would not provide adequate defense, might give nation false sense of security, and develop war¬
,
I
Trust Officer, Ann Arbor Trust Company
Mr. Heffernan, continuing
*
,
,
solve
'
In
-
Educator opposes
ment
as
By EDWARD M. HEFFERNAN
By PROFESSOR ALONZO F. MYERS*
contend| threatened in-,
flation is
Copy
a
Estate Planning in Practice
Opposed to VMT!
am
Price 30 Cents
York, N. Y., Thursday, April 22, 1948
4 1948
it has
been
difficult to suppress
.
for the proper
d
expedi¬
tious handling
a n
of
their
It"
estates.
ir ;
the purpose of
show
stampede the Congress into adopt¬
with
that voluntary
ing UMT now,, not because it is
suspicion that theyfwere really not proceeding at all, but show ^exactly y
what; can be
taking it all out in oohtroversy and words. It must be said done
for
a
that the developments of the past few weeks have done
customer
b y
Ed. M. Reffernan
nothing to allay these fears and doubts. Certain events of the writer. I
the past week or two must be regarded as having rather shall ' explain step by step (see
previous article for the .11 sug¬
positively further stimulated them.;
$ :
gested consecutive steps) the var¬
The particular point which has given such a bad im¬
ious and complex phases of one
pression of what is going on in Washington is, of course, particular case. ^
;
the controversy about the air arm.
Some little time ago
Perhaps it should be pointed
someone dreamed up a sort of slogan known as a "seventy- out at the start just what "tools"
ments
restraints
are
t i
ineffe
c
and,
Truman
President
because
ERP*
of
the
defense
-
v e
and
well as
tax reductions, inflationary ten¬
dencies have become stronger.
program,
as
text of the President's ad¬
The
glad to be here tonight to
speak to the American Society of
Newspaper Editors.
You editors
am
make
distinct
a
contribution
to
and
important
operation of
the
government in the United States.
Your frank expression of views on
current affairs has great value
people, in
helping
form their judgments.
our
It
because
is
but because it has been
by
that
the
hysteria
which
be
is
to
of
the
them
to
to
on
get
are
in
;
as
lead
to
I
name
of
of
sense
or
yjyy
not.
If
with
the propaganda would
UMT
because
adequate basis
no
(Continued
31)
.
^
Abstracted from
Professor Myers
address
an
may
have
definite meaning to at
a
some
in which
influence
page
least
cates of this program
36)
on page
It
group" Air Force.
military men, but few outside of a strictly limited
y-,7'?;: circle could say precisely what such a program means in
it can terms of an over-all total of planes, types of planes, and all
for the the rest. Neither is it at all clear what many of the, advo¬
believe, this certainly is
oppose
provide
at
regardless
time to adopt UMT.
no
war
may
the verge of war
on
us
the
defense,
Russia,
of
time
anything that
whether it makes
*
.(Continued
period
favorable
a
demanded
we
of: UMT
proponents
present
national
dress follows:
I
needed,
judged
defense.
by
before the Asso¬
ciate Members'of the New School
as
to the period of time
should reach this level of armament.,
we
But
the
have in mind
this
.
.
•
/
this article
are
to
needed and used by the Estate
He
Planner.
should have
a
basic
knowledge of taxes, together with
a
set of the latest tax tables,\ as
well
wide
a
as
background cof
trust arrangements
ministration.
and estate ad¬
He should also have
(Continued
on
page
28)
"seventy-group" label has taken hold of
popular mind, or so it would appear from the be"■.
y (Continued on page 30)
.''y',
:>
'
Social Research,
April 19, 1948,
for
New
York,
•
■
....
State and
.
Havana
ing Go.
R. H. Johnson & Co.
Established
/'!
1927
64 Watt
Hirsch & Co.
York Stock Exchange :
>
Municipal
MUNICIPAL
y:'/;y
Bond Department
Street, New York 5
BOSTON
and
BONDS
4'
INVESTMENT SECURITIES
Members New
STATE
PHILADELPHIA
THE NATIONAL CITY BANK HART SMITH & CO.
'
1
Members
and other Exchanges
Troy
25 Broad St., New York 4, N. Y.
Harrisburg
v Teletype NY 1-210
HAnorer 2-0600
Cleveland
Geneva
NEW
ISSUE
London
•
Woonsocket
Syracuse
Buffalo
j.
Scranton
y,
Wilkes-Barre
-
.
Chicago
Albany
-.''"-v.
(Orlando,
Price 100
NY 1-708
New York
THE CHASE
Dealers Assn.
HAnover 2-0980
NY 1-395
Montreal
Toronto
NATIONAL BANK
OF
THE
CITY OF
NEW YORK
;yy. y. ryfy ■
.
UNION OF
CANADIAN
3% Bonds
Underwriters and V ■
Due Mar. 1,1958
41 Bid—421/2
Distributors of Municipal
plus Accrued Interest
i
<
for
and
■
Portland General
BONDS & STOCKS
SOUTH AFRICA
Fla.)
$295,000 10-Year 1st Mort. Conv.
6% Bonds:
Dated Mar. I, 1948
York Security
WILLIAM ST., N. Y.
Bell Teletype
Bond Dept. Teletype:
Washington, D. C.
AMERICAN MACHINERY CORP.
■
52
Springfield
(Representative)
-;iy. ,y
OF NEW YORK
New
Electric Co.
Offered
COMMON
£20.
,
Convertible into 333 shares
of
Copies
common
of
stock per bond
Offering Circular
on
request
Corporate Securities
(Incorporated)
Gordon Graves & Co.
Established
INSTITUTIONAL INVESTMENTS
30 Broad
Street, New York 4, N. Y.
Tel. WHiteb.ll 3-2S40
Tele. NT 1-8M
Dominion Securities
SUTRO BROS. & CO.
OTIS & CO.
1899
*
CLEVELAND
New York
Cincinnati
Denver
Toledo Buffalo
* Chicago
Columbus
Est.
'
1896
Members New York
120
6RP0RATI07!
*
Stock Exchange
40
Exchange Place, New York 6, N. Y.
Broadway, New York
Telephone REctor 2-7340
ira haupt&co.
Members New York Stock Exchange
and other Principal Exchanges
111
Broadway,
WOrth 4-6000
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NY 1-702-3
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Teletype NY 1-2708
Telephone:
Enterprise 1820
THE
(1746)
2
COMMERCIAL
&
FINANCIAL
CHRONICLE
Thursday, April 22,
Soft Spots in the Price Structure
Pacific Gas &
By RAYMOND RODGERS*
Electric
Professor of Banking, New York
Alabama &
University
'
A
Stock
Common
Pointing1 out prices have dropped after all previous wars, Dr. Rodgers contends it is likely to happen
again.
Attacks theory price level will be maintained because of money, supply, and'bases future price
trend on end of spending psychology.
Denies in competitive economy, under modern marketing condi¬
tions, costs determine market prices, and decries reliance of business on* ERF as basis for forecasting
still higher prices. Contends wage increases in buyers' market are
deflationary rather than inflationary.
BOUGHT—SOLD—QUOTED
AT NET PRICES
New York Hanseatic
Corporation
120
7-56GO
NY
Teletype
5
1-583
on
the
that it is 15 months overdue!
Many students of business, how¬
ever, especially businessmen, feel
over,
1926 wholesale
price level
as
that
100.
Virginia Elec. & Power
Deb.
Conv.
3T&S, 1963
In
of
1812
Bought—-Sold—-Quoted
to
in
in¬
of 47%.
an
crease
Members
3
New
York Curb Exchange
5
;
til
V
*
'
"V
.■
.
'
r"
''
•
Radiator
;in the
same
World War I
way,
wholesale prices rose from 68.1 in
1914 to 167.2 in May, 1920, an in¬
crease of 145.5%. From the World
SIEGEL & CO.
DIgby 4-2370
39 Broadway, N. Y. 6
Prices
then
tended
On
on
to
77.1
in
1948,
Aetna Standard Engineering
American Time Corp.
Blue Moon Foods
Clyde Porcelain Steel
that
Is
Botany Mills, New & Old
International Detrola
Kirby Lumber
LaSalle Petroleum
Mackinnie Oil & Drilling Co.
Northern New England
Punta Alegre Sugar
Taylor Wharton Iron & Steel
Pacific Telecoin
:
Distilling
Telecoin Corp.
II
to
will
expect
be
an
■■
World
War
II
price
be¬
in
soon
after the end
of
1812
and,
Civil
War.
price
the
the
also,
As
soon
for
break
end
the War
after the
World
16
came
of
World
of
War I,
months
hostilities.
War
I
price
In
de¬
cline
was
practically finished iff
33 months whereas the World
War
II price decline has
Clearly,
if
the
history
of
.
St., N. Y. 5
Hanover 2-4850
Teletypes—NY 1-1120 & 1127
the prewar level.
creases are
our
es us
anything* it4 is that a sharp
break in the present
general level
of prices is
inevitable, and, more-
address
by
Professor
Rodgers
before
Supervising Ex¬
Conference,'Federal De¬
Insurance
Corp.,
Wash.,
aminers
posit
Established 1856
D.
-
C., April 14, 1948.
money
Members
York
Stock
New
York
Curb
—demand
A
is
lot
the
of
New
.York
Cotton
Commodity
Chicago
Exchange
Exchange,
Board
New Orleans Cotton
And other
of
"kidding"
themselves
score.
■
Exchange
Exchanges
this
on
To show you the importance of
inclination, please note
spite
our
that
volume
enormous
NEW
CHICAGO
Exchange Bldg.
YORK 4, N.
DETROIT
Y.
PITTSBURGH
GENEVA, SWITZERLAND
de-f
of
money and demand deposits, bank
loans in
1947 increased
000,000 to
a
total of
$43,100,000,000
at the end of the year.
most people would
say
caused by high prices,
Although
this was
actually;
inclination caused the creation of
new
purchasing
The- quantity
ment
relies
of-
J;\
power.
money
argu¬
too
heavily on bepsychology, I If the
American people were unthinking
automatons, if they were electric
havioristic
ahead
to
and
so
Brown
state
people
spend
body
Minn. & Ont. Paper
Noranda
whether
wait, and don't let
64
Established
WALL
New
ST.
York
1923
Curb Exchange
/
^
NEW
Teletype NY 1-1140 /
-
YORK
5
HAnover 2-947C
Curb and Unlisted
any¬
W:St
differently. As I
before,
the
quantity- of
"money" derives its chief impor¬
tance from its effects on the
"psy¬
chology" of the people.
you
-
Support of Agricultural
There
Securities
Joseph McManus & Co.
Prices
others who maintain
are
Members
that government
up.
They
support
reason
prices
New
York
Curb'~Exchange
>
Chicago Stock Exchange
support of farm
product prices will keep all prices
39 Broadway
that government
Digby 4-3122
New York 6
•
Teletype NY 1-1610
agricultural
on
commodities will prevent the price
of food from
dropping very far
that
and
since
food
is
basic
and
fundamental in the economy, other
prices will
necessarily remain al
high levels.
and :
This is indeed
transitory
support
a
weak
for
the
price structure because of the
un¬
precedented price distortions aris¬
ing from the extremely high level'
of agricultural prices.:
According'
to' the
on
Department of Agriculture,
Jari. 15,1948, the index of
prices
received
by
farmers
was
Troster,Currie&Summers
223%
above the 1939 level, whereas.the
prices of non-agricultural com¬
modities had risen only 80%. Even
the farmers don't
expect such a
'
•
;
New
,
J
Members
York
Security
,
.
•
Dealers
•
•
Ass'n
Teletype-—NY 1-376-377-378 J
J
maladjustment to continue
long!
JJJ:JJ J;/
-
cost
same
cloth
as
-
of
-
food price
-
Empire State Oil
cut out of
and
has the
the
high-cost-of-
same
Utah Southern Oil
argument
advanced, by
observers/ They insist that
high wages necessarily
prices.
Before
unionization
GOODBODY & CO.
■'
they
tell
many
South African Mining Shares
1
said
wages
Canadian Securities Department
■
Members
it
weaknesses
Mines
;
an
determines
or
Tudor City Units
Frank C. Masteison & Co.
is merely to once
obvious, inescapable
fact: The mood, or
"psychology,"
if / you please, of the American
the
Co.
§
things
purchasing
necessary
credit,
more
The high
;
Memphis Natural Gas
op¬
are
for the
pay
level-prop argument is
Powell River Co.* Ltd.
the
mean
high
;
;
Equity Oil
widespread
of
the thirties this
would have been too
silly to dis¬
cuss.
Even with the
wage
in¬
.
Members N. Y. Stock Exchange and Other
Principal Exchanges
115 BROADWAY
NEW YORK 6, N. Y.
Telephone BArclay 7-0100
get
This "is not to deny the impor¬
tance:; of the quantity of money
very
United Kingdom 4 % *90
and
resources
to
money
great
British Securities
Department
N. Y. Cotton
are
JW J--j.J':J
Inc
Trade
;
will
controlling fac¬
businessmen
Exchange
'«
our
.
used
tor.
Teletype NY 1-570
Texas Gas Transmission
our people have
spending or saving
not
We Maintain Active Markets in U.
S. FUNDS for«
Exchange
than
they
by the public. In human
affairs, inclination is the criterion
St., New York 6, N. Y.
Mackinnie Oil & Drilling
living
that
of
ciifiieg the;
While these in¬
pocket
'•*'
125 Cedar
power from consumer credit chan¬
nels.
'
£
i
-,
activity only to the. extent
that they are used. To the extent
they have been used, they have
been the primary means of infla¬
tion, but they were not the real
cause.
By the same token, huge
and
over
yet
WOrth 4-7786
they want to buy, have no diffi¬
culty in securing an enormous ad¬
ditional. volume of goods by se-
enormous,
H. Hentz & Co.
New
high
ness
deposits
land
available.
great that those who do not have
the
it should- be
clearly understood that they are
passive; that is, other than psycho¬
logical influence, they affect busi¬
this
*An
our standard of
portunities
-
more
so
Likewise,
to > $86,900,000,000
period.
;
- I' ^
$7,452,-
previous wartime inflations teach¬
Members N. Y. Security Dealers Assn.
is
the
Pocket money is thus
America,
the choice
be¬
same
indi¬
living is little above the sub¬
level, money placed in
in
$29,793,000,000
for the
gas.
above
prices
1948 earnings.
Has
half million acres
undeveloped. Dividend
payer
since
1940.
Capable ag¬
gressive
management.
Statement
of
attempt to
any
natural
222%
crude
higher
interests in
j
the hands of the
people is imme¬
diately spent for necessities; but,
from
are
declines, which started
hardly begun,
coxa
than
increase
an
trast to the
assuming that it has begun!-
Utah Southern Oil
better
even
find
we
prevent
deflation, or even
cushion the recession, unless
fact,
& pfd.
of
in¬
money"., mentioned
money
cate
and
earnings
sistence
a
nearly 33 months since V-J Day
and prices are still at
peaks in
many lines. This is in sharp con¬
after
Merchants
Bell
reasonable
War
previous
our
havior is already an exception so
far as the duration of the
peak
levels is
concerned..
It
is now
the
Time, Inc.
United Artists Theatre
37 Wall
it
1
;
Well,
General Aniline & Film "A"
com.
They have also dropped
World
tern?
-
adjusted)
American, and
Current
Standard of Living Factor
in
Prices have thus risen in all of
Empire State Oil
United Piece Dye Works
165.6
to
exception to this traditional pat¬
Electric Bd. & Share Stubs
time,
from
saves
spend! In short,
unto himself. He is
V In countries where the
standard
of wealth is low and the standard
January, four times its prewar volume and
increase of 115%.
/•.*.' J demand ; deposits are three times
an
wars.
;
and
creased
he
save;
net
S. R. MELVEN & CO.
Total
mand
should
law
a
oil
1947
1946.
reduce him to.a common denomi¬
nator is foredoomed to failure.
the end year of a roaring
bank (deposits (de¬
was
depressed
the economic scene,;
sharply after all of
Boston & Maine R.R.
Equity Oil
1939
our wars.
Baltimore Porcelain Steel
that
"folding
comparable
a
Selling Under *3
Producing
he should
is
an
December, 1939, to $26,600;in December, 1947.
By
way of comparison, $3",639,000,000
did the "money work" in 1929 and
boom.
he
when
he
000,000
fore,
basis, World
War II wholesale prices rose from
Olctual TtlarkeU Qu
when
argument; is
bank
above the
level until the
'30s arrived
U, S. Finishing
widely and most in¬
advanced
branch offices
our
OIL STOCK
the American is, all
often, irrational and at times,
even
irresponsible.
He
spends
'JJ
as
prewar
t
most
months.
peak in
stabilize at about 40%
Teletype NY 1-1942
.
The
May, 1920, prices
dropped very sharply to a level
about
one-half
as
high in
19
I
J
rational,
is
December, 1939,
figure of $57,698,000,000 to a De¬
cember, 1947, total of $144,600,000,000.
Or taking demand de¬
posits (Adjusted), which function
War
Direct wires to
quantity and there
breathing
000 in
they continued to decline un¬
they averaged from 82 to 84
in the early seventies, which was
33% higher than the level prevail¬
ing just before the war;
*
*
Indus.
of
NY 1-1557
La.-Birmingham, Ala.
no
too
and
-
be
compound
of
hopes and fears.
Contrary to economic law, which
presumes that
homo economicus
and considered, one
v J.\ •;,/
•;•' > JV J\J J
■
function
St., New York 4, N. Y.
New Orleans,
question about the
future of the price level. But the
American is a living,
j
in 1865, an increase of 116%. By
1868 prices had declined to 97.7
Soya Corp.
U. S.
could
quantity of pocket money and
deposits make a "high" price
level inevitable.
They point out
that during the war period "folding money" in the hands of our
people increased from $6,401,000,-
level!'
basis (1926=100), wholesale prices
zoomed from 60.9 in 1861 to 132
ACTIVE MARKETS
'
a
from
that the enormous increase in the
Rodgers
Raymond
;r; In the Civil War, using the same
Am.
price
different
so
/ Effect of Money Supply
sistently
the
than'
er
prewar'
Tel. REctor 2-7815
Great
one.
^
low¬
was even
factors
present
,
BROADWAY, NEW YORK
120
by
by
1816
prices had
dropped back
to 103.5, which
New York Stock Exchange
are
be examined
But
McpONNELL&rO.
economic
our
old—Q uoted
HAnovar 2-0700
is
absolutely predeter¬
mined by the material placed in
them, then price would be simply
those
in
our
previous
postwar
price structures that only a minor
price readjustment is to be ex¬
pected. Their arguments will now
1811
154.6
1814,
Request
on
basic
structure
from
in
the
underlying
prices
rose
104.9
Prospectus
War
the
'
Members New York Stock
Exchange
25 Broad
tabulating machines in which the
answer
'
Steiner, Rouse & Co
the
of
basis
'
B ought—S
History repeats itself, they say, but with a difference. Our problem on prices is how
history have to say about the effects of our wars on our price
structure? Subject to the limitations of all index.numbers, let us make some
quick compari¬
sons
'
.
.
Louisiana Securities
much difference: What does
New York
Broadway,
BArelay
1948
creases
and
additional
economic
strength,/won
J
Teletype NY 1-672
by , the unions in
recent yeaTs, thh'iact remains that
any
such
thinking puts the
(Continued
on
page
37)
cart
James M. Toolan & Co.
1
67 Wall Street, New York 5, N.
Tel. HAnover 2-9335
Y.
•
i
Bell Tele. NY 1-2630
,\\.s
i
167"
•Volume
V
i
INDEX
■
■
.
face
Heffernan,_,__^_Cov^r
Soft Spots in the Price Structure^—Raymond Hodgers-^----.- "/
"*Thfc Outlook for th& Stock Market—Heinz H. Biel; Sidney B;
i
.>
.
»
*
,
' •
*,■? i*ir-T T "*
^,'tp
B. S.
i
AND COMPANY
„
•/
Invest-
; ^
/'V
j
; \
VJ,
i.
J 1,
A--
^
*»
{.
.A,-'./*
1
*r
;
-i"'
••
J
THE
uuu.td
KINSEY REPORT
'
H
—but
Qf all the many activities, of the Securities and Exchange
Commission which have .plagued underwriters, deklers^ and
Cohu_llC-
i
.
continuously pfovoked. Budget allowance a waste.
Emergency over: Commission should be abolished.
!
;
8
r"'>
THeir price" control efforts contrary
field
1
Rafferty^>i-
f ■
inqu an dry,.Acting at, their jieril gives rise to fear.
ment
)
—GeorgeL.Harrison____._-J--^:L^:^^l^_-__---_-_-_iv6
The Latin American'Market-Today—W. A,
—A*'
Commission will not define doctrine of reasonable relktion to market price: which it created. Deal-
j ers
4;>,;
6 i
Proposals for* SoundBanking-^J6hii J. RpweLife Insurance Companies and Eqdity Financing
VllVWi) villi vAICKAll
»/n, i~ t;<
to^onoir sy$tein of' fre^. enterjprise.
I
?
Luriet Arthur J. Messing; and Nicholas Molodovsky1——-
.p..
SEC and .NA$D a* dhal OPA.
'■JS * i
Why I Am Opposed to UMT~Alonzo F. Myers. --Cover
The Paradox of'the Airlines—LaMotte T.
(1747).
PKef v(Kt That]-ollowsUncliilift
■
Estate Planning: in Practice—Edward M,
nRANClAL CMoNlCtE.
illVi
i," '
>?/, t
"• " ' '•
'
Articles and News
>
i
THE' CbMMEltCIAt. &
Nurnber 4692
/V
brokers,, the emergence of the Commission andi the National
the Mortgage Dollar—Charles Fleetwood— 10;
Association, of Securities- Dealers t as a dual OPA in the
Strong-Railroads—Pat tern for Prosperity—F. A; Dk wsoril. _ ~ 12
1 llie Railroads in 1947 and After—William T. Faricy-.v--i-%
:
securities field, is the most pressing and untierving.
NeW Concepts of Corporate Responsibi iify-—Claude Robinson 14 V5
..The attempt of these
organizations to control, prices, to
The future of Radio and T'etevisiOn^^arry ^--fianni^er^l^w'i
dictate reasonable
-*Ptri»He Responsibility in B»4dness^Eugen^Holman"i---j-i 'Jl&n* •
"mark-ups'' without an eye to profit, has
No Ground* for Wail Street-Depression—Whitman C. Haff- _n5'
disturbed the equilibrium of the entire
the
who else will quote
stuff
that
buy?
we
A Fair Wage for
*
Obsolete Securities Dept.
99
WALL STREET,
.
NEW YORK
Telephone: WHitehall
4-6551
*
"
United States Should Wit hdraw from" International *
-
-
industry.,
1:
'
•
j
-
19
The= Consumer Credit Structure—Thomas W. Rogers
19
Banks and Tomorrow-^I\ C.^Roott—22
W. Babson
.Stalin's Objectives—Roger
What Government Expects of Corporation Reports
v
.
'
—William W. Werntz
•
*
'
,
'
;
!"'f .^*
♦'*
V1
'• • 1
.
'
-
•
chosen1
William R; Boyd. Jr., Sees Oil Demand and Output in
:
Plan
—
W
-
—
—
' -
—
——
—
■
Out Deficit
Railroads Granted Rate Increase by ICC__
vu His'Own Handiwork (Boxed)
^L,_
^
—
;——-
_i
_
-
Export-Import Bank Grants Columbia- S10 Million* LOan_i-
_'
17
Which
20
21
21
PAC. Patch of Chicago Purchasing Agents Reports Some
Slipping of Business,
-
:
a
;•
as
'
NASP to Admit Firm to Membership,,
23
S. Holden Renbrts BbUding Contracts at High Mark 24
t
-
Attorney General Freezes Assets of
Edward R. Parker Co.
Birth of the. Republican Party
Restores Italy's Gold
-
24
Cover
10
Business :'Mah's'' Bookshelf,^—29;;?
A^ We See It (Editorial)—'
Stocks
Bank and In&uraiice
•
—
Canadian
20;-
.Securities:
Coming^ Events in tlie Investment* FieldUL.*—J
8
8
:
News—Carlisle BargerOnJ--^ 7
•
I-
Dealer-Broker Investment Recommendations
From Washington Ahead of the
•
;
,
*
NSTA Notes
-
24
——w———
Corner^i-25
Securities Salesman's
;
u
no
;
these
Twice
Dominion
Weekly
COMMERCIAL
The
of
!
and
FINANCIAL
CHRONICLE
1 Bank
$25.00
S. Patent Office
Reg. U.
..
WICUAM B. »AXA
COMPANY, Publishers
Pa£k Place, Mew York 8, N.
25
Y.
j-
•;[ REctor 2-9570 to 9576
;
$25.00
-
$38.00
per
'
Since the SEC
.
doctrinaire has established the prin¬
as
answer
f '
RIGGS,
'n
7777 Listen to the Chief Counsel of its Trading and Exchange
WHitehall
Quotation Record—Monthly,
(Foreign postage extra.)
Earnings' Record — Monthly,
year. .- (Foreign postage extra.)
year.
per
account of the fluctuations in
made
in
New
Corporation
BOUGHT
"v. :
-
York
Bond &
S.
La.
Salle
St.,
FIRtif
as
1942,
Y.»
:
second-class
at the
under
N
''
r
matter
52 Wall St.
Tel
on
Request
COLONY
New York 5, N.Y.
HA2-ROSfl
.
Tele. NY 1-2425
LAMBORN & CO.,Inc.
99
WALL.STREET
NEW YORK 5, N. Y.
is precisely -what spread is
SUGAR
;
Raw—Refined—Liquid
a
set of rules
Exports—Imports—F utures
by which reasonable relationship to the mar
ket price can be determined? What elements are to be con
sidered?
Is there to be any profit? Is the period during
We
DIgby 4-2727
are
interested in offerings of
Pan-American
in
435.00
per
year:
of
& Trust Company
of New York
First quarter
available
7
Spencer Trask & Co.
Prudence Co.
-
S.
The Public National Bank
PREFERRED STOCKS
Members' Hew
15 Broad
York
St, KY; 5
Bell
Teletype
Stock. Exchange
on
analysis
request
Members Hew York Stock Exchange
Newburger, Loeb&Co.
Subscription Rates
Subscriptions in; United States, U.
Possessions. Territories and Members
:..-V
'*/%
High Grade Public Utility and Industrial
Mtge. Guar. Co.
Y. Title & Mtge. Co.
Febru¬
.
Union.
QUOTED
(Continued on page 40)
post office at New
the Act of March
I. 1879.
'
—
CORPORATION
Lawyers Title & Guar. Co.
,
N.
answer—r
Will the Commission at least formulate
Lawjrers Mortgage Co.,
Copyright 1948 by William B. Dana
'Company
• • •Reentered
SOLD
and standards
funds.
CERTIFICATES £
3, TIL (Telephone: State 0613);
Drapers' Gardens, London, E. C., Eng¬
land^, «/o Edwards & Smith.
,
York,
—
7. 7*' £/
Current Bulletin
7
If the author of the product wojti!t tell, who wdll?
1
ary 25,
3-0272—Teletype NY 1-956
TITLE COMPANY
..
135
SecurityDealers Assn.
St., New York 4, N. Y.
Business Manager
'? Thursday, April 22, 1948
Offices:
.
Metal Forming
reasonable in relation to the current market in all cases."
7
'
rate of exchange, remittances for for¬
eign subscriptions and advertisements must
Etot£ Thursday (general news and ad¬
vertising issue) aJid every Monday (com¬
plete statistical issue — market quotation
records, corporation news, bank clearings,
•tate tmd city news, etc;).
'
.5
•
Other
Chicago
■;
from the Commission.
likely to attempt to
year.
the
be
D.
7
ciple of reasonable relationship to. the market price in the
first Hughes case, you would naturally expect to get the
WILLIAM DANA SEIBERT, President*
WILLIAM
■
and
per
Note—On
«
HERBERT D. SEIEERT, Editor & Publisher
*
Broad
of; things was left unanswered in the first Hughes
case—-and which the .Commission, I would guess, is not
$42.00 per year.
Other Publications
Monthly
:
Canada,
Countries,
^
-
>
nature
Other
,
25
a
Trade.^and^Industry;*5 /,
Tomorrow's Markets (Walter Whyte:^^Says)42
Washington and You——,
53
The State of
published
•
DUNNE & CO.
j Members H. Y.>
Division,: Mr. Louis Loss: "Another question which in the
"
>
-
r
Dan River Mills
doubt consult with each other
Securities Now in Registration^"—48/ -
:
U. S. Sugar
:
j
i^-What does the SEC say?
;Railroad:";Securities!---i;^-ii^-*^f,-,.^-^-^-ii^-:—1^;.,:
-
.
;
I;
.
«Our Reporter's Reportiu
VOtirReporter on',Governhientsi^ii-*J-ui^-r-t-i^-4---::^:47:;;' •
Prospective Security Offerings-^—
—i.—50
—
.
regulatory bodies in
brokers as if they were
j Naturally, dealers and brokers, who are subjected to
edicts, try: to determine what they mean, what is
expected of them. Can they do so? Let us see.
>t
?
Alegre Sugar
Susquehanna Mills
our
relatiofiship'to the market price"
mark-ups may h dealer accept without
being subject to criticism? What is the maximum mark-up
that he may take?
.„t
t
v
s
5
Public -Utility"Securities.,
completely achieve.
In creating so-called price standards and regulations,
mean? How much of
'
1
never
,
———29
Observations—A: Wilfred May
.
Punta
{
i--——10^
News About Banks and Bahkers^.,-
-
approach but
-
Lea Fabrics
^
course,
we
Broadway
Teletype N. Y. 1-714
.
What does "reasonable
Indications of Business Activity^i—-45'
"Mutual?Fitnds
—--j—,2^—
:
"
-
and when these standards are finally enunciated by the re¬
spective bodies each quotes the rules and regulations of the
other as authority as if the results of their respective efforts
were' independently : arrived at. That impresses us pretty
much as if the Devil were quoting Scripture.
j ijf: J
—*->,—.35,
Reserves-—
in security Dealers Assn.
2-4500—120
.
pack of thieves and cite, some of those isolated instances
justification for such treatrqefnt. ? 7S 7 :
7 - ;
j
24
——
—
1
'
the SEG and the NASD
\
^
REctor
Bell System
7/aThese bodies ignore the high plane and standards that
prevail generally itf the securities field today. ;7 ; V ; v
.
23
SEC Orders
New York
\
-
the securities .field treat dealers and
*
Thomas
Established 1908
Members N.
into the appraisal
considerably increased.
The sad commentary is that
I
22 'Y
-i——
go
J.K.Rice,Jr.&Cb.
ever was
there still, arise isolated instances of mal¬
practice and there always will be. Perfection us an ideal
Of
Jj;:
18.:;.V;
18
,,—-
than it
now
•
19 ; ~
Budget Deficit
conscious
knowledge of the factors which
counsel.
13
Inflation Trends—
Treasury1 to Raise Interest Rite' on Certificates
Curb Settles Strike; NYSE Dispute Continues.,,
Marcus Nadicr Foresees Revampiing of Fiscal Policy With
''
.
Haile Mines
I
The old cry of the deluded widows and orphans has
long been exploded: because,, quite generally, those who
invest and are unknowing seek the advicfe of investment
-
Investor Pays Dealer With Silver Dollars in Buying SecUrs.Allan SpiouT Discusses
whipping; boys ;is; hard to fathom; since the
.
_
World Bank WipeS
the
more investment
of securities has
5
5 %-/.
11
Progress ofv Peru's Second Bond Exchange Offer,
------11
Edward A. Hole Named Director of Anemostat Corp.
12
-
and it£
^
4
Balance
Rep. Joseph W. Martin, Jr., Attacks Trumkn Ariti-Inflation
*
as
public is
f
Issues
Why those dealing in and] selling securities should be
j
• *
:___Cover
tEditorial)^w,l_.i__--^ "3
Cyrus S. Eaton Defends Competitive Bidding on Utility
Dorset Fabrics
Southern Production Co.
,
23
Inflation Endangers Nation's EcOnomy^Triiman,
The Fear That Follows Uncertainty
.
Finishing CoRi. & Pfd.
■
,
' V " . 'j- '
ri';.
U. S.
were controlling,
dealer-brokers, through' the "devious activities of the SEC
and4 the NASD; find
superimposed upon- them • the "5 %
yardstick" and the principle of "reasonable relationship to
market price" of the. first
Hughes case.
7
■
?
—-
£ •'.,•>$••.-' «V
jj
Kingan Com^ & Pfd.
,
the ; fluctuations' of supply and demand
„
.
Tidelahds Oil
.
Accustomed to .operate a free arid open market in an
economy hased uporr the principle of free enterprise where
FrederickC. Smithu->i^^r---^-i~-16/
* Why I Favor TJMT—Robert
P. Patterson__—^- 4—-- — 16
•
V;., Advantages of Tax Exempt Bonds Overlooked by Smaller
:
Investors^—Bertram M. Goldsmith,..___—
—17 >
-Monetary Fund—-Rep
Members Hew York - Curb Exchange
C. E.
Street,* New York 4
135 S. La Salle St., Chicago 3
^
tel.: FINancial 2330
61 Broadway, New York 6, N. Y.
25 Broad
•
Tel.:
WHitehall 4-6330
NY: 1-2033
HAnover 2-4300
-
,
Albany
-
' Boston"
■-
*
r
'• ^
Teletype^NY 1-5
-
-
Glens Falls •«^
Schenectady
.
Worcester'
Unterberg & Co.
Members H. Y. Security Dealers Ass'n
...
Telephone BOwling Green 9-3565
teletype NY 1-1666 •
^
...
.
•
I
(1748)
THE
COMMERCIAL
&
FINANCIAL
CHRONICLE
Thursday, April 22, 1948
The Outlook for the Stock Market
By HEINZ H. BIEL*
By SIDNEY B. LURIE*
Statistical
Economist, Laird, Bissell & Meeds
1
Pointing out business conditions
Mr.
are
of
results
threatened
stocks
above prewar
ward
readjustment
re¬
break-even
190 industrial
because of high
points of business
concerns.
have
ihe
accepted" with" mixed
invitation to discuss
tlemen,
form
When
for the stock market.
who
the
tally
■
.
,
claim
"bears," and
bear
c
to
be¬
to
H.
which
Biel
mations;
gether
•
re-
Sidney B.
;;
Lurie
quires
posi¬
///, / •/'/ tive opinions
as welcome as a bull in the china
and, right or wrong, I have mine
shop.
//
/'/:////•■ and you have
yours.
Rather, my
But a bear is no more
your "en¬
hesitancy reflected the fact that
emy" than the weather
men
is
about
7
forecaster
I don't want to be
we
right
middle of
coming from the "bull" side. We
by
now
market
a
in
are
the
phase bounded
already established trading
indulge in wish¬
ful thinking.
We must face the top and the Italian elections. Fur¬
ther, it is impossible for me to
.fact that we have chosen a
pro¬
the
long-term
outlook
fession where errors in judgment discuss
show up fast,. When, a physician when I don't think, there has been
makes a wrong
diagnosis, the pa¬ any such animal ak, long-term in¬
vestment policy since the spring
tient may never find it out.
When
'
a lawyer
:
gives bad advice, he can of 1946.
not afford to
can
an
.
blame it
.
_
law.
the
on
For these reasons
ambiguity of the
But when
we are
ing
wrong, the
to
hew
I
not go¬
am
$trictly
to
the
an¬
customer loses money—and that is nounced subject matter of today's
forum.
As a case in
Where the argument ends.
"
point, let's
first consider the
•
The customers' broker can
be
bearish
and
still
business. If
clients'
accounts
he
keeps his
liquid, they will have
making
money
opportunities
the market offers
the realist. And
by realist I mean
do
_
buying
power to take advantage of
major
rallies.
Besides, better switch op¬
the customers' broker who
recog¬
nizes the New Look to the
market
—a
look which requires a fresh
portunities and greater value dis¬
„
approach,, avoidance ;of the
crepancies
bear
/So
/
/
are
usually found in
market/;
much
the
lar
a
Mr, Biel before
of
popu¬
to. all
talk
of
us.
by Mr. Lurie at meet¬
ing of the Association
ers'
''-.w'v.,:
think that
Brokers,
New
April 15, 1948.
of Custom¬
York
City,
\
facilities
FOR NEW YORK STOCK
accomplish
a
do their
key employees for
advantageous end
.
to
clearing,
more
Firms
that
light of
are
on
either
an
omnibus
expenses
can
and free both
productive work, with
an
result.
Our Research Material is
available
in the
interested
present
day
in
costs
Fdb.
On
^lap
left
was
under: 111
This
exhaustion
gap,
of
known
as
to
firms
111
at the
place
same
the
as
10th
to
March
19th
as
classic
a
us.
arrangements
should communicate with
cates
advance
uncertain
no
expectation of
stock
not to
confidentially 5
ESTABLISHED 1891
\
i
'•
AND
Prirote wire
systen to Branch Offices and
YORK 6, N. Y.
all
terms
prices
•
if I
COMMODITY
''
r.
■
V
EXCHANGES
Correspondents
from
minor reaction devel¬
around
as
yet
fully
*Substance of
Messing
levels.
welcome op¬
invested
(Continued
Telephone: BArclay 7-0100
a
these
portunity for those who
in 'leading cities
pas¬
* *"
beforehand.
The
like is the old man,
we
a
...
.
.
.
gloomy looking
looks around the
and says:
...
to
on page
not
are
become
38)
address by Mr.
before the Association of
Customers' Brokers,
City, April 15, 1948i
New
V
>-
Yor!
"The'1
1948,
page
15,
text
of
Mr.
Eaton's
ment follows:
:
state¬
,
"The proponents of
competition
in public utility finance are not
going to stand idly by while the
Wall
Street monopolists urge a
return
to
credited
the
old
domination
thoroughly
racket
of
the
industry.
of
public
»,.
•
„,
dis¬
banker
utility
"
r;
.
"We recognize the Boca Raton
speech of George Woods, Execu¬
tive Vice-President of First Bos¬
,
ton
Corporation, as the opening
in a campaign to destroy the
gun
great
advances
toward
years
finance. We
of
the
last. 10
democracy in
going to fire back
r
true
are
with both barrels.
"Mr.
•
Woods'
address
statement of the
ments
that
is
a
re¬
lame argu¬
same
previously
failed
to
persuade Federal and State au¬
thorities to let the public interest
continue to be sacrificed to Wall
Street
ring's
money
desire
for
competition, and it has obviously
been smarting under the
necessity
of
having
to
that
ness
compete
once
for
its
was
Since
with
as
busi¬
'sacred*
Securities
tion
has,
say,
tinuing to rain steadily all day.
(
"For the man that prophesies
us bad
weather, on the contrary,
we
entertain
revengeful
only bitter
thoughts.
Mellon
last
of
utility
consolidating
Corpora¬
First Boston
Summer,
course,
to get
centive
had
double in¬
a
back
banking
the
public
that, both
First
Boston and the Mellon interests
controlled in the days before com¬
petitive bidding."
f r
:
back feeling still more
against him, and with a
vague notion that, somehow or
other, he has had
come
angry
do
sied
something to
with
For
a
it."
long time I have prophe¬
bad
weather.
forewarned
of my
So please be
basic pessimis¬
tic slant.
Let us
that the
for
assume
American
a
out
of
the
leaders
(Continued
on
moment
rearmament
program, once it gets
earnest, will scare the
of
going
in
daylights
the
Soviet
page 39)
/An address by Mr. Molodovsky
before'the Assodaticih of Cus¬
Brdkers,
April* 15/1948/
/
..
;
1;
NeW/York
;!;, ■:
-
(it
(Special
to
The
Financial
Ch;.dnicli)
has become associated with
Paine,
Webber, Jackson & Curtis, mem¬
bers of the New York Stock Ex¬
change.
an
Mr. Patton
officer of
City
z...,;
?
was
formerly
Burns, Potter & Co.
Houston Bonds Sold by
Phelps, Fenn Group
'A
syndicate headed
by Phelps,
recently
Fenn & Co., of New
York,
marketed
S6,860,000
Houston,
Texas, 2Vz%, 2%%
3% vari¬
purposes bonds at prices to
yield the investor from 1.10% to
2.80%,
according
to
maturity.
and
ous
The bonds
s
tomers'
Paine, Webber Firm
OMAHA, NEB.—John H. Patton
'Stupid old fool!,' we mutter,
'What's he know about it?'
And.
if his
portent
proves
correct
we
John H. Patton Joins
and
"
•
an
(See
April
prerogative.
by the circumstances
its not clearing up, but con¬
.' of
the
were
securities.
lessened
would
attention to the possi¬
a
•
"And we feel an affection for
that man which is not at all
the
over
in my duties
call
*
wish him good
morning, and
start off; 'wonderful how
these
old fellows can tell!'
which
ahead, I feei ihat I
This should prove
.
it
right enough, sir.'
'Ah, he knows,' we
"
for
formation, and the
considerably higher
market
us.
\
as
"'Oh no, sir, I think it will
clear up all right. It will break
probably completing at
this level only the first of a
series
of upward
legs in a new phase of
the advance. Without in
any way
modifying the bullish implications
recent
you
who wants to be foretold
horizon
are
the
of
'
'
what I call the "Great Island Re¬
versal of 1948."
We
all
to
we
dramatic
months
Goodbody & Co.
WOADWAV, NEW
about
writings.
in
it
of
.
during the past four weeks indi¬
oping
PRINCIPAL 6ECURITY
,
an
formation
manu¬
the stock market
on
financingon the
was handicapping
/ the' Weather? ;It. ijj ..bdef eriougf/, easy profits. "■}}> \
V when it comes, Without'ohr hav¬
'//'First Boston has consistently
ing
the /misery
0f
knowing, declared itself the arch enemy of
"Island"; the most powerful and
dynamic formation possible. And
so rare, that I believe
that it will
bilities of
MEMBERS
.
/morning
ary
in
see
S
sage:
left all of the period from Febru¬
gap,
a
recommend
pre¬
'
'
I
and
breakaway
a
I have bor¬
book that I have
required reading. Here is the
(prophet
who, on
was
Boat","
appear in the near
It is Joseph Mindell's ex¬
future.
cellent work
This obvi¬
gap.
famous
question.
been privileged to
on
vious exhaustion
bias.
long time
script, due to
Thursday, March 18th. On
Friday, March 19th, the top of the
trading area was again reached,
of
clearing through
discussing clearance
Inquiries treated
passage in
row
range with four distinct as¬
cending bottom.
The long trend
line through the %prior
tops was
decisively penetrated on the up¬
by heavy volume.
On the next day, a
gap opening
occurred, also between 110 and
a
The
/>
caution / you
personal
bear for
sale
Chronicle,"
limita¬
this
rowed it from
very nar¬
accompanied
the
,
an
Thereafter, for almost six weeks,
a
also
possible
Cyrus S. Eaton
uptrend
K. Jerome gave a good
illustration of the normal reaction
against pessimistic forecasts.
/ II
i$ a long time since I read /this
book and I did not remember the
indicating final
selling
pressure.
the market traded in
side
the
before
Jerome
a
downside
between just
ju4t above 110.
is
This shows
a
to
that it
ground
./,//•!•■
lows
body likes a bear. In his
book, "Three Men in a
10th/;
and
exhaustion
new
might have created a
deformation in my thinking. No¬
open
what
was
be remiss
-Jt
and
the Times chart should be before
you.
Molodovsky
intermediate
a
end
an
bidding in
public utility
Nicholas
should
called
competitive
July//!/_:/■
I have been
February and the early part of
March, and the dynamic effect of
basis, New York Stock Exchange firms
I
against
lined during the past two months.
In order to follow the description,
powerful base which was
being
built up during the latter
part of
EXCHANGE FIRMS
substantial reduction in their
and
partners
US
disclosed
forth my con¬
it best first to
very powerful for¬
the
for
tions of my prophetic
powers.
/;
in
Raton,
Boca
Fla.,
establish
foreseen.
the Stock Market has
experienced
clearance!
a
Messing
.///////.
mation which the market has out¬
The
or
J.
!;//////
setting
I think
describe
future
D Y ALLOWING
Arthur
for
•
Before
Electric / Ex-
change,
highs
next
Annual
Southeastern
develop. But the rise began
from a higher level than I
had
the future from this most power¬
clusions,
15th
Conference of
could
ful of formations.
become
fl—'
the
on
an
address at the
decline
would
we
draw
can
ration, who
April 9, in
con¬
last
First
Boston Corpo¬
warn¬
from the
of
I
which
ously
*A
Customers'
Brokers, New York City, April 15,
..
dear
This
point .-/can't ? be
overem¬
apparent, but phasized, for once we understand
page 38) ,///■'/
•-(Continued on page 38)
on
*An address
by
the
Association
-
go-
/.'
for the
(Continued
1948.
cliches
for¬
to¬
with
opposi¬
Vice-
The
do
interme¬
diate
implica¬
tions
"Lucky Pierre"
—and
who predicts rain. It is a mistake
listen only to the sweet music
to
the
a
a
the
stock
market V
s
business
a
Heinz
' of
mar¬
will
ing. //;/////;'v''
\. Prior to this
last
rise,
l
thought / that
a s
in
Woods, Ex¬
ecutive
fession and to
the most clas¬
sic
himself
President of
give
I
regarded '
...
placed
'iyou,
make/
think, become
sole
answer
will,
Ohio,
your
guide
years to come,
I would like to
ex¬
time
by
you
and
tomorrow, the
some
o
en
the
later to
/
released
Cleveland,
take
hand
statement
a
April
20, Cyrus S. Eaton of Otis &
Co.,
investment bankers in
year.
day after, and
for years and
detail what in
of
a
among
ustomers'
or
current
week's "Chronicle."
„
In
of
range
tion to George
ket
and
endeav¬
plain in
the $64 ques¬
tion; we're in
'
chapters
I
what the
Rever¬
1/
the
the
.
write
narrow
is¬
attacking speech
George Woods of First Boston
Corporation, appearing in last
through the winding paths of wis¬
dom, to
the
sure
and
certain
knowledge of
what will become known
on
Island
•
y
possessor,
the
for
-case
i t
that"
k
a
ing
chosen
Before
"The Great
as
than the
t
a c
m
have
state
my )
books
//./•' ,/.\ /"/'",/
;
will
a
prices in
collective
up
shall
f
seems
to
time.
and
stock
;
to the present
Market technicians of the
future
stemmed from "
confess
been
lit¬
was a
stocks
statement
of
stable, Mr. Molodovsky predicts
slowing down in demand for
sal of 1948.'! I
more
apprehen¬
I
I
February
Cyrus S. Eaton of Otis & Co.
sues
or
'
the
of
Co.
for
for peace is not
bullish,
and stock market situation is un-
has been written by the action of
market from the
early part
me
out¬
&
Maintaining outlook whether
war
Technically speaking, a new
chapter in Stock Market history
t i mid
investing
public. But I
It
aver¬
market
/;/ '/'/;
continua¬
during February and March.
up
White, Weld
Members, N. Y. S. E.
of present bull
Views., Th is /
the
that
a
■'//..
it
au-
an
dience for
be¬
the
sion.
com¬
invited
Tabell
stock
/
Of
Stock
market, led
by the Rails, with minor reactions /
taking place from time to time.
Says recent stock market rise has
powerful base which was built
hesitant about accepting even
meant
impor¬
must
Eddie
though
.
broker and
to
stock price
look with your group,
tle
vi¬
link
tant
tween
be
may
York
Messing looks for
tion
down¬
Predicts, however,
discuss the
to
honor to talk to you, gen¬
an
Mr.
before Labor Day.
age
your
outlook
It is
of
remain
a
New
Exchange
pleted before postwar business
stabilizes.
I
will
levels, but
duced earnings
feelings
Members of the
Upholds Competitive
Bidding in Effecting
By NICHOLAS MOLODOVSKY*
With Herzfeld & Stern
Webber,
Curtis
Lurie contends, because
inflation,
beginning to fear not
only deflationary effects of fiscal
and credit policies, but also ad¬
verse
Paine,
&
/•/•• Members, N. Y. S. E.
though generally good, are shady
in spots, Mr. Biel contends in¬
vestors
Dept.,
Jackson
Members, N. Y. S. E.
By ARTHUR J. MESSING* A'
and
from
are
mature
1949 to
dated June 1, 1948,
serially
on
June
1968, inclusive.
1
The
offering attracted strong demand
from
various investment
sources*
'
t'-
,
THE' COMMERCIAL
167 \ Number 4692
Volume
Stbsl
Prod actio*
& - FINANCIAL
"
Output in Balance
Electric Output
Carloadings
Although petroleum supplies of
Retail Trade
State of Trade
record
Commodity Price Index
By A. WILFRED MAY
Food Price Index
Industry
ing
Failures
Business
the
steel
industry is to escape this year the imposition of
controls it must present convincing arguments
government
against such controls.
Before the coal strike most steel delivery
promises were being met on time, but that good position no longer
holds.
Because of the loss of, steel due to the coal strike, the Marshall
y
*of
v
motion of
shutdown is far more
*
in,
increase of
it will total
;
*
.
more
than 1,500,000 tons of steel, or an
tarian
over
A. Wilfred
arguments it can advance, according to "The Iron
(1) Steel loss since the end of the war because of strikes
than 20,000,000 tons, sufficient steel to have placed
the industry on a normal balanced supply and demand pattern.
(2)
The industry has not had the money to expand under present recon¬
struction costs.
(3) Many steel customers are taking more steel than
they need and, because of the vast number of customers, policing of
are:
been
more
■
of steel
end-use
the
is
almost impossible.
After
years
no
one
market on the
industry.
(4) The steel industry is in business to make money and
if wage rates are advanced it means prices will have to go up.
< v,
has been able
pin the responsibility of the gray
to
:
Despite all the industry's arguments at its command and with
Congress in no. mood for controls, the whole steel picture is entirely
dependent on events abroad and the speed with which this country
rearms, states the magazine.
m
■
l/Y/
nm§
;:t;$
.The freight rate advance this week (averaging
.
Is in for overhauling,
f
•
.
labor costs are figured later this
n0
looks
as
if
are
;>
report of .th*
Institute's Na¬
lessons available to us from
abroad: It is not realized tnat
^ilBiih
tional Oil Pol¬
BoydX^r.
'R.
-\V v"'
"" '-x"•
icy Unit.
■
the
estimates
Committee
The
supply of petroleum avail¬
able to meet - domestic consump¬
total
tion
ralysis has set in from an ideological belief in
planning, in lieu' of instituting measures accord¬
May
:>>m
doses of control,-:
"-for
months'
the! ,12
April 1, 1948
starting
'■
.
y . •
to be free¬
governmental interfer¬
"There will continue
y"..
dom from
imposed in the
hurdle and get
back to high output and stay there, the magazine concludes, it may
escape a priority system which would produce untold confusion: •.
.
Congress towards controls keeps them from being
near future.
If the steel industry can get over this
■
a
of the authori¬
1
enough to produce a temporary situation which
it needs controls. Only the general negative tenor of
setback
mine
5-fi
.
new
'??$■,',£• gy»:
stitute, said,,!/
making publi*
y
;jAdministration leaders , who favor a straitjacket for steel are
finding the current supply picture playing into their hands in their
argument for controls, "The Iron Age" adds; - The huge demands
from the oil industry plus defense plans when added to the coal
/off.'.
;
after
year.
-
.
approximately
;' 4.5%) is another hurdle for steel firms in their rising steelmaking
costs; It is also further proof that the. present steel price level ;
vI
o
the America
Petroleum Jn
perioc
will aver¬
age' 6,025,000; barrels a day, V oi
/
ing to unified policies laid out in advance.
Almost the entire em¬ approximately 8% above the de¬
phasis has been fastened on removing the automatic controls, or, mand in the similar period start
ing April 1, 1947. "But, even witl
changing for the sake of change.
V:.V-'
Thus in England we see that the yearning for planning has re¬ this increase, supply and demanc
sulted in
a
hybrid conglomeration of pseudo-management over¬ promise to be in delicate bal¬
i'
weighted with destructive acts.
The Laborites have only succeeded ance," Mr. Boyd stated.- ,;
This estimate is based in part
negatively
in
removing the test of the market place which
upon
the forecast of the U.* S
matches up money units with the true value of available goods, in
Bureau of Mines that, for this pe¬
juggling the rate of interest without providing planning for the
riod, imports of oil will average
proper place and use of capital; which must end in the full conscrip¬
tion of labor as well as capital.
Already, in spite of the cumulative 102,000 barrels per day more thar
piling-on of additional distasteful controls to "protect the socialist exports.
"If conditions outside of its con¬
equity," Great Britain is faced with a complete misdirection of the
trol do not retard the continuec
nation's production.
/
-V• V
Nationalization per se has not been the important issue. Its im¬ expansion of the oil industry," Mr
portance is confined to the fact that neither production nor distribu¬ Boyd declared, "all former rec¬
tion can move without central direction of all kinds, including li¬ ords will be surpassed by. quan¬
tities of gasoline and fuel oil prdcensing, which causes paralysis of individual effort/
' •;/.
duced
during
the yoming
V
It is monetary policy and related full employment ideas which
12have created and are still creating the very inflation about which month period, and, if the public
Will practice reasonable restraint;
ilie Socialist planners pre. profqssing to be so concerned,
vtj; Similiarly/ Germany, although potentially v6Ty productive, after deliveries will probably meet the
' v'*
a long period of super-planning now finds
itself with a completely increasing demands."
The estirtiate assumes that:
A
paralayzed economy- which is absolutely , dependent on additional
.
A few of the
has
R
Ji
President
actually there is no planning with a real plan in
any
European
country excepting the USSR.
There has instead been merely an unwitting drif.
into collectivism. * In country after country pa¬
being the case, the steel industry will have.; to put. up a tough
fight to prevent steel distribution regimentation and it must also
again defend itself on the capacity question which is sure to arise
soon, the magazine points out.
v. V-,i y7v>'.-'v '
Age,"
Boyd,
>
experience
will be close.
William
There are many
the
Such
m:
.
complexities besetting the pro¬
economic planning.
poison.
ii
consumptio
Editors (cf. cover of this issue)
Americans invaluable insight into
terparts of Europe's initial doses
the estimate made last week by this trade paper.
■w'V
'
'*'V ■*'
'•»' : .*•'"< J'•
'
'
- TS-V
r v: ' vrTn^ apparent need
for allocations wilt loom large soon, since
the gray market barometer already points toward heavy activity.
100,000
mee^
enormous
increase
gives additional evidence that our diffi¬
culties here, notwithstanding .the visiting Pro¬
fessor Laski's demagogic exhortations to follow
his British road to Utopia, are merely the coun¬
serious than generally supposed and when the full figures are
.
us
to
the
It
Age," national metalworking weekly.
because of the mine
to
"the
race
the characteristic
certainty of defense requirements, steel supply is now
tighter than at any time in the past two years, according to "The
The loss of steel
Newspaper
affords
re¬
leased,
Successive publication of a new
Plan and the
Iron
estimate
memorandum by the Council of
Economic Advisers (cj\ "Chronicle," April 15, p. 4)
of the Con¬
gressional testimony of outgoing Reserve Board Chairman MarEconomic Advisers (cf. "Chronicle," April 15, p. 4) of the ConTruman's address before the American Society
jj
If
according to an official
year,
On the Road to "Planned" Confusion
<
•
strict
proportions will be avail¬
during the coin¬
able to the nation
Production
Auto
and
'
(1749) '5
'CHRONICLE
^
.
'
Washington's Flirtation With the
European Pattern
I
;
ence or
'
controls;
"The excess of
imports over '
rhetorical inundations pouring out from
Washington: the two-clear facts about our goyenipient's economic exports will be at the levels esti¬
doings are that it is doggedly continuing to drive for the peacetime mated by the Bureau of Mines- a?
sh
/-Z
restoration of wartime economic controls; and that a good part of its of March 25, 1948;/.
strike * whicHt-seriously jjrpperilled the /production* of' confusion stems from the basic disagreement between Presidential
"There will be no major inter¬
steel entered upon another phase of the dispute when Judge T, Alan advisers as to how far the planning and controlling should go. In ference with the industry's ex¬
Goldsborough of the U/ S. District Court of the District of Columbia
lieu of blaming any individuals, we should remember that of course pansion resulting from strikes oi
on
Tuesday of this week fined John L. Lewis, United Mine head
"■
such dissensions and uncertainties together with motivations of polL disasters;' and^S'■ : '
$20,000 and the United Mine Workers Union $1,400,00.0 for criminal
"There will be no' unusual de¬
tics, are an unavoidable component of planning operations.
^
;
contempt of court. The government,, in addition to this penalty, is
Close perusal of the Economic Advisers' report with its inclu¬ lays or supply failures in the flov
considering a jail sentence for Lewis shbuld the miners fail to return
sion of so many franklv-statcd imponderables, gives this writer the of materials, on order and plan
to work. Approximately more than a fourth of the soft coal miners are
distinct
impression that actually the Council itself is uncertain ned.; which are required to carr/
idle in protest over their leader's contempt of court conviction. On
whether we are headed for inflation or for deflation. , Even the out the expansion programs dur¬
Friday; Judge Goldsborough will act on a finding that Lewis anc positive arguments for the likelihood of inflation, to which the de¬ ing tills period."
the United Mine Workers are guilty also of civil contempt for theii
mand for controls is tied, is hedged with so many if's, but's, and
frustration of the court's stop-strike order.
may's, as to render them completely worthless. Failure of the con¬
* $'■
sumers' price index to fall may or may not be due to a time lag;
} tOver-all
industrial production continued to decline slightly important items like meat and rent may go up or they may go down*
Lookim?
beyond
the
■■
"
v?'.--
h.<
Zips
'.VS
...
r,.
V:^r "
{>!•
'f';-
(honestly, but abortively for its purpose).
that the impact of the Euro¬
pean Recovery Program will function as the economy's elevator to a
new
plateau of inflation, or merely as the needed temporary stop¬
/li/l hamper production in some lines and deliveries of raw materials gap against an impending depression and deflation, is still completely
unclear—even after studying its report.
The Council itself in one
were less prompt than in previous weeks.:.
'
:
place states that the $3 to $4 billion program "would seem to be
The return to the pits of about half of the coal miners resulted
something the country could readily take in its stride," but with
in a slight rise in the output of bituminous coal, though output
mm
| remained considerably below pre-strike levels.
The drop in the the reservation that at least dangerous effects will be felt in certain
areas of the economy.
.,
;
•
v ! m.mmm supply of coal forced many steel makers to reduce their production
,
...
'51'?
Output in most lines was somewhat above
during the past week.
;
level
of
tho planning agencv
savs
Whether the
corresponding week of 1947.
While there was a
slight rise in claims for. unemployment insurance, total employment
was
sustained at a very high level. / Labor disputes continued tc
the
-
the
Council actually expects
,
schedules.
■my"'""
m
mm
However, for the current week
f.
show improvement.
scheduled steel operations
f
-
No one can berate the Council for its forecasting difficulties
Institute announced on Monday
nor
for the glaring errors in its past predictions.
The Council's
this week the operating rate of steel companies having 94% of'm trouble rather lies in the fact that its own voluntary demand for
the steel-making capacity of the industry will he 80.0% of capacity for the week beginning April 19, 1948, an increase of 8.7
points, or 11.2%. This compares with 71.3% last week. A month
ago the indicated rate was 95.7 %.
1 .
*
1
"•m-m:
controls is based on
.
—
'•
-
-1,
f- X
hnperial Oil, Ltd.
International Petroleum
i,.\ Controls Call For Non-Existent Forecastability
The American Iron and Steel
;r Y.:y; .;
/Calgary Edmonton
J
the premise of
(Continued
unachievable forecastability.
on page
44)
HART SMITH & CO
52 WILLIAM ST., N. Y. S
.
HAnover 2-H980
Bell Teletype NY
,
!
1-395
Toronto
Montreal
New York
„
11
„
:
This
is equivalent to 1,442,000 tons
week's; operating rate
fj of steel ingots and castings as against 1,285,200 tons last week,
1,725,000
m-
capacity
tons
one
a
month
year
ago
ago,
in 1940, the highest prewar year.
L "
.
,
Dravo Corp/
j
1,662,400 tons, or 95.0% of the old
T
and 1,281,210 tons for the average week
McGraw
"
:
NATIONAL BANK
of INDIA, LIMITED
(F. H.) & Co.
Bankers
'
-
Mild
weather
in
many
parts
of
country
the
stimulated
American Maize Products
the
y demand for Spring merchandise and the response to special sales
was
favorable.
Dollar volume of retail trade during the period
ended on Wednesday of last week was moderately above the level
of both the previous week and the corresponding week a year ago.
Many shoppers continued to be selective ahd budget and basement
Bought—Sold—Quoted
.departments well attended.
t..:
/'/
-, •
Wholesale dollar volume increased
y
y and continued to compare favorably with .thai of tl)e
1947.
Retailers generally continued to avoid long-term;
-
V
(Continued
on page
34)
v
Jik^ week of
commitments
MEMBERS
Wall Street, New
N.
Y.
SECURITY
York 5, N. Y.
-
Bel! Teletype NY 1-897
Government in
|
j
Uganda
<
|
; *
Keny^)
Burma, Ceylon,
Kericho, Kenya, and Aden
and Zanzibar
India,
.
±
Capital--.—£4^000,.000
|
Paid-Up
Capital——£2,000,000
if
Reserve
Fund-----—.-£2,500,000
Subscribed
Bank
conducts
banking and
DEALERS ASSOCIATION
'
in
(
The
Established 1888
y
63
INC.
the
Colony and
Office: 26, Bishopsgate,
London, E. C.
Colony,
.
'
moderately^ for,,the.period
Branches
s
FREDERIC H. HATCH 4 CO.,
to
Kenya
Head
>'
,
Co.
every
Trusteeships and
also
description
exchange business
Executorships
undertaken
|
W
6
(1750)
Proposal^ fox Sound Banking
H
i
v
'
*
*
By JOHN J. HOWE*
in
i
,,
,
'
,
'
t
■
'
1
•
''
1
*
'
'
1
>
'
-
is:'.
•
-
-
■•■'''
,
V
1
.
>
•
Holding present powers of Federal Reserve *re fully adequate, Mid-Wesfern banker urges banks be
permitted to increase earnings and add to their capital. "Says large bank deposits are result and not
cause of inflation, and attacks
plan to force banks to hold U. S. Government bonds in special reserve.
hy gforge l. harrison*
'
President, New York Life Insurance
Company
t
; i
^
^Contending life insurance companies, which channel
$4 billion of *
savings annually into investments, have
obligations not only to pol-
;
The Preamble to the Federal Reserve Act is as follows: "An Act to Provide for
the
establishment of Federal Reserve banks, to furnish an elastic
currency, to afford means of
i
icy holders but
rediscounting commercial paper, to establish a more effective supervision of banking in
the United States, and for other purposes
.''/'('Yr-sS
The origin of the Federal Reserve
System stemmed, in my opinion, from the panic of
1907 when the actual supply of available
currency ran out. The public, in great numbers,
insisted
for
cash—in many
ways
pn-
as
explainable
when
as
cattle
stampede,
j
Panic, in its
worst
blind,
time when they needed a low
in¬
terest rate—at the very time when
they needed to.reduce expenses to
regain solvency (somewhat like
medieval, days when a desper¬
ately sick
bled, when the
man was
reverse was needed
sense,
implies
Today,
for recovery).
borrowing
by
banks at the Federal is
member
practically
black, unrea¬ wholly against government bonds
soning FEAR; which the banks (very rightly, in
often
h
c
is
1
o
Rowe
r e
causes
not
are
J.
opinion)
my
liquid asset.
un-
asonable.
the first'hurdle
was
to
jump; hence, that portion of the
Federal Reserve Act./
'I"
The second aim, namely, to af¬
ford means of rediscounting com¬
mercial
well.
has .worked fairly
intent is .thoroughly
paper,
The
covered
by
wording, but in
the
a
the
in
idea
at. the
very
of
ber .'ibanks
government manage¬
conviction
that
! the
should
themselves
more
ulations
think
not
need
for
and
more
by
of
this
and
the
the
few,
produced a
broadening/of the defini¬
steady
to
but
mem¬
all-wise and omniscient reg¬
More
rediscounting
bank
ment rwith
tion
excess
States)
thousands and thousands of
alties for what
deemed to be
United
mean an improve¬
examinations, but
steady and persistent growth in
ment
the panic of 1929-1933 there were
banks who had to pay heavy pen¬
was
the
believed to
was
Inelasticity of
currency
in
word
more
Federal
"supervision."
power
was
Reserve
given
Board
nomic
Report, Washington, D. C.^
April 15, 1948.
^
/ S
-
.
so
regulation after regulation,
that today men active in the
banks have to
constantly refer to
long .series of Operating Letters
by number and Regulations by
letters, which now run through
BOSTON
Boston
&
Prior
Maine
Trading Markets
—*
24
Federal Street, Boston
Tel. HUbbard 2-3790
10
t
greater
CLEVELAND
powers
about
:
to
seems
so-called
largely
increas-
without
ing
re¬
p
necessity 4o prevent further
rise in price levels, and a desire to
put - a floor under the price of
government bonds. He"Economists
s e e m
to
that
i
r
ourselves
r
life
a
cause
ance
is
i
differ
its
be
that
if
posits in
(payable
paper
adds
one
seems
total
up
life
to
to
demand)
plus
in circulation, the
of the total is a self-
evident
on
of
cause
the size of
L.
Harrison
agement
insurance
whole
a
inflation, due to
great
put it—"The world
i$;v divided Tntb two /classes: ctf
aspects
er."
In
and
the ;saver,
other
.'awaiting
to.
,
provide
investment,
the ;lon|g
for
,
"inflationary"
money
bonds
.^as| being
and
includes
practically
all
savings deposits and currency
in safe deposit boxes and the mat¬
tresses.
t
,
I .,
I •
•
•
j
>.
-
Next, there is
.
direct relatiori-
a
'
(Continued
on
35)
page
But
,'j
•
should be deducted from the
tot^l
"E"
enterprise system.
and I think it is
first I
f1::
z;
'
.•
like
would
z
<
•
to make
clear that I
am not
us'ng the term
"savings" in its restricted sense
deposit in a savings bank, but
as a
rather in the broad
sense used
by
economists generally,. For the in¬
dividual, sayings are the differ¬
ence
between Mncome
and
ex¬
These individual
penses.
may
into
go
directly.,
ment
of
savings
formation
capital
through
Or,
insurance
indebtedness,
or
.
the/pay¬
premiums and
otherwise,
they
may go into such institutions as
life insurance companies.
From
an
economic
point
view,|the
of
savings
CI
accumulated
surance
ST. LOUIS
companies are the dif¬
between.1 aggregate cash
ference
by
life
in¬
6.'
Central Illinois Pub. Serv. Co.
Hield, Richards & Co.
Union Com.
BIdg.
CLEVELAND
Union Cent.
Bldgi
CINCINNATI
Tele. CV 174
Tele. CI >50
.
V
u;
M
1420 Walnut St.
v
-
Philadelphia 2
PEnnypacker 5-5976
■
:(4V"
*
*.. t
.
/
.•
509
OLIVE
/
STREET','
j
•••.» ■,.V-/
■
companies
New York 5,.
Members St.
.-
■/
Reliance
Varnish
Co.
Send
easy-to-read
Buy ?
highlighting
esting
for'
memo
a
stocks
the
formation
Louis Stock
Exchange
^
amount; of
must
we
ments.
v
'
«
Savings
free
insurance
come
NORTHWEST MINING
SECURITIES
dozen inter¬
Immediate Execution of
Quotes call TWX Sp-43
or
briefly
j
^
of
Exchange
A.M.,
other
^
Pac.
from
Std.
10:45
Time:
hours.
Orders!'
on
to
Floor;
11:30
Sp-82
1
at
14
;
5
suitable -for
1st
Floor, Kentucky Home Life
BIdg.
LOUISVILLE 2, KENTUCKY
Long Distance 238-9
Bell Tele. LS 186
H. M.
the
are
can
de¬
savings
{<
deduct
other
-
' 1 1
t
bene¬
disburse¬
"
,
fundamental to
are
enterprise
of
I
aggregate
I
as
mean
cash -in¬
aggregate -cash <dis-
;
amounted to about
—
.^3*3
:
bilbon. / This compared with
about SI billion growth in savings
bank denosits, about
$1.2 billion
growth of denosits in savings and
loan associations and about
$1.4
billion growth of tim#1
deposits in
commercial banks.. You can see,
then,
that the annual
cumulations
business
of the
may
savings
life
ac¬
insurance
occasions
be
almost eoual to the annual
aggre¬
gate of all these other forms of
■
on
private savings, combined.
: But this dotes not
tell the whole
story. The savings that are chan-*
neled into the life insurance com¬
panies
greater tban just the
are
annual
accumulatinns.
For
just
their
i^s;Policyholders'dlr'eet
sav¬
ings into
life insurance through
the navment of premiums, So also
;/
system
and
/
our
the
individuals, corporations and
governments owing money on the
know
it.
Byllesby & Company
CORPORATION
Members
Standard
of
Stock Exchange
BIdg. Phila. 2
Telephone
Teletype
PH 73
Brokers
\
-
Stock
Exchange
-
Underwriters
Peyton Building, Spokane;..
Branches
Kellogg, Idaho
and
at
Yakima, Wn.
Savings
are
converted
as a.
for
example,
that
the amortization
mortgagors;!n
move
an
ahead
hope
to
economically and
on
we
even
from
repayment
bonded
pf
indebted-
lion
from
;the
Federal
Govern-.-
paying off maturing debt.
When
t h
add
we
debt
$3.3 billion of
have
e s e:
excess
with the creation of debt.
per
keeping
pace,
as
If it is
some
au¬
it might be well
for us to explore this field more
thoroughly, to study the various
factors
argue,
involved, and then to ask
amount
apart
*An
address
bv
Mr.
Harrison
before the New Yoxk-Xhapter of
Chartered Life Underwriters, New
York City, April 16, 1948. :
And
the
from
the
mentioned,
the
it
J-'j 'O'S'v
■s
' i;
this
is
entirely
proceeds
of
any
S
voluntary sales of investments.
Utilization
One does
stand
of
that
equality in
tween
of
Savings
not have to
Lord
Keynes
there
a
1:0:
life
problem / ;
which now Si- K-ty}'over
$4 billion •
well
to
to
income that
funds
annum.
ciple
;
previously
investing
savings "
retirement
apparent that
insurance business has a
of
-
and something like $100 mil¬
ress
keel, the volume
of
eauity financing must keen pace
/
y-
or
becomes
If
-
repavment of
something like $200 vcorporations in. the -'
mortgages,
million
debt
equity.
during
whole .will receive something
1 ike $1 billion from
I
or
/
,-
into capital in the form of either
Spokane
Dealers
:
qur economy as we
..
over
through
thorities
PHILADELPHIA OFFICE..
RIttenhouse 6-3717
"savings"
by
hi*rcpm<»nts
ment in
not
STANDARD SECURITIES
Incorporated
of
of life
companies—and,
over
uninhibited flow of savings into
capital is essential, to the proper
retail.
IB! BANKERS BOND 90:
are
1948 the life insurance
companies
;
For
Consider H. Willett
life insur¬
whole
a
accumulating in the hands
functioning of
Murphy Chair Company
as
mated,
fit payments and
SPOKANE, WASH.
American Turf Ass'n
that, .in
accumu¬
to us some of their
savings
through the .redemption of their...
own debt to us,. ..It has been esti-
income
the. life insurance: compa¬
nies, make,, available for capital
St. Louis I,Mo.
New York and Los Angeles
to
know
the annual
living on.farms and in cities and
villages, who/use/ their /personal
savings forihis purpose./ There is
'
What
do
,
tbe
sayings'.
mortgages, bonds or notes held by
life - insurance /; companies, / turn X
termine
LOUISVILLE
American Air Filter
we
the
do
which
WHitehall 3-7253
Private Wire System between
Philadelphia,
demands for
of
or
also investment income and other
*..
44 Wall Street
/
rapidity
savings
of
income.* And before-wo
^y
INVESTMENT SECURITIES
Request
BUCKLEY SECURITIES
CORPORATION
' * i,-
\
<\
'
'
on
we
more, if we
premium payments of individuals,
Stix & Co.
Dumont Laboratories
....
too
and
Included in their
Portsmouth Steel Corporation
mData
faofs
and /aggregate cash dis¬
bursements *of > the. companies.
Gruen Watch Co.
Richardson
v
magnitude.
Last year, for
example,, the /aggregate savings
of
one
great concern
to all of us who are interested
in
the continued welfare of our free
words—the spender
*,
is
%
great
directing it
into the channels
and
years
where it is most
To my mind, this is almost
have said,
needed/
The /broad
subject of
completely incorrect thinking. As
the excess
capital formation in its various'
Charles Lamb
income
Harshavv Qiemical
However.?
recent
man¬
a
know
we
lations of/savings^ by
ance
has
its volume, but also in
Jhis potential spending
volume
investment
Indeed, it might
mar-
yy
much
accumulation
responsibility toward the flow of
savings, not only as to increasing
power.
iiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiii
Drackett
the
effective functioning
as
insur¬
to be able to calculate either
are
management/: to
of our economy.
be said that life
money
magnitude
George
insurance
more
life
i
know
to
need
related
the
-
are
profuse,
little" of the basic
make; pn^important*/contribution
de¬
we
that
ject
sponsibility, is the opportunity of
banks, and the total of
in the hands of the pub¬
E bonds
lic
thought
know
we-
*
-
general
anything,
if
:WhUe the writings'bn-this sub¬
.
compe¬
The
what,
Magnitude* of Life Insurance
Investments
vidua)
rectly
are
capital
amazingly as to the causes of in¬ policyholders.
creasing prices, and unless4 there, At the same
time, and di¬
be an agreement among
tent-thinking people as to causes;
it' is impossible to gauge the ade¬
quacy of remedies.
comnanies
ketsif'/ •/'
'
i
as
the accumulation of
personal sav¬
ings flows into the
y
company
d
is
human
probably the most impor¬
tant single funnel
through which
of
toward
.
n
the
is
ance
insur¬
,
which
to
can
do about it.
We should at
least consider these
questions be¬
the
ma
is
<?>
say¬
obligation
the
LD 33
PHILADELPHIA
directly,
and i
inflation,
non-inflationary.:,^ This
Tele. LY 83
vay
flow
subject v/ith which the life
insurance
a
very
thinking, back of requests
volve
Lynchburg, Va.
Tele. BS 128
It is
equity
requires serious study.
.
most
Connolly & Co., Inc.
body.
stocks,
is to discuss the flow of
money into
.
The
common
;
Asserts insurance
sufficient outlet for
not
conSystem are fully ade¬ i n g 1 y
c e r n e d
Of
quate, and, in fact, more than ade-^
course, it goes
quate.
'yZSCYr.
future, in an amount which
obviously is unascertainable,
Scott, Horner &
Mason, Inc. |
is
matter
Reserve
range
—
stocks
common^
My principal object today
;; If this is what the word "super¬
vision" means, it seems to me that
the present powers of the Federal
saved
Dan River Mills
*
in
danger
authority,
sees
recent
sayings and thence into the creation of canital—a
ynal to our national economy as the bloodstream
Supervision j
Adequate
•
Bassett,Furniture Ind.
f:.;
advantages and disadvantages.
alphabet.
-
*
Monies
Traded in Round Lots
Walter J.
!
Notes
investment in
and points out
investment
Reserve
1
well, Mr! Harrison
use
funds, and whole
the
A—Z.
Federal
:
of
obvious that this is true.
'j
' ;
American Furniture Co.
RR.
Preferred
letters
to the economy as
of these funds for debt creation
alone.
in several states for life
insurance
people—the spender and the lend¬
LYNCHBURG
mum iiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiii IP'
b m
From
to
issue
'-Statement of Mr. Rowe before
the Joint Committee on the Eco¬
of the
for
/•;/ .V-•/
The third preamble proposed (a
more
effective
supervision I of
banking
all
their most
consider
some¬
times
John
psy-
gical,
o
and
in
upon
asking
Companies and
J-/,
....
President, The Fifth Third Union Trust Co., Cincinnati, Ohio
1
,
Ufe Insurance
-**'
be
to
must
a
dis¬
underbe
healthy economy be¬
. savings
asthey
money
(Continued from page 25)
y
an
/ ■;
Volume
COMMERCIAL
THE
Number 4692
167
&
W(ashington
Ahead of the News
By
.
The real story of Harold
of
the
most
j„;
;
disturbed times.
His progress, in fact, may be attributed to those very disturbed times
and it adds to the disturbance. It is unquestionably a very disturb¬
ing thing.
has
,
be
It
:•
■
developments of
/
:—
It
should
:
•
-
leaders.
be
disturbing
to
the country at
large.
have
You
-
In
dustrial
to
who
a
at
in
the
of ,41 is
the complete
political boss
of
his
its
and
Carlisle
own
He
Bargeron
help him but
Like
the
late
Huey
Long he is ambitious to increase
his power. There are many other
torial
in
fight
found, earnings ^results of airlines in. current year wiJLbe no-better than 1947.
1947
airlines of the United States carried
the
iMorch
.If
to
because the
developed
their
-a
guberna¬
all
their
.
ers
and cargo, did it
regulat¬
;,
are
in
000
1947.
airlines
considered for the year
are
And, if the
$22,000,overseas
excluded—and certain
estimated profits for 1947 still de¬
pend upon undecided air .mail
pay—the loss for all domestic air¬
lines exceeded $20,000,000.
11
of more than
times in the volume of inter¬
national
basic
air passenger
Why the
•
*
y
Paradox?
This paradox is not
phenomenon.
business.
Lower Load Factors
policy.—^":--
a
one-year
The early months of 1948 indi¬
cate that, unless rapid solutions of
.
| These traffic increases came de¬
para¬
Manifestly,'this ambitious young dox has grown
out
of
has ability.
It is a Kelly- also
like or a Hague-like ability to or¬ many
uncon--;
arrivals from
passenger
foreign countries to the United
in seven short years,
government
This1
improving efficiency, the
fered losses of more than
1947,. we find that the airplane
brought
in
approximately
IV2
as many persons as did -sur¬
face vessels. This is an increase,
agencies,
of
forts for
overseas
times
suppliers,
y
race.
passengers
airlines of the United States suf¬
all
States
selves, their
free
for
Atlantic,
points.
airlines them¬
rea¬
Democrats
more
govern¬
<j>-
<
this he seems and the mak¬
on
have
are
.efficiently., and lost more money than ever before in their .history. This startling
paradox, of which there are few parallels in business history, is compounded from other
seeks
had
be
would
areas
Democrats
its Governors and
and
He
'
N
mor£
into the Republican primary ing
heated
names
Senators.
Ohio
to have miscalculated
Minne-
state,
sota.
those
come
age
of
Taft.
to believe that the
son
man
areas
undermine
x
v
COHIJ*
Says price inflation has nullified efforts to improve operating efficiency, and attacks inadequate
ment airmail compensation. Concludes, however, outlook is not hopeless.
demand, Congress passes paradoxes,
c o
mfusions,
the ; Taft-Hartley
Act.
Stassen
miscalcula¬
graciously gives it his approval.
But he says' he would 'have done tions, and er¬
rors
on
the
it
a
little
differently.
On this
of
the
basis he goes into the heavy in¬ part
tacle
young'
unless solutions
|
In
overwhelming
an
T.
7
accompanied by increased revenues,'lays blame on "confusion, miscalculations, and errors" on part of
airlines themselves; their suppliers; their regulating agencies; and government aviation policy. Holds
-
here the specof
to
answer
public
LA MOTTE
,
.
President, Trans World Airline
,
■
—-——-—...
taking action and
just; laying down formulas.
not
disturbing
Repub¬
to the
lican
our
confronted with
to
come
'
Stassen's campaign for the Presidency-
arresting
.
;Leading aviation executive, in pointing out "startling paradox" of lower net earnings of the airlines,
By CARLISLE BARGERON
one
,
.
~
\
is
{
4
,
it;'/- The Paradox of the Airlines
From
^
(1751)
FINANCIAL CHRONICLE
.
T.
LaMotte
man
Coliu
the
spite the return, in 1947, of near
normal load factors, after a war
could handle only
similarities.
ganize.
He. .got this apparently trollable factors, such as the com¬ priority passengers and those few
passengers
with
Stassen has the likable person¬ drom his father who has long been plexity
of the airplane and its non-priority
-stamina to; spend long hours at
He has the
ality that Huey had
j the Republican boss of the Minne- operation, the difficulties of rapid
airports waiting for an occasional
same
unlimited energy and the sota county in which young Stas¬ expansion, and the disruptions of
period when
pp:%
underlying
we
airline, problems
found, the results for the
are
1948
year
show a similarly dis¬
couraging picture.
Why this paradox? While the
entile airline losses of 1947 can
may
attributed
be
to
governmental
those
0 policies—both general and
economic worlds. seat,:.
The airlines carried the traffic specifically affecting the-airlines
At college he had the knack .of
; I don't believe that we in air¬
ends.
He is mot the; rabble rous¬
because of a prodigious increase —I would be less than candid if
organizing
his
fellows.
As
a line management can alibi for our
ing demagogue.
■
\
in
plane miles which resulted 1 did not admit our own mistakes
It has long been taueht in this county attorney he developed it. errors; nor do I think we should
from the adding of hundreds of and, at the same time, recognize
country that every mother has a About this time, the Republican blind ourselves to the causes of
those uncontrollable factors which
right to rear her son for the Pres¬ and Democratic party elders were our* plight. We should not deal Constellations, DC-6's, and DC-4's
have cost the airline business sub¬
to their operating fleets.
\
'
idency, and every son has a right encouraging the youngsters, to or¬ lightly with the blunders of gov¬
stantial sums of money.
to aspire to it. But when you con¬ ganize but confining their activ¬ ernment nor with the stark reali¬
;?
Personnel Reduced
Kiln the wisdom of hindsight, it is
to
sider that in all our history only ities
mostly { social
affairs. ties of basic economic upheavals.
Yet, with all this growth and
easy to chide airline management
31 -sons have .attained; it, and that Young Stassen persuaded the sec¬ Our job is to find out why the
with the complexities of breaking
for
its mistakes.
And I realize
of this year's crop of aspirants, ond and third generation scions of paradox exists and to do all in
in new airplanes, as well as the
that one of America's favorite in¬
Stassen is the least trained in the Minnesota
milling
families and our power to remove its causes.
costs of preparing for the inaugudoor sports has become this critiscience of government, in indus¬ other families of wealth that. if For we do know that a sound net¬
neces¬
try, in the professions; the least they would-follow .him, they.could work'of airlines is just
employees
tile
' c.ism «* airline management's opqualified by any measurement, take over the State government. sary for the social and economic
It1047 was, tlrnisms, errors, and struggles to
this by /electing;; him welfare bf this country, as for'in¬
you can appreciate how his am¬ They did
10% less than those plan the a'r transportation busiternational security of the United
bition has run complete rout.
: ^ Governor in 1938 when he was 31.
onbf^/vroLa year
i ness 0n a sound footing with a
on .the payrolls a year ea
i
this
vastly
increased
volume
and
••
iHis claim to the office is that he When
youth crusade 'had 'States.
:In 'TWA, alone, the total num- scope.
At the same time, these
has been the Governor of a rela¬ completed
its reorganization of
.Record Traffic in 1947
ber of employees have been re- mistakes
have
contributed matively small and uncomplicated the State -government there was
duced from over
17,000 (in the terially to the airline paradox.
;
State.
This and
his service as scarcely a gray head left in it.
Taking domestic and interna¬
fall of 1946) to 13;000 at the end
From the day he was installed tional
flag-reamers as a whole,
county attorney for a semi-rural
Too Optimistic Planning
'
of -1947.
And this reduction has
county outside St. Paul constitute as Governor, he has been running every class of traffic — passenger
One of our principal mistakes
been
accomplished
despite
a
his
career.
More
recently,
of for the Presidency. Throughout mail,
express,
and freight—in¬
40.9% increase in the ton-miles was to plan too optimistically.
course,
he has maade- his liveli¬ the country he and his young creased in 1947 over any previous
When, in 1944, domestic pas¬
of available capacity
offered to
hood put of running for the Pres¬ zealot associates have established year. In 1947, for example, while
ruthlessness
same
his
attain
to
,
sen
reared.
was
;
• -:
v
•
* •'
the political and
.
.
"or?
domesU^afrUne
approximately
ear?ier
'
that would do passenger miles flown by domes¬ the public.
Despite the record volume of
of our big. city; tic airlines increased only slightly
bosses, which very much resem¬ over 1946, they were nearly six business, and the ;successful efing formula for settling problems. bles the big city organizations ex¬ times those flown in 1940. Domes¬
It has served to make leaders of cept that those making it up are tic express and air .freight in¬
112%
over
1946
and
business and industry and a lot of cleaner and in the blush of youth, creased
amounted
to
a
volume
of ton
other substantial citizens listen to more well meaning, <
It has, and is spending perhaps, miles 20 times the air express car¬
him
seriously and gravely nod
their heads and assert that -he is three times as much money as any ried in 1940.
of the other candidates, and un¬
In the international field, the
what the country needs.
,Are we^having, trouble in world questionably it must be reckoned three American flag-carriers han¬
dled 85% of all air passengers ar¬
affairs?; Then the world leaders with.
;But What should be generally riving in this country over the
should sit down and talk across
the table.
When we have labor- recognized is that it is not a Re¬ North Atlantic route and 75% of
management trouble, management publican organization. It is in a those ' who
departed, over the
and
labor should sit down and sense a third party.
It is outside
talk across the table. It sounds sp the
regular
organization
and
"An address by Mr. Cohu be¬
easy
that you wonder why it should by chancerStassen get. the fore the Society of Automotive
hasn't been tried before, except nomination at Philadelphia ; and Engineers, New York City, April
win in November, it will not be a
that it has.
''- •
15, *1948.:
v
';
He has carefully avoided getting Republican victory.' It will be a
Stassen victory. He dominates his
in on the settlement of any prob¬
lems, He just tells the way to go crowd. >He is the undisputed boss
about settling them. After his re¬ something which many of his ad¬
mirers do not realize.
He would
turn from naval service he steered
clear of the Senate, to which he do to the Republican party what
could
haveybeen .elected hands Roosevelt did to the Democratic
Wichita River Oil Corporation
(whose
common
stock
is .listed on
the New
down,
because there, men like It would, in short, be more of one
York Curb), a.controlled affiliate of Oil
*
•» ;
,V
Vandenberg and Taft, are daily man rule, i
Exploration
Company,
has
an
active i
m
m
a most . unusual way to
living, indeed.
He has a simple and an appeal¬
organization
idency,
an
make
credit
a
to
was nearly 50%
when, in 1945, this
(Continued on page 32) :
senger
business
above 1943 and
any
;
*
>
Oil Exploration
Company
EXHIBIT
m
.
T
drilling
campaign under way on
its
holdings in the Sholem Alechem Field
in SteDhens County, Oklahoma; Tatums
We
Have
Had
Field,
A
New Report
Prepared
on
' ,;
Come and see how
County, Oklahoma; .and
Field,-Clay County, Texas.
Carter
Edwards
and
present you
completed have increased
daily oil production and earnings.
Wells recently
Compo Shoe Machinery
LISTED
on
Further successful
expected.
NEW YORK CURB
oil developments
'
-i
'
Copy Will Be Sent You
on
Approximate Market $6
MDIW3 2s m
Members:
Chicago
Stock
:; 7
Exchange
a
in old-fashioned costume will
Souvenir Booklet.
At Our 26
CORTLANDT STREET Office
V:'; r'
Oil Exploration Company common stock
is traded in the over-the-counter market.
Request!
with
1818.1948 BANKING EXHIBIT •
are
„
A
grandfather and his dad saved money in the horse
buggy day's. Our Anniversary Teller
From April
12th
to
May 21st, Mondays through
Monday evenings 4 to 6.
■
EAST RIVER SAVINGS BANK
26 CORTLANDT STREET
Comstock & Co.
60 SPRING STREET
291 BROADWAY
743 AMSTERDAM
41 ROCKEFELLER PLAZA
225
l
EAST
MASON
PHONES—Daly 5392
ST.
MILWAUKEE
Chicago: .State 0933
Teletype MI 488
CHICAGO 4, ILL.
231 So. La Salle St.
Teletype
_
(2)
t! }
nr
■
Fridays, 9 A.M. to 3 PM.; y
.
Dearborn 1501
CG 955
NEW YORK CITY
filtmhtr hdtrt! Dtpotit t»sur*nct
Cctporttion
AVENUE
3
COMMERCIAL
THE
(1752)
FINANCIAL
&
CHRONICLE
The Latin American Market Today
Commerce
Recommendations and Literature
/
Commerce Department expert review! Latin American trade relations with U. S.
with reference to individual nations.
Points out, because of wartime industrial
and analyzes situation
expansion in various
countries, present difficulties arise from increased competition from foreign imports.
Notes steady de¬
cline in gold and exchange holdings of Latin America accumulated during war, and comments briefly on
effects of ITO and ERP
T
It is understood that the
*
justify the conclusion that Latin American imports reached their
highest level in 1947. Although complete figures for 1946 are not available as yet, the
value of imports in that year is estimated at $3,500,000,000. Partial figures reported for 1947
10
10
tries
coun-^
amount tightening exchange
controls
has
to"$4,135 bil¬
lion and it is
also
the
countries,
year's
toforv the
total
Notable
a
N.
inflation
7'
<
■■
ization remains
!n
.77>7 A :.*"*>
....
Latin
most
e r »
can
on
$8,600,000, respectively.
Importance of U. S. Trade to
Individual Countries •>
*
The
the
(Continued
on page
countries, coupled with deferred
iemand backed, by foreign ex¬
change holdings accumulated
luring
the
'hctive
war
trade
the
when
years
balance
the
of
area
ncreased
substantially, account
this high level of imports.
A
oortion
of
the
total
represents
;
or
46)/,;
equipment
and
In
Investment
onvinced that
were
expected
in
decline could be
a
the
1948.
of
course
Exchange and import controls in
11 but
of the countries
exer-
ising such controls—13 in
num¬
one
ber—were
ened,
progressively
the
as
demand
tight¬
foreign
for
exchange continued to exceed
ceipts.
cially
In
other
those
restrictions
countries,
without
re¬
espe¬
stringent
designed
to
control
exchange
payments — notably
Cuba and Venezuela—the volume
of
consumer
toward
goods imports tended
satisfying both the general
demand
and
the
stockpiling.
As
special needs of
'
,
competitive
..
market
....
condi¬
tions
developed, 7; there was
growing consumer resistance
an
Field
29-May
1, 1948
(Ft. Worth,
high prices/
became
ers
Importers and deal¬
price-conscious
more
and
restraint in
resulted.
In
it
forward
buying
appears
highly probable, "par¬
ticularly when
While
of
the
to 65%.
relative
imports
from
into
within
Latin
the
declined
area
an
dollar
has
their
1947,
remained
tablished in 1945 when,
es¬
result
as a
of the stimulus derived from
war¬
time trade disruption, intra-Latin
American
imports amounted to
$590
mUUon,i;/';777|'§
Latin America
ably will record
trade
whole prob¬
as a
balance
for
1947,
owing
largely to ,^an import, balance in
its
trade with the
active
with
balance
Europe is
this
time
United-States.
redeveloped
limited, asset at
a
because
the
of
and
the relatively scant avail¬
ability, |r6m much of that area,
lor
disbursements
imports
the
Latin
of
exchange
and other purposes by
American
Republics
during
closely
1948
will
aporoximate
the area's exchange re¬
ceipts during this twelvemonth.
Exports, the principal source of
ioreign exchange, are expected to
teach a point somewhere around
J-he high levels of approximately
essential
of
passive
United
upon
import
balance
trade
complete
data
not
are
with
States has caused
a
the
dram
necessitating,
in
countries
many
the
tightening of. existing ex¬
change control measures in order
to regulate further the outflow of
dollars.
-
Decline In
Gold
*
7
;,
,
and
Exchange
available
for
the
purposes
(6'ieh
debt
of
use
exchange
imports
example, as
interest, insurance,
other
purposes,
than
for
service,
freight and travel exDenditures),
there
such
is
reason
payments
perhaps $1
leave about
believe' that,
to
$4 billion for the fi¬
expansion
American
cially Argentina,
in
countries,
Mexico,
espe¬
Brazil,
impetus during the
when imports were curtailed
war
as
a
result of conditions of short
sup¬
ply and export restrictions abroad.
1947,
however,
war-nurtured
many
industries
countered the competition of
newed imports, and
increased protection
While
the
o
$ g e,
outing at
on Russian
from'
$4,450,000,000
to
at
the
$3,736,100,000
1947,
decline
was
pold
end
the
at
decrease
a
estimated
an
of
1946
close
of
16%. "NThis
of
dollars,
principally
a' loss of
since holdings of
blocked currencies remained rela¬
or
the
a
:•
'77-;!v
decline of $714,800,000
total
gold
and
exchange
holdings of Latin America may
seem insignif:cant, particularly in
pressure
reason
ance, the case in
ual countries is
remaining bal¬
certain individ¬
so
salient
deserve special attention.
tine
holdings
lion
en¬
lion
or
re¬
million
for
declined
as
to
Argen¬
$658
May
:
28, 1948
| Pittsburgh
(Pittsburgh, Pa.)
are
of
for
38%: those of Brazil, $55
million or 7%: Mexico, $113 mil¬
50%; and Colombia, $51.4
or
29%.
These countries
Securities
Association Annual Outing at the
Sharmopin Country Club
Field" Day -at
the Sleepy Hollow
City Bank
of
Stock
Bank
New
Trust
&
York
—
First
Quarter
Analysis—C. E. Unterberg & Co., 61 Broadway, New
York 6, N. Y.
Red Rock Bottling Co. of Cleve¬
land—Memorandum—William
S.
Stocks—
analysis
March
Co.,
42
Broadway,
"7.7 /
York 4, N. Y.
New
SperryCorp.—Memorandum—
Stanley Heller & Co., 30 Pine
Street, New York 5, N. Y.
20
of
31,
Baren
&
Co., 209 South La Salle Street,
selling
R.
under
Melven
$3—
Co..
&
Street,
New
York
Developments
—
Cur¬
rent developments in the indus¬
try—Vilas & Hickey,
49
Wall
Street, New York 5, N. Y.
Stocks
Selling
—List of
be
10
Under
stocks
JYork City)
Corporation Bond Traders
of
suggestions
to
Buy?
Easy-to-read
dozen inter¬
retail—H.
M
—
highlighting
a
esting stocks for
Byllesby & Co., Stock Exchange
Bldg., Philadelphia 2, Pa.
Tower,
is
Spring Outing and
Dinner at the Wingfoot Golf Club
Mamaroneck, N. Y.
(Pittsburgh, Pa.)
.7
I Bond
Club of Pittsburgh An¬
Spring Outing at the Chartiers Country Club.7
nual
(Chicago, 111.) ../
Traders Club of Chicago
In¬
tabulation
a
for
Indiana
In¬
Robert Lehman Director
Robert
Lehman,
of
ner
Senior Part¬
Lehman
Brothers
and
President :7 of
The
Lehman
Corp.
was
elected
What
Circle
available
vestor*
appear
lower marketwise
than other comparable securities—
Bond & Goodwin, Inc., 63 Wall
Street, New York 5, N. Y.
Co.—Analysis and
Cohn & Shu-
Kiser,
Inc.,
Also
di-
a
rector
United
of
Fruit
Co.
Mr. Lehman
is
also
di¬
a
rector of Gen-
American
Machinery
Circular—Gordon
Corp.—
Graves
&
Co.
Street, New York 4, N. Y
Central Illinois Electric and Gas
Co.—Analysis available to dealers
on
request—S. A. Sandeen & Co.,
Building, Rockford, 111.
eral
Foods
Cor
poration;
Pan American
Airways, Inc.;
C. I. T. Finan¬
cial
Corpora¬
tion;
Goods
Compo
Shoe
As¬
and
sociated
Machinery—New
& Co., 225 East
Street, Milwaukee 2, Wis.
Mason
Dry
Robert Lehmar
Corpo¬
ration.
Gay lord
Container
'
'
.,
Gulf Stales Utilities
Corp.—An¬
H. Walker ! & Co.,
Street, New YorkI5, N. Y.
1
oh
Halsey
Clut
of New York
U Bond
—
dianapolis 4, Ind.
Earnings
which
selling
Wall
1948
Coach
outlook
maker,
alysis—G.
12,
6
N.Y.
Country Club, Scarborough, N. Y
June 11, 1948
Twin
■
Cedar
125
June 11, 1948 (New
Gruen Watch Co.—Data—Buck¬
ley Securities Corp., 1420 Walnut
Street, Philadelphia 2, Pa//
Also
available
Portsmouth
Steel
Laboratories
data
are
Corp.,
on
Dumont
Central. Illinois
and
Public Service Co.
Stuart
&
Inc.
Co.
associated underwriters
are
find
offer¬
ing to the public today $12,000,000
Gulf
Utilises
States
first
Co.
j
mortgage bonds, 3% ? series due "
1978 at 101.75% and accrued in¬
terest.
7
Net nroceeds
to be used for.
are
general
Hanson
-
Van Winkle
-
Munning
Party at the Acacia Co.—Analysis—Maxwell, Marshall
& Co., 647 South Spring Street
Country Club.
• V
Los Angeles 14, Calif...
Golf
,
18, 1948 '(Boston, Mass.)
corporate purposes, in¬
cluding the payment of its present
the aggregate
$4,500,000 and the fi-of a portion of its 1948 I
short-term
amount
notes in
of
nancing
construction requirements.
-
16
and
17
from
9:30
p.m.
midnight..,June 22, 1948 (Boston, Mass.) '
Boston Security Traders Asso¬
ciation
29th
Annual
/Outing
of
Philadelphia Annual Summer
Outing at the Tavistock Country
Club, Haddonfield, N. J.
July 16, 1948 (Toledo, Ohio)
Club
at
the
of
Toledo
Inverness
and
investment
appraisal
—Kalb,
Voorhis & Co., 25 Broad
Street, New York 4, N. Y.
i : Home
Insurance Co.—Analysis
—Geyer & Co., Inc., 67. Wall
Street, New York 5, N. Y. -
annual
Recent
bulletin—First
Colony Corp., 52
Street, New York 5, N. Y.
Wall
Also
Metal
available
is
Forming
Electric
Corp.,
a
bulletin
Corp.,
M.
H.
on
Dumont
Lamston,
Inc., York Corrugating Co., Strat¬
ford
Pen
Corp.,
and
Loew
Drug
Co., Inc.
Country
Club.
New
ciation Convention.
Card
Jersey
Worsted
Mills—
memorandum—Koellner
Gunther, Inc., 31
Newark 2, N. J.
Clinton
&
Street,
are
prices
for?
scaled from 104.75%
y
to 100% while special redemption
prices from 101.75% to 100%.
comnanv
is
;
prin¬
engaged
cipally in the business of gener- |
atinc electric energy and trans- j
mitting, distributing an^ selling\
U
—
redemption
-Regular
the bo^ds
The
Hungerford Plastics
July 9, 1948 (Philadelphia, Pa.)
Investment Traders Association
Bond
review
Co.—Basic
at
Woodland Golf Club.
outing
Harshaw. Chemical
until
change holdings of
of
of
report—Loewi
1948 (New York City)
Bond Club of New York Annual
Jhne *4,
Nov. 15-18, 1948 (DaHas, Tex.)
National Security Traders Asto
number
Tax-
Trader?
among v our
largest
Latin
American customers.
Dollar exa
Through
and
Statement—S.
Talcott
mil¬
or
arose.
principal
view of the large
National
Company
Tennessee Gas Transmission Co.
30 Broad
Municipal Bond Dealers Grour
of Cincinnati Annual Spring Part\
at the Kenwood Country Club.
Municipal Bond Club of Boston
annual ' outing
at
the
Country
Club, Concord, Mass. To be pre¬
ceded
by parties at- the Hotel
Statler on the evenings of June
While
Chile and Colombia received sub¬
During
L
1
^
stantial
the
a n n u a
June
declined
York
as
memo
-
ica
in
many
.
exchange holdings of Latin Amer¬
tively unchanged.
7
of Industrial Expansion
Industrial
Latin
to
amount
may
billion—which would
nancing of imports in 1948.
Results
It is reported that the gold and
Waldorf-Astoria
May 25, 1948 (Cincinnati, Ohio)
Annual
*
concerning
,
the
at
Northwood
June
Holdings
—
La
—Information—William A. Fuller
to
River/
/The
accumulated dollar holdings
*$4.5
billion in 1946 and the esti¬
mated $5.5 billion for 1947. While
items.
(New York City)
Association
incon¬
tightening exchange controls, that
meeting.
22 and 23, 1947 (San Fran!
Cisco, Calif.)
I San Francisco Bond Traders-
•
small passive
a
tax
May
value
level
1948
Stock? Exchange.
estimated
the
near
Data
1948—
.May 10, 1948 (New York City)
J Annual
Election
New
York
percentagewise
15%
in
Hotel.
t'/
American
from 27% in 1944 to
6.
Meeting
America
Latin
stamp
Bond Club of New York Dinner
importance
vertibility of the funds acquired
total
May
1947;
however,
the United
States position a* a sunnlier has
increased from 59%
York
Lower Church Hall, Our Lady of
Victory Church, Pine & William
Streets, 4 p.m. ;
< ; .
America's
the
considers
one
Security Traders Association of
New
:n
The
view of these developments
Latin
of
Profit
Railroad
May 4, 1948 (New York City)
exports from 51% in 1944 to 40%
a
to
share
—
Co., 231 South
Street, Chicago 4, 111.
Laird, Bissell & Meeds, 120 Broad¬
way, New York 5, N. Y.
Tex.) 7
Texas Group Investment Bank¬
ers Association Spring Meeting.
exports to Europe since the war's
end have cut down
the United
States
5,
—
Booklet explaining
municipal bonds in layman's lan¬
guage—Ira
Haupt
&
Co.,' Ill
Broadway, New York 6, N. Y. 7
Oil
40%
of
its
prices, but volume also estimated
exports.
dainly registered gains.
•
:<' This compares with 33 and 32%,
A peak in
imports obviously respectively, for the period 1936oomed
as
the
Increased Latin American
year
1947 pro¬ 1938.
cessed and most observers
&
Exemption
ncreased
:
Co.
&
7
to
How
raw
took
Exploration
Comstock
Salle
Chicago 4, 111.
During 1947, the United State*
supplied approximately 65% of
and
Oil
■
.•-.•7:7-,i
Comparison
EVENTS
April
imports
Program— Tabu¬
Y.
stocks
materials.
area's
Benefit
list—Newburger, Loeb
15 Broadway, New York
New
COMING
the
sponsored 7 or encouraged
orograms will continue to produce
a
strong demand for industrial
the
lated
to
.
ment
machinery,
Likely
Defense
from
k
total trade of Latin
M. Kidder
&
Co.,
Street, New York 5, N. Y.
1 Wall
.
;
importance of the United
States in
major objective
larger Latin
countries and govern¬
American
•.
Companies
a
of
certain
Circular—A.
Public
and
in
Rafferty
N. Y.:
Co.,
increases
many
•
A.
S-l—Morgan, Rogers & Roberts,
Inc., 64 Wall Street, New York 5,
Cuba, Peru and Venezuela;
their gold and exchange holdings
increased $220,100,000, $10,209,000
were
*
W.
figure - charts of stocks and
commodities—write for Portfolio
Mexico,
Peru and Chile, tariff
Niagara Hudson Power Corp.—
on cap¬
on
exchange, protection has
played
a
part.
In some
example,
firms mentioned will be pleased
parties the following literature:
ital growth by means of the point
and figure method—also literature
the general down¬
ward trend in exchange holdings
for
interested
exceptions to
commodities were enacted,
A m e r i can
nartly for protective reasons and
Republics will partly to reestablish the effective¬
-a rtnyoximate
ness of fixed specific duties viti¬
$6 billion. '77 ated by the rise in price levels.
An improved Upward revision of import dut'es
supply situa¬ has been talked of in a number
tion
abroad
of other countries, including
and
growing Brazil and Colombia. Industrial¬
Latin
twenty
also, but
much smaller scale.
on
to
conserve
estimated that
other countries declined
and import
the 'desire
been
send
to
Capital Growth—Letter
All available facts
by
7
v
future Latin American-U. S. trade relations.
on
1948
Dealer-Broker Investment
By W. A. RAFFERTY
Office of International Trade, U. S. Department of
Thursday, April 22,
in
an
Texas
and
ismna.
area
in
in
southeastern
central
south
comprising
<
Lou-/
aonroximately
27,500 square miles and extending '
from
Deanville.
Texas, on
the
to
west
Holden,
distance of
enst,
a
The
company
gas and
La.,
also
on
the
350 miles.>
over
sells
natural
water in parts of this
Aporoximately 13.5% of the
area.
com¬
pany's total ooerating revenues is
currently derived from the *ale of
electric energy or steam directly
to
the
pipe
oil
line
industry
for
pumning
pumping and drilling.
refining,
and
.
well
•
Volume 167'
&
COMMERCIAL
THE
Number 4692
ft'ft' fft; i?:
ft ft'W ft;
y-
*'V; ft
"
*
'ft'-.!' -ft''' .ft'""1 .• ft.
-
.
in
„•
.
,
a
motion
Company's financial position was
Metropolitan policyholders
before enjoyed the blessings of life
insurance. Through investments, the Com¬
pany played a bigger role than in any pre¬
ceding year in helping to keep the wlicels of
Industry turning . . , to provide jobs and
Departments completed, as
•
.
and to maintain
records. \
of lower interest rates, and because
prevalent increase in the cost of goods
A. Lincoln reported these
Company's 1947
facts in his'account of the
OBLIGATIONS
AND
ASSETS
■'?: r
•'■? )A-i:' :V.-,■■ -V.'
■'-M
OBLIGATIONS TO POLICYHOLDERS, BENEFICIARIES, AND OTHERS
,
Policy proceeds from death claims,
.
.
.
.
Railroad
373,634,251.42
.
Public
matured endowments,
which beneficiaries and policyholders
Company to be paid out to them in
in 1948 to those
Claims in process
i
Loans
'
34,085,5^0.50
of Settlement, and estimated claims that
been reported to the *•.
'
Obligations
.
.
.
.
.
y
.
.
.
i
•
ft' 33,550,654.32
•
-
17,704,521.00
Taxes Accrued
Including estimated amount of taxes payable in
business of 1947.
for Mortgage Loans.
All Other Obligations
.
OBLIGATIONS
<
.
.
.
,
•
,
.
,
.
.
.
.
.
This
Obligations by
•
•
Unassigned Funds (Surplus)
NOT.Et—Assets carried at
law
or
•
»
•
•
.
,
.
.
.
.
.
«
»
Premiums,
21,000,000.00
«
29,389,937.42
»58,048,865,244.66.
.
.
.
.
105,388,903.00
,
.
.
.
•
.
964,666,721.19
86,117,937.09
$
y
.
»
.
•
>
»
.
343,301,733.81
.,
•
•
208,752,510.79
/
..
$ . 139,090,580.35
35,015,955.07
-
; c:
i
\
^
i
'
'
«
This fund,
•
(
27,276,356.51)
$427,
59,645,975.37
.'
.
156,258,124.20 :
124,836,913.79
^
57,706,111.28
./ . 58,548.422,601.17 ;
V
.
•
Deferred and in Course of Collection
1
.
.
.
.
v.
OBLIGATIONS.
TOTAL ASSETS TO MEET
•
.
their policies.
(After decrease by adjustment of $25,000,000
Accrued Interest* .Rents, etc.
-
.
878,548,784.10
Policies
.
$ 72,281,000.00
.,
,
Cash and Bank Deposits
safety fund is made up of:
Special Surplus Funds
Loans on Real Estate
.
.
.
policyholders on the security
99,557,356.51
.
1,150,294,533.15
ftft'ft
debtedness (of which $ 19,098,5 79.96
,
v
,
y.,-.
Preferred or Guaranteed,.
'
J
Thus, Assets exceed
,
'.
.
V'.
.
is under contract of sale)
1948 on the
-
Contingency Reserve
v
'
1
0ivv-v>'
'
,
V* '7
'■>'v'
.
^
4
'*'
representing about 6 per cent of the •
5412,328,264.37 in the above statement are deposited with various public officials under requirements of
Annual Statement filed with the Massachusetts Insurance Department. Policy Reserves Required
by Law are $7,333,661,993,00, and All Other.Obligatidns are 529,265,908.42. y ■■
r
METROPOLITAN LIFE INSURANCE CO.
1 Madison Avenue,
1
Gentlemen:
Please send
I
Metropolitan Life
■
*
■
me
New York 10, N. Y.
.' * '
a copy of your Annual Report to Policyholders entitled,
**PageS From An Open Book."
•
—
•
NAME.
Insurance Company
\ A MUTUAL COMPA NY\
y
t Madison Avenue, New York 10, N. Y.
STREET-
CITY.
'
obligations, serves as a cushion against possible un- 4
favorable experience, and gives extra assurance that \
all policy benefits will be paid in full as they fall due.
regulatory authority. In the
j
0
,.v
C* '
975,681.105.50
^Properties for Company iise: •, . * •
: Acquired in satisfaction of mortage in-,
Including premiums, received in advance, etc.
.
510,214,387.99
in the aggregate) .
.
,
.
.
.
Housing projects and other real estate
acquired for investment- > • .
.
;
,
have occurred hut have not yet
TOTAL
on
Real Estate
■
Company..
Other Policy
74,399,932.15
'
.
.
.
Made to
. ■ -
#•;•$$
Other Property
policyholders eligible
;
.
,
.
.
Farms
to receive them.
Policy Claims Currently Outstanding y
.
■
2,710,589,958.79
»
'
141,215,117.00
.
f
Set aside for payment
.
53,876,921,624.32
244.410,821.32
♦
.
Municipal
,
First Mortgage
64,747,219.00
.
.
.
,
All but $1,565,382.00 are
Policyholders'Dividends Left on Deposit
.
•
Utility
Stocks
.
future years.
Reserved for Dividends to Policyholders
.
Industrial and Miscellaneous
and other payments
have left with the
;
.
.
53,632,510,803.00
Other Bonds
Provincial and
.
OF OBLIGATIONS
ASSETS WHICH ASSURE FULFILLMENT
-Canadian Government
:
;
1947
3 1,
;
U. S. Government
ftft; *
Supplementary Contracts
policyholders." ft "
"Vork State Insurance Department)^ v; yo- >
•
benefits.
condition."
Metropolitan's Annual Report for 1947,
which is entitled "Pages From An Open
Book," contains much additional informa¬
tion about the Company's operations. If
you would like to have this booklet, fill in
and mail the coupon below. A copy will
be sent to you without charge.
DECEMBER
-
;
'■
of all future policy
Reserved for Future Payment tinder
'
National Government Securities
#$7,333,537,964.00
...
together with future premiums and reserve
interest, is required to assure payment
sound financial
accorded the
(in accordance with the Annual Statement filed with4h$ Jievv
.
a
"Policy claims are paid promptly, and
fair and equitable treatment has been
'
—Metropolitan will pay in 1948 somewhat
more in dividends to policyholders than in
1947, although there will be downward ad-ft
justments for certain classes of business. -;
and services."
This amount,
it is in
t•;
,
Metropolitan
Company indicates that
Life Insurance
.,•
year-end, policyholders owned a
total of $37,250,(XX),000 of. Metropolitan
protection—the greatest amount in the Com¬
pany's history;
without its
problems. Insurance costs were higher be¬
,
ft.
?—At the
"However, the year was not
Policy Reserves Required by Law
&
-
32,384,000.
«
President Leroy
k
"The examination of the
people bought
Metropolitan policies during the year. The ;
total of Metropolitan policyholders reached
of living.
of the
V;;v t,i
$671,000,000—topping all
<
*
-ft: - - • , .
ft
—More than 2,300,000
high standards
cause
totalled
ciarics
,
required by law,
periodic examination of Metropolitan. In
their conclusions, the examiners reported:
a
—Payments to policyholders and benefi-
excellent. More
reported that last year
representing all State Insurance
committee
a
Mr. Lincoln:
ever
'ft'-
Mr. Lincoln also
picture entitled "Pages
Open Book." Here are some other
important facts about 1947 presented by
"The
..
'V*..-'
•
o
i;
,
.
From An
•
history of the Metropolitan
Insurance Company.
•
Vr
homes
"
■
Metropolitan's History
activities in
*C1 y^l was one °f the best years in the
047
1
than
(1753)
An Outstanding Year
4
ftftftft,;/.y- ;
Life
CHRONICLE
FINANCIAL
.STATE-
*
,
,
1
9
COMMERCIAL "&
THE
(1754)
10
A Fair
Bank and Insurance Stocks
CHRONICLE
FINANCIAL
'
By CHARLES FLEETWOOD*
Mortgage expert calls attention to depressed and inadequate mortgage interest rates, which handicaps
savings and investment as well as home building.
Lays blame on prewar and postwar Federal mort-
Insurance Stocks
—
parent and consolidated bases.
the
companies
22
to
issue
the
of
"Chronicle" should be used, how¬
instead of those given in the
ever,
earlier
issue, because some in¬
accurate adjustments were made
for changes in the unearned pre¬
mium
the
results formerly
underwriting
shown.
distorted
and
reserve
Figures for 1945 and 1946,
correctly shown,
may be used for comparison
however,
and
were
with the corrected 1947 figures.
ciation
the
with
in
*
an
table
the
no
own
report
tive
concerned.
the
and
a
You
'
',
.
<'
*'
'
V
*
'
*4'
1947,
by most
February,
what I
can
see,
there
short¬
a
funds
grant increases this year.'
Chas.
G.
Fleetwood
to
t
-VO"*,
/_
.'
')U
V'..
Fed. Tax
m
—1.09
Agricultural
*
2.19
4.84
—8.02
American
Boston
Insurance.
2.31
Inv. Inc
Net Total
$
$
<
2.93
—0.83
Cr0.03
,
5.44
'—10.00
Cr0.04
/ 1.59
•
2.31
0.10
3.54
0.43
0;33
0.82
3.57
2.91
1.37
*0.18
4.10
3.25
0.85
0.10
4.00
Fire Association
4.16
1.21
0.14
5.23
Insurance..
$
#4$
*
1.12
.
Fidelity-Phenix
Continental
Consol.
Net Oper,
Fed. Tax
Net Und..
.
—3.18
0.10
3.24
Equitable
Insurance
Cr0.02
V
i
4.05./
1.59
1.03
3.97
•••
2.17
0.28
5.50
1.91
0.23
5.86
4.63
'
-
1.54
—0.3Q
Great American.
1,42
0.52
CrO.Ol
Hanover Fire
2.09
—0.67
0.02
4.11
4.11
0.25
7.97
•
1.75
1.93
0.41
3.27
*
4.44
1.71
0/13
5.97
2.84
—4.62
2.62
—0.44
1.42
0.13
0.03
6.72
0.24
13.07
0.81
0.08
4.47
0.22
6.80
.
Hartford Fire
;
.
i, i '•
.—-
...........
Home Insurance.
...
i Insurance of No. Amer..
National Fire.
New Hampshire
North River
^
1.24
0.94
0.15
5.42
0.75
CrO.Ol
2.23
—0.68
0.01
„
.
.........
Phoenix Insurance
6.59
3.74
J
St. Paul Fire & Marine.
3.23
Security Insurance.
Springfield Fire & Mar._
1.73
3.48
1.21
6.21
1.25
Cr0.25
7.71
5.26
3.79
—5.93
—2.14
0.10
2.89
—1.16
0.01
1.72
1.68
1.52
1.42
0.13
0.03
1.52
r
1.97
r
:
own no
0.77
to
The
Financial
FT. WAYNE,
Pape is
now
Chronicle)
IND. —Albert
O.
affiliated with Wefel
Maxfield,1 Ft.
Building.
Wayne
Bank
WitK Herrick, Waddell Co.
(Special
to
The
Coulter
is
Financial
Chronicle)
CITY, MO.—Monte C.
now
connected
Herrick, Waddell
&
with
¥.07
5.59
0.32
2.52
'
—1.55
Cr0.42
■•.■2.20
0.35
^
-
13.07
0.12
v
•
6.03
,
3.97
3.2T
'
are same as
1.39
;
—2.05
s
4.35
•
.
"parent."
--r-
'
Over 1,400 members and guests of the
COMPARISON
AND
ANALYSIS
20 New York
City
Bank Stocks
March 31, 1948
Circular
on
Request
was
Laird, Bissell & Meeds
Members
120
New
Stock
BROADWAY, NEW
Telephone:
Bell
(L.
York
are
also
A.
Exchange
7-3500
Teletype—NY 1-1248-49
Gibbs, Manager Trading Dept.)
which
Security Traders Associa¬
attended the Twelfth Annual Dinner
three
old-fashioned
TRADERS
was
served.
ASSOCIATION
OF
PHILADELPHIA
The annual summer outing of the Investment Traders Association
Philadelphia will be held on Fridaj-, July 9, 1948 at the Tavistock
j Country Club, Haddonfield, New. Jersey.
of
our
policyholders.
An
editorial in
"The American
Banker"
gs
an
exception to the
general trend of thinking and to
my mind cuts to the root of the
trouble.
posal
In
for
commenting
the
on a pro¬
establishment
of
a
secondary mortgage market, the
editorial points out that such pro¬
posals are nothing more or less
and particularly mortgage
to keep pace at least in
money,
money,
some degree, with the increase in
all other costs of housing.
I was glad to see "The Amer¬
ican Banker" take this
stand, for
it parallels very
closely my own
views. At the same time, I re¬
gretted that the editorial could
not have appeared in other papers
also.
The question of mortgage
interest rates and their effect on
home ownership and
on
our
na¬
tional
economy
is one
whichshould be understood by the great
general
public. The only way it
understood by them is
through the columns of our news¬
papers
and our magazines, and
The result is that at present
through
the
sound
educational
work that people such as you and
period the cost of everything
else, including our cost of doing
business, has steadily increased.
yields,
mortgage loans have lost much of
former
attractiveness
comparison with other and
liquid forms of investment
be
over
met
be
can
I
can
carry
in
more
pres¬
ently available.
and
something left
and above the net yields ob¬
tainable in government and grade
industrial securities, there is
point in making mort¬
out.
•
/V//
I
7
-
We cannot escape the fact that
interest represents a large part of
the
ultimate cost of the - average;
residential property, which is not
paid for in cash but paid for over
a long period of
years.
It is per¬
fectly understandable that the
buyer or builder of a home, con¬
cerned
ment
like
primarily in the advance¬
own interests, would
of his
to
see
mortgage
-
But let us—and I
as
:'
f dpn't know how other insur¬
ance
companies feel; about this.
I
don't
know
what
other
tutions have done
or
can
we
of
insti¬
will do.
All
We have been
con¬
our
concerned
because we wish to
continue to make mortgages.
Ob^
viously, if costs; continue to increase
interest
and
rates
not
are
permitted to rise, the yields will
drop to a point where there is no
incentive to make loans.
That,
we
whole
a
loan
rates
and
mean
not
just
society
who
we
in the real estate profession—
look at the other side of the ques¬
are
tion.
What
sources
say is that
in Pruden -
steadily rising
doing business. We are
do
we
owe
to
the
of mortgage money?
Volume of Mortgage Loans
At the end of
1947, according to
estimates, the
non-farm home mortgage debt of
this country was approximately
the
most
reliable
$30 billion.
total of
I understand that the
new
mortgage loans placed
one-to-four family non-farm;
one
homes
reached
.$11.4 billion for
1947. Regardless of the astronom¬
ical character of these figures, the
facLthat must never-be lost sight
bf is ihktvthe^b^
think; would be a* bad thing, for
of
bad thing for you, arid a bad
thing for the borrowing public;
savings; the savings of our thrifty
people-^iir men, women and, yes;
us,, a
Now that I am four-square with
look at this mortgage situation in
a
completely objective
manner.
Recently there has been
of
and financial journals
about the
so-called
tightening up
mortgage market. There
be
rash
a
articles and editorials in trade
a
in
the
seems
to
soft market for GI 4%
very
that/hiortgage; debt represents,
bur' school children:
even
are
and
similar accumulations. And
they will range from a- $5 thrift
account to five-digit fortunes—or
more.
Why have all these millions o£
people, including some 24 million
Prudential
policyholders,' sacri¬
miums and finder's fees for Title
ficed
VI loans which bear 4%. The con¬
earnings?
sensus
order that their
as
expressed
cles I have
great
many
accordingly
of
-these
by the
mentioned
arti¬
is that the
pretty bad way. A
bromides ajnd panaceas
a
trotted out.
are
are
?
Most
compounded
straight government aid
or
of
guar¬
Thesev
represented by life in^/
surance
contracts, savings bank
accounts, pension funds, deposits
in savings and loan associations
savings
loans, and lenders apparently are
no longer eager to
pay high pre¬
patient is in
INVESTMENT
a
year
(April
teams
"sauerbraten? dinner
safe
a
But—and here is the rub-f—mort¬
gage interest rates during the! past
*
bowling match between Philadelphia and STANY
the Downtown Bowling Academy, on
Sunday, April 18.
in
and
the world,-we can go ahead and
competed was won by STANY.
Following the games those in attendance retired to the old "German
American Rathskeller" on Third Avenue at 17
Street, where a good
YORK 5, N. Y.
BArclay
match
is,
•
annual
held at
doubled
provided the result
and profitable return
interest rates.
cerned about
Pictures taken at the dinner will be published in the "Financial
Chronicle" of April 29.
The
account
oh the funds of
costs
19) at the Hotel Waldorf-Astoria, New York City.
After a few brief remarks by Association President John J.
O'Kane, Jr. of John J. O'Kane, Jr. & Co., the gathering enjoyed a
program of professional entertainment.
The
ex¬
have been mighty concerned
about the inadequacy of mortgage
SECURITY TRADERS ASSOCIATION OF NEW YORK
tion of New York, Inc.
in
tial
Security Dealers Association
-
this
see
iji th$ recent past
4.75
.
of the New York
invited to attend,
mortgage loans
$1.3 billion. We would like
I know and all I
3.98
have the benefit of their experience in clarification
;
We
Rates
; The Security Traders Association of New York will hold a
meeting on May 4 at Lower Church Hall, Our Lady of Victory
Church, Pine & William Streets, at 4 p.m., to discuss New York
State Tax Stamp legislation and possibilities of eliminating payment
of the stamps. George Rieber of the N. A. S.
D., representative of the
Clearing Banks in New York City, and others are invited, so that
,
by
the public purse.
Adequacy of Mortgage Interest
NEW YORK STAMP TAX MEETING
Members
Co., Inc., 1012
Baltimore Avenue.
to
total
even trebled
6.90
5.69
2.55
0.07
0.78
supplemented
reduced to the minimum.
3.50.
.
9.07
^
hold
cess of
a
borrowers.
637,000
gages.
BillNSTdSNotes
of the laws.
now
$4.7 billion to
over
about
not much
*
the group may
of
A
!
&
KANSAS
1.54
1.05
2.36
affiliates, hence consolidated earnings'
With Wefel & Maxfield
6.72
3.80
'
^Companies
(Special
CrO.lO
0.24
6.59
4.61
.
a little, Texas style, I. could
that over the years Prudential
ing to
1.79
0,48
3.27
say
has made mortgage loans amount¬
can
1.04
4.44'
s
11.87
0.33
2.18
—0.73
1.88
1.54
0.67
—1.78
3.79
*U. S. Fire
1.78
2.89
-
just
It costs money
to produce and service a
mortgage
0.42,/:
loan properly.
Unless this cost
1.84
<
*
^Pacific Fire
4.81
2.75;
7.14-
5:40
•
nationwide
ment and mercantile & properties.
If you will permit me to brag
their
4.22,;
1.24
—0.30
2.13
1.40
•
1.54
1.95
*
on a
be
directors, mort¬ than a demand for government
always have been an invest-,aid in staving off economic retriment
bulwark.
We
believe in bution.
In place of any such
pal¬
properly selected mortgage invest¬ liative as this, f^The American;
ments; we like to make loans on Banker" urged that steps be taken
homes, farms, industrial, apart¬ to permit the wages of investment
3.43
4.18
3.61
$
3.78
—4.52
0.82
•
;• ■
s,.
2.13
'
*Franklin Fire
active
decade have been forced down b>
about one-third.
During this 10-
Total
& Net
N$t Oper..
$
$
v'/
Aetna Insurance.
•
Total
1946
COMPANY-
-CONSOLIDATED
COMPANY
%m. inc,, Net TJnd..
the
that
an
to
gages
of invest¬
age
available
t
been
able board of
our
really
isn't
of the Mid-West States;
States are likely to
Us
about
basis for many, many years.
In
the eyes of our management and
ment
Net
know
has
antees
liberal transfusion of funds from
on
how
you
feel
mortgage
money.
From
Additional
PARENT
'/ **".
probably
,
Prudential
1947 Earnings Per Share
'
the Prudential
mortgage investments.
the
The
full
favorable
effect
of builders and buyers of real estate,
affiliates, consequently the earn¬
ings shown as "consolidated" are these various increases have not provided they are willing to pay
the same as the "parent" earn¬ yet been felt and will not be fully a fair rate ofv interest, y
I should like to explore the sit¬
ings.
All
figures are derived realized until all policies written
at the lower rates have matured-. uation with you today, and while
from Best's publications.
It is pertinent to close with the we may not come up with an an¬
It is interesting that seven com¬
panies
experienced
higher
net following quotation from the cur¬ swer that will satisfy every one,
underwriting profits, on a parent rent issue of Moody's Stock '.Sur¬ perhaps we can clarify certain
basis, in 1947 than in 1946, as vey: "Prices for insurance stocks questions and you may be able
follows: Boston, Great American, as a group appear reasonable and
*An address by Mr. Fleetwood
Hartford Fire, Home, Insurance the industry's longer-range pros¬
of North America, Pacific Fire pects relatively favorable.
Re¬ at the Fourth Annual Long Island
and
St.
Paul
Fire
&
Marine. tention of these stocks for income Mortgage Conference, Garden
City, L. I., April 14, 1948.
Furthermore,
three
companies, is advised, generally."
■
start
we
various
in
New England
Atlantic States, and
Middle
at
we
deal
about
Before'
this, I should like to tell
we
heard
great
important
some
few
months
have
fully the prob¬
reasoning of an in¬
lender,
such
as
the
more
the
Prudential.
the
During
last
net
appreciate
stitutional
mortgage lender
rates have been increased
of
to
lems and
is
my
shortage of
1947
Since
States.
-
(
our
made effec¬
were
and
1946
in
on
e c o no
Many of the companies are be¬
ginning to benefit from the rate
increases which
ef-
broad
feet
underwriting profits in 1947, com¬
pared with net losses in 1946.
by
companies marked
Phoenix,
and
1
The five
*
....
which mortgage dollars can earn have a profound effect that percolates
through all our economy. In the final analysis it ends up with the one who is paying the
report larger total net operating
Wages and the one who- is receiving the wages being almost indistinguishable in so far as
Two companies, viz., Agricultural
"narent" basis were tabulated, com¬
pared with 1945 and 1946.
The^
1947
"parent" figures tabulated American Equitable, Fire Asso¬
current
and invest
save
The wages
and net underwriting profits on a
the
y
gage
earnings for 1947 than for 1946.
and National Fire show a consolidated net operating loss.
.:r\
In the March 25 issue of the "Chronicle," net investment income
in
:
aid policies, and foresees shortage of private funds for housing, if interest yields' are artificially
depressed. Says free enterprise system is endangered by low interest rates, which discourage incentive
profits for 1947 of 22 representative
stock fire
are tabulated this week, compared
with 1946 consolidated net.
Figures for 1947, furthermore, show net
investment income, net underwriting profits after adjustment I foi
increased premium reserve equity, and Federal income taxes on both
net operating
insurance companies
of
:
Vice-President, The Prudential Insurance Co. of "America
Consolidated
Sixteen
1948
VAN DEUSEN
By E. A.
This Week
■
April 22,
Wage for the Mortgage Dollar
,
=
"Thursday,
put
to
to
futures.
set
aside
work
or
of
to
their
in
so
savings might be
safeguard
their
They have added to these
accumulations
age
part
They have done
so
that in their old-
under adversity
(Continued
on page
they and
35)
V
^
THE
Number 4692
167
Volume
COMMERCIAL
FINANCIAL
&
Citi¬
land of the collective farms.
Speaker Martin Attacks Truman
Anti-Inflation Planf |
uries
Strikes
would
tive
Speaking at the Convention of the Daughters of the American
in Washington April 19, Joseph W. Martin, Jr., Speaker
the House of Representatives, expressed opposition to President
Truman's program to
V
i
■
lective
prevent
a
decep-
great
tion
being
practiced
the
o n
people.
is that
we
have
a
It
can
o
t
n
r o
which
at
a
living
in
live
of all goods
The prices
services
Russia
1 s,
can
be
times
from
time
just
payment of 16 years bond interest
.Of
'59-
SI,029,000
$8,728,000
6s
of
'00.
5,276,500
48,383,000
3s
of
'61——-
3,099,500
24,469,500
and to accept
the
/V'j.
American investors
huts, or
nal
conditions
to
seem
of
owners
stead
amounting
Peru
$115,000,000 which was reduced
to
when
$81,580,000
Peru
of
of
the
6%
the
ternal
issues.
to
It
:is the pretense
Hon. J. W. Martin, Jr.
that
thos^
controls will not tend to encroach
STANDARD ,01D'™]
the liberties and privileges
upon
«of the .citizens.
"Now the fact is
a
government
with powers of control over part
of the citizens' activities is under
constant
•control
pressure
the
over
is
:
to. assume full
direction and
speed of every part, big and little,
in the whole economic machine
a
In 1946 Standard Oil
1.
over
(Indiana) and its subsidiaries
3159,000,000 for construction and other new facili¬
ties-'of^lkinds.'lrr 1947cthe companies' capital .expends
X Sales in 1947 were* $886,300,000, as
there is the picture of
compulsory state in all its
naked ugliness. We want none -of
"Now,
that in America.
which
The year 1947 was the 54th consecutive year in
dividends have been paid. Reinvestment of earnings
■
"Controls necessary in war are
and : 360,000,000 from depreciation and
depiction. (Arrangements have already been made to
cover the bulk of the prospective 1948 and 1949 capital
requirements.)
the
"When
government is the
customer it knows what it wants.
5. Net crude oil
could government bu¬
Washington know what.
145 million customers wanted?
But
how
reaus
barrels
^Then,
on
an
CONSOLIDATED
i
I
And Summary
people
revenues.
Materials, used,
penses
<
'
'
3667,639,570i
,
ex¬
'
...,
,
' ]j
J
,/
' •. •; 'M:
.
Federal and state income taxes...)
3 60,208,278
3 51,905,112
22,229,000
j
20,867,000
3 38,971,454
.
(exclusive of
taxes
i.;....
amounting to
~
Vf V
2,144,482
;
;
1
2,242,988
3599,989,785
citizen's life. The people are mere
•
pawns.
Yet that control has failed
^completely
"results.
produce
to
i. too
Our tax rates are
States.
ingh» hut in Russia recently,
they executed
a
$0% capital levy.
plants operated, at the year end.
the
year
4,497
30,369
„"'•*>
j X
ittcdme/..A^922,BIO,305
"Net earnings...........
........ i. .....
94,880,715
(Dividends .paid.. /.
.•
30,570,249
.
3 67^649,785
at
3667,639,570
67,649,785
26,748,791
64^0,466
40,9.00,994
34.43
A, J 32.00 . *
31.75
.3924,870,060 $860,560,177
share, at the year end.....
$60.51
; $56.30;
.
the year end;...
Book value per
.
£6-21
learnings retained in the business..*
dividends paid per share..
Net worth,
3633,768,075
4,515
31,453
.j
end...,,.
. .
........
(Indiana)—32.00
per
30,570.249
*
PEOPLE
26,748,791
.3 64,310,466
Earnings retained and invested in the bustness at beginning of year.....,......
364,404.010
3 40,9(X),994
Balance of earnings retained...
"Earnings retained and invested in :the bustness at
end of
.<
Stockholders,
at
the
year
'M..
97,237
42,616
323,503,016
[
:
.3428,714,476* 3364^404,010
year..'.
'^Including 3197,000,000 restricted by terms of debenture and bankagreements of subsidiary companies and about 39,500,000 of
,.
.
Copies of the 1947 Annual
loan
earnings of pipe-line subsidiaries
fDccree in Elkins Act suit. •
..
97,495
45,967
end..,y..
Employees,-at the year end.
efficient
They have had worse in-
Ration than we Jhave had in the
United
Oil Company
share in 1947 and
31.75 per share in 1946.
3a5,750
Dividends paid by; Standard
years,
-
,..^94,680,715
income.
;
.3886,290,397
Total sales in dollars...................
Net earnings per share,
3.886.880
124,432,303
403,400
Cross
16,652,044
982,527;
21,545,740
.
3827,929,590
Total deductions..,
Net
;
the Kremlin has
.held complete "control of govern¬
ment, industry, agriculture, labor,
and of every detail of the private
"For
51,377
,
refineries, barrels......... 135,096,034
run at
Crude-running'capacity;/year end, barrels
per day.
FINANCIAL
v
'
pened there.
58,513
..
ment agencies)......,
Interest paid..
Minority stockholders' interest in netincome
of subsidiaries...,, .A..,.....,.. 1....
Look
what has hap¬
,96,678
.
Retail outlets served, at
12,933,658
1946 collected from customers for .govern-
"test of the last few years.
12,867
81,590
14,114
«
traffic, million barrel miles
/*•'
Bulk
3142^52,68410 1947 and 3128,914,947 in
completely under the
..
Pipe-line traffic, million barrel miles.,,
Tanker and barge
•MARKETING
13,813,576 ;
:
taxes
,
-
Pipe lines owned, at the year end, miles.
Crude oil
3507,340,114
3 25,157,878
Other
end,....
1946
64,533,584
7,205
381
MANUFACTURING
operating and general
other than those shown below.,. .3717,915,210
Depreciation..... 1.
.3 29,365,616
Depletion and amortization of drilling
and development costs. ,; ,..
.
17,438,774
3 46,804,390
Loss on dry holes, retirements and abandon¬
ments
13,403,888
government
see
'
for depreciation, depletion, and
amortization of properties—
is
not successful government. Tt has
always failed to give the people
happiness, progress or prosperity.
and
Oil wells otvned,, net, at the year end,. ,w
71,811,680
,
7,772
579
}
3910,746,050 $650,615,964 /
10,710,937-1"
9,452,4151
1,353,318
7,571,191 !:
Provision
political shell game.
at Russia
/
. .
Gflis wells'owned, net, at the year
1946;
.3922,810.305
Total income
DEDUCT:
*
It has failed
*947,
Crude oil produced, net barrels.
TRANSPORTATION
operating
Dividends, interest, etc. received,,.......
Gain on sale of investments and capital assets
ever
"Concentrated
j
the Rus¬
Sales and
FIGURES
PRODUCTION
of Earnings Retained and Invested in the
1947
other entrances. But under¬
the high-sounding slogans
and
the
glitter of paternalistic
isctollwotk, they are all the same;
The American people will not be
■*
fooled if they know the nature of
,
in}40 states. In the 15
THE "STORY IN
EXPENSES
Business for the Years 1947 and J 946
many
neath
;-v
prod¬
Nojrth ;Central states, confajning (nearly % of the nation's population, the company
is the largest refiner and jnarketer of petroleum products.
ucts
STATEMENT OF INCOME
AND
i
entered into
the compulsory state through a
door on which the price of admission was plainly posted, except in
case
of
subjugation. There are
"No
"
.
19. Standard pil add its subsidiaries sell petroleum
production in 1947 averaged 196,700 j
all-time record and an 11% increase
.
this
and no
organization owns as much as 5% of the stock,
individual owns as much as 1%.* i r- }
^
r
government
based, and upon which
sian economy operates.
'
has
During 1947
stockholders increased to 97,495." No
what principle would
at Washington
guide the national economy? Ob¬
viously, it would be on the prin¬
ciple
that what
somebody
at
Washington thought was good for
the people would be done. That
is exactly the principle on which
the despotism of the Kremlin is
.•the
day,
a
at
number of
the
•for the year,
produce for 145 million customers.
1
greatly increased the stockholders' equity.
capital expenditures were financed with
396,000,000 of borrowings, 364,000,000 from net earnings
1947
4. The
in a peacetime econ¬
omy. The objective of a war econ¬
omy is to produce for the govern¬
ment. A peacetime economy is.to
not necessary
runs at refineries averaged 370,000 barrels
compared with 341,000 barrdls a day in 1946..
as
employees increased from 42,616 to
45,967.>PayrdU and employee benefits were 3183,000,000,
equivalent'to an average of 34,091 per employee. Back
*oi each
employed ther£ is an average capital investment
of 324,600.;
'compared with?
compared with
3. Net earnings were 594,900,000, as
367,600,000 in 1946.
day
7. Tliemumber of
3633,800,000 in 1946. ^
>
Important oil idiscoveries were made, -
completed a.nd 234 wells were purchased.^
6, Ci'ude oil
a.
children.
the
were
?
3220,000,000. Approximately the same amount
will be spent in 1948. Thus for the tnwe-year period, a :
total of about 3600,000,000 will have been invested in
expansion and improvement to help meet the unprece¬
dented demand foi^ petroleum products*„ £
- v)'
,f\
tures were
where you would, have to
live; what you would have to eut;
how you should spend your leiIsure; how you must educate your
1946. Several
509 wells
spent
.you
;
' '.
FACILITIES
EXPAND
TO
government could de&y
anyone the right to earn a living.
A government with such powers
could' make access to the necessi¬
ties of life dependent upon obedi¬
ence to it§ authority.
It could tell
Such
spendingf6Q0,000,000
segregated under provisions of Consent
•
;
r
-
,
*
•
'
's
as
v
v:*.
the supply
Report available on request as long
lasts. Write Standard Oil Company,
910S. Michigan Avenue, Chicago So,
years,
lJ/2%
2%
the
new
and
bonds
7%
in¬
which
solemnly obligated itself to
investors
pay
asked
two
but
few.
return of only .1%
t.wo years, and 2V2% to the
maturity
the three exter¬
originally
issues,
the prin¬
are
second
third
$81,580,500
$9,405,000
a
interest the first two years,
always
a
to
the bondholders to skip the non¬
which will re¬
main
up
6/26/47
exercised
time,
offer,
Outstanding
7S
highly luxurious."
jobs in factories or on the
1947,
Exchanged
miserable, cipal
into
26,
Bonds
which make even
crowded
our
Chained, by governmental decree
to their
packed
June
Old Bonds
of
different
at
hovels, log
mud
are
barren quarters
Men are
greater than ours.
in
else
many
are
deal
favorites
bonds under their
new
year.
squads.
classes
prices. Most of the Russian people
tenth as high as ours here
home.
and
only
are
firing
and
for
exchanged
April 4, this
col¬
They get better goods and lower
few
governmental
c
levels
about
of
grades
yesterday that only
us
$9,405,000 of $81,580,500 Republic of Peru external bonds have been
stores than the rest of the people,
dollars they had.
Russian
collec¬
by
living.i The privileged rulers and
nine
out of every ten
They
action
are
$9,405,000 to April 4.
The New York Stock Exchange informed
rulers.
settled—not by
be
their
—-———-——-/ f.
Those who had saved lost
the
impossible.
are
bargaining—but by the
There
eorr.bat inflation in the following language:—
"We .m u s t
v
•
lux¬
Wages are low and
rigidly, regulated
Revolution
:
life.
of
11
New York Stock Exchange reports record of bond exchanges only
,
or
(1755)
Progress of Pom's Second Bond Exchange Offer
have
to
the other comforts
any of
he says government controls will tend .to i
encroach upon individual liberties and privileges, "exactly the prin- ;
ciple on which the despotism of the Kremlin is based."
of
permitted
radios, telephones, automobiles, or
in Washington address,
:
are ; not
zens
CHRONICLE
Illinois.
on
the
three
......
j
ex¬
■
12
COMMERCIAL
THE
(1756)
FINANCIAL
&
CHRONICLE
Thursday, April 22, 1948
Strong Railroads—Pattern lor Prosperity
By F. A. DAWSON*
J
Vicc-Presiricnl, New York Central Railroad Company
Rail executive, citing
railroad's role in promoting urban and industrial growth, as represented by Syra¬
N, Y., describes progress in furnishing additional railroad equipment. Points out importance of
/investor's role in maintaining efficient rail transportation, and decries heavy tax burden on railroad
Following the strange pattern that virtually all sections of the
stock market have set in the past year or so, Illinois Central common
lock late last week turned somewhat reactionary on good news.
For the first time since 1931 the company has declared a dividend
on its preferred stock.
The distribution will be $3.00 a share, pay¬
able May 15.
Now that the step has been taken, it seems logical
will
rate
be
resumed
this year the management
give serious consideration to
tutting the common also on a
regular basis.
later
Illinois
Central
of
few
the
was
characterized
"marginal"
as
that
the
subsequent
serious
boom.
war
with what
faced
It
was
directed
first
elimination
toward
of the debt to the RFC, and later
the reduction of the 1950-1955
be
For
the industry as a whole the
first two months of the current
Opera¬
year were
difficult
tions
seriously hampered by
were
weather
ones.
only
was
maturities. This program has been
During the
its
non-equipthan $108 mil¬
frient debt by more
lion.
1941-1947 the
years
reduced
company
During
the
same
period
equipment debt was cut by more
than $8 million.
Moreover, early
this year the road called for tend¬
of all
ers
bonds in the 1950-1955
maturity .range.
It
prepared
$20 million
of treasury cash for this purpose
utilize
to
as
much
was
reasonable.
$13,635,000 of the
There'.were
1950-1955
ma¬
turities acquired in this operation.
The
aggregate
since
Dec.
leased
of
31,
line
debt
reduction
1940,
current
y
$100
the rate increase announced Mon¬
day, the full year's results could
tvell reach
The
had
been
reduced
exclusive
of
tial
earnings.'1. if
lion
Anemostaf Director |
Edward A. Kole has been elect¬
a
director
poration
of
of'Anemostat
America,
stantial
Cor¬
are
gage debt.
\ With
debt problem
intents
to
al1
and
purposes solved, and
finances still more than ade¬
quate, it is natural to
with
stock
look
expect that
holders may now
forward to some
tion
in
This
is
as
particularly true
large
recent
finally
participa¬
the road's
high earnings.
sums
inasmuch
have been spent in
years
on
property
and
additions and better¬
addition to the debt re¬
equipment
ments
in
Guaranteed Stocks
Edward
A.
Kole
turers of air diffusion control, and
a
devices. Mr. Kole is
lawyer with offices at 39 Broad¬
has
N.
Y.
City, who for years
specialized in the corporate,
real estate and securities fields.
.
Northern Trust Oo.
Official
NY
1-1063
i1
than
"Salt
because
d
anv
other
form,
has
of $800,000 for
construction
Utlca Railroad,
of
the
Svracuse
predecessor
a
there
was
no
coordination of effort;
no unity of
The result of this cha¬
purpose.
otic
condition
was
government
control of the railroads.
"But out of this
wartime
melting pot of
transportation
problems
Strange, how often
mirrors the past!
Since
iron
a
that
that
dense
swamos
on
nationwide scale.
a
Advisory Boards
alike
throughout the
Shippers and
country.
welcomed
railroads
the
opportunity
thus afforded for joint considera¬
tion of mutual problems.
This
closer
teamwork offered
for a clearer under¬
resulted
cooperation
in
so
improved
which
now,
ful
peace,
is
The
once
arteries
dustry.
of
changes.
Northern
to
Trust
two staff
McClave was
announces
Norman
promoted
tary
The
from
Assistant
Second
Secre¬
Vice-President
and Robert L. Fisher was elected
Assistant
Secretary.
Both
are
officers in the Trust Department:
Mr. McClave joined the bank in
1934 in the Messenger
Division
following graduation from Prince¬
ton University.
Mr. Fisher be¬
associated with the bank in
ance.
1
'
to
The
'■
the
of
you
railroads
than
those
in time of
industry
are
of
a
hope¬
which
and
us
of
less complex
the need for
no
war;
united effort is just as great as it
was in time of war.
Because you
the Shippers
Advisory Boards,
Traffic Clubs and the civic organ¬
izations of Syracuse have'been so
Scars of War
they did
over 25 years ago.
railroads, today, are strug¬
your
gling
from the deep
transporta¬
to recover
received in
scars
the
tion battle of the most
it
as
does
the
to
heart of the nation's Empire State
which we have served continu¬
ously
for almost
quarter.
We
a
century and
happy that
are
part of this community.
are
gether.
we
have
a
a
we
To¬
in
vital, stake
Us Pattern for Progress and Pros¬
financial
nourishment
these wounds,
still
have
we
faith
tution
as
tion's
economic
in
them
power
But
the
funda¬
our
na¬
system, both in
will enable
peace,
continue
as
a
mighty
for economic stability and
to
national
than
heal
of their consti¬
vital arteries of
and
war
to
of the railroads
that
mental soundness
security;
the railroads require more
just
faith
in
themselves.
They require faith that those who
perity.
daily depend upon the mass trans¬
It is against this background
pf portation service which the rail¬
traditional cooperation that you roads—and
only the railroads—
of this Greater Syracuse and we can provide will see that a public
-
.
■
great Chinese philosopher, wrote,
Mejia
?
Chronicle)
Building,
York
&
members
San
you
dance
vine
We
j
Davies
and
That the railroads have an
"Study the past if
would di¬
the future."
the past
talk
about
and past experiences be¬
of
the
Exchanges. Mr. Hutchines
previously with Sutro & Co.
better
demonstrated
during the last war.
was
than
Shippers and
receivers of
freight, the Shippers
Advisory Boards and the Traffic
lessons for the present and future. Clubs all worked in close harmony
cause
we
see
in
them
valuable
Meiia,
Francisco
abun¬
of both kinds of faith
never
*
with the military
An address by Mr. Dawson be¬
fore
the Atlantic
States Shippers
Advisory Board, Syracuse, N. Y.,
April 8, 1948. -,;.i.
.
■P'-J
A,.i.
..
,w,
vilian
and
services, the ci¬
agencies of the government
the
fort" in'
carriers.
a
common
constitute
a
mighty in¬
present and future welfare of the
American people is linked insepa¬
rably with the welfare of our rail¬
road
industry.
This pattern of
interdependence presents a fasci¬
nating picture. Yet, its final de¬
sign can be only as attractive as
is
our
skill
common
together
the
in
weaving
economic
many
threads required
and
of
to give strength
durability to the very fabric
our
Let
economy.
moment and
a
us
for
pause
examine just one
,
part of this great national fabric
—let
us
see
just how closely the
threads of commerce,
government
industry and
actually inter¬
are
woven.
Area of New York Central
In
and
thJs
'
north of the Ohio
Potomac Rivers and east 6f
area
,
the Mississippi, served by the New
York
that
Central,
have
we
firmly
I
believe
to* offer thai!
more
any other section of the country;
Within this territory are concen¬
trated 52% of the United States'
buying
States'
skilled
66% of the United
labor; * 75%
6f
Vni'ted
States'
bituminous' coal
power;
steel
production;
great
the
and
85 % of
United States' Atlantic coast fpr4
eign trade."
;
"*
ports
handle
Thus, in this area we have vast
quantities of those important in¬
gredients—natural resources, pro¬
duction, labor, markets—so essen¬
tial to produce a strong pattern
for progress and prosperity.
In
this pattern the railroads stand out
in bold relief. Indeed, the number
of
employes for which1 the> rail^
> are
the direct ihedhs'; of
roads
livelihood would make a1 city
times the size of Syracuse.
thousand
here
of
them
this
in
Syracuse
'sh^
Three
located
right
look
area
to the New York Central for their
strength.
fv':-
Financial
with
New
was
and in¬
commerce
railroads
strument for the
strengthening of
this
unity.
In very truth, the
and
policy is developed which will
following 13 years' expe4 of the railroads must look ahead.
help to insure the continuance of
with banking
and', insur¬ Centuries ago, Confucious, the their financial health and
Russ
Stock
the
carrying
Todav, Syracuse lies as
our hearts on the New
Central
Directors
over spongy
Syracuse along
its "handsomest street" have given
CHICAGO, ILL.—The Board of
Co., Chicago,
and
bisect
backbone of our nation's
transportation system, America's
same
equally effective.
today con¬
problems
front
trans¬
It is that
effective in time of
war
-
problems
our common
portation service.
As
bands of
stretched through
>
As the
This plan
called for the creation of Shippers
present
time, the
forest
to
the
once again that in
unity there is
strength.
'
there flowed, in 1923, a plan for
industrial and carrier cooperation
and
City/'
transportation,
r o a
to
associated
Teletype
r a
Ufeblood of its
FRANCISCO,
CALIF.—4
C. Blumberg, Jr., and
Hartley F. Hutchings have become
N. Y.
the
over, as
city's
SAN
9-6400
all
*
standing of
York
1941
New York 4,
.1
was
But
up
warehouses; because there
not place to unload them
wag
opportunity
world
jammed
were
devastating
war in history.
Despite the phys¬
1
way
to the rails of steel which
ical wounds which they have suf¬
today, in very truth, have become
fered, despite the lack of adequate
the
Frederick
Bowling Green
The construction of
transportation routes soon
to make Syracuse known'the
"lose
(Special
®r?3d Strcet
Telephone
cars
these
Changes
With Da vies &
25
freight
the Atlantic seaboard awaiting
helpful in'ythe past, I am asking
privilege of carrying freight for
your continued assistance in
in
addition
to
passengers,
pro¬
the solution of the problems which
vided it naid tolls to the canal
now confront yoyr railroads.
during
the
navigation
season.
rience
Special Securities
tic Seaboard.
no
the
came
Bonds
the
chise of this -little railroad gave it
way,
coupon mort¬
facilitate
to
was
of the New York Cen¬
tral System "of today.
The fran¬
equipment four
planned to utilize the proceeds for
retirement of higher
area
and
measurement
would be 6old unless
the company
prosperity. In
of the principal reasons
company
jale of $14,000,000
trust
likely
industry helped to
the
accepting bond tenders.
five years old.
th*t these bonds
salt
,
expected
or
days that tolls exacted
authorized capital
sub¬
contemplating public
of equipment
obligations, .secured on
From
original village of Syracuse alone
subscribed one-half of the total
to
is
transportat:on.
growth of this Hub of the Empire
State.
Over 100 years ago, the
the balance of this
year. The
company has more than
$5,000,000
of the
$20,000,000 it intended to
utilize in
it
were
fabric
developed hand in hand with the
over
Also,
industrial
for the construction of canals and
the development of railroads in
more
already been deposited
reductions
of
the very
from the
manufac-
$1,208-
Moreover, further
transportation
the
and
on
transportation of salt to the Atlan¬
mortgage trustee. They
down to roundly $90 mil¬
a result of
the 1948 tender
as
of
into
history
this
now
Operation.
\;
1
As time went
lines
the
present dur¬
Second
;
was
became
progress and
with the
are
indus-
your
between shipper
was
thousands of freight cars virtually
Fred A. Dawson
of
one
g)00 Cairo Bridge 4s, 1950 for which
funds
have
the
trial life.
co¬
unloading; jammed upy because
they
had '' been
ordered
there
despite the lack of ships; and how
when salt be-
fact,
presenting any real
problem. T As of the end of last
year the 1950-1955
non-equipment
maturities
over
years ago
your
selling
as
$103,948,000,
of
at
or more, a com¬
total debt structure nor the 19501955 maturities
may any longer be
considered
pattern
began to take
foundation
same
by the emergency. - Many of us
recall all too well how thousands
design.
build the Erie Canal, transporta¬
tion has been an integral part of
less than three times such poten¬
a.
considered by
analysts that neither the
proud
stock is
$12,00,
share.
mon
stock outstand¬
generally
There
to share in its
This
*
War,
World
War.
organization to
handle the large problems created
are
indeed
World
the
have
not
/ the
For the first four months,
theless, and further stimulated by
ed
is
the
First
ing
Central
of Syracuse, the city began to de¬
then, there will likely be lower velop and gain strength.
The
earnings than a year ago.
Never¬ history of Syracuse is, indeed, the
<
It
into
the
carrier that
woven
month,
including
than
more
common
railroad
carried
edly
ing.
I
affected
certificates, has been
equivalent to
share of
adversely
were
as
if the tender prices were consid¬
ered
earnings
did
we
York
ca me
by coal strikes and this undoubt¬
During
operative effort
100
March
Shippers' Advisory Boards
•
..
and
New
shape
earnings,
in
year-to-year. drop
from $1.58 to $1.39 a share.
singularly successful.
that
"Pat¬
a
ity." We of the
Illinois
a
shipping and travelling services
Prosper¬
modest
For
conditions.
Central there
to
railroads is nation half crippled, and unless higher costs
may be seriously jeopardized.
without strong
revenue*,
tern for Progr e s s
and
deprecia¬
Earnings on the common stock
amounted to $10.25 com¬
pared with $4.67 earned in 1946
without benefit
of tax
credits
fact
the
here is
be¬
last year
bond
maturity problem
in the 1950-1955 period.
Its major
financial energies, therefore, were
will still
yearly equipment
tion charges.
admittedly
was
maturities
low
formerly
did not pay any dividends during
the pre-war earnings recovery or
trust
ment
of the
one
railroads
obligations it is pro¬
posed to sell, the annual equip¬
ment
by higher
I am happy to be with you today, because this
meeting affords me the privilege of
participating in the celebration of the Centennial Year of the Greater Syracuse. One can¬
not come to your ''City of Diversified Industry" without
being profoundly conscious of
equip¬
Even with the new
itation.
vill
matched
are
tirement and the financial rehabil¬
that
and
Concludes nation
companies.
expect that the full annual $6<&
to
a
cuse,
Such joint'ef¬
chuse' "proved
wages which annually total about
$9 million. Yes wages, which with
pensions and payroll taxes in 1947,
took
us
57
over
dollar
enue
cents
of
every
earned.
we
rev¬
And
let
not
part
forget that a very large
of that sum flows directly
into your local commerce and in¬
dustry.
Thus
interest
in
have
we
our
welfare,
for the railroads likewise
pendent
upon
the
Syracuse for their
mutual
a
common
are
patronage
own
de¬
of
livelihood.
Railroads
provide not only for
employment, but, through
their purchases, they also provide
direct
indirectly for the welfare of those
thousands of other employes in
industries closely related to the
railroads
materials and supply
industries—in fact, all the way
—
back to the farmer and the miner.
It is estimated that last year
rail¬
road
purchases of equipment, ma¬
terials, fuels and other supplies
amounted
to
over
$2^ billion.
That is
a huge sum, even in these
days of astronomical figures! Its
significance, however, lies more
in the fact that
sents
a
previous years,
tually have no
hand than
in
the
although it
substantial
repre¬
increase
over
the railroads
more
material
ac¬
on
they have had at times 1
past.
Such is the price of
inflated values! In fact, unit prices
for materials and supplies have
increased
since
:
on
1939,
the
average
while
(Continued
of. 74%
freight I rates
on page
30)
; ^
:
■
i";
;,:y
S."
Volume
COMMERCIAL
THE
Number 4692
167
-V/'
By WILLIAM T. FARICY*
^
spokesman, commenting
Maintains railroads show lower return
rial costs.
.
reported
fact that expenses
Asserts railroads cannot afford third round of wage increases,
will lose including workers themselves. Tn event of another war, wants rails
ceeded
niggardly in granting increased rates.
and if
granted,
everyc*!*
to
so
and not government to
V
;
terest
handle
touchy
that
feeling
people
can
when
supply of
a
the
any¬
has
thing
be
get
short
a
the industry junked
cars than were built,
but beginning in October the turn
came, and now each month that
or
ra¬
tioned.
by sees more freight
built than are retired, so, at
'
The
goes
causes
the
freight
of
be
now
can
T.
William
Faricy
the
clearly
seen as
egg
predecessor agencies, got so com¬
placent about the railroads' per¬
formance that they cut our indus¬
war
age,
tion
job of transportation was
that the car
not mean
does
We shall have
is over.
substantial short¬
and with the record produc¬
of steel, it is very likely that
again this fall
expanded.
ments should have been
The
cars
long
way
shortage
will be
there
a
a
continuing short¬
done, as all the age of gondola cars. But the rail¬
world knows, but it took its toll
roads
have
on
order
126,000
of our freight car supply.
Then
freight cars, which is more -than
came the surge of traffic incident
can be built in a year, even if the
magnificently
peacetime pur¬
to reconversion to
suits,
traffic
more
>
perhaps than
people
as
of
much
handle
to,
.<
the
freight that formerly had moved
by water.
Coincident with that
a
be
be¬
<;
.
*,■;
,
$16,000,000 for the development
of hydro-electric power and agri¬
culture.
These loan
agreements
<•
The Bank's total income for the
nine months of the present
from
faced
will
fiscal
amounting
$8,577,770, and special reserve
provision amounting to $1,960,266,
the
net
income
was
$2,242,597.
deducting
expenses
income
the
for
March
Iron
for
lag5 of 180 days* which cost the
Every effort was
made in the 1947 case to reduce
railroads dearly.
is
Institute
Steel
and
American
The
much.
dollars
ment
obligations amounting to ap¬
proximately $470,000.
the
cur¬
panies
investment as danger¬
on
ously low. Yet, in the railroad
industry, our 1946 rate of return
was
only 2.75%, and improved a
little in
1947 to 3.46%.
While
there
is
is
of
this
6%
road
been
has
done
on
RAILROAD COMPANY
and the rail¬
to keep
campaign,
industry
THE BALTIMORE AND OHIO
A great
slow.
too
work
deal
in this, it
progress
some
altogether
proposes
V*'\
until ,we
everlastingly at it
re¬
fair treatment that
ceive the same
other, public utilities do. We
to it as a matter of
entitled
are
interest
best
*
country
money//which/they cannot now
It may be a
do;
long struggle to
goal, but we must
give up the fight. In that
this
reach
never
try.
.
with
earnings were $367,600,700, but expenses
us,
but
railroad
by the Brotherhoods.
By
the time the Interstate Commerce
growth the last two or three years
that it now appears that by the
urged
Commission
fit to act,on an
saw
application,
end of year after next we are and the rates could be made ef¬
very
likely to have 150,000,000 fective, 43 days had gone by,
people in this country. This means which is still too much of a lag.
more people to be fed and clothed,
However, a cut from 180 days in
and housed. It
and
means
more
schools
colleges, more facilities of
kind.
It means more rail¬
every
business.
road
production
has
conversion
its
miracle
The
conversion
America's
been
to
the
to
of
wartime
repeated in
pursuits of
With it has come an amount
of traffic that actually produced
more loaded cars moved in 1947
peace.
interim
emergency
Situation
mail,
gers,
other
reduction
old
in 1947 is a good
to 43 days
194-3
percentagewise, as my
say, and we are
Chief would
hopeful that ultimately the Com¬
mission will come around to the
that it
view
should act immedi¬
ately when there is a
substantial
increase, and obviously no
other way to compensate the car¬
riers for it than to raise freight
wage
rates horizontally. There is no legal
of the war,
obstacle whatever under present
45%
more
ton-miles than
law to the Commission acting im¬
moved in the
than in the peak year
and
were
prewar peace¬
mediately and without hearing to
time peak year of 1929.
?
raise
More^ Freight Moved \tfTth
•
With
000
half
a
a
million
fewer
than in 1929 and 50,fewer freight cars than in the
railroads
the
war,
year's
That
cars
moved
last
record peacetime traffic.
traffic included the largest
history, and the
greatest
wheat
crop
that
our
country ever saw.
True, there
were
car /shortages,
particularly
at the peak, last October, but at
their worst they were less than
coal movement in
one-fourth
*An
fore
what
we
had
had
address by Mr.
the
Western
a
in
emergen¬
question of get¬
Commission around to
It is just a
ting
the
necessity of acting more
expeditiously. The matter is un¬
der scrutiny of the House Com¬
mittee on Interstate and Foreign
see
freight
rates
cies.
Cars
Less
i
i
lower
or
the
and
Commerce,
were
public
held last week on the ques¬
tion whether the
adequate
Commission has
under
power
laws, and, if not, what
the
statute
have
hearings
should
confidence
tion, is
through
going to
greater
be
that
present
changes in
made.
this
improve, either
appreciation
Faricy be¬
Railway Club, tbCtPaft of ,the; Commission of?
Chicago, 111., April 19, 1948.
We
situa¬
on
the
necessity of eliminating the lag,
had
case
every
-.'Ji
I $55,810,279
:
7.805,705
912,607
-*
T—
/■>
L.L—- $367,«<)l),700,
..
'
1'>'i
>
,
cases
start
two
struggling
possible strike
at the end of their second round
demands.
When the 1946 strike
was settled, all of us felt that the
at
a
•/•The
which
lesson
that
from
a
everyone
experience
learned
ought to
a recurrence for
years
But here we are tonight
under the shadow of an¬
other work stoppage. Conferences
return
6%
the
going
be
Are
But
reached.
we
on,
and
we
are
settlement will yet
suppose
not simply putting
it is?
off the
Already the non-oper¬
ating unions, who comprise 78%
of all the railway employees, have
served demands for a tnird rounc
evil day?
and the 40-hour
time and a half for
Saturdays, and double time for
Sundays and holidays. That the
operating unions, representing the
other 22% of railway employees,
will also come in with substantial
of wage increases
week,
with
foregone conclusion.
week-demand, unless
one
understands the history of
its non-application to the railroad
industry, has at first blush a cer¬
tain amount of plausibilitv... The
demands is
a
857,038
1 $51,524,434
I $
4,698,452
net investment of $956,423,861 in prop¬
service was only 3.04%, or about half of
return. {
' \
.
to transportation
fair
a
in
investment
their
properties,
13,' 1947 and January 5, 1948. It is estimated these interim increases
yield the Company 16%
additional freight revenue annually based
decision
still
the Company's
9,255),381
$52,381,502
will
on
are
$358,341,310
*
i
considered
on
prevent
hopeful that a
—,
1
,D
Confronted by sharply higher wage
return
;
on
31,086,057
miscellaneous services-
and supply costs, and an inadequate
the railroads petitioned the
Interstate Commerce Commission during 1947 for increases in rates and
fares. Two intprim freight rate increases were granted, effective October
f-.%i
to come.
almost
and
services
^—
devoted
erty
time when we are
with others over
rents and
Earnings—
Net
been made
segments of our industry
by some
fuel*
Total
demands have
wage
-
$327,255,262
disposed of. Third round
ones are
material,
Interest,
a point where
before the old
reached
have
! $56,222,880
> j' >;,
t
EXPENSES=:j lIMIiSISS
three years, that was about all
we should be asked to face.
Now
new
15)46
$360,294,995
—isu*,
*
Payrolls,
or
we
with
dividends,
sources—interest,
.
Total
£ ;V'.K /
the demands from
unions are being
wage
a
of
' ' *
passen¬
etc
express,
etc
rents,
-
freight,
of
transportation
From
pressed with ever-increasing fre¬
We used to think that if
we
V:'
1017
X/
quency.
has
earnings
U.
From
industry is our labor situa¬
That always seems to be
150,000,000 people. Such a spurt
taken
place
in
population
as
.
Comparison
EARNINGS:
;
A present cause of deep concern
tion.
'I. -V
at a high level and the
all-time
<
• v.
the Company was greater-than for any
high, at > $358,341,319; ./leaving net
Comparison with 1946 follows: .
*'
\'X
an
-
.»
our
■:
^
1947 was maintained
production in
freight transported by
5 $9,259,381.
.
Concern Over Labor
in
'\r '• *
•'
'
.
,
'preceding peacetime year. Total
freached
the welfare of the railroad
-
of
volume
genuinely interested in
indus¬
are
.*.V-•' • ~v
.
fight, we shall need the continu¬
ing, .persistent help of all of you
who
'•
1
ALL SECURITY HOLDERS:
Industrial
rail¬
equity
with
finance
can
.
•V-: ;
to
situation where the
a
roads
the
of
TO
really in the
fairness,- and it is
S'v'
Summary of Annual Report—1947
the telephone companies,
panies,
v';v-\V'
'
v', "
'*
\
the electric light and power com¬
the
time
other
running an ad describing
9.4% return of the steel com¬
fore America would have as many
years
its equivalent in
or
currencies.
rently
they put it out, instead of
five months earlier, as had been
many
ttu
the
the $16,000,000 ap¬
Chile, the total loan
commitments at March 31, 1948
amounted to $513,000,000, against
$5,-
was
ap¬
Including
proved
quarter
1948
31,
after
Government of Chile.
to
ended
effective
ratification
and
of the loans by
become
propriate
guarantee
amounted to $12,780,633. Af¬
year
make, as they should, at
that
least
have
that
lag,
and
the Arbitration
development, there came a growth Board, in the non-operating em¬
in
our
population beyond what ployees case, recognized the force
had been predicted.
Students of of the carriers' argument ? and
population statistics had thought made the award effective as of the
that it would
utilities
Freiffht' Rates Lag . Behind .Wages
an
the result that the railroads were
asked
-
elimi¬
been
now
,
year ago
and
Another
problem; > which ;• was
with us a year ago, and, to some
important competi¬ extent, is still with us, is the
tive factor after the war. • The devastating lag between increased
maritime unions had icaught up
wages
in' the : railroad industry
with
the
coastwise
and
interand
compensating ; increases
in
coastal steamship operators, with
freight rates. In 1946, we had had
peared
has
■jv
«
and is still with us
the need of the railroads for
a
hoped for, but not yet at¬
tained, goal of 10,000 new freight
cars per month is reached;
long
had foreseen.
For
example, the coastwise and intercoastal steamship business, which
bad offered such stiff competition
before the war, practically disap¬
most
During this quarter, the Bank;
approved loans to two Chilean
corporations in the amount of
305,755. Provision for special re¬ which disbursements have been
made approximating $403,000,000.
is
serve was $889,592, and total ex¬
a 6% return.
If is mystifying why penses, $2,613,491, leaving a net Disbursement of the $250,000,000
loan
to
France has been com¬
the regulatory authorities are so income of $1,802,672.
•
reluctant to see the railroads get
At March 31st, after deduction pleted. The Netherlands, Denmark
a rate structure which will insure
and Luxembourg may still with¬
for
existing loan commitments,
them a 6% return.
Nobody gets the Bank had available U. S. dol¬ draw
approximately $94,000,000
excited about the fact that the lars and short-term U. S Govern¬ under their loans in United States
larger and better
new cars are
every
This
try's steel requirements for freight
cars at a time when its require¬
nated.;;
The
Which
problem
•
Development
necessarily ex-3>the early
during
received from lending
was
operations
Return
6%
The
.
Another
us
than those which
they replace, so the overall carry¬
ing capacity of the American rail¬
roads is now definitely improving.
in
in a coal bin. In 1942,
the War Production Board, or its
an
as
>
-
last, we are gaining back some
of the lost ground. And, of course,
' shortage
car
year
freight
more
p p o r-
tioned
job could not have been done.
Last
to
\
op¬
new
erating records had to be set last
year, such as a new low in turn¬
around
time of freight cars, or
best l: of
the
of
number
A
or by more specific direction
Congress, if necessary.
of
increased -volume
an
;
to
organized
Boards
business.
even
century ago, before
and
the Shippers
a
railroads
the
Advisory
of
:
ter
quarter of
tally at mine,
because
business.
<3>-
speak,
inciden¬
and
run own
income
stages of organization before in¬
/ ;
; V;
When I reported for work on April 1 a year ago in Washington, I found that by far the
greatest problem with which we were confronted was the freight car shortage, >„ Some of
the member lines in different parts of the country were ready to fly at each other's throats,
f
and
April 21 a net excess of income over expenses of $1,-
on
178,792 for the entire period of its existence.
The deficit of $1,063,805 existing on June 30, 1947, due to the
and mate¬
and ICC has been
investment than other industries
on
Reconstruction
for
Bank
International
The
railroad situation, notes progress in providing more equipment for
on
to present.
up
"
expanded traffic in last year, but points out freight rates have lagged behind wage increases
^
Reports net income of $1,802,672 for full period of its operations
■
President, Association of American Railroads
Railroad
World Bank Wipes Out Deficit
1947 and After
The Railroads in
13
(1757)
FINANCIAL CHRONICLE
&
traffic
present
still has before it for final
increased
volume. The Commission
petitions for
the
permanent relief. Passenger fares were
cents per mile in coaches, and from
$■3.3 cents to 3.5 cents per mile in Pullman cars. Increases in express
rates and
an
interim increase in pay for handling railway mail were
also authorized.
'■ 1 / i
.
V
,
June
1,
The
1947
from
2.2 cents to 2.5
acquisition of 30
powerful steam locomotives, seven Diesel passenger
7365 steel hopper cars, 100 express cars
1940 steel box cars,
locomotives,
cost of about
improvements in line, track, ter¬
minals and structures at many points on the railroad, brought B & O's
transportation efficiency up to the highest point in its history. With the
delivery of 5636
additional steel hopper cars; 60 Diesel road freight
locomotives and 3 00 Diesel switchers, scheduled for 1948, it is believed
the Company's freight handling equipment should be adequate
to meet
and
miscellaneous
traffic
The
efforts
passenger
and
requirements.
Management
of
r
officers
patrons and
work car units, at a
with substantial
coupled
$42,000,000,
1
acknowledges,
and
employees,
with appreciation, the
and the cooperation of
agencies of the Government
loyalty and
stockholders,
throughout the year.
The 40-hour
(Continued on page 47)
1
R. B.
White, President
14
(1753)
New Concepts of
;
"
^
President,
i
TheFntureof Radio and Television
Corporate Responsibility
By CLAUDE ROBINSON*
,
/ ■/<;
Contending survival of capitalistic system is likely to depend on social insight of corporate heads, Mr.;/
Robinson urges dedication of corporations to pub lie service and human side of business.
Deplores ^
hostility to capitalism, and says people should be properly informed regarding capitalism and their
ignorance of it dispelled.
dominance
One of the curious facts of
our times is that
competitive capitalism as a social system is
heavy attack. It is an undeniable fact that capitalism has rolled up a
increasing abundance fox the common man without parallel in any other social
under
ceilings,
allocations, • priorities,
closed shops and government con¬
undeniable fact that
Western
capitalism
men
sonal
liberty.
centration
There
are
no
in
camps
and
the
right
freedom
please.
their
of
to
They
President of
the
United
who
there
this system
say
ioned
and
brought
under
powerful
central
people
every
a
to
man.
individually
that-most
of
us
bath¬
tubs, and two pairs of pants and
real leather shoes, yet there are
\roices
among
who
us
doctrine of work
get
tal have compounded
great
hostility
against this
ment
has
has
process
cracked
: > grownt
|up
that govern¬
down
Historically,
'who
dom,
fought
but
a
for
liberal
was
individual
through
Some
- •
_
some
view
one
perversion
claim the labels of lib¬
now
eralism
put
their
the
trust
rain
or
part of the natural
or¬
der of
things, They overlook the
simple fact that with so¬
cial phenomena "thinking makes
people
in
the
seasons—a
strange
semantic
who
corporations
God-given—
the change of
as
basic but
price
it so."
*An address by Mr. Robinson
I should like to argue here that
before The Economic Club of
New
survival of the capitalistic
system
York, New York City, April
21;~ in America is likely to depend a;
1948.
'
:v
great deal on the sociological in--
y
■
announcement
is neither
'
some
both
Harry Bannister
criticism
doubts
of
and
lack
of
widespread;be¬
•
*v/
,r'1
^
*jV r
have
won
confidence
the
our
and
%y
*
*
IIJII GEORGIA
'
*
-
*
our
of
I
am
in
in
one
no
was
left to encounter which
nothing
hadn't
Or
dovetail
brackets
with
the
<
about 2
years
ago,
we
upper
duplication
managerial
all
overall
an
radio opera¬
our
no
at
.
basis. In that way, we
continue to
indefinitely,
while
both stations
run
or
we
expand
can
contract
we
or
if necessary,
altogether and close
on
the
other
the ultimate
we
wind
can
survivor.
putting it another way—
•/
decided to go into television. Im¬
r All of this is
public is not sure that cor¬
probably an over-'
mediately, we found ourselves de-t simplification. There are
porations are-dedicated to publid
many
service. There is widespread doubt prived of the sure footing we once complications.
For
example, no
which
that corporations are on the side had. We found ourselves without ! matter
way
the
future
a
backlog of successful solutions | shapes up, it is an undoubted fact
of the people.
and expedients. Instead, we were that for the next
year, maybe for
Testimony on this point comes on a sea of
uncertainty.
somewhat longer, radio must foot
out in various ways. For exam¬
j the bill for TV. Right now. all the
Guesswork and Risk
ple, cur Public Opinion Index for
Daily, for almost two years, I profits from our radio station are
Industry asked people to rate corI sadly insufficient' to
take up our
we've been driven into decisions
(Continued on page 51)
/
?
based not, oii sure, knowledge* but 1TV deficits.
any
of these securities•
pick
in
*
*
.'
PACIFIC
guesswork
on
was
no
one
risk.
and
••
Television
to help us,
although we've, tried to
the
the
brains of everyone
else
Therefore,;
all
ways
in
radio
to
Radio
vs.
must
we
maintain
status
we
strain
same
question divided into three parts.
(1) Would we indefinitely operate
simultaneously
a
69,500 Shares
.00
•"
<
'
'
i"
'.\t
v*
*~rv
*
'<l\f
v.
We
sell
TV
our
to
old
friends
of WWJ, knowing that in so
doing
radio station and I we're
making it more difficult
a
television station; with both ap¬
for
them
to
'*j v
1
maintain
their radio
\
~
:;i
\
'
?J
,
4
i'1 H
i(
fe
'i!.
K'<•
J
>
1
A
k-M
( without Par Value; stated value $20)
'
Price $23.00
per
.
•
all
other
in
other developed
of domi¬
maintaining the lesser? (3) Would
h
operate; both, stations through
transitional period until
t^le-
we
a
vision: totally displaced radio,, and
then cease to be broadcasters and
become* televisors instead?
10,425 Shares
The
Common Stock
'
($1 Par Value) ;
but
in
of
the
which
in
Prospectus
Share
such
d/' the
be
obtained
undersigned
securities and in which
such
are
from
the. undersigned
legally authorized
Prospectus may
to
act
only
as
in
States
dealers
legally be distributed.
marks
a
living
We
determination.
But,
appeared to
far,
nothing has
conclusively which
will go.
I
a
a
way
we
its
or
that
less, the pic¬
something like this.
network
stations
will
their complete
sign-on
to
schedules,
sign-off. There
*An address at the Fourth An¬
nual
Radio
and
Business Confer¬
sponsored by, College, of the
City of New York, New York
City, April 14, 1948.
ence
message—•
Television
the
on
road to
this
V
place.
proper
know
to
be
true,
and
radio sponsors have already
future.
V
,
But
there
in
those
will
are
areas
Vdiere tele¬
be
available, covering
our
population,
today some 40,000,000
60%
of
radio sets. The
placement
.
sneaking hunch
decade,
major
televise
from
1
..
have
within
a
does.
else
milestone
full life and it cannot be
a
denied
perhaps
All
April 22, 1948
we
enough of television
delivers
nothing
as
vision
this
ture will look
Reynolds & Co.
as
vital/ not only
right now, be¬ j verified this, or will do so in in¬
today,
to¬ creasing numbers within the near
and next week should be
on
show
may
uncertain
as
nor
otherwise.
it captures the imag¬
—
ination—it
shaped according to our ultimate
destiny. Countless other decisions
so
Copies
do
business
our
morrow
seen
attention
wait
per
to
;to know that it's terrific. It holds
most
answer/ is
for the future
cause a
Price $23-00
just
are
We've
characteristics
nance; and then concentrate on
the
dominant
one,
while
still
*
!They
dare
we
marked
Share
Plus accrued dividends
with
as
each category?
{2)
are,
but neither one of us can
simultaneously operate: afford to
ignore either medium, at
both stations only until the time
this stage.
;
\
when1 one or the
Would
»
Convertible Cumulative Preferred Stock
/. > ;
ourselves
well
as
stations,
j"*
r
j
in
our
while
even
Wf "•*.
strive
boat, the net result ;mightly to build up TV;
and
added little or nothing to our fund
meanwhile we must recognize that
of sure knowledge. Basically, we in
building up TV, we're creating
have sought the answers to three a
Frankenstein which may ultiquestions, or rather to one overall jmately destroy its maker.
-i*
other,
>\ l'J
one
ranks
our
pealing to the same audience, in
sponsorships. But neither they
eternal
competition
with
each
*
of
levels
policy being set on*
the
PLYWOOD & LUMBER CO.
.
to
flexibility,
change direc-r
in
v
with
our
as
of
up
we
met before.
Then
tion
running
manner
have to
we
experience, that there
the human touch.
such
maximum
a
case
can
rights
above
human
rights; that dollars count more
humanity; that managers fail
to understand people; and that as
corporations grow bigger they lose
property
we're
unsure,
retain
tion. Our TV and
-
*
;
business
financial
statement has been satisfactory to
-the: owners..
stations
That's: my hurich^-but it's
onfy
hunch: I'm not too sure. Because
a
and retained
community; and
handful
a
existing
stations.''
have at¬
problems so that the.future held
important uncertainty, and we
had the assuredness, based on long
corporations put
than
i
y
letter
spirit;
affection
be
AM
broadcasting without TV to pro¬
vide rural coverage for.zones out¬
side the range of other
and
are
down
or
70,000. Out¬
communities, there
high-powered
We had tackled and solved enough
to sell, nor a solicitation of offers to buy,
offering is made only by the Prospectus,
J'
and
tracted and held maximum audi¬
ences;: we
in
some
areas,
a
multiplicity of FM sta¬
broadcasting without tele¬
personnel
corporations
•
^-7'
and
60,000
such
/; ipn; radii we h
sure: of our ground and of the
ground we planned to enter upon.
that
offer
an
The
of
con¬
in
in
and
we
whole¬
*
tele¬
one
be
public
necessity"
indicates that there
pub¬
capitalism—for
of
will
venience
because
'
to
side
interest,
rather
This
maybe
highly
successful. We
And there
i
people
marketing
of the poor; that
of
capitalism
like
free¬
officers
.
smaller
greedy
and self-seeking; that corporations
exploit people and grind the face
of
ern/conditions this vmay prove to
be a naive point of view.
the
on
risk takers.
;
such
years
From these studies
The first is the
a broader social
purpose, nor cast
their thinking in other than eco¬
nomic terms.
In the face of mod¬
natural
our
officers
as
being
practical conclusions emerge.
hearted/enthusiasm for: the sys¬
tem.
corporations
believe they have only economic
functions.
They cannot admit to
Enterprise, managerial skill, and
willingness to save and risk capi¬
wealth, but in recent
lic's
lief
Some
re¬
garded
the1 capitalistic
two basic reasons for the
its
Respon¬
Social Functions of Corporate
Officers
preach the
less in order to
erally
"
inn
will
community
every
100,000
tions,
are
"Some New
Corporate
of
is gen-
vision. And there'll
The evidence
sibility/'
'• ////•
more.
of
There will be at least
vision station in
"in the
doubts about
stations
which
broadcast, without television.
have operated
and
backdrop against
should like to seek
,
smaller
markets
which
other. student in the
field, I have sought the basic rea¬
sons
for
the
public's criticisms
lives today are oriented,
is in this direction that
Concepts
automobiles,
.
other
oped a radio
enterprise
any
system.
I
result
contact.
same
than
very
with
by
be
have spent all the years of
professional life studying pub¬
lic opinion trends.
More, perhaps,
our
it
faith
I
American
intellectual
which
and
the
will
the
devel
years,
my
the
of
and
the
into
people are
happen. Never¬
theless this struggle between com¬
petitive capitalism and statism is
collectively have been productive,
have/ radios,
the
cause
At WWJ, we
have, over the
.
Propagate
that
faith/' to
public
with
whom they
come
too smart to let it
be
Please pardon
the% live, and
(b)
take
state
erty we now enjoy.
I personally
don't think this will happen, be¬
us
government
common
which
the
..
Looks for television^ station in
every
Any evaluation I offer is necessarily based on
my own business.'
me, therefore, while I dwell on the facts of
my own
experience, v
:
Specifi¬
>
Formulate
(a)
com¬
stitute for the abundance and lib¬
is old-fash¬
control
the
of
its place.
In
which event many of us believe
that poverty and tyranny will sub¬
States—
among
the whole system
on
corporations, for their
the
public's welfare,
'
should—
from
and
by
the
antiquated—must
work for the
Our
forces
are
without
petitive capitalism will succumb,
a
system of central control
without fear of imprisonment for
diversionist tendencies.
Yet
result of
as a
and
they
and do criticize
officials—even
from
within
move¬
as
and
attacks
by jury
worship
can
public
trial
that
possible that
It is
con¬
America.
People do have freedom of
ment,
view
own
the other.
100,000 and concludes television; because it marks
road to a full life, cannot be denied its
proper place.
The business future of radio and
television is good, but hazy and
confusing. I see no evidence of clarification for some time to
come.
cally, I should like to advance the
■'
trol."''"
have enjoyed a high order of per¬
sight of corporate heads.
over
milestone
system.
an
over
community
; -
under constant and
It is also
1
J Stressing uncertainties of radio and television, Mr. Bannister says t
y there is confusion in outlook because;
(1) radio and television are I
in eternal competition ; and
(2) the likelihood thai one may achieve' %
'
record of
/By HARRY BANNISTER
Manager,. Radio Station WW J, Detroit,
Michigan
-..
General
Opinion Research Corporation
factor of
mere
will
insure
the
re¬
con-/
tinuance of present day radio for
many
years,
even
while
TV
growing and spreading. How
will
manage
through such
to
a
steer
a
tortuous
is
we
course
maze,
I
not
prepared to state. My fer¬
vent hope is that economic con¬
am
ditions
to
remain
carry
us
sufficiently sound
out of. this welter of t
uncertainty and
waters
beyond.
that, I
"
1
into
am
the
sure,
,
smooth
must
lie
Volume 167
Read Offers
No Ground for Wall
Writer contends it is time to be¬
today
over
future of
2%%
securities market and
points out
tremendous
power
a
new
Consolidated
optimistic
buying
is
used
securities business.
reports
earnings
of
of
announcements
.market
by
have
or
have
Brokers
and
hear
•
how their
the
.
outside
was
"Wall
of
Street,
companies were havin
business in their
largest
writer
and down one's
Business, business every¬
spine.
where and Wall Street
a
This
there
dead
as
as
Churchyard!"
Trinity
that
believes
writer
ever
was
if
time, to become
a
to
such
Public
racy, freedom
human liberty.
was
In
as
approach¬
that
aware
•
1935. The five -sub¬
constituting an inter¬
connected system, are; the Hope
Natural Gas Co.; The East Ohio
Gas Co., The Peoples Natural Gas
Co, The River Gas Co. and New
is
'
only
aspect
sidiaries,
Hoiman
Eugene
For whatever the
individual
an
his
moves,
history
can
the
more
and
things
Such
achievement.
this
of
biles
be¬
disappearing
a
than
telephones,
great host
into
Americans
ful
the
world—more
of
that liberty
which
our
and freedom are not
guaranteed to us forever.
are treasures we can lose—
unless we accept the obligations
that go
wealth
is
We
automo¬
of
other
the
comforts
held
not
mean
high
narrowly
one class.
It is spread
widely than in any other
society of the past or present.
They
responsibility to the
has
probably
vital as if is at this
by
' Furthermore,
standards of living.
rights
organization
•
thought-, and
conveniences " t h a t
realization health and prosperity and
a
the
other people in
any
events have shocked all
curtain.
iron
* an
when
released
are
all familiar with the sta¬
are
tistics
and whole popula¬
men
of freedom of opportunity.
means
You
achieved
be
energies of
have
suddenly
our country is
demonstration of
of
paramount
what
of
robbed
being
countries
tions
broader
in
the
law of nature.
But
have seen people in
hind
welfare
common
revenues
area
or
we
their freedom
it
*
-subject < of
responsibility in general.
public
York State Natural Gas Corp.
of
and
The
one
,
.
,
much
some
other
well
am
by
lately
ing the theme,
I
hear
enterprise
of
'
them—while we share
only in, the benefits—may be a
very
human" impulse, but it is
likely to be fatal.
accompany
ordinary
times these are
things which Americans take for
granted.
We accept them as nor¬
mal—as things which come to us
business>
a
of
women
In
youabout
public respons i b i 1 i t y
in
which is solely a
and
men
today much discussion of democ¬
like to talk to
construction of
operating
for
mo¬
ments I would
Utility Holding Com¬
Consolidated
so
few
the
America compare notes—we
this.
as
And
a
facilities and other purposes.
company,
where
organization
from time
purchase additional
pany Act of
'(It's enough to send
shivers (up
cold
A
'
organized
1942 to acquire the stocks Of
five operating natural gas com¬
panies from ■ Standard
Oil / Co(New Jersey) in compliance with
the
tory. As one broker recently told
the
'
••
its
of
rtlding
w
,
the
of
sale
the company
The company,
their own
fjiem how good busi
tomers tell
ness
new
sit
.to
from* the
be applied toward
the
securities.
for
had
by
followed
oeen
prices
lower
by
ignored
entirely
■
wholly-owned oper¬
ating subsidiaries. Proceeds taus
realized by the subsidiaries will
stock
and increased dividends have been
almost
by
time
to
and
special
extra,
Capitalism, despite attacks, is enjoying good ap¬
Says
pressing need is to establish improved communication between business and people to lead to better
understanding, and calls for greater business skill in promoting public relations. Cites problem of adeJquate oil supply and preventing runaway prices as instance of responsibility of industry. Seeks stable
,v
k
'
employment as business objective.
•
depression that this, writer can re¬
call in his many .vears of experi¬
the
VV"
speaker—facing so distinguished an audience as this—must wonder what he can
debentures, estimated at $29,899,say that will be worthy of the occasion.
It seems to me, however, that among the many
970 will be added to the general
funds of' the company aid, to-; topics claiming our attention today there is one of particular significance to the member•V*
'T-l''-'1.•*' ■
S h i P
of : an''V'""
' -—
gether with other funds,/will be
For the past two years, or so,
Wall Street has had the longest
in
'•;/
President, Standard Oil Company (New Jersey)
Leading industrial executive points out Democratic
The
1988.
"v'-^
petite and great ambition, and does not propose to rest but to seek new goals and achievements.
issue of $30,000,000
' Natural
Gas .: Co.
debentures, due
Proceeds
later, in better securities business
Good
&
securities, which were awarded to
the group at compe'.itive b'daing
April 20 are priced at 100%%. ,,
bound to be reflected, sooner or
ence
Responsibility in Business
By EUGENE HOLMAN*
'V,.
Co. Inc. heads
a
group
of investment banking
firms which is publicly offering
Read
Dillon,
With Ward & Co.
come
15
*
C. HAFF
WHITMAN
Public
(1759)
CHRONICLE
FINANCIAL
&
Consolidated Gas Debs.
Street Depression
By
COMMERCIAL
THE
Number 4692
by
ahy
.
more
with them.
Clearly, there is a price tag on
human liberty.
That price is the
Our System the Most Productive
the future of the for 1947 totaled $94,170,000 and
that time is ret income was $14,818,000. Other moment.
Everything that has happened
willingness to assume the respon¬
-Over luncheon tables, in pub¬ sibilities of
right now. Here are a few of his than the debentures being offered,
during the past few years and
being free men.
reasons:
First — With railroads, the, company's sole capitalization lic
continues to happen today con¬
j meetings, in taxicabsV and on
.Payment,of this, price is", a per¬ firms the fact that our system is
£
industry and public utilities en- consists of 3,274,031 shares of cap¬ street corners—in all the places
sonal matter with each of us.
It
:
more vigorous and productive
joying the highest earnings in ital
stock, par value $15 per share.
is not something that we can get
their history their securities, until
*Ari
address by Mr. Hoiman
others to pay for us. To let others 'than any other in the world.
Except for purchase obligations, before the Economic Club of New
recently, have been consistently
'v,' I cite not only the unbelievable
going down. Many, of the secur¬ the. subsidiaries have no long- York,: New York City, April 21, carry the responsibilities of free¬
(Continued on page 43)
ities are at present selling at from
dom and the work and worry that
1948.
'
term indebtedness.
'J
- -
been
never
optimistic
over
securities
•
so
market
■
.
,
only two to- five times earnings;
•
Never has this writer seen
%
a
time
when
earnings were at their peak
stocks selling so low.
It is
and
-
this
possible,' in
v^ry
opinion,
that
investor
the
again
never
there be such an
as
New Issues
writer's
will
Interest
exempt from all present
opportunity for
now
exists.
:
$6,860,000
especially during the
The market,
Federal Income Taxes
past six weeks, has already begun
v
possibilities
show
to
of
great
a
City of Houston, Texas
change for the better in face of
strikes, the foreign1 situation and
-political conditions.
This
government
launch
immense
an
calling
program
to
dollars
be
?■
is about to
preparedness
3,840,000 2%% bonds due
820,000 3%
billions
for
for
spent
oi
planes
Dated June 1, 1948. Principal and semi-annual interest (Jupe 1 and
National Bank of New York City. Coupon bonds of
clothing; food and many
things too numerous to men¬
tion. On top of all this is the 16
billion or so of dollars to be spent
guns,
'
other
''
'
'
<
'
-
„
'
*
*
.
,
7 '
\ V
1
\
the
war
us
'
to win
was
Today,
however,
we
have two big problems, immense
one
tp*. prepare our¬
selves in case of another war and
problems,
'
other to
the
save
practically the
entire world from starvation and
Is
not
1.30
1950
Also
line of business?
every
all *<>f this money is to
within
,
our
own
own
\<y» '
1
t
Lv t
'
J
T'
/'
' ''i. 0
•
A
, ,
.
A
'
'
v
,
,l
A
4
C
" 1 J
J
1
Yield
Due
Yield
Due
2.75
2.15%
2.60%
2.30
1960
2.60
1965
1961
2.65
1966
2.75
1954
]
v;
2.70%
1964
1.50
1956
:'i;.l:.75;'C:
1957
2.50
1962
2.65
1967
1953
2(00
.1958
2.55
1963
2.70
1968
'^$5
2.80
1952
2.80
®
are
as and if issued and received by us and subject to the approval of legality
Washburn, New York City, and Ike Attorney General of the State of Texas.
B
offered when;
by Messrs. Reed, Hoyt &
■ s "
.
rf 1
V, ~
f
,
,
;
^
^
'*
»
vi/"'f
r
Phelps, Fenn & Co.
V
A
1
v
i
,
' *
"
v
^
i •
»
;
,
•
almost
be * spent
country and for
k
'•»
|
A
\
..*r
■:
Bacon, Stevenson & Co.
Paine,1 Webber, Jackson & Curtis
Eastman, Dillon & Co.
"j -Vv£
Laidlaw&Co.
G.H. Walker & Co.
R. S. Dickson & Company
Dominick & Dominick
Incorporated
country.
The old adage
i
1959
It also
merchandise manufactured within
our
»
almost
cannot be overlooked that
t
1951
ture buying power bound to be
reflected, sooner or later, in the
market?
r
2.40
These hands
securities
c
*
;:-"1955ft
; 1.10% :f
1949
this tremendous fu-
all
•«
Yield
Due
Yield
,:
„
disaster.
.
$1,000 denomination.
#
MATURITIES AND YIELDS
Due
and save ourselves from
disaster.
''
bonds, to be issued for various improvement purposes,.will constitute,
in the opinion of counsel, valid and legally binding obligations of the City - of-Houston, payable both principal and interest from ad valorem taxes
levied upon all the taxable property therein, within the limits prescribed by law.
given but little
and. that
"
'
These
consideration, and yet is of vital
importance; is that during the last
war
we
had only one big prob¬
lem before
^
v
4
.
provide the necessities of life
to the peoples of Europe under
One fact that is
December 1) payable at the Chase
.
4
'
to
the Marshall Plan.
$110,000 annually June 1, 1949 to 1968
$192,000 annually June 1, 1949 to 1968
bonds due
$82,000 annually June 1, 1949 to 1958
$2,200,000 2%% bonds due
"The early bird
Gordon Graves & Co., Inc.
^
Detmer & Co.
Whiting, Weeks & Stubbs •
IraHaupt&Co.
'catches the worm" can very well
•
refer
to
the
investor
who
takes
Rauscher, Pierce & Co. Inc.
Thomas & Company
advantage-of the present oppor•"
tunities in the
securities market.
Chace, Whiteside, Warren & Sears
,
C. S. Ashmun & Company
Van Lahr, Doll &Isphording, Inc.
The National City Bank
of Cleveland
Incorporated ;
to
The
Financial
Barrow, Leary.&Co.
Mackey, Dunn & Co.
With Ferd A. *Meyer
(Special
Incorporated
Chronicle)
wy
INDIANAPOLIS, IND.—Arnold
Marks is with
Ferd A. Meyer,
East Market Street.v
-Si-V
<8
New York, April 19, 1948.
;
Dallas Rupe& Son
16
(1760)
THE
COMMERCIAL
CHRONICLE
FINANCIAL
&
:'
,
■
F»y
:
A!
C.
SMITH*
U. S. Congressman from Ohio
'•...,
Member, House Committee
:■
A
Banking and Currency
on
7
Congressman Smith, pointing to devaluating of French
currency despite opposition of International
;
Monetary Fund, contends Fund is without authority and its rules are
hedged about with ambiguities.
Quotes late Lord Keynes to prove escape clauses in Fund's charter
permit devaluation of currencies '
at will, and accuses
Keynes of scheming printing-press money as bringing death to private property. / \
Holds to oppose free use of
gold is communistic concept, and concludes political authority ofi nation
^
must bear responsibility for evils IMF may bring to people and to world. V'.
:':,i
The action
recently taken by the French political authority in adjusting the red or
.
the
into
throws
cow
United
service
render to
can
we
United
authoritarian value of the franc to conform
accepted value, providing for
tion
an
4994, May 22, 1945, Congressional
Record), in a speech before the
the ut¬
expose
House
of
ness
this
scheme;
Lords,
May
AMy noble friend, Lord. Addi¬
More
son, asks who fixes the value of
tive, changes in excess of 10%
gold. If he means, as I assume he AA (Continued on page
26)
important,
that
of
the sterling value of gold;
it is we, ourselves, who fix it in¬
itially in consultation with the
Fund; and this value is subject to
change at any time on our initia¬
does,
23, 1944,
made this crystal clear. V-He said:
ter fallacious¬
action
right now is to provide
military strength with which to
back up the peaceful and nonaggressive purposes of the great
majority of the United Nations.
nearly to its true, free and generally
apparently partially free gold market,-in spite of objec¬
from the
fund officials,
should clearly
Nations
more
There
"Wait and
f j;
strength persuades them to stop.
If
lations
inher¬
tern a t i o n a
Frederick
C.
7
ticularly
it
be
a
warning
France's action should
come
as
surprise for nothing but the
xpected and inevitable has happurely accidental that
'
'•he
*
French
hould
political
be the
pudiation
Tund.
It
to
one
authority
initiate
wrecking
; or
could
have
re¬
of
the
been
any
of the other political authori¬
one
1
dictators
un¬
.hat of the United States itself/
~
tional
relations
that
thinking straight
right now,
get
we
this
on
our
whole
will
h
The
International
there
are
that
no
any rules of the
Monetary Fund, for
rules. Certainly none
founded
are
on
reality, or
that are not so
completely hedged
about by
extenuating phraseology
as
to
nullify
their
meaning.
Every
signatory to the
Fund
agreement
knew
when it signed
would violate any provi¬
whenever it suited its pur¬
pose to do so.
that
it
sion
Every
miliar
forthright
with the
fa¬
person
evolution of this
for
ing
monetary
knows this to be
Consider
the
red
the
fact,
a
!
value
of
the
early
United
the
The
C
year
1776.
was
The Declaration
but
Washington's
lost
New York and
of In¬
army' had just
was
in
flight
after disastrous defeats. The Dec¬
laration would be
of paper
pieces.
-
scrap
-
•
*
y.-
.
Congress,, pointing out the
for
trained
He
men.
ex¬
plained that he had to rely almost
on untrained, men—men
entirely
stand
(or
exchange
$1.00)
of
in
Article
vides that
the
red
IV, of the
a
Fund,
5(f)
pro¬
"member" may alter
value
of
its
"domestic,
policies"
that the
social
warrant,
currency
Fund "is
or
so
only
satisfied/'
Escape Clause Written by
That
iteynes,
as an
who
a
Bill to
Withdrawal
from
Fund.
the
of
on
against
to
the
page
provide for the
the
United
States
International Monetary
countries
Second,
that
still
will not have
we
dictators
-
ambitious
right, that he
overstating
the
need
not
was
of
,
trained
men.
weak will
in
as
But in
who
Congress there
had
no
supposed
as
that
were men
knowledge
what it takes to win
was
an
dependable
a
about
war.
They
untained
man
as
trained
a
man.
They
were
well-meaning
patriots, too, but utterly without
experience
They
in
rejected
vices So
to
fight
a
in the field.
He
long, exhausting
had
war, a
that would
surely have been
but for the
help this young
war
lost
war.
nation received from the French.
The war dragged on for seven
talk
Forum
ciate
Social
by
Mr.
Dinner
Patters'on
of
the
at
Asso¬
Members, New School for
Research, New York City,
April 19, 1948.
_
:
-
we
run
,77>''}'AA/:Z>v/7A/AA
see war
petered
That
out
-
dictators
of
would
war
long
ago
Yugoslavia,
>.
have
if
the
Albania
and Bulgaria had not been
sup¬
plying
the
guerrillas
with
weapons, ammunition, food and
clothing as they went back and
forth
across
anyone
border.
those
suppose
wouldhave
against
the
dared
Does
countries
gang
Greece, if Greece
up
was
strong, powerful country?,.
are
living in.
It
is
a
world
where the rights of the weak to
a
peaceful existence, to be let alone,
not treated with the
slightest
of
war.
ran
for
and
are
have
people who think
oeace
it hard
if
onlv
we
means
And
on
We will
sea.
not
strong air
a
re¬
is like saying that the city
fire department but not a
a
young men. Opponents have
that
line.
They were
obliged to, in view of the fact that
the
millions
returned
of
to
showed
tion,"
trace
no
after
mind."
"militariza¬
of
7 -A* AA'i;
./.A
.
There
should
be
•
confusion
no
between the proposed resumption
of Selective Service and universal
military training. Selective Serv¬
ice is
needed
Army,
to fill
Navy
and
the
standing
Air
Force
to
their authorized
strength, because
has not been ade¬
volunteering
quate. It is to bring the standing
forces up to strength. Universal
military training does not add a
single man to the armed forces
at the
present time. Those: in
training remain civilians and will
constitute
the
to
reserves,
called up in emergency*;.,:
•
be
A.;;
without
of
reference
the
board
to
the
headed
Compton. The board
report
by
was
Karl
made up
of
nine citizens of distinguished
service, three of them eminent in
education.
Their report, rendered
fense is necessary to the safety of
this country and to the success of
United Nations. It is also the opin¬
ion of the board that one of the
elements of
necessary
tional
defense
is
tary training. The board discusses
other important elements also, air
power
and research and develop¬
ment
among
sentence
case
of
them.
the
untrained
build them
strange
But in
to
some
and in the face of
experience they think
un¬
••
men
well
trained
as
defend
can
them
as
men.
"We recommend the adoption of
universal
training because
convinced
that
two.
If
attack
there would be
then with
would
that the
era
weakens the
which
rest
peace.
A
America
A
Uhited
our
should
.
believe
us
of push-frotton war¬
has come; that soldiers are
longer needed; that a handful
scientists sitting in a dug-out
Texas
can
pull some_switches
against targets
and send weapons
10,000 miles away. That possibility
does
not
exist,
imaginations.
familiar
do
tell
with
us
except
The
in
their
scientists most
what
that
the
weapons
age
if it
of push¬
ever
comes,
sig¬
nificant
also
testify
that
those
fail- A
the
best
guarantee for
success
our
of the
poll
military training. The
a major¬
week ago showed
a
ity of 5 to 1. It is significant that
majority i's heaviest in the :;
age group from 21 to 29, the group
the
that would carry the main burden
in the event of war. As happens
often, the people
Congress
delay
on
the
on
one
ahead of
are
issue.
increase the risk of
is
5
Further:,
that
war.
The risk
resolute, prompt action 7
avert. .:
»
.
Donald B. HiUiker V.-P.
scientists
universal
;
Of S. C. Parker & Co.
BUFFALO,
N.
Y.—Donald
Hilliker has been elected
President of S.
C.
a
Vice-
Parker &
Co.,
Inc., Ellicott Square Building. Mr,
Hilliker, who has been in the in¬
vestment business in Buffalo for
18 years, was
of
the
recently
Buffalo
Johnson &
co-manager-
office
Co.
With M. N.
(Special
of
R.
H.
^ 7
to
The
Hogan & Co.
Financial
MEDFORD, ORE.
Hogan
^ military Co., 38
is
;
the part of Congress will
can
is in the far-off future. It is
that
to
strong and resolute Amer¬
of universal
can
come,
'v.*.
have
,
irresolute
and
invitation
an
also
Nations, op,
hopes for lasting
weak
is
our
coun¬
The polls of public opinion over
last five years show that a
fare
of
on
time to begin
no
training.
Others
we are
weakness
part not only involves tttir
try
in
grave
risks
but
so
: The training that would be pro¬
vided by universal military train¬
ing would be a lasting asset. Ht
would not be outmoded in a year
or
the
up.
heavy and increasing majority of
the American people are in favor
way
trained
final
sums
did
carpenter
house.
a
The
report
the
Washington's day. They would
care to be treated
by an un¬
trained / doctor/ They would /not
an
na¬
mili¬
are
not
want
strong
a
universal
United Nations."
in
button warfare,
enough.
We yearned
yearned
for peace in
the
who
men
life
symptom of the "closed
no
we
yearn
young
civilian
of service in World War II
years
people who raise
are
the old cry that trained men
not necessary, just as people
respect.
There
"closed
dropped
ica is
in
-
,
the
"open mind" with
safety and for the
a
That
war
against
Greece
is
plain proof of the kind of a world
we
no
Destructive Weapons Require
no
to
by
:
being waged against
the
ure.
all
.
..
weak,
will
More Trained Men
as
dic¬
as
risk of being plunged into
Greece.
are
*A
the
be
can
for
|
expand
criminal
substitute
mind"
would
that it
our
police department. We need both.
get short shrift.,
Moscow
dangerous and
We
"
to
by use of the police
by suppression of free speech
and by means of
terror, the rights
grave
was
it
land and
needs
powerful
are
their power
Dictators
of
There still
there
as
state
of the
becomes
the
serves
adopt
universal military, training.
times*;
As long
more
force but do not need trained
strong
a
spend
To say that we need
free.
we
to
have the requisite strength in any
unless we have trained reserves.
and
national defense unless
Representatives
for military planes. If that
case
on
defense
remain
of
voted
they will not
win a war by themselves. The fact
is that strength is needed in
air,
safety
country and of the other
this
of
tators in Berlin/.
If we remain
after defeat
sub¬
every
monetary scheme (see
of
counted
battle
wrote
'Congressional Record remarks
of Congressman Smith
on
April
14, 1948 on occasion of introduc¬
tion
-
escape clause. Lord
stantive provision of this interna¬
tional
not be
in
up
military matters.
Washington's ad¬
Washington, lacking a
trained force, had to take defeat
Lord Keynes,
•77.
language was specifically
intended
could
in
principles.
the peace
trained British army.
Everyone
who has served in war knows that
to
political
provided
join up for two or three
months—and that those untrained
men
insure
House
whole; problem. The
planes will not fly themselves;
they will not service themselves;
they will not protect themselves;
military
national
Washington
market-for
Section
extent it deems
necessary if
any
fts
free
a
equal $1.00.
will
strong
a
two
on
reserve
1
week
preserve peace in these troubled
Washington sent letter after let¬
to
rests
would
training
nation;
the
times. In the opinion of the Comp¬
ton board, a strong national de¬
Every
passage
.-\*h>/4 A,*'
for universal
case
/military
"militarize"
a
year ago, is one of the ablest
and most convincing papers of our
solve
nothing but a 7 First, then, as tot the
necessity
if that army went of a strong defense if. we are to
.
ter
"Y "-A.
.
training
will
dependence had just been signed;
to
*
First,
Robert P. Patterson
States?
Whatever
francs
"•'">*
,
The
who would
of
\*r
-*
large
a
law,
it
will
strengthen the national defense. I
hope that it does become law. But
The Case for UMT/
history
of
franc: from 119 francs
equal $1.00
to 214 equal
$1.00; and from 119
fiancs
equal $1.00* to 305
number
■
-
dentin the
need
.
changes made in
official
or
contrivance
\
We used to hear opponents say
that
military train¬
man who has seen
measure
military
in large
men
time
same
money
numbers would have furnished.
inci-
an
have
we do not
trained men; and that reserve
trained
men
will
not
exist
The
not necessary, wars that
would have occurred if we
strength that trained
by recall¬
enough^if
we.
the
last
were
had had, prior to war, the
trained
men
Clandestinely jerry-built interna¬
tional
that
never
trate the need
not
ple truth.
when it should have been
history. Again and again we
been forced to fight wars
our
'
tary training would be adequate
ing.
have
May I illus¬
French political
authority
(erroneously called government)
has not violated
we
trained
av e
defense
against
combat knows that to be the sim¬
in three years. 7
That was-the price this country
paid for lack of trained men. It
has been that way all through
have
national
without universal
«
strength
we
such
of
enemy
No discussion of universal mili¬
won
men.
matter
-
not
that
unless
a
the
use
need
of
:
i We
have
at
.
years,
not
of
military
In
that
will
we
by
defensive
take
against
air power, an alert intelligence
service, improved weapons. Those
elements are important. But they
these dangerous days readiness on the
part of this country
repel aggression will avert vVorld War III.
Military strength is
the only lan¬
ties belonging to it, not excepting derstand.
\
It is vital to the preservation of
what is left of normal' interna¬
For
to
guage
those/conditions
—
adopt universal military training.
are
I should like to outline
why I am in favor of universal
training.
appeasement,
strong national defense until
substitute for UMT.
no
,10
>ened. It is
Second,
simply invites aggression. Maintains more trained men are essen¬
tial as weapons become more
destructive, and selective service is "
§
avert the risk
aggression; and in
aggression comes war.
the train of
without universal military training.
Says we cannot rely on United
Nations to have peace, and
weakness, appeasement and isolation
the
to
United States that grave trouble is
n store for it
unless it withdraws
rom this international
scheme.
na¬
simply invite
Asserting military strength is only language dictators understand,
Mr. Patterson contends strong military force cannot be obtained—
Smith
strong
a
Weakness,
war.
isolationism
By ROBERT P. PATTERSON*
1
Par¬
should
of
Formerly Secretary of War
Monetary
?und.
;
^
repeat,
may
tional defense will
Why I Favor U M T fl
ent in the In¬
I
to
as
weapons
Wait and see! The
see.
that dictators do not stop, except
as the
firm presence of military
re-
ought to dem¬
ternational re¬
say,
aggressions of Moscow are a dan¬
ger to world peace, but perhaps
Moscow will stop." They forget
onstrate -the
danger to in¬
those, too, who
are
are
us.
promote
*
them
well
measures
Na¬
world peace is pro¬
posed. I favor continued support
of United Nations, in the hope of
better days ahead; but the best
be¬
destructive,
more
required to trans¬
and to operate them,
men
as
tions machinery every time a step
to
weapons
more
port
people say that we will
if we simply concen¬
trate on supporting the United
Nations. They say that, in spite
of the monkey-wrench that Mos¬
as
*
*
■
y
trained
have peace
;
•,
come
Other
7V/
*
The fact is that
Nations
Cannot Rely on United
A.A/A/'A:/ *AH:A:-'A
^ ^
A"'"'
,
defense.
trouble
Monetary Fund!
HON- FREDERICK
training is needed for the national
1930s, but we landed in war. The
was
that Hitler and the
Japanese
war - lords
were „ not
yearning for peace.
United States Should Withdraw
From International
Thursday, April 22, 1948
with
M.
Chronicie)
—
N.
David
Hogan
South Central Avenue.
M.
&
;
Volume
THE
Number 4692
167
COMMERCIAL
&
FINANCIAL
COMPARATIVE
Advantages of Tax Exempt Bonds
Overlooked by Smaller Investors
under
tax
new
such investors receive
frcm
to tha retimed income
able.
Such
income from
an
course,
bered
yielding 5% that is tax¬
top of
on
other income
If
deduc tio
and
t i
Let
n s
o n
division
of income
sources
that
the
band
Government
wife,
interest.
exceeds
is
the
holder
empt
afford
you
B. M. Goldsmith
///;
consid-
a
of
■'•than
the
rate
net
greater
income
of
60%, the
fronds receives
after
return
taxes
investment
yield of 1%.
satisfactory
only $1,600 on his
This is a
certainly not a very
of $160,000.
retainable income
comparable taxable secur-
erably
derived from
U. S.
paying 2Vz%
bonds
these
of
actual
an
bond
will
there¬
160 $1,000
Since the $4 000
at
taxed
$16,000, then
tax g ex¬
return.
If this same $160,000 were in¬
//V/// ;■ *.}?■K = vested in
high grade tax-exempt
bonds at the same interest rate of
Under present tax
laws, the 2V2%, the bondholder would re¬
government takes away a good tain his $4,000 yield intact, free of
portion of any periodic income taxes.
■<*7
:7
The Need for Tax Exemption;
1
Surtax
46.6%
Looking at it another way, our
with the $40,000 income, in
income between $20,000 and $26,the 60% bracket, must find an in¬
000
(after deductions) is taxed vestment
paying 614% (hard to
away,
cutting down
percentage find without involving real risk),
yield from high grade investments to
equal in net return the taxto as low as 1% and less.
On in¬
exempt ^incomev>of 2 xk %v As inr
comes over $38,000 investment re¬
come
increases so does the taxturns are cut 69% to 80%—cerbracket, and the relative value of
tainly no encouragement to thrift. the tax-exemption becomes great¬
There is a way, however, in er too. This is graphically illus¬
which the lion's share of income trated in the accompanying table.
/■ from investments can be retained.
How Much Is Tax-Exemption
It's done through tax-exempt se¬
Half
investments.
such
an
man
curities,
often
investor.
average
In this table you can
Standard Oil
Motors,
General
as
U. S. Steel.
or
They
ton;
As
Englewood, New Jersey.
or
rule
a
buyers
•
only the
(banks,
.
panies,
Philadelphia, Bos¬
Out
insurance
of
from ' tax-exempt
and
com¬
in¬
have
million
$16,400
municipal
bonds out¬
You
This
may
be
one
and other
•bonds today are a
average
reason/;
why
tax-exempt
mystery to the
investor. Another reason,
perhaps, for the mystery is
relatively low interest
in
clared
which up
the bonds
the
rates de¬
themselves,
to the time of confisca¬
taxes made/them
tory
less: at¬
tractive.
Today, however,
tax-exemption
brings greater net returns.
How an
;
Individual Can Profit
a
individual
in direct
taxable
the
investor
the
Briefly
greater the income, the
benefit.
71.3%
73.9 %
3.97
4.36
4.78
3.81/
4.08
4.41
4.7.7
5 22
5.74
4.45
4.76
5.14
5.54
6.05
6.70
5.88
6.36
7.00
7.66
6.62
7.16'
7.84
8.62
2.81
2.95
3.12
3.29
3,50
3.12
.3.28
3.64
3.84
4.03
3.45,
3.57
3.74
„
3.94 /
.
4.15
stated:
'
.
,
5.45
5.09
'"4.02
4.21
4.43"
4 68
4.93
5.25
5.72
6.13
4.46
4.68
4.93
5.19
5.50
5.84,
6.36
6.81
7.35
7.96
8.71
9.65
2.75
4.91
5.15
5.42/
5.72
6.04
6.42
7 00
7.49
8.08
8.75
9.58
10.43
3.00
5.36
5.62
5.9i;.
6.23
6 59
7.01
7.63
8.17
8.82
9.55
10.45
11.49
3.50
6.26
6.55
6.90
'7.27 "
7.70
8.17
8.35
9.62
10.30
11.14
12.19
13.40
Prepared by Ira
Haupt & .Co., with the assistance of
be available
request.
upon
:
whose more complete
"Bond Buyer,"
the
_■
.
First Boston
Rails Granted Add'l
First
The
100
Boston
Broadway,
announces
York
New
that
.
Corporation,
in
order
City,
to
im¬
Pittsburgh Bond Club
Rate Increase
Corp.
Announces Changes
To Hold
/ On
April 20, the
Commerce Commission
Pittsburgh has announced that the
annual springs outing of the Club
will be held at Chartiers Country
For
Hartford
will
located
be
Bank
National
the
in
&
Trust
more
which
30%
averages
Eastern/roads,
the
is ' 10%
crease
the in¬
represents a
and
September of last
since
compared with an average
year,
Building. A direct Enterprise of 21.4% increase for country as
telephone will connect Mr. Ly¬ a whole. ////•; ./
.%;;'/.■//■"/ "/X'::/
man's office with New York. /;'■//
Z The new rates are to remain in
The firm's Buffalo office will
who
has
Frank L. Marshall,
office,
been
will
manager
located
be
of that
in New
York, and will be in communica¬
tion with Buffalo customers from
/./;,;
The
telephone number 1 of the
changed
New York office has been
manent order
It
f.
\
I" safe,
'
a
than
feature of the
outing will be the
golf tournament for the bankers
cup and other prizes to be fol¬
lowed by dinner and entertain¬
ment.
Commis¬
Bond,
York
Harris,
in rail reve¬
Upham
&
commodi¬
on
May 1, and
on
Co.,
14
solicitation of an offer to buy, any of such Shares.
•/ offering is made only by the Prospectus, -"/■■•;•'/. ',:./•//■/ /.■
or as a
/'./.■v/ /,«/'•.•'•"
■,
1/
'■
'
"V-i•'vr/■-> ' /"'.•%•'■■"/■
•
■
/
321,726 Shares
Pacific/Lighting Corporation
! Common Stock
(Without Par Value)1
:
.
,
Rights, evidenced by Subscription Warrants, to subscribe for these shares"have
issued by the Company, to holders off its Common Stock, which rights
expire April30,
as more fully set forth in the Prospectus.
y
Tax-Exempt
Bonds
been
.
,
Subscription Price to Warrant Holders
Govern¬
bonds, State and
ment
the
depression of the 1930's, and
all
almost
defaults
such
without/ loss: to
who % maintained
or to
including those named below, intend to offer,
be purchased by them through the exercise of/warrants at
be, plus an.amount equal to stock exchange brokerage commission. Any such offerings may
acquired by the Underwriters through the exercise of warrants purchased by them or
anticipation of the acquisition of shares pursuant to the Underwriting Agreement or otherwise,
all as more fully set forth in the Prospectus.
1
^
sf Z-;:X •' /\ '' '•
.'i• *•:. \ '■> *'/<; r,.l'.:! ;i
1.1,;;
V*''
</'* .5 ' c
v •' '•
,l"
r' '
"
/
,
•
"V
' I j :v /
I 'ty< f
jf /
may
include shares
in
*
i
Copies of the Prospectus may be obtained from the undersigned only by persons to
undersigned may legally offer these Shares under applicable securities laws.
whom the
the
bondholder
purchased
prices not less than $40 per share and not above a price equal to the last sale price of the Common
Stock on the New York Stock Exchange during the current or previous trading session, as the case
were
up
S-■■ •/:
share
The several Underwriters named in the Prospectus,
shares of Common Stock
Next' to United States
•
/
' %/
bis
cleared
period. In
investment during this
the
*
'
-
BIyth & Co., Inc.
.
great majority of cases these
defaults
were
remedied in a rel¬
atively
require
perity to put the
on
period of pros¬
a
community back
*"
its feet.
The
•
1
j
'
road
Ripley & Co.
Incorporated
fort period of time and
did not
Harriman
«The First Boston Corporation
Dean Witter & Co.
Smith, Barney & Co.; / Stone & Webster Securities Corporation / W. C. Langley &
■.■'///%///X/■/'/-' -. / •.//;//■/ '■;•// :*;/•'/- -/•/'///''' ■/;■%'// ;'/•' //
: / ;/'; '' /.'.
Elworthy & Co.
I ■
William R. Staats Co. %
.
>
Co.
,
;
:•
percentage of utility bonds
than
three
times
eight times as
Brush, Slocumb & Co. /
Bateman, Eichler & Co.
Davis, Skaggs & Co.
'/
higher,
many
rail¬
Hill Richards & Co.V
/
r
"
Lester & Co.
,
a
;
■
^
Mitchum, Tully & Co.
bonds defaulted.
A further
herent
indication of the in¬
soundness
bonds is shown by
of
/
curity buyer.
Pacific Company
of California
"
Schwabacher & Co.
*
municipal
their ready ac¬
April 20y 1948.
/
/
f
/
•
.v//X«:/
; ;
,
"/
f.
Wall
their customer accounts.
.
circumstances to be construed as* an offering of these Shares for
no
New
Street, New York City, will take
over
$2V2 billion.
Co.,
&
commission business
ties and securities
Z1/'■ *r.■
,
McEnany
since
granted
.
City, will discontinue their
gross
/..
//,..
'■
■
;
Harris, Upham Takes Over
per¬
increases in
revenues
more
under
The
fl
estimated by the
mid-1946 aggregates
offer to buy,
or as an
issues
fixing freight rates.
that total
freight
This announcement is not, and is
%
was
sion
Com¬
Interstate
the
Commission
merce
nues
to WOrth 4-4000.
until
effect
11, 1948. The usual
Club on. June
increase
interim
aggregate
granted
rate
freight
Co.
also be closed.
O.
than 4% over existing rates.
Connecticut, certain changes in
operations are being made. The
Hartford office is being closed and
Henry Lyman, representative of
firm
/
PA.—Ernest
Dorbritz, Moore, Leonard & Lynch,
President of The Bond Club of
crease,
the
granted a
Outing
PITTSBURGH,
-
in¬
the facilities they offer in¬
stitutions and dealers in Central
prove
Interstate
slightly
interim
third
per
Safety Record of
greater ceptance by the professional se¬
?/
.
4.67
4.40
II).
umn
while
derives
proportion to total
income.
68.6%
3.67
2.68
net returns to the $69,009
income
equivalent
to
taxable
more
benefit from tax-exempt secur¬
ities
66%
3.46
-•
bring
defaulting during this period was
Through Tax-Exemption
An
63.3 %
3.18
2.92
also
can
,
$8,600 million.
municipal
60.7 %
57.2%
51.9%"
invest¬
municipal
standing in 1945, banks, insurance obligations have the finest record
of safety of all classes of invest¬
companies and gov eminent
ments.
Less than 2% of all mu¬
agencies owned more than half, or
nicipal issues defaulted during
State
Surax
ments.
formed themselves about such se¬
curities.
$90,000
Surtax
professional yields of about.4% to 11% (col¬
larger estates)
,
$80,000
Surtix
2.7.4
locate for
translate into
have
earned general
confidence
actual returns the interest rates
and respect.
of tax-exempt bonds.
For ex¬
On the other hand, they know
ample, municipal bonds paying
little of the reputation of bonds from 1.25% to 3.50% (column I)
of the cities of
$70,000
Surtax
"54.5%
your
yield
porations
$60,000
Surtax
'• 2.60 *
income bracket the amount
of return you must obtain from
Most investors are quite famil¬ ordinary securities to equal the
iar with the securities of such cor¬
Tax-Exemption
The "Mystery" /of
$50,000
Surtax
Worth?
the
to
mystery
a
$44,000
Surtax
2.46
43.3%
there.
bonds, savings accounts and /
other
$38,000
Surtax
2.31
,
.
from
.
$32,000
.
addition
an
Now let us as¬
$4,000 of this^
was
investment in
an
and
$26,000
Surtrx
2.23
the top
at
are
top
$40,000 income
tween hus¬
,
of
us
sume
be-
$22,000
Surtax
2.50
sources
of income,
proximately 60%.
and
s,
after
$20,000
2.25
take, for example, a tax¬
able income of $40,000.
The cur¬
rent tax on the top portion is ap¬
exemp-
to
$18,000
"
fore bear the brunt of the surtax
ail
after
$80,000
to
chart will
to other
in¬
$70,000
to
dividends received
from investments
your
"axable
is taxed
Interest and
income
falls.
come
addition to all other
the to¬
which
Income
$60 000
to
2.00
<$>-
into
bracket
tal
coming
and
Income
$50,000
to
'
to any individual's investment program is, of
highly personalized one, but it should always be remem¬
revenue,
Income
$44,000
to
to
1.75/
2%% bond equivalent
an
Income
$38,000
Income
<"
1.50
a
income is
Income
$32,000
tc
Income
'
approach
a
Income
$26,003
to
/ 44%
bond yields an
that investment
Income
$22,000
to
to
1.25
.
The
Income
$20,000
to
$16,000
d'stinct impor¬
a
equivalent of 8%% to an investor in
the $60,009 bracket.
Safely value stressed.
a
.
securities according to your income to equal the
$18,000
Income
Income
.
Yield
investment
an
,
,
the 1948 Tax Law
on
Surtax
Tax
Exempt
taxable income of $16,090 or more, since-
a
Yield that must be obtained from taxable
Bond
laws, municipal bonds have
with
17
taxfree
yields in Column 1. In using this table,see that column into which your taxable income falls, after all
allowable exemptions and deductions and after diviiion of income between husband and wife.
*'/■'■ Partner, Ira Haupt & Co.
tance to investors
BONDS
FROM TAX-EXEMPT
RETURNS
Shown in Percentages Based
■•:"■•/,.
Bj BERTRAM M. GOLDSMITH
Even
(1761)
CHRONICLE
iff, f i y f ' ■;.:'/
/;•■'; '
••
..
Lin—m^^i'iTr
i
ywHsp*M*viaae*!rr4M)M«l«tt^K«»
r
COMMERCIAL-& "FINANCIAL
THE
(1762)
18
Interstate Financial
CHRONICLE
Corp.
His Own Handiwork!
SYRACUSE, N. Y.—The Interstate Financial Corporation is en¬
.
gaging
from
securities
in a
offices
in
Building.
the
Thursday, April 22,1943
J ; "Inflation may seem to you to
But there are some men in this
be an old story.
country—men who
happen to be in influential positions—who still fail
business
:
University
,
|
to understand
•
By HENRY HUNT
or
who
deliberately ignore the gravity
of the situation and the need for
How to Gauge Investment Management
As
atioFial
securities series
Prospectus
your
upon
request from
investment dealer,
NATIONAL
or
from
SECURITIES
&
CORPORATION
RESEARCH
a
novice
analyst,
used; to wonder how it was possible to
we
nies
use
far
a
liberal
more
to
de¬
policy
in
reporting
earnings than the revenue bureau
Though
^
VDH
On
bonds
other
hand,
it
that
funds
1
J]
select
comparing
your
In
investment dealer
PHILADELPHIA
2,
and few
l
PA.
to
l-to-2
a
ortant
to
note
the
amount
cause
*
asset
values.
In
to
order
/■
you would have made
purchasing a mutual fund
some years ago, it's a good idea to
use the offering price at the time
of purchase, and the bid
price to¬
day. .
*
»*'
V':
v.*
-
know, of
/r
'■?*'
'
•
v
s
course,
rt
-
how inflation
'
seems
To
us
a
Moreover the Truman program to combat in¬
seems to us to he nothing short of a
proposal
flation
that
////;y;/.
we
abandon free enterprise in the hope of
curbing or eliminating a curse his policies and those
of his predecessors brought down upon bur heads.
,
40 Bonds
just how
V
f
direct and inevitable product of Roose¬
velt and Truman policies.
seems
currently: sell^
Dow-Jones Index
see
Government
by silently while inflation
on the American. people/'
the President's audience in this instance.
to
it
dividends paid as well as changes
in
'
•
We do not
a
ing at premiums over the support
levels. Most high-grade corporate
of
'the
measures
.—President Truman.
cau¬
"Now, confidence has returned
ernment bpnds are
showing. It is
year
might
what
I believe
I cannot sit
continues to creep up
:
encourage
adopt
to the bond market. All listed gov¬
5-to-10 year record
a
to
deflationary spiral in business.
judging investment manage¬
more importance should be
ched
to
banks
contraction
credit
so
ment,
//']
or
with
efforts
tious loaning policies all created
fear that
the
official
policy of
adaptable to
statistical analysis for a check.
are
and
commercial
know
we
should take.
clear-cut
a
that
bonds
with
you
in
work
managements
prospectus from
,r
.
tools to
same
IMWCOTMCMT ClIMn
"I believe that the Government has
responsibility to deal with high prices.
rates
provided
Truman
forgotten.
New
government
of
retirement
is rela¬
of
President
let it be
Chicago banks, the
York City and
records. Mutual funds all have the
Mi mm
requirements
reserve
surplus tax receipts, the
firming
of
short-term
interest
comparable
fl IVIUIUAL INVtolMtNl rUNli
that I do not propose to
"Further than that, the increase
in
funds,
established 1928
i
week
a
■
"For my part, I believe that
inflation is so grave a menace to
this country and to the world
nearly $4.5
tively easy to gauge the ability of
investment management of mutual
FUND^JMm
worse.
had
Banks
during two weeks
billion of bonds
during the past three months.
no
the
;
/.
buy, because no one else would,
$800 million of government
and
their tax returns.
longer a tyro, we still
think it a
tough assignment to
make a quick check on the ability
of industrial management.
m.
W WELLINGTON
on
Reserve
>
over
preciation
allows them
Federal
The
earnings for years; other compa¬
120 BROADWAY, NEW YORK 5, N. Y.
l
•-/.'
judge the competence of the management of an industrial company,
if one lacked the opportunity, or time to make an exhaustive "field"
survey.
Of course, the record of a company's earnings, its financial
position as indicated by the latest f>balance sheet told you something.
the Federal Reserve Banks and
But, bookkeeping methods vary; the Treasury to continue support¬
some
ing the market for very long.
companies in the develop¬
ment stage spend large sums for
Selling of government securities
research
and
show
little or no reached flood level proportions.
"
forthright measures; to meet it.
They have tinkered with the
problem of inflation—they have
even taken some feeble
steps in
the right direction.
But they
have taken other steps in the
wrong direction.
steps that'
have made the problem much
.
out
Fundamental
,
ik'
..
%
.
-V ''V' 'i
<
V'
{1
Hugh
W.
DEC.
Long's
April
York Letter" discusses the
ery
in bond prices
as
sent
chill
a
when
port
through
they lowered the
level
for
FEB.'
•
and
the
bond
high-grade
It
is
quite apparent that
now
the government's
anti-inflationary
prices. Bond prices generally de¬
policy
moderate degree. From
came
sharply and investors be¬
skeptical
as
to the ability of
ment
will
be
pursued
only
viewpoint this is helpful."
HUGH W. LONG & CO.
INCORRORAUD
April
Investment Report
funds
the
which
investment
it
the
but
•
"'A
48 WAIL STREET, NEW YORK S, N Y.
V''r ''' / "
' ' "
O
-
'
<
»
,
'
'
y -try
„
/
'■
!V<», V
CHICAGO
v/
//,
'
rJ
"
in¬
depression" which
materialize for 19
tax¬
'
#
.
Union Bond
market
not
by the
been
sharply increased
Tax Bill, especially by
new
"community property" pro¬
visions. The result should be to
attract,
0
^
\
;
Prospectus
upon
™
'
\
A
•''
if
11
///■:£
1
.
Cost
of
living
(billion
Personal
lion
-
1945
1943
1948
170
187
183
191
195
100.2
128.4
139.3
159.2
168
170
169
213.1
203.7
229.6t
78 3
171.6
177.2
19G.3
1940
;
■
,
•> 1949
;
product
dollars")
income
253
243
247
'207
211
v.-
book
on
(bi-I-.
dollars)
<■
/
217
/
!
foregoing," says Vance, Sand¬
ers,
"with the observation that
since Sept., 1939 the Dow-Jones
index of; thirty industrial, stocks
Brock
Stevenson's
"In-
vestment Company Shares."
National
7
Security and Research
Corp. has issued two
new
folders.
One called "A Monthly Paycheck"
has increased"less than 30%."
•—
,
Chicago
—■
New Orleans
*—
>
discusses the "National"
income programs, and the other
its ten industry, groups.
Los Angeles
SHARES OF CAPITAL STOCK OF
:
%
'The assets of Wellington Fund,
sponsored by W, L. Morgan & Co.
of Philadelphia, hit $53,600,000 on
April 17.
Seven individual funds
now have assets in excess Of ^50,000,000, namely M.I.T., Investors
Mutual,
]
Incorporated,
State
Wdllington.5 Other sponsors
as / Keystone,
Distributors
Group, Hugh W. Long,' and Na¬
such
tional
COMMON STOCKS
Securities
control
•
or
from
more
Herbert
President
of Boston
i
Research
of
R.
$10
Prospectus
your
may
be obtained from
Group,
local Investment dealer,
or
THE
PARKER
CORPORATION
ONE COURT STREET, BOSTON 8, MASS.
Inc. advising us that Group Secur¬
Million
Export-Import Bank of Washing¬
announced on April 15 the
ton
approval,
of
a
the
"
,
*
*
East
42nd
sold
over
the
as¬
financing
acquisition of United States
needed for the
tion
of
ances
in
will
be
speedy reconstruc¬
properties
in
the
and
worked
destroyed
out
or
disturb¬
recent
Colombia.
requirements
basis.
Alec
meeting,
supplies, materials and equipment
16,000
of
special
Republic of Colombia to
Street, New York, has
copies
a
sist that government in
damaged
Fiduciary. Publishers, Inc. of 50
at
commitment of $10 million to
ities, Inc. has assets of $87,000,000.
Notes
Loan
The Board' of Directors of the
Anderson, Vice-
Distributors
-
Congress Street
Boston 9, Massachusetts
and
than
$50,000,000 of
assets each,
but have no single
fund that large.
Pertinent to the
subject is a letter just received
(Series S1-S2-S3-S4)
Keystone Company i
Grants Colombia
and
(Series K.1-IC2)
local investment dealer
Export-Import Bank //
Street, Dividend Shares, Affiliated
PREFERRED STOCKS
'/..■«■
monthly
Circle
Participation in
(Series B1-B2-B3-B4)
50
1947
/
.
(1935|
Gross national
1946
203
100.5
„
production
Wellington Joins $50 Million
New York
investing their capital
Tke
?
41st half
125
v
.
Industrial
♦Estimated.
Lord, Abbett & Co.
INVESTMENT FUNDS
your
\
"2nd half
/'v.''
INCORPORATED
Funds
Prospectu t from
a re¬
"Report For the
*'1st half
/•
request
Custodian
BONDS
Hale, cites the
Business Executive":,
the
:
/
Lag
cent issue of the
\
(1935-1939—100)
iA
>'*/'&}
prospect for
following figures taken from
/:
•J
stock
a
Vance, Sanders' "Brevits," writ¬
>
tigg
Veystone
appear to be in
time to come."
ten by Edward E.
high-grade bonds, by
extraordinarily, wide margin)
ployed.",
by
to
since
*
'
M
Fund B
"forecast"
ceeds that of
an
failed
months
decline—and which does
Stock Prices Still
gradually, into common
(whose current return ex¬
stocks
has
some
its
1939=100F
Certificates of
originally
payers the potential return net
after .taxes of income from invest¬
;
4
available.
not
<
,/'■.<&//,#,///><
•
;"#r
now
for
releases
increased
centive to invest. For many
bargains in security values
Stock prices can¬
indefinitely reflect a "coming
many
of
"Groups Securities,^^ Inc., "is hot
funds that have long been unem¬
•
IOS ANGfltt
in
invest¬
an
the
ments has
corporate
security markets in general.
sup¬
government
the
bond markets has been helpful to
clined
Prospectus from your Investment Oeoter or
,/ ./JUAB*//' "
bonds have -recovered the De¬
cember-January
price
decline.
This recovery in the government
recov¬
follows:
financial markets late in Decem¬
ber
•ililAN,
.
"New
"The fiscal authorities in Wash¬
ington
Incentive
Continuation of a high level of
corporation/earnings is predicted
"must
^'The most important investment which
inevitably;: attract
effect of the reduced taxes," says' the attention; of investors to the
Recovery in Bond Market
Investors Inc.
Increases
To Invest
.
.
c
Reduction
Tax
Details
as
to
arrangements
on
a
mutual
COMMERCIAL &
Number 4692
Volume 167
Stalixt's
BABSON
YV.
By THOMAS W. ROGERS*
Asserting goal of Stalin is to el minate capitalism, Mr. Babson sees
H nts people of Central West
for
responsibility of taking
should
national affairs,
over
A'lA
i
Executive Vice-President, The American Finance Conference,
Chicago, 111.
,
possibility of Russians, when Ihey get the atomic bomb, of planting
them here to blow up large cities and by this way establish Communism in America.
Mr. Rogers defines "consumer credit" and analyzes
•
,
prepare
V; :V
extend.ng
j
j
talked with him.
by Mr. Stalin, Mr. Churchill, and Mr. Roosevelt. I, there*
using my column this week to answer certain inquiries
coming to me,^ ■
The conclu-, would be selected when we are
sions are not more or less in a row with all of
attended
fore,
am
.
.
these governments.
pleasant.
There
ent
are
differ¬
three
economic
social theo¬
or
ries
Therefore, our
big
cities could
completely ^ be
destroyed .witnout our knowing
jor sure who destroyed them and
certainly
without
war
having
c
ommonly
as
known
e n
t
free
p
ri(se
e r
Babson
Roger
•
Final Result
What the final result
would be
foretell. With a dozed
of
our
biggest cities destroyed;
there wbuid no|be M
nobody
can
Capitalism for many years to
.one.
Thus, the purpose of the
been
so
suc¬
cessful in the Communists would have been at-f
which
has
xd ir.ed.
They might try to have ■ a
nand in the( goyerhrnent of thb
(2) Fascism. This has been tried
United States; but it would then
in Germany, Italy and Japan; it is
be taken over by the people of
a form of State capitalism where
;United States.
:
:
65% of all
credit outstanding.
can be of
great benefit both to students
by creating a better understanding of the nature and functions of our eco¬
business society.
Too often business men have looked upon formal education
nomic and
-----
and
the
<$>_
or¬
ganized
edu¬
:
must
ness
cational
procas
Without
thing
apart.
a
there
_
be—always—to
society by
esses
be
can
for
reward
no
cational
au¬
neither
and
those
have
in
critical
and
vidual
a
the
it as
that
part
of
)ursociety
is
the
the
reward
for
the
under
and which is
di¬
Thus
against
tion
been
millstones
Credit
tional Economy," and
of competi¬
topic
assigned to
of
Structure
,
In
in
'A
...
..Stalin's Ultimate Goal
Therefore, Stalin's goal is to
eliminate Capitalism. Anyone re¬
sponsible for making a success of
Communism would probably have
i the same aim as Stalin. The Labor
government in England is gradu¬
ally coming to this same conclu¬
.
is
It
sion.
like the
ruthless
not
Pays Dealer
Mail Silver Dollars in
iV.
-v
is,
believe that their success de¬
sity,
she
blow
may
on
Con¬
Credit, Ohio State Univer¬
Columbus, Ohio, March 23,
some
its
sive one,
while to others it has a
restricted meaning. There¬
more
in
fore,
our
here
discussion
Grand
of
treated
were
to
recently when
Rapids,
an
a
defined,
broadly into
thus
divisions; namely,
quivalent, and
which
with
f
Sale Credit. That, is, credit
is
the
sale
of
connection
in
extended
This announcement is neither on offer fo
The offer is
exertion,
with
small cart into the
a
-
"lore," had been obtained from t
of securi¬
may have no thought of landing ties. The
client, it developed had
'troops here or of taking over our been "saving up" the pieces of
government. It would be only one silver for more than 20 years and
step in her campaign of destroy¬ had finally decided to invest his
ing Capitalism. Her hope would riches in much less cumbersome
articles of merchandise
nection with the sale
of
m|
;
some
Muc1i
and
service.;
?
confusidti
;
that—with
States.
She
cities de-
big
our
"
'
Socialistic
a
manner.
System
silver
would be needed to operate our
and
remaining industries.
most
eliminate
also
nations.
This would
undue
industries
from
competition
communistic
in
'
much better understanding
a
sell nor a solicitation of an offer to
made only by the Prospectus,
buy any of these Shares.
'v-1,
*/
..." !'
I;V-.
'
•
x--' v*.' <*"/'
/t
■
*:
•
this
their program then,
Atomic
is
when' the Russians get the
Bomb, they
center
of
It
would
them
over
here
of
friends, in
big American
own
our
-cities.
bales
these bombs
may get
planted, by their
the
in
goods.
be
easy
to
get
in
dollars, weighed 117 pounds
to bank officials,
dollars
the
of
were
borders
evidenced by Subscription Warrants, to subscribe for these
issued by the*Company to its common stockholders,
will expire at 3 o'clock P.M. Eastern Daylight Saving Time
on April 29, 1948, as more fully set forth in the Prospectus. The Com¬
pany is also receiving subscriptions from certain of its officers and em¬
ployees during the subscription period for a maximum of 2,400 shares
of common stock not subscribed for through the exercise of rights.
attention to the above
our
dealer in
the
Vander
which
is
a
"You
in
Subscription Price to Warrant Holders
$37.50
regular feature of the
his
In
as
letter
may
follows:
undersigned several underwriters may offer shares of common
acquired by them pursuant to the underwriting agreement or
through the purchase and exercise of rights at prices not less than the
subscription price set forth above, and not above a price equal to the
sum of the current offering price on the New York Curb Exchange and
an amount equal to the commission of the Curb Exchange.
be
The
trucks or airplanes
without being detected by custom
expect
that
we
would
Jjand, how.
it is the
the
can we
Russian
Spanish
"I know you
retaliate
On the other
then prove that
Government,
Government,
or
the
in
the
got from
an
in
silver
Argentine Government that does
to
us
the damage?
customers."
or
Of course, the time
newspaper
some
clip¬
publicity
j
one
which
of
these
be obtained from only such of the
Copies of the Prospectus may
>
**
-
undersigned as may legally offer these Shares in compliance v
*
with the securities laws of the respective States. 5 ' 7;..V..
•
■
•
;
-
,
MORGAN STANLEY &
CO.
>
COGGESHALL & HICKS
we
odd deposit of $2,000
dollars,
from
stock
will be interested
enclosed
pings, showing
Share
a
Mr.
automobiles,
with our airplanes.
: (no par
••
which rights
the last year of silver
coinage.
Editor's Note: In
"Chronicle;"
our
.Vv:-7
Hi ah Is,
question, J.
Moere, of J. Vander Moere
& Co., Grand Rapids, Mich., says
it merely points up the wisdom of
a suggestion contained in a recent
column by John Dutton, author of
"Securities
Salesman
Corner,"
story,
•.
shares have been
coined
1922,
dollar
trunks, or'in
They could be Moere writes
across
•:
The load, containing 1,890
interested
in
knowing that an article written
recently by Mr. Dutton was the
examiners.
Then
the
Russian needed inspiration for one of my
agents could deposit these in their men for going out and making
boarding houses in our big cities calls on people who would not be
'until the time came to explode considered as investors. We find
'them at a certain moment on a that he is right in that people off
certain day. Time clocks could be the main roads are the ones who
used so that the Russians would have the money for investment
-have time to get away. Thus all at this time. We find too that they
;these cities could be destroyed at are quite willing to invest in the
better grade preferred stocks at
a certain set hour.
their current high yields.
Of course, the Russians would
smuggled
Common
according
calling
What Will the Communists Do?
If
"
(Continued on page 41)
v/e
came
in
kind
of
G. H. WALKER &
CO
or
con¬
will be avoided
::: 35,374 Shares
•
in
rendition
or
Peninsular Telephone Company
client for the payment
*
stroyed
or
;
"
be
article
some
Mich.,
sight
local investment
puffing
maneuvered
unusual
,,
Credit
Officials of the Peoples National
Bank
longer
;.
(1) Money or Cash Credit. That
credit which is extended to in¬
(2)
all-inclu-i
the term is an
"invest¬
a
dividuals in the form of money or
•
to some persons, particu¬
larly with reference to its scope.
To
real estate
of
over
the big
up
United
the
cities of
J^r, Rogers^at
1948.
pends upon having the same pro¬ bank's office containing a waste
gram adopted by all other leading
paper basket loaded with silver
countries.
dollars. The dealer, after catching
Therefore, it is possible that as his breath, explained to the star¬
soon
as
Russia gets the Atomic tled
bank
attendants
that
the
Bomb
*An address by
sumer
Buying Securities
Communists, but even their lead¬ dealer,
ers
.
as
rules
also
on
forms
credit,
classified
main
two
vague
the National Conference
definition
other
be
may
-
investor
consump¬
Consumer
types' of financial
agencies and institutions now en¬
gaged in consumer credit activi¬
is Socialism hey will not, it certainly means purposes of both education and
that the people of our Central
with brutality added. One coun¬
business
know
that neither of
West will someday have a great
these
critical points of view is ties in the United States and de¬
try could get on under either the
opportunity
and
responsibility.
Coreect"or wh'oUyTustifled.
scribe in a general way their proCapitalistic System or Fascistic
The question is are these people
System by itself but Communism
Formally organized education
;hrA v/s•'/.?•V.-;'
^ •'?
nov)
preparing
jor
such
even
or
Socialism
probably needs a
and training should and must as¬
The term "consumer credit" is
though it may be a remote pos¬
world organization
in order to
sist us in adjusting to and inte¬ being used more frequently in our
make it work.
At least, this is sibility?
grating with the realities of life; economic literature. However, its
what Mr. Stalin thinks.
and the chief objectives of busi- connotation
is
still
somewhat
Communism
purposes
to' the
Classes of Consumer
the
you
business
period of time. 7
discussing this topic we shall
years.
term
Credit."
Consumer
period
will not
extended, to in¬
the
,
a
of ,the' individual
This
the
as
consumer
three
ment" credit funded
give emphasis to the word "struc¬
ture" and shall attempt to outline
for
than
mortgage credit
and
of
a
as
is "The
me
serves
desires
capacity
his
or
related
needs
out
the particu¬
for
not
such.
Na¬
the
in
credit
embrace
for discussion today.
morning
us
"Consumer
lar
defined,
and
which
way
credit
liquidated in
more
as¬
want
Your session theme this
Thcmas W. Rogers
not
of
has
subject
is
individual
an
dividuals
we
some
or
individual
the
/
spirit-and
needs
this point of
to approach
that
signed
led
by
selfish
people and in
which
enterprises
this
credit
employed in indi¬
background^ of
view
re¬
garded
which
are
It .is 'in
•
vein
have
who
be
in
primarily and directly the current
business;
rection of management.
upon
business
there
can
"consumer
term
denoting that form of
as
which
credit
those
the
use
credit"
service
customer
who direct the affairs of
looked
shall
serve
serving its customers.
such
Likewise, edu¬
tion grind relentlessly and for no
continue to own their
munities, largely the people of useful social purpose. Those in
property but,use it as the State
Central West. If my prognostica¬
directs.
either of these groups who are
(3) Communism. This is
where there is no private owner¬ tions come about, which I hope acquainted fully
With the real
ship.
,!
and to business
he smaller cities and rural com¬
persons
consumer
Pertinent and factual business information
students
(1)
Cap italism.
are:
This is what is
on proportion¬
Concludes instalment credit represents in normal times between 60% and
thorities
;
declared.-': 7;
today.
They
(1) book'.credit; and (2) instalment sales credit, and gives data
as:
importance of each.
I have friends who have often
Some of them have been at the famous conferences
met Mr. Stalin; but.
never
'
its structure and subdivisions.
Lists institutions
credit, and gives brief description of their various methods and operations. Clas¬
consumer
sifies sales credit
ate
I have
19
(1763)
^The Consumer Credit Structure
Obj ectives
ROGER
By
FINANCIAL CHRONICLE
-
-
•*'
20
(1764)
t
THE; COMMERCIAL - & FINANCIAL. CHRONICLE
•,
Thursday, April 22, 1948
Sprout Discusses Inflation Trends f
i
In 33rd Annual
Report of Federal Reserve Bank he describes U. S. inflation as "chills and fever" type i
inflationary pressure in last half year to deterioration of European situation.' Prefers i
"open inflation" that came after end of OPA, to "disguised" or "suppressed" type, and points to
increased production resulting from removal of price curbs. Looks to larger food output with resulting
and
t
ascribes
'
lower food prices
decreasing inflationary
as
fM
pressure.
In
transmitting to stockholders the 33rd Annual Report of the Federal Reserve Bank
Sproul, the Bank's President, offers, as an introductory portion, an en¬
lightening discussion of U. S. inflationary trends since the beginning of the war. Accord¬
of New York, Allan
port:
-
-tanding
of
ent
itself.
eco¬
controls,
the
year
both
at
■home
further
progress of in¬
flation.
the
Since
ed, the
rect
world
has
with
lor
been
faced
condition
European tion between
here
at
process
home
was
ac¬
us
was
feasible
more
than for most other
can
flation
f
policy of relaxing di¬
restraints
tries
a
0
whereas
reconversion
That the
end¬
war
the
of
inflation.
or
our
Since the abandonment
breakdown of OPA in the mid¬
by early removal, or dle of
1946, inflation has ex¬
breakdown,
of
direct
wartime pressed itself here in a rise of
controls, and the main reliance prices which, up to the break in
was
placed on freeing the econ¬ the primary agricultural markets
omy to make its own adjustments.
in January and
February of 1948.
was
the
most
companied
and
abroad,
In
"open" inflation
countries the main emphasis con¬ and what in Europe is
being
tinued to be placed on the direct called "disguised" or
"suppressed"
feature
the
1947,
contradiction to the appar¬
facts of the case, especially
when
out-
nomic
be in
;
v
The
establishing the dollar at its previous
analysis would appear to<S>-
coun¬
hardly be doubted.In¬
always
consists
of
some
had
carried
price
our
proximately
to
level
the
ap¬
point from
which the postwar deflation-be¬
gan in May 1920. But this rise in
prices was accompanied by an ex¬
parity.
This
conclusion
on
casual
re¬
ing to the
-
Paradoxically enough the Canadian economic prospects were
brighter than they are today, despite the currently acute ex¬
change situation and the violent criticism of Canadian action in re¬
never
an
present situation
is
compared
with that prevailing
iust prior to the revaluation of the
illusory
of
the
the
appearance of
Canadian
strength
balance
of
for¬
eign payments. The collapse of the
U.
S.-British-Canadian exchange
triangle
also
has
had
a
most
salutary effect north of the border.
Canadian dollar. At that time the
Canadian
exchange reserves of
gold and U. S. dollars were almost
embarrassingly large, the Cana¬
dian favorable balance of foreign
trade was at a record level and
the
in
Although
the
free market brought
to bear on the official
exchange level of 10%-discount,;
According to the superficial
pressure
facts and indications the Canadian
overall
picture then was never
the
faulty
basis
on
long
been
con¬
recognized,
tinued
there
to
was
strength of the Canadian dol¬
lar
;
which this system rested has
authorities.
has
Its
now
The
which is
breakdown
how¬
changed the whole
Canadian
of
:
course
policy.
it
successfully
pardonable compla¬
the part of the Canadian
cency on
ever
while
operate
a
economic
austerity
program
the first outcome of the
changed
mentality
could
only
deficiency of goods pansion of physical output which more attractive. When
looking un¬ have been
imposed in the face of £
superfluity of money. In both despite a period of hesitation and der the
bright surface however, it
and, v
,.
a dire calamity of this nature. In
respects we entered the postwar uncertainty last year, carried us was
possible to discern underlying
seemingly as intractable, as the
addition to its corrective influ¬
period in relatively favorable con¬ by the end of the year to a record darker
aspects of the case that
deflationary conditions that char¬ ditions. We had
given an aston¬ peacetime peak. In some of the gave rise to serious reflection. In ence on the U. S.-Canadian trade
acterized the thirties. It has taken
balance it has directed Canadian
ishing demonstration of produc¬ European countries on the other the first
place an analysis of the
different forms in different coun¬
tive capacity and could look for¬ hand, the attempt to suppress the
attention towards the greater ex¬
pleasing total of the Dominion's
tries. The differences have arisen
ploitation
of
the
Dominion's
ward, once reconversion was com¬ rise of prices by direct controls foreign
exchange reserves would wealth
partly out of the differences in
of
natural
resources.
pleted, to a backlog of deferred and subsidies has met with a ris¬ have revealed that a
large pro¬ Another beneficial
circumstances, economic and po¬ demand, both domestic and for¬ ing volume of complaint that the
aspect is the
portion was derived from U. S.
litical, and partly out of the dif¬
likelihood that U.
S. industries
eign, which would keep our econ¬ process is only accentuating the investment in Canadian
internal
ferences in the policies
pursued. omy running, for some
rather than lose their best foreign
years at scarcities, diverting labor and ma¬
securities, a part of which repre¬
customer
will
terials from more to less
establish
branch
The
essen¬
whole
problem must be least, at full speed provided cumu¬
sented speculation on an almost
lative maladjustments did not in¬ tial employments, and leading to
viewed against the
certain upward revaluation of the plants in Canada. Consequently
background of
the previous flow of U. S. specu¬
terfere.
On the money side, we disruption of trade and hoarding
the war. It is due
Canadian dollar. Another portion
basically to the
of goods.
lative capital is likely to be re¬
destruction of resources
Moreover, there is in¬ of the
in
the came out of the war with a sub¬
remaining balance arose
placed by industrial investment in
war, and to the difficulties
in¬ stantially higher ratio of money creasing evidence that, in a num¬ from
non-recurrent
U. S.
war
Canada
of a permanent nature
herent in the conversion of re¬ to national product than at the ber of countries at least, the con¬
purchases in the Dominion.7 The
which will supplement the
sources
from peacetime to war¬ beginning, but with nothing com¬ trols are cracking and the sup¬ remainder of this U. S. dollar
sur¬
Dominion's own efforts to achieve
time ends and back
again. These parable to the large money "over¬ pressed inflation is coming out plus was made possible as a result
a greater degree of industrial selfimmense changes have been car¬ hang" that has plagued the Euro¬ into the open in the form of price of the
ready conversion into U. S.
increases that go far beyond any¬
ried out, in all
dollars of sterling and other cur¬ sufficiency.
countries, b.y a pean countries. Though most of
combination of specific measures the European countries—despite thing we have seen, or are likely rencies
Thus it would appear that as a
which
formed
part of
result of the recent series of eco+
designed to direct and ration pro¬ Ihe wartime destruction of plant, to see. This rise of internal prices Canada's overall favorable
foreign
the big hole
duction and
nomie setbacks Canada has been
still y remaining in and the disturbed conditions Of trade balance.
consumption and to
" ;
control wages and prices, and of Germany, the disruptions in trade production and distribution have
This latter feature of Canada's jolted from her previous state of
the more general
produced by the iron curtain, the of course had the effect of greatly
complacent reliance on outmoded
monetary and
complicated exchange system has
fiscal policies
designed to control loss of foreign assets, and the increasing their international def¬ long constituted the Achille's heel procedure and will now follow an
the money
economic course directed towards
supply and the aggre¬ chaotic conditions in the Far East icits, which has resulted in in¬ of the Dominion's
economy. While
a fuller development of her native
gate volume of spending. During —have made more progress in creased inflationary pressure on the other
two sides of the timethe war, the
resources
and
the
insulation
of
pattern of policy production than is commonly rec¬ our own economy.
honored U. S. British Canadian
the domestic economy from the
pursued in the different countries ognized, and though some have
It is against this sort of back¬
exchange triangle remained firm,
was
impact of external influences.
fairly uniform. Considering resorted to unprecedented meas¬ ground that our own experiences the Canadian
exchange line could
ures
the magnitude of : the war
of
During the week the external
monetary
1947
must
contraction, in
be
effort,
appraised. be easily maintained. With the
their problem, in general, is still
it was in most countries
surpris¬
Throughout the year, the impact breakdown of the British com¬ section of the bond market dis¬
one of
acute deficiencies in out¬ of world conditions
ingly successful.
But as we see
on our econ¬
ponent the basic defect of this sys¬ played a firmer tone and the in
ternals improved sharply as a re¬
clearly now, its main effect was to put combined with a highly re¬ omy, and the differences here and tem has been
thrown into sharp
postpone rather than remove in¬ dundant money supply.
sult • of the sustained strength of
abroad that have been described, rfelief. ;
vp-fp Pffdpifppp:i
free funds. With the approach of
a
One result of these differences had
flationary pressures. The uniform
major effect
upon
the
T$et 1uCjdoy£ .consider the^ cur? the tourist season, the improve¬
pattern of policy may be said to in circumstances and in
policies course of prices and production
rent situation in the
light of this ment of the overall exchange
have ended almost with the war has been the now
familiar distinc¬
(Continued on page 36)
development and the revaluation
position, and the absence of im¬
of
inflation
combination of
Allan Sproul ;.■<
as
•severe,
and
.
the
result
This announcement is not
the
dollar.
latter
A
direct
event
is the
cessation of speculative
purchases
of Canadian
securities, which at
no
time exercised
any construc¬
tive
influence on the Canadian
offer to sell or a solicitation of an offer to buy these securities,
offering is made only by the Prospectus.
an
The
•
.
Canadian
of
economy and 011 the
contrary gave
$12,000,000
*
r
1
*'
*
'
"v
•
V
'
-
*
•
,
\
\
"*•>
cr
c
advance
CANADIAN BONDS
V
;
^
V
i
r-|t< ,*
GOVERNMENT
April 1,1978
V-
,•
.v
j,
>
^
may be obtained in any State in which this announcement is circulatedfront
bnlyduch
undersigned and other dealers as may lawfully offer these securities in such State,
CANADIAN STOCKS
.
,
'..'.dp/
Incorporated
AUCHINCLOSS, PARKER
&,
-
REDPATH
GREGORY
&
SON
INCORPORATED
JULIEN COLLINS &, COMPANY
STERN
BROTHERS &
v*
|
CO.]
-
April 22,
1948
....
.
STROUD
V
DEMPSEY &. COMPANY
THOMAS &, COMPANY
:-Pf-'p'jp;f/ff ' V;
OTIS &. CO. '
'-.P:p
.
\
\
COMPANY
INCORPORATED
formed
of
with offices in the
Commerce Building, to
William B. Holton.
Mr. Farra
was
^
■
A. E. AMES & CO.
.
HILL &. CO.
f fP:
with
INCORPORATED
Merrill
Lynch, Pierce, Fen-
& Beane.
In the past Mr. Hol¬
ton and Mr. Farra were
associated
in the firm of
Holton, Foster & Co.
.
WHEELOCK & CUMMINS, INC.
P.p. p \...
encour¬
the
engage in
a
securities business.
Principals of the firm are John B.
Farra, Alex P. Herrington, and
ner
j
&.
;5PPC;
*
(Incorporated)
.
recent
from
formerly with Otis & Co. and Mr.
Herrington and Mr. Holton were
v".rr;
A. G.BECKER & CO.
the
and
results
highly
promising Leduc field will give
impetus in this direction.
been
HALSEY, STUART & CO. INC.:/
f
than
i
LEXINGTON, KY.—The firm of
Holton, Herrington, Farra Co. has
PpP::*mm~*m~mPP;'^P
'J :
headway with the exception
golds which now appear
Farra Form Invest. Go.
MUNICIPAL
Prospectus
of the
de¬
are
further
Bank
The
section
Holtcn, Herrington,
PROVINCIAL
CORPORATION
c.-i
this
is¬
further
the
aging
pi 101.75% and accrued interest
Price
r
in
a
Canadian stocks also made fur¬
ther
of
favorites
Company
Due
*
internal
ever to be
unduly de¬
Western oils have now
replaced the golds as speculative
Mortgage Bonds, 3% Series due 1978
1
of
pressed.
Dated April 1, 1948
•i
maturities
cidedly favorable.
more
Gulf States Utilities
First
minent
sues,the; prospects for
TWO WALL STREET
NEW YORK 5,
N. Y.
iPi^-PPWORTH 4-2400
r.
NY-1-1045
Jacquin, Bliss Admits
Jacquin, Bliss & Stanley, 61
Broadway, New York City, mem¬
bers of the New York Stock Ex¬
change, will admit F. Romana
Witenberg to limited partnership
on
May 1; -
Volume
167
Number 4692
Treasury to Raise
Carb Settles Strike, Bat N. Y. S. E. Holds
Certificate Rate
Capital Levy in Britain
York
Stock Exchange employees continues, though without noticeable in¬
terruption to normal operations.
The New York Curb Exchange, on
By PAUL EINZIG
■*
Einzig describes repercussions of Britain's proposed capital
levy, and characterizes it as a political issue on part of Labor Gov-
>
from
^ ernment. Holds it will handicap raising of fresh British capital,
and will discourage savings. Points out levy is unnecessary because
government's budgetary surplus is already substantial
is
It
j
views
LONDON, ENGLAND—Interest in Britain in the adoption of the
ERP. Bill by Congress was overshadowed by the sensation caused by
the
the announcement of
that
capital levy in Sir Stafford Cripps'
For months past lively controversy was raging in
budget speech.
the
'
about
the
the
ford
general 1y
Cripps decided in favor of
of the profits tax or
on
a
compulsory limitation of
dividends, it would have been
very unpopular in financial cir¬
cles, but it would have caused less
assumed
actual
but
during
recent
it
weeks
almost
was
that
harm.;
In
nothing would
adoption
be
done
any
rate
this
It
was
year.
the
capital
big
a
levy
for
have assumed
that it would not repeat itself in
of
the
ad-
lifetime
As it
of
The
to
1 Vs %
from
of
to
has
Spring.
'
is, it is widely assumed that
all
to
make
lenders
"The
the cost of
reluctant
reach
to
mini strative
the special contribution would be
difficulties
Whether the new
again.
For commitments.
wealthy people rate is the final step in the series
are inclined to liquidate their in¬
taken by the Treasury toward a
vestments
and
to
keep
their
the
of
repeated
assess¬
ment
cap¬
for
ital
of
this
the
Dr. Paul
Einzlf
purposes of a levy would be tinsurmountable
tions
when
in
the
Department is
with
arrears
ments.
existing
Inland
condi¬
Revenue
18 months in
some
income
tax
assess¬
This
difficulty < was
overcome, however, by assessing
the tax not
capital but
on
in¬
on
again
reason
money either in a liquid form or
to invest it in a form that does
amount
to
anything
under 150%
of
the
up
total
will
to just
income
for, 1947-48.,
1950.
This
As
capital levy, this "special
(as it is called) is
a
moderate.;
Assuming
that
since last Spring is still
would
the
movement
savings
It
is
the
that
absurd
should
of
a
is
seeing
needed,
not
that there is already a substantial
revenue
all" there
This,
a
for
cause
everybody,
So¬
in itself, is
practice.
justification of
the thin edge of the wedge, and
that it will either be repeated in
cellation,
frequent
current purposes
intervals
will
it
or
much heavier
be
cap¬
to
the
British Labour
Party has been advocating cap¬
ital levy ever since World War
I,
during World War II active agi¬
tation has been suspended, owing
to the heavy direct taxation on
profits.
As the British income
tax and surtax amount to 97V2%
high incomes and death duties
on
have
also
raised
been
high level, there
to
was a
a
feeling in
Socialist circles that the rich
now
very
adequately taxed.
were
The revi¬
val^ of the capital levy as a live
political
issue
to personal
political
It
due
was
causes,
in
part
but largely to
causes.
doubtful
seems
whether
a
capital
The
fritter
the
a way
To
v-
•
mature
annually *640,000
rvd-.vA'?•
Vi,
}s
advocated
j
*
in
Once out of office, how¬
he began to agitate in its
adopt it.
ever,
favor
head
and
placed
himself at
the
the Left
of
Wing Socialists
advocating it.
In face of Mr.
Dalton's
attitude,
Sir
Stafford
Cripps felt impelled to show that
he was
good
Socialist
his
predecessor.
Hence
his
small
capital levy in this year's budeet.
This did not satisfy Mr. Dalton
who, in a speech during the bud¬
get debate demanded a big cap¬
as
ital levy.,
i
The
a
as
a
speech,. Mr.
big capital
'
{
"
'
political
reason
for
the
adoption of the special contribu¬
tion
was
the desire
to
make
the
stabilizing
policy acceptable to the workers
by a move directed against cap¬
ital.
From this point of view,
however, the choice of the means
government's
to
that
very
end
wage
must
ill-advised.
-
be
Had
considered
Sir Staf¬
J
*
: (
...
*
-
\
^
d V
each May 1, 1949 to 1963,.inclusive. /
:
byp»"
The Pennsylvania Railroad Company
-A r
/ .
I'JH"
1
•
«
<•']>.
p
-
MATURITIES
mm
\
l
^
',
..
t
'
,
,
f
}u \
.
"
/
*
*
"*;••••
,
1950
1951
means
his
by
who agreed to pay out
stocks
in
nationalized
in
of
railroads
2.25%
1959
2.625%
1.65
1955
2.35
I960
2.70
1.85
1956
2.45'
1961
2.725
2.00
1957
2.50
1962
2.75
1953
holders of
1954
1952
successor
government bonds instead
as Mr. Dalton would have
3%
AND YIELDS
(Accrued dividends to be added)
abandonment
a
2.125
1958
2.55
1963
2.75
1.45%
f|
2Vz%
if
believes
done.
He
oublic
that,
were
reduced
debt
the
with
Certificates are subject to authorization by the Interstate Commerce Commission,
Offering Circular may be obtained in any Stale in which this announcement is
circulated from only such of the undersigned and other dealers as may
lawfully offer these securities in such Stater
) \
.
Issuance and sale of these
The
big levy, it would be
easier to enforce the cheap money
the aid of
a
'
'
,
What he appears to over¬
look is that the capital levy would
reduce the demand for govern¬
policy.
ment
it
bonds
would
at
the
same
its
reduce
time
supply
;
■
HALSEY, ETUART &. CO. INC.
should
it
a
ti
e c t
and
interest
rates.
The revival of capital levy has
gpne a
R. W.
BLAIR & CO.,
INC.
GREGORY
&, SON
INCORPORATED
OTIS
&, CO.
(INCORPORATED)
(INCORPORATED)
L. F. ROTHSCHILD &
of class war.
THE ILLINOIS COMPANY
BURR & COMPANY, INC.
THE
R. L. DAY
Sc CO.
CO.
WILLIAM BLAIR & COMPANY
FIRST OF MICHIGAN CORPORATION
GRAHAM, PARSONS & CO.
FREEMAN & COMPANY
THE WISCONSIN
Rafferly Municipal Mgr.
& CO.
INCORPORATED
HORNBLOWER A WEEKS,
HARRIS, HALL & COMPANY
FHELPS, FENN & CO.
.
A. G. BECKER
EQUITABLE SECURITIES'CORPORATION
tering relations between the gov¬
ernment and its opponents.
The
latter regard it as a hostile move
which could not be justified on
any economic grounds.
It is con¬
sidered. in fact, an undiguised act
:
;
BEAR, STEARNS & CO.
& CO.
PRESSPRICH
long way towards emblt-*
1
,
as
For Schwabacher & Go.
V
on
*
MILWAUKEE COMPANY
;
~
;
McMASTER HUTCHINSON & CO.
MULLANEY, WELLS &, COMPANY
«
THOMAS & COMPANY
SCHWABACHER & CO.
HAYDEN, MILLER &. CO.
WM. E. POLLOCK 8, CO., INC.
KEAN, TAYLOR & CO.
COMPANY
;
F* S,in^rpoI/!?ed&' C°*
^
FRANCISCO, CALIF.—
Schwabacher & Co., 600 Market
SAN
Street, members of the New
and
Francisco
San
York
Stock
Ex¬
changes, announce that James
CerUfjcat^'fn'tem^iran^r dcl^nkive fon^wiu'be available for
U
F.
-
Rafferty
with
has
them
as
Wall
Mreet
New York
delivery at the office of Halsey. 'Stuart & Co. Inc..
information contained iierein has been carefully compiled from sources
guaranteed as to completeness or accuracy, we believe it to be correct as ot this date.
N. Y. The
considered reliable and while not
become- associated
of
manager
municipal department.
■
the
April 22
1048
'v
'
the
April 21.
$39,240,000)
'
how^
at
on
Certificates are to be issued under an Agreement dated May-r, 1948, which will
provide for the issuance of $39,240,000 principal amount of Certificates to be secured
by new standard-gauge railroad equipment estimated to cost not less than $49,
1949
as
why
While
to want to
going
These
for ensuring the
success
of : cheao money nolicv.
He is still smarting under the re¬
verse suffered by that- policy to¬
wards the end of 1948 and its
levy
Dalton's
seem
Union,
the
guaranteed as to payment of principal and dividends by endorsement
;
*
that there is. therefore, no reason
resignation.
of
still
close of the market on
contract, like the old,
new
and
were
ever
'
r
12%%. Equipment Trust Certificates
To be unconditionally
1
'
is fundamentally
levy had come to the
fore at all had it not been for Mr.
office he did not
of
at the end
T
-
(Philadelphia Plan)
tax on capital for
In the course of his
Dalton
Although
year.
change
wrong.
ital levy to be assessed on capital
values.
To
proceeds of a
|
'fi-AW
capital levy is
a
4*1
£
■
Exf
representatives of the Ex¬
tween
surplus.
the purpose of debt can*?
serve
■$:
most unsound
only possible
the
For
cialists and Conservatives alike, is
convinced that this tax is merely
followed by a
Stock
Equipment Trust, Series T
£ 105.000,000 which in
mere
case
ing to reduce the
But
York
New
Pennsylvania Railroad
govern¬
reduce income taxes without hav¬
discontent.
the
tween
expose
chequer that this tax' is "once for
no
period of the contract. ■ <;
Despite efforts of the Federal
Service, no agrees
ment appears ii\ prospect yet be!
Conciliation
$9,600,000
the country
to such disadvantages for the sake
sal¬
the full
authorizations will
the Exchange and
(First installment of a proposed issue of
would increase.
pro¬
in
10%
and the
financing
assur¬
be
one
uncertain.
It would also interfere with
of the Chancellor of the Ex¬
would
of
aries, effective when the confrati
is signed.
Salaries are fixed fol*
days.
revocable
be
must
raising fresh capital very cliff'*
cult.
budgetary surplus. The only pur¬
pose
of the special contribution
is to enable the government to
possible to accept the
will
agreement
increase
an
gravely handicap produc¬
the maximum rate of 50% is only
of the capital taxed.
If it
were
be acted on by
tion, for it would make the task
any
ance
vide
..
new
it should
proportions,
the
average yield in investment is 5%,
2%%
The
contract continues the
that only new
pattern
rate
tract.-.
if
trend,
considerable
assume
ment
contribution"
short-term
of
yield any income, at least
unt'l the next general election of
cost of government
investment
higher
15
plan which
bonus
not
income
from
speculative
and
and
though it will have
paid in many instances out
of capital, for total taxation on
to be
long-term
many
of
even
come,
for
was
'
Exchange adopted in 1945, a*
it now exists, is to be incorporated
without change in the new con¬
membership by those
voluntarily chosen to
new
volume
old
in the
•
provisions of the old contract re¬ change and the striking union or
Picketing of the
garding deduction of union dues its employees.
by the Exchange for all employees entrances to the Exchange corn
who are union members and au¬ tinues, but few disturbances have
reported.
Negotiations be
thorize
such deductions, except been
thus
and
borrowers
have
contract
continue their drive against infla¬
funds
union
existed
the
chooses, withdraw from the Union.
The withdrawal period in the old
it is generally believed, is a move
of
the
monetary authorities to
tion through increasing
The
as
maintenance
on
have
as
agreement.
join the Union, but it will pro¬
vide a period of 30 days, after the
signing of the contract, within
which any employee may, if he
followed
been
contract
old
who
short-term pattern
that
rates
choice
It
pol¬
a
the
union
the
certificates
one-year
strike
contract preserves
new
of all employees
membership.
continues the provisions
free
Association,
June 1 or
with
to an agreement with its striking employees
ceptions noted below:
of
the
This higher interest rate policy,
generation.
this
^
of
This is in line with
since last
Everybody would
contended
that
of
on
icy of higher
would have been less harmful,
at
rate
iy4%.
the
a way, even
Bankers
beginning
indebtedness
of
increase
an
meeting
July 1, the Treasury will advance
press
question,
the
came
It entered into new<S>contract for a period of two years may not be cancelled b,y either
which is exactly' like the contract party
and
continues the
same
just expired March 1, with ex¬ agreements of the union not to
the basis of
on
Council
Executive
American
form of
a
reported,
attending
hand,
April 15.
on
expressed by Treasury of¬
ficials
more
other
the
\Vs% to iy4% to be made
possibly on June 1.
f
Oat
than three weeks duration, the strike of New
After
Authoritatively reported increase
Dr.
>
(1765) ..21
FINANCIAL"CHRONICLE
COMMERCIAL: &
THE
'
22
THE
(1766)
LAICNAN& CHRONICLE
IF
COMMERCIAL
;: •■'■</
Assistant
;
to
the
■
will continue to increase with the
President, Texas Technological
College
continued
v
-
>
about
plete
banks
of
of government bonds.
The
of
government
financial
country
our
safely
will determine the future of bank
and
for
soundly
investments in government
I
your, deposi¬
tors and prof-
i t
b 1 y
a
uation
is
fact of
T.
C.
Root
uncer¬
tainty;This
■
,
tainty
possibility
u n c e r
,
has been caused by the
of
the
increasing
government control
the operations of banks, in¬
over
flationary tendencies,„ the dis¬
turbing influences of strikes,
,
of war, government oper¬
ations in the organized
rumors
commodity
markets, constant sniping at the
profit system, the future develop¬
ments
credit
in
control
and
con¬
tinued vacillation in foreign pol¬
icy,
War and the New Deal,have
ruptured
the
needs
apparent
business
Mr.
Binson
told
you
psychology, with caution
group from
good
The
swift
ERP, the tax cut of
of
$4 billion, the almost certainty of
the military
budget, and the usual interrup¬
tions of production due to strikes,
have furnished an
impetus up¬
ward, ;and almost dbmpletelyrer
versed
the direction of recent
yesterday
favoring something
nation as a whole.
the
for
disappearing;
the
that selfish interests may prevent
a
balanced,
poor
of
very
a
economy
secondary consideration.
impres¬
sive, and onlydefinite, fact
in today's sit¬
business
almost
with
the
most
are
it takes
but little to tip the scales either
way.
Truman's message seemed
to " bring
an
abrupt change in
passage
for deficit financing,
deflation
versus
evenly
fairly
ment's need
for
find
inflation
banking policies will be
dictated primarily by the govern¬
holders,
I
bonds.
think that in the future, as in
the past,
stock¬
your
future
policy
large increase in
a
cautious
thinking;
large holdings of gov¬
bonds, you would not Another
Siege of Deficit Financing
like to see their prices decline,
We are in for another siege of
would you?
I think we would
financing
which,
when
have; a healthier economy with¬ deficit
upon
our
present
out a pegged market for govern¬ superimposed
ment bonds,
The wartime rule heavy debt, will be an almost un¬
With
your
ernment,
.
requiring the Federal Reserve to
buy
bonds offered bv
any
bers
should
ended.
be
mem¬
strain
bearable
nomic
upon
In
system.
eco¬
the
inflations, ending
world's wildest
It
our
the
increases
in
past
gives
the Treasurer an artificially low in the complete wreckage; of the
rate of interest and permits banks value of money, have been: ac¬
to
create
by
a
succession
o
an
additional
credit companied
which can be spent as money. We badly unbalanced national
bud¬
hear, much of government control gets.
Debt retirement is defla¬
It
of natural re¬
entirely safe to
seems
that this definite trend will
say
continue in
For
to; operated
the
continued
utilization
sources.
bankers, it is necessary for you not only to live in^the future but
as
by
of tnis great area.
will
be
brought
the
war or
peace.
it
future,
that
seems
the banks in this territory
will be
forced to go more and more into
departmentalization, and as gov¬
ernment agencies and others fac¬
tors take business away hunt new
Lelds
tor
profitable operations.
As the drug stores took business
away
from
the
hardware
aid
all
of
aware
not
Indeed
arej.
services
the
of
all;
use
many
by the bank.
The bank will have to pay more
development
.population' and in industrializa¬
tion, accompanied by a more com¬
policy is closely allied to inflation.
A sage once remarked, "The future is intensely interesting to me because I intend to
Jive in it." The future is
interesting to all of us for that very good reason, and it becomes es¬
pecially important if,
economic
and expansion
This
increase
Commenting on uncertainties regarding future, Texas educator foresees likelihood of more deficit
financing with intensified inflation. Predicts bank rates will not soon rise, and attacks Federal Reserve
buying of government bonds. Does not look for nationalization of banks and contends our foreign
-
not
offered
do
bank
a
its services.
of
associations: assets, deposits,
capital funds of your banks
your
and
B.v T. C, root*
territory served by
the
id
of
tomers
One thing seems certain for the
hiturev
Banks and Tomorrow
it
1948 :
Thursday,i April 22,
and
more attention to public rela¬
tions, to the education of present
prospective
customers,
to
keeping the public informed so
that its opinion may be shaped
and
,
intelligently.
The
banker
have to
take
as
citizen
a
will
active and
an
mili-
basis.
old
The leading citizens of the
West formed
vigilante
murder
law
themselves
bands
and
and
to
pillage and
order to
into
discourage
bring
to
Most of the
cus¬
ties.
The citizens of the present
day West need to form themselves
into good government leagues,
to"
choose condidates and persuade
these candidates to stand for elec¬
practically all
relations
and
old
eco¬
substituted
of credit—we need control of government credit
Nadler Foresees
Revamping of
Fiscal Policy withfBudgetpeficiL
Looks for
new
powers
market and credit expansion
deposits and lending increase.
over money
should bank
math.,
of
who
insanity
militant nationalism
and
way;
yet, I shall discuss three
things:
the possible course of
government
control in the future, the
possible
of
course
business
sible course of
the
and
unbridled
inflation and its after¬
We have too many people
readv and anxious to
are
convert
to
Federal Reserve officials find
themselves on the horns of a
They know they can¬
same
discount
rates
and
Re¬
requirements -and at the
time support the market for
government
bonds,
The
;
recent
advance
in
discount rates > and
Reserve requirements was accom¬
plished by a drop in the bond
market because a raise in Re¬
serve
requirements
brings about
the sale of bonds.
The only way
open for credit control then seems
to be the individual bank's
efforts
to curtail credit.
In England the
Socialistic Government has made
very little attempt to control the
domestic policies of
banks, al¬
though
exchange
control
has
been
rigid to the extreme.
In
this country we have had
control
the form
of repeated warnings
Federal and State
from
authorities
and
banking
campaign for
a
voluntary restraint by the
ican
Banks
Association.
Amer¬
These,
coupled with rapid loan expan¬
sion, have served effectively to
prevent
other
speculative banking.
strong
force
often
An¬
over¬
looked is the skill and
ability of
the bankers coupled with a
desire
and
determination
banks sound
and
to
and
ernment
/or relief, assistance
in
had
dilemma.
raise
planned
We have too
many groups who turn to the gov¬
keep their
solid.
real
any
For 16
emergency.
serve
fully
a
managed economy.
subsidy
pos¬
foreign policy.
.Dilemma' 'of''Federal Reserve
in
and
party
no
dellation.
along with subsidy
control, and the administra¬
stands ready to try
anything
new ones
sanity of economic inter¬
dependence and the utter
not
tionary
wants
or
fane'ed
of
have
vears we
type of administration that
a
encouraged this tendency in order
to perpetuate itself.
It has be¬
quite
come
finger at
Street",
and
to point the
common
"big business"
"the
or
some
"Wall
or
lenders,"
constantly sniping
are
monev
at profits.
I do not believe the
banks as a whole are open to this
of
kind
rabble-rousing
scaoe-
the banks are in¬
separably bound to the economy
course,
forces that started either
condition
snowball
and
economic
ruin.
The
spect
and
have
constant
business
contacts with their bankers.
I do not believe the government
will'
attempt
to; take over our
Banking is too highlv de¬
banks.
centralized and to work
a
highly
decentralized system with detailed
rules would certainly create
more
problems than it would solve.
I
feel auite certain that if we had
of
hands of another country.
is opposed to
bank rates.
the
the
nation
the
and
course
business determines the
banking.
Banks
are
.course
also
of
of
stabilization.
We
in
near
have
future
discuss
the ex-military. We need to strike
balance between
military power
interdependence.
*An
address
by
Mr.
Root
at
joint meeting of the South Plains
Bankers Association and the
Southwestern
Bankers
Associa¬
tion,
El
Paso,
Texas,
April
1948.
10,
'
Dr.
said,
the
-maintenance
of
ail
orderly
government bond market and, sec¬
the redemption of Treasury
obligations held primarily by the
Reserve and commercial banks.
ond.
"Through
is dif¬
each
separately.
Also, our foreign policy is now
almost entirely in the hands of
a
"first;
Dr. Marcus Nadler
higher
Our foreign policy is so closely
allied to inflation and resulting
to
ivadler
Deficit
not to
are
the
e
two
on
props,"
of
higher rates
t h
of
this
the
policy
Re¬
serve
banks, despile the fact, that
they acquired a large amount of
long-term government obligations,
able to reduce their
were
holdings
of government securities and thus
the
credit
base
of
the
firm control.
to
get
cause
vou
on
will
and will stay on and
become clearing¬
houses of ration tickets and
gaso¬
Last
at
vear
this
time
those
nations
profitable,
are
and
in
engaged
mutually
bene¬
trade
agreements, favorable
through
lending and in¬
So long as the surplus of
vesting.
the
Treasury
is
maintained
and
ness
for
a
the
was; wrong.
dicting
a
downturn
last half of
This time I
boom
for
the
in
busi¬
1947.
I
am pre¬
last half
1948.»
I hope I am wrong, for
boom will lead to wilder infla¬
tion with collapse following.
It
seemed
dent's
that
prior
speech
on
to
the
March
Presi-.
17,
the
forces of inflation had about
run
their course.
expansion
When the forces of
versus
contraction
or
ated
the
reserve
balances
cre¬
by the acquisition of govern¬
ment
bility
of
market
the
already
bond
government
considered
is
ex¬
Second/the sta¬
impor¬
an
tant
cornerstone
in the generalstability of the economy of the
country.
A material decline in
prices of government obligations
accompanied,
as it would be, by a
corresponding decline in prices of
high-grade corporate, State and
municipal obligations, could in¬
ject
an
element
of
great
uncer¬
tainty into the business picture of
the country.
Thirdly, the mone-tary
authorities
must; consider
how
securities,
this
policy
can
lays,
confusion
and
beneath
the
dignity
United States of America.
we
are
all agreed that our
policy should
on
and
present
policy.
that
with
be
firm
of
the
into
deficit.
a
The
converted
recent
action
to
for
next
rearming,
fiscal
which
year
a
back
the
the
increase
may
deficit.
Once
this
occurs
and
particularly if the volume of bank
deposits should rise through in¬
creased
lending and investing, t.n
authorities
will
find
monetary
task.
be
during
military expenditures by an addi¬
tional $3 to $4 billion, have ereated the possibility that the present surplus may be converted into
foreign
the power should
which
Congress in lowering taxes
$4,800 million, plus the need
a
very
difficult
If
were
spent
greatly stimulate the
inflationary forces.
gations
themselves before
now
they would
of
is
redeem
to
sale of these securities
since
government
decide
but also if the proceeds of the
ury
entirely different problem
will arise, however, if the surplus
I think
from
should
these obligations it would not only
cause embarrassment to the Treas¬
"Because
"An
the
E, F and G bonds which
obligations.
If the
demand
latter
and will be effective.
by
the past, our foreign policy
has had only one characteristic—
vacillation. There have been de¬
is
predicted
teract
of the
The Foreign Policy
In
of
I
which
country
are
secrecy, and
by the time the policy has been
discovered it has been reversed.
Appeasement
is
a
word
fiat
should have no place in our
gov¬
ernment's dealings with
any other
government. It is a word which
at the
South Plains Bankers
convention,
the
ceeds $5 billion.
of Series
coun¬
again
refunding operations
the
the banks to create additional de¬
when
comes
government controls will be
clamped
| plicate
posits
nations
tariffs,
and
non-discrimination,
try,
the
people have
accepted are equally important in foreign
executive controls only in time of policy. It is not good when some
war.
I hone we will continue to of our people suspect the
military
reiect controls in time of peace. of beating the drums and
.waving
If war comes, it is needless for us the flags just at
appropriation
to- worry or try to predict be¬ time each year.
So far in this
the.
between
tual
effort
whether
a sharp break in
government
obligations would affect holders
narrow
would
every
highly doubtful
■their -policy, of
country and reduce the ability oi
economic
ficial, commercial intercourse. A the authorities are able through
strong military department, mu¬ their redemption policy to coun¬
make
j js
J monetary authorities will
Happiness in the home is engen¬
dered by economic security. Peace
and
branch banking with few central
offices, government planners
irre¬
vocably tied into government fi¬
nancing through the purchasing
rest
Higher bank rates an
credit control and
forces
lcl*'
authorities, riallv increase
the debt burden of
no stopping place short
complete military defeat at the
financing
,
monetary! 0f {he Treasury
a/icl would mate-
that it has
a
of
.lcies
it
is injected into the system,.*except
business conditions that it
re¬
once
a
abandon
maintaining the,
The
pres-| government bond market.
First,
ent credit pel- :
Such a move would greatly com-
thing
same
be said for militarism
can
ficult
and
7
become
major developments. There is nc
stopping place for inflation except
where
line coupons.
Of
same
goatism. especially in this section
the citizens know
accentuated
little inflation. Once started
nor a
the
r
ants.
Speaking at the Eighth Annual Forum of the New York Chapter
in power
of the American Society of Chartered Life Underwriters in New York
Unfortunately,
City on April 16, Dr. Marcus Nadler, Professor of Banking and Fi¬
the party out of power is always
and
nance at New York
University, warned of additional controls over the
What About Unbridled Inflation? the one that talks economy. Defi¬
tion
money
mar
; v- ''
^
^
cit financing is inflationary, and
which seems politically expedient.
ket and credit, | tain new powers over the
I do not believe our present
money'
in this country has been by far
There seems to be no
should the inplace lor form of government, or of eco¬ the most
powerful
j market and over credit expansion
inflationary
an
economist except
flationaryl by the commercial banks,
perhaps to nomic ^activity can survive an¬ force. The trifth is that you can-^
lift his small voice to proclaim
the* other war, or weather aberidd oi nof
spiral become j
bring about a little deflation
/'As conditions are at present it
ultimate
nomic
some
•
their communi¬
jewelry stores, and as department
stores took business away from tion,
to support their election
drug stores and others, the indi¬ campaigns and to insist that once
vidual bank will have to make elected, the representative works
hew business, and go out and get free of group pressure, free from
It." Banks' participation in instal¬ class prejudice, free from the dement loan business has
not yet
sire to perpetuate himself in:, of¬
been developed to any great ex¬
fice.
We need to demand states¬
tent.
The personal loan depart¬
ment offers real opportunity for manship in our Government serv¬
increased profits.
-
tant part in local and national po¬
litical affairs on a non-partisan
ing
the
a new
factors
the
to
amounts,
these
of
and
Treasury is now start¬
drive to sell such obli¬
public
is
highly
it
in
large
doubtful
whether the monetary authorities
will
of
abandon
the
maintaining
present
the
bond market.":
M
policy
government
V:
.
>-s■
v-■
YnrU Stnrk Fvrhan^e
1>leW 1 orK ^locK E-Xcnange.
Weekly Firm Changes
The New York
Stock
has announced the
Exchange
following firm
changes:
B.
Walter Vos will retire from
limited partnership in Boody, McLellan
&
they then wish to curb
credit expansion they will have to
abandon
from
Co., New York City, on
April 30.
the
present
maintaining the
policy
of
government bond
market unless, of course, they ob-
J.
Harrell
Howe will
withdraw
partnership in James M.
Leopold & Co., New York City, on
April 30
Volume
23
(1767)
COMMERCIAL & FINANCIAL CHRONICLE
THE
Number 4692
167
Chicago Purchasing Agents Report What Government Expects of Corporation Reports
'y-iUi.
By WILLIAM W. WERNTZ*
Some Slipping of Business
'if'
'
Chief Accountant, Securities & Exchange Commission
-■■
With Touche, Niven, Bailey &
of Business Survey Committee, sees deliv¬
for first time since 1947, more firms
P. C. Patch, Chairman
Former SEC accountant, in
eries better and faster and says
'
,
of the Business Survey Committee of the Purchas¬
ing Agents Association of Chicago, of which'P. C.' Patch Is Chairman,
a slignt downward movement of business is reported for March as
.compared with February. The basis for the conclusion, arrived at by
In the report
analyzing
member
sum-
d
z e
*
-
formation
to
precipitously
as
Jide off about
a s
last
n
as
quarter.
second
year's
.Jowever, we have all heard much
(1) Deliver-
,f
the
European
Recovery
Plan,
orders for aircraft manufac¬
turers, and the new defense pro¬
gram.
It will be interesting to
arge
3 %
ment i
i
o n
n
g
deliv¬
the
is
eries
best since last
August. •
Prices
.
P. t. Patch
show
together with other gov¬
activities, such as re¬
cent tax reduction, will be suffi¬
cient and come fast enough to put
us back on the upward track again
ditures
ernmental
Those
who
had
to
higher
prices last month were the fewest
in number since the start of sur¬
To
(3)
Inventories
More
members
duction
than
in
in
reported
a
re¬
month
Employment shows
eral trend
;
toward the
from
preceding
Also, for the first time
May, 1947, more firms re¬
employment
decreased
ance.
underwriters and dis¬
tributors of industrial real estate
enced
production
experi¬
was
by 30%, the largest number
(6)
Order backlog
small
a
curities.
reduced
was
side
of
backlog showed the most
porting since May last year.
(7) No change in
policy. It is almost
days and less.
and
stocks
dents; H. J. Wickstrom, treasurer;
and Marion Frieburg, secretary.
All officers were formerly with
le-
the buying
entirely 90
in
and
of
ex¬
treme
im¬
so
/
.
corporate
ancing of benefits against cost in
time and effort, and neither busi¬
enterprises
what is or. is not
data, and what is or is
sole judge as to
customers,- creditors, in¬
employees that they
almost bcome affected with
necessary
and
not
too
costly and time-consum¬
the
al
in
•
it that
any
part
.
,
of
present associates.
my
create
filed
some
with
sort of overall report
a
interested
centralized
agencies
as
was
such
business
conditions
were
may
than in the month before.
the
For
most
hour
man
part,
evidently
of
at least in
or
in
You are much more aware than
„
.
•
cases
in
furnish
as
which
data
other
which
well as the opposite
This
the
poses
companies
you
short
difficulty
;
fused
ojjerto buy securities.
If
no
more
orders
were
backlogs
received
heaviest
almost
within
90
percentages
two, three
and four
days.
The
fall in the
month cate¬
cern
junction with amount of produc¬
tion materials already on hand,
order backlogs bear out the buy¬
ing policy of 90 days and less.
order
even
backlog
in
the
the
Dewitt
brokerage
may
April 1,1948
be obtained from such of the undersigned {who are atnonf\
prospectus) as may legally ojjer
applicable securities laws.
the underwriters, named in the
"""
these securities under
con¬
engaged
regularly
Dillon, Read & Co. Inc.
business. "We,
possible standards and we appre¬
ciate that the position it has urged
stated that the
of his firm would
is based
three hours.
level is still
see that 79% of the
on
its desire to attain that
It said,
the question involved
interpretation of law.
objective," the SEC ruled.
however,
high when we
reporting members found their
firms' employment had not varied
hinged
on
Merritt Robinson Opens
more- than
10%, jeither up or
down, from what it was the first
of the year. However, 10% more
firms experienced
declines than
EAST
Merritt
in
a
fices
'
tT
that
not
was
Copies oj (he prospectus
course, endorse the efforts of
the NASD to maintain the highest
employment
increases.
Price 100%%
plus accrued interest from
of
be completed in
The
found
had
gories. Thus, when taken in con¬
One member
tzk% Debentures Due 1968
NASD
appealed to the SEC to have
this decision reversed.
The SEC said the Association
had refused membership, because
Dewitt's principal officer, Paul K.
Guthrie, was suspended from the
Philadelphia Stock Exchange in
1922. It also stated that the NASD
two out of
three would complete their order
today,
ty * 'i ;• .v
Consolidated Natural Gas Company
and
;
Special Questions
after
membership to the
V
L.
Robinson
securities
on
N. Y.—
is engaging
ROCHESTER,
business
Eaglehead Road,
from
.v
of¬
Salomon Bros. & Hutzler
L. F. Rothschild & Co.
Union Securities Corporation
A. G. Becker & Co.
Bear, Stearns & Co.
Blair & Co., Inc.
Incorporated
Clark, Dodge & Co.
Laurence M. Marks & Co.
Dick & Merle-Smith
Reynolds & Co.
;
the
with
(Continued on page 40)
\
not,
the first and perhaps
greatest
The firm had been re¬
ton, Del.
buying, smaller backlogs and
less need for stockpiling of inven¬
>
K, $ ^s2cV'*'*r*\
do
situation.
The
term
tories.
Del.
How¬
part.
it does provide some very
difficult questions both for re¬
porting companies and for the re¬
cipient agencies.
■ft
'
v. "
ever,
those
<
Securities and Exchange
Commission, on April 15, ordered
the National Association of Se¬
curities Dealers, Inc., to admit to
membership the firm of Dewitt
Investment Company, of Wilming¬
are
and- results
Investment Company
of Wilmington,
sufficient
available
for
prompt shipment to permit
production to ease off somewhat,
and to put 'brakes on the price
spiral. This situation is aided by
the apparent increased output per
materials
Dewitt
to
or
be that it can be achieved in
whole,
$30,000,000
Overrules refusal of membership
worse
the
of
necessary
pertinent to their activities. The
idea is a most inviting one and it
ojjer oj securitiesjor sate orasoticitation oj an
To Admit Firm
v 7;i
agency
then disseminate to
the
\
'
gestion toward easing the task of
corporate reporting has been to
With this somewhat long drawn
1
This announcement is not an
of
Perhaps the most frequent sug¬
March»4hate information.
!
may-
requested to I of the breadth and variety of
supply data.
In this important inforpiation you now are asked
area
of
informational requests,: to furnish, and the number of dif¬
an
advisory committee of busi¬ ferent/agencies to
which such
ness
and professional men 'has data is sent. You also undoubt¬
edly can point out a good many
performed valiant and valuable
the
,
■
which
not coincide with that of the
agency with which I was recently
associated or, indeed, with that of
reasonable refusals and delays on
data /furnished. Jt
got-
my own person¬
view
of
information
and
Necessarily, I
may
government has adequate and reli¬ services both in resisting and de¬
able business data before it on feating unreasonable demands for
data, and on the other hand in
*An address by Mr. Werntz be¬ persuading the reluctant of the
fore the Brooklyn Chapter, Na¬
real importance of supplying adetional! Association Of COSt AC24, 1948.
only
express
point
particular
any
New Issue
SES OrdersNflSD
Finally, business conditions
same or poorer for a sub¬
stantial majority.
The largest number since the
survey began
said they thought
can
of
data.
for
only satisfactory means of solu¬
tion, and there have been a good
many examples in recent years of
to me our economy has
countants, Brooklyn, N. Y.,
justification
demand
which would
companies. It
public wel¬
fare and not at all in the sense of
ing to prepare. It is an area where
cooperative joint-discussion is the
public interest.
It is not the
surprising, I think, that un¬
about,
government can be the
nor
ness
large in size and affect
many
have
that no fur¬
needs with a careful bal¬
proper
William W. Werntz
feeling
vestors
say
exists. Corporate re¬
government it like any
other business matter ought to be
tailored
to fit the ^government's
In¬
many
to
ports -V to
deed, there is*
now so
not
ther problem
whole
some
/
.
is
This
C. L. Schmidt. & Co.
(8)
are
-
Aim, president; Vincent T. Kane
and Arthur W. Rogers vice-presi¬
order
so
utility
over-the-counter se¬
Officers will be Paul E.
and
bonds
majority.
"smaller"
The
as
public
*nd
since February, 1940.
for
act
to
Lower
Kane
bal¬
on
size
vast
ly best served by seeing to
T.
Vincent
(5) Production declined
a
cor¬
porate form is
for the
that must be solved
ments./
ducted in
terpi to >a ppint where? |he selfinterest of the corporation is clear¬
than found it increased.
>
government—Federal,- gested would be Of particular in¬
terest to you. I want to approach
and I include in the these as practical business prob¬
lems
seems
reduced
your
benefit of the general
spite .of
month.
which
executive, but especially the legis¬
lative" and
the
judicial depart¬
con¬
obtaining such information or
June, while the largest percentage
since October, 1945 found employ¬
of the specific questions
Chairman has sug¬
some
up
local—who must make
just that. Undoubtedly there have
been many instances of improvi¬
would
be
most surprising and dent and unnecessary demands for
most
dangerous
if government information arid there have like¬
were to undertake to proceed with
wise been, in my opinion based
its
affairs and policies without on my own experience, some un¬
Fewer members reported an in¬
than in any month since
preamble, I would like to take
ousiness
furnished by* such
lesser side.
crease
ported
and
decisions,
government not merely the
becoming more
dent on information
in several respects:
since
is not whether, but
get'proper data before
out
word
government is
and more depen¬
Employment level is interesting
ment
The
________
—
,——-—-——
,
part played by
der such conditions
gen¬
a
.
now
to
State
the
!
•
those in the
.east
1946.s
(4)
how"
—
its decisions.
base
question
our
economy
1
to
which
is
It
in
that
a
inventories
since June
average
any
Aim, Kane,
~
<?>'V '
•
knowledge
are
Rogers & Co., will be foimed with
jffices at 39 South La Salle Street
lower.
are
local.
that
Open in Chicago
CHICAGO, ILL.
vey.
;'"T
'
common
economy.
£!m, Kane, Rogers Co.
pay
or
the
a
dency toward stabilization.
it
be
—
Federal, State
portance to
in the next few months.
ten-
marked
-
if the volume of these expen¬
see
ment
and clarifying report forms.
long time, but most especially in the recent past, a great deal of the factual in¬
necessary, first for the adoption and later for the administration of legislative
is derived from reports furnished by American business corporations to govern¬
a
programs,
Business has evidently begun
follows:
faster
great deal remains to be done in simplifying
\
For
Conclusion
con-
is
opposes
re-
from
ns
calling attention to burden of formulating reports to various government
establishment of single agency to receive and distribute reports. Upholds present
system of having report forms approved by Bureau of the Budget. Says real difficulty is in different
purposes for which report information is obtained, and admits much data has little or no use. Concludes
agencies,
Hints lax
reported greater employment decrease than increase.
redaction arid ERP may again change trend.
v
Smart, Accountants
Formerly
,j\
Estabrook & Co.
Bramhall, Barbour & Co., Inc.
<
>i
(1768)
THE
COMMERCIAL
FINANCIAL
&
CHRONICLE
Thursday, April 22,
1948
Report Building Contracts at High Mark
Thomas S.
Holden, of F. W. Dodge Corporation, says construction contracts
quarter of 1948, exceed previous year's by 23%.
first
east of Rockies in
Thomas S. Holden, President of F. W.
Dodge Corporation, reports that a new firstquarter high mark in dollar volume of construction contracts has been set in the 37 states
east of the
h
e
Rocky Mountains with
previous
iirst
quarter,
-
ecord
Middle Atlantic States—The to¬
estab¬
lished
tal
last
dollar
the
volume
?ontracts
heavy
ume
equal
first
increased
46%
period of
Thomas
S.
of
quarter
Dakota—With
sharp
houses to look at the deal.
in
reported
first
the
that reported
over
for
sponding
for the
of
last
period
It is
1947,
compar¬
analysis
of
re¬
.
in an interpretation
activity record, pointed out
the sharp increase in
con¬
during the last
year
Non-residential
were
of
contracts
to
look
over
the
property.
Eventually the company-will
lect
one
se¬
dealer, who will then
"negotiate" with the company, and
corre¬
form
year.
a
,
to
group
sell
the
if
ture
market conditions
remain
42%, residential contracts
generally favorable.
While the prospectus does not
36%, while heavy en¬ awards showed a decline of 10%,
while heavy engineering awards so
gineering awards were down 3%.
indicate, it appears likely that
were up 74% for the quarter.
American Power & Light will use
Western Pennsylvania and West
Western
Virginia—The first-quarter do lar
volume of $90,844,000 was 14%
greater than that reported for the
braska,
showed
the
This
—
area
heaviest
second
14c
would
share
a
in
vol¬
be equiva¬
(before any
Property account is stated at
orig¬
inal
stock
cost, and the common
equity is about 28%.
N. Y.
Edward R. Parker Go.
Charges
concern
consent to
subsidiaries,
with
their
with appropriat¬
ing customer's securities without
equity investment
in connec¬
other
tion
Attorney General
Freezes Assets of
the proceeds of sale of this stock
to increase its
Missouri, Kansas, Ne¬
Oklahoma
amount
to
stock.
increased
^
lent
them
tives
the total shown for the first quar¬
ter
of
last
year.
Residential
up
acquisition
adjustments
amounting
to
$85,685
a
year,
which
some seven houses
lax;, savings).
Depreciation and
currently interested and some maintenance expenditures in 1947
are
sending representa¬ were
about
13%
of
revenues.
are
March, the area total
amounting to
$52,726,000 reflected a 64% gain
quarter
a
understood that
in¬
in
creases
in plant
now
banking
for the first quarter
area
1947.
the
over
of the
that
South
exemption from competitive bidding
i3>
—
•
$225,655,000 to show Non-residential awards, with a There is no indication yet as to
a 27%
gain over the total reported particularly heavy March volume, the offering date, but this will
for the corresponding quarter of were slightly more than
double probably be in the near-term fu¬
Holden
the corporation's field
project
ports discloses.
%■* •;*/••* * r..
struction costs
first
re¬
e
amounted to
and
heavy engin¬
eering awards"
able
the
for
that
an
d
u n
vogue, the company has invited
number of
investment
•
double
volume of contracts
this
were
42%
up
almost
Southeastern States—The dollar
con¬
tracts
ing. It has asked the SEC for
requirements.?, However,
the compromise method
up
engineering
was
ported
nonresi¬
dential
Non-re si d e n t i a 1
awards doubled in the first quar¬
61%, resi¬ gineering awards showed a 5 %
3%, while gain.
contract vol¬
Minnesota, North Dakota and
were
v
issue outstand¬
$69,593,000.
the
last year.
quarter of last
year,
in
was
dential awards
at
the
;
dential awards were off
was
level
i
reported
$275,265,000 to ter over the corresppnding three
gain over the first months of last year. Residential
last year.
Non-resi¬ awards were up 22%. Heavy en¬
of
quarter
residential
maintained
contracts
quarter
a
29%
show
While
to
of
first
year.
)f
Kansas Gas & Electric
American Fower & Light has announced that it will
sell 250,003
shares of Kansas Gas & Electric common
stock, out of the 600,003
shares which it owns and which constitutes the entire
total of $1,986,936,000. This volume surpasses by 23%
a
get bank loan.
Attorney General Nathaniel L.
gain of all regions in the
? some, if not all, of The
needs.
Dodge reporting area east of the nancing
•-he dollar volume
Eventually,
oi Goldstein of New York State, on
advance was marked by an
gain.
Rockies during the first quarter. course, American will be dissolved April 14, obtained a court order
86% gain in non-residen+ial con¬
The physical volume of
nonThe total volume of $126,196,000
(two plans were recently tiled to freeze the assets of Edward R.
tracts, and an 85% gain in heavy
esidential snace as measured
by
was
81% higher than that re¬ proposing bases for allocation of Parker Company, Inc., securities
engineering awards. These vol¬
square foot floor area and
covered
ported for the corresponding pe¬ assets to the preferred and com¬ dealers of 165 Broadway, New
ume
increases were more
than
^nder contracts awarded in the enough to offset a 54% decline in riod of last year. The advance mon stocks). The remaining 350,- York City, on the ground that the /
,-irst quarter was
000 shares of Kansas will be dis¬ firm
substantially in residential contract
was marked by a gain of 130% in
used stock belonging to a
volume.
excess of
that reported for the
heavy engineering awards. Resi¬ tributed in accordance with the customer, without his consent, to
'.wrespondmg period of last year,
Northern and Eastern Ohio
eventual plan
dential contract volume was up
adopted and ap¬ obtain a bank loan, and thus save
Mr.
Holden said.
At the same Contracts
awarded
in
the
first 53% and non-residential -awards proved by the SEC and a Federal it frcm
bankruptcy.
The same
-*me, considerably less new floor quarter were
13% higher than in increased 58% in the quarter over Court.
order
also freezes the personal
the corresponding quarter of last the
Kansas Gas & Electric, with bank and
corresponding period of 1947.
trading accounts of the
year.
The total was $80,239,000.
headquarters at Wichita, was in¬ company's officers:
Edward
R.
Texasr—The
state
of
Texas
•orresnonding period of last
ume
construction
year.
fi¬
—
bidldingsrePOrted *0r residential
Gains in dollar volume of
w?V0n, the
contracts
ii of
were
porting,
Those r;
or
con-
shown
corporation's 15
whose
regions,
gams
f? llti
were
the
H
-
re-
areas
equal
to
or
increased
tracts
building
awards
residential con¬
55%,
declined
19%,
and heavy
engineering awards showed a 6%
gain.
avera&e for the
Mkh£
?16 Atlantic states;
the
Iowa
d
e n
;
y;
,
Southwestern
Ohio
are: upstate New York- tucky—Moderate
" .^ates; \ southern
Michigan, northern Illinois, Indi¬
ana,
Non-residential
t i
1
a
awards
and
Ken¬
declines in resi-
and
non
-
residential
reported during the
first quarter, total awards
being
$45,469,000, and representing an
over-all
Tennessee
Louisiana and
of
and
Arkansas-
Mississippi-
Min-
N°irth Dakota» - South Da¬
Missouri, Kansas
'western
kom
kota,
ffSa!kVnd Oklahoma.
regions showed
gain
a
Other
year except
l °d'vdown 7%; metro¬
New York
Si
politan
and
northern
OhlotT V". 2T"; ^western
j
and
Kentucky,.' down
nr.
19%-
Texas, off 4%/
New
E
contracts
n
g
1»
n
in
the
,
total
reported
firs'
ime
and
from
corr™
for the
Sd'nl?eri?d of last year.
* volume
showed
487
Nona
?iin
andS|?entialengineering volvolume was off
and
heavy
was
more
than
double
that
qua" '
Po6ge corporation
iS0year
r^nnrti J.
that
reported
44% of the dollar
valuation of total
awards was for
oZ?3JiIafied
Publicly
as
owned agamst a
percentage of 18
in the first
quarter of last
year.
Northern0^" Jersey—The dolHr
York and
Northern New ,New
volume of construction
awards in
nnn
000
wi
Quarter totaled $226,778
against
$231,161,000
responding
gafa
Sain
quarter
in
of
-
the.
1947
of''ii"'13'J,olume showed
1%
while heavy
of
eenng
a
en<un-
contracts
declined
17%
te?Pvaeaer ?■!!? theJirst huarteVS
residential awards
were
down less than
1%,
Upstate New
York—Marked
55%
hps
greater than
quarter was
that shown for
'feLCOrNnnPOnd^g Peri0d of la^
Non-residential contract?
,3 ear.
?9%> al0-
were
fbe 37-state
average gain.
modest
a
first
4%
awards
was
were
up
a
ter
total of
to
engineering
offset
decline reported
for non-residen¬
a ^4% decline in
residential Contract volume.
tial awards and
during
the
with
first
the
quarter
volume
\
Wnt. R. Siaats Staff
re¬
ported for the corresponding
N-.
Tony Bottari Joins
pe¬
(Special
to
Tn«
Financial
Chronicle)
SAN
FRANCISCO, CALIF.—
Tony Bottari has become associ¬
Southern; Michigan—The dollar ated with Wm. R. Staats Co., Ill
riod of last year.
volume
of first
totaled
quarter contracts
to place the
gain of 29% over the
quarter of last year some¬
first
what
a
advance of. most other
in
east of the Rockies.
residential
quarter
5%,
while
feed
up
farm
Northern Illinois, Indiana, Iowa,
Northern Michigan —
total
a
dollar
volume
region showed
over
a
awards, which were
up 98%. Residential contract vol¬
ume gained 7% and
heavy engin¬
eering awards were up 45% in
the
Arkansas
—
porting
15
areas
Southern
Tennessee
The
the
among
to
the
&
trading
Co.,
was
greatest
major
double
shown
for
corresponding period of last
re¬
the
Inc.,
a
gain of 178%
non-residential awards, an in¬
crease of 75% in residential
con¬
in
tracts,
and
a
53%
increase
.
in
heavy engineering awards.
Louisiana and Mississippi—Con¬
tract volume in the first
quarter
was
running slightly ahead of the
r«'
on
v
the
basis of
•*
.
.•
*•'
a
rv.;
there
to
manager of the trading de¬
Sutro
&
Co.,
and
total of
Parker,
and
his
Ben¬
of
the
area's
Diversified in¬
include flour,
The Birth of the
Republican Party
area
alfalfa
the
milling, meat
manufacture of
Many letters of commendation
have
been
article
by
received
Noble
regarding an
Berrien in our
a
industry
residential
customers
Be
SAN
Co.
of
ANTONIO, TEX.—Russ
San
is
the
Guild
national
averages,
acter of the
The
record
as
earnings
in
recent
and
years
follows:
Fort Worth from April
ing invitations, in the
a
29-May 1.
The firm has issued
very amus¬
gay-ninety wood cut.
•
■
•
manner
of
the
National
of
the
Church,
a
William Troutman ApptcL
Officer of J. B. Dunbar Co.
Earned Paid
LOS ANGELES, CALIF.—John
Dunbar
&
Co.,
634
South
$2.36
$1.60
t
2.38
1.60
Spring Street,
2.81
1.30
liam
1.72
,83
1.66
.63
been
1.C6
.83
Treasurer of the firm.
1946
__——
1945
—
1944
—
B.
announce
Troutman
has
that Wil¬
been
elected
to the Board of Directors and has
appointed
Secretary
and
1.25
1941
1.00
1.20
Converse, Pokorny & Co.
1939
1.07
1938
Formed in Allentown
1.20
1940
—
Group of the Investment Bankers
Association which will be held in
of
Churchmen
area.
1942
April 30 from 4:30 to 7:30 p.m.,
during the meeting of the Texas
of
t
1943
on
President
this
company's
dividend
&
at the Texas Hotel
also
is doubt¬ Protestant Episcopal
less explained by the rural char¬
lay organization.
Antonio is holding a
"turkey blind"
Kuebler is President. Dr. Kuebler
are
somewhat less favorable than
Year
Turkey Blind lo '
Held on April 30
were
1,265 kwh. While these figures
has been
Russ
--
average for the 37 eastern states
with an over-all 28 %
gain re-
ported
and prior
Mitchum, Tully 8c Co.
year.
contract volume of $112,-
™
department of Blair
gcins
Dodge
were
that
formerly in
was
Il¬
and
reported for
this region
during the first quar¬
ter, with a volume slightly more
than
Tony Bottari
Sutter Street. He
partment for
Missouri,
Western
linois,
Ifo
:
quarter.
Eastern
E.
The
47 % advance
residential
Anna
wife.; Vice-President,
major center of the avia¬ the small frame school building,
in the southwest. in which the Republican Party
company's average revenue was organized, is now on the
per residential kwh was 3.48 cents
Campus of Ripon College (Wis¬
in 1947, and
average annual sales consin)
of which Dr. Clark G.
tion
*
the
corresponding quarter of
last year.
The gains were par¬
ticularly
pronounced
in
non¬
Metuchen, N. J., Presi¬
Mrs.
^
ita is
.of
$245,047,000 in the first quarter'
the
Parker of
dent;
implements, oil field ma¬ issue of March 18 last regarding
chinery, cement,x clay products the "Birth ,of "the • Republican
and fertilizers. In
addition, Wich¬ Party."
We omitted saying that
Wisconsin,
With
and
packing and
engineering
gain of 3%.
a
portion
economic activity.
dustries in the
heavy
awards showed
-
Non¬
were
char¬
gas business hav¬
processing of these and of
agricultural products comprise a
substantial
in
the
first
84% higher than last
year, residential awards
its
business is
and the
re¬
awards
were
and
The
"
$93,767,000
with
area
1909
1980.
ing been disposed of in 1925. The jamin E. Fuqua of 13 Charles
territory served includes most of Street, Secretary.
southeastern Kansas (about
6,000
Irregularities in the company's
square miles)
and a very small
books were first noticed by the
part of Missouri near the State
Securities and Exchange Commis¬
line.
Retail
electric
service
is
sion during a routine check of the
provided to 114 communities iri
company in 1947. The matter was
Kansas with a population of
304,- then referred
to Mr. Goldstein.
000; Wichita with a population of
Assistant Attorney General John
160,000 provides about half the
Trubin tbld the court that his in-4
company's
revenues.
Wholesale
showed the Parker
service is also provided to 22 com¬ vestigation
Company was on the "brink of in¬
munities with a population of
40,000. The business in Missouri is solvency" in December, 1947, and
was anxious to fortify its finan¬
negligible.
cial position to impress the/SEC
The territory served is
largely examiners as of Jan. 1.
agricultural^ but
mineral
^re¬
sources, including coal, oil and gas
25%
a
to
runs
all-electric, the
43 %, but the gain
insufficient
in
corporated
decline in
quarter with
$168,977,000./ Heavy
613,000 reflected
by
mcreases in residential
the dnl1Iy englneering contracts,
reoortPd for
reported LV?iUm^ 0f $74>8G3,000
the first
and
5%
compared
gions
d—Construction
awarded
represented'^^ ,$99'064'000
S ? ?
a decline of 7%
the
drop of 19%; Heavy en¬
gineering awards showed a gain
the
over
N?w S e?VaSt
the
were
ani Wisconsin, eastern
Missouri, southern Illinois, west¬
ern
showed
^Not available in Prospectus.:
i Twelve months ended Feb.
29,
1948.
earnings
are
Co.
& Co. and J. M.
announce
firms
to
Pokorny
^Calendar Year 1947.
These
ALLENTOWN, PA.—C. V. Con¬
verse
be
known
&
Co.,
pro¬
vision for amortization of electric
now
organization
as
with
the Commonwealth
after
Pokorny &
the merger of their
Converse,
offices
in
Building, The
will
conduct
general securities business.
a
r
■
THE
Number 4692
167
Volume
■
COMMERCIAL
j viduals that historically may have
the utilization of these flowed into risk capital is now
savings by borrowers who want j flowing into the hands of the tax
to put them to work.
Most of you collector. It is unavailable to corwould. probably .'agree* that, ' if porate users.I i"v
v
savings accrue-In larger amounts-': Furthermore, many individuals
(Continued from page 6)
least
than
.be put to work, there
tendency for the coun¬
can
would be
'
a
try's economy to slow
down.
the
consider
at
r
our
find
solution, for the
a
their
securities,
both
bonds and espe¬
and
insurance companies
life
the
who
obligation to be help¬
I
Fortunately, there is little evi¬ cially1" stocks; •> With1 this 'growing ful" in finding it: Indeed, with you
reluctance to make direct investdence of over-savings, ,as'some
men
and' womern of the field so
people like to call; it, or under- j ments, an 5 important 5 source of
funds for the purchase of common actively engaged "in selling life
mvestmeht, as other people prefer'
th« rvirr-hacn rvf rnmmrm insurance and in directing (funds
stock has
been diminished: h'ln
to speak of: it.-; 'To the contrary,
into the life insurance business,
there is some evidence that there (addition, it should be remembered itr is becoming increasingly im¬
is more demand for money for the (that an increasing number of inportant that we do find a solution.
creation of new'capital that there • dividuals
are having much of ;i
Tn
is money beifig made available for their
saving done for" them tent view of the nature and ex¬
of the problem, ■ we * might
that /purpose by the accrual of through the operation of pension
very well ask ourselves what we
savings.
I, for one, believe this systems.
These -funds -'.which
were
available "for are now able to do in meeting the
country
is * greatly
under-1 formerly
equity investments directly from heeds of equity financing.
Mechanized and uhder-capitalized, individuals are now being chan¬
jiife; Insurance! coriiparries gen¬
*fh arid aifburid the' home,7 fn the
office,-in the mines, factories, and neled, to a larger and larger de¬ erally arri now authorizeti * subject
gree, into institutions such as the t6 soriie'
restrictions, to1 buy Shd
/ Jrarisporjtation^ arid "distributive life insurance companies.
hold guaranteed and preferred
systems, arid within the realm of
sioCks.-:^t:the'
government, for such, 'things as
Prohibition of Purchase of
companies owned about $1,100,roads, bridges, schools, libraries,
Common Stocks1
000,000 of these securities, paving
post offices, hospitals, playgrounds
But at this point we strike a
increased
their holdings during
and patJcS.
flh short, I do h6t serious
impediment to the flow
the past twayea^'by hbOut $400,4
agree that our econorriy has grown
of funds into equity investments,
old arid decadent/ but rather that
000,000.'/But.^ripw"evW"'^drisiriiblri
especially common ; stocks.
In
New York State, for instance, the pteferted 'stoc^ririre ris ari"lnyest4
rrient f orilif einsurance companies;
purchase of common stocks by life
growth
there "is .trie riisadvaritage];]thaf,:d4
insurance
have
real
a
ago
could
it was suggested here that business
by seeking out new customers by cultivating people
regular investors.
The theory being that much new
money has gone into the hands of those who formerly did not enjoy '
the larger incomes which -they do1 today;
Jf 'current statistics on
this subject are reliable there has been a definite shift in certain
quarters of the population as-to their prevailing annual incomes
compared to their status in this respbe't befoVe World War II; - Some
actual experiences'of salesmen who have put forth effort in this
field indicate-that intelligent sales effort directed along these lines
be; developed
it.s; Somewhere, , some¬
become more hesitant to do
owri investing in corporate how, the! answeri must be found,
pend upon
have
months
Several
system may in part de¬
terprise
,
f
.
By JOHN DUTTON
suc¬
operation of the free en¬
cessful
r
•
com¬
mand." It is vitally important that
we
«
.
Securities Salesman's Corner
with
problem
earnestness
the
all
( accrue and
25
(1769)
FINANCIAL CHRONICLE
Companies | and Equity financing
Life Insurance
'
&
.
productive.
] v;.
' ";
v
York City: Investment Banking firm offered a common
will be
^
not
were
„
A New
stock in the $11
"
The; ad
price range, in a newspaper advertisement.
pulled over 100 inquiries.
As a result of a telephone interview one
order for 1,000 shares was obtained from an executive in a large
organization.
Obviously the buyer was acquainted with the com¬
pany whose shares were being offered.
The salesman in this 'tinusual instance did not even talk with the buyer but gave the infor¬
"
concerning,the security to his secretary.
The order came in
mail. -Exposing yourself to business often turns up unusual
opportunities but you must seek them out in the first place.
]-.
Another salesman reports an instance of $2,000 invested in secur¬
mation
>
later by
*
investor who made payment in 2,000 silver dollars. This
was
so
unusual the local paper made a feature story
ities by an
transaction
'
"
out of it.
'
there
Then
the
was
case
of
salesman and his family who
a
-
been'givihg their trade to a neighborhood delicatessen dealer
for many years.
He had a busy store and appeared to be the saving,
thrifty, sort of individual. /The salesman made an evening appoint¬
ment and opened the account in a small Way.
Several weeks later
the delicatessen'owner turned over several thousand dollars in casto
to the salesman and told him to invest it.' The account has now
had
*'
economy
-
well demonstrated
was
ited,
by the pictorial presentation We
have just Witnessed/in i'this room.
have
I
sires of our"
ments in
hampered
or
dis¬
couraged by the confusion and
uncertainty of governmental di¬
rection 5 and
action, there will
continue for a long time to be
ample opportunity for putting to
work all the savings that accrue,
v i'However;
it takes more than
just a demand for money to keep
savings moving into1 suitable and
profitable channeIs. Savings
must be available in a form and
at a rate satisfactory to the user;
and the user in turn must seek
to offer an investment security in
—:u
h"fornT and "at "a yield which will
be appropriate to the saver or to
the 'institution through- which the
necessarily
:
_
_
w
—
'
-
•
■
-i
.
it
authorized
is
there
common
stocks is
-
sonal
savings into equity capital,/ sesarph '
many
corporations * are finding
themselves
becoming
burdened
with
what
is
probably
a
dispro¬
portionately large volume of debt.
For example, some very well
operated public utility companies
being pressed to issue such a
large volume of dollar obligations
are
to finance their necessary expansion of facilities that they are
——i- ;-t-
government, are aware , already high in relation to asset
involved and are values.
But there
is a limit to the
concerned with the serious malamount of debt which can be sup¬
adjustments that may arise if
We all
savers
and users are not prop- ported by any company.
can
remember
the " unfortunate
erly brought together. More speposition in which many railroads
cifically, the question has been
found themselves in the past be¬
raised as to whether the flow of
cause
too great a part of their
savings is being unduly impeded
■anywhere along the line.
And, caoital was in the form, of debt
most particularly, We
wish to rather than in equities..
As
a
corporation
grows
and
know whether the life insurance
business is doing its part in help- expands very often the most logi¬
cal way for it to acquire addi¬
irig to maintain the freedom of
tional capital is through the\ issu¬
the flow;
'
'
but also in
-
-
~
ance
Past Role of
Life Insurance
insurance
both
junior
and
small chain of shoe repair
investor
probj
already
stores./. This was the first experience this
had in the purchase
ever
The account has
of securities.
eventually been built up to a total of approximately $50,000
Shoe
repair
store
silver cart wheels,
which
were
operator,
and a
' -- •<
time. "
of securities in less than a year's
(delicatessen
business executive
available for investment.
owner,
—
worth
*** (*
■
■■
collector of
all held idle funds
But someone had to go to see
.
insurance companies is
limited and at present
there seems to be a hesitancy ori
by
life
distinctly
the part of many
Field of Rental Housing
senior
Validates Jap
Liquidation of Allied Banks
*•
U*;-i*9
h
Philippines Supreme Court, by 7 to 3 decision, rules Japanese occiv
Trio: /challenge' to participate
riipre directly in matters vitaUj|
affecting our country's future has
also been answered in part by the
If the capital structure
This might be a" good time to look in new places for new cus¬
tomers.
corporations to
this type.of security to meet
their capital needs.
use
palioii forces had
v/";
power
under international law to. order liquidatiow v
the Bank of Taiwan.'!/
of allied banks through
The validity of wartime payments to allied banks in the Philip¬
insurance com¬ pines made through the Bank of Taiwan on order of the Japanese
panies into
field of rental military administration was upheld by the Philippine Supreme Court
housing.
Only during the last on April 11 in a precedent-setting-7-to-3 decision./'
/'
The / ruling of the high court <S>
few (years has. legislation been
tration of allied bank assets was
sufficiently fbroad and applicable settled one of the most important
to? enough states tcr enable lif6 postwar
legal
questions; which not confiscation of enemy prop¬
recent
entry
insurance
qf
the
companies in general to
make a substantial contribution to
the solution of our Housing
lem.
prob¬
arose
from
actions
of
wartime bank trans¬
the
Bank
with allied banks
Taiwan
involving more
than 50 million pesos;
■
of
[The situa¬
for its con¬
further dis¬
position- by* t re aty between
belligerents at the end of the war;
erty, but was made
servation subject to
'
Of course, life insurance com¬ tion was covered in the: "Chron¬
(3) That such payments made
panies: have; lpng recognized the icle" by Francisco Ortegas, Jr., of by debtors to the Bank of Taiwan
importance to 'the family/of ade¬ Manila, P. I., issue of March 13, had, removed their obligation to
the allied banks; "
~ "
quate housing. Since" their earliest 1947.—Editor]
The
tribunal through Justice
days they have made' it possible
(4) .The allied banks adversely
for peiople of moderate means to Felicisimo R. Feria ruled: y
affected by the Supreme Court
(1) The.enemy occupant (Ja¬
acquire a home of their own
ruling can
seek recourse from
through mortgage financing.
A pan) through the Bank of Taiwan,
Japanese Government for indem¬
power
under international
large part of the $8,500,000,000 of had
nity by virtue of the validated
law to order the liquidation
of
mortgage loans qWned by life iri^
wartime payments;
• '
banks
which were
de¬
surarice companies at the close of allied
(5)
That the Jap war notes
1947; was1 on ] residences. The life clared as enemy institutions by
were legal tender during the oc¬
insurance companies may well be the Japanese military administra¬
cupation, having value at par with
proud to have played such an im¬ tion;"'
the Philippine peso.
(2) The liquidation and seques¬
portant role over the yerirs in fos-
borrowing company is to
be
well,
balanced,
a
certain
amount
of
equity financing is
necessary]' /The same principal
holds for the economy as a whole,.
If there cannot be adequate equity
of
companies have
the
sensitive, to the
capital needs of the
economy. They have
made
substantial purchases of
railroad a ecuri t ies, mortgage financing along with the issuance
loans, government securities for of debt; then the pew debt, since
the financing of wars and, more it may represent a contract diffi¬
recently, public utility and indus- cult of fulfillment in times Of
V' trial' securities.
However, the business depression, becomes: un¬ terihg hbrtie1 qwriership;
'Supplying of funds to meet these desirably hazardous. - Because of -And/at present /time, there is
needs has been almost exclusively the need in our economy for more another great need which should
through the creation of debt.
In equity financing, and because se¬ be met—the need for rental hous¬
fact, life insurance companies in lected equities may very often ing. Thousands of veterans, new¬
this country have not been an im- measure up to the conservative ly married ana starting families
portant source of equity capital. standards required by life insur¬ of their own, are confronted with
This point gains importance from ance companies, if is quite Un¬ a serious, shortage of housing.
It
always
Here's one time when slicing the
...
S7:T'' investments
Life
of
securities.
sizable" proportions.
baloney supplied the cash for investment.' / "!/\ '
/ " ' ; " '
Another salesman opened up an account with the owner of a
eyolved, a formula which would
greatly/ assist > in this/situation] them and make suggestions for the investment of this idle cash.
While - that formula ha? (not yet There are people like these investors in your town. If the signs are
been adopted and may not.be the
,right'there.seems, to have been a revival of confidence in the busi¬
final5
answer/,
it
rievertheless
ness outlook during the past two weeks.
This confidence has been
points trie way toward a (possible
reflected in higher stock prices. ' When investor confidence begins to
solution.
The total volume of preferred revive it is much easier to bring out some of this idle cash and con¬
stocks which might be purchased vert it into securities.
<K
" '
of the problems
*
has
Committee
to
grown
This is but a small
ably not/ an insurmountable ob4
percentage of the $50-odd billion
Stacle.
A sub-erimhiittee of the
of life insurance company assets.
Insurance Investment Re-t
With the reduced flow of per¬ Life
$250 million.
(
•
(Fortunately; this is
losses.
beginning to encounter difficulties
* in ; qualifying
under their pwri
savings are'flowing.
\| mortgage indentures. In many
This entire question is not just cases, State Public Utility Coman academic one, of interest only, missions
are urging the public
to the life insurance business.
It utility companies to expand their
is a matter of great importance to plants and equipment to meet the
all of us.
And thoughtful people rising needs of their communities
everywhere, not only in business,' at a time when utility debt is
*
wfeyH are
.
are
,
belief that, if the
every
'companies is prohib¬
in some other-states
evaluated at, a .year-end (market
substantial restrictions.
It is esti¬ price. For that reason they con¬
tribute to artificial Changes irithb
mated that the total amount of
valuation ( of - company
assets.
life
insurance
company
invest¬
Which affect coiripany gains'] arid
about
where
optimism and natural depeople are not un¬
innate
;
and
.
been
changing
country's
-
'
PRIMARY TRADING MARKETS
-
;
that" many people feel derstandable why the investment
has been a drying-up of managers of some life insurance
some of the previous sources of companies are beginning to look
with greater favor upon equities.
equity capital. >///•(;
..For
one
thing, Federal and
Question Requires Study
State income tax laws have .made
t At any rate, we must recognize
it difficult for persons with sub-'
our
responsibility toc take the
stantial incomes to save as large
matter
under the
most serious
a
proportion of their incomes as,
,vyyv..^y^y^
formerly. Thus, much of the say-i study. We may well be open to
necessary/ and
in
the' fact
.?
-
-
•
t
~
should
there
many cases it may be highly un¬
desirable, for these young people
to be forced to" purchase homes
and to assume an indebtedness
ings
accumulated by these
>■
t
not
will
that
be
last ; for
many/*years.
Often it- is. wiser for
tain
>
a:
,....
considerable
. ,.v .......
theqi to re¬
,
degree
of
rnobrtity ;so that/they, can more
indi- grave criticism if we' do not' ht if
(Continued on page 26) '
"•
' " • •
• ••
">-■
:,-i.
y
■
CRESSON
.:
|
CONSOLIDATED GOLD MINING & MILLING
KINNEY-COASTAL OIL COMPANY
/
V KUTZ CANON OIL & GAS
COMPANY
MACKINNIE OIL & DRILLING
"
UNITED
'
B. E.
'
GOLD MINES
Established-1929
^
_
,
,
.
'
r-.
..
.
Simpson 6- Company
California Building,
Tel<ph«rt« KEjslone 3101
Denver 2, Colorado
Bell Teletype DN 157
26
THE
(1770)
COMMERCIAL
&
FINANCIAL
CHRONICLE
the
irregularity of income.
The
disadvantage of the volatility of
Liie Insurance Companies and
asset .values
and
the
adverse
common
on
25)
page
will
stocks
the
put
Solve
Problem
if the need is shown.
course, the life
insurance
companies cannot alone solve the
whole problem of the flow of
funds from savings into capital
fect upon a divisible surplus would
have to have most serious study.
The likelihood that the holding of
''."-"-U"7"' (Continued
r
Cannot Alone
Of
ef¬
Equity Financing
Thursday, April 22, 1948
formation.
But
should at least
we
life
seriously concern ourselves with
readily move in the event that
But, as we have seen, such
approaching the problem in an
into the affairs of corporate man¬
opportunities are offered to them investments, quite apart from the
open-minded fashion.
elsewhere. Until the young fam¬ law, have distinct limitations as agement, while a possibility that
My comments this afternoon
must be very carefully consid¬
ily knows
have simply been personal obser¬
definitely where it an outlet for equity funds. It may
wants to settle down permanently well be that they are not yet suf¬ ered, can probably be offset by vations.
On this important sub¬
certain limitations
(such as al¬
and can find the kind of home it ficient to have an appreciable ef¬
ject of equity financing and comready exist in many states) as
will need, it may be well advised fect upon the overall situation.
mon stocks, there are many others
to the amounts of any one com¬
who are far more expert and bet¬
^to rent rather than to buy a place
So, we find that by far the most mon stock which
can be field by
to live.
ter qualified to speak than I am.
\
important and the usual form of
insurance
states.
companies
too
much
>
individual company.
an
In
view
rental
more
that
say
of
the
need
social
for
housing I am glad to
housing for ap¬
through
rental
proximately 200,000
resenting
investment
an
of
tions,
$400,000,000, is either com¬
pleted or planned by the life in¬
chusetts
against
and
contribution on the part of life
insurance companies, although it
does not go nearly far enough in
meeting the serious national need.
But it must be recognized that
have
year;
These six
York,
thfere is
tant limitations. .In the first
it takes
of
a
very
amounts
of
rental
On
housing.
the present costs of construction,
; which are especially discouraging
in
view
difficult indeed to establish
sat¬
isfactory scale of rents based
current
construction
companies
there is
no
chase
is
of
of
swer.
tion have been frozen by the gov¬
ernment.. The cost of new con¬
struction has doubled since 1939,
investment in
such
investments
and
most
rental
struction
scales
should
for
new
con¬
necessarily take
on
common
be
may
due
part to the fact that some of
permissive
maintenance
legislation
has.
the
Of
course,
approach to this problem is to
duce
building costs, but
one
re¬
little
very
progress has been made in this di¬
rection either
of
building
as
respects the costs
materials
labor.
or
Quite understandably, this situa¬
tion
is
serious
a
deterrent
to
equity investment in rental hous¬
ing. ;
.'
f
\
Acquisition of Business Properties
The
recent
acquisition by life
companies of business
insurance
properties for rental to businesses
is
still
another
new
development
of some
assistance in helping the
flow of savings into the
hands of
users. This
type of investment has
recently been authorized to a lim¬
ited
extent
states.
many
companies
build
or
for the
and
a
net
Most
are
the
life
now
laws
of
insurance
permitted
to
buy properties designed
use
to
under
of business
lease
enterprises,
these
properties at
which gives a fair
the funds invested and
rental
return
on
complete repayment during
sonable period of years.
a rea¬
This
type of investment is a
step in the right direction. It pro¬
vides capital for
corporate users
without
requiring those corpora¬
increase their capital in¬
debtedness
or
to
sell
common
tions to
stocks under present adverse
ditions.
However, it
moves
con¬
along
slowly and is not yet a very im¬
portant factor in
helping the flow
funds. At the end of 1946 all
of
life
about
insurance
companies
$77,000,000 of
held
such business
properties and by the end of 1947
the amount had increased
some
$115,000,000 to $192,000,000;.
believe
must be certain
see
missing
to
granted by the laws of the several
to focus
and
an
>.
dynamic force
more
predicated
a
i printing
on
press
-
money it necessarily postulates re¬
pudiation of public debts, both do¬
mestic and
foreign. Sections 5 and
7 of Article IV of the Fund
pro¬
vide for such repudiation and for
making it'legal,
,
nature of things an integral
very
part of this concept.
\
■
Streamlined Marxism
to
to
Objects
do
of
the
Plan"
in
his
In¬
,
'national currency should con¬
a
prescribed de jure ex¬
national
form to
neither
with
away
he
added,
intending
with
us
property.
that is just what we
your
Precisely
so;
intend."
Marx, in his manifesto,
Keynes was never so bold in
openly stating his ultimate objec¬
tive, or the end result of his
The fact is, however,
printing-press
Of
progressive taxation
course,
must
inevitably lead to absorption
by the political authority of all
social power, with resultant abso¬
Under "The
ternational
re¬
which
reproach
money
is a
quicker death to private property
ownership and freedom than pro¬
gressive taxation.
"For instead of
of
•
.
a means
even
Clearing
Union
scheme, of which the Fund is but
a
paraphrase, he said:
maintaining the
principle that the internal value ;•> "We need a quantum of inter¬
quires it,
,
Since the Keynes employment
and purchasing
power concept is
advocated progressive taxation as
for effectuating that end.
opportunity
insurance
other country).
any
which
currency,
determined
in
is
lutism.
Such absorption is now
developing in the United States,
and has already
progressed to the
extent that it is
causing marked
retrogression of production ca¬
pacity.
This
is
the
cardinal
symptom of the virus of commun¬
ism
in the body
social; and be¬
cause
of its importance will be
example, by the technical mentioned again later.
obligations, not if necesssary so as to conform to progress of the gold
To be sure, Keynes had
industry, nor
objec¬
equities.
whatever de facto internal value subject to large variations de¬ tives
besides that
of jockeying
results
from
domestic
Objections to Common Stocks
policies, pending on the gold reserve poli¬ this political authority into ex¬
which themselves shall be immune cies of individual
I well
countries; but propriating the produce of Ameri¬
appreciate that in many from
criticism by the Fund.
In¬ is governed by the actual current can labor and giving it to the
segments
of
the life
insurance
business there are objections to deed, it is made the duty of the requirements of world commerce, political authorities of his and
Fund to approve
changes which and is also capable of deliberate other countries. In the speech from
common stocks and
it must be ad¬
companies have been
of fixed income
mitted
that
there
tages to "them,
Perhaps the
purchasers
disadvan¬
are
fnost
frequently
stocks, representing
a corporation, suffer
the first impact of
earnings.
market
it
value
should be
bad
times
derson, according to
in
a
New
a
York
news
"Herald
item
Tri¬
March 22, 1945, almost
year later* amplified the above
It stated:
"Both
John
Anderson,
Exchequer, and
Lord Keynes, have declared that
ups and downs
insurance company asset the British Government will ad¬
valuations and the resulting dif¬ just the value of the pound when¬
ficulty of apportionment of life ever Whitehall considers it neces¬
insurance
dividends
emphasize sary. The Chancellor even said that
the policy pursued here would be
very well the uncertainties in this
of
prices, the
life
kind of investment.
disadvantage is
the
Still another
irregularity of
income that is inherent in the in¬
or decreases of
dividends
paid by corporations. An added
creases
argument against common stocks
is the political one
that unless
emphatically restricted their own¬
ership might lead to too great
involvement
the
of
life
management
insurance
of
in
industrial
similar to that of 1933. He said
that the Government would com¬
mit itself only to consult the In-
ternationl
sist with its intentions should the
refuse consent."
Fund
Than there is Article XIV of the
Fund, which also gives the French
political authority a clean bill of
health.;
try.
pletely
such
control
past
investigations of life
have been raised in
ance.
insur¬
'
*
It must be
admitted, therefore,
that these various
questions con¬
stitute real problems and
they
not easy of solution.
It
seems
are
to
Monetary Fund before
changing the value of the pound
sterling, reserving its right to per¬
companies
throughout the coun¬
As you all know, charges of
done
me,
however,
that
mand."
But
body is
exonorated
any
grounds
that
wrong
than
com¬
from
on
those
having
quite other
^his same de¬
vice might also be used to
lesseri
:'
v
i.-
-"
;
.
Printing
been
tion
of
as
a
system.
the
anything but
promise
ruled out
that
That
system
Union
pool
called for
of
international
an
amounting initially to
money
about
from
the
scheme:
retain
to
wartime
other
special
ar¬
rangements during the transition
postwar period of uncertain dura¬
tion
(the French political au¬
thority did nothing that contra¬
venes
this right);
(2) an indis¬
London
the
for
means
maintaining-
the financial center of
as
world;
adding
greatly
to
Britain's monetary
reserves; and
in Keynes' own words:
"The
most
Americans, who are the
likely to be affected by this,
power.
cause
About $18
which
was
billion, the bulk of
consists of
printed
money,
provided in the International
Monetary Fund and Bank setup.
Fundamentally
the
Fund
and
Bank
merge
single
themselves
political
serye -a
into
instrument
a
and
common purpose.
;
had
to
achieved
the
benefits that would
his goal as
speech above
heiilists the
accrue
to Brit¬
ain from the Fund. He said:
full
"Third, the wheels
to
a
be
have, of their
of trade
offered
ing of
a
far-
during the innamely the drain¬
years,
out
the world to pay a
was
will and
us
of deflation
terwar
of the rest of
reserves
country which
borrowing and
obstinately
exporting
on
scale
a
t
immensely
lending and
importing. Under Clause VI (Ar¬
greater
than
VII
plan
it
was
a
of
final
draft} i
; th$
country engages itself, in
effect, to prevent such a situation
from arising
again, by) promising,
should
it
fail,
countries frdm
take
are
free
own
honest purpose,
ticle
Keynes; seemed to? be satisfied
in
thing
Britain
The right
reaching formula of protection
against a recurrence of the main
where
his
(1)
restrictions and
$25
billion to be drawn upon by the
members of the Union to produce
employment and purchasing
is evidenced
underwrite
be
possesses
printing-press
referred
to
broken
can
property
monetary plan Keynes sought to
was
a
it
part of the defini¬
a
we have
previously quoted,
lists, among others, the fol¬
lowing advantages
accruing to
he
printing-press-money pensable
that he
objectives.
One
to finagle the United States
the
of expanding, but
not contracting.
Keynes' International Clearing
mentioned,
several
is
money
currency that can be made
to fit into this formula. Of
course,
the contraction feature has so sel¬
political
which
Great
,
press
which will be considered later.
In contriving this international
achieve
manner,
only
dom
Sir
unpre¬
set deflationary and
inflationary
tendencies in effective world de¬
on
Chancellor of the
an
irrelevant
expansion and contraction to off¬
assertion.
or
The instability of
the
and
as, for
altered
will have this effect."
bune"
dictable
provides that its
Lord Keynes and Sir John An¬
fact
poor
value,
external
A
.
mentioned argument against com¬
mon stocks
is the
possibility of
loss of
principal due to the
that common
the equity of
ternal
pay
to
release;; other
obligation, ;to
its exports, or, if
taken, to
for them." 5 ':*
any
oiled by what is, in
In this connection it should be
effect/'
addition to the world's remembered
that -Morgenthau's
of monetary
two first drafts for an Interna¬
reserves, dis¬
great
stock
,
.
us
that we are not
possible
any
make life
greater
safely
employ¬
by
serious
ment
and
purchasing power
thought and Study they may be
scheme with
stocks, rental answered. For
printing-press dol¬
example, some loss
housing and business properties of
lars; that is, put the producing
principal might be offset by
that the need for equity
element of this nation under com¬
financing setting up a reserve, over a
pe¬
is being recognized to an
pulsion to share the fruits of its
increas¬
riod of time, from the relatively
toil with other nations and in
ing degree by the life insurance
par¬
high average yield that is offered
ticular with Great
companies
within
the
Britaip Some¬
powers by common stocks,
.
It is apparent from
what I have
said about preferred
acknowledgement)—is £325,-
"You
thoughts in that direction. We
our
obstacles
equilibrium
a
000,000.,."
property,"
I earnestly
use.
in our economy.
domestic
our
>
artificially low rents on old passed so recently, and it may
construction, the public is not yet also be due in part to the fact
prepared
to
accept the higher that, traditionally, and by long¬
rents
that
higher
construction standing
custom, life insurance
necessitate.
demands for their
International Monetary Fund!
if
been
ful
before
(Continued from page 16)
in
of
costs
survey
believe it is timely for
the quiring the approval of the Fund,
part, well below the legal which must not withhold approval
This
a
U. S. Should Withdraw From
stock,
into account these increased costs.
the
some,
for
are,
treated for all
are
part of the British
monetary system (in itself a use¬
as
scheming.
Even among the companies
in
states
permitting
limitations.
such
remove
and
ourselves
Colonies, which, I
Accordingly, I think the first
step should be for the Life Insur¬
Stripped naked of its trappings
Investment Research Com¬ Keynes' employment and purchas¬
mittee, which was created to di¬ ing power scheme is but a stream¬
rect its
attention to just such lined version of Marxism.
Marx
questions as these; to make a wrote, ''The theory of communists.
major study of the entire subject, may be summed-up in the single
both the supply of savings and the sentence:
abolition
of
private
ways by which
or
this—for
ance
wise and statesman¬
any
purposes
that
the pur¬
But because
of
are
of
mention,
may
me.
if,
overcome.
domiciled
some
a
disadvantages
be effectively
may
However, permissive legislation
not necessarily the entire an¬
eral rent levels for old construc¬
help to
impediment, then I
the
stocks.
common
materially
of
domiciled,
are
restriction
by
business itself to endeavor to
common stocks, and
England, where some of the
world's most conservative life in¬
on
Gen¬
costs.
15%
arguments
However,
suggested
a real impediment in the
savings into investment—
if there
in
very
a
to
up
surance
practical matter, it is
a
invest
benefit
decisive.
it would be
their assets in
of
commodations.
As
to
posi¬
having the
tion
of common
insurance
com¬
like thing for the life insurance
the
mitted
the. widespread need
demand for low rental ac¬
and
will
that
other hand, Canadian
life insurance companies are per¬
A second limitation has to do with
want to assume any definite
about it without
holding
these
share
own
and the Crown
Ipso facto, unlimited confiscapersonal or individual
observa¬
tions.
At any rate, I would notN^*on of Private property is in the
never¬
—and if the purchase of common
stocks by life insurance companies
does
permit the purchase of any
common stocks
by life insurance
companies.
time to plan and to erect siz¬
able
domiciled,
are
to this question should
depend upon a broad and over¬
all study by experts and not
on
and 1 might add that there is no
conspicuous agreement about this
not
place,
considerable period
assets
answer
life
been
flow of
companies holding almost 40% of
such
be
has
as
where
this type of investment outlet for
life insurance funds has impor¬
perhaps
wouia
only, last
New
by
panies,
domicile
of life insurance companies hold¬
ing over 46% of all life insurance
But
and
stocks
liberalized their' laws;
states together are the
assets.
the
chase
and
Ohio,
of the arguments
holding of common
many
theless, if there were no real and
compelling reason for the pur¬
30
some
The
stocks might be answered,
permitted for life
now
Pennsylvania. Two
other important states, Wisconsin
substantial
a
are
including such states as
New Jersey, Connecticut, Massa¬
companies of this coun¬
Under present circumstances
high costs, this is
stocks.
common
While
states,
surance
of
is
Such in-
insurance companies by
more
than
try.
financing
vestments, within certain limita¬
rep¬
persons,
equity
corporate
The aggre¬
gate for the world is put provi¬
sionally at £2,500,000,000.
Our
tributed,
moreover,
able way.
in
a
reason¬
The quotas are not so
large as under the Clearing Union,
and Lord Addisondrew attention I
to that
But they are substantial
pot' wanted by^he,^ound
io\Jhtttlyglj people, of c$hgl£ii<fj
and
can
be
tional
Monetary
provided
United
debts.
plish
for
•
The
Plan
expressly
by the
British foreign
assumption
States
of
provision.!to
accom¬
this, no doubt written
j,ncreased.subsequentlyv Keynes, was so technical and
by
in-
Volume
volved
Number 4692
167
that
Treasury
even
THE
so-
called
experts who led in promot¬
ing the passage of the Fund pro¬
posal did not fully understand it.
However,
that
provision
was
dropped like a hot potato when
Dr. Benjamin M. Anderson and
others exposed its "hidden" pur¬
pose..
■
.
We
should
carefully keep:, in
objectives which the po¬
mind the
litical
authority of this nation
sought to achieve by this scheme.
It was meant to provide artificially high employment and income
by exporting huge amounts of
goods in excess of imports, and to
perpetuated the illusion that the
minion
the
internationalism,
which
is
in
the
cult
one
-
process
of
neo-
worldism,
of anni-
the
possess
But
the
ductive
creative
a
mechanism.
last
power .can
resources
cerned.
States
planning
that
has
the
of
health.
This
intercourse
and
between
individuals,
private
substituting
and
therefor international authoritari¬
anism,
that Js,
monetary,
fi¬
nancial,
commercial
and
other
transactions
only between politi¬
cal authorities under
a
centralized
power.
The ulterior motive
exten-
was
i sion of
political control over the
/life of the individual citizen and
to
communitarian
promote
Im¬
perialism.
It is
.
•
•.
,
,
„
•
the
very
Gold is
of communism.
essence
fetish to the communis¬
a
tic mentality
only
long as it
it
approve
Congress
its /totalitarian
by
Its alleged purposes, par¬
ticularly
that
of
peace,
were
painted in glowing colors and the
facts pertaining to its actual pro¬
visions
adroitly
were
visions
more
than 300 years. The
debt
many
billions
to
called
was
out of the
in
the
If the United States
race
than
that
the
the
out
gave
stabilization
impression
provisions
intended to prevent currency
value
so
world
posssessing it
*
case.
it
that
would
continu¬
be
sured
of
extent
strong,
now
is
future
must
and
gold
the
authorities
stocks
languish
as¬
To
progress.
political
the
mankind
secure
civiliza¬
and
wither
Of
course, if the political au¬
thorities could be dispossessed of
all gold and it were recovered by
the producing element, to whom
it
rightfully belongs, it would be
freely available in the market,
functioning to protect each per¬
son in his natural right to enjoy
Union
and to tax without limit and start
states;
authority has complete
of
the
po-
con¬
stocks of the
country over which it rules, it
possesses the essential means for
sustaining the communist state.
,
gold
Experience proves this. The Bolsheviks, before they got control,
condemned gold; but the moment
they
came
into
power
they
grabbed the gold stocks with an
avidity
that
characterizes
the
communist ideology. Once they
were
in possession of the
gold of
Russia their power was complete.
Hitler
and Mussolini knew
the
secret.
It
was
the
urge
for
ac¬
quiring authoritarian
power that
caused the architects of the New
Deal
seize
to
the
gold
stocks of
the United States
on
road
that
Bolsheviks,
Nazis
and
the
Fascists
the self-same
traveled
the
that
led to their totalitarian regimes.
When the Fund was being de¬
vised
the
upon pay
term net
Economic
Number
"It
C.
2,
devaluation of the red rate of the
Progress Report
Reinold
currencies of individual countries.
Noyes
Provides for Currency
that,
for the first
history and
perhaps for the first time in our
entire
history,
the
process
of
growth in reproducible
wealth
has practically ceased for an en¬
tire decade
business real capi¬
tal stood in 1945 considerably be¬
low the point at which it stood at
the end of 1930
the private
economy in the aggregate has not
only failed to create any new real
capital; it has not even mainstained its net real capital intact."
appears
time
in
Debasement
recent
our
.
.
Section 7 of Article IV provides
for continuous uniform more or
less
jrnissaar it
v
»,
was
going to be,
Filsc! Assumption of IMF
The!'; :Ihternational
Monetary
/. Fundj like the other- foreign aid
undertakings, is predicated on the
United
.
States is'in
a
thing possibly can be. The exact
opposite is true, however much
we
might dislike to be told this.
In
the final analysis.* the po¬
litical' authority
of this nation
must bear full responsibility for
the evils the International Mone¬
and economic
condition, that it is
possessed of almost limitless re¬
sources and that, withal, it is the
"richest
;
?
nation
in
the
world."
Having,, through the unlimited
power of taxation,-, obtained do¬
and
to
those
intermittent
currencies
debasement
of
all
of
that
of
the
rest
of
the
world.
After Keynes
had intrigued the
run,
seen as
would also, of course,
the relative repudiation of debt
and
plunder of the producing
population. Was ever a more im¬
bilized,
moral
as
and
contrived
antisocial
by
Marx * must
the
be
institution
mind of man?
smiling in his
grave.
No, do tiot' -blafne the French
political authority for the action it
took. Back of that procedure were
the
peasants and other enterpris¬
who produce the. necessaries
of life and pay the taxes. Their
refusal
to
accept the franc at
ers
rate
the
red
to
their resistance
political
and
the first revolt of national
sovereignty
of
against
the Atlantic
Charter
subdue that primal and
emotion.
If
attempts
the
it
"
*
i
*
•
of
*
''
*
Failure
^
.
*
-J '
■
'
its
are
erations
in
Its
record.
gold
is
in¬
op¬
complete-
thanks to the spirit of liberty that
still lives.
While condemning the
it
political authority's action
the establishment of
condoned
multiple currencies
to
prevent
Chile,
this
it
so
and
done
reported.
in
Weinwurm,
unable
or was
being
is
the
in
Ernest
"Commercial
Financial Chronicle," Feb. 5,
the
there are per¬
Washington that
says,
sistent
in
rumors
American
executive
director
of the Fund cast his vote with the
majority against the French pro¬
posal while the State Department
and
the
Treasury issued state¬
ments expressing satisfaction with
the plans
the French were by
the
means
only ones that were
by these apparent incon¬
shocked
sistencies
There
were
.
.
.
no
of
led
-
American
indications
are
policy.
they
that
to h believe
that
the
United States would support their
plans for free exchange markets
that
and
this
expectation
was
a
contributing factor in their strong
defense of those plans
foreign
opinion
fered
reports
that the
.
.
certain
.
expressed
the
had
suf¬
Fund
heavy and perhaps fatal
prestige," all which is con¬
a
loss of
with
sonant
the
nature
of
scheme.
this
W"
,
The
reports, which the Fund
publishes can tell us nothing about
the
favoritism, corruption, and
pernicious international implica¬
tions that must eventuate from its
was
bu
The
billion
Monetary
answer
well be foreshadowed in the
tax
may
high,
exempt salaries and perquis¬
,
the whole of the world's interna¬
tional relationships may return to
something
akin to those of the
nineteenth century, with national
fe
the
As
International
Monetary
shows,
Fund's financial statement
and
this
everyone who understood
scheme knew when it was
as
governments again acting as the
passed would be the case, it is
welfare or supposed welfare of
being
used
to
supply./foreign
their own people dictates, and not
countries with dollars, the same as
as
remote theorist in
some
some
foreign land thinks they ought, to
act.
Such a reaction from the
ideology of the past decade would,
without doubt, cause the 'Daily
Workers' word 'chaos' to become
justified, but out of that chaos a
new
order
order
on
would
emerge,
the model of
a
old
order, an order of naturalism and
patriotism. Should such a revolt
from
international
tivism
fiscal
collec¬
the example might
easily spread to more limited, do¬
France
occur,
for
their
exemplar)
-
all the other foreign aid schemes./
The. Fund's
statement
for
the'
month of
March, 1948, shows that
equiva¬
it has "loaned" the dollar
lent of roundly $600,000,000, ap¬
proximately 99% of which con¬
sisted
of American
dollars.
new
a
very
u
"
their ground,
International
Fund-Bank?
period to ites which the officers of the Fund
persisting provided for themselves and em¬
spreads ployees.
- *
robbery
(printingmestic affairs, and the mock gov¬
press money is that and nothing
else) became so intense that the ernances of quite artificial and
political authority was compelled largely self-appointed 'authorities'
to yield and exercise a little in¬
be subject to the same flouting.
tegrity.
' ;
*
- ■ -.
If a natioA (France)' or nations
' "^'It is too ea^ly to know to what
(those
who
may
easily
take
,Ui'tent'th6 French
r
in turn -Sold to the1 befibfe'to h6ld
dollar
revolt
the
Washington politicians to approve
the scheme, which was so easy td^
do,
Record
'
18
"It may even be that, in the long
the action of France will be
members.
eral currencies would remain sta¬
sound state
tary Fund will bring to our people
financial
A
'
The Fund has been in operation *
since March 1, 1947. Failure and
relating to the recent French cur¬
operations. Political conduct when
procedure that the world
exposed to the most enlightened
must look for redemption from
publicity and effective checks has
the chaos that plagues it. In its
always been bad enough.
But
Jan. 31, 1948, issue the "Statist"
what
must
it
be
in
managing
makes some very poignant com¬
secretively
and
autonomously
ments on this subject, It says:
an
institution like the
printing-press money expansion¬
ist system. The formula provides
that all member political authori¬
ties shall uniformly, in a more or
less continuous stream, print the
same
proportionate amount of
money. Thus, the parities or rela¬
tive purchasing power of the sev¬
of health is as'unfourided as any¬
assumption that the United States
sound monetary,
It is to devlopments such as
This complements the Keynesian
.
is in
a
the
.
.
,
"
rency
gold stocks of practi¬
cally every nation had been na¬
tionalized.
Through this scheme
its designers sought to centralize
control of all gold holdings in a
single
authority
and
establish
what Lord Keynes, in his Clear¬
ing Union Plan, calls "a genuine
organ of truly international gov¬
To reverse the trend of shrink¬
ernment,"
and
which he
says'
"might become the pivot of the age of tools of production, and to
future
economic government of put the nation back on the road
the' world," that is, commissar of progress, it is necessary to rid
it of the socialism imposed by the
.rule over all mankind.
Stalin, who embraces only such New Deal and restore the ratio of
internationalism as conduces to taxation to political spending that
his rule,, who never joins anything generally prevailed at some period
he can't! control, and although he prior to 1929.
Surely not a hope¬
has the! veto power in the United ful outlook. Accordingly, the as¬
Nations, and Trygve Lie is his sumption
by
the political au¬
: map;»V hesitated
to
take
out thority/ that the economy of' the
j membership in the Fund." He just
^Wanted!\\0 be sure whose com-
,
,
Self-in¬
'
1948,
away.
gold in their possession
they were free to print money
a
national
of
discredit
With the
trol
Once
light
ability to prevent free market
the United States in 1933 and 1934.
litical
•
so
use.
If other nations do follow
.
French
that
control
as
least,
as
na¬
1
locked
-
Potentially,
pos¬
of
human
were
the
modes
personal life.
or
.
made
war
men's
terest."
the
would be infinitely better off
it is with the political au¬
tion
were
the
men
long ago. She will have to survey
own position and needs in the
civjliz-,
in private hoards the
would
nitely
were
of
of
that example, Britain will have to
do what Britain should have done
'
up
needs
her
much of its short ously command the same amount
foreign liabilities in gold, of goods and services. The public
by no means an impossibility, the was
propagandized to swallow the fruit of his labor and to main¬
picture would be still darker.
this whole.
tain the most equitable distribu¬
The total Federal debt, includ¬
Nothing could be further from tion of wealth.
ing nearly all circulating cur¬
the truth. That is not at all what
On the' surface, the Fund op¬
rency, is
composed of inflation,
the stabilization provisions in the posed
that is, printing-press money or
the French political au¬
Fund mean/ In ^ fact,"(they were
thority in the action it took.
political-promise-to-pay, media.
specifically designed to do the Fundamentally,
The Marxian system
however,
the
of pro¬
very opposite and provide a sys¬ Fund was engaged in resisting the
gressive taxation and New Deal
tem of continuously depreciating efforts
of the peasants and other
Socialism is having a telling ef¬
currencies
having progressively producers to stop the political
fect in annihilating private own¬
less purchasing power. The provi¬
regime of France from robbing
ership of capital. It is destroying
sions relate to currency parities, them of the
produce of their toil.
the private profit system and hin¬
not to their absolute purchasing The Fund
lined itself up squarely
dering the plowing back of capital
power.
on the side of state spoilation and,
for the creation of new tools of
Keynes' idea Was to establish by in so doing, exposed its collectivist
production. It has made this na¬
The severe rebuke
tion into a welfare or "seed-corn" peremptory international law the feet of clay.
that is being leveled against the
eating state, the same as Eng¬ parities or relative values of the
currencies.
Section 5 of Article French action belongs in the same
land,/ France/ Russia and the rest.
IV provides for doing this through category.
Quoting from the Tool Owners
remains in free
".
of
ation, thanks to centralized (politicalized) banking. If all the gold
stocks
it
and
which
upon
tional
universal authoritar¬
ianism that is submerging
Fund
The promoters of. the plan defi¬
emotions
sible
and
forms
thorities
embodied
depreciation.
It was to give to
1/10 that amount each
currency a permanently fixed
less than
gold.
pre¬
that
an
again conquering the artificial
clear
ownership
gold
basis of the
sented.
the
The political authority has out¬
standing obligations and promises
to pay amounting to roundly 3%
of
pro¬
political
of
the
protect
pri¬
mal
Menace of Gold Stock Control
is
to
hazardous experiment may be, in
other words, the sign that the
restraints
It
need
disaster,
the
hands
of
the
political au¬
thority, that they will never see
it again,, and, that it will become
the ultima ratio for taking from
control
self-
individual
are
scheme, as shown by the hearings
relating to its consideration and
the publicity given it when it was
before Congress, was misrepre¬
listed debt.
sesses
its
intelligent
an
The Keynesian stabilization fea¬
ture
uncollected pay roll taxes pledged
for Social Security benefits, which
add
understood
that
question.
One unlisted item alone—
would
who
sentation of them
is
considerably
the Treasury statement
than
shows.
pe¬
that
loose of the metal it will fall into
crumb
is
withstand
may easily
units, in the
sense
of
enterprises,
will he
forced to the same conviction, and
will act accordingly. The French
be
surprising that they should
their gold.
They fear that once they have let
last
law
communal
and
cannot
the
of
economic
they have earned.
people
more
not
the
first
27
immediate breach in the national
defences against sociological and
French
political authority
doing so well with the
scheme to get its fingers on pri¬
vate gold holdings. French peas¬
ants and other producers have had
much bitter experience with po¬
litical manipulation of money. It
is
the
agreements
strain
bread
wealth of the United States which
public
most
a
that
preservation,
hope.
mouths
has been accumulated
real
as
their
withheld
The
Federal
debt
is
The truth is,
nearly from the public.
equal to the total reproducible however, that there were so few
riod of
welcome ray of
The
find
rapidly de¬
tyranny
their effort shines forth
nation.
purely communistic con¬
cept to oppose the free use of trillion grains of gold, or paper
gold in the economy. Political with
purchasing
power
equal
ownership and control of gold is thereto. However, it actually pos¬
a
importuned
'
a
of
be reluctant to give up
with the self-promoting
special-privilege-seeking lob¬
byists that infest the Capitol and
(
over
hour
world-wide
trading
be
peated.*
no
dark
and
countries
cannot
practically
How U. S. Was Committed
to
authority of this na¬
alleges it can restore to a
state
had
is
con¬
this
veloping
propaganda machinery and horse-
the political
tion
This
producing
the matter.
authority
virus,
collectivism,
or
sickened
free
tion of this scheme know, merit
played little or no part in commiting our nation to it. The political
afflicted
is
of bil¬
of
As all who followed the forma¬
or pro¬
-pernicious
same
the
on
the
in
(1771)
is not
J
is, the social organism
United
the
eyes
worth
merchandise.
They
voice in
almighty
long as
so
dollars
reflection
no
remain for it to devour.
The fact
the
Its
only
of
than
necessary
populations of the countries
6veremphasia(|r^,4op often ^/re-;
spon¬
that is,
trading
internationalism,
voluntary
international
was
American
basis of this as¬
sumption of power belies all the
premises upon which it rests, for
the political authority is a con¬
suming and not
coun-*
difficult task, for apparently no
more
very
taneous
*
a
CHRONICLE
This also seemed not to be
lions
hilatin^all true, natural and
C;
tries.
dangling before their
state
is
political authorities of other
to lift the distressed
power
with
there
the
only
Soviet, too, was invited to
participate in ERP) out of the
trouble they have got themselves
into, but has appointed itself to
execute this task.
.v/V''
of
Then
to
not
FINANCIAL
(the
earning element ot the nation is
being made richer by giving away
Cult of Neo-internationalism
itself
has
&
peoples of almost the whole world
its produce.
;
resources,
authority
presumed
brain
such
over
political
COMMERCIAL
now
•/ In
order to prevent further in¬
jury to international relations and
universal
inherent
degradation
in
the
of morals
operation of the
International Monetary Fund, and
to
save
sible
the nation
from
the
as
much
anathema
as pos¬
this is
bringing down upon it, I ask the
Congress to support my Bill for
the immediate withdrawal of the
United
States from
this
interna,^ t
tional communitarian scheme.
.
.1
.
,'l.
I
I
I
II
r~
I II |—I-
....
1
COMMERCIAL
THE
(1772)
28
&
•
FINANCIAL- CHRONICLE
Thursday, April 22,
tion of certain property—and also
Estate Planning
j/.'
J
•«v-
v
.
'
■
the
in Practice
'j
i, "
» ■
■
everything joint." How simple it
(Continued from first page)
would be to
relieve a ; grieving
a supply of such elementary items
as
pencils and paper/ because widow of additional worr.y and
not have her dependent upon a
there will be plenty of figuring to
be
done!
And last, but by no busy friend or relative who has
his own affairs to handle or sub¬
means least, he must have the ca¬
pacity for understanding human ject to the preying of unscrupu¬
to
insure
which
is
and/or
payable
there is
cluding the possibility of profes¬
or graduate school training
for the boys; The present home,
he hopes, will be retained by his
for
sional
constitute
directly
so
tax
we
his
although
se¬
better than
find
that
circumstances
will
in
purposes
Prospect's estate.
Mr.
In view of such
the
Federal
Gov¬
and
wife until the children have com¬
ernment
suggestions
schooling, although
he then feels that it might be sold
and smaller quarters "found for
against
estate taxes will be collected from
his wife. It is his further expecta¬
to
action1 would
in
be
permitting the savings
becomean
estate,
the $60,000 level,
over
such
increment
because
the
tax
to " his
rates
the
higher brackets for
Prospect's estate.
Probably
are
Mr.
the
suggestion for Mr. Prospect,
provided that he feels 'that cir¬
best
the insurance
also "interpreting his lous individuals of whom there
and plans in a way always will be some in the world!
which will be comprehensible to Regardless of how adequate and
the layman.'
satisfactory all "home-made"
r>
'ft'^
plans seem to look through the
Sparing A Widow Additional
rose-colored
glasses
of ? happy
;i
Grief -J.
married life, the survivor of this
nature
<
.
union, unfortunately, does have
ual in this case finally has realized the important problem of man¬
the need for establishing a con¬ aging
and/or
disposing of the
crete plan
which will conserve estate. Indeed it is only after
education — and
for
his
wife
and
children
the considerable
We
assume
can
has
he
which
estate
that the individ¬
build
worked
so
during his life¬
time; It is still surprising to find
hard
to
up
.the large number of people who
are so busy building up an estate
take the time
that they neglect to
the
make
to
not
have
best
arrangements
that
already
they
only for what
accumulated,
for
also
but
which
they expect to accu¬
mulate.; Or if anything 'is done,
it is limited to the*1 making of a
will—which, in effect, may merely
pleted
tion
their
his* insurance
that
that
a
insurance
his
deficiency
any
prior
lien
monies
for
so
Federal
cumstances will permit, is to make
annual
gifts
of
$1,000-$2,000
to
each of his Children and establish
monies, even though Irrevocable trusts for- .that/pur¬
payable to his wife and/or chil¬ pose. V The
income
from
these
monies
This immediately raises
dren.
will provide; ans estate of $20,000
for each child, while his wife will
an
trusts then could be accumulated
important question which wiir.be lh'/- guardianship
accounts** until
discussed under step (6).
such; time as the children would
have the balance of about $65,000
exclusive
have
ably will be
to
deficit of roughly $8,500
a
Federal
next 10-year period. If he makes
gifts to his wife, her estate prob¬
under
children
options,
lected
tion for each of the children, in¬
will
Of course/ the insur¬
wife
college educa¬
a
estate.
ance
during their married life. He also
wants
items
his
1.948
'Neverthe¬
Fed¬
need
the
less, it is his intent that the wife
eral estate tax liability will be on
tion.
This
will have full access to the entire
his widow's estate.
for her
use.
Next
we
show
what
the
funds
for
would
their
educa¬
accomplish two
Assuming that parts of Mr. Prospect's over-all
estate, including the insurance,] Mr. Prospect predeceases his wife objective: 1
/ /
sometimes after needless misfor¬
and further assuming that she, in
tune—that " the
average
layman during her lifetime.
(1) Build up an estate for each
decides to do something about his
Mr. Prospect estimates that his turn, becomes deceased five years of the children—possibly to 'the
• ;
earnings over the next ten years after his death, we find that tax maximum' desired.
'usually hard-earned estate.
Let us now sit down and have will be $30,000-$40,000 annually,! liability to be approximately $12,(2) Reduce tax liability. - *
500.
Certain other assumptions
while his savings or surplus funds^
our initial talk with our contact,
It .has been noted that no 'pro¬
are
made regarding the use of
year ' will / vary/ between
whom we shall call Mr. Prospect. each
vision
has been ~ madei//^::'/JjVfi^^
ome
principal
funds
by
his
$5,000 and $8,000.
" :
Prospect and his partner/ lor j#e
(1) Analysis of the Nature of
Idow. % *
1
We also learn which members
ConVenient .liquidation of Tftheir
ALL Property: After the prelim¬
From a purely tax angle we business
of his wife's family,
'uponthiedeath of one/pf
aslwel^ a,
inaries,-during which Mr. Pros¬
estimate
the same
tax
his1 own family, are still living.
liability the partners; This is ano ther- ex¬
pect asserts that he has been go¬
This fact usually comes, to- light for the estates, including the in¬ ample of how lax
many successful
ing to do this very thing for some
surance monies, of both Mr. Pros¬
business
time and decided that the start of when discussing the possibility of
and prpfessionaT men
pect and ' Jus wife; if they' were* can be about some phases of their
a common disaster to the husband
the New Year provided an excel¬
placed in trust. If a trust is set
personal: affairs.
On the other
lent Opportunity, he asks/ "Well, and the wife. It is wise to provide
what can you do for ?me?,"
Of fdr; such a contingency/and have up giving his wife a "life inter¬ hand, it gives some indicatjdii'of
est"
therein with ultimate dis¬ the need for
a legal guardian named in the will
good financial ad¬
course, I explain to him that first
tribution upon her death to the visers who
he must disclose to us ALL of his for the children, if they still are
provide not only coun¬
minors. Mr. Prospect, like many children, there will be a probable sel, ' but who also have the facil¬
property or assets and also what
saving—for Federal estate ities for relieving these Very bufcy
others, had never thought of that tax
he hopes to accomplish with his
possibility and said that he would taxes alone—on the combined es¬ individuals of " the- burdens v of
estate/ Perhaps the best way to have to talk that point over with tates of $12,500. Under such an
physically handling the many and
start, I tell him, will be to make a his wife. He would guess that his arrangement the trust provision complicated details. A simple so¬
,
"pass the buck" to one's family—
in the case of a man.
He says/
"I'm
everything ; to "my
leaving
wife—want her to have it all."
A
admirable' and natural
thought! But'What'experience has
she had in handling financial mat¬
ters
or
managing property?
In
most cases, the wife has had none,
as she has always depended upon
very
her husband
complete inventory of his present sister-in-law, who has only
still
assets and liabilities. For this pur¬
by the husband, "It's all
care * of,"
or • "We
have pose a form is used as follows:
echoed
taken
.
to take care of such
And
matters.
.//
Bonds:
is
there
yet
in the will must be drawn in such
one
Child, probably would assume ,the
responsibility of the moral or
spiritual guardianship.
a
Joint
Wife
Husband
/
Other:
--
-
——
Bank accounts
$5,000
1,000
$5,000
S. Government™
U.
Stocks
Total
$1,000
3,000
/ ■
i
,,
3,000
/
Business assets
4,000
$1,000
im
%
Automobiles
,
Other,Real Estate
1,000
Life Insurance/125,000
Miscellaneous
$1,000
$139,500
$34,500
$175,000
-.4/1 ■ '.-VJ.-f'
The form lists the assets in that
because
order
that
be
to
seems
most natural*way for people
of these
items
Many
the
think
to
times they
never even mention
the items which are owned jointly
until
they are asked about them.
They presumably believe, as do
individuals,
uninformed
many
that such items
are
taken
of
care
the
is a result of the
contribution through earnings of
the
husband,
excepting
$1,000
stock and about $1,000 of the joint
bank account.
Those .two items
property
to Mrs.
came
estate
he
Prospect from the
At this point
the possibility
of an aunt.
also
-
mentions
that his wife may inherit as much
as
$25,000
from other rela¬
during the next
more
sometime
tives
completely by virtue of joint own¬
ership.
A*nd then they casually
mention their insurance since they
ten-year period.
already have selected
of the
data '.is
Under
conversation with every prospect.
one
options available to them.
the
terms
their
of
policies,
the
proceeds are going to be paid in
a
predetermined manner directly
to
wife
the
false
so
sense
are
many
factors which
lulled, is
causes
of the
great suffer¬
one
policies.
'
event,
Mr.
quite impressed
.
Prospect
with the
any
tabulation of his
not
It is
assets.
own
unlikely that it is the
first time that such a compilation
has been made1 for or by Mr.
Prospect. We also learn that there
are no liabilities other than those
at
all
.
of
routine
a
The
next
roughly
estate
and
minor nature.;
is to estimate
Prospect's Federal
step
Mr.
tax—we
can
do
no
more
than that at this time—which
we
find to be approximately $23,000!
Mr. Prospect looks very
much
sur¬
prised so I have the feeling that
he already is finding the confer¬
ence
and
while.
is
tax
make
our
analysis
most
worth¬
It is pointed
some
the
out that there
discussion of a change in
law
but
that
he
should
plans on the basis of
present law and, if necessary,
information.* The
Continuing
estate,
a
later date.
with
we
the analysis
learn that all of
from con¬
the
of
balance
devoted
to
the
interview
is
th$ discussion of the
business
assets
number
of estates
in
our
various
dan¬
lution
Mr.
for
and
Prospect
his
partner would be'for each partner
to take out an insurance policy on
the life of the other in fhe esti¬
,Qn the basis of Mr. Prospect's mated amount of their respective
estimate of minimum annual
interests- in' the business. BV such
f
own
savings
$5,000 over the next an
arrangement,' the surviving calculate their tax partner "would be provided with
liability ten years hence—both funds to
purchase immediately the
with and without the; aforemen¬
assets
of the 5 deceased - partner
tioned trust arrangement. The re¬
from the latter's estate.
And .in
spective estimates are $37,000 and Mr.
Prospect's case, such art ar¬
$59,000, a saving of approximately
rangement would aid substantially
$22,000 with the trust arrange¬ in
ten
of
years,
ment
a
on
There
which
we
combined
are
should
still
be
meeting1 the* anticipated1 tax;
basis.
other
noted
factors
in
this,
liability:1
•'
-
f
#
(6) Review .of Mfe. Insurance fo
Ascertain the Adequacy of the In¬
plan—for dis¬ surance Program: It has been in¬
cussion with his attorney or any dicated that Mr. Prospect's estate
at present, and probably over the
other specialist.
(a) Possibility of a $25,000 in¬ next year or ;so, will be inade¬
conferences with his attorney, his
heritance by his wife—it would quate to'satisfy Federal tax glainas
insurance underwriter and him¬
be wise not to build up the wife's against it.
Thus, any deficiency
self, as well as any other special¬
will have to be paid out of his
ists which it*is deemed best to estate much above $60,000 if that
prevented, although we insurance monies. However; J^r.
consult on the plan. It is already can be
discernible that Mr. Prospect is may find it necessary to equalize Prospect may wish to take out
the two estates inasmuch as death additional insurance to cpverthis
beginning to realize that this is
anticipated deficit since he has
is an uncertainty. :
a much more important—and cer¬
(b) The new Community Prop¬ told us that he feels that his pres¬
tainly more complex!—problem
erty Tax Law now in effect in ent insurance /will be yequired to
ithan -he had imagined.
take care of his family. Further¬
It is then agreed that Mr. Pros¬ Michigan.
r This law is a motivating factor
more, his estimated earnings Will
pect will bring his insurance poL
be sufficient to provide the addi¬
icies in to the trust company and. for Mr. Prospect to:
(1) Maintain accurate records of tional insurance which can be
that plans will be submitted to
payable
directly
to
the
the
distribution
of
income
be¬ made
him
capacities
as
executor,
adminis¬
trator, guardian and trustee. How¬
ever,
no
commitments can be
made pending further study and
particular
case
and they are cited
in footnotes to the
prior to our first conference
with his
leave
attorney. He takes his tween his wife and himself. (Sug¬
appreciative of our gestion that his partnership make
very
pointing out his great need for
definite estate plan.
a
out
checks each
two
month—one
estate.
outlined
As
above
it
also
under
will
be
step
(5)
suggested
that Mr. Prospect consider with
to his wife and one to himself.)
(2) Maintain separate bank ac¬ his partner the advisability of , a
receipt of the insurance
(Each party could have business insurance policy.
policies the following day—which counts.
on
t^he
indicated Mr. Prospect's interest the power of attorney
(7) Determination of the Meth¬
of one of the partners. It is some¬
od of Handling the Insurance Pro¬
other.)
thing which apparently had been —^we resume our study of his es¬
Lastly, we have prepared a ceeds and Consideration of Estabtate plan..
^
mentioned by the partners, but
table showing Mr. • Prospect's in¬ Hshmeiit' /of/ "a//Life' Tnshrance
(4)
Consideration of Federal
never pursued to the point where
come^ tax, liability both *, currently
Trust: ' 'With Mr. Prospect's
Tax Liabilities:' First we. deter-:
a definite decision on disposition
and under the new Community mission we now discUss his pol¬
mine
the estimated Federal es¬
was reached. A very common and,
tate tax as shown by the list and Property Tax Law, indicating the icies with the insurance under¬
again unfortunately, very human
savings under the writer from whom he purchased
nature of the assets given to us approximate
occurrence.
new
law.
Supplementing
this them. The life insurance under¬
by Mr. Prospect and on the basis
(2) Review and Reconsideration of the
table, we also show the estimated writer is fully equipped with the !
present tax laws. All assets,
of Any Plans Already Formulated:
with the exception of the $1,000 of monthly income for his wife un¬ knowledge of the various options 1
No previous plans had been made,
der the various proposals as sug¬ which are available to Mr. Pros¬
stock and $1,000 of cash owned
so
it is not necessary to devote
pect. We explain the objectives
by his wife as separate property, gested and outlined above.
any time to this step.
'
will be subject to the Federal tax
(5) Disposition Now of Certain of .the case—outline the estimated
(3) Frank Discussion of Desired in Mr. Prospect's estate, if he pre¬ Items in.the Estate Through Sale. tax liability under the plans we
Objectives: Of course, Mr. Pros¬ deceases his wife. After his pres¬ •Outright Gift or an Irrevocable intend to present to our. prospect
-^-arids Slso*^
:
pect says that his overall objec¬ ent exemption of
beehr«ug4::
$60,000 and de¬ Trust; or the Determination of the
tive is to provide financial secur¬ duction of
$5,500 for approximate Methods of Liquidation at a Later gested ^Uftder 4st0psnumbers*,(5) |
ity and comfort for his wife and last illness and, funeral expenses Date: Under this category we are and (6> regarding abusiness inchildren. His wife is the same age and
costs of administration, there ready to consider the annual es¬ su ranee policy./'5* as he—41—and he has three chil¬
Some insurance Companies per¬
will be an estimated estate, sub-- timated increase to Mr. Prospect's
dren—two ,boyS; aged 5 and! 6,
mit a trustee, where a life insur¬
ject to Federal taxes, of $107,500 estate through savings.. We know
Furthermore,'
no
arrangements
Upon
made to carry on the
business in "the event of the death
have
been
"
and
girl,/aged 11. As is usually
a
some
revise them at
of the
job can only be done
the'prospect with complete
receivable. Interrogation 'discloses
that
Mr! Prospect's business is
operated on a partnership basis.
these
seems
for
security, into which
Such
these properties and the proceeds
In
Yet the best
consist of equipment and accounts
children.
ing to the very persons who are
supposed to be benefiting from
of
through casual
a
or
of
It is surprising
how much valuable and pertinent
obtained
away
6,000 general aspects of Mr. Prospect's
5,000 situation and the various possibili¬
3,000 ties that may fit his requirements.
25,000 This is possible due to our wide
1,000 and long experience, not. only in
125,000 working out plans for many others
like Mr. Prospect, but also in the
administration of an equally large
1,500
25,000
1,500
Home
break
now
V
5,000'
3
We
sideration of the specific steps and
no
of the trust assets being in¬
cluded in the widow's estate.
..
-V
that there will be
way
ger
the
case,
Mr. Prospect wants his
wife to be in
tain
the
which
she
a
position to maim*
standard
has
of
been
living
to
accustomed
on
which /the
alorte will
.
Federal estate, tax
'
be about $23,000./'
that
in
a
portion of this increase
estatef;'will !; be- con¬
the-
tables to Show the sumed; bv death taxes upon his
ofj'his1 estate. decease.'Perhaps we should con¬
sider the'possibility of Mr. Pros¬
own ^outright
arres'ult of the joint* registrar pect making some gifts over the
We
cash
set
up
trust
has
been established,
option either of tak¬
ing a lump sum settlement or per¬
mitting the monies to remain with
ance
to select the
requirements
What his wife will
the insurance company.
as
Mr.
Prospect's
However, >
is not
company
Volume 167
THE
Number 4692
'
COMMERCIAL
among those relatively few com¬ be a very natural result when¬
panies which grant a trustee such ever people have us analyze their
latitude.
estates and submit plans to them.
A life insurance trust is not al¬ Undoubtedly
the prospect feels
a "must," but after careful
consideration of all angles, includ¬
that
ing the information received from
an
life
ual.
ways
insurance
deemed
best
underwriter, it is
that
Mr.
Prospect
trust.
There
several
are
we
be
important parts of the trust
agreed upon and there is to
provision for the invasion of
a
principal where
more
benefit
(a)
Sufficient
of the
care
income
to
family.
:
(b) Trust arrangement will not
seriously affect income tax status
of the wife.:22:-
(c)
Greater
util¬
ization of the proceeds of the life
insurance policies.
d)
Contribute,
duction of
(8)
-
in
to
part,
re¬
death taxes.
Consideration of
or
Imme¬
an
Part of Present Property:
a
though.
as
'.lis client, this provision must be
carefully
very
will
rust
assets,
cluded
However, if he should pursue
suggestion
of
that
individual
ou
trusts
irrevocable nature be estab¬
an
lished
for
each
of
the
children
this- would
constitute
investment
management.
The
charted
and
of
the
addition
instruments
irrevocable
children.
he
dren
Mr.
the
to
decided
to ipake
gifts to each of the chil¬
that,
and
size
arrange
if the instruments
he then could guage
gifts according to
the
of
his circumstances.
other
the
for
trusts
Prospect
could
drawn up,
are
wills,
the life insurance trust and
cover
the
the
the
to
with
step
children's
There
was
one
1&e
respect
to
that
trusts-r-and
Was
the
information
above
assembled
form
a
of
again, being in¬
his wife's estate.*"
In
annual
tha'
service
that
so
danger
no
once
discussed
ing in Mr.
Prospect's estate
worded
(10) Preparation of Legal Docjvrents:
that
management
be
in
At the present time there is noth¬
requires
of appointment, al¬
the attorney stressed to
power
we
diate Plan for the Management of
All
the
chere
flexibility in
for the
necessary
Mrs.
of
Prospect.
There
also is to be granted to the wife
take
.
individ¬
■;'>% ■ ■■'! -'.J'
I";;".,'
which warrant this
conclusion, the
important of which are: ; ^-
our busi¬
administer
can
estate better than any
are
reasons
that
and
The
consider the establishment of such
a
definitely know
we
ness
is
now
it
and
is
question of setting up collat¬
eral guardianship trusts to accu¬
mulate
income
from
the
large
reviewed by bur Estate Planning
frust3 until such time as it would
Committee, comprised of person¬
be
nel from the
for educational purposes.
Tax, Investment and
Trust Administrative Departments.
The basic theories and suggestions
endorsed
are
by the Committee
after careful study and the plans
submitted
are
to
Mr. Prospect.
Ten days later Mr. Prospect
ephoned to
the
say
material
tel¬
that he has studied
carefully and
lie likes the plans very much
that
very
He then asked that
arrange for
we
separate conferences—first,
insurance underwriter
with
and,
the
secondly, with his attorney.
The
necessary
arrangements
were made and the first meeting
Due
to
life
Prospect.
the
previous discussions
our
with the
This
former, he was wholly
tion
instruments.
of the
since
on
the
the trust provisions
realized
former
were many phases of trust
administration and operation with
which
he
wills
agreements
submitted
final
his
aoproval
a
life
be established.
I then queried Mr.
Prospect whether he would want
to "invade" the present insurance
monies to
satisfy the Federal Gov¬
claim for estate
ernment's
taxes.
reluctant to do that and
at least until his estate had grown
He
was
for
>
Agent, Executor
final meeting
or
was
ments
vided
It also
executed.
opnortunity
an
Prospect
with
toward educating the gen¬
public on this all-important
subject of Estate Planning. One
of the most active groups in this
respect has been the banks and
trust companies, probably because
of
their
uniquely advantageous
position. And they have been as¬
sisted by many outside groups,
such
of his
attorney^
appointment so that
when he arrived for the confer¬
ranging
who already appreciate
important part which these
institutions play in Estate Plan¬
ning. The Insurance Research &
Review
Magazine published
an
writers,
the
article
ence
he
of
apprised
was
the
Mr. Prospect
salient features of it.
Friend" which goes on to complete
this sentence with "is name him
executor.in
I
took- them
on
tour
a
well
as
himself.
for
(2) His estate and that of his
wife will be conserved. 4
(3) Taxes will be minimized.
wanted
our
executor
Mr. Prospect
trustee
both wills, as well as
with
his
to
company
and/or
that
act
as
under
for
that any de¬
as a change in
tax laws, that may affect his
so
Everyone Needs An Estate Plan
Not all plans embrace as many
Some
are
others
relatively simpler, while
are even
more
communities
any
a
or
to conserve his or her estate.
The
Estate Planner, on the other hand,
up
the
opment, because neither he nor I
plan which will best fulfill
this
mentioned
we
have
that
angle.
found this to
most
a
supplement each other in almost
The legal profes¬
respect.
every
an
of
Avenue
Bank
of New York
porting resources of $37,963,524,
the Amalgamated Bank of New
at spe¬
Fifth
and
of
York announced it has 12,700 de¬
of
Bank
The
Stockholders
York
voted
New
cial
meetings on April 15 to ap¬
prove- the merger agreement en¬
tered into last month by the re¬
spective boards of trustees and di¬
rectors.
York
The
adopted
for
Of
tion.
"Bank of New
name
Avenue"
Fifth
and
the
the
Bank of New York
was
institu¬
merged
vote
total
the
at
positors today in contrast to the
who
helped
establish the;
bank in 1923 under the guidance
of the late Sidney Hillman, Mr,
Potofsky's predecessor as head of
the Almagamated Clothing Work¬
ers; The Chicago bank today has
assets of over $36,000,000.
few
t •(
meeting, which
standing,
than
more
99.9%, it is
aryiounced, was favorable.
It is
further stated that
Fifth
at the
Avenue Bank
stock
meeting 94% of the
represented, with more
was
than 99.9% of votes
favorable.
President
present being
Traphagen,
C.
John
Bank
of
of
York
New
our
present complex economy re¬
quires
not
specialization which was
a
the past.
recognized in
relationships
the
hours" is the subject of a
series of
exhibits, the first of which is now
the windows of Colonial Trust
in
Company of New York in Rocke¬
Center.
feller
shown
R.
in
measurably
of
Board
Downey, President
Trust
Chaney
the
directing
head of the Fifth Avenue office of
combined
the
C.
Albert
institution.
Simmonds, Jr.,
Vice-President
who
of
has been
of
Bank
York since 1941 and
New
recently
in charge of the commercial bank¬
President.
months
ing
more
will
serve
as
Merrill, who
department,
the overall trend is
all
from; all the
visited
well as from the art
editors of the Minneapolis press.
the
Chairman since 1931,
1332.
and
1228,
March
❖
,
25,
page
#
acquiring that muchThe
protection
financial
needed
high
show,
York
New
State
Banking
is
luncheon in
honor of the trustees of %:e Bank,
at the
giving
Office, Satur¬
than 200
guests, including trustees, officers,
employees and many wives, will
stock of the Trade Bank
Bank
& Trust
a
130 Bowery
April
Shields,
More
24.
)
Murray
luncheon.
the
attend
on
of
President
Bruere,
Bowery Savings Bank of New
March 22 approved
& certificate of increase of capital
Department
through good Estate Planning.
praise
as
Henry
day,
»:«
Mr. Prospect
was
critics of the country who
York
page
each
as
Company,
drew
The
day
more
an-r
Edwin G.
as
Honorary Chairman.
regarding the merger ap¬
peared in our issues of March 18,
families like that of
finds
In
the exhibit Arthur S.
President •« of Colonial
noted that Mr.
recently paid the un¬
usual tribute of being invited by
the Minneapolis Club to have a
"One Man Show," and his pictures
becomes
encouraging,
National
Northwestern
nouncing
Items
All in
Clarence
Kleeman,
John I.
has served
most
paintings
of
bank.
and
recent
18
work
Chaney, Vice-Chairman of the
of The Fifth Avenue Bank, will be
im¬
alone.
The
the
are
Bank, Minneapolis, Minn.
Advisers
have
ff
since 1931, will be Chairman and
Chief Executive of
the
merged
improved
Financial
ners,
be¬
and Estate Plan¬
tween this group
Trustmen
Ac¬
s;t
What bankers do after "bankers'
represented 85.7% of all stock out¬
Vice-Chairman and
sion also is coming to realize, that
of
Vice-President
the
of the Manhattan Company,
obligation to society to
everyone
objective.
At
in
the
formerly with the Department of
consisting of 180,000
shares, par $10 each. An item re¬
garding the plans to increase the
capital appeared in our March 4
$1,800,000,
issue, page 1012.
Officers and employees of the
Square Savings Bank of
on April 16 celebrated
Investment
of
ment
Bankers
Association
of
Investment
Bankers
America
—
of America, 33
Association
Clark Street,
South
Chicago, 111.—Cloth.
setting
risk
of
New York
the
Magic
Believing,
of
The
—
the
at the Hotel
Astor. They also chose the occa¬
sion to honor eight of their asso¬
ciates who have been with the in¬
stitution
H.
for
20
years
or
longer.
his
of
staff
and
their
Inc, 70 Fifth Avenue, New York
guests.; He noted that when
bank
the
.
opened
on
July-1, 1848, the
only paid employees were a $400Managerial £nterprIse, Its a-year accountant and a porter
who acted as office boy and .mes¬
Growth and Methods of Operation
senger.
The first day's business
—Oswald Knauth—W. W. Norton
accounts; totaling
Fifth Ave¬
$1,263, he said, and as of Jan. 1,
nue, New York 3, N. Y.—cloth—
last, the bank has $59,380,689 in
$3.00.'
brought
& Company, Inc., 101
38
with 42,398 deposit ac¬
An earlier reference to
counts.
of
the National
of Financial Analysts
Proceedings
Federation
Conven¬
tion— The
Analysts Journal, 25
Broad Street, New York 4, N. Y,—
Societies,
First
Annual
paper—$1.00.
the
in
bank's
,
anniversary appeared
April 15, page
#
#
O. Sensor and Mary
Faith Martin
Relations
section,
California Institute of Technology,
Pasadena
4,
Calif.—paper—$2.50.
vington-on-Hudson, New York—
paper—copies on request.
Postwar
Belloc
Press,
repetitious, I should like to state $2.00..
—
in
California,
War and
Changes—Nedra Bartlett
University of California
Berkeley,
Calif.—paper—
First
Vice-President
the Federal Reserve Bank of
011
a
was
of
of the
Potot'sky,
Chairman
gamated
Clothing
of
the
the Amal¬
Workers,
the
made by the bank during
a
quarter of a century was re¬
viewed and its services listed. Re¬
progress
had
absorption
its
*
0
O
Kneeland B. Wilkes
Bank
of Buffalo,
/
..)'"
\
elected
was
Saving*
trustee of the Western
a
the
branch
a
Albany institution.
/■;;;?) vV
N. Y.,
April
on
14, according to the Buffalo "Eve¬
ning News" of that date. The ad¬
vices from which-we quote also
state that the board also named
Charles F. McGahan as Secretary,
succeeding the late Fred C. Sprick-.
Donald M. Crawford, former
man.
Vice-President
to
Hill Mort¬
the
appointed
was
the, mortgage and loan depart¬
of the bank.
ment
'
of
Corporation,
gage
V'
>'
a
.'
.4
«
V
,
executive
meeting of the
posit & Trust Company of Boston,
on
April 15, Horace W. Cole
elected Secretary of the com¬
to
pany
fill
the
caused
vacancy
by the death of William F. Tripp.
Mr. Cole has been in the employ
the
of
for
company
the
last
15
and since the first of the
year has served as an Assistant
Trust Officer, it was stated in the
Boston "Herald" of April 15.
years
\
the guest speaker.
statement issued on April 13
Board and President of
was
Bank
Watervleit bank becomes
New
In
by
Michael
M.
Nisselson, Amalga¬
mated Bank President, and Jacob
York
S.
Wages
anniversary
April 14. The occasion was marked
by a dinner that evening at the
Commodore Hotel where Leslie R.
Rounds,
Watervleit
With
rency.
was
25th
Y„
capital of $153,635, of which
$73,635 consists of stock A ;(RF,C>
and 40,000 preferred stock B, local,
according to the April 12 Bulletin
of the Comptroller of the Cur¬
by the Amalgamated Clothing
Workers
of
America,
together
with
the Algamated Bank
and
Trust Company of Chicago, cele¬
its
N.
a
Mass.,
brated
Water-
of
Bank
Watervleit,
The
Y.
N.
York, at 15 Union Square, organ¬
Survey of Personnel Practices
Los Angeles County—Richard
Industrial
at
committee of the Boston Safe De¬
,
ized
in
Jr.,
absorbed, effective April 2, by the
State Bank of Albany, at Albany^
■
Amalgamated Bank of New
The
National
The
At
columns
these
1663.
Berle,
A.
State,, will speak on "Is There an
Bank, welcomed the 60 men and
women
Adolf
Answer to the Russian Riddle?"
Brownell, President of the
11, N. Y.—cloth—$2.95.
as¬
being
of
Anniversary
dinner-dance
ily"
R.
Claude M. Bristol—Prentice-Hall,
100th
bank's incorporation with a "fam¬
on
Revolution."
vleit,
Union
Fundamentals
talk
"The New Industrial
will
500,000 consisting of 150,000 shares
of the par value of $10 each, to
or small—a person has
Thought Starter, A — Henty
obligation not only to his Grady Weaver — The Foundation
her family, but also to society, for Economic Education, Inc., Ir-
sist
even
is
moral
has
hart
this
and
natural alliance as the two groups
complicated.
And this was an
Actually,
com¬
cils have been established in more
—
angles as did that of Mr. Prospect.
important and interesting devel¬
minor children.
trust
he But large
co-guardian
sister-in-law
a
CAPITALIZATIONS
deposits
(4) A plan sufficiently flexible
and a financial counsellor suffi¬
tures of
will.
than
work
Trust-Life Insurance Coun¬
feeling of security.
protection for his wife and
children—as
the
attorney
this
pany.
one
no
pared for Members of the Invest¬
legal obstacles to any part o £
estate will be brought to his atten¬
Mr. Prospect also furnished
tion
and
the
necessary
action
the missing details from our orig¬
taken.
inal meeting and had noted his
his
is
nro-
it.
advised
concludes
ticle
there
for
will." 1 The ar¬
by stating that
better qualified
your
Banking—A Training Course Pre¬
no*
Mr., Prospect's
a
Bankers
and
ETC.
REVISED
trustee of
executor and
ciently interested
actually sold our plan to
velopments, such
his attorney and the latter found
pect and his- wife and it was de¬
cided to set up a trust only under
"The
Thing You Can Do to
intro¬
himself
preferences of the optional fea¬
the plans. Both of them
then discussed wills for Mr. Pros¬
entitled,
recently
Meanest
Mrs.
for
the Trust Company and
the
NEW OFFICERS,
acquainted
become
to
the
nancial
(9) Make a Will;- A copjytbf bur
proposed plan had been delivered
to the attorney at the time of ar¬
the Life Insurance Under¬
as
duced them to several of the key
of
NEW BRANCHES
eral
both her husband's and her own
estates.
CONSOLIDATIONS
put
wife, together
and all docu¬
his
and
were
concluded, we adjourned He. now had accomplished:
Prospect aiid'IJaWaited
(1) Comprehensive plan of fi¬
the arrival
been
Trustee: The
held with Mr.
Mr.
>;
much
year
Company of New York, from $1,-
for the en¬
dorsements on his present insur¬ Accomplishments of Mr. Prospect
Mr, Prosnect completed in about
ance policies to be included, under
the. trust and also to write the ad¬ one months time what he had
ditional insurance, * The insurance wanted to do for several years.
and
past
effort 'has
forth
underwriter arranged
phase
the
Family Relationships with the
insurance and a greater
The
indebtedness.
During
worthwhile
Development of Personal
(11)
viid
News About Banks
Recent Progress in "Planning"
and
personnel on the staff. They re¬
larger, he decided to take out an marked almost in unison upon
additional policy, payable to hif
leaving that they were doing so
estate, to take care of that poten¬ with an.added sense of satisfaction
tial
de¬
.1
good estate plan.
a
wife.
Prospect
that
were
both him
by
with his attorney,
mend
The
then
Prosoect
Mr.
to
the various policies
recom¬
insurance trust
famdiar.
not
was
and
He explained
too,;would
that
there
the entire situation.
why .he,
The at¬
torney then drafted the necessary
documents and v;e worked closely
with him
veloping
29
(1773)
CHRONICLE
FINANCIAL
that everyone has a need for
cordingly,
meeting then ended with
familiar with
and
beneficiaries
the
by
a tentative date, to be confirmed
by Mr. Prospect, for the execu¬
insurance
andMr.
with
held
was
underwriter
needed
&
'
• •
ff
'
Stockholders
of
*
the
'
' '•
•
Riverside
Trust Company at Hartford,
Conn.,
meeting on April 13
added John S. Garvan, Jr., VicePresident of P. Garvan, Inc., toin
the
annual
board
elected
the
is -learned
of
directors
and
from
the
re¬
This
Hartford
other members.
(Continued on page 37)
mrrn
nmi /rn
(Continued from first page)
members
Administration,
his
Defense
,
program
garded
as
more
Congress and
does.
less
launch
to
'i,,,.,
y
upon
any
the plan is commonly
certain
find
to
re¬
acceptance in
to be enacted into law unless the President
veto
power
and quite possibly
—
even
on
if he
out of rational
much in
so
is the
a
military in
topic of much
during World War II.
Upon occasion
days and times
discussion and regret
as
of
was,
—
course,
it
seriously interfered with the attainment of the ultimate
in offensive and defensive effectiveness. It
was
supposed to
have been eliminated, or
organized out of our military system
when all its branches were consolidated into
one defense
portfolio.
plished.
Evidently its elimination has not
But
even
more
serious questions
this current
controversy.
amount of money to be
once
possession
of those, such as
plane manufacturers,
normally beTwell informed on the subject-—
at least as.well informed
or
as
any one outside of the
r:
veloped
—
it is easy to conceive of good
such information is not
public property.
reasons
purchases. Yet, as you men of
industry know full well, such pur¬
chases
represent anpther large
why
segment of our economy which
has a direct stake in our mutual
How Much Real Advance?
The fact remains,
however, that opposition within the
inner circle to this vast
outlay for additional planes appears
to rest
upon knowledge that
.any aircraft, with certain ex
ceptions perhaps, built in large numbers in the
next year
or
two
and prosperity.
the railroads are
progress
truth,
In very
among
best customers.
your
or at
any rate in the next year — would be so
In addition to being good cus¬
little advanced from World
War II craft that
they would tomers, the railroads are good
be obsolete before
completion. This, of course, is the old providers. They furnish the cheap¬
old
controversy about volume production of the best avail est and most efficient mass trans¬
portation available anywhere in
able craft versus much smaller
—
attention to
production to give greater
design. Hitler is supposed to
improvements in
have decided
upon mass production in the middle thirties
and to have come
dangerously
winning the war thereby.
circumstances in which we find ourselves
today
are
vastly different. We have no enemies
poised just
beyond our borders. We have no
desire, and only
doubtful ability to rush into a
surprise, aggressive war
against anyone. About the
only condition under which
near
But
<
it would appear at all wise
for
be one in which some
doing
us
to imitate Hitler would
prospective enemy
so
—
with such modifications
was
concerns
our
at
we
not
merely building 12 times as many planes as are
building planes and whatever other devices as are
to
reach
us
we,
and
our
purpose
interests,
—
one
at
and to build it
-
but
least
large enough to serve that
even if in the
certainty that we
should have to
replace it almost
.
more
up-to-the-minute craft.
•
as soon as
One
it
was
are making an investment
essential part of our national
tually
an
Payment
of
freight
becomes
a
too, are a lucrative
of revenue for local, state
federal
built with
could, in such circum¬
governments.
The
which the railroads pay to
this Empire State annually are
equivalent to paying over a mil¬
lion dollars every day this month.
Of this tremendous bill, the New
Central
accrued
points'which we can and
then, of course, there is at least an
argument for building
as
rapidly as may be a large air force to defend ourselves
•
,
charges you are not merely mak¬
ing payment for the transporta¬
tion service rendered, but you ac¬
one-half.
necessary
would defend—
at
clear
York
—
and reach them
could in any event defend.
5
What Competition?
v
any¬
make ,this point crystal
that when you pay freight
taxes
or
If Russia has
embarked upon such a course of action
carry
me
source
immediate and direct interests
points which
let
and
mass-;
us
to
Railroads,
itself with
possibility that Russia has devised and is now
producing weapons with which she could reach
highway,
charges,
therefore,
double investment.
Russia, the question
which
one
—
willing
economy.
already
as
the
air—is
of
water,
thing, anywhere, at anytime. Only
the railroads can do that job. And
in
are
necessary to
make their
weapons effective against us thousands of
miles away.
Since nowhere in the world does there
exist any
military strength which could possibly con¬
stitute a threat to us outside of
really resolves itself into
ransportation
or
other agency
No
world.
the
alone
pays
over
Last year our company
$52,000,000 for total
taxes, or almost 8% of our entire
gross operating revenues. Yet our
net income was less than onethird
over
of
revenues.
amounted
and
cent of those
Payroll
taxes
alone
to
almost
$32,000,000
one
per
equivalent to about 77%
In fact, they
were substantially more than all
our other taxes, including income
taxes, because we did not have
any income subject to .taxation.
of
of Investors
In the railroad in
a
brother, in
is the railroad
He
vestor
owner.
railroad
The
has
it
Only
fixed charges.
as
den of
the railroads' heavy bur¬
high taxes is at least
has
par-
to
been
and
years
been
abso
Yet, the investors stake
financially sound railroads is
important as the railroads' need
for the investor.
Without the in
vestor, the ability of the railroads
provide employment, make nec
essary
improvements, and
buy
new equipment—in short, to con¬
tinue being one of your best cus¬
to
tomers—is
Investors
their;
seriously- threatened.
be q^sured that
must
money
quate return
will';-earn
and
efficient
if they
an
ade¬
to
"
are
kinds of in¬
the
individual,
many;
beside
there
the large insurance com¬
panies, banks, educational insti¬
tutions, and foundations, all hold¬
ing large investments in railroad
securities for the benefit of others.
Life insurance companies, for ex¬
ample, at the closer of 1946 held
almost
three
railroad
this
58
trains
billion
bonds
for
By,
power.
year
we
all
new
structures,
of
the
System.
expect
completely
cars.
too.
Syracuse
centers
nerve
Here
located
are
of
classification
railroad, where
yards
is
our
DeWitt
Yards, the largest and most
ern
mod¬
on
out
mar shall
we
freight for the east and west, the
north
and
south.
Like
all
our
other
facilities, these are con¬
stantly being studied in the in¬
terest
of
faster handling of traf¬
improved freight service.
For example, we have installed
radio telephone systems not
only
fic and
at
this
at
our
particular
yard, but also
major classification
other
yards, in order to speed
up oper¬
ations.
In
addition,
have completed
we
final tests looking toward the in¬
stallation of radio telephone serv¬
ice
for
trains
passengers
between
Chicago,
Louis.
feature
on
New
York
<
and
and
eventually to St.
necessary telephone
The
equipment has been
service
will
livery
of
be
ordered
started
new
upon
passenger
and
de¬
cars
probably in June.
Our
total
entire
dence of
of
of
approxi¬
This is evi¬
faith
in
the future
and
our
America
faith
involves a
program
expenditure
mately $272,000,000.
its
railroads;
that out of this program
progress will come
of
prosperity for
all.
Burden of Loss and Damage
Claims
*
vestors;
are
of
co»-
are
roads.
There
motive
end
have
tinue making investments in rail¬
dollars
of
the benefit
of
; *
vigorously
us
railroads'
attack one of the
heaviest financial bur¬
dens.
This burden stems from the
millions of dollars which railroads
pay out annually for preventable
•I
repeat,
preventable—loss and
claims. This, of- course,
is
not a
one-sided
problem in
either its causes or effects. Loss
damage
•
and
relationship of interest between
holders of life insurance policies
and the railroads emphasizes the
vital necessity for the railroads
to earn an adequate return on
the capital invested in their fa¬
per,
cilities
year
pay
a
their,
so
that
they
turn
car
fair and proper return to
investors.
Last
year
the
railroads' return
on
erty
investment
and
three-tenths
from
in
sufficient
their net prop¬
only
was
per
to
three
cent—far
attract
new
damage claims represent a
complete economic waste to ship*
transporter, and receiver of
freight, and annually costs all of
us
is
tremendous sums of money. It
that
expected
freight
claim
payments by the railroads of the
United
and
Canada
will again reach
excess
five
States
of
a
this
figure in
$100,000,000,
times
the
or almost
amount
paid in
1941.
Conditions
war
were
tributing
growing out of the
important factors con¬
to these progressively
railroad industry
and to enable them to insure the
increased loss and damage claims.
Many of these wartime conditions
continuing
were
capital
those
to
the
financial
investors
stability of
dependent upon
railroad prosperity.;
,
;
Yet, this program can be seri¬
ously jeopardized
unless -all of
people whose lives-rare protected
by policies of insurance. This close
were
our
return
investor
cases
in¬
luteJy nil.
in
calls
passenger
streamliners;
and 315 uniis of the most modern
some
equally devoid of adequate
coverage.
as
time,
to-date
and
dustry he has
some
present
Our program of course, is not
limited
to
new
equipment and;
motive power; it includes plant
his shoulders.
in
Providers
the
one
pitifully small in recent
Railroads—Customers and
forging
23,400 of the most modernfreight cars; 720 ©f the most up-
equipped with
taxpayer has often been
portrayed as the forlorn little
a barrel suspended from
or
are
for
fellow in
the
hand in
1944—long before the end of the
The
cases,
move
unfortunately, they do not
war—to
Prosperity
Role
that progress
can
by a.*y faiiraa in a similar period.
program,
started early in
coach
and price,
the railroads cannot
long continue making these huge
strictly inner circles of government. As to details—
assuming that details of anything new have been de-
feel
still
This
only 38% and to- | tially lightened during periods o
fare is right maximum traffic can they hope to
where it was in 1939.
In short, have an umbrella to protect them
the increase in average prices against
traditional
rainy
days
which railroads must pay for what Benjamin
Franklin
once
said
they buy is about twice as great "Only two things in this life are
certain—death and taxes."
as the increase in the prices which
But
the railroads may charge for their we might add, they don't come in
services. Unless a greater balance that order!
,«can
be established between cost
even
who would
I
de¬
we
stand
the New York Central
have increased
we are
or
cannot
survive.
the
basic
We
pjheprl wi h the largest new
equip¬
ment
program
ever
undertaken
The necessity for secrecy must not, however, be per¬
mitted to hide incompetence and neglect, and what is true
of aircraft may also be true of other implements of war.
day's
'
always. With undaunted faith that
they will move together, we of
KMX9
(Continued from page 12)
the point is in the
on
1
.ti__
-
are mov¬
we
improvements
prosperity
tiand;
kept wholly secret.
doubtless should be
Pattern for
are to be put into production at the earliest
What kind of planes would these be?
Bluntly,
there is no answer to this
question, so far as the rank
and file of the citizens are concerned.
So far as
specific information
«
*
in what direction
and
J Strong Railroads—
raised by all
One must conclude from the
are
planes
no
"
as
-
said,
world
stand;
once,
great thing in this
so much where we
not
to
moment.
aware,
The
jurist
is
accom¬
expended, beginning almost at
proposals, that fully developed and
under these
tested
been
-
--
differences of view inevitable in
state of flux
a
VOUAVk
eminent
teriorate.
already well developed by the end of 1945?
Is it true, as is asserted now and then, that other coun¬
tries, notably England, is far ahead of us in at least
some
aspects of plane design? It is understandable
enough that the authorities would hesitate to make
information of this sort available in detail. Some of it,
things among the so-called experts — a lack apparently
growing as much out of traditions, partisan prejudices, and
as
Improving Equipment
An
further
be to resume production
could do would
we
and
all having vital stakes
in vigorous and financially stable
railroads, I think, point unmis¬
takably to the fact tnat all of us
are closely woven into tnis pat*
tern for progress and prosperity.
investor,
and
of planes
such
science
best
UC31
the
II1C
government
receiver,
,
ahead toward the achievement of
what we had on V-J Day
has as yet advanced much if at all beyond the drawing
board stage. Is it true that should war come tomorrow,
Now, first of all, there is a distressing lack of agreement
among the authorities about what would constitute the best
type of defensS~torce we could build. This lack of coordi¬
nated, and in the end more or less concerted thinking about
ship¬
These interests—employe,
per,;
The railroads recognize that
progress cannot be static; it must
be
dynamic.
Either
we
move
nothing very much other than
;
npin
ing."
spokesmen are to be taken at full face value. As to
the general public, it is hopelessly confused and uncer¬
tain about the current situation. Alice-in-Wonderland
stories about new devices alternate with assertions that
tion
Capitol Hill.
Arguing Still
,
these
under
force
—
a greatly enlarged
backward about making
known, at least
any
inurbua^,
year after year to keep it fully up to date.
But is Russia
doing anything of the sort? So far as we are aware, the
American people have never been told there is any real
ground even for suspecting that she is.
There is, however, another serious aspect of this
situation. It is this. IIow does it happen — if happen it
does
that we are no further advanced (beyond the
latest World War II craft) than is apparently the case
or at least is the case if the arguments of Administra¬
Meanwhile the Navy would like
air arm, and is not
particularly
its wants and wishes
the like
CHRONICLE**
—
his
uses
it wise
this time,
or
r
Even though the
represented by the President,
and apparently
the Army
think
not
at
,*
Congress.
as
Secretary,
authorities does
such
of
at least
AT.
readily understand a belief that we were
the necessity of building and rebuilding a large air
_
of
T?T1M A TSlPT
Pi
stances,
As We See It
havior
/rmn/^iT A T
difficult to control, such as
shortages of manpower and ex¬
perienced help, heavier loading of-
♦
i
Volume J167
freight,
in
increase
and
prices,
out
THE
inadequate :< containeis
marked
ment
Number 4692
commodity
difficulties
maintenance.
merely
I
of
equip¬
point these
to >,emphasize
again
^ns v^ich were common to
3
£ shlPPers and the rail¬
roads.
..^The cessation of hostilities
arper^nepresent °f thera; for the
S°me+ and call others
still
are
most
educational
vigorous
policing job that all of
us
penditure
of
do.
Yet,
cuse.
as
to
the
of the situation from
the. standpoint not only of the
drain on their revenues and the
reflection
on
the
character of
seriousness
their
but likewise of the
service
material
tained
and
labor
losses
sus¬
by the shipper and
often
the inconvenience suffered by the
receiver.
Present-day
underline
the
shortages
importance
for
remedial measures.
Through
have
taxes
$211,000
.
vention
country, the National
Loss and Damage Pre¬
t
Committee
of
the
Asso¬
ciation of American Railroads
in¬
dividual railroad station commit¬
tees,
and
a
,
increased
been
-
over
year.
further
make
result
i
improvements if
be
given
that
could
would
taxes
of
increased
be
not
such
as
improvements.
the
question that I want to
leave with you today is just this.
How
can
railroad
live
to
private investment in
improvements be made
public invest¬
competing forms
transportation?
In your own
alongside
ment in
of
tax free
oi
and
of
let
without strong railroads is a na¬
tion half-crippled. • >
'Y>r•:
years
19,
a
public policy which will
bring railroad taxes and earnings
into greater
balance, the railroads
hope to maintain their
economic
financial
and
they cannot hope
independent,
an
stability;
continue as
self-sustaining
to
transportation servant of Syracuse
Revere
April
on
took
his
being
made
less
rising costs
matched with
are
adequate revenues, the ability of
the railroads to continue provid¬
the quantity and
transportation service
ing
quality
which
of
the
shipping and traveling public has
a right to expect may be
seriously
jeopardized. The great need to¬
day is for the modern Paul Reveres
the
over
country who will
and warn the public of the
rise up
dangers
grave
reduce
to
the exact time when this will hap¬
Some
key prices have been in¬
creased, unwisely and unneces¬
sarily. The outstanding case was,
of course, the increase in some
important steel prices.
I believe
railroads
their
ing
the
of the
rest
economy. They made
regrettable decision to in¬
crease,-prices even though they
the
financial
now
our
foreign
has
been
greater regard for the public
welfare, have fought a losing bat¬
a
tle to
keep their prices down.
addition
In
done
the
and
necessary
was
Enacted
I believe that the anti-inflation
the
bill recently en¬
Congress reducing
the
by
rectly with specific high prices.
All
.
™-
tive
results-
be
can
attained
by
Yorivnfwnfi e.ducation. the New
*u
Central has undertaken an
fSrtf (e,pr0gram for truck¬
freight station personnel training
and
ers,
With'the
trainmen.
co¬
operation of local State Boards of
Education,
freight
handlers
at
inflKcS ave Committees. These
formed themselves
mto Service
ommittees
meet
frequently to
discuss and devise better ways of
handling
and
protecting ship¬
ments on trucks, at stations, and
C?r-S' In addition, the
iSoEV.?-
lUotallatmn of impact registers for
checking switching operations has
shifting carsapd a visual educational instruc¬
tion car shortly will be operated
lessened the shock of
adjunct of the local
as an
training
of our is economic assistance. To be ef¬
democracy that I am glad to have fective, it must be coupled with
this opportunity to discuss with sufficient military strength to give
the free peoples of the world some
you one of the major problems
sense
of security while they re¬
confronting our country.
All
the
I am going to talk to
night about inflation.
All of
tion
we
out
to¬
These
foreign situa¬
on
our
minds
much
freight «i^ipper® is 10 reject
J 1
or
J ls Shippers ap¬
inadequately
to
are
the
our
to
foreign relations
in working
succeed
international
difficult
problems facing us.
not afford to neglect
But
our
we can¬
problems
marked.
The lesults
to
date
are
couraging-claim
reduced
most
receipts
and
en¬
have
handling and
unloading have greatly improved.
We
The
of
foreign pol¬
icy depends to a very large extent
upon the strength and stability of
our domestic economy. The plain
fact- is, however, that our econ¬
omy
is in serious danger as a
result of high prices and inflation.
success
our
Inflation may seem to you
old
to be
story. But there are some
who
or
deliberately
ignore
the
confident
are
that
all
of
gravity
in
the
have
right
taken
wrong
direction.
other
But they
in the
steps
gions.
Shippers Advisory Boards,
and
a
move
the
railroads.
phasize
It
appreciated
serves
again
once
to
year
every year.
bespeak
your
but
em¬
that "perfect
every
much
Syracuse
that
we
know what
measures
the
month
linues to creep up on the Amer¬
ican people.
The basic facts which make this
problem of such fundamental im¬
portance are plain. The world
Toward that end,
stands
continued cooper¬
now
at
one
of the decisive
;
passenger
station
and
By virtue of the strength with
grade
ects
for
crossing elimination proj-, which we have been blessed the
completed and opened United States is the chief support
service. These improvements to those people of the world who
were
represented
art
outstanding)
ex¬
are
seeking to rebuild their civil¬
ample of cooperative effort among ization in
city, county, state and railroad principles
company.
They involved
an
and
bedrock
hopes
out it
nor
which
upon
for
of free
the
rest
establishing
a
peace
the world.
in
men
With¬
provide neither aid,
nor example.
we can
leadership,
being undermined by
High prices are now
working real hardship upon most
ex¬
accordance
with
the
inflation.
American
inflation
families. If
will
consequences
every
new
of
one
''
This is
us.
situation,
worse.1
unchecked,
bring on economic
which
will
hurt
*
it
but
is
not
a
getting
government's
stability, because it is
likely to result in a deficit in the
next fiscal year.
It is also dan¬
from the standpoint of high
for the additional billions
of dollars of purchasing power
will not be accompanied by any
significant increase in production.
It means simply that more dol¬
lars will be bidding for the same
gerous
prices,
most
the
the
check during
recent months.'
The ERP and National Defense
At the
time that taxes
same
tide,
prices
and
have
ditions
are
to
national-defense
our
Both of these programs
of utmost importance, and we
By last fall it had become clear
we could not place our mai n
reliance on voluntary methods.
On Nov, 17 I presented to the
ten-point legislative
program for dealing with infla¬
tion.
That program has not been
Congress
a
enacted.
And
prices
have
con¬
tinued to rise.
The program which I presented
to the Congress was sound and
necessary
last November. It is still
sound, and it is
even
more neces¬
sary now.
The
total
demand
for
goods is
still outrunning production. Com¬
petition for scarce
pushing prices up.
is
at
record
levels,
items is still
Employment
but
the
real
purchasing power of most of our
people is still losing ground to
inflation.
.
-
in
sult
parts
on
of
re¬
our
very
far.
The
were
prices
paid
affected
The general
by
hardly
level of prices
I
proposed
are
They are designed to stop
prices,
so
that great
runaway
In
•
I
wish
"ri
by delay.
Addi¬
delay will only add to the
danger.
tional
Striving
effects of
these programs, it is extremely
important to realize that we now
have practically no slack in our
economy. We have substantially
employment.
Factories
gen¬
Crisis
people must not
misled by those who oppose a
be
reasonable anti-inflation program
and
a
reasonable defense program;,
been said that the
It has
present
Administration is trying to create
economic crisis
an
exact
The
We
an
tecting
avoid
war
a
are
prosperity while we
our
We are striving to
have it.
still
interna¬
or an
opposite
striving to
economic crisis by pro¬
crisis.
the truth.
avoid
the
to Avoid
The American
is
considering
,
to
difficult
more
tional
proper
crisis by being firm
before it is too late.
The welfare of
effectiveness
the
•
our own
of
our
,
people,
foreign
erally are operating at top capac¬ policy and the strength of our de¬
ity. We cannot increase our plant fenses all depend on ojir pros¬
capacity rapidly.
We have only perity.-Only if we preserve the
the normal growth in the labor soundness v of our economy,
force to count on for new
power.
Under these circumstances, new
for
demands
materials
and
duction necessarily have a
pro¬
direct
prices—unless the proper
anti-inflationary steps are taken.
It is apparent when all these
factors are considered, that the
effect
on
danger
has not di¬
inflation
of
minished in the last few months.
the
On the contrary, the need for
legislation I
more urgent.
It
seems
to
requested
me
question is clear.
we
take
some
until
action
good,
crisis
a
simply
or
a
is
even
that the basic
It is whether
in
time
to
do
whether we delay
is
upon
us.
It
is
adequate
and
through
prompt
measures
to control inflation, can
we
contribute
our
which
in
peace
full share to a
and
freedom
democracy will be secure.
I believe that the people of
th»:
States
understand that
we have a great opportunity and
a great responsibility to lead the
world through these changing and*
difficult times.
I believe that our
United;
-
people have the faith, the wisdom
and the unselfish devotion to the
take
whatever
actions are necessary to
meet that
good
common
to
responsibility.
We
can
succeed if we act cour¬
ageously and act in time.
.
matter of taking out in¬
before the house catches
Wolfe Co. to Admit
other
at all.
sible.
have
climb, Vages and prices will con¬
tinue to chase each other upward.
housewives
measures*
numbers of American families will
add to infla¬
fire.
agricultural products.
But
agricultural prices did not drop
for long, and they did not drop
The-
not
do
there was a break
in the market for wheat, corn and
In February
.
designed to hold prices down
while keeping production up and
increasing it as rapidly as pos¬
can
which
we
they will
controls.
surance
.
strains
if
tion
full
that
are
being reduced, we are undertak¬
ing a program of assistance to
foreign countries.
We are also
considering certain necessary ad¬
economy
continued to rise.
consistent
strike at the heart of
the problem of high prices.
emphasize that the
situation has already been made
peatedly urged business men to
exerciser voluntary
restraint in
setting prices. Many of them have
the
and
complete
a
pf the greatest benefit.
must have them. But
stem
offer
program to
helped to hold prices in
hardships and dangers of high
prices for a long time. I have re¬
courageously
done
what
they
could to hold prices down. But
they were not strong enough to
rea¬
are
measures
practical. They attack
inflation in a direct manner. They
important single factor
which has
program.
I have been calling attention to
these
sonable and
be. priced,oul; of, the, market
goods, and prices will be bid up
These
accordingly;^ FuhhermorbVby for the thihgs.they need.
eliminating the government's sur¬ measures are designed to insure
plus of receipts over expenditures that scarce goods are not wasted,
the tax-reduction bill will remove but are used where they will be
'
democracy
and
freedom. The heart of our support has remained well above the al¬
of
the
of
financial
economy are
Voluntary Restraint Ineffective
worse.
points in history. Emerging from
the
most terrible of\all wars,
The Tax Question
people all over the earth are fix¬
In closing, I want to leave with
ing anew the* pattern of civiliza¬
you one question. In 1936 the new tion.
ation.
mines
direction—steps that have
made the problem
government should take. I cannot
by sit
by silently while inflation con-'
shipping" can and should be the
goal to be attained not one month
every
American
us
i^Tp16
most
of
The strength and vitality of our
recognize this as a common prob¬
A Grave Menace
lem, calling for united action on
For my part, I believe that in¬
the part of all. Only in such a
flation is so grave 'a menace to
way can we hope to achieve the
this country and to the world that
improvement so desperately
needed.
y I do not propose to let it be for¬
gotten.
;
an"Hal. April campaign for I believe that the government
perfect shipping is now in prohas a clear-cut responsibility to
fuGSb
a camPaign sponsored deal with high prices. I believe
through tne efforts of the Re¬
A
duction
at home.
of the situation and the
need for forthright measures to
preciate this and are cooperating
meet it.
They have tinkered with
by improving containers to make
the
problem of inflation—they
them strong enough for
shipment. have even taken some feeble steps
nark
packed
must
be
requirements
large part from the pro¬
.
are having
men
in this country—men who
effect, but we feel
happen to be in influential posi¬
of the greatest services
one
in
and,
farms.
This is proper; for we factories
iTbus,. a
a
great
deal •j of strong American economy vis the
tions—who still fail to understand
in
met
desired
that
in
build.
devote
thought
if
you
have the
these days.
an
these programs
us
very
must
ng
program.
standpoint
(Continued from first page)
course
that
see
scarce
factor making for
new
is
to*
measures
goods are distributed fairly
and to their most important uses.It includes measures to deal di¬
Reduction
of Tax
government-revenues by $5 bil¬
lion.
This is dangerous from the
..
Program
Anti-Inflation
Wants
,
acted
the
in the enact¬
the
the work stoppage
Another
upon
a
legislation to aid
European recovery.
But our do¬
mestic economy has been danger¬
ously neglected. It should be ne¬
glected no longer.
creases,
inflation
have
been
policy. This interest
reflected
of
ment
includes
you
has
there
service,
greatly increased interest by our
citizens in national defense and in
record
making
already
.
Effect
ffftl0.n 01 shippers in these
Wnf
anc partlcuIarly the intel-
v
'
at all.
program I recommended
to the
in the coal
Congress last November should be
public policy is implemented, we
industry.
The serious effect of
enacted at once.
That program is
all can be sure that out of this
the loss of coal' production shows
balanced and well rounded. It in¬
pattern for progress- and pros¬ the narrow
margin of supply on
perity, will come stronger rail¬ which we are operating, and how cludes measures to reduce the ex¬
cessive amounts of money and
roads and an even Greater Syra¬
quickly shortages
of
materials
credit which are lifting prices. It
cuse.
can cripple our entire economy.
is
that
the
'Convinced that the most effec¬
cannot afford to let it happen
we
con¬
i
cb'rthoadnsd ins;ituting
The important point is that
pen.
In, the face of these
actions, other business men, with
were
profits.
to these price in¬
inflation has been en¬
couraged
by some unnecessary
in maintain¬
interruptions to production. The
integrity. If outstanding example, of course,
which
an? dama£e freight
deeply appreciate the
HaUiS °w
claims.
We
unemployment,
in
depression. It is of little signifi¬
cance
that no one can forecast
the outlook
made
end
Since I pddressed the Congress
through
New England warning the people
one month ago today on the need
of
approaching danger.^ Today, that the business men who made for prompt action on the European
the railroads of this country are
these increases did not consider Recovery Program and on uni¬
faced with immiment danger. Un¬
versal training and selective
their far-reaching effect on the
front
sup¬
Paul
1775,
self.
Syracusans
month,
dramatic and historic ride
all
all
this
ago
that have
for inflation considerably worse.
One hundred and seventy three
self-interest, I ask you most re¬
spectfully to think this over care¬
fully and then decied for your¬
Unless
tors
will
business distress and recession or
and
assure
me
it
other centers ready excessive level which pre¬
industry. And vailed in 1947.
you that a nation
And now there are new fac¬
nation's
our
commerce
31
(1775)'
CHRONICLE
FINANCIAL
greatly enlarged rail¬
forces, strenuous efforts
road field
are
these
Railroads would be encouraged
to
cannot
rvlSh-T
of
port
the cooperation of the
Shippers Advisory Boards
various
result
a
improvements, the railroad's
same
Now
alive
prosperity of Syra¬
and
progress
railroads
-fully
No
will deqy that such improve¬
ments have greatly enhanced the
assurance
are
Company
eight million dollars.
over
•The subject is of vital concern
all who are in
any way in¬
volved ln freight shipments. The
to
Railroad
one
and
can
the part of the New
on
Central
iforR
COMMERCIAL- &
If the cost of living
continues to
unhealthy boom will impose
further hardships upon those who
fall behind in the race. The great¬
er the inflation and the longer it
The
lasts, the greater the danger
that
George V. Mahedy
Co., 60 Beaver Street,
City, members of the
New York Stock Exchange, will
Wolfe
New
&
York
admit George V. Mahedy to
part¬
nership on May 1. In the past he
was with Byfield & Co.
32
(1776)
THE
COMMERCIAL
&
FINANCIAL
CHRONICLE
the lack of
The Paradox of the Airlines
(Continued from
it
page 7).,
increase continued,
of
rate
same
not easy to estimate where
was
the growth of business would stop.
In the last year-and-a-half we
plied and which, if granted, might
impose a serious competitive
threat.
either
where
have
been
cases
many
independent
research
and
have experienced this same kind
of
problem with air-freight,
which has grown at a faster rate
the
our
increased*
when
business
passenger
ever
But in 1944 and 1945,
the
airlines
had
to plan
fleets and organ¬
their public re¬
sponsibility for adequate trans¬
portation and their requirements
for the post-war
ization to meet
and
the
on
same
airlines
who
tended
where
war
potential
passenger
ranging
from approximately 6 billion pas¬
miles to 25 billion
senger
ger miles.
;
passen¬
passenger
miles
veloped
relatively conservative
a
in
1950
de¬
and
equipment program, we know that
certain carriers placed orders for
equipment which, if actually re¬
ceived
and
would
have
25
billion
properly
utilized,
required at least a
passenger-mile
the
last
year,
al¬
were
together too often accompanied
by grandiose plans for expansion
of organization and personnel and
by the development of palatial
city ticket offices and other fa¬
cilities.
Plans
for
bigness have a way
breeding other plans for big¬
of
One airline ordering an
cessive amount of
equipment
ness.
courages
its
likewise.
For
business is
with
son
it
the
most.
-
A
connected
operation.
There
ner
too, much)
by
one
a
market
gets
in
developing
more
economic
with
of
of
airline operations,
others,
un¬
like
of
cor¬
the
we
encourages or
competitor
to
palatial office to at¬
by the airlines in not
undertaking adequate financing
many
cost
late
as
was
when
a
it
organization
and
control
to
hold
costs in line with actual
expan¬
sion plans and the
immediate out¬
look for traffic. I know
of cases
where the increase in
acquiring Con¬
stellation equipment at $550,000
per airplane.
But, these airplanes
personnel
was
so
rapid that actual employ¬
ment exceeded
future budgets be¬
fore it was found out how
many
persons were on
There
have
the payroll.
been
other
much
In
a
this
increased 500%.
so
1945 and
«■
immediately
war.
after
:
.
..The influx
of
the addition of
toat
,v
passengers
plane-miles
fected the airlines
public
the
as
and
af¬
so
to cause
just
criticism,, with tile result
thousands
added
of
persons
quality
supervision
largely eliminated since.
have
Competitive Fervor
The
competitive
airline
the
business
war
the
the
end
of
immediately after the
to
flooding *. the Civil
Aeronautics
Board
applications.
growth
of
It
an
with
nurtured
independent
route
the
and
confidential attitude
by each air¬
line
on
research and the
develop¬
facilities.
Many route
applications,
we
realize,
have
ment
of
been
made
with
companies filing
on
they really did
which
another
a
for routes
want, but for
company had ap¬
can
door of airline
equipment in
period has suffered
new
considerably.
Irresponsible Laber Leaders
during
which
time
passenger revenue
mile
dropped by
lc or
per
Most
of
Altogether
passenger
approximately
drop
of
occurred
in
airlines
in
the
possible
cost
to
ity
which
lowering the fares and
the
more
excess
profits
few
airlines
level
would
of
serves
building
financial
up
for the future and of
.
was
factors
of
the' airline
due, fp part, toicerbeyond
i:
':
:h:'3
average
the
in
rates
been
rate
carried
have
loss of
in
applied
1947,
earned
TWA
of
profit
a
a
$8,000,000.
Government
icy
is
not
in
we
sup¬
almost $12,000,000 of
inOation
have
would
of
prices,
our
been
$4,000,000
profit, despite the fact that pas¬
senger rates were somewhat lower
in
a
1939, and mail
pay w^s but a
of the 1939 rates per ton
fraction
Policy
Confused
confused,
pol¬
unrealistic,
with
accordance
and
the
dic¬
tates of the Civil Aeronautics Act
of 1938.
why
do-
costs
realize
persons^
air-mail- incurs
far
those which are
for freight.
Air
and
mail
is
handled
priority load.
A
carrier
incurred
as
a
top
;
is
obliged
to accept
air mail, or risk fines, even if pas¬
sengers are removed thereby.
.
In order to protect themselves
and
to
give the Post Office the
service
it
needs,
airlines
most
allocate space and weight for air
mail which cannot be sold in ad-r
to passengers.
vance
This priority
treatment is costly and justifies a
mile.
,
servicerateformail well above
A part of this inflation in prices
can be laid
to the disruptions ol
the rate for passengers.
But
war*
Inconsistency
large part of it must
a
be laid at the door of government
policy
An interesting inconsistency in
which encouraged undue
increases during and espe¬
cially immediately after the war
and which also encouraged wasted
funds through many unnecessary
government policy arises in inter¬
national air mail.
government expenditures.
United States,
If
handles east-bound mail from the
i't receives 75 cents*
ton mile to the foreign gate-"
If
foreign carrier handles the
a
kind of east-bound
same
handle
ticipated because, by the time we
have them in service, price in¬
mail,
their ad¬
vantages.
ployees
on
in
our
numbers
payrolls
of
are
em¬
offset
most
of
the
east-bound
have such startling para¬
doxes a$> the United States Gov¬
we
ernment
this
Reduction
mail, it
is paid $2.86 per ton mile.
While
American
flag-carriers
planes do not yield the profits an¬
have wiped out
flag-carrier
the North Atlantic
over
ways.
This
inflation
of
prices has
largely nullified our efforts to
improve efficiency.
New and
more
efficient air¬
creases
American
an
operating
per
Added Efficleircy Nullified
paying
a
attractive
thousands
of
during,
foreign airline
rate
for
flying
time
a,
ton
miles
of
when our
Overseas Airline
mail
own
by increased wages.
American
was
Improved operating and main¬ shut down -by a needless strike
tenance techniques
which yield called
by
an
American labor,
savings , measured in millions' - of leader.
dollars are offset by increases in
the cost of gasoline and oil.
Feeder-Line Mail Rates
It has also seemed a little puz¬
Competition and Higher Costs
This
of
merry-go-round
zling to
me why the United States
price Government
should place an in¬
increases which absorbs efficiency
increases is intensified by the fact
that
the
airlines
pass much of the cost
the public
in higher
or
unable
to
rise
to
are
on
passenger
higher express and freight
Passenger and cargo business is
highly competitive, not only be¬
tween airlines, but between air¬
lines and surface carriers. '
individual airline
is master
of its sales
price.
Even though the airlines
experienced
into
feeder-line
operator
local service and pay mail
amounting to $20 to $100 per
ton mile, when a major airline
like TWA is allowed only 45 cents
per ton
mile for carrying mail
over
the feeder-type portions of
its route.
Yet the major airline
a
rates
is generally in a position to give"
superior mail service.
CAB Air Mail
Policy Disregards
Act of 1938
were
high
the
a
service
Mail Rate Reductions
great
quarter
as
increases is sharpened by the gov¬
There
other
of
are,
factors
course,
beyond
our
many
exec¬
utive control.
We
towards
mail
'
flation
very
was
time post-war in¬
hitting the airlines, in
the
service
mail
rate
the
and
While mail pay has become a decreasingly small percentage of our
gross revenue, amounting to 7%
domestically in 1947, the fact "that
costs
confusions
of
off-
Out costs
the, j control shortages'of
are
(still affected by
various
kinds.'
For
to
45
carriers
cents
per
from
ton
continue
well
,
the
development of air transportation
to
an
extent required for
national
national
the postal service, and
defense.
-r^ir:".V- ...r
The record speaks for itself.'
:
-
Not
low that
the
trunk-line
and
60
still hampered by
operating delays
and
schedule operations:
maintain
of
1945, the Civil Aeronautics Board
reduced
cents
to
only has the service rate
for the carriage of mail been be¬
weather,
are
as
commerce,
the
At
attitude
under honest, economical,
and efficient management as
The dilemma presented by price
ernment
Other Factors
:
.
talp
mail
mail
air
Few
$8,000,000 loss experienced in 1947
rates.
sav¬
Factors Beyond Control
paradox
harm
much for twice the time.
should justify.
This
.loyal
re¬
the future trend of airline costs
business
e n,
possible- their
to
and
earnings
been
ing passenger fare decreases until
passenger loads should drop off
or
f t
majority of employees whose
holding
have
makes
salaries
tax
than offset by the desirabil¬
of
o
re¬
by $1,150,000; and had the
air
above
increases
without
No
too
its
been
-
this
Profits
fare
duced
have
would
The handling of air-mail rates
not shackled with the Anti-Trust
costly make-work operating Laws and even though customers has, to a very great extent, dis¬
agreements by irresponsible or had no alternative but public air regarded to clear dictates of Con-,
uninformed union leaders.
intent, in
the
Civil
transportation, the
competitive¬ gressional
It is a strange
commentary on ness of this industry would still Aeronautics Act of 1938.
the American scene when a group
In this Act, Congress clearly
mean
that price increases could
of
employees,
such
as
airline not;be
passed.on through higher stated that the rates set for air
pilots, earning upwards of $12,000 rates. How different from the mail must reflect the need of each
per year and working
80 hours sheet steel business or the busi¬ air carrier for compensation1 for
per
month, use their strategic ness of producing automobiles and the transportation of mail, suffi¬
position to cripple the business underwear!
cient to insure the performance of
1945,
average
soaring and passengers
clamoring for airline seats.
Clearly, with passenger load fac¬
tors at 90%, there was no valid
the
is
of employees are led into
wasteful and harmful strikes and
were
a
paradox,
groups
rate
were
for
airline
labor leadership.
18%.
1945.
1945
the
the
loss
mail,
air
domestic
of
1947
mestic
rates.
con¬
most businesses in this country,
management, is the
domestic passenger
reductions made in 1943 and
to
has
and one which has interfered with
and
needless
be laid to the
rying
some
found
we
1947 expenses. In other words,
fares
tributed
unwise
defensive basis,
not
which
efror
reason
in
and
led
war,
fervor
near
costly
can
this country which in¬
the; postwar
costly
delays for which the
financing markets of
early 1946 did not wait.
Another
were
and
in
augurated this
Another factor which
to
the payrolls to handle a
problem, which revised methods
airline
result, the
Unwise Passenger-RateReductions
volved.
with
a
the DC-6's
properly estimate the cost of in¬
augurating these
airplanes,
in¬
cluding the losses suffered by
their grounding, although every
programs required were
vast that they called for
solve
handling
As
time before the
some
airlines operating
as
required
financing
favorable
This occurred, I feel
sure,
reservations
and
ground-
that
.
It will be
turned out to be the case.
few years, the gross assets of
country's scehduled airlines
when
management attempted to
the vexing problem of an
expanding
business
by
simply
qdding personnel rather than
by
solving the basic problem .in¬
be
ex¬
approximately $15,000,000.
in addition to the capital cost of
purchasing the airplanes and
equipping the airline for their
operation.
»*
•
^
!
*
de¬
were
in
penses,
has
caution and
times
would
money
as
in
by cost reductions, and
non-recurring additional
of
simply could not believe
Therefore,
cost us, in loss of revenue not off-.
Another probable reason for
this lack of financing is that we
cases
contributed
set
in too
many
Constellation
con¬
fore¬
cost $800,000 when
they
livered early in 1946. '
accompanied
by a lack of
the
1944,
as
making
estimate
our
in
one year alone,
the introduction of new airplanes
•i
felt it
the
facili¬
new
has been warranted
by the growth
the
airlmes, was
of
that
fact
is
costs for equip¬
parts
and
to
any
spare
grounding
,
example,
tion.
This expansion, much of which
to
or
figure
in that* year.
.
servative
Control V
the
this
and
underestimated future in¬
ties.
cast
this.
car¬
our
wage
year
in the costs of
TWA
transporta¬
far beyond that which
approxi¬
mately $7,000,000 to our net loss
we
creases
For
inauguration of service,
introducing these air¬
was
addition
perhaps is
reason
gone
had any reason to expect.
ment
are
for
have
cost of
$8,000,000
expansion
There
reasons
principal
that
the
planning
194*3 alone, we
have estimated conservatively I
believe, that the cost of introduc¬
ing these and our international
DC-4 airplanes
was
more
than
Financing
planned.
TWA.
for salaries and wages
the prices of materials and
even
During the
m ad e
The
careful
into
recognize that mistakes have
clearly
aircraft,
planes
those who offer the most tend to
the ^tremendous
on
pay
oper¬
though years
had gone into the airplane's de¬
sign and testing, and long months
get the most.
for
The
be
In the case of TWA's Constella¬
individual airline, act¬
ing as an individual, is virtually
compelled
to
keep up because
I
Constellation
a
tion
an
Inadequate
new
the DC-3
over
lVz
smooth, safe and profitable
ation involves Many costs.
unnecessary du¬
service.
In
this
sphere
the effects of
prices
experience,
startling results.
complex as the DC-4, a
which involves placing
complex
machine
into
as
such
occasional
been
the
program
scheduling of aircraft,
the
war-time service rate for the
plies, including gasoline and oil,
times
plication
increased
1947
period of
as
costs, is
even
received
TWA
Our governmental air-mail
plying the cost per unit to
is
complex
as
:
paid during the war de¬
Had
in
account for
and
expansion.
some
it
25%
the
below
rate
spite higher prices: and
strange indeed.:.
v;v
years.
By taking the principal items of
1939 operating expenses and ap¬
in
air¬
cannot
long
a
particularly
prices,
2% times
economic
Joneses" has resulted in
service
over
in
single $3,500,000, instead of incurring
realized that
the DC-4 is estimated to be nearly
competitive urge to keep
with, or get ahead of, "the
up
into
When
years.
Uneconomic Scheduling
a
of Cost
aircraft
absorbed
The
tract customers and to
perpetuate
the reputation of air
Lack
re¬
research, the
easily have
sound
a
basis for future
the
office, devel¬
airline,
no
with
efforts
amount
would
greatest
We have analyzed
these
money,
the
of
the last few
air¬
planes themselves.
■
The cash outlay for placing
been shared by airlines and could
have assisted airline management
do
though
busy downtown
compels
build
to
programs
ticket
been; virtually
of
sums
reduction
of the airlines arises from the in¬
of increasing complexity
the airlines of America
the cost of
TtyA's 1947
o*
for the paradoxial situation
cause
cost
to
the
Perhaps
flation
new
have
operators
been asked to carry mail at a
1939
Expenses.
.
built\ around the
of the airplane, is
of
Effect
Inflation;
is
tremendous
|
of
the
it
addition
results of which could
.
on one
even
(even
;
,
has
combination
spect
develop¬
with airline
know
we
trunk-line
the
to both domestic and international
I sometimes
airline
business,
introduction
planes
has
technical
other
that
The
in¬
shortages
parts
costs and keep us from
our
efficiencies which
be attained.
the
can
Introducing New Airplanes
instru¬
these
Day,
crease
Complexity and Cost of
manu¬
on
,,
■
undertaking
research
ments
en¬
transportation
most
cases
ex¬
to
in which the per¬
•
palatial
oped
the
one
be
may
competitors
and
been
or
complexities
the most complicated business of
all.
.r -
heating and
ventilating
systems, loading devices and
indus¬
equipment plans, many
,:bl;which have been sharply cur¬
been
adequate supply of
accounting.
because
ments,
These
in
have
expensive
try.
tailed
airlines
both
many
'.
-
While, in our own case, we
planned for a domestic industry
reaching approximately 10 billion
think
manufac¬
and there have
turers
most
for
even
ef¬
these
aircraft
the
to
facturers
post¬
a
had
sums
saved
pooled.
Some of this
duplication of effort has even ex¬
for economic size, we were faced
estimates of
have
been
with
expert
by competitive
could
considerable
forts
subject and for
same
purpose
management
complex
machine.
And
this complex machine en¬
genders complex, procedures for
its
maintenance,
for
passenger
handling, for its operation, and
the development of facilities have
been undertaken at the same time
than
man's
an
particular type of bushing, for
example, we have often been re¬
quired to cannibalize a spare en¬
gine or an airplane to keep our
overhaul shops producing a rate
necessary for our operations.
Nearly three years after V-J
a
the government.
In general, they are due to the
fact that the airplane is perhaps
Vi,". • ■.■'•v'-.ff-v-1.'"
There
of. airline
Thursday, April 22,, 1948
mile.
required by the costs of
rendering
the
service
required
and, in th£ international field, be¬
low that paid to the competitors
of American
rate has
flag-carriers, but the,
been
far
below
that re-
Volume
167
Number 4692
<
THE
used
lines
quired by the dictates of Congress
itself/': }\
\
Even though
In
pending mail rate
should allow
cases
the mail
increase in
an
rate, much of the dam¬
will have been done.
/
The needs of the airlines for
age
;
>:
a
sound credit standing for their de¬
velopment and
than
City,
scheduled
the
for
the
year
airlines.
"Even
at
crowded
The need for these facilities has
increase in
the domestic
too
often
these
Program
by
Congress in 1946, rather little has
decided—within
days,
pointing
at
the
past
disap¬
different
most
a
figure.
How
delay from the expedi¬
this
was
but
accomplished.
Considerable
service is
ings
Other Inconsistencies and
/
There
are
other inconsis¬
many
tioned.
I
where
—that
airline
no
lowed
Board
back
prevails
should
be
al¬
before the date
officially filing for an increase
of
pay
—then the losses due to such gov¬
ernment actions as the grounding
of the
Constellations will not be
reflected in mail pay. In this con-*
hection,
reading of the Civil
no
Aeronautics
ments
Act
lead
can
its
or
amend¬
the conclusion
to
that Congress intended the pay¬
ment of back air mail compensa¬
tion to depend upon the day when
the applicant filed for the rate.
As
the
development
mestic
taking a
have
known
the
to
services
There
where
are
the
mind
short
c o n
For
an
of
that
i
n
times
on
as
its
in
a
safety
cabin
lin¬
in with the govern¬
airline business, the
and chaos of govern¬
the
as
confusion
ment
policy; from their effects
price inflation to their ef¬
fects upon safety modification of
aircraft, are costly in terms of
long-range planning as well as
upon
from the standpoint of daily oper¬
expenses.
Airline Outlook Not Hopeless
I
should
be pessimistic
indeed
if I left with you the impression
that the outlook for the airlines is
accom¬
hopeless. It would be a sad out¬
plished through the careful plan¬ look if we, in the airline business,
ning which the outlining of a felt we had to look forward to
national route pattern demands.
increasing our business and ex¬
k Each case tends to be dealt with
tending air travel to the air pub¬
as it arises.
lic only at increasing losses. Such
:
,
By not having a definite long- an outlook would, of course, spell
range plan and
by yielding to the end to private enterprise in
arguments
which
such
a
plan the airline industry.
I feel that there is much which
would show to be unsound, the
Civil Aeronautics' Board has de* can be done by the airlines them¬
<
subsidy.
' "
The spurious requests of every
city for one-carrier trunk line
service to every other city has
altogether too often been met by
adding a carrier to an already
over-served
route, rather than by
looking for such, alternatives
schedule
connections
and
as
equip¬
ment interchange.
To be sure, some of this blame
must fall on the airlines for their
applications into territories where
they cannot contribute additional
and economic service.
But much
of it has grown out of the Board's
insistence upon competition, often
beyond
the
that
public;
which
the
required to protect
the
slowness with
route
developed
establishing
in
has
Board
acted
cases;
its
on
selves, their suppliers, their em¬
ployees and by State and Federal
Governments.
matter
a
of
facty'the rude
awakening from the
of wartime years
easy
profits
and the recogni¬
tion of the economic problems in¬
in
volved
the
the capital costs of expansion and
costs of operating our busi¬
we
in
of
/;;///•///y4y"/v^ v//// //•/.,-,v:
/-,/•
More Facilities Needed
Another f 1 eld of government
policy of considerable importance
to the airlines is the program for
the construction and modification
of airports and airways facilities.
Most of these are clearly re¬
quired in the interests of national
if
and
are
many
obtain
necessary
dependable
and efficient airline operating
we
are
-'W
system,
Most
to
of
a
f.
these
tary pilots.;
of
our
airlines
As
a
struc¬
This job on the part of in ana de¬
r e qui res cost
reduction
and
mili¬
matter of fact
largest airports are
recent
Authority
way
„
Aeronautics
pro¬
oper¬
to
undertake
considerable
year
between
attempt was made
no
the
airlines
to agree on
how the details of this work were
to be
accomplished and engineer¬
ing and maintenance departments
of all the major carriers incurred
duplicate expenses in approach¬
ing this problem on an independ¬
on
a
cost-conpart of em¬
their economic
ployees who see
security bound up with the effi¬
cient operation
of their airline
company.
Not only does
require
the
on
this
Weight 3350i,
1
,,
i
„
kind
of
effort
Another
type
of
cooperation
may reduce costs is the
pooling of maintenance and over¬
haul of such iterns as engines,
Which
instruments and accessories.
record of
has
not
The
pooled engine overhaul
been impressive, but
yet
there has not been to my knowl¬
edge
single
a-
overhaul
was
case
pooled
this
where
on
large
a
enough scale to make real econ¬
omies possible.
A further field in which airline
many
are
airlines
the
to
can
reduce costs through
kind of cooperation designed
There has
benefit the public.
been
much
talk
of
consolidating
Board
even
should
so,
a
can
prepare
now.
help
us
the present time by tak¬
active interest in the
more
production
of
For, until
we
replacement parts.
can have a smooth
flow of parts needed for the
haul
of
our
aircraft and
over¬
their
plants and accessories, we
reduce our mainten¬
power
hardly
costs
ance
to the minimum.
■
,
This
the
airline
enter-
requires labor statesman¬
a high order, as well as
ship of
an
of
success
airline management which will
a
through
rates imposed
assistance,
knowledge of the fun-»
does
nor
in
the
it
Lines this spring.
This
ness.
Act
does
not,
in
my
judgment, hinder the healthy de¬
velopment of air-freight, and its
interpretation
riers
would
not
few
car¬
system where
a
skim
can
a
the
off
cream
of
the
air-freight business by lim¬
iting their services to hauls be¬
tween
large
traffic
generating
points.
v
./,,
What
the
is
Civil
■
.
clearly
needed
Aeronautics
recognition
the
on
under
Act
the
is
part
the
Board responsible for its adminis¬
tration that (1) excessive
of
compe¬
tition
is
not necessary
in
busi¬
a
closely regulated as the
industry;
(2)
a
master
so
airline
plan for route development must
be drawn if the chaos and
expense
of unduly duplicated services are
to be avoided;
(3) the national
defense importance of the airlines
the expenses of their devel¬
and
opmental
period require
high enough to cover
rate
costs
and
mail
a
proper
occasionally
allowance
to
a
special
exceptional
cover
costs
forced
on
the
airlines
no fault
of their own;
decisions in the public inter¬
through
(4)
est
do
not require
should
feeder line route
be
that each city
be given a
immediately
supported
whether
not
or
it
can
that each
or
a
Need for Government Consistency
Perhaps the greatest contribu¬
tion to the development of a sound
airline industry lies in govern¬
international
policy,
should
be
given special financial support by
the government.
The Paradox Not Inevitable for
The Future
ment
policy.
This policy must be/ consistent
within itself arid oVer a period of
hearings and disrupting delays.
Over the long period of time,
of
course,
the government can
contribute
most
by making sure
that its budgetary and monetary
policies do not unduly disrupt the
price level.
A
has
our
spiralling inflation of prices
already robbed the fruits of
efforts to increase efficiency.
Further material rises in prices
iikely to destroy the private
are
The
airline
traffic,
losses
high
is
paradox
high
high
not; inevitable, for the
■„
future.V,,,
By
of
and
efficiency
/
recognizing
involved
>#.
-
the problems
attacking them
and
by
whatever their causes
be, I feel sure that the air¬
head-on,
may
line business
can develop into the
position expected by its optimistic
forecasters
few years ago.
a
But the solution of these prob¬
lems is urgent.
<•
'<■
,• '
The airlines
in
terms
relatively small
capital invest¬
are
total
The
ment.
of
total
capital
domestic
and
American
of
all
interna¬
enterprise existing in
On the part of
the aircraft,
en¬
gine. and parts manufacturers, the
paradox
tional carriers is smaller than the
business.
Improved Designing Essential
road and equipment account of a
single large American railroad.':
the airline
business,
being
highly competitive and selling a
service so sensitive to price rises,
cannot resort to the mere ex¬
pedient of increasing prices each
This
of the airlines can be
time the price of labor or
assisted materially by a number
terials
rise.
As
I
pointed
of
important means.
Too often
transport airplanes have been de¬
signed as a fuselage with wings
and power plants and later with
a
view to their adaptability for
of
passengers
of the future will prob¬
ably be built without such draw¬
backs.
However, as of today, with
so-called post-war airplanes,
preliminary approach to the
initial
design and development
has
upon
been
one
of
concentrating
structure and aerodynamics.
airplane
so
systems
that
are
cation
costs.. maintenance
and mechanical
delays.
>
we
cannot
and'material
pass
on
out
labor
cost increases as can
most
to
glad to say that this fault
being corrected and that air¬
planes
earlier,
ma¬
firms in mining, manufac¬
turing, and retailing.
(
Government policy with respect
and
I am
is
t
i
city asking for one-carrier serv¬
no
ice should be/given it if by so
strike, that- no
doing a
sound
airline
system
company
can
long> pay wages
would not result; and (5) certain
beyond its ability, arid that low
cost of production of airline serv¬ routes, particularly in the inter¬
national
field,
having
been
ice means high wages and steady
granted primarily as a matter of
employment.
wins from
airline
carrying
*
proper
development of the airline busi¬
ness
Airline
labor
must
recognize
that its monetary rewards and
economic
security depend upon
the
the
proper
kind of cooperation
manufacturer
to
pretation by the Board, does not
require airlines to carry air-mail
permit
can
strange
Act, at
no point, requires
develop an exces¬
sively competitive route pattern.
This Act, contrary to its
inter¬
the
rea¬
help in solving time and must deal realistically
paradox
is with problems without requiring
removing the pressure long,
drawnout
and
expensive
management
the
accessories and
forced to fit into a
predetermined structure, causing
thereby excessively high modifi¬
and
there
ing
one
its employees, but
places where the
company
This
Civil
damental economic axiom that
Pooling
This has resulted in designing the
each
ments,
bility and
v
individual
of
part
this cost-reduc¬
clear-cut
policies
of
the
Aeronautics Act of 1938/
-
the
tion
Board in its interpretation of the
manage¬
direct aircraft maintenance; yet operate on a premise that an oc¬
there has been little concentrated casional strike is a good thing to
a nd
effort by the airline industry to keep management • in line
act as a group in handling neces¬ labor union dues fully paid.
I
should rather hope/that this labor
sary improvements and modifica¬
tion to such engines . as the leadership will develop responsi¬
our
Cost Reduction via Cooperation
long time to
a
results, but airline
-Mofepyer, it is known effectively give the facts to its
I should hope that
that
power-plant costs
repre¬ employees,
labor
sented between 50% to 70% of all this
leadership will not
and
the
indi¬
ent basis.
cargo.
business
It may take
lize
can
by May 1 of this
good case at point.
cient organization and methods of
sciouness
Airline
with.
away
,
fire
ators
a
Civil
mandatory
modification
the
doing
do
p
to go
which required airline
gram
is
long
economic research.
through the development of effi¬
■
beyond the reach of any sin¬
gle airline, not only because of
their expense, but because they
are
public facilities necessarily
open to the use of private flyers,
some
economic
ment
improvements
are
non-scheduled
nation's
our
ture.
•
defense
so.
I
opera¬
needed is the removal
the chaos and the inconsisten¬
of
the - Civil
Aeronautics
cies
at
most at
a
sharing the results of technical
dnd
have
for a national air route pattern.
the
Sharing Research Results
We still have
.
nesses.
I l'eel certain that when
result.
of
What is
of
refuse
The
the
done
would
for this
.
carriers; and, above
all, the lack of a consistent plan
for
certificated
•'
:
standardization,
flexibility
and
policy is expressed in the Acts of
Congress, needs very little over-
arrangements,,
accessories,
sys¬
tems, loading devices, and other
technical
matters, are a costly
luxury which I believe we could
small
and
postwar
period for
duplicating route awards and
already led to many actions facilities for extending through
designed to put the airlines on a carrier
service.
sound footing.
I doubt whether Ball Bearing,
The main job of airline man¬
Ohio, or Frozen Dog, Wyoming,
agement today is to improve the would be so insistent on one-car¬
quality and dependability of serv¬ rier pervice to
every major point
ice, and to reduce costs. Arid by in
the
country if the airlines
management I include every su¬
could
better
coordinate
their
pervisor in our companies.
We
schedules or interchange equip¬
must improve the quality and de¬
ment as TWA is planning to do
pendability of airline service and in
cooperation with Delta Air
at the same time we must reduce
public opinion will force
such
changes
in
governmental
policy that we cannot fail in be¬
coming a sound and integral part
rules
airport
have
delay
and
enforcing
control of non-
As
a.
tion
-
offered.
de¬
33
haul.
viduality, with respect to cockpit
where
essen¬
non-competitive
services
Virtually
as
saving
especially
The
cases
g
changed
time
of
course
confused and has not been
veloped a national route pattern
replete with duplicating services
and routes requiring considerable
in
medium
cities
of
toward
"
'
re¬
industry necessarily
closely tied
ment
u s
three
or
space
f
has
CAA
two
the
specifications, such
ings, for example.
Air Policy
recognized, the
the present do¬
pattern has been
savings small.
possibility for sav¬
exist, - however,
in
at
of
concept
accompanied by greater
were
feel that great dividends in cost-
and
are
Constellations,
sign
of
for
small
and
cases
of
action, with
course of
different from
was
ating
of
route
aerody¬
look
offices
regional government
administrator
insisted
upon v us
President's
has
and
to
one
Route Pattern Haphazard
Commission
structure
efforts
ticket
action of another administrator.
if the view of the
T fear
highly competitive and
does
men¬
policy which could be
ago.
Aeronautics
that
see¬
at¬
downtown
cities,
tially
spect
Moreover,
industry
have
large
«■
Confusions
tious handling given to the mail
rate reductions nearly three years
Civil
so
we
the possibilities for
been
approved
was
ment
few
be
can
ate with the manufacturer in
savings in the busy airport
terminals of large cities where the
port
had
nally
airline
this costly
designed if
will cooper¬
avoid
to
It
kind
and
time
some
mail
control, was fi¬
ing
of
for
tencies and confusions of govern¬
no
the
for savings.
recognized
March, 1947. More than a
year later, our case, based upon
an
emergency
situation growing
out of conditions over which we
or
know, undertaking two major
experiments on consolidating air¬
you
past,
rate in
little
designed
mistake.
port operations at Cincinnati and
at Willow Run.
V ■
the
stand materially in the way
attaining dependable operation.
Yet, even though the Federal Air¬
an
The airplane of the future must
be
airlines are, as
that, in
tempted
unquestionably been harmed by
the government . attitude on the
cases.
The
touched field
been
The delays in handling mail rate
cases have been extremely costly.
4 TWA
for example, applied for
action.
some
(1777)
Chicago Municipal
namic design is made compatible
the scheduled airlines
The consolidation of many air¬ with
simple and dependable ac¬
made only 64% of the total land¬
port services and downtown ticket cessory and
system design.
ings in 1947.
?' ;V offices is still a relatively un¬
If this
expansion in this
;;
CHRONICLE
Airport,
critical time is imperative and has
mail rate
FINANCIAL
the scheduled air¬ ticket offices and ramp and air¬
by others.',''V port facilities.
There has -been
Kansas
1947, only 27% of the total land¬
ings and take-offs were made by
the
&
by
.
Irreparable Damage
—
less
COMMERCIAL
costs,
labor
still leaves much to be
desired.
Law which
removes
some
of
the inequities of 14 years of prolabor legislation does not apply to
the airlines.
still
The airlines, instead,
operate
Labor
Act
under
which
a
Railroad
does- not
reserves
sorb
consider¬
no
from which
development
nance
to
ab¬
costs and fi¬
In their entire
expansion.
20-year history, the airlines of the
United
good
years
did
of
States have had only one
period
of
earnings—the
1941-1945—and high taxes
not
permit the
reserves
accumulation
needed
for
postwar
expansion.
/1
The recently enacted Taft-Hart¬
ley
The airlines have
able
not
do
think
I
have
over¬
emphasized the gravity of the
problems besetting our industry.
Our country became great by con¬
quering
other.
one
We
frontier
after
an¬
advanced
from
the
Atlantic Seaboard
across
the fron¬
tier
of
ticularly suit the airline business
the Appalachian range to
the fertile lands of Ohio, Indiana
and is certainly no answer to
and
the
par¬
the
proper government responsibility
in airline labor difficulties.
5
:
Middle
tains and went
Remove CAB Chaos
West.
We
con¬
the frontier of the Mis¬
sissippi, the great Rocky Moun¬
quered
until
a
The
on
continent
to the Pacific
was ours.
crossing of these terrestrial
Basic government policy deal¬
It reing with the economic and safety frontiers was not easy.
(Continued on page 34)
regulations of the airlines, as this
i. "7
COMMERCIAL
THE
(1778)
34
CHRONICLE
FINANCIAL
&
and
The Paradox of The State of Trade and Industry
(Continued from page
The Airlines
was
~
(Continued from page 33)
quired more than
FREIGHT LOADINGS ADVANCE TIIE PAST
century of a
a
We
expect the crossing
cannot
frontier—the air
—to be easy.
'
■
Yet, the amazing fact is that in
short years,
20
the airline indus¬
try of the United States leads the
world in air service.
industry for the week ended April 17, 1948 was 5,086,826,000 kwh., according to the Edison Electric Institute. This was
an increase of 53,947,000 kwh. over the output for the previous week
and was the first time in six weeks that an increase was shown over
preceding seven-day period. The peak was reached in the week
Jan. 24, 1948 when 5,436,430,000 kwh. were turned out. The
the
ended
This astonishing fact has been
accomplished despite untold oper¬
earnings
disappointing
business problems
and
the time
at
seemed
to
mark.
be
last
Industry: which 1 has grown
Pop Hanshue, Jack Maddox, and
the many others who have con¬
tributed to the progress of the
airline industry, are the Daniel
better
BUSINESS FAILURES RISE
Telephone
and
Telephone Co., ' of
Tampa, Fla., is offering to, stock¬
holders of- record April *15 the
share
for
common
value,
for
five
one
share
Such
rights will expire at 3 p.m., (East¬
ern
Daylight Saving Time), on
April 29, 1948. The company is
also receiving subscriptions from
certain
of
its
officers
and
em¬
ployees during the subscription
period up to 2,400 shares of com¬
mon
stock
not
subscribed for by
the stockholders through the
ex¬
each
with
decline, commercial and
1946.
in
industrial failures
Despite
past five
a sharp rise from the low mortality level
busines# casualties were only one-third as
1939 when 31*3 were recorded.
years,
in prewar
as
incurred in eight of the larger casualties.
liabilities under $5,000 remained low, totaling
were
last week and 15 in the comparable week
^Proceeds
from
the
sale
of
the
a
against
15
year ago.
during the week.
Forty-seven retailers failed, increasing from 34
last week and exceeding the 25 reported a year ago.
Wholesaling
casualties at 15 were three times as numerous as in either the preced¬
ing week or last year.
Manufacturers succumbing were up slightly
from 22
In
to
24, but fell short of the 32
construction
low
and
commercial
level, with only
Over one-third
seven
1947's comparable week.
mortality continued at a
and eight failures, respectively.
the week's
Pacific States when 36
in
service,
casualties
concerns
concentrated
were
went out of
the
business with probable
creditors.
The next largest number of failures, 25, was
ported in the Middle Atlantic States.
loss to
re¬
FOOD
INDEX POINTS
UPWARD
LATEST
IN
WEEK
represents
in about two
ties.
to
the
com¬
company's plant and facili¬
It
is
estimated
that
it
will
cost over $3,000,000 to complete
projects already approved.
an
or
in the latest week.
The daily wholesale commodity price index,
compiled by Dun & Bradstreet, Inc., advanced to 286.14 on April 13.
about 79 communities in 10
in the industrial,
sponding date
citrus,
^phosphate and
resort
areas
Grain
on
.
^ Florida's west coast.
Among the
cities
served
are
Tampa,
St.
Petersburg, Lakeland, Clearwater,
Sarasota, B radenton, Bartow,
Plant City and Winter Haven. Ac¬
cording to the Florida census of
1945, the population of the area
f
the
only
country serving such
area,
of
Of
the
is
revenues
totalled. $6,421,231 with
$6.40
per
share of
Net income in
The company has
-
:
y/'y
narrow range
small.
was
for
a
1947
net in¬
$1,211,504
was
influenced by continued buying of cash
issued by the Department of Agriculture
production of Winter -wheat this year
gain of about 22,000,000 bushels above
corn
still
$990,037.
on
farms
were
improved
the smallest since 1937.
conditions
the
fresh
/
Spurred by prospects of expanding export
prices continued to gain ground in the past week.
.
.
vf-v
meat
buying, cotton
'
'
"
Current quotations represent the highest levels of the year.
Other strengthening features included a drop in the stock of certified
cotton
and
continued
improvement in the textile trade and other
•;•■'/ '•'/
•, / v.
:'V"Z;
Activity in the ten spot markets increased sharply, sales totaling
163,400 bales for the week, as compared with 100,900 a week previous
outside markets.
stimulated by
was
Substantial purchasing of men's light¬
areas.
footwear
and
was
favorable
and
cotton, Lnen
and
tionery
bakery
and
housewives
products,
generally
'
,
confec¬
for
sought
staple
foods.
Demand for margarine and other substitutes for high-priced
butter and meat remained large.
Fresh
fish
and
There
poultry
was
sold
well
with
canned
moderate increase
a
in
the
foods steadily
buying of l'resh
fruits and vegetables.
Substantial
yardages of piece goods and lace trimmings were
purchased for home sewing.
attracted favorable
an
Sporting goods, .cameras and luggage
Many nurseries continued to report
attention.
increase in the demand
for.plant bulbs and shrubs.,
.•....
.
Branded refrigerators and nationally advertised furniture of
good quality remained in large demand.
Retail
the
Wednesday of last week
was
a
volume
year ago.
Pacific
and
sought along with
country in the perfod ended oilestimated to be from 7 to 11% above 4
Regional estimates exceed those of
by the following percentages:
South
were
building materials.
for
that of
,
•
-
/Spring cleaning compounds and paints
hardware and
4
Coast
year ago
a
New England 8 to 12, East 6 to 10,1
to
8;
Middle
West
Northwest
and
7 to 11, and Southwest 11 to 15.
An increase in
offerings of goods suitable for special promotions
purchase heavily.
Wholesale dollar vol¬
moderately during the week and continued to compare
favorably with that of the corresponding week a year ago. Buyers
sought the merchandise which would sell most rapidly at the retail
level and reluctance to
incur long-term commitments remained
induced many retailers to
ume
rose
Department store sales on a countrywide basis, as taken from
the Federal Reserve Board's index for the week ended April 10,-1948,
increased by 13% from the like period of last year.
This compared
a decrease of " 12%
in the preceding week.
For the four weeks
ended April 10, 1948, sales increased by 6% and for the year, to date
with
;
.
-
•
-
Activity marked the course of retail trade here in New York /
the past week, but department stores failed to approach the gains :
enjoyed by them in the preceding week. It
that
consumer
was
to promotions during
response
noted, however,
the week proved
satisfactory.
-
.......
the
Federal Reserve Board's index, department
City for the weekly period to April 10, 1948,
increased 9% above the same period last year.
This compared with
a
decrease of 11% (revised) in the. preceding week. "For the four
weeks ended April 10, 1948, sales increased by 4% and for the year
to date by 4%.
'"
'
'
;
to
store sales in New York
each
Pacific
Lighting
Offering Common
Blyth
group of
which
that
of
on
March
intend
The
common
announced
20
to
offer
stock
of
the exercise
shares
the
not less than
above
of warrants at
$40
a
Pa¬
prices
The Pacific Lighting Corp. is
offering its common stockholders
rights to buy 321,726 additional
cisco Stock
Proceeds
are
The
offer
until April-30.
listed
the New
on
Exchanges.
y
-
:
of the
financing will
retire $6,500,000 of bank loans and
may be used to finance in part
expansion projects of the company
and its subsidiaries, the Southern
California Gas Co. and the South¬
ern
Counties Gas: Co. of California.
C. Jerome Cable td!
additional
15 to buy
.
Be J, A. Hoffle Partner
LOS
ANGELES,
CALIF.
r
C.
Cable, manager of the of¬
fice of J. A. Hogle & Co., 507 West
--
Jerome
Sixth
Street, will'be
admitted
partnership in the firm
on
to
April
29. / The firm, whose home office
shares. The rights entitle i is
holders of record April
one
rights
open
price
price
common
shares, held.
share and not
equal to the last
of the common stock
on the Stock Exchange during the
current
or
previous session, as
the case may be plus an amount
equal to Stock Exchange broker¬
age commission.,
a
five
to remain
York, Los Angeles and San Fran¬
& - Co., Inc., headed" a
investment banking firms
they
the
is
cific Lighting Corp. purchased or
to be purchased by them through
sale
in
trade, all
classes of livestock scored substantial price advances
during the
week despite somewhat expanded market
receipts. Lard prices also
continued to rise, selling at the best level in more than two months.
or
at the rate of 62 V2
Corn displayed considerable strength during the week, aided
by high premiums for the cash article, relatively limited country
offerings and a government report showing that reserve stocks
of
stock.
declared divi¬
cents per quarter.
v.
Spring and Summer apparel
some
Daily price
and net changes for the
860,521,000 bushels, or a
the Dec. 1 forecast.
This increase was, however, 'somewhat below
recent trade expectations.,
r
Reflecting
dends for the last three quarters
of this year
fairly
at
are
"
common
1946
a
The April 1 crop report,
two weeks ago, indicated
miles
wire, approximately 84%
for the year of
were
-
generally firm last week.
were
Strength in wheat
the
entirely
242,000
come
markets
wheat by the .government* a tightening of supplies in commercial
channels and relatively small country offerings.
extensive
in underground cable.
Operating
earlier and compared with 258.33 on the corre¬
year ago.
a
.
an
whose operation
automatic.
in
company
week
movements held in
period
served exceeds 500,000. It is
prob-
ably
a
high-priced/
goods.
According
The general level of prices in wholesale markets trended upward
from 283.67
'
lar^e number '
a
petticoats remaining among the best-selling lingerie.
While there was a slight increase in the demand
over the $6.24 recorded on the corre¬
It marks the highest level for this index
since Feb. 17 when it also registered $6.76.
COMMODITY PRICE INDEX EDGES HIGHER IN WEEK
coun¬
Z
silk print dresses were very popular.
Millinery and main-flo6r
blouse departments
attracted considerable attention with cotton
year ago.
a
months,
The company,
operating wholly
within the State of Florida, serves
ties
departments continued to attract
Summer dresses
increase of 8.3%
sponding date
f
increased by 6%.
of the
added
be
apparent.
in
corporate purposes, in¬
cluding betterment and expansion
be
:
to
pure
Resuming its upward trend, the Dun & Bradstreet wholesale
food price index for April 13 rose four cents to stand at $6.76.
This
will
said
weight suits and topcoats lifted both unit and dollar volume above
the level of a year ago.
The response to numerous promotions of
(
general
'
and luxury
11
pany's general funds and used for
,
Basement
Small failures
& Co.
stock
1*
%
were
Australia
and
of shoppers and consumers evidenced little interest in
Wholesale and retail trade accounted for most of rise in failures
ercise of rights. This offering is
being underwritten by Morgan
Stanley & Co. and Coggeshall &
Hicks, together with G. H. Walker
Africa
South
the week
scarce. >
Numerous clearance and promotional sales encouraged consumer
buying during the period ended on Wednesday of last week and
boosted retail volume moderately.
Total dollar volume was mod¬
estly above the level of the corresponding week a year ago, according
to Dun & Bradstreet, Inc., in its current survey of trade.
"
addi-
held.
shares
rule continued
as a
PREVIOUS WEEK AND LIKE PERIOD OF 1947
the week ending April 15,
"The week's increase occurred primarily among failures involv¬
ing liabilities of $5,000 or more.
Up-ffrom 68 a week ago to 86,
concerns failing in this size group exceeded by a wide margin the 53
reported in the same week last year.
Losses of $100,000 or more
stock, without par
the basis of
on
each
three-week
a
numerous
$37.50 per
shares of
35,374
16
the
in
Peninsular
at
-.
RETAIL AND WHOLESALE TRADE MODERATELY ABOVE
purchased.
reports Dun & Bradstreet,
Inc.
Increasing from the preceding week's 79, concerns failing num¬
bered 101 as compared with 68 in the corresponding week of 1947
Offers Com. to Holders
tional
trucks.
rebounded in
/(right to subscribe
in the United States and Canada
The agency predicted an output of 459,700 vehicles for April
compared with the postwar high of 515,223 for March. The industry
as
a
whole, it said, seems determined to continue at originally
planned schedules until stocks ol steel and iron are depleted.
After
Peninsular
and trucks
cars
week advanced
Lincolns and
Boones and John Fremonts of the
the
in
markets
mild weather in
slightly to an estimated 104,740 units from last
week's 103,004
(revised) total, according to "Ward's Automotive
Reports." This compares with 105,377 units in the like week of 1947
and 99,945 in 1941.
"Ward's" said most of this week's increase was
accounted for by a higner assembly rate
by Ford on Mercurys
perhaps faster than any major in¬
dustry in history. -And it demon¬
strates how the Wright brothers,
air—the pioneers of
world of tomorrow. -
13, but supplies
The demand for
Production of
This fact dramatizes the virility
of an
"
Wool
;
AUTO OUTPUT SHOWS UPTURN IN LATEST WEEK
beyond solution.
.
ended April
production for the April 17 week was also 426,506,000 kwh., or 9.2%,
excess of
that for the week ended April 19, 1947 and was the
15th consecutive week that output exceeded the 5,000,000,000 kwh.
difficulties,
which
...
.
Some business was reported in the finer grades in
in
ating
?
fine and half-blood wools in the Boston market; with -little interest
jnown
in %s or lower wools.
:
power
American transportation scene.
<
the Southwest and Southeast were reported to be offering more
freely as a result of the advancing market.
Registrations under the
cotton sales for export program were reported at 785,059 bales for
the season through April 3, with cancellations totaling 13,300 bales.
Carded gray cotton cloth markets were very active early in the
week with substantial yardages reported sold for third and fourth
quarter delivery,- Prices remained firm.
O;-,/
v
>
-»
:There was a persistent demand for both domestic and foreign
.
distributed by the electric light
The amount of electrical energy
and
It has
in the
other nation.
major force
a year ago.
About 300J)00 bales *>f
to have been, purchased for export to. China.
mills continued .rather slow.
Farmers in
said
domestic
prices rising and strong competition.
Condi¬
were reported quiet but asking
.
1
prices for super wools continued high.
•
WEEKS
FOR FIVE
low-cost air service than the air¬
a
like week
the
firm and active with
ELECTRIC PRODUCTION UP, AFTER DECLINING
tually every large city on the face
of the globe.
It brings to the
people of the United States a
greater volume of dependable and
become
WEEK
in
were
from
tions in the South American market
cargo
around the world and serves vir¬
lines of any
it
week in 1946.
same
It carries passengers and
,
Loadings for the week ended/April 10, 1948, totaled 683,8521
cars, according to the Association of American Railroads.
This was
an increase of 22,045 cars, or 3.3% above the preceding week.
Carloadings not only in the corresponding weeks of 1946 and 1947, but
also in the week of April 10 ana cne preceding week this year were all
reduced because of labor difficulties in the mine fields. They repre¬
sented a decrease of 73,987 cars, or 9.8% below the corresponding
week in 1947, but an increase of 34,554 cars, or 5.3% above the
nation's effort.
of the remaining
5)'/
for special promotions was stressed,
also noted that deliveries of most goods were prompt.
suitable
merchandise
and
37,600
staple
the
Demand
Thursday, April 22.; 1948
in
Salt Lake
City, hold
mem¬
berships in the New York Stock
share, at $40, for •Exchange and other exchanges.
Volume
THE
Number 4692
167
COMMERCIAL
&
centage
Proposals for Sound Banking
current normal ex¬
count and his
living
and \ as
penses,
quarterly tax
and
have'mounted
expense,
payments
to
be
made
have
mounted, it is my experience that
the
eral
Reserve
have
will
Banks
to
them in order to provide the
to deposit with the Fed¬
eral, should reserve requirements
ouy
funds
be increased.
';;5S:l
The Federal Reserve Bank is a
individual's personal completely separate solar system
if one may use the world—than
checking account averages much
more-than it used to. Accounts! ol the solar system of the member
average
this nature should be deducted.
then
We
corporation
to
come
banks considered
accounts, and there, there is a
direct relationship of needed cash
in bank, pretty much based upon
the annual volume of business of
each
The
that
keep 10% of
volume of sales in
no
thumb figure is
rule of
their
annual
largely in the bank.
W.th
at present levels it
is obvious that business bank bal¬
cash,
sales
volume
ances
larger, perforce.
are
tinue
be
bus:ness enterprises
to
that
owe
To
would
money
We have
obviously disastrous.
GOLD to deposit nor have we
and
my
in bank deposits increased
crease
prices, as it seems almost obvious
that increased prices and volume
of business
demanded increased
whatsoever;
hence,
idea when there will
^control
any
have
no
flow-back of currency
a
which
reserves
our
and
the Federal.
None of us know when that will
that
the
and
occur
it
will
probabilities
be
elasticity
the
of
supply.
money
Consider the changes in indus¬
hence,
process;
part
not
discussion.
To
three
increase
to
ways
the
balances
bank
at
the
only practical one is to have
Federal
the
own
United
more
States bonds and the banks less.
The effect of this is lower earn¬
-
deposits had to go up to make the
facts possible.. The fact that na¬
tional personal income continued
to
up after the war while in¬
dustrial production dropped
sharply, demonstrates clearly that
this is a major reason for the rise
prices; namely, that income has
.continued to go up while indus¬
trial production went down—the
old, old law of supply and dein
'mand.
(ability to purchase),
'namely,
personal
income,
con¬
tinued to r'se while the supply
of
goods went down.
people were
postpone: their buving.
the war they very natu¬
and very humanly wanted
to
glad
"After
rally
what
they
could
and
get
were
willing to pay for it.
In my opinion, cures rest with
a variety of necessary factors: in¬
creased production calls for bank
*
credit
for
capital
new
or
new
tools: and the man-hours involved
lengthening
require
hours
rather
than
of
working
limitation
of
hours per week.
are
the overwhelming
production and the serv¬
ices, and round after round of
■increased wages can only mean
increased costs: hence, increased
.'prices.
To think that prices can
Wages
cost
in
.be held down bv restricting credit
'seems to me utterly absurd.
It
«
is
my
^effective
of
progressively
means
-better bank
i
conviction
firm
supervision
that
banking
better
and
examinations. '
The job has been done far bet¬
ter, in
mv
opinion, since the bank
holiday than before, but no mat¬
ter how good it has been, it still
'can
be better.
'
-
The divergence in the perform¬
ance" of
the banks of the countrv
in
higher
10% ratio of net
better than
worth
debt—and
to
mind
you—
deposits are bank debt, ancj, a 10%
margin against bank debt (net
worth) seems to me on the low
side, not on the high side.
When, as and if the public real¬
izes
that the
of
increasing
is to reduce the govern¬
reserves
ment
result
bonds owned
the
owned by the
easily be
a
by banks and
government bonds
Federal, there could
growing apprehension
the, government bonds have
be
artificially supported in
lest
1
Proposal of Increased Reserves
>
The
serves
proposal
to
increase
re¬
simplv
adds
up
to
to sell
governments and the Fed¬
to
promptly pay bills that they
owe, so
that obviously in due
course, the immediate monetiza¬
Fail
'';L.i'-
In
I've
their
families
upon
It is in
to stand
need
others for support.
our
feet.
own
fies the self-reliance that
mire
become
American tradition
our
on
not
It
typi¬
ad¬
we
and
try to teach to the
younger generations.
It is the an¬
tithesis of the totalitarian philos¬
ophy which we as a nation
fighting throughout the world.
It
not
was
more
than
a ■;
are
posits will remain up, and bank
loans and bank holding of gov¬
this
thread
samer
delicate
and
the
as
a
gos¬
slightest
suspicion could cause a
panic on the part of holders of
government bonds to get out of
them.
The result of this form of
tion ago that these
savings by the
citizen and small wage
were
relatively limited.
There
were
opposite
namely,
of what we all desire,
to steadily and persis¬
tently increase private ownership
of government bonds.
In the parlance of the invest¬
banking profession, the di¬
gestion of a new issue of securi¬
ties takes time to accomplish.
ment
It
is
not
to offer a large
corporate bond issue and get them
in the hands of permanent in¬
vestors at once and the digestion
process
goes on
until—again in
the
parlance of the investment
banker, a specific bond issue has
been well digested, well placed,
and
necessitous
selling can be
easily matched by new investor
easy
demand.
The
size
the
of
Federal
debt
naturally takes longer, for this dieestiye process.
In my opinion,
they are moving from the hands
of the weak holder to the hands
the strong
of
holder better than
natural
us
of
process
this
digestion
in the opposite
direction.
People ARE prone to
mass
psychology and no chances
ran
easily work
should be taken whotsoever,
which
these
v
funds
limited
*
made
were
home buyers.
as
to
time went
people found that they could
on,
set aside
income
tures.
do
But
investment
available
•
more
and
more
of their
protection for their fu¬
They were encouraged to
so,
as
and
as
a
result all forms
of savings have grown phenome¬
It does not alter the situ¬
ation that today savings are rep¬
resented by tens of billions of dol¬
nally.
lars instead of hundreds of thou¬
it
financing does not relieve us
responsibility for seeing to
that these
savings
earn
a
just
r
As to the suggestion that banks
either
may
or
must own a per¬
credit
said
system is endangered.
It is all too easy to follow the
;
siren song of
to what is too
be made by
as
has
do
of
some
have
And
expenditures for its pros¬
ecution
could
current
resources.
alternative
be
not
but
met
There
deficit
out
of
of
the
What
Leading to Low Interest
; Rates
was
it that led to present
low interest rates?
money was
the
same
In the old days
subject to pretty much
economic laws that ap¬
no
was
financing
began to issue
bonds at very low rates.
I be¬
lieve there are very few people
who would argue the fact that in
the time of
national emergency
a
nation snould
capital of this
be made available to our govern¬
ment at modest interest.
Present Mortgage Rate
Situation
'
the situation is vastly
different. The entire nation is con¬
cerned with inflation.
with
the
We
need for
the business pump.
not
are
priming
On the con¬
trary, we are eager to do every¬
thing we can to divert money
from consumer channels into capi¬
We want to do this
tal channels.
that we may increase produc¬
tion and thus reduce or eliminate
so
bidding
of
up
which
prices
down
their funds would be overcome by
offering them insurance against
loss of principal and that a higher
rate of home building and buying
could be brought about by hold¬
ing down the cost of financing.
fundamentally a pumppriming program, and as such I
It
was
think there is little doubt but that
it accomplished its Objectives, at
least to a large degree. Personally,
I think that FHA has done a
good
job.
It can now do a better job
by insuring loans at a fair rate of
with
the
times.
It
easy
boils
thing
incentive.
matter of
provide
for
would
am sure we
whole
reasonable incen¬
a
mortgage
there
money
will be plenty of it available from
the
traditional
and time-tested
of
sources
of
If there is plenty
money,
busi¬
your
and my business can go ahead
ness
—so,
the
savings—
private
mortgage
you
To
mind the classic story
incentive concerns a
man
who had a large
my
regarding
rich
in exactly
see, we are
boat. J ,
same
old
family of sons.: On his wedding
anniversary he invited them and
their wives to la dinner at his
home.
As
they sat down, he made
little speech saying that,
praise God, all his sons had ideal
wives—but there was one thing
them
a
There
were no
grandchil¬
dren. So that very day he had es¬
tablished 3 trust fund of $1 million
the first grandchild that ap¬
peared. "Now,"'he said, "let us say
grace." When he raised his head,
for
theyj were all gone.
In
let
all
me
seriousness, gentlemen,
that we in Prudential
the future belongs
say
believe
that
to those who prepare for
it. This
saying, gentlemen, applies to a
great deal more than the life in¬
surance
maintain
business.
If
wish
we
to
healthy system of free
enterprise, it is necessary to en¬
at
courage
holding down mortgage inter¬
est
To
me
starvation
to
rates
it
seems
levels.
obvious that
and
we
do
everything we can to
people to save their
money rather than to
spend it.
Such a program is not inconsistent
with our efforts to provide the
a
people to
our
be .self-reliant.
to
to do this is to reward
self-reliance
be thrifty
The
way
thrift and
to make it pos¬
and
sible for the; individual to attain
through his own initi¬
security
ative within the framework of our
democracy.
people of this country with ade¬
quate housing. Lack of financing
has
not
been
the
reason
for
the
housing
there certainly has
of mortgage funds
for housing.
But a shortage of
private funds for housing may
v c r y
well develop if interest
yields are artificially depressed to
a
point where a fair return can¬
not be paid on savings. Then we
Up to
been
no
now
lack
would have the
ironical situation
of low interest rates
actually hin¬
dering the solution of the housing
problem instead of helping it as
the
proponents of low interest
rates claim-; they wish to do.
capital.
Schram,
risk Title VI loans at 4% whereas
A short time
President of
ago
Louis
"alarming
capital"
said
that
shortage
and
there
of
Italy's
Gold Reserve
The
Department of
that
the
announced
Gold
decides
claims
of
was
number of Eu¬
a
claim
restitu¬
the
for
full
in
almost
allow
to
Italian
tion
of gold
taken from Italy by
Only a part of Italy's
recognized at the time
Nazis.
claim
'the
about
countries by the Nazis, has
decided
the
recognition
monetary gold that
to
taken from
ropean
the
Brussels
in
Commission
which
State has
Tripartite
was
Commission
Gold
first
of
distribution
recovered in
decision
its
gold
Germany. The recent
the
of
made
looted
Gold
Commission
means
that Italy will soon
about
$31
million
worth
receive
of gold
in addition to $4
to her
on
million allocated
the occasion of the first
.October
17,
1947.
Italy is participating on the same
distribution,
basis
as
the
countries,
the
gold
on
becomes
'
claimant
rata basis to
recovered looted
pro
that
extent
tribution.
other
10
a
available for
I
i\ :'./l
.
■
dis¬
.
New
"Stock Exchange, in an ad¬
dress at Washington University in
St.
Restores
Emil
the
York
gined loans under Title II are
generally insured at 4V2%.
During the war the enormous
too
discussion
a
need for Federal assistance aimed
doesn't make sense to insure high
conservative and better mar¬
the
the
Since this is the case,
interest which will be a truer re¬ I I We must consider very seriously
this problem of savings and risk
flection of the risk involved and
consistent
to
is the basis of inflationary
spiral.
there is no
all
implications of this
But no matter how far
that
we
be
into
wandered, I
find
wrong.
But today
shortage.
Mrs. Samuel
Rosenman in a thoughtful article
and demand.
v
•
•
published
in
the
New
York
"Times" recently pointed out that
After the wild boom of the late
the housing log jam is due to a
'20s was over and we had begun
number of factors, including the
to experience our historic depres¬
rapid ; rise in costs, scarcity of
sion, every effort was made.to
critical materials, fear of sudden
stimulate business so that employ¬
deflation on the part of builders
ment
and
our
national income
and investors, failure of the build¬
might be increased. As a part of
ing industry to take full advan¬
this national effort, there emerged
the FHA mortgage insurance pro¬ tage of modern methods, high real
estate taxes, and the high cost of
gram.
It was felt that the reluc¬
urban land in blighted areas. ;
tance of investors to let loose of
plied to goods and services, and
particularly to the law of supply
off
social
problem.
we
Incentive
would
wander
and the government
encourage
Factors
it
to
otherwise not.
Federal
the
of freedom. '
Investor's
examining
plenty to do in
challenging the ability to pay off
every borrower as they examine
banks and take what they deem
to be appropriate action in criti¬
cism or in ordering chargeoffs.
faced
security at the price"
measure
to
The Federal Reserve
should
reward.
are
I feel very
each bank.
fewer channels through
and
save
more
^Fear for Government Credit
remain up."
will
judgment
fewer opportunities to
breath of
panic could accomplish the exact
The
the
genera¬
money
who
my piece.
Believe me,
deeply that we should
everything possible to encour¬
go up.
*■:i >
;■ age private enterprise by provid¬
& During
the - w a r the banks ing a fair profit for work well
loaned the money to the govern¬ done. The principles involved in
ment and created the deposits im¬
this question are part and parcel
our
free
peratively needed to take care of of
enterprise
system
which has given us the highest
mounting volume of production.
As long as production and prices standard of living in the world,
call for high totals in dollars of bar none. And I sometimes fear
industrial production, bank de¬ that through factional self-interest
(Continued from page 10)
of the
as
available from
willing to risk
funds in promising under¬
takings and enterprises.
Well, there we are, gentlemen.
people
their
periods of great expansion in
activity, obviously bank
loans go up and bank deposits
Wage for the Mortgage Dollar
gage
is
con¬
slow
a
is
tive
taken.
Credit
the
of
becomes
there
35
does not progress unless
economy
If
sands. The resulting scale of mort¬
the
fact that member banks will f»ave
con¬
price and that the case is so des¬
that this action had to be
of member banks with the
Federal
on
perate
could dream when we
-to ea ch bank's net; worth, demon- contemplated, early in the period
•strate clearly
that the private of increased Federal debt, how it
management
of
banks
differs would be possible to achieve this
greatlv in this regard and that imperative digestion.
■such remedy as is needed lies in
Efforts to interfere with the
Regulation!
credit and
a
have their bills paid, they are apt
thrifty
any
'not in
thing true of
both
on
business
ernments
earner
of
of supervision.
the
banks,
pro¬
sets, measured risks in proportion
powers
debit there is
back
keeping themselves strong and
"sound with carefullv valued as¬
-the present
re¬
of
ledger
banks
:>■
process.
solidated balance sheets of all the
earnings to
a
to
&'■* During the war the
constantly
same
The, double - entry system of
bookkeeping means that for every
tect their deposits and to get
namely,
■'ncrease
.
Demand
s
Isn't the
every single loan that banks make
unless money is borrowed at one
bank in order to pay debts at an¬
other?
mind, this proves that
my
the
of
ings for the member banks, when
they need the exact opposite,
.to go
debt.
are
monetization
as
dependent
production with the growth
;of national personal income and
•it seems to me obvious that bank
trial
banks
to
are
slow
of this
member
•
the
ferred
long and
a
Federal due to increased reserves,
happening is exactly in
the preamble to the
Federal
Reserve
Act,
namely,
Government bonds in the hands
of
solidated
authorities
over which we, nor
Reserve Banks have
Federal
M This
with
of the government.
the
of
borrower pays the bills, to pay
which he borrowed the money.
When
people
and companies
something
tre
deposits.
accord
governments, there is the risk of
engendering fear as to the credit
double-entry growth
sides
is
own
question of which came first—the
chicken or the egg.
It is there?
fore unfair to say that the in¬
imme¬
the
much
Would increase
is very much 'like the old
it
mentioned
arguments
diately before this hold to an even
greater
degree.
The > moment
there is a
requirement to own
(1779)
tion of debt results in larger pay¬
ments
of pre-existing debts—so
when one bank makes a
the proceeds are promptly
deposited in other banks as the
opinion, bank de¬ which., if and when it occurs, will
posits have gone up as business give the banks funds with which
to
volume and living costs went up,
buy government bonds from
In
against
reserve,
loan,
be
.
governments
additional
CHRONICLE
The currency demand
has been made by the public.
It
currency.
we
Cause of Increased Deposits
to. deposit.'
borrow the needed increased Fed¬
eral Reserve balances and to con¬
partnership.
or
company
GOLD
no
consolidated
We member banks
balance sheet.
have
as a
as an
the
(Continued from page 6)
ship between a person's bank ac¬
of
deposits
FINANCIAL
is
an
venture
added that a
free
McDougall-Butler Co. Inc.
BUFFALO,
Butler
a
Co.,
N.
Inc.,
Y.—McDougallis engaging in
securities business from offices
at 6 Evans Street.
"
THE
(1780)
36
COMMERCIAL
CHRONICLE
ity markets occurred, we had had
previously equaled in time of
peace, and though later in
the supply it except at rising prices.
There were, however, some sig¬
year
this excess somewhat de¬
clined, the pressure of specific ex¬ nificant differences as between
1947 and 1946.
In the earlier year,
notably grains under the
industrial
production y increased
government's buying program for
European aid, has been a major substantially in each successive
quarter, whereas in 1947 the level
spearhead of our inflation.
of industrial production reached
One effect of our relatively fa¬ in the first
quarter was not again
vorable conditions has been that attained until the last quarter; but
our
inflation
has
been of the for the year as a whole it was 10%
chills-and-fever rather than the above
1946, and in many impor¬
ports,
,
type.
runaway
,
At no time since
postwar expansion began in
quarter of 1946 have we
been entirely clear whether we
should fear more the inflation that
branches of
tant
industry
opera¬
the
tions
the first
volume, with capacity being util¬
ized to the full.
Steel production
visibly going on or the
was
too
the
last
a
record peacetime
quarter
of
1947
was
defla¬ only'3'% under the wartime peak
might at any time ensue of/ the
first
quarter
of
1944.
vigorous corrective meas¬ Though steel and some other ma¬
adopted; and as prices terials were still in tight supply,
tion that
ures
in
at
were
were
and
production
rose
to
new there was in general a better bal¬
heights, this fear of a downturn anced flow of goods than; in the
that might get out of hand grew
preceding year, representing in
correspondingly. The result was part the' further progress of re¬
that the movements of prices and
conversion and in part the Very
production both pursued an irreg¬ large volume of capital expend¬
ular course in 1947. The uprush of itures that has characterized the
Thursday, Apr.il 22,. 1948
Why I
Sproul Discusses Inflation Trends
(Continued from page 20)
about two full years during which
During the first part of the year
the volume of effective demand
we had a surplus of exports never
exceeded our current capacity to
if
& -FINANCIAL
Opposed to DMT!
am
.(Continued from first page)
having been brought back will
now provide a basis for continued
successful defense of our country gress is prepared to support it for
high output and employment with against attack under conditions o. at least the next four or five
decreasing inflationary pressure? modern warfare/We know that'if years. Does any person seriously
/These are the possible alterna¬ war should come it will come with believe that the
Congress: will
tives/The last would seem much terrible suddenness through the support both programs continu¬
the
most desirable, and,* quite skies. We need the best possible ously, along with $2 bill on for
,
without
predic¬
least indicate
at
attempt
any
some
may at
of the elements in our cur¬
rent
defense
situation
tion; one
that
in
which may, point
direction.
That agricul¬
tural prices
had got seriously out
prices Is appar¬
of line with other
ent, as are also the reasons for
this development. Since the firsi
this
of
the
year
evidence
has
been accumulating that the worlc
a
the
is not
vide such
I
UMT
outmatch
under
r
',
■
number of
in
us
the
men
Our military leaders
arms.
speak of the necessity for a strong
military posture for the puipose
sible
removed
underwent
a
and
moderate
for
the
serious
production
forecasting which
decline,
1945. The
errors
situation
tor.
But
induce
it
and
also
might
hesitation
in
readily
trade
and
ployment.
The resumption
Drove
to be the
results of the decline in the
com¬
pressure
oration in the situation in
Europe,
as
revealed
Western
particularly
In
dollar
value, consumers' ex¬
penditures for non-durable goods
increase
in capital expenditures
put into effect.. During costs would, turn, construction was
the summer—with the further ad¬ resumed with
a rush at
rising
verse turn in Britain's balance of
prices, with the result that total
payments resulting in part from private construction for the year
the winter fuel crisis, the rise in exceeded that in 1946
by about
believe
bet
than
the
Program:
munism
a
per¬
better
prevent
to
from
com¬
engulfing
(b)
War III?
any
European Recovery
(a)
Europe?
Does
that UMT is
Western
prevent World
to
::////
Not
Feasible
/1 oppose UMT because its adop¬
tion would give u§ a completely
this
; for
tendency
coupled with
a
reason:
adopted?
:
I oppose
UMT because its only
major achievement, if it
were suc¬
cessful, would be the development
of
a
ness
spirit of warlike aggressive¬
in
American
youth
and
.
eventually in the American peo¬
the President's Com¬
Universal
Training
recognized that UMT is a danger¬
ous and undesirable thing, having
no proper place in American life;
If our leaders were working even
ple.
Even
mission
half
as
on
hard today to achieve
in¬
understanding and to
ternational
strengthen the United Nations as
they are to bamboozle the coun¬
try into adopting UMT, the out¬
look for peace would be much
greater
than
is.
it
Instead; our
natural desire for government by-passes the UN and
taxes, to seek does everything it can to weaken
to offset the expenses of the uni¬ that
body, and then says that the
versal
training
program
by a UN has failed and can no longer
curtailment of one or more of the be relied
economy and lower
*
'
upon.
other elements of national
edly a large backlog of unsatisfied
demand, both domestic and for¬
I oppose UMT because 5t just
ity—intelligence, research and de¬
does not make sense. We &.1 be¬
velopment, mobile striking force,
lieve in a strong America.
We
Regular Army, Navy, and Air
want; an America that is strong
Forces,; National Guard and re¬
militarily to discourage
serves, maintenance of equipment enough
and
industrial
preparedness.
If any present or future aggressor.
by Secretary Marshall's speech on
eign. In any case, with many of
5, and the growing recog¬ expenditures for durable goods the
maladjustments that charac¬
nition that the economic and po¬ rose 33%.
The other noteworthy
terized the boom after the first
litical restoration of Western Eu¬ change was the substantial further
war much less serious this t'me
rope
would require not only a increase in capital expenditures,
the evidence seems to warrant
large-scale program of aid from for producers' equipment and hew confidence that we do
not face a
us—the European Recovery Pro¬ construtcion.
After a period, of
downturn of such .dimensions as
gram
which has now been ap¬ hesitation in the spring of 1947,
occurred in 1920-2J; and, on the
proved—but also substantial in¬ caused by high building costs and other side, the imorovement in
terim aid before
that program the uncertainty as to which way
be
son
background there is still undoubt¬
June
could
research and' develop¬
greatly strengthered Air
Termination
a
If these should
of ihflatfonaVy able goods in 1947, though about
modity markets, the corrective
in the second half of the 4% greater in quantity than the
adjustment that has taken place
year can be traced fairly directly year before, averaged about the
would be salutary indeed. In the
to the growing evidence of deteri¬ same as in the last quarter of 1946.
v.
a
own
our
of
made in
production of nonJdurwere
ment,
of impressing Russia.
Our adop¬
give
tion of UMT would not frighten
I
oppose
UMT because, once
some promise of improvement, a
Russia. Air power, scientific re¬
adopted, it would be virtually im¬
least as regards the grains, where
search and development
indus
possible to terminate it.
If' the
the pressure has been most acute
trial production, and maintenanc.
War
Department
would
spend
A correction, however, Of the di-v
of a sound' .'economy /are
wha» millions of dollars of public funds
mensions we have had might well
Russia fears, because she know:
in direct violation of Federal law,
have collateral
effects in other
that those are the primary factois in order to scare and
propagan¬
segments of the economy, some
that will determine the outcome i
dize the people and the Congress
favorable and others less so.
It
war should come.
Our adoption Oj into
adopting UMT, as it has done,
might well take the edge off the
UMT
would
jeopardize ail ' of what would it not do to prevent
wage-price spiral, which would
these.;
J
the repeal of UMT, once it was
a/".h'/.'///////J
surely be a major stabilizing fac¬
food
false, sense of security. It would
which,
if too
pro¬
prices that began in the middle of postwar period. One noteworthy production
1946
appeared to have run its difference between the two years nounced or prolonged. might lead cause us to believe we were stron
to
a
cumulative contraction ol when in fact we would be weak
course
by the end of the first was that in 1947 the main expan¬
It would cause us to neglect gen¬
quarter of 1947. This fact, coupled sion was in the durable goods in¬ output and employment. But with
the pressures of demand already uine preparedness measares whil
with the general feeling of uncer¬
dustries, both consumer and pro¬
tainty which had been generated ducer. It will be recalled that in threatening to strain the economy getting our youth ready to fighthe next war along the lines of
by the stock market decline of the first phase of the expansion beyond capacity, as seemed to be
the case in late 1947, some slow¬ the last one. Even the President
the preceding summer, and per¬ of civilian
production after the
Commission on Universal Training
haps particularly by our aware- war, the leading role had been ing up of capital exnenditures
Would be desirable, while the re¬ recognized this danger.
I quot
mess that the level of production
played by consumer non-durable
was
already very high and that goods, a fact which, in view of lease of consumer income by r from their report, "A Program fo
drop in food prices could be an National Security," p. 29:
"We
we had about reached the point in
the high level of consumption of
important factor
in
sustain'*# realize that there may be danger,
time at which depression had set such
goods already attained dur¬
if
other kinds of consumer expendi¬
our
country
puts universal
in following the boom after World
ing the war, took many govern¬
ture, provided consumers were training into effect, that it will
War I, resulted in some months of ment
and
business analysts by
not at the same time becoming therefore be lulled into a feeling
hesitation in which the upward
surprise, and was largely respon¬
worried about the outlook for em¬ of false security. There may be
pressure on prices seemed to have
been
scientific
Force, Navy, etc?
because
security is not from
Russia can always
our
armies.
mass
attack,
to pro¬
defense.
oppose
threat to
an
way
such
against
but UMT
the food situation, if
it turns out
to be substantial, might well mean
that the worst
nhases of the in¬
flationary spiral, - so far as "this
country is concerned, have run
of
introduction
the
secur¬
universal We don't need UMT for that. We
want
an
America
that
has a
training should have such an in¬
direct effect of weakening, rather
strong,
strengthening, the other ele¬
ments of national security, then
That
than
our
is
Commission
of
the
firm
opinion that the adoption of uni¬
versal training would be a mis¬
take and would diminish, rathei
healthy, educated
was
first
the
tion
of the
sion
on
people.
recommenda¬
President's Commis¬
Training, and
Universal
they admitted that UMT is not
to improve the pa-
the best way
lion's health
education.
and
We
want an America that is strong
national secur¬
their course.
It is important to
and
sound
economically,
UMT
ity." Can any intelligent person
prices here, and the premature at¬ 25% in value but less than 5%
would impose a heavy tax burden
recognize that for the European
seriously doubt that the adoption
tempt to resume convertibility of in volume.
Countries also a decline of world of UMT would have precisely that on the American people, would
sterling—the British loan ran out
As; indicated earlier, up to the
agricultural prices would go far effect? Our leaders are gamblin? take a million young men out of
with astonishing rapidity. In May break in the
commodity markets to lessen inflationary pressures
the field of productive effort each
dangerously with the national se¬
the French
price level, already early, in 1948, Ours has been an
and would be an important con¬
curity when they advocate adop¬ year: at a time when production
very high, broke out in a rise of intermittent inflation. It has been
tributory factor to the success of tion
is badly needed if we are to give
of UMT at this time.
•runaway proportions. The Italian characterized by a strong upward
the European Recovery Program.
needed aid to Europe and at the
economy was in critical condition movement
of both
output arid But this hopeful analysis of eco¬ Waste of Money and Manpower same time avoid disastrous infla¬
;by early fall.' The combination of prices,
but
with the
emphasis nomic trends can be justified only
I oppose UMT because it would tion. At the same time, the adop¬
bad harvests in Western Europe transferred
increasingly to the on the dual assumption that the;
be a complete waste of money tion of UMT would require the
•and our own short corn crop ex¬ latter. There have been
through¬ European countries will pursue a
labors of additional millions of
and
manpower.
General Eisen¬
erted
acute. pressure
on
grain out sufficiently marked periods
vigorous anti-inflationarv policy
men and
women to provide the
prices here, and through them on of pause and uncertainty to raise and that American business, la¬ hower says the decision in an¬
services
and
munitions
other war will come in the first goods,
meat, dairy products, and other recurrently the question whether bor, amd consumers, as well as
needed for maintaining UMT. We
60 days. What use could we mak'
.prices. As the effects spread out, the inflation had run its course domestic borrowers and lenders
want an America that is spirit¬
of the Umties during that period?
there occurred a broad rise- of and would presently give
way to of credit will pursue a policy of
Training
received
under
UMT ually and morally strong, able and
■prices during the second half of a deflation that might get out of watchfulness and restraint.
would be outmoded .within les ; ready to lead the world toward
the year, which brought us to
We must bear in mind also that
hand./The drop in the stock mar¬
than one year after it had been peace and international coopera¬
about the level from which the ket in 1946 raised such a
question, in a period' of rapid change like
tion. The President's Commission
received.
than increase, our
,
While and the year 1947 has been much
the present,
new
development^
rise has been marked in .referred to as the year in which require continuous re-appraisal
the expected postwar depression, of our economic outlook. As this
many
categories, it seems clear
that agricultural prices in partic¬ paralleling
1920, did not occur. report is written, the foreign aid
ular have been the spearhead, ris¬ Nevertheless,
as
has been said program is being broadened to
ing to much beyond their 1920 earlier, there was a period in the include
further
assistance
to
peak, and giving an impetus to spring of last year in which the China,- Greece, and Turkey, and
demands
for
increased
wages price rise appeared to have lev¬
major budgetary changes are in
which, in turn, resulted in higher eled off, and this was a period process. The enlargement of the
prices of other products. No more also of moderate recession in out¬
foreign aid program indicates that
striking evidence of the distortion put.
The drop in agricultural
we must think
in broader terms
of the price structure on the agri¬
prices this year has again raised
than Western European recovery,
cultural side could be given than
the question.
Is this merely an
the fact that, despite
the pro¬
strategic though that is, and must
nounced
drop in prices in the other interruption of the infla¬
downturn occurred in 1920.
the price
I
admitted that UMT cannot be jus¬
UMT because our
tified
on
moral grounds. 1 UMT
cannot support and the
just does not make sense. •
Congress
will
not appropriate
funds to support UMT and thf
other activities for which funds
Milton C. Powell Adds {Two
must be appropriated if we are to
(Soecial to The Financial Chronicle)
be militarily strong and if we are
PASADENA, CALIF. — Milton
to avert another world war. UMT
C. Powell Co., Security Building,
oppose
economy
,
and
the
will
ERP
each
cost
at
All wil1
least
$4
agree
that neither program should
billion
a
year.
be entered uponunless the Con-
.
take account of
primary
commodity
markets
in tionary spiral; is it the first phase
January and February of 1948, ag¬
of the downturn twice
ricultural prices had not got down
to the parity support points by
anticipated;
the middle of February.
one
Until this drop
or
is it
a
previously
correction in
sector of the economy which
in the commod- had got seriously out of line, and
our
economic and
political relations with the world
as a whole.
As to the budgetary
changes,
it
seems
premature to
attempt to form a judgment about
the effects of the combination of
has added Edward
and
tax
v
reduction
and
H.
D. H. Maddox
Thurbur to
the
firm's staff. Mr. Thurbur was pre¬
viously
Co.
income
Clarence
•/'
with
,
First
/.
California
/
in¬
expenditures for defense,
With Flynn & Levitt
obviously these changes raise
(Special to The Financial Chronicle)
important questions for both mon¬
LOS ANGELES, CALIF.—Bruce
etary and general economic pol¬
icy, and their effects must *<be Whitney Catlin is with Flynn &
Levitt, 411 West Seventh Street.
closely watched.
'
creased
but
^
THE
Volume : 167 /Number 4692
COMMERCIAL
&
FINANCIAL
CHRONICLE
against the price level. The third
Soil
round of wage increases will cre¬
ate just that much more
pressure
Spirts in the Price Stmctare
toward higher prices
"(Continued from page 2)
before the horse. As a practical
matter, you can't pay any wages
7 unless you can sell your product;
;
and the price you can get for your
product and the productivity of
your labor force determine the
rate
ot
provements, and that is the glory
capitalism.
77'77:7'
4 ■ '■ 4,
ent conditions of what I call "over¬
May I epitomize: In a competi¬
employment," But, in this connec¬
tive economy, costs are largely
tion, I want to call your attention
Of historical interest; only market
of
price is real.y.V:7-
to
can
indefinitely produce at a loss.
limiting factor which carinot Obviously, in the long run, prices
7 be
It is the ' basic influ-
escaped.
which
ence of wages on demand
.
;; makes w^ge rates so impo'r^rtt."
There are still others who Assert
.
that labor
have
to
cover
that
costs.
shift to
a
Once
there
is
a
buyers' market; varia¬
tions in productivity between pro¬
ducers become
all-important and
productivity increases be¬
4 over-all
the inefficient high cost pro¬
ducer will be eliminated by Com¬
petition.
;*7'<7 77;*7
'■j7
cause
The current heavy tax-burden
;
4
is also advanced
7 which
another factor
as
makes
price reduction imV possible.
After all, the taxing
authorities, Federal, State, munic¬
ipal, and district, have to get their
cut!
Taxes
can't
be
escaped, so
it follows, they claim, .that prices
have to stay high until taxes are
reduced
all along the
matter
gin
4H>iisumer
this
allows
foresee
profit.
long periods below
as
fut prices can drop of time,this
:vel for
there
is
nothing in competitive
capitalism
whichv guarantees
a
profit!; On the contrary, all it of¬
fers, basically, is hard, unrelent¬
ing competition under the grim
compulsion of "devil take the
hindmost"—the basic principle of
competitive capitalism.
7
7
Turning to the demand side,
several very strong upward pres¬
against the price level are
way. Let us attempt
sures
getting under
to evaluate them.
Effect
of
ERP '
Marshall Plan,
The
now
offici¬
ally titled the European Recovery
arguments;
and
many
similar
is that they assume that costs
determine price.
In that distant their estimates of the future. The
r "long-run"
that the
economist plain fact is that a $5 or $6 billion
talks about, costs may determine ERP expenditure in the next 12
price, but in the "short-run" of months, in the light of our current
market competition between mod¬ $130 billion gross national product,
ern products with
large elements is relatively insignificant. Sounds a
of psychic value created
by adver¬ little like "pump priming," doesn't
Other than on a few ^scarce
tising, costs determine profits— it?
-
market
surveys
price
or
policy
committees determine prices.
Over-emphasis
which reached
peak during the
a
is undoubtedly at the bottom
war,
of much
of the current
of market
ities.
disregard
^alities and potential¬
.
In
wartime,
businessmen
could pass thein costs oh to the
.
government
matter
no
items such
as
steel and farm
ma¬
what the
in the
consumer
same fashion, no matter how
high
their costs may be; Under condi¬
tions of competition this is, of
nonsensical.
course,
Under
petitive capitalism, which
com¬
we
are
beginning to once more enjoy,
price determines cost much more
largely
be
can
than
more
What
in
have
we
the
European
Recovery Program is a cushion for
ihe
business
readjustment which
making—not the engine
spiral!
Rearmament
expenditures are
is in the
munists
do
elections
win
not
April
on
18,
I
not
do
expect heavy rearmament expen¬
ditures.
In fact, we probably
not spend more
will
than $3 to $4 bil¬
the most basic
will be removed
generous mood,
a
upward
from
pressure
price structure and more
and levels
our
7
relationships
But even if food prices should
stay at high levels because of crop
failures
other
most
other prices, with the exception
of those of steel, iron, coal, oil,
farm machinery, railway equip¬
ment, and the standard make au¬
or
reasons,
"Courant"
of
.
April
which
14,
stated that Mr. Garvan's presence
on
continues tra¬
directorate
the
ditional
But such a level of de¬
expenditures does not even
approach our wartime levels. Fur¬
ations to the founding
conveniently
that
One of the charac¬
of
normal
a
market
is
percentage
substantial
a
of
tion'that
it
have
cannot
nounced effect on'our
a
pro¬
price level,
producers'^doinot ^et ^heir" costl although it will accentuate certain
back;"
Ceirtaih/^i^duic(Brs;:5ar^'!se-i
lected,
by consumers,
losers in the economic
of
ure
these
be
to
race.
marginal producers
is normal and happens all the time
in competition, a condition which
to
seems
There
have
been
shortages;
Of
the
Fail¬
forgotten by
is'aribtherimportant-as4
a
if
course,
should
then
<
win
we
real
the
rearmament
would
necessitate
naturally
lose
money
proportion
even
on
the
turers
output,
of
his
break
products,
wide margin of profit
remaining few. Manufac¬
however, are
insisting on a standard
mark-up
7
a
substantial
a
today,
orally
uct
his
some
and make
on
of
on
over
cost
regardless
tions.
This
sellers'
of
be
can
market;
on
eachJprod-
market
but
condi-
of
program
new
change
Reserve
a
policy* A
\ v $''
However, as I indicated before,
I do not expect the Communists
win
the Italian elections.
in
a
Italian
population is nearly 1Q0%
Catholic and the Church has taken
a
strong stand against the ComIn addition, the Church
munjjstsl
made\a
women
of
and vote.
which
are
starting in
lines will force all produc¬
to meet the price of the low¬
ers
est-cost
costs
are
that the
of
producer,
not recovered.
consumer
though
even
It is thus
gets the benefit
efficiency, economies and im-
7-
forecast
strong appeal to the
pect that they will,
as women
world
religious than
over are more
the
men,
of
and
the
forces
World
inflation
of
War
II
still
bred
by
rampaging
throughout the world, one cannot
be positive as to the economic or
political future.' NCwadays, we
live
in
truly
a
It follows that
world.
uncertain
we
must be ready
bur minds and-
to change
a
Buyers' Market
Soldiers' bonuses being paid by
the various
Stages and the $4,000,-
phia Bourse.
our po¬
sition if basic influences change.
son
as
director of the Republic
a
National Bank of Dallas, Texas, to
succeed
Percy Davis, deceased,
announced
was
on
April
13
by
Fred F. Florence, President. From
1935 to 1939 Mr. Harrison was as¬
sociated
with the firm of Touch¬
stone, Wight, Gormley and Price,
in
and
1939
Counsel
surance
of
he
became
General
Trinity Universal In¬
Co. At the present time he
is Vice-President and director of
Trinity
Universal
basis.
Insurance
has held
'
>'f
has
Pa.,
been
the Bankers Association for For¬
eign Trade. Mr. Hall joined the
foreign department of The Phila¬
delphia National Bank in 1911. He
was
elected a Vice-President in
January 1942 and placed in charge
of the foreign department a year
later.
77 v-77 7777;.
7 -7#77
The First National Bank & Trust
Company
of
Hamilton, Ohio, in¬
creased its
capital, effective April
5, from $900,000 to $1,000,000 by
a stock dividend of $100,000.
Trust
Hutchinson, Chairman of
E.
the Finance Committee and Vice-
President
been
of
elected
Corp., has
Chrysler
director
of the
Na¬
tional Bank of Detroit, at Detroit,
was
reported in the De¬
13, in
troit "Free Press" of April
which it
.
cerits
35
a
■:
a
ft 7
'V'iV; >f*7:'; «•
First
'77777:;'
7;;
National
Bank
and
Company of Fargo, N. D.,
the election of Wm. F.
announces
Vice-President; and di¬
Graves as
rector,
a
-
.
-v
,
..
>7'
nial and
was
also
stated:
7*
"Bank Chairman Walter S. Mc-
Lucas
announced
imtely'1 cf§ate
stock
on
a
a
that
directors
plan to place bank
quarterly dividend
he
^
!.'!
Overseas) announce that
Cokayne Gibbs, C.M.G.
Goeffrey
has been elected-a Vice-Chairmah
of the Board; 777/. 7^77v7-;'>: 7^:. ■ ,.7
and
is
Trust
Company
completing
the board of directors of The Do*
minion Bank, Head Office, To*
ronto, Canada.
a
of St.
Louis
expansion 7 and
modernization program which be¬
gan several
years ago.
The 7an
story building on Seventh and St.
Charles
Streets, which it pur¬
chased, is being remodeled and
joined to the main bank building
by means of bridging the alley
between
Seventh
and
Eighth
Streets. When
will
Carbon
and
poration, New
York; Presi-7
dent of the St.
Lawrence
President of
Electric Fur¬
nace
Products
block in
da.
is
located.
The
formal
opening of the new banking quar¬
At present
ters will occur shortly.
Al¬
loys and Met¬
als Ltd., Beauharnois, Quebec, Canada;
Co. Ltd.*
it
7
Cor¬
surrounding the
streets
'7
utive of Union
the 'four
entrances
:
senior exec*
on
have
which
completed, the bank
*
Sneath is '
Mr.
Carbide
The Mercantile-Commerce Bank
Sau- )
William
Norway; v7,:;.;7
and Vice-President
lurgical
Co.,
H.
Sneath
■>*.■,-7;,7'''7
.
Electro Metal¬
New York, having
with the latter
associated
been
six floors of the build¬ company in many capacities over
being used for various a period of years. He is also at
banking activities, and the formal director of several other interna*
opening will take place as soon as tional corporations including Brit¬
the alterations to the first floor ish Electro Metallurgical Co; Ltd.,
the upper
ing
B.
of
.
44 77^.7 ;7i
#
^ 65
cents 7 semi-an¬ 7,777;7■ *
William H. Sneath, New York
nually* equal i 0- $1.30s a year, have
beenpaid.'' 7:;777777 i:7 w:77777 industrialist, has been elected -to
For many years Mr.
interested
in the development of the Port of
Philadelphia. He is Treasurer of
positions
1941.7;;'-777777'7
dividends of
The
Hall, Vice-President
which
since
7Barclays Bank (Dominion, Coloy
dividend
A
Co.,
surance
share, equal to $1.40 annually, was
declared payable May 1 to stock
of record April 17.
Previously,
V
7
Hall has been actively
approved
pressures
of the in¬
,
director of the Philadel¬
a
000,000 Federal tax reduction defnew
The election of Hamlett Harri¬
not
ment expenditures rising, and. with
*7
' s'f
Philadelphia,
elected
Mich., it
Wage Increases in
is
manufac¬
prophecy. With
Russia intransigent, with govern¬
r
'<' 7.7' > .}
#
Reuben B.
Tfaly-to go to the polls
If they do so, and I ex¬
markets
many
•
of The Philadelphia National Bank
The
the spread of Communism
buyers' will be brought to a halt.
done
the
a
Treasury borrowing and
in the present Federal
to
will
program
Such
der normal
producer
Communists
elections,
vast dimentions.
credit restriction
a
the
Italian
shall probably embark on
pect in which pricing on the basis
of market competition differs from
pricing on the basis of costs. Un-
conditions,
'7.-7
7
,»
thermore, the amount is so small
relative to our national produc¬
Hemingway
.
stitution in 1907,
he
national
for
L.
talking about wait¬
(Continued from page 29)
planes.
back,
are
News About Banksiand Bankers
fense
costs
still
W.
Co. and Security National Fire In¬
dates back more than two gener¬
teristics
/
maintained and
.
Chairman of the Board, and GalO
F. Johnson is President.
the
de¬
additional
country*
lip is still
upper
.
If nature continues in
favorable.
lion
5 competition.
'
being
stiff
a
,
Italian
the
and
Second
-
If the Com¬
price level.
at
„
fense, and that will be largely for
he has to get a cer¬
price because he has to get
says
forgets the two great consumer
safeguards .'of substitution
and
*
While
another inflation
the
office
despite their advertising claims of Pine Streets.
In 1868 the name
revolutionary new improvements, was changed to the Bank of Corny
had to cut output and have-had merce.
Twenty years later it bey
to bring out secondary lines* at came a national bank. * Its lasto
cheaper prices. In the textile; field, banking quarters were in the Na*
particularly cottons, German and tional Bank of Commerce .build*
Japanese competition is beginning irig at the,, .southwest corner of
to reappear in the international Broadway and Olive; In
1899, Fes*
markets. The home appliance in¬ tus. J. Wade organized the Mer*
dustry, particularly the - electric caritile Trust. Co. With total re¬
accessories
people,' ; are having sources in excess of $365,000,000
their troubles, tpo, and so it goes Mercantile-Commerce is said to
for many industries.
7V7'?;»: be the 51st largest bank in the
James M. Kemper, Chairman of
ing lists, the plain fact, is that the Board of the Commerce Trusfr
they are pretty well caught up Company of Kansas City, Mo., jya^
with demand in most lines.
We elected President of Jhe Kapfisas
ion that there wduld be a read-' might
say
that basic economic City Clearing House vAssociation
forces are pushing down while ar¬ at its annual meeting on April 13,
justment. Well, as .you know, a
readjustment started in about that tificial forces are pushing up on according
to the
Kansas
City
time (spring) but the crop failure prices, j
"Star," s u cce e din g Thornton
in Europe caused
In conclusion, barring a world
by too little
Cooke, Chairman of the Columbia;
rain, the short corn crop in the crop failure, I anticipate that our National Bank, At the same time
United States cdused by too much food prices will drop, despite the Nathan Rieger, President of the
rain in the spring and too little European Recovery Program pur¬ Mercantile Home Bank & Trust;
rain in the summer—both
acts
chases.
Obviously, any drop in was elected Vice-President of the
of God—and our government's de¬ food prices will exert
heavy down¬ Association. R. L. Dominick, Pres¬
cision to feed Europe despite the ward pressure on the price level. ident of the Traders Gate
City
effects on our economy put up But even if food prices do not Bank, was elected Treasurer of the
the prices of food, and
Association and A. O. Biggerstaff
general drop, I anticipate a moderate de¬
was
re-elected Manager' for the
prices and wages resumed their cline in non-agricultural prices.
Please note, however, I do not eigteenth consecutive year.
upward race.
7
The
v Remember*a,of
all prices^ food expect the price declines to be "Star" also reported: "The elec*
prices are the most basic. They too sharp or too deep. As I have tion of Mr. Kemper marked the
have risen nearly three times as
said many times before, a reces¬ third time he has headed the As^
much as non-agricultural prices. sion, not an old-fashioned depres¬ sociation. Officials are elected for
A bumper world
crop
of food¬ sion, lies ahead. :And it will be a one-year term, but it is the cus*
stuffs, particularly grains, would cushioned, but not prevented, by torn of the membership to re-elect
force food prices back into line the reduced taxes and by the in¬ the President after he has served
and would have a profound effect creased expenditures of the gov¬ a year. Mr. Kemper's first term
on
our
&vas in 1936."
economy.
So far, the ernment for ERP and rearmament.
7;'7777 7;' '■■'17.world outlook for such a crop is
7'-: *
7'■;
May I emphasize that this is
thaii the7bppbsit£7rwhcii adftsi-
-his
*
situation. The tire manufacturers,, small
turers
agricultural production, which
was nearly 50% above the 19351939 average, and the high prices
prevailing and expressed the opin¬
representation of mem¬
bers of Mr. Garvan's family, which
tain
*
isv evident in many the St, Louis Building and Sawr¬
lines; and, it is contagious! The ings Association was chartered
radio-industry,is facing a serious and opened for business in &
of
nessman
;
resistance
offset
a
37
Trust Company, but the history of
the bank dates back to 1857, wheii
Supply Catching Up With Demand
be
on
tomobiles will, in all probability,
decline.
Serious consumer price
bountiful production of food
crops.
When I was here, last
spring, I pointed to the high level
by
expected by many businessmen to
a highly inflationary influence
.
thus
will reassert themselves.
for
to the
are
normal
final result might be.; They seem
to think that they can
pass their
on
and
plan will; have little inflationary
effect on our price level.
Even
with the ERP shipments, exports
will be less this year than in 1947.
costs
v
buyers' mar¬
on to the
chinery, and, of course, food, the
cost accounts,
on
a
passed
.
Program, is being relied' on too
heavily by many businessmen in
ones,
be
.
mar¬
a
called
costs
over
line.
The main weakness of all these
cannot
of
determined,
so
Do Costs Determine Price?
.
ket
is just a simple
deflationary because they reduce
raising prices is all
sales and increase unemployment.
wrong.
It is, instead, as every
We now come to 'the $64 point.
businessman knows, accomplished
All of the pressures which we now
oy a never-ending battle to reduce
sume
■
needed.
increases in
wage
But, to as¬
productivity is low and
that it necessarily foUoVs that
v'■
prices have lo be high. This holds ■costs. •"V" '':
Under modern marketing condi¬
true only in a sellers'- market
demand
determines price
where inefficient proddcer's have tions
to be used to secure the total pro¬ and supply.
Normally, the price
duction
a
looked:
business
4 price you can get Is the ohe; over-
4 all
fact
that is always over¬
Wage increases in a sel¬
lers' market are inflationary, but
7:;.7v7f7;7'77
This is not to say that
pay.^ The
wages you'can.
it is too
as
much to hope that labor will in¬
crease its productivity under
pres¬
(1781)
are
banking
Sheffield, England. In
pleted.
of his interest and
lobby have been com¬
By acquiring this addi¬
tional building, the floor space of
the bank's quarters was approxi¬
mately doubled.
The Mercantile-
Commerce Bank and
pany was
Trust Com¬
formed in 1929, through
the National Bank
the merger of
of Commerce and the Mercantile
wegian
industry
Mr. Sneath was,
recognition
services in Nor*
and commerce,
in 1928,, knighted
by the King of Norway and ad¬
to the Order of St. Olav,
mitted
one
of the highest orders
way,
in Nor¬
of which he has since been
a
Commander.
38
COMMERCIAL
THE
(1782)
FINANCIAL
&
CHRONICLE
Thursday, April 22, 1948
The Outlook for the Stock! Market
conflict between the
ket
mar¬
customers'
the
and
analyst
broker.
Against Bull Market
Reasons
In
economist, not
ist, and it is for economic
am
an
chart¬
a
ish.
The
imminent
neither
is
Russia
reasons
that I turned and remained
of events
cause
g
(By HEINZ H. BIEL)
unreal
and prices, corporate 1940's will be far above the pre¬
profit and higher personal war average.
on
our
economy,
an
impact tar income taxes, allocation of critical
Marketwise, the New Look has
greater than the trend of domestic materials, priorities, etc. Add to meant two things: (1) Tnere is
this the threat of war, and ask
ousiness. I refer to the conquest
too much inflation frozen into our
of
Czechoslovakia
which is no yourself whether this would be a economy, there has been too great
less significant in 1948 than it was healthy climate for a budding bull an increase in the
population and
I don't know.
But I the standard of
in 1938. I believe that war with market.
living, for stock
position somewhat be¬
which may have
altered my
(Continued from page 4)
inevitable. But there
bear-
are
nor
so many
highly explosive elements in the
expected recession was
that
situation
has
war
become
a
getting under way early last year distinct, rather than a remote, poswhen for a variety of well-known
slbility.
The
chances
may
be
reasons the trend reversed itself,
three-to-one against a war this
However, despite the fact that year or next.
But I don't like
business
continued to boom all even that ratio.
It frightens me.
through 1947 the stock market re¬
Being a European by birth, I
may
be a little more sensitive
about foreign affairs, but I think
I am not any more easily scared
Why?
mained skeptical.
(1) Major
general
advances,
markets" to use the chart¬
"bull
ists'
term, usually do not start
when business, employment, earn¬
most
etc., are at their
is to
ings, dividends,
peak.
of
r
•
•
chan
can
rored these conditions. Wide seg¬
of
joyed
our
raise
to
high wage scales
set by
the coal, steel and automobile in¬
same
as
dustries; they had to pay the same
high taxes, the same high prices
for materials, etc. Such conditions
do not last indefinitely
and^he
balance
proper
will
be
restored
later.
sooner or
(3) The investors' doubt were
further aggravated by the decline
in exports and the deflationary
aspects of our fiscal and credit
policies.
Treasury cash ? receipts
in
far
were
of
excess
cash
ex-
that
doubts
serious
such
feel compelled to warn
I
against the
commitment of all
in
common
liquid reserves
stocks, not to mention
aggressive purchase of stocks on
margin.
v V
,
The present
,
t
market bears some
to
resemblance
last
year's May/
July rally which caused so much
premature jubilation on the bull
I expect that there will be a
side.
lot
in
stock
of
the
for
around
vis
made last month.- In any event, it
seems to me too early to bury the
bear market.
we
Wishing
far
am
from
convinced
Just
anticipated
of the
Stock
won.
this
of
is
year
pretty good period
a
for most industries and most com¬
panies.
;
,
1
\
*
/ ;•
.
'
*>'"
•
■
ft? \
f.'f
i
iv"\
Looks for 190 Industrial Average
p:i Level
In my
opinion, this background
suggests that the industrial aver¬
will better the 190 level be¬
age
last
more
discounted
recession which first
a
now
and Labor Day.
A
optimistic point of view re¬
quires certain assumptions in the-
realm of psychology—assumptions
a few months
will the 1948 market have which I don't think are warranted
For example, we
completed its downside readjust^ at this writing.
ment long
before business sta¬ could get' a tremendous lift to
reared its
ugly head
ago, so
stock
bilizes.
You may have noticed that these
comments were expressed in pas/
tense.
This was purposeful, inas¬
much
as if we are to properly ap¬
praise the slock price outlook
from here out we must first un¬
the
a
background
points
prices
as
to
wiiia.
15-point advance frorr.
I
That back¬
it, had and s ill
things: (1) Stock
and will sell higher or
see
two
can
have seen the
(2)
We probably
lows for the
nex,
six months.
prices
buying
We
security
realizes
make
that:
(1)
transition
our
to
normalcy without undergoing, a
major depression; (2) Normalcy
does not spell the frenzied war
years nor a period when everyone
has money to burn.
More immediately, I wonder if
the Italian election- results will be
as
the
important a market factor
Street expects; although
real
as
a
be made either way, the
case can
rests with
answer
psychology.
Personally, I rather think that
marketwise.
Market
tne
once
public
can
the election results will be a dud
that
As I see it, the New Look mani¬
preparations for war are necesfests itself in various ways.
sarBy "bullish." But armament exFrom the viewpoint of doing
penditures on a major scale may
commission business, it means that
very well halt, if not reverse the
recession tendencies which again we must sell individual values—
became evident in recent months. not the stock market.
After all,
! Instead
of
facing
an
era
of no one buys the industrial aver¬
abundance, we hiay re-enter a age, but many people do buy the
period of scarcity, of allocations, high
yields,
the
liquid
assets
1rationing. Congress has not yet available at a discount, the high
appropriated additional funds, and earning power, etc., characteristic
if it does, initial appropriations of the market place today. Seldom
may not be more than $3 billion in history have we had so much
in excess of budgetary provisions, salable
merchandise; all that's
But the anticipation of an arma- required is merchandising ^tech¬
ment boom may prove to be a nique. i w
/;
« '
j.
/.
likely to be
stimulants.
latest
half
tween
long before it arrived, and
year's market of indecision
lower earnings;
Merchandise
Market
postwar
the
by
second
boom
ground,
beast, half the
speculative battle is
the
the mid-March lows.
Salable
I
(2)
market
permitted
(By SIDNEY B. LURIE)
the nature
for
prepare
we
peace,
lows;
to the prewar
as the 1945
bull
turned,
The
return
derstand
(Continued from page 4)
helium"
mat
to
av¬
and I,, for my part, would
accept some profits on purchases
emergency.
pacem,
para
oe liule uouot
can
prices
186
industrial
sale
Dow-Jones
erage,
war.
But others al¬
increasing prices.
ad-
will follow this old Roman saying
wage,
ready were facing a buyers' market.
Yes, they had to pay the
Wallace
as
for any
prepare
"Si
the higher costs by
gnd recoup
We
surrender
can
have
us
There
en¬
unlimited sellers' market
an
could'afford
and
still
economy
Our
scare
a
wages
today and as Lindbergh
advised us 10 years ago. Or, we
vises
shaky in spots. The stock market
in its pronounced selectivity mir¬
ments
fight
a
to
about it.
do something
choice. We
a
without
(2) The boom was getting out
balance,
and
business
was
reaction
natural
have
,
fellow Americans.
my
on
excess
Superficially
High
New
Look
Unquestionably, if one thinks in
terms of the various averages, the
market
is at least superficially-
the old
high; we're still above the range
which has prevailed in most o
past years, and the drop from the
1946
top was only 28%.
But
This isn't part of the
but
illustration
an
of
fluence.
there's
the
New Look here, too, i.
sense
that the averages ait
not
representative
a
the
of
held by the public.
s.ocki
axiom
that once'
certainty becomes
fact, it
ceases
un¬
established
an
be
to
an
market in¬
a
(Continued from page 4)
'
(By ARTHUR J. MESSING)
so. It is likely to be the final
portunity.
.
.
op¬
.
Prospects of a minor reaction
(and it will only be minor .and
their
1946
highs,
we've
been technical in character) stem from
through a severe bear market in two underlying factors. They are
preparation for a lot of things (1) The scope of the advance it¬
mo?t 3>oteyqt ; psychological, factoy.
In
-iiililividuaL securities, -' the which haven't happened.
Further- self, which, up to April 12 has
You and I have been holding New Look means that the big ap¬
more, just as a number of indi¬ Encompassed 15 points in the Dow
back on purchases of shoes and preciation potential is held
by the vidual groups made their highs Industrials, 7 points in the Rails
sbirts and tires and perhaps even so-called
secondary
companies before the market as a whole in and 11 points in the Times Aver¬
a
car>
because we thought we rather than the industrial giants.
the spring of 1946, so did certain ages, all in less than four weeks.
might get them cheaper this Sum- 1947 is proof of the fact that re¬
groups
show definite signs
ol (2) The fact that the Dow Indus¬
mer or Fall.
Our wives postponed liance on the past drawing
power turning
the corner before
last trials have reached an important
| the purchase of sheets and home of a name rather than the dynam¬ March 16th.
supply area between 179 and just
furnishings for the same reason, ics of a new company, or one that
below 182, constituting the De¬
This does not necessarily mean
Weil, how do we feel about it to- has changed character, means the
cember-January
topside
shelf.
that we will get a Dow Theory
day?
Dont we all remember the loss of profits for your customers;
A consolidation period for a week
bull market confirmation withou
shoe coupons and the difficulty of A
or two
could very well take the
year
ago,
for example, you
the market first pausing to refres
getting a white shirt?
could have bought Denver & Rio
place of a minor reaction.'
*
issues
off
50%
With
and
so many
from
more
,
penditures and all attempts to re¬
duce income taxes met witlTfail-
,v
...
ure
until
very
recently.
The
Treasury also made every effort to
tighten interest rates, culminating
in
sharp
a
bonds and
decline
in
for
prices
preferred stocks
De*
in
cemoer.
;
,
(4) Despite
large
profits
in
many industries evidence accumulated
'
that ! the
rising
was
break-even
point
to
dangerously high
ever increasing volume
necessary to maintain earn-;
levels. An
was
*
'
These
same considerations apto business. Exorbitant prices
| ply
Many
other
reasons
could: be
have
mentioned for the stock market's
lack of
confidence in the per-
caused
many
manency of the boom, and the refusal of investors to be
tempted by
and low price-earnThey could not be
high yields
!
ings ratios.
tempted because the adjustments
of prices, wages, labor
efficiency,1
the
deferment
of
expansion plans. But if there
is the prospect of allocation of critical materials, or if there are to be
other restrictions, we might better
go ahead
now,
regardless* of cost,
Grande
N.
Y.
$10
share, while
per
sold
at
16;
where
they today?
are
In
the
.
itself.
for
Central
Don't forget that the trend
industrial production has been
downward in the last few
months,
of
that
final
analysis,
we've
ived through a tumultuous decade
which
is
bound
to
have
pro¬
foundly affected the position of
many companies.
You and I can
signs of business deteriora¬
tion have been visible, and that it
take time before the lates!
will
series of "shots in the arm" affect
the
trend.
After
all,
although
Should
take
such
minor
a
reaction
place at this time, I do not
think that it will go deep enough
to warrant losing positions at this
level
in
would
expectation
consider it
thereof.
I
astute to
more
add to commitments if such minor
reaction should develop. As to its
realizing via the tax cut, the Marshall Plan scope, the outside possibility >1
would judge to be the 172^-175
that selectivity is more than a and our
accelerated defense pro¬
pects,
but
are
they
adequate catch
phrase, that it has dollar and gram, this is only equal to about level where powerful support is
burea^"e7?1rl' P°ints» ; etc., if we face a war economy? For cents importance to our custom¬
which should follow the
7% of our national income. Fur¬ indicated; and with a good chance
post-war these reasons it may be entirely
that the 175-176 level would hol<L
ers.
inflationary burst had not yet
thermore, our $11 billion 1948-49
unnecessary to spend one addiMuch
to
the
t
disappointment of
taken place. Without such
Selectivity
defense budget can not be spent
adjust-! tional cent on rearmament to get
the bears, the upside gap of Sat¬
Industrywise, the New Look overnight, nor will the money
1Tie9. n.° ex^e^ded period of pros- this change in psychology which
urday, March 20, probably will
perity is possible.
means that Wall Street's habit of
spread throughout our industrial
can revitalize our
faltering boom/
NOT be closed for a long time,
applying a label and then closing economy; the over-all program
No Need for Depression
A View of Prospects
its eyes is a mistake which the simply does not require the same perhaps for years. As for the Rails,
whicn
indicate NO supply area
There is no need for a
alert speculator can turn to ad¬ physical facilities we needed after
depres-*
These
potentialities
already
sion or a.
here, I would only expect a sidebust.
But neither is have
We're living in too dy¬ Pearl Harbor. Much of the $3 bil¬
caused a strong recovery in vantage.
wise consolidation movement in
there any assurance that
prevail- the stock market and it may carry namic an era for a blanket classi¬ lion supplementary defense pro¬
u-
Business
inventories
ample for
present
be
may
.
business
recognize
this. fact
$14 billion is being injected
some
by
pros-
u
,
conditions won t lead to one.
We bears have been
accused of
ing
wolf
crying
ing, or
and
fostering,
a
thereby
further. We
and
caus-
we
depression. On
are
still in that initial
happy phase where
eat
can
too.
our
cake
But lets take
the contrary. By
warning and by of the prospects,
pointing out the danger we may
alternative:
help prevent a depression. The;
m
d
•
extreme
caution
being exercised
by retailers and
turers
many
manufac-
their
in
inventory policy
undoubtedly avert the col-
will
lapse that would
decline
ness
if
busi¬
a
should hit them
prepared. The
stock
occur
market
market
same
goes
which
which
now.
now
less
vulnerable
because
mained sober and did not
in a dangerous boom
un-
for the
ic
is
it
for
far
have
a^yocate
been
of
investment
an
a
very
outspoken
extremely liquid
policy. I remained
so
until last month when I modified
by
bearishness
and
advised
partial commitment of
the
reserves.
I
think
and have
it
realistic view
a
I
can
see
an
fication of good
subject
or bad not to be
individual exceptions.
to
Furthermore,
that there is
the
wnLj
war
in
mind
the
at¬
tached
to
the
textile
industry's
booming earnings is a case in
? ?
In that point for Wall Street is overlook¬
^ on a minor scale.
case,
domestic economic factors ing a number of pertinent facts:
(1). The industry is composed of
will again become of
paramount
various operations, and it is pos¬
stockpile TtrateL"'^—™
strategic
st0CKPlle. strategic materials
i™P°rtance. a"d
a
a "recession" may
slump,
because we
have
larger inventories and
become
be
far
vulnerable
more
in
many
other respects.
(2) The world situation remains
critical, in which case we may not
spend $11
defense
twice
It
is
gram
true
or
my
a year on
rearmament,
but
three times that amount.
opinion
must
war
$14 billion
or
and
that
such
pro¬
inevitably lead to a
with ceilings
economy,
sible for
perous
one
at
division to be pros¬
the
time
same
another
is having difficulties; (2) At the
time tfce industry was being liq¬
uidated in New England, fortunes
were
the
being started
South.
with- lower
in
made
capacity,
strengthening
and
via
earning
an
an
in
if
I'm
correct
in
my
ap¬
of the New
Look, any doubts and
fears Which later arise about the
business
outlook
will
not
have
than temporary influence on
the stock price structure. For one
thing, it seems to me that we have
passed a psychological land mark,
more
that the
tide has turned, and the
speculative fraternity will stop
trying to play a game of musical
chairs. Secondly, Wall Street sen¬
timent should be buoyed by the
immediate
fits
our
and
discernible
bene¬
-armament program-will
worst.
In the event that the Dow
should
Industrials
this move, any
minor
reach
thought of
reaction
should
182
aban¬
be
doned for the time being.
The
sum
and
talk, therefore,
been in
a
-
substance
is
that
on
even a
of
;
my
have
we
bull market for a very
long time, led by the Rails/ and
irrespective of the Dow Theory;
and that, subject to normal reac¬
tions
which
are
bound
to
occur
from time to time when the mar¬
ket
becomes
overbought,
the
trend will be toward considerably
higher levels.
I
wish -to
stress
one
important
factor, namely that there is
a
good
Chance that the market
increase
haven't started
hibit
great
internal
do
latter
part of the current month,
what
consolidations,
power
But
sympathy with the Industrials, at
give to the aluminum and copper
industry. Thirdly,
although
we
Furthermore,
population
normal
and
gram, for example, will go to air¬
craft research and development.
charm in praisal of the market implications
bargains for
The
suspicion
means
courageous.
^
bearing
never any
obvious; unanimity of opinion
usually
CPi^2 i?uS+si pip!s
and
shall
re¬
indulge
psychology.
I
;
we
of
the
on
think that the
ness
will
recession
be
a
boom, I
new
selective
now
cushioned,
in
and
busi¬
progress
■
perhaps
because
this
strength
would
might
toward
be
the
ex¬
the
final
opportunity for investors to make
'
T1'
:v,.
;.r
n::e
167"^Numbem692'.'V^^
Volume
't^i»i
i
purchases
and take
a
man
.long-term
(Continued'from
-
tJhion.
.
.
They
the
aware* of
are
those
basic economic weakness of their
last
important
Offense
the first
develop such
could
then
a
industrial
Should they
frame of mind,
read
we
morning in
one
our. paper that the" Ambassador
of the Soviets has rushed* paid
and
far
Soviet
of
aims
policy.;.
in
centers.
Echoing his Master's voice, he will
assert
any
far
that
from
Motors
nurturing
Sentiment
that the fo¬
such
on
a
tions of;;
bidders
would
the
present state of affairs prevails
itrvestchfS^ and ? speculators
will
doubt that many
be
for
found
So
continue- to
the
bid
long
for
nothing but peace.
In company's shares even if a market could conceivably lift them to
the name of .-his government he
for stocks still continued to exist mucfe; higher levels,
It seems clear, however, that
will utter solemn pledges of ever- Respite the havoc of war. If war i
lastihg friendship^ and. offer all' should come, who will be bold this situation.is unstable. The hyguarantees that Washington may enough, in its early stages, ltd .brid\e,conomy of declining, peace¬
.,
■
-Vwish^Complete disarmament, in- forecast with
ternatlonal
control
of
military
prodtictionv withdrawal of troops
from
any
^designated
its scope
assurance
time • business increasingly bol¬
stered
growing wartime de•> continue
indefi¬
nitely.; This unstable balance can
an(;j duration or the form and na-
ture
of
its
battles?
sUntil
region
threat has been convincingly renottiing will be refused;; A
moved> the possibility- of I actual
mfieent offer! If c&nnot be turned
physical- destructions wilL add itis
down.
It* signifies an overnight
shadow to the prospects1 of new
change ill the entire international and- probably more' drastic* excesspicture.
What wouldj it mean in profits taxation and governmental'
terms of stock prices?
controls
and
regulations.. It is
be
suddenly- upset by a relapse
towards either war or peace. The
realization nof this possibility by
'
Effect of Real
hard for
Peace
There
that
tidal
a
be
cannot
wave
doubt
much
and
relief
of
'
The
hope should be tremendous.
market would advance bv
It would light
leaps and bounds.
a
bonfire of celebration.
a
But after
investors would stop to
They would weigh against
each other the implications of the
stupendous economic changes that
while
think.
the
sudden
advent
of
real
peace
look
very
attractive
*
.
...
.
.
Neither War Nor^ Peace
Economy Bullish
jubilation would sweep the market. The resurgence of confidence
and:
to believe that stocks
investors,
to
,
me
then
would
.
Of course, we all earnestly hope
that the present state of interna-
tional
tension
will
not
reach a
The
ocint of actual shooting war.
other possibility, that of a sudden
durance of peace,
seems even
less likely. Certainly nothing in
the present Soviet attitude permits
us
to
countenance
such
a
.
public^ should exercise:
the:,
^
•
by
this: :mand$,> cannot
a re¬
fraining ^.influence on sentiment
and! stock; prices;
So .far we have considered two
factors uplyi; the outlook for pro¬
duction and earnings on the one
hand,
and
financial sentiment,
i.e., the willingness of the public
to buy stocks, oa the other. .Both
are
important determinants of.
stock prices.
But there exists in
market
stock
the
equation
an¬
perhaps still more po¬
tent factor. I am speaking of the
effective demand for stocks.
other and
Scarcity of Venture Capital
The
scarcity of venture capital
new problem in American
economy.. It was ushered in by
would bring with it. The need of
rearmament and the urgency of
hope.
Both of these hypothetical
events, however, are important,
is not a
the
They represent the two extremes,
the two opposite poles between
which American life will now be
the
moving.
Depending
upon • the
shape of foreign political devel-
were
would
ERP
would
become
disappear.
difficult
to
It
make
the American taxpayer meet
cosh
For the coming fiscal
their
year
alone
military and international
expenditures of over $21 billion j opments,
the economy of this
are proposed, or almost the equiv- ;
country will increasingly lean eialent of the entire public debtjther
towards
war
or
towards
after the end of the last world peaces And in the present posiwar.
Big slashes would have to tion of the business cycle, neither
be made in the Federal budget. of these two contingencies, I think*
In? the present stage of full ca¬ Is bullish for stocks.
Neither a
pacity industrial activity it should full-fledged industrial mobiliza¬
not take too long to fill the back- tion with the accompanying heavy
legs'Qf the still unsatisfied domes¬ taxation and regimentation, nor
tic
economic needs;
The recovery
European industry and agricultuue would make- Europe increas¬
of.
the
withdrawal
of
most
of
the
artificial supports whichnowprevent
the
unfolding of the defla¬
ingly able to cover its own're¬ tionary process are materials out
quirements. Eventually European Pf which":a< hull market is likely
"
.
1
-qxporfc surpluses would reappear. to be built.
j > \
Competition would return to in¬
For the time being, however,
ternational trade. And despite the we have neither a war nor a
.
offsetting factor of substantial tax
-
travel through
The cyclical re¬
possible and inevitable, this couns cession, whose clouds were begin¬
try would soon be facing a period ning to be discernible on the busi¬
pf contraction and deflation. No ness horizon, has been temporarily
matter how much Stalin might arrested.
The additional defense
reductions
that
would
become
sunny
valley.
During
Deal.
'30s;
the
only the supply, but the de¬
mand for private capital as well
small;
The
wartime indus¬
expansion, and the bull mar¬
ket
itself, were
practically fi¬
nanced by the government.
But
after the war a new need for ex¬
trial
appeared. Industry had
to take care of the backlogs of
civilian demand accumulated dur¬
pansion
to trade the
sur¬
their
injection into the
economy
render of hig plans for expansion will help to maintain the present
against the hooe of engineering level of prices not only by stimu¬
an
American depression.
lating demand but also by decel¬
,
; ;
What of War!
But let us also
liquidations.
imagine another
ened to take
This process threat¬
place at an increas¬
pace as a result of
The Soviets may be ingly rapid
economically weak but militarily fears of business recession.
strong. Just before the outbreak far. the rearmament
possibility.
of the
last
program
war
a
great deal
was
heard in London and Paris about
So
has
apparently brought just the right
the German bluff and many al- dose of actual and psychological
leged flaws were cited in the Ger-isupport to business. It means the
households.
oi
an
actual
stead of
The recent large
Southwest, ii
Colorado anc
made
possible bj
the
Oklahoma,
sprang
in
up
Texas,
Kansas
were
certain
advantages.
tax
these fortunes have oil
Most
for new plants and
was
equipment.
If
fortunate-in having built up
during
war vast liquid re¬
It is doubtful that with¬
the
sources,.
contributed
small
So
measure.
in
them
to
needs. As it is, its
of bank credit has been sub¬
tax
long
no
advices
of
customers'
men.
the
Republican
bring
a
certain
this
relief in
of
connec¬
particularly its community
property feature.
Not much of
this
released
purchasing power;
j think, is likely to go into the
tion,
this
as
will
cut
amount
lasts, not much of this
money is likely to seek the
new
)
Undoubtedly,
situation
■
Anc
It will rather serve
stock market.
this is
perhaps also partly respon-- to prevent further dissaving, fursible for the lack of market in- ther
living beyond one's means,
terest on the part of that large
it will also serve to bolster conclass
rich—the
farmers
sumer demand
and1 thus help to
been market; extend the period of high- corconscious.
But at present, with porate earnings. But I doubt that
taxes in mind, they may feel that it will contribute much to the efit is smarter for them to buy ff. fective demand for stocks.,, A sigof
few
to
new
have
They
never
additional;
invest
in
rather
acres
Sears,
than
Roebuck
nificant release of venture capital
or
flowing into the stock market, or
directly into industry, will have
It is not by the modest alleviaof the recent tax law thai
to wait for more drastic tax re-
Deere.
duction
tions
measures
or
for an
im-
basic shortage of venture portant change in the present ficapital will be suddenly replen- nancial background,
ished.
Moreover,' these tax reMy friend Gene Banks, over at
ductions themselves are far from Brown Brothers Harriman & Co.,
this
last
the
In
secure.
some of these factors
index basis so that their ef-
has reduced
submitted
report
President
to
week
to
Trumar
an
by his Council of Economic Ad- feet can be studied throughout
visers, these reductions are al- several business cycles. His work
ready called imprudent?* And the suggests that these financial facreport states that Congress should tors tend to determine the average
be asked to impose new taxes to price-earnings ratios at any given
compensate for added costs of the time. In other words, the current
preparedness program which arr low price earnings ratios may be
not balanced by a reduction in
caused primarily by the financial
government expenditures. In ad- squeeze rather than by the gendition, the report recommends, as eral expectation of a business re-
Ian anti-inflationary measure, an cession,
increase in the reserve require4- gested.
ments in order to hold down bank
credit,
the
well
as
of
use
this
restrictions on
as
credit.
consumer
Reserve
increased
for
backing up its policy of restricting
\.
two facts seem to
the
current business
up,
sum
and
scene
control
outlook
the
the
for
the present and probably gradually increasing
defense
appropriations
remain short of large scale industrial mobilization, calling for ad¬
.
ditional
credit.
has been so often sug-.
stock market. As long as
bank reserves as a means of
over
as
dominate
And
already the Federal
Board has again asked
Congress
To
j
week
taxation and governmen¬
controls, they will exercise a
stimulating effect on the economy.
Corporate earnings will remain
at a high level.
They will place
a floor
under the prices of com¬
tal
Effect
Depressing
Inflation
of
Besides,
alone
industrial'
enterprises,
directly or through pur¬
of equities, in
the stock
in
either
chases
market.
The
themselves
do with
inflationary trends
have
it.
a
A mere
stocks is not
able backed
out them 4t would have been
market.
permissible under the law.
have
demand for stocks
long period a rising trend of the
a
o;
as
ances,
through
It cannot sustain for
down.
goes
their source.
The: large
depletion and maintenance allow¬
ing
go
of dissaving in¬
investment. Caught in a
process
their effective
ranch¬
or
business firms
They
squeeze between growing working capital needs and high taxes,
fortunes which
ment
great deal to
desire to buy
It must be
enough.
mon
But the financial and
stocks.
credit background is such that it
will minimize the effective de-<
This will put a
mand for stocks.
ceiling
on
The un¬
mixed war-peace*
stock prices.
certainties of
a
by adequate purchas¬
up
economy will dampen investment
confidence. Once again the mar¬
demands on;
ket seems to be destined to move
to finance its
ing
use
funds which are typical of an in¬ for some time to come within a
Until
flationary period may leave many relatively narrow* grange.
potential
buyers
with
empty some decisive event forces us out;
hands. Only a constantly renewed of our present middle course be¬
stantial.
The
f 5
..
V
National
Association
of
Manufacturers estimates the cur¬
rent
deficiency of venture capital
$8" billion annually. It points
out that commercial bank loans
at
rose
rapidly
in
1946
and
1947,
The
power.
demand
many
stocks
for
can
create
a
rising price trend, Once the avail¬
able funds are exhausted, the bidding-up
is brought to a
process
common
stocks.
High taxes must carry the ma¬
jor share of responsibility for this
lack of enterprise on the part of
private
capital.
A well-known
brotkerage firm carried in last
Sunday's "Times" an advertise¬
ment featuring the advantages of
tax-exempt securities. Why should
investors in this uncertain period
w
tween
of
and
war
peace;
fluctuations of
unlikely
more
to
than
halt, the trend ceases to advance,,
then reverses itself as profit 1947.;»
side
from
and
a
stock
the range
prices is-
depart, I think, by
few points on either
the
highs and lows of
/
-
v
taking sets in.
effective de¬ A. D. Watts & Co.
which contrib¬
utes to the trend building process- Opens in N. Y.
The
of the
bulk
for
mand
in the course
swing,
,
stocks,
of
an
Alfred
important up¬
mostly,
comes
I
think,
periods
through the capital markets. Out when during prosperous
stream
of
swelling earnings
of this amount, according to Mrl. a
Schram's recent testimony, before flows into the hands of the mil¬
the SEC, only $784 million were lions of active members of the
erating. the process of inventory represented by
.
or
8%
yielding
of their
treasuries
tax¬
its
liepd.
American
machines
and appropriations now being slated while individual holdings of cor¬
products, :he could not be counted are not large compared to the porate securities showed little in¬
upon to sustain even partially the current
total annual production crease. This means that corporate
American economy by his own of
goods and services which is enterprises had to borrow from
orders.
This
imaginary
peace estimated
around
$250
billion. banks instead of financing their
overture on his part would not
They represent not much more capital requirements by the sale
have been prompted by a true than 1%.
But they are in the of securities. Only $4.5 billion of
spirit of benevolence. He could nature of marginal demand. And new money were raised in 1947
at least then try
securities
as
ing
the hostilities and to bring
plants in line with technologi¬
cal advances.
It was confronted
with large capital requirements
ual
bring,
can
much net return
taxes
are
not
high
responsible for the lack of
risk capital available for invest¬
peace economy. We
a
New
not
many cases,
maj
more.
as
stocks: and
investments
as
able
a more generous
dividends.
and
They
.
cumulated
them
val¬
uation-of each dollar of earnings
If the plants of General
shouid vanish from the
own have to face constantly
rising working capital needs. The:
higher cost of doing business and1
of personal living
exercises on
them
a
relentless
pressure.,
In
save
such
on
an
pow¬
industry could not fail tov
bring'about
of
,
it-causes actual grad¬
liquidation of portfolios ac¬
during the previous
repaid, it continued, by
an- investigation
of tax-exemp. periods of large savings by all
state and municipal bonds. Yields? those who need to replenish the
modern
industrial map, I
designs of aggression, the So-
viets want
attention
standards,
habitual
their
well
immediate outlook worked
dutstripped
w
true
their I investments.
be
cusing' of
disheveled, to the State De- rons of single-trip suicide planes
partment to protest against its ;! reduces to shambles Pittsburgh,
extraordinary
misconception
of Detroit and some other industrial
the
of
their
Those among them who
conduct independent businesses of
available
sums
strategical erful change in financial sentiAnd
this
turnabout was
thinking. Suppose the Soviets take iment.
the cue from the Japs who twice made even easier by the fact that
in recent history attacked without when it took place, stock prices
prior declaration of war: the Rus¬ ;were once more in a zone of deep
sian fleet at Port Arthur in 1904, j undervaluation ' on
the basis o.
and the American fleet at Pearl their current earnings and divi¬
dends;1 A change towards a more
Harbor.
Imagine that a sudden
attack by guided missiles launched optimistic feeling as to the prob¬
from submarines and by squad¬ able duration of profitable opera¬
place, will have been
completely smashed.
by
tain
living.
said this advertisement,
not
may
r
un¬
important factor.
an
has
defense
centers, and the vital oil industry
in
tion bill,
difficult, for them to main¬
more
tax reduc¬
new
of the ERP.
assistance of
war
draw will be
the
Even
stocks?
high-
quality .common
them the large
through I tax-ex¬
empt securities. If their taxable
income is <iver $16,000 they may
be' paying; taxes, under present
laws, of from 40% to 90% on some
doubtedly also developed other
powerful means of destructibnr IE f Change of. Financial
is inevitable, quickness to the fi:Smair wonder then
be moved to feel that in a
machines, to say nothing
of an atomic war, they cannot
hope to win. They might arrive
#t the conclusion that the war will
not have lasted many weeks be¬
their
the
With
war.
,
of
fore
ij^eiding !gbdd
stimulating environment are fur¬
ther: strengthened by a deduction
of taxes and by the implications
came
factor in the
a
Soviet physicists ttiey have
;
may
;
guided missiles' which
too late; to become
county. They realize; that- its In-'
dustrial
potential
is
infinitely
smaller than that of the H. S. They
war
risk their funds to buy even
high
panding. According to some re¬ ings, since the latter need a high
ports, it is powerful indeed. And' ;volume of production to-protect
the
imported German scientists Ithe narrowing margins of profits.
nave
been
developing
further And the beneficial effects of this
4)
page
period .of
extension .of the
military machine. The Soviet
Citizen may live like a dog^ but industrial aetivxty and prices and,
the Soviet airforce is rapidly ex¬ | therefore, also of corporate earn¬
^profUy if thej^so desired, just prior
Vo the .election. r-'<?Tv-t3v?v;
%%
(1783)
FINANCIAL\CHRONICLE
''THE rGOMMERCIAL^ &
*'
fices
at
D.
216
Watts
is opening of¬
William Street,
New
City, to resume his invest¬
ment business. Mr. Watts was for¬
York
merly in business under the same
firm name, and more
recently was
in the Canadian Stock Department
population engaged in the various
businesses and professions.
The of A. M. Kidder & Co.
other
reservoirs
of
investible
funds are of a more static nature f
and
tions
less
tion
their
of
effect on the fluctua¬
stock price curve is
the
marked..
A
period of infla¬
eliminates these
from the
becomes increasingly
practically
active bidders for stocks
market.
It
;
L. C. Fisher Co. Opens
ALA. — L.
C.
in the securi¬
ties business from offices in the
Sheffield Hotel Building, under
the firm name of L. C. Fisher Co.
SHEFFIELD,
Fisher is engaging
40
COMMERCIAL
THE
(1784)
FINANCIAL CHRONICLE
&
sible
The Fear That Follows Uncertainty
-
,
<
(Continued from page 3)
■
<
^
present,
a
attack
(and I am sure there are)
single "filing would have to
conform to the highest level of
accuracy and the greatest amount
of detail applicable to any of its
particular securities were held in portfolio to parts. Along these same lines is
the question of timing. Some data,
bearing?
,
• ^
/ vw v
to be worth very much, has to be
When a dealer spends considerable time and, in sonje obtained
quickly, even if in a
instances, confers benefits upon the company whose secur¬ fairly rough and condensed form.
For other: data; time is not so
ities he holds, is he to consider that as part of the yardstic
much of the essence.
In all of
which determines the amount of his selling price.
these cases the idea
which
have
the
any
■
dealer at his peril translate the connotation filing with a
ply does not,
"reasonable relationship to the market price
of the
term
single
a
when the SEC refuses to define
single
agency sim¬
a
his business,
the
disclosure
data.
of
A
requirements
good many
are
for
the
.
much
longer will this regulatory product of an
continue to function? The emergency is long
When will
securities industry again
the
be restored
to its freedom and enabled to operate in an uncontrolled
economy? When will the State take its nose out of business,
excepting only the business of governing the people in a
system of free enterprise, the system that characterizes the
over.
American way?
}
The
longer we examine the work of the Commission
during the span of its 14-year existence, the more firmly
convinced we become that the public interest requires aboli¬
tion of the SEC.
If the members of the
Congress had an opportunity to
carefully study the Commission's reach for power, its exer¬
cise of unauthorized legislative
function, the ^hardships that
it has worked in the securities,
field, We are of the
which
sums
waste of
opinion
generally would feel that all budgetary
subsidize
the
Commission
constitute
utter
an
public funds.
What Government Expects
iigsioi
a
size
central
of
required to
form
the mini¬
mum
requirements of a group of
agencies.
It seems to me that
under
present conditions to pro¬
pose that every
company about
which any agency wants
any data
should furnish all the data that
any agency might want would be
a
grave imposition and a
huge
fcurden to corporations
It would
generally.
necessarily result in the
accumulation at great
expense of
a whole mass of
unneeded mate-
rml.
On the other hand, to seek
to have such a
general form but
to permit or require omission
of
parts not wanted, would result
in
a
sort of jig-saw puzzle affair
that I,
personally, feel would be
difficult and more uncertain
in operation than the
present sys¬
Even if the proposed
more
tem.
agency
were
confined to the collection of
financial data instead of
sll
including
of
nomic
the
various
data
government
that
sorts
are
of
eco¬
essential
to
activity, the resultant
form would have to be measured
ia ounces, not
sheets, and would
increase
amount
materially
of
such
data
the
to
total
be
col¬
lected.
'
There remains
ity, of
course.
a
third nossibil-
The central
could
agency
request data from corpora¬
tions, or lists of coroorations as
reeded, and
ticular
specified by par¬
agencies. As the official
as
snd sole conduit for such
requests,
it could screen and
reject requests
made
data
by the agencies
as
already in its files.
ficulties in such
a
supply
The dif¬
procedure
the expense of
duplicate
scarcely
are
handling
data, the time consumed in
such ail indirect process of as¬
sembly, and, most important, the
maintenance of a staff qualified
expected
two fields with unfailing accuracy.
It
that
interest
may
you
to
know
some
mental
years ago an experi¬
overall form was worked
me
submitted
for
the
suitable
the
sale
statements
the
with
Exchange Act.
tne
under
And the Exchange
permit the filing ot
copies of the stockholders* report
in lieu of the financial statements
called
for
by
by
Form
either
case,
of
course,
ments
must
10-K.
the
In
state¬
the
periods
called for by the applicable forms
and must substantially conform to
the requirements of Regulations
S-X.
In practice, neither of these
permissive rules has been utilized
cover
to any real degree.
far
as
fected
It appears, as
I can determine, that af¬
companies have made a
business
decision
that
a
fresh
or
different
filing is desirable and
preferable;
moreover,
from
a
strictly accounting viewpoint, re-
a
small
men,
it':
a
rather dis¬
of
and
accountants,
other business¬
and
exercise
no
judgment
than
more
fice,
it
red
would
like
much
independent
an
formed
but
in¬
and
served
forwarding
a
look
what
is
to
me
as
of¬
very
called
tape."
deal
directly with the
personnel
of the
to use,
pass oh,
agency which
is
the data being
I do not believe, for
or
furnished*
example, I would like to have to
discuss—or
with
argue—tax
through such
or
questions
inter¬
an
mediate agency. Nor would I like
to
have registration
statements
for
the
sale
through
an
agency.
I
prefer
of
securities
intermediate
quite
am
discuss
to
flow
central
I would
sure
such
problems
Bureau or the
directly with the
SEC.
Then
the
there
law
differences
are
to
as
in
the
resnonsibility
reporting com¬
assumed
by the
Consider, for example, the
quite different liability provisions
pany.
of
just three
laws:
the
the Securities Acts; and
eral Power Act.
If but
tax
law;
the Fed¬
one
filing
is to be made, it seems to me that
the highest level of liability would
have to be applied to all of the
information filed rather than just
to the part needed under which¬
ever
most
law
has
rigid
in
fact
standards.
if, there
are
accuracy
and
set
up
the
Similarly,
varying degrees of
detail now permis¬
of the forms and set
them
out in
single regulation applicable to
all of the, commonly used forms.
a
A
second
step was the adoption
liberal rules as to incor-
of very
poration by reference of exhibits
and financial data from one form
another.
to
A third
permission
to
step
use
the
was
prospectus
a
under the 1933 Act
as
a
basic fil¬
ing document under the 1934 Act.
Finally,
there
was
determined
a
attempt to adopt, under the 1933
registration
form
that
applicable to most fil¬
ings—the
effort extended
over
Act,
a
would
be
five
some
birth
kinds
S-l.
in the supplemen¬
forms
issuers
of
Form
present
as
S-series
tary
and finally gave,
years
the
to
In this form
an
for special
attempt was
abandoned
was
as
un¬
workable and impracticable.
It
also
may
interest
to
happen not to have
bounds.
best
of
my
you
make the decisions
knowledge,
only
Department
of
Commerce,
the
two companies have ever availed Federal Reserve Board or the Federal Trade Commission. Finally,
themselves of that privilege.
I am personally very much in there are the reports whereby a
favor of another approach to this
problem
though experience
has shown it to be a thankless arid
even
difficult
task.
existence
reau
a
There
division
is
of
now
the
in
Bu¬
of the
Budget to which the
Federal Reports Act of, I believe,
1942 gave the job and the author¬
ity to comb over the reporting
requirements
of
almost
every
agency and to suggest or require
elimination of unused data, sim¬
liability of the declarant is estab¬
lished, as in the case of tax re¬
turns.
ried
Consideration
purposes
and
of
uses
such
of
va¬
data
leads inevitably to the conclusion;
I think, that a single, multi-pur-
would not be in the best in¬
of those who file the data,
of the agencies involved, or of the
pose
terest
public
users
of the information.
I do not want to leave the im¬
pression that nothing can be done.
plification
unduly complex re-- Federal reporting has grown up
quiremerits, utilization of data very much like Topsy—it just
already obtained by other agen¬ grew and very haphazardly. There
cies and so on.
These, it seems are unnecessary
duplications,
to me, are the essential functions There are undoubtedly many in¬
of
Its
the
central
task
personnel
is
agency proposed.
tremendous
and 1 its
overworked,
contribution to
yet
its
stances where two
cies could
or
more
agen¬
get together and use a
single form,
exchange informa¬
tion.
There is a lot of data gotten
that is put to little or no use. And
or
simplification, par¬
ticularly in the field of preven¬
tion of additional reporting bur¬ it does seem at times that an ef¬
dens, has been very large. You fort has been made to make simnle
may
have seen its trade mark requests as complicated1-arid ab¬
"Approved by the Bureau of the struse as possible* or to vary them
Budget" in the corner of some just enough to require,^ separate
of the forms you receive, i For the report and a Separate compilation
As
whether
a
is
of uncertainty as to
particular fact or cil*-.
a
cumstance
pecially
result there
al¬
ways an area
the
technical
was
the issuance of
accounting
regulations,
S-X, which deleted detailed ac¬
counting requirements from most
step
for reasons of the national
safety.
In other cases, the in¬
formation, while public, is pri¬
marily to enable an agency to
war,
to
the
early
single
business reasons, or in the recent
rather
with
f.1' t1.3?
that
prefer
deal
information
group
intended
"more
And in.any event, I
think most of us would
to
maximum
requirements vision of previous statements may
simplify by clarification
of agencies. It often be essential in order to make ,of riems, elimination of burdena fair presentation in the
one
of
the
light of \ son)e details and concentration on
agencies request the data from a subsequent knowledge, so as to j
issues.
Much remain^ to
sizable group of companies and "throw back" to the affected years
j jjf
?n
Is direction both ir}
that
each
of
the
drafting of requirements and.
cooperating costs, losses, and income or rev- I
agencies, would then take from enues whose existence or extent in their day to day administration,
the
data
that
which
it
would became known only long after is¬ as ! am sure we who have to use
otherwise have had to request it¬ suance of the original statements. the forms will agree.
J
self.
This question of administering
By the time the minimum
It seems to me that evidence of
requirements of each agency were this kind touches the heart of the the specific language of the re¬
collated,' Jthe form had grown to matter—that the real
difficulty is quirements has always been very
pome
30
closely printed pages the different purposes for which troublesome. No general language
calling for all the usual financial information, financial or other¬ can so precisely apply; to any
data and a mass of semi-financial
wise, is obtained and is used. particular situation as in all cases
and related figures. Worst of all,
cover, specifically- thebasics
Some of the material is obtained to
several of the agencies whose in¬
business or. financial. questions!
specifically and primarily to en¬
formational requests were quite
that the case presents. Of neces¬
sure disclosure thereof to the pub¬
detailed
in
specific areas indi¬ lic at
large, or a segment such as sity, the language of a form must
cated
that the receipt of such
be broad enough to call for vital
investors, in the exact form in
data from about one-fifth of the
data in a variety of changing situ¬
which
filed
by the
companies.
ations.
It must also be suffici¬
proposed list of companies would This includes most of the
filings
be
entirely sufficient for their with
SEC—saving only the few ently precise to keep the scope of
needs.
After presentation of the
its
inquiry
within
reasonable
given confidential treatment, for
of
required of it,
as in the case of filings with SEC
know, if you
looked into the Securities Laws
by utility-holding companies un¬
and the rules issued under them, der the
Holding Company Act, by
that there
now
exist
railroads with the ICC, or by op¬
statutory
provisions whereby certain util¬ erating
utility
companies with
Still other reports are
ity companies required to file the FPC.
with the Federal Power Commis¬ required for the purpose of pub¬
sion are specifically permitted to lishing compilations of statistical
file copies of such reports in lieu data for general use without dis¬
of those called for by the SEC closure of the position of any parunder the 1933 and 1934 Acts. To ticular company—for example, the
special problems of a vast variety
of data.
If the agency did not
in
der the 1933 and 1934 Acts. An
rules
Act
primarily
public, the
has
i
filed
already
Commission
the
agency
i
under the Securities Act to incor¬
porate
filed
a
securities
of
is
use
to
distribution
Existing
Commission
rules permit a registration state¬
for
making
Accordingly, much
" deY°.ted within
the SEC toward devising simplif'ed forms for filing purposes un-
investors.
ment
Budget
is
a special
simplifica¬
tion of its requirements and the
accumulation
of only necessary
the
statements in
for
the
and
by
interest
past decade or more."
There js
none, so far as financial data goes,'
reproducing
of
work
collecting
ports for new financing versus an¬
reports
pre¬
Bureau
at
direct
for
your
of the "necessity: for separate re¬
nual
are
out to cover certain
controllers,
of
be
knowledge to distinguish the
and
idea and the form to
agency, that is
that would be
cover even
could
tinguished
_
(Continued from page 23)
idea of
the
who
to have the breadth of experience
was
that Congressmen
asked
problem
still
members
to discuss the question
of
one
.
'
emergency
further,
form
the problem of public
forget
we
purpose of providing public
in¬
breeding ground of fear.
r
The securities industry in its present anemic state has formation; others, and these prob¬
ably include most filed data, are
many insufferable burdens, and the Commission appears to
to secure data for the administra¬
be an artist in further provoking it, as witness its failure to tive
purposes of a single agency
treat confidentially the annual financial statements filed by and are kept confidential or, if
registered dealers and brokers pursuant to SEC require¬ published; are put out only in
the form of overall or industry¬
ments.
";,v .v • v •r'
* •'r'.
•
■ •".
wide group figures.
Here again
The Commission permits a financial magazine to bolster it seems to me that
safety calls
its circulation campaign by openly boasting that it will for an all public or all private
filing basis rather than a single
publish in detail all of these financial statements.
There seems to be little limit to SEC daring when it filing with the public or private
decision
made
in
the
agency,
comes to the invasion of the right of privacy.
probably
by
clerical
assistant*
How
the
narrow
except as there is a necessity for
foisted upon him are filing
and the uncertainties that have been
;
To
these
real progress.
Where, data
;
tate.
the
hard
is
technique would necessi¬
agency
But
data.
which
lution which the single collecting
as I see it, fill the
bill and would increase materially
Yet, this he must do if he is to continue
•
more
the
1948
cisely the areas at which the Fed¬
eral Reports Act is directed and in
problem promises
results than the grand revo¬
the
the burden of reporting. Nor must
it?
of
that this
satisfied
am
on
.
.
of
Why must
I
Thursday, * i\pril 22,
be
must
when
the
whether
prevent
other
disclosed,
question
that fact is
es¬
is
to
being
necessary
from
data
misleading—and the furnishing of
such additional data is a specific
statutory requirement. Its omission
brings into play some of the se¬
vere liabilities imposed by the stat¬
utes. Of course, an administrative
agency such as SEC has no right
or power to insist upon the use of
specific language.
It must, how-
eYf,r' revl®w whatever is subnutted to it and if it feels it not
!-0 be acceptable, its redress is the
issuance of
deficiency, followed,
by hearings, stoporders, injunctions and whatever
if
a
necessary,
other
means
of enforcement of its
views the governing statute makes
available.
On the other hand, the staff
members of many administrative
agencies,
such as SEC, if asked
whether this
this or that
such
or
to
as
that language, or
or
presentation will;be
cause
them
to
not to take, further action,
take,
will
ordinarily indicate their position^
As a. Prap^.cal
igencies of time
able
nature
matter, - the exand the unpalat-
of
alternative
the
of action
frequently compel
acceptance
by
a
registrant
of
language indicated by the agency
course
acceptable,
as
ings
as
sirability,
I think
far
from
—"What
may
real
or even
its
accuracy.
I have wandered
the
announced
pretty
subject
Government Expects
Corporation
like, to
though 5 the
even
have
misgiv¬
to its materiality, its de-
company
of
I would
to it .now—but to
Reports."
return
limit my answer to my own
feel-
ings
Such reports
filed with the SEC.
expected
be
reasonably
can
to
tests:
these
meet
(1) Conformance to sound ac¬
counting principles—to what are
often called
generally accepted
accounting principles applicable
to the facts of the case. Of course,
the excellent.
the
tween
field
of
careful
able,
of language; pre¬
physical form that
discloses rather than buries; the
and occasionally as to
principle, admittedly
in wide use, produces an absurd
result in the particular case; or
to
ments
the
the
and
form
as
tent
the statements and
the
of
to
furnishing
to
Disclosure
information
of
to prevent the re'quired
from v being,
as
a
whole, misleading or a half-truth.
necessary
information
Consistency
(4)
related
with
financial data otherwise published.
Statements
meeting these tests
the
credit
method
and
kept
which
of
these
developed,
were
two
and
groups
the
proce¬
dures used in connection with
based
are
each,
legal
different
upon
A recognition of these
concepts.
differences will facilitate
understanding of the functioning
of each group.
some
go
of
We shall point out
differences
these
i
better 1
a
The
Term
of
money
The
rower.
,v
previously
as
loaned to a bor¬
so borrowed
money
be use for any purpose the
It may be used
to meet emergency expenditures,
for necessitous purposes such as
may
borrower wishes.
Money
form
credit,
of
r^r
I made than is
.
loans.
A
ma¬
this
percentage being applicable
to a specified period of time. The
usual, and customary period of
statutes, however, are of a scribe a "split" fate with one rate
special nature and permit either | for the first $100 of the loan,
acceptance of deposits under another rate for the next bracket,
prescribed rules or the sale of in- and still another rate for that part
vestment certificates
—J
J
1
Statutory
limits
'
"
both.
or
to
as
;
-
.Credit Unions
According
Credit
unions
place
the
or
The
acts
statutes. We shall note these
special statutes later.
usury
The extension of
personal
to
recent
laws
upon
the
amount which any one borrpwer
.,
|.n some states to have the $300
estimates
are
these
/Industrial Loan
others companies
are
required to
"a certificate of convenience and necessity" before they
nrocure
|
Companies
finance facts account for the low overhead vestment. Their capital funds
costs
In
institutions
these,
have
as
secured
in
the
same
are
fashion
as
addition
groups,
can
operate in the state. Generally
their
credit
money
tal
loan
personal
loans
lion.
not
departments.
exceeding $45 mil¬
Previous
number
and
smaller.
may or may
additional security is not required.
"£his is especially true of the
called "small loans"
or
personal loans made
so-
individual
For
to
amount
this
time
that
were
their
v
'•
•.
upon
an
may
poses
in
basis
commonly
two,
an
loans,
<
so
increasing number of
that ribvr
a
consumer
number of
used
ways,
is
pur-
but
that
a
of
form jo^personalIoans.;7
some
.
■
.
...
.
oh
,
ating in most states under special
the
which
statutes
usual state
usury
tions
statutes.
in these
supplement
banking laws and
Because of varia¬
state
statutes, it is
difficult to describe with precision
erations
of
these
companies; In
general, however, they
acterized
June
(1)
ment
-
Tabulation of data from insured
commOrcfah1 banks
.
,
by
two
are
principal
^29,
by the statute.
is
It
FHA Loans
They
collateral
a
the
com¬
above Those in the industry estimate that about 50% of this total
might be classified as industrial
companies
50%
and
as
The Federal Reserve Board esti-
the
industrial
end
Jtaled
of
loan
by
*
1947,
By
$134 million,
Small Loan Companies
loan
loans
to
insured
be
under
definition these loans
our
considered
be ?
credit"
since
may
"consumer
as
they
generally
payable upon an instalment re¬
payment basis, covering a period
of time limited up to 36 months.
are
are
not to be confused
mortgage
real estate loans
longer period. /
These loans
with
which
run
for
a
Charges for loans insured under
are determined by the
lending institution and may be
any amount so determined, sub¬
ject to the state usury statutes, so
long as these charges do not ex¬
ceed the top limit set by the Fed¬
eral
Housing Administration m
the rules governing such charges.
Such charges include FHA insur¬
ance
costs, established by FHA
authorities, which at the present
time range from one-half to three-
companies
1
fourths of 1% per annum.
are
by an institution depends upon its
operating policy. Some organiza-
or less specialize in
this type of loan and the purchase
of this
i.1
to-
•
_
A
n
>
tutions
gree
tals
known generally as "small
bor-'loan laws."1 These laws permit
^
J*
nvi
J
+L/\
VMirnnn CA
type of paper, while others
have only a nominal volume of
these loans.
The number of insti¬
or¬
in
the
these
Title I of the Federal Housing Act.
at!' tions more
companies
December,
char¬
fea¬
extending
credit to consumers folr
consumption purposes also make
loans for the purpose of the repair
and modernization of real estate,
money
The amount of FHA loans made
mates that loans outstanding held
by
the financial institu¬
of
tions and organizations
industrial loan companies.
co-maker or other /statutes
supplied
estimate
instal¬ ganized and operate under special
and
enabling
state
either by the permissive
specialize
loans secured
signature of
to
number of "industrial loan"
banking
Many
FHA Title I
difficult
panies as contrasted to "industrial
banking" companies. A total num¬
ber of these combined groups has
been given under our discussion
of industrial banking companies
Small
majority of tures:
be classified commercial,r banks: make
discussion
.
all of the characteristics of the op-
However, with the last decade
in- banks have been making
stalment repayment basis,
or
-cP:
.
type of financial institution oper¬
state
•
.
likewise are a specialized,
even
this
such loans.
or
laws.? This group of companies
had loans outstanding T>n that date
in the amount of $713 million.
money
reason,
and
not be
accompanied by the giving of se¬ others, other specialized types of
financial
institutions
were
de¬
curity for its repayment. Much
of this type of credit is extended veloped to make such loans and to
upon a "character" basis and an serve the economic demand for
a
loan
$300
may owe any one
without pay.
serve
activities, of
and
...
:
of
a
•
statistical
limit
a
.
.
stated amount
a
small
dustrial
or¬
an inseparable part of our
recent years. Earlier, commercial these organizations had $269 mil¬
statutory law in all jurisdic¬ banks generally refused to make lion in loans outstanding as of
tions throughout the United States. this type of loan and looked upon Dec. 31, 1947.
^ -t'"
•■ •/•''' :
hi many states, however, there are it as unprofitable, risky, and as
Industrial Banking Companies
special laws, permissive in form, being outside the expected func¬
which pertain to interest charges tions of a commercial bank. In
Industrial
banking
companies
on designated types of loans and
1929
probably fewer/ than 200
and/or Morris Plan banking cornwhich allow interest charges high¬ commercial banks operated con¬
er
than those permitted by the sumer loan departments with to¬ panies
Money credit
Generally,
of Dec. 31, 1947, amounted to $168
supervision of a Board of Direc¬
*
tors, Committee, or other group million.
of officers who
in
whether
instalment .loan
there
cooperative
are
forms of financial institutions
own
for
of the loan over
size]
the
of the loans which may
foecome
v
the
pany
organization and operation. the time it is made. The statutes
In the smaller banks such activi¬ In addition, there is a Federal law governing
these
institutions as
ties may not be segregated into permitting organization under a well as industrial banking firms
time used in relation to this per¬
Federal charter in any state. As of usually permit a "discount" rate
a
special
department, although
centage statement is one year.
this is the case in almost all of February 29,
1948, 5,280 credit of from 6% to 12%, depending
Interest charges are regulated
unions were operating under state upon the state law. In addition to
j the
larger banks, particularly
in all states by general statutes those located in the larger cities. 1 charters, and 3,907 groups were the discount charge, under certain
governing usury. The authority to ;The extension of these so-called operating under Federal charters, conditions, other charges such as
so
regulate is well embedded in I personal loans by banks on any a total of 9,187 units. According to an investigator's fee, delinquency
the English common law and hasi sizable scale is a development of the Federal Reserve Board reports, fees, and the like may be allowed
consumers
by
the
are the funds of other non-bankto
these
larger compared with other financial or¬
ipg ^iuanciaLinstitutions,
7 1
credit is extended ganizations that operate without
these subsidies. Charges for lpans
In the case of both industrial
by miscellaneous lenders such as
in form.
'
'
made to credit union members are banking companies and industrial
pawn brokers, remedial loan com¬
Where money credit is extended
governed by the statutes pertain¬ loan companies; loans are made
panies, and individual lenders.
the lender makes an "interest"
ing to them and vary in amount. upon
an
instalment repayment
Commercial Banks
charge which, by business prac¬
The first credit union law was basis and charges are based upon
tice and in contemplation of law,
"discount"
principle. - These
Commercial banks usually make enacted in Massachusetts in 1909. the
is stated as a "percentage" of the
are
their instalment
or
usually deducted
single pay¬ Today 44 states and the District discounts
^principal" amount or sum loaned, ment loans through what they call of Columbia have laws permitting from the proceeds of the loan at
quently, the needs for and use of
money credit are many and varied
to
permitted
of
state statutes require that
governing groups are subject to .? Industrial loan companies op- j
general state or Federal supervi¬ erate generally in the same fash-, c01*Pames operating under them
ion
as
the
by a variety of financial institu¬ sion,depending upon the law under
"industrial banking make annual reports to state autions. Principal among these are: which the
and , thorities and their operations are
group is chartered. Of- companies. t The distinction
classification between these two.,
Perlbdic inspection t>y
ifice
(1) Commercial banks
space
is usually furnished
£
(2) Credit unions
j without charge by an employer or types of organization are some- state ofhcials. of 1947,
As of the end
what
approxi¬
arbitrary and
are
based
(3) Industrial or "Morris Plan" iother interested organization or
i person. The groups are not subject
largely upon the fact that indus- mately 5,500 individual business
banking companies
to Federal income taxes or other trial loan companies do not accept units and branch offices were op¬
(4) Industrial loan companies
(5) Small loan companies (some¬ forms of income taxation. These deposits or sell certificates of in¬ erating under state small locia
an
the liquidation of already existing
obligations,
to
purchase
goods,
wares, merchandise or services, or times
called
foe put to any other purposes de¬
companies)
sired
by the borrower.
Conse¬
/
a higher
charge for loans
extended in the single payment loan, is extended
noted, is credit
form
Credit"
"Money
credit,
these companies to make
are
approximately 425 in- Lmit in the small loan laws raised,
banking and industrial ; Small loan statutes are5 in effect
ganized usually among a group of loanfirms(notincludingbranches) .in more than 30 states. In prac(1) Instalment Loans—those re¬ individuals having common in¬ operating in the United States; 95 tically all of these states the compayable upon an instalment pay¬ terests; such as the employees of of these operate under the so- i panies which operate under the
a single employer or a school or a
called "Morris Plan" and the rement basis, and
>
j statutes are required to be 31(2) Single Payment Loans—those church group. Their purpose and maining 320 firms fall under the censed and are under the general
repayable at a single time and in function is to take deposits from "industrial banking" or "industrial, legal supervision of a designated
*
a
single payment, commonly at and make loans to their members. loans" classification; Total loans J state official *or board. Minimum
the end of a period not to exceed
requirements ■ are
preThe management of the indi¬ outstanding in the hands of "in- capital
90 days.
some states and- id
vidual credit union is under the dustrial banking" organizations as ["scribed in
the
Institutions Extending Money
Money
loans-
,
Credit
,
altogether,
such
to this classification, jate .of interest
individual company at any particular time. Some
states place this limit at $500, and
a
few even higher. Where the
amount of the indebtedness exceeds the stated limit, the statutes
provide that the rate of Charge
million in automobile retail paper these institutions is between $300 shall not be in excess of the genand
purchased from dealers, and $512
$400, the figure being ap- eral usury statute for, /those sums
million in loans and paper for proximately twice the size of the loaned in excess of the designated
other retail purposes.
>
average loan made by small loan small loan limit.; During the last
companies.
few years efforts have been made
we
as
along.
modernization
its
of
clearly in mind. Federal Reserve Board uses
Historically, the legal background two following classifications:
out
although
tower,
not confined
41
-
liquidation, as
will be had if these two broad divi¬ stated in the lending contract. The
are
(1785)
(2) They obtain at least a part general usury statutes of the state,
their working funds from the .Some-of these statutes follow the
of consumer credit held by com¬ acceptance of deposits or the sale so-called
Uniform Small Loan
mercial banks is held by about of investment certificates.
(Law. Others embody some of its
900 of the 11,365 banks participat¬
The first company of this type!features- and vary therefrom in
ing in that field. More than half was granted a general charter as some particulars.
of
such
credit
is
held
by 192 a Virginia corporation about 1910.
Interest charges permitted un¬
banks.Of the
total
consumer
At the present time some 31 states der most of these small loan laws
credit
held
by
banks on the have general statutory laws relat¬ are based generally upon a "per
above-noted date, 41% of this to¬
per
month
ing to the organizaion and opera¬ cent
plan.
These
tal was in the form of instalment tion of this
type of institution. In monthly rates vary from state
cash loans, 28% in retail automo¬ a few states these
to state, but the top rate per¬
companies opT
bile paper, and
31% in retail erate under regular banking char¬ mitted
in
any
state
is 3^%
other than autos, including repair ters. Most industrial
banking com- per month. Some state laws pr£-
art in
(Continued from page 19)
sions
CHRONICLE
unnecessary
The Consumer Credit Structure
of the subject of consumer
FINANCIAL
be made
by the^e organizations vary from
state to state.
A common range is
from. $1,000 to $2,000, with a few
lion in personal instalment cash states permitting a top of
$5,000.
and their accountants still find
time to give earnest thought to loans and $535 million in loans to In some states the limit is stated
the best way of presenting the buy automobiles. In addition, these as a
percentage1 of the capital
banks held $487 million in repair structure of the organization. 7 The
end product.
and
modernization
loans,
$348 average size of all loans made by
mation.
(3)
&
itself); the avoidance
jority of the banks participating
repetition and com¬ in this
field
hold
only
small
plicating
criss-cross
references; amounts of instalment
loans, repand many more.
resenting in percentages from one
Fortunately, in addition to all to five
per cent of their total loans
the time that corporate officials
and discounts.
and accountants are devoting to
The Federal Reserve Board re¬
the formulation and clarification
that as of Dec. 31, 1947,
of accounting thinking, there is ports
abundant evidence that companies commercial banks held $717 mil¬
con¬
as
an
footnotes
readable
still
of
specific; infor¬
of
and
is
Commission.
(2) Compliance with the appli¬
cable requirements of the Com¬
mission
(indeed
footnotes
the
and
drafting of adequate,, informa¬
tive
pronouncement
a
a
elimination of trivia in the state¬
a
the
choice
sentation in
the
contrary
is not sus¬
of hard and fast state¬
principal tools avail¬
however, are well known;
accounting principles; as to which
are applicable under the facts of
of
the
into
lies well
artistry, and
The
ment.
is
The difference be¬
two
ceptible
disputes do arise in this area as
to
what' are generally accepted
case;
whether
COMMERCIAL
would comply with all require¬ 1946,
shows that
11,365 banks
ments, but they might not, even then held instalment loan paper;
so, be free from
all objection. 1.970 banks did not hold any of
There are still criteria whereby this type of paper.
v.;/'
to distinguish the acceptable from
About 75% of the total amount
statements
financial
to
as
THE
Number 4692
Volume 167
several
Reserve
that
participating to some de¬
in this phase of lending to¬
as
thousands.
Federal
figures
indicate
Board
of Dec. 31,
1947, these or-
(Continued on page 42)
•
FINANCIAL CHRONICLE
&
COMMERCIAL
THE
42 (1786)
,v
Thursday, April 22,. 1948
-
.
.
stops may become
double-edged. Tor once a stop
is broken, assuming it's a writ¬
market,
Tomorrow's
Markets
Walter
becomes
that is
Whyte
have to
Guard
prof
paper
by using familiar trading
f it
half at 32 % or better.
#
*
was
Last week I sounded
what
off
on
stock market news
was
what
and
expect from it.
to
profit even if it
much
too
in
doesn't
-t
of
with
tial
(1)
mean
points.
Stop should now be
raised to 5.
There's
torn among
under¬
seller and the buyer, based upon a
definite undertaking whereby the
informally
buyer
merchants. Under the
is an implied
the part of the buyer
amount of money
promise
to
a
payment" loans
are
banks
mercial
although
The
pawnbrokers,
financial institu¬
other
single payment
loans outstanding at the end of
1947 was estimated by the Federal
certain
made
at
crops
Groups
are
jjiif
haye
'
*
*
*
•
about 61.
now
A 'hi
\
This week's news has to do
Sell half if 55
is broken.
specifically.
chant is
When
^
The first was
ian -elections.
weeks. ago.
The broken.
second is still being weighed.
discounted
actual
In
prac¬
what to make of it so it
now
in at 52.
came
is
^
,wailo
between
of
ii
week
Last
the week
(and
before) I said that when there
two
are
contrary indications
in
chances
market
the
are
one
present
the
would cancel
the other and dullness would
result. Of
that
course
a
was
u
j
Li
,
mortgage, the seller retains
security title until the purchase
price is paid.
Under the bailment
lease, which is used only in.Penn¬
sylvania, the legal effect is some¬
what the
The
is broken.
United
24,
operate principally in large indus¬
trial centers.
Many of these companies had their origin previous
27 is broken; buy it back at 24
general statement.
But in
or better.
every phase of the market
*
*
*
cycle — dull to active — there
are
stocks that go off on a V More next Thursday.
—Walter Whyte
tangent. So even if the mar¬
ket itself may be dull, these
{The views- expressed in. 3M*
stocks can be anything but, article do mot
necessarily at any
and a possible collapse must time coincide with those of the
Chronicle. They are presented as
be guarded against.
those of
'essential
elements
have
upon
Federal
stocks for
all
some
the
in
makes
long of ten
time. They're
lenders
comfortable
to
(Special
to
SAN
The
Financial
Chronicle)
CALIF.—
FRANCISCO,
Weeden
hold.
&
Co., 315 Montgomery
They will probably go
Street, have added Philip A. Zim¬
higher in the future, but I
merman to their staff.
don't like paper profits to dis¬
appear, whether in airplane
stocks or something else.
Of With John G. Perry & Co.
there
course
is
sure-fire
no
guarantee that all profits will
hold.
The use of stops in¬
sures
always
that
a
in
(Soecial
to
The
Financial
DENVER, COLO.
Check
amounted to
has
Chronicle)
Frank W.
—
become affiliated with
G.
partially. There is
possibility, however, Building.
an
active declining
Perry & Co., Equitable
of
the
Our
the
to
credit,
Orders Executed
active
firm,
and
in
principal
commodity
the
are
total
the
various
serve
We
of
turn
the
,
;;
:
'
New
York
York
Curb
Stock
.*>/';
Exchange
lAssociate)
Exchange
■
Commodity Exchange,
New York Curb Exchange
New York S, N. V.
7-4150
Teletype
to
■San Francisco
Monterey
—
NY
1-928
Principal Of/ices
—
Santa
Oakland
—
New' York Cocoa
Exchange
New York Cotton Exchange
Private Wire
to
Sacramento
ways,
more
count
credit:
account
of
count
recent
in
or
tracts
of
known
for
merchandise.
services
are
There
Automobile
Reserve
(b)
Other:
$921
i'v;.
shall discuss these items in
Charge
account
credit,
the
that
wherein
instalment
to be made
are
no
on
detailed
number
Board
million
standing
■
..
that they
so
the
net
cash
Companies
y
it
is
pay¬
the obli¬
of
on
of
;
some¬
;
Instalment
credit
Dec. 31, 1947.
Instalment
Sale
sale
as
and
is
render
service to both retail
to instalment
buyers.-
The devel-
sales finance
opment of
nies
financial
dealers and
began
in
the
compa¬
United
States
around
1910, but their real growth
may be dated from the early 20's,
the period immediately follo.Wirrg
their
them has increased, the -number
of such units has declined -since
that
peak.
At
present
about 500 such
United
an
additional
that
there
are
companies in the
States. There
2500
purchase
small
are perhaps
organizations
amounts
Of
as a mcwc-Rpr lessminor
activity, while engaged in other
types of financial activities. 1;.V
paper,
j
A substanial number of com¬
mercial banks, especially in the
larger towns and cities, also purtail
.paper and «erve re¬
dealers
fashion
as
do
in
much
"the
sales finance
same
com¬
panies. This activity on the part
of these banks is \a recent ^devel¬
opment. Earlier banking organi¬
out¬ zations generally refused to handle
instalment paper and looked with
show
Credit
credit
sales finance companies
I chase dealer
data
professional
estimates
such
as
The peak, in terms
number, was reached
about
1925;
and, although the
volume of /business handled by
Frequently con¬
signed by the recipients
are
such
or organizations extend¬
ing service credit, but the Federal
times called "book" credit, may be
their
function
of
In
persons
V:
in¬
instal¬
World War I.
or
however, there has
growing tendency to place
(b) Service credit 1 ;v
Instalment sale credit:
v
selling
Sales Finance
1947, amounted
gation at stated intervals.
(or book)
-
and
It is in connection with the dis¬
Such credit is extended
stipulated
the
-
_r
upon
ac¬
years,
a
to
,
costs,
in their
contract,
price for
the goods which they have sold on
an
instalment payment basis,
t
substantial.
are
?.
\
or
con¬
secure'funds
selling prices
realize
it -upon ■; a >more formal basis in
cases where the amounts involved
(a)
I
We
other
may,
com¬
services—professional
credit
(a) Merchandise credit
(2)
and
ment
has been extended upon the same
informal basis as has charge ac¬
classes
are
instalment
clude these >sums
that
Dec. 31,
on
ments
Chicago
York G, N.Y.
of
depending
common
their
otherwise
or
ticipate the amount of this "dis¬
usually by doctors, dentists, hos¬
pitals and other such groups. In
previous years this type of credit
a-description
handling sale
Charge Account Credit
29 Broadway, New
Reserve
show
manual.
Sale Credit
the order named.
Direct
Barbara
Fresno
of
The
sell *a
specialized financial -organizations
ance
the purpose of such classifi¬
following:
(1) Charge
Inc.
(Assoc.)
■New York Produce Exchange
Wires
of
who
counting or sale of these dealer
instalment sales contracts that the
been
number
New York Stock Exchange
Chicago Board of Trade
Private
of
classes
dealers
Board's
Federal
States
Sale credit may be classified
Chicago Board 0/ Trade
COrtlandt
to
now
methods
Glasses
MEMBERS
San Francisco Stock Exchange
14 Wall Street
to
credit.
Members
Hew
principal
dis¬
or
charge ac¬
counts outstanding in the United
institu¬
used in current literature
Schwabacher & Co.
finance
the
to carry on their business. These
retail .dealers must therefore 'an¬
commercial
company,
.with
he later sell
retail
"discount"
security for
will discount
a
connected
should
tracts,
capital to
specializing in handling
The
institutions.
the
bookkeeping,
goods find it .necessary to sell
as
or
commercial
estimates
to convey a general im¬
of
items
Most
counts receivable.
this
financial
such
cation.
Joseph Faroll & Co.
needs
borrowings,
pany
extending
money
credit.
However* the information given
upon
appointment.
merchant
other
tions
a
write for
the
bank, sales finance
other
as
major
additional
(1)
for
retail
two
large volume of consumer durable
1
Telephone HAnover 2*6600
Pacific Coast Exchanges
of
costs:
incurred
cost,
these accounts with
whose
data available
no
volume
of
the
count the instalment sale contract.
credit,
to $3,598,000,000, the largest single
large enough to have;
consumer credit item.
i
any particular significance to the'
consumer credit field.
Service Credit
;
In the time at our disposal it
Service credit may be variously
has not been possible to give a
defined, but as the term is here
detailed and exhaustive descrip¬ used it includes credit
extended
tion of the methods of operation in
connection with the perform¬
mar-
or
into
runs
but it is not
experienced customers' brokers.
i?
costs
In fixing
charge"
consider
must
groups
thousands.
such
other types of financial activities.
There
Lets, has desirable openings for
on
establishments
pledge the accounts
States,
are
"time
"time sale" and (2) his "discount"
such
extension of
there
charge.'
"finance
dealer
handle his accounts, he will either
borrow the amounts needed and
above noted
is the
two
as a-
such
If
of
pression of the nature and func¬
security
Securities?
United
between / these
"finance
a
this
costs are included in the
original price of the goods sold.
•groups who extend such credit in
a
minor way while engaged in
will
Customers' Brokers
?
as
sary
Board
amount
organizations
tions
Pacific Coast
very
$120 million.
addition
money
of
John
them
in
chief function
that
and
black
,
them
total
which
price differential," but is common¬
ly referred to by instalment buyers
In
outstanding as of Dec. 31,
1947, in the hands of miscellane¬
ous
In
Weeden & Co, Adds
Reserve
the
sellers
at
collection, risk of loss, and other
the
loans
the author only.]
been
of
prices
of
small.
The
sale
difference
neces¬
estimate
condi¬
a
retail establishments. The number
now
credit, is probably
consumer
two
prices is known in law
general,
retail
merchants
who extend charge account credit
informal basis, and it is difficult
carry such accounts on their books
to have any accurate knowledge
to maturity.
If these are carried
of the scope of their operations.
for the usual period, no charge,
The volume of such loans, as a
separately
designated,. for
this
percentage of the total amount of credit service is
made. The
classes
We have
are
Buy it back at 16. comparatively unimportant.' Indi¬
Aircraft, bought at vidual lenders operate upon an
about 30. Sell half if
now
laws and their activities
under
as
general retail merchants, depart¬
ment stores, and similar types of
small loan
about 22.
same
which charge account credit is ex¬ 1 goods are offered—a "cash" price
tended to the buyer are: (1) his and a "time payment" price. The
1C
Martin, bought at 16,
SelVhalf if 19
G. L.
now
buyer,
articles purchased, or security for tional sale contract.
Most
retail
instalment
the liquidation of such obligation. !
ac-
65
at 15.
the
the
merchandise
is violated. Buy it back at 54.
fic in stolen property.
Rates of moraLcharacter, (2) his capacity
doing nothing. By the time
Dresser, now about 25%, charge are also regulated by many to pay out of current income, and
you read this the election re¬
bought at 22. Raise stop for state laws. Because of the risk (3) his accumulated financial re¬
turns will probably be in. At
factors and othey procedures in- sources. These are sometimes re¬
half to 23.
r
this writing, however, they're
•
volved, the charges made for such ferred to as the three C's of credit
Lockheed, bought at l*j, 4s Joans are relatively high,
-—character, capacity, capital.
still unknown.
now about 22.
Stop for half
Remedial loan companies are Charge account credit is used
y.
should be 18, with repurchase comparatively few in number and widely by retail stores, grocers,
*
Such
*
legal form may be
conditional sale con¬
by terms of the
by operation of law,
gets absolute title.
In the icase
of a sale coupled with purchase
money chattel mortgage, through
45 and 60 days.
articles
time
111<4UC
ct.t/
,
about
in
contract and
are
Itivities of pawn brokers are gov,2,. erned by local and state law, such
Sell half if 58 regulation being for the principal
purpose of preventing illicit traf¬
,
Douglas,
know
^
the miscellaneous class. The
Buy it back at 12%.
^
doesn't
market
The
^
period of time.
a
sold until the payment of the pur¬
chase price is complete, at which
when
seasons
sold.
bought on charge account, the
sent only a small percentage of buyer
gets the title to the mer¬
Consolidated Vultee, now
the total of all loans made in the chandise immediately. His obliga¬
1X1
UiC
about 15%, was bought at 12. [country. The pawn broker -group tion to the seller is general and
Half should be sold if 14 is is perhaps the largest single group without specific reference to the
^
airplane orders and Ital¬
with
mentioned
In terms of volume of loans made,
these miscellaneous groups repre¬
we
those columns.
over
contracts
~
$2,697,000,000.
Lending
and
accordance with these
or
methods of dealing.
agreed
.
of
Miscellaneous
the
Among city, merchants, practice J1;-either (1) a
usually requires that the credit ;so tract, (2) a sale coupled with ?a
extended
be
liquidated by the purchase money chattel mortgage,
or (3) a bailment lease.
10th of the month following the
;
month
in
which
purchases are / ' Under a conditional sale conmade.
In rural areas this -time
tract, the buyer has possesion ^of
the
article
purchased,
but the
may be longer and payment may
be
expected : or required to be y. seller retains title to the article-
made by com¬
and
amount
on
in
pay
customs
tions do make such loans.
change in Beth-
Jh® olt?t(£
pay the balance
purchase price in
at stated intervals,
instalments,
ed
reading it you probably
|
The miscellaneous 1 ending tice, however, the average amount
wondered what
it was all still good. Stock is now about groups previously referred to in- of time taken to liquidate the
35 %. You bought it at 31.
elude all organizations not other- average charge account on the
about. I warned you, however,
rafornillar bought at 55 is wise included in the groups which books of the ayerage city mer¬
that it was going to be one of
Caterpillar, Dougniaioo, is
After
to
agrees
of
credit is extend¬
agreement to repay it
single payment. Most "single
similar dur-
or
determined by fciis-
are
stood and ?ai^
upon an
auto¬
stoves,
as
conditions
law of sales, there
Reserve Board to be
no
credit, such
washing machines,
(2) the performance
or
of
sums
mobile s,refrigerators,
wares, or mer¬
service. Usually the terms fable goods.
These sales involve ,a
connected with formal agreement between the
some
payment
Although the majority of money
loans made are repayable on an
instalment
basis,
a
substantial
in
6%,
Avco, now about
percentage
time.
same
chandise,
and
Single Payment Loans
technique, maintaining posi¬ bought at;4%. That's a juicy
tions at
the sale of goods,
"
bought at 32 %. Sell half
breaks 35. Buy back the
was
Possibility of sharp break not
its
chance you
Anaconda, now about 37%,
By WALTER WHYTE=
removed.
Still
market order.
a
a
connection
in
extended
(Continued.from page 41)
,,
ganizations had outstanding FHA
insured repair and modernization
loans in the sum of $552 million.
take.
Says—
=
with the broker, it
ten order
L.-
used
disfavor upon the
principle of in¬
stalment selling/Even
now, most
banks in the consumer credit field
principally in connection with the
have
sale of articles
ing
involving substan¬
their Chief
activity, lend¬
"money credit" operations
as
or
V
Volume
THE
4692
Number
167
:
...
.
;
.
the "time price," "finance
;
Sales finance
CHRONICLE
FINANCIAL
&
like to allude briefly to the gen¬
eral relationships between the to¬
primary responsibility for fixing
charge,"
or
other similar charge — that
rather than the purchase of instal¬
ment sales paper..
COMMERCIAL
tal
amount
of
consumer
structure and the national
able inqome.
credit
companies may be
handled by each of the groups
as national, regional, or which the instalment buyer pays
companies. The operations —rests with the retail dealer sell¬ comprising the consumer credit
national companies cover - the ing the merchandise, and the deal-,
1929,
years
local
1947:
entire
of
those
country;
the
of
area; and local companies usu¬
ally operate within a single state
qr
within a county or' counties
within, a state.. These companies
also be classified as indepen¬
dent, factory-owned, or factory?
affiliated, depending upon the re¬
lation to a manufacturer. During
may
ment
has
ance
of
Federal Govern¬
compelled the sever¬
sales
finance
-
in
tions
field
automobile
the
For
rela¬
company
-
of
Kinds
Instalment
purposes
of
summary
as
2.
Sale
1.
tab¬
Laws.
finance
Sales
/
companies
com¬
pete with each other for the priv¬
3.36
4.10
2.12
1.91
.72
Credit
.
.66
the
2.84
-
the
As of the end of 1947,
dealer's
the
of
amount
"finance
indirect
effect
upon
credit
Sales Finance Companies and the
Instalment Buyer
;
r.
5.92
the retail
Step 2—The transfer of the in¬
tail
dealer
company, by
hot
company
servations
topic.
",
On the
each, plays in
creating the relation with the in¬
volume
income of
prewar
;
\
consumer
of
1947 will be
income.
the
for
summary
1946, and
helpful:
■
23.8
of
45.0
$28
billion—almost twice the
Meanwhile, the nation
huge commitr
to help other people in the
38.2
43.8
46.1
world.
22.9
17.8
28.1
30.0
6.2
12.9
8.6
6.9
It is not
to
33.8
38.6
41.0
24.0
30.7
—
from
needing either a physician or an
undertaker, is enjoying good ap¬
petite and great ambition.
26.9
7.8
hear
uncommon
that
the
these days
wealth
of
our
to
the fact that we fell into the
cream
pitcher so far as natural
nation is due in large measure
——
8.7
12.0
10.0
12.5
37.87
15.2
15.3
21.2
61.8 7
56.2
53.9
100.0
100.0
15.6
18.2
-
32.9
*
'
*
5.3
19.6
v'
:Other
3.2
17.3
■
63.6
3. Total Sale Credit
-
in
counts
people's
unjustly, in
indicted
on
eyes—
opinion, but
my
nonetheless.
of
structure
consumer
is clear that
become
home
,
and
in
on
to
beneficial
Americans
"credit
and
back improved products, or
big business is almost syn¬
onymous with exorbitant profits
that
used
in
it in the
in the
the
street will be
and
that
believe
not
abused
is
*
be
not to
not
Standard
as
well
as
I certainly do not
past few
that
years
the
in
after surinformation such as
survey
standing of the importance of.the
I
profit; motive
of
as the
spark-plug
production, and of increased
ourptit per'man as the only means
.
achieving increased real wages
a higher standard of
living. :
In
a
will.
of
the ineffectiveness of
way,
efforts at
our
a
talking with people
paradox.
We have the
Moreover, there
tools
at
hand
to
are
do
host
a
the
job—
radio,
newspapers,
magazines,
We cannot complain that
films.
lack
we
the
means.
Lacking of
Skill
in Public
Relations
<v
want
What
and
the
Jersey
business
ideas one big need shines
forth: the need for better under-
people today
present us with a new type of re¬
sponsibility—new hard problems
that American industry must face.
of
up
people
taken
!
skill.
No one can observe
about
about
close
as
what
that I have just outlined. Out of
I this welter of confused and mis¬
the impression that" 1
think it is something new.
But the desires of
keep
■
oppor¬
convey
on
only
but
And
turns
vey
can
we
we
..
.
.1
•'
appear
■
to lack is the
Little by little", to be sure,
are
becoming more proficient;
my hope that we shall
it is
be able to step up this proficiency
to a point where we will be able
consistently to obtain the under¬
■
777
the events standing of people.
This matter of communication
without a
American
is
important
people have come to expect a very
great deal indeed from business.
Having achieved a standard of
viewpoint
living which is the envy of people
everywhere, we look forward to
new goals—and I am. very much
impressed with growing evidence
that the American people look to
business
to
take leadership in
tive
from
that
Business
not
is
force
not
of
the
of
a
from
only
self-interest,
the
but
common
good.
dynamic and
crea¬
in
society.
It is
something separate and apart
our
but is linked and interwoven with
our
entire way of living.
velopment of
between
a
The de¬
continuing friction
business
and
other seg¬
ments of our society, therefore,
working toward these goals.
It is
not the key to our success.
Public opinion polls show, for would be disastrous for all.
There
are many parts of the world with
example, that in periods of un¬ something that could be hoped for
equal or greater natural resources. employment
the popularity of only by those who would weaken
We our society.
The simple truth is that wealth business takes a nose dive.
is not found, but is made.
Wealth see the same loss of confidence
Better communications can pre¬
does not 7 exist until men and in periods of widespread strikes. vent the development of friction
women come along
and use not During such periods the Amer¬ and lessen any that already exists.
only their hands but their heads ican people tend to lose patience A primary responsibility of mod¬
and their hearts to create it.
The with those of us who are in busi¬ ern business, then, is to report to
In such times it is almost the public—to act in the open—
accomplishments of our country ness.
are
due to the great productive futile to try to explain compli¬ to live, as has been said, in a
cated economics, to
power that was developed when
try to get gold-fish bowl.
;
7 7.
a whole nation of men and women
people to understand that there
Of course, skill in communica¬
were given freedom of opportun¬
are
forces beyond the power of
tions is not the end.
There must
any business to control.
To the be something to communicate..
ity under law.
The American people are proud American people it is a problem
What are some of the problems
They look
of
past
accomplishments.
But that must be solved.
for whose solution the public looks
they do not propose to rest there. to their leaders to get on with the to business for responsible lead¬
And high among their
In their desire to get on to new solution.
ership?
%
goals, they have thrown a chal¬ national leaders they rank men of
A major current .obligation is
..
" 'V
lenge to American business and industry. that of supply. The reason for any
industry that we cannot ignore.
Better Understanding Between
company's existence is, of course,
This is another way of saying
to meet a human need.
It must
Business and People
resources
55.0
tunities.
to
we
is rather
Our obligations must
sponsibilities
as
think,,
t
,
my company we
tab
general.
of
Millions
all.
salaries.
In
a
of our
business,
still
and
I
credit has
life. An intelli¬
understanding of
gent
classroom,
credit
integral part
an
American way of
we
rooms
hold
,
From these it
consumer
think
smoke-filled
in body of table.
the United States.
minority of Amer¬
get together in
to rig markets
fix prices. Many feel that we
icans
the highlights of the
are
realization
Democratic Capitalism, far
Automobiles
*
77 a
7.63
.
Conclusion
These
undertaken
has
2. Instalment Sales
77-
and stores are crowded.
1929 rate.
22.3
businessmen stand indicted
many
6.40
4.05
or
ignorant about keeping in touch,
we
Responsibility in Business
1947, gross private domestic
investments rose to an annual rate
20.2
36.4
Credit
Total
4.20
capital that never fades away."
177
In
24.8
16.2
Service
'A
t(
applicants.
eager
'
:
v.,
colleges and universities are
hard pressed to accommodate
21.5
22.0
27.9
Charge Account
Merchandise.-
"
: *
enormous
1947
1946
22.3
,7
-
3.44
have been either backward
we
performance of this country dur¬
met continuously if we are
ing World War II, but what has
happened since then.
We have forfeit pur freedom.
come
out of the wartime period
Business Responsibilities Not New
going full blast.
Gross national
There is nothing new in the
product was $230 billion last year.
Domestic
demand
for goods is Idea that businessmen have re¬
Sale Credit
f
•'] 2.26
,
whole.
ments
1.
1.62
(Continued from page 15)
credit, the following
1943
1941
8.5
Single Payment Loans-_
Money
out¬
returned to its
percentage of disposable
Public
'i
.
Money Credit
■f-f.X. Instalment Loans
3. Total
credit
consumer
Our
1929
'
,7 .98
V
and
Shown
(Source—Federal Reserve Board)
2.
.61
Business has paid heavily for fail¬
ures
in communication.
Because
for
our
-
1929, 1941, 1943,
years,
the
aspects
At End of Year
«f-
.96
point out further
CREDIT
OF
of
plainly that the
standing has not
Percentage of Total Consumer
Credit Outstanding
CLASSES
by reference to the table,
question of the percent¬
comparative
•
law,
.66%, being represented by au¬
but the data show
of each group to the total of
age
all
will
"structure"
the
company
of
or
for each pf
mentioned?
of disposable
.66
.64
a problem to which we
give much time and effort.
must
questions, but some general ob¬
many instances* a clear picture of
the part the dealer and the sales
contemplation
The
represented
1.62% with less than half of this,
Time will not permit
exhaustive review of these two
an
place. Instalment buyers, gener¬
ally; have not understood the na¬
ture of this three-party transac¬
tion, and hence do. not have, in
7 In
of
the Nation?
is
party to the instalment sale
contrast until the second step takes
stalment buyer.
year.
be made
pattern
sale.
or
finance
a
finance
outstandings represented 7.63% of
a disposable income amounting to
How does each fit into the overall
finance
.34
.48
not total because of rounding figures
♦♦Will
It may be noted that as of the
fend of 1947 total Consumer credit
$175.3 billipns for the
have
we
.13
■
1
tomobile. Other comparisons may
groups
2.58
disposable income of $175.3
upon
Instalment sale credit
the
re¬
discount
sales
The
sales
the
to
the
preliminary—based
resented by the total
'
stalment sale contract by
♦Figures
total of all consumer credit is rep¬
and
the many complex
situation, then I am
would agree with my
of action."
course
billions.
each of the
types of: consumer credit we have
described. What percentage of the
dealer and the instal¬
ment buyer,
him¬
to
me
they
sure
2.46
10.75
9.25
want; to conclude this dis¬ percentage for sale credit was
cussion by noticing the compara¬ 4.20% and for
money credit 3.43%.
importance
.53
with
most
automobile
outstanding in
We
tive
said
not
only I could get people '
understand my business and
A substantial
Groups
..-Step X—The creation of an in¬
stalment
sale contract
between
has
us
factors in the
1.65
6.73
3. Total Sale Credit--—---
Percentage Total Credit is of
National Disposable Income**
Comparative Importance of
sales finance company:
a,
.54
get them to listen.
"If
to
'
.
Two
2.05
.52
4.16
■
Total
$1,684,000,000.
separate steps take place
before a relationship is established
between an instalment buyer and
;
1.92
1
1.95
-
Other
and other instalment
outstanding
totaled
159,000,000
sale
1.13
of
self:
3.43
2.11
1.45
3.04
Automobile
the United States amounted to $1,-
this charge.
r.
credit
instalment
charge," although it may
some
save
2.94
moment and
Who
2. Instalment Sales
credit.
sumer
1.54
1.76
;
2.57
1.59
Total
during the war period it de¬
clined to a very low point and has
not as yet returned to its prewar
percentage of the total of con¬
the: "discount" which
the dealer must take on his con¬
tract is determined by this com¬
petition. This competition, how¬
ever, does not determine directly
/
difficult thing to seize
of people even for
more
attention
see
__
ever,
of.
1.42
far
This is
amount of instalment credit. How¬
amount
.907
unions, in the professions,
agriculture.
It is an easy
in
the
1.89
/,
•
Service
single
largest
ilege of buying retail instalment
contracts from dealers, and the
1.52 *
a
(1)
groups:
comprises
1.74
.86
.
Charge Accounts
-Merchandise
automobile
and
(2) other. In normal times
automobile
instalment I credit
main
2.57
Single Payment Loans-Total Money Credit
divides instalment sale credit into
vwo
2.36
a
ulation the Federal Reserve Board
being violative of the Anti-Trust
.79
1. Instalment Loans
only in business but
in education, in
thing to say: "We will tell the
public what we are doing."
It is
1947*
1946
1943
Money Credit
Credit
Sale
1941
of the difficul¬
am
overcome—difficulties,
government,
labor
and Federal Reserve Board)
1929
3.
manufacturer-
certain,
in
or
-
I
as
be
to
that exist not
For Years Shown
v
(Sources—Department of Commerce and
retail dealer.
recent years the
,>:
people—the kind of
communications that
conscious
CLASSES OF CREDIT
the
from
gets
company
and
,
Each Class Is of Disposable Income
5V
from the contract which the sales
finance
1946
1943,
43
lead toward better understanding.
I suppose that all of you are as
ties
this
charge, subject to agree¬
ment by the buyer. When a sales
finance company acquires a con¬
tract it procures an instrument already completed, and any and all
rights acquired thereunder, and
obligations imposed thereby, flow
or
1941,
and
ness
improved
sum¬
Percentage Year-End Outstandings
is free to determine the amount
er
re-;
gional companies, a given region
dispos¬
The following
affords comparisons for the
mary
classified
of
(1787)
are
concerned.
This is
.
Grand Total
•
"A number of
observations
•
may
a
few
will
be
>
(4) During the war period and
charge accounts for mer¬
: have;
represented the
largest single percentage of the
total.
(1) In normal times sale credit
all
ing,
consumer
and
credit
money
sented
outstand¬
credit
35%
credit
to
..
,
•
...
:
\
the
has
low
increasing
been
point
in
1943;
since
and
al¬
though the 8.7% figure at the end
of 1947 is still far below the 19.6%
(2) Immediately prior to, and
figure for 1941, the low was 3.2%
At ] the
and money
end
at the end of 1943.
during, the war period instalment
loans as a percentage of the total,
did not fluctuate as widely as
some
■■■■»
;
percentage
repre¬
by automobile (instalment
of 1947, sales
55% of the total
credit 45%.
40%.
credit represented
rt
:.
(5) The
represents between 60% and 65%
of
100.0
chandise
mentioned.
Note* the/following:^
•
since,
but
be "made from this summary,
only
100.0
100.0
-----—
(6) Instalment sale credit, au¬
and other, represented
tomobile
21.2%, the total at the end of 1947,
other forms of credit.
(3) Instalment loans and
compared to 37.8% at the end of
single
1941.
payment loans have represented
approximately the same percent¬
age of total consumer credit, over
a period of time, although instal¬
ment
loans
show
a
larger
aspects of con-
the freedom given to free
enterprise in America—like the
freedom enjoyed by any individ¬
ual—has its price tag.
That price
credit. However, we would
tag is obligations to society as a
that
Relation
•
Others
cuss
per¬
1
centage at the end of 1947.
.
the
sumer
to
on
Disposable
Income
the program will dis¬
volume
A
vitally important area of our
responsibility, it seems to me, is
the pressing need to establish^bet¬
ter communications between busi¬
try to supply the kind of
people want, when and
that
they
goods
where
them. Today, largely
(Continued on page 44)
FINANCIAL
COMMERCIALS
THE
(1788)
44
CHRONICLE
that business
out
in Business
Public
wages,
and so
(Continued from page 43)
as
result of inability to replace
a
and
war
into account their costs of
business and the earning of
lines.
doing
a rea¬
profit if they are to keep
their concerns in existence, con¬
sonable
Business Gain
Oil Supply and
-
the
on.
Further, businessmen must take
expand equipment during the
years, it is not easy to sup¬
ply people's wants in some
the import-export balance, given
This creates a problem, and it tinuing to supply goods for con¬
sumers
and
employment
for
is up to business to do all it can
workers.
to solve it. This means that man¬
To the full extent that they are
agements cannot always consider
economic
factors
alone
when able, however, businessmen must
exert themselves to prevent run¬
making decisions.
In order to
prices.
Several American
meet a public need it may often away
be necessary to undertake actions companies have taken action of
this kind, and although they have
which would normally be vetoed
from
a
narrow
prof it-and-loss not been able to stop the tide, I
believe that their efforts have at
viewpoint. In my own company,
least had the effect of slowing it.
for example—and I am sure there
Certainly such conduct is testi¬
are others which have done the
to a clear awareness of
same—our funds available for re- mony
/ investment, are
being
pri¬ public responsibility*; ?
will
Disposition of Corporate Earnings
used
for facilities which
increase supply.
We have re¬
frained from undertaking some
marily
ventures which promised far more
attractive returns but which would
oil supply.
not have increased the
connection
In
with supply
re¬
sponsibility, this audience may be
interested in
situation.1 The
on
industry
the oil
felt
has
force of the tremendous
the full
up-surge
This
views
our
in the national economy.
the American people
almost double the oil
year
will
use
consumed ten years ago.
duction
will
be
17%
the output of the
To
Oil
peak
pro¬
than
more
war
year
help meet this sky-rocketing
demand
have, on the one
hand, stretched to absolute ca¬
pacity every bit of equipment at
disposel.
our
we
we
On the other hand,
have invested huge sums in a
program of expanding productive
capacity at
third
A
look
for
tioned
fare
by
a
which
in
area
actions
that
people
condi¬
are
of public wel¬
the disposition of
sense
concerns
corporate earnings. I mention this
particularly because we are now
the time of year when com¬
a
stable
of
panies
are
Company (New Jersey)
affiliated
companies
have
been continuously
employed since
the day they were hired.
In
we
work
The
/
being reported by
profits
instances, high in comparison with
of
periods. In some
cases, they are at record
levels.
But
these figures, standing by
themselves, have little meaning.
They must be considered in rela¬
tion to the jobs which profits are
called
upon
to perform.
These
jobs are related to such factors
as growth in population, the num¬
ber of people served, the volume
of goods required, and the purChasings value of money.
/
'■
What is significant in net earn¬
ings, in my opinion, is not so
those
past
in
a
our
dwellings which will require
oil
rather
No
prolonged local shortages
than
breakdown
in
some
other
fuel.
distribution
reasonably
be t expected
present conditions. There
or
can
under
may
be
minor, temporary and localized
shortages. Individual service sta¬
most
all major lines.. This need
a time when the cost of
arises at
constructing
new
plants and build¬
ing new machinery is extremely
high as a result of inflationary
forces throughout the world. In¬
flation bears also on the people
to level off seasonal
-and
valleys considerably/.
Jersey Standard, employees
have been given the security of a
Retirement Program, and an op¬
portunity to accumulate savings
through a Thrift Program to which
the company has consistently been
the larger contributor. These are
means of reducing the effects of
such unemployment as may
be
unavoidable.
..
In
,
Continuity of Employment
continuity of employment, and we
now studying means for pro¬
viding stable employment under
are
almost; any
reasonably
conceiv¬
able circumstances.
Of course,
no.
purely financial
arrangement reduces in the slight¬
est the need for sound and cordial
human relations within a
com¬
Also, I should like to point
any plan for stabilized
pany.
that
employment, or any
gram
of
employee
be
must
The action which the manage¬
ment-of
particular
a
should take
on
company
prices is not al¬
based
other pro¬
protection,
hard-headed
on
ways an easy and
simple thing to
are, for example,
Preventing Depressions
.
the American
people want busi¬
to give attention is
Heckle. There
ness leaders
economists who will maintain that •that of
depressions in the business
irresponsible for a company cycle.
to reduce its prices
when, because
In this field again, as in that of
of factors beyond its
it is
control,
is
it
already
having to strain to
These economists
point; out that the price re¬
duction will have a
tendency t©
meet
demand.
prices, business does not have sole
responsibility, d, Govern ments,
that in my
aware
However,
ing
we
tuations
own company we
of
this
felt that
an
oil
abate
and
reduce
to
harmful effects.
.
argument.
supply would
upward pressure
increas¬
tend
to
'
-
That entails efforts to
their
-
stabilize
employment. That may be difficut, but jf the men of industry
,
other fields such
as
agriculture,
agement of my. company we have
ceed in it,
the
unity
things which
are
at present in the spotlight.
Next
month
or
next
year, : the
are
strength
they will contribute to
and hence" to the
of
our
society.
I
am
confident they will not fail.
^
'
Observations
(Continued from page 5)
-
The Council concludes both that complete regimentation
should
only certain
areMs.
But this ertd seems quite impossible to accomplish.
At just
what degree of sweet reasonableness to compromise in the overall
movement, or at what areas to limit the encroachment of regimenta¬
tion, is impossible to determine, either initially or permanently.
Can there be sincere doubt, both on .the premise of logic as well as
experience throughout the world, that the initiation of any controls,
no matter how
innocuous, must set in motion a chain-reaction of regi¬
mentation of the entire economy and involuntary self-enslavement?
The attempt to select the controlled areas initially can only accen¬
tuate the harm, by fostering a false sense of security.
It must be
be
and
avoided,
litical
controls should
that
the main
cause
be
exercised
in
of the British Labor Government's po¬
troubles is in having made all kinds of promises which turned
out
impossible to live up to.
Many parts of Mr, Truman's above-mentioned address themselves
really demonstrate the difficulties of the planning which he advocates.
He
pictures the economy as being in great danger, omitting the qual¬
cited by his "brains trust," and without indicating when
during, the restfof; the twentieth century the economy will not be
in danger from either inflation or deflation.
ifications
The President -expresses worry oyer the present under-supply
Is it conceivable that he and the other planners will ever
-
of labor.
to
cease
be
concerned
over,
either
shortage ;of labor
a
traditional quest for "full employment"?
As the "outstanding" example of
their
or
,
allegedly unwise and
unneces¬
sary price increases, he cites the adjustment in the steel industry#
about which cause celebve three of the Administration's own agencies
reported with
an
equal number of varying conclusions/
The President and the Advisers excoriate the newly-enacted tax
reduction and the removal of consumer credit controls because of
their stimulation to
inflationary consumer spending. But how can
public regard these pronouncements as objective and sincere
in the face of the President's own proposals to remit. $40-plus per
taxpayer and for an ever-higher minimum wage?
Does interpre¬
tation of the economic: facts of life merely" depend on whose ox is
the
back of it.
■f 'The President and the Advisers plead for the necessity rjif direct
price controls for putting the lid on inflation. But the President says
The desire for
,
The Real Root of Inflation
security is a deep
instinct, however, and the: wish
not
for
about: the root
stable
it.
>
employment is
Since business has
a
part
solved
promptly
whenever
called; upon.
America's indus¬
tries
and
are
Uncle
Sam's
muscles
They have not failed him in ear¬
lier emergencies and they will not
fail him if one arises again. V
While willing to
withni.it
reservation in
time of conflict,
however, the corporate citizen,
like the individual,.: should hope
v
serve
trade
relations
may
involve
word,, and; the Council includes, a mere nine-word sentence,
causes of the trouble; namely,/his: Administration's
policies. Certainly the government's persistence in pumping
a
fiscal
,
into the economy; more dollars than the supply of goods and services
can
absorb—-via easy mortgage credit*- housing subsidies and the
retention of $3L billion in its. agencies and corporations—should at
-
least be taken into account by the planners.
The
testimony of Mr. Eccles, quite characteristically of plan¬
chaos, only complicates further the picture painted by the
Administration. The former Reserve Board Chairman* now seem¬
ingly "quasi-discredited" by the President, proposes that the in¬
ners'
flationary
effect
of
the
government's
erning such considerations are the
responsibility of our government
acting in the best interests of all
expenditures
dollar
be
can
neutralized by isolating them in the, banking system. But even if
this were practicable, under any conditions, it would necessitate a
halt in the continued expansion of dollars.
And in saddling the
banking system with responsibility for anti-inflation, the' other side
planning-medal here is that a cutting-off of bank-lending
for our badly-needed plant enlargement and
capital equipment,
of the
would limit
production and thus act
highly inflationary element.
as a
Again characteristically* Mr.
not only with Mr. Truman's, but
Bank
of
his
of
nizes
the
System.
own
"Chronicle,"
need
20) this
p.
for
production
symptons, calling attention
inflation in Europe* ~
V
V-,: V'
•
Escles' doctrines are inconsistent
even with the New York Reserve
In its /annual report (c/., this issue
branch of the System clearly recog¬
-V-.v-fcA*
Thus,
way,
we
even
see
before
our
lieu
i
*V
;s*
If
-
in
superficial-controls
of
the dire consequences
to
of
of repressed
*
f
'•
-
'■
'
' * '
"*
■•'
-
*}
,
""
Ty:'"
V '
;f h 'TfV
planning here has fairly gotten under
the portents of inevitable hopeless confusion on
/
'ffe/the'--European: pattern.:;-;.;:;:;;:
po¬
litical considerations of the high¬
est order, and that policies gov¬
on price
cannot
find ways
of' achieving
that, in the meanwhile, by
;
holding our prices even for a re¬ more stable employment, people its citizens.
latively short time, we could help are likely to turn to government.
Companies should not expect
And whenever we turn to govern¬
avoid price spirals.
greater protection for their inter¬
ment for help in solving our prob¬ ests abroad that is
normally af¬
As I hardly need point out to
lems, we give up part of our free¬ forded by the U. S. Government
this audience, there are
dom.
many fac
to any private citizen in overseas
tors affecting prices which are
When doing business in
No two businesses are exactly trade.
other countries, they should con¬
beyond the control of business
alike, and things that are possible
duct themselves as good citizens
men.
These factors include gov¬ in one kind of
industry may not there.
ernment debt,
taxes, prices in work in another. But in the man¬
I have
and
They
being gored?
farmers, labor—the habits of con¬ and work for peace.
sumers
and the hopes and fears
Companies with foreign opera¬
of the general public—are all in¬
tions have a particular responsi¬
expand demand, and thereby to
volved. Nevertheless, businessmen
increase still further the strain
bility in this connection.
They
must try to minimize the fluc¬
must recognize that international
on our productive
system. I may
say
of these
of the company.
will
were
larger and larger propor¬
tions in business management.;'To
the extent that executives suc¬
the strength and re¬
No such
plan is stronger than the concern
depend on
sources
fully
Still another problem to which
The function of communication
assumes
find solutions.
realized that
We feel that there Is more yet
out
facts.
people at large to
peaks
dividends from bustions here and there may be out ness for all or part of their in¬ so many other tough problems, it
is
no
doubt only natural
for
of gas for short periods.
Naturally, come. These people—who have
if present conditions change rad¬ provided the tools for America's people to look to business for help
in solving this one.
ically—if iriilitary needs increase industry by their investments—
No discussion of the topic we
greatly or if major strikes occur are like all of us in that they feel
are considering tonight would be
—oil, like almost any other com¬ the .declining value of the dollar.
complete without reference to the
modity under similar conditions,
Under such circumstances man¬
responsibility ^ of the .citizen—
might well be in short supply.
agements must exercise great re¬ whether individual or
corporate—
sponsibility when deciding what to his
The Price Problem
country. ■ :
proportion of net earnings to dis¬
It goes without saying that
Another matter of concern to
tribute as dividends, and how
every company capable of pro¬
the
American
people today is much to reinvest in plants and
ducing any sort of goods required
jprices.
equipment.
for national security must respond
..
help the
with the oil industry in gen¬
eral,
of
who rely on
will
expects
responsible
business—action that
by
storage operations in slack sea¬
have been able, in com¬
mon
•
new
action
sons, we
rate the greatest by
practicality if it is to contribute
history. Hundreds of
to true security. The security built
oil companies are doing the same.
by an individual for himself, and
As a result, we expect that the
even the security of a nation, de¬
Industry can supply as much as much size but what a company
It is generally pend on the strength and resources
8% more gasoline this summer does with them.
than last. Next winter the indus¬ agreed that there is a pressing which each can command. Simi¬
try should be able to supply all need to enlarge ' the productive larly. any plan looking toward
existing heating oil customers and machinery of this country in al¬ greater employee security must
far
many other
the
public
But I have talked
to be achieved in the direction of
American companies are. in many
is, of
There are achieved only through continuous,
problems on which effective communication of the
.
par¬
the Thir¬
ticular problems because they are
introduced a "staggered current.
program" which enabled us
to keep a substantial majority of
our
working force steadily em¬
ployed. By the careful planning
of
problems may be different.
But
need for communication, the
responsibility for* keeping people
informed, will remain.
Business
must have the support of the pub¬
lic, and that support can be
the
list
not complete.
the depression of
ties,
This
trade.
course,
Oil
and
when
tional
-it;
r
present moment, 90% of
the domestic employees of Stand¬
At the
are issuing their annual re¬
and when the newspapers
full of earnings statements.
bility
is expected to
of public responsi¬
it takes actions af¬
fecting
ment.
ard
sense
a
supply,
prices, profits,
employ¬ business fluctuations or interna¬
at
ports,
show
great deal of thought to
question
Thursday> April 22, -1948
Hatsey, Stuart Sroup
Offersfa. RR. Equips. ;
Joins -Thomson
& McKinnon.
(Special
to
The Financial
Chronicle)
:
"
Halscy, Stuart &
associates
today
Co. Inc. and
are
offering
$9,600,000 Pennsylvania RR. 2^2%
equipment trust certificates, series
T. due annually $640,000 on each
May 1,1949 to 1963, inclusive. The
certificates to be issued under the
Philadelphia plan, are offered at
prices to yield from: 1.45% to
2.75% according to maturity. The
sale of the certificates is subject
to authorization by the, Interstate
now spoken of a number
of specific matters.- I have pointed Commeyce„ Commission.,
/
.
„.
MIAMI, FLA.—Fred C. Wight is
with
;
Thomson
&
McKinnon,
Shoreland Arcade Building.
With Gordon Graves & Co»
(Special to The Financial
-
Chronicle)
MIAMI* FLA.—Harold C. Arm¬
strong is with Gordon Graves &
Co., Shoreland Arcade Building.
Volume
167
Number 4692
THE
COMMERCIAL
CHRONICLE
FINANCIAL
&
45
(1789)
Indications of Current Business Activity
The
following statistical tabulations
shown in first column
production and other figures for the latest week or month available (dates
or month ended on that date, or, in cases of quotations, are as of that date) :
cover
either for the week
are
Latest
IRON AND STEEL
AMERICAN
Indicated
steel
operations
Equivalent to—
Steel ingots
.
Week
80.0
Apr;25
(net
tons)—.
95.0
95.7
$150,959,000
BANKERS
'.
1,442,000
V?
1,662,400
1,725,000
1,285,200
ACCEPTANCES
DOLLAR
STANDING
Apr. 25
Month
$167,840,000
Ago
,
71.3
'
(
and castings produced
Previous
Year
Ago
Latest
Month
Month
Previous
Week
INSTITUTE:
(percent of capacity)
YORK —As
NEW
RESERVE
FED.
—
OUT¬
BANK
31—
March
of
OF
48,328,000
AMERICAN
shipments
_______—_______—
12,261,000
11,344,000
Domestic
warehouse
credits.
10,547,000
$157,709,000
42,742,000
Domestic
'/
PETROLEUM INSTITUTE:
12,551,000'
35,887,000
13,508,000
..
'
Crude oil output—daily
t
Crude
(bbls. of 42 gallons each)
average
stills—daily average (bbls,)
(bbls.)
Kerosine output (bbls.)_—______x_—
.
Gas oil
distillate fuel
and
Residual fuel oil
oil
/
Finished
Kerosine
Gas
oil
(bbls.)
and
at
5,568,000
>
5,475,000
5,407,000
4,637,000
16,509,000
j
• 15,735.000
15,608,000
14,130,000
Apr. 10
2,472,000
_______i._L._l Apr. 10 *
(bbls.)_______
5,264,850
5.388,700
2,484,000
X
gasoline
(bbls.)
'
7,754,000
9,292,000
'113,261,000
111,918,000
-10,930,000
9,677,000
104,521,000
9,492,000
Apr. 10
33,121,000
32,180.000
32,108,000
30,627,000
V
)
__vXi._—i_X_—___
oil
___Apr. 10
;___
at__l__
(bbls;)
(bbls.) _at
Apr. lo
49,228,000
Wholesale
42,753,000
48,546,000
47,959,000
—
Retail
16,504,000
7,28S,00Cl
$252,827,000
$228,030,000
_________V—
FAILURES—DUN
INC.—Month
101,000
17,461,000
;;
and shipped between
Total
BRADSTREET
&
*
V
March:
of
Manufacturing
1,846,000
$241,195,000
countries
BUSINESS
•
13,536,000
1,639,000
V——______
goods stored
on
foreign
8,185,000
111.589,000
11,438,000
9,108,000
exchange
Based
5,397,000
7.586.000
9,084,000
X—Apr. 10
at—_____
Dollar
2,038,000
2,547,000
7,419.000
—Apr. lo
terminals,/In transit and in pipe lines—
distillate fuel
Residual fuel oil
lo
.
output-(bbls.)
unfinished
and
output
j
!_L__t,i._i4*^i:_Apf.
XX
output
Stocks at refineries, at bulk
4,912,950
5,377,400
__Apr. 10
to
runs
Gasoline
—Apr. 10
number
57
number
number
•
i
.
35
194
24
88
22
47
—X——'
i
...
165
43
'
*
108
151
136
—________
44
'
Construction
ASSOCIATION OF AMERICAN
RAILROADS:
>
Revenue
freight loaded
Revenue
freight rec'd from connections (number of cars)
(number
of
number
Commercial
.
cars)
Apr. 10
683,852
797,033
757,839
586,289
——Apr. lo
661,807
593,504
711,433
626,133
Total
number—-.—
service
j
477
liabilities
—
.
13
21
254
417
$9,243,000
$17,897,000
number
Manufacturing
•
•
$11,336,000
•
Wholesale
CIVIL
:■(
ENGINEERING
Total
U.
'
construction—^^-—y—
construction
State
and
COAL
'i
Bituminous
coal
Pennsylvania
lignite
OF
$144,579,000
Apr. 15
89,036,000
STORE
15
55,493.000
68.849,000
57.589,000
41,219,000
15
42,944,000
X
54.965,060
38,877,000
V
13,884,000
18,712,000
12,373,000
COMMERCIAL
X
X
TEM—1935-39
As
'
~
Apr. lo
2,325,000
Apr. 10
850,000
Apr. lo
8,600
INDEX—FEDERAL
RESERVE
AVERAGE=100
"2,090,000
13,314,000
856,000
1,214,000
975,000
*9,900
122,700
I.':* 63,800
X
IX *
7,172,000
SEED
Received
-f Electric 'output J In; 000 kwh.)—
XX
steel
Pig iron
Y--.X.'' X XX
101
/'XX
X..
7
87,096,000
117,424,000
983,918,000
837,862,000
1,066,578,000
942,185,000
825,034,000
V'L
XX.
79
XX-
'*''
•V
'
.
KETAL
'
*
1
*
*f
1
(E.
M.
&
.Lead
v
.
.
'
,s
Louis)
(St.
3.23940c
3.23940c
2.86354c
S40.ll
$40 11
$40.29
$40.33
$40.25
$39.75
$34.75
* r •*-
i'e,
v
</•
:
<•? .yyyy
i
>f
»*\» M<.^v
^
'V-. .V ^ VV
"/,_
^ r
;
—_:
;
X—Apr. 14
__Api\14
" M\ ' y'
'
ijX>
v
^
>
^
v'
^
'
'k.,;
v-17.300c
14.800c
14.800c
4'Hull
12.000c "'f
\
w'
r
10.500c
4r
y
^
\
V. S.
-Apr. 20
corporate.
100.82
100.87
_Apr. 20
112.19
.112.19
Apr. 20
117.40
117.40
Aaaj^
115.43
Apr. 20
1
111.81
104.83
104.66
_Apr. 20
Group
106.92
X
:
116.41 X X X
XX: •XXX
X"
114.66
116.80
103.47
DAILY
1,086,002
Aug.
Aug.
Mar.
Aug.
to
Mar.
Mar.
XX
105.69
:
112.75
x
4TXr 4'
121.04
113.89
113.70
116.02
116.02
.
v
.Apr, 20
w___Apr, 20
2.44
2.44
APRIL
Composite
X Piece
2.20
3.05
3.11
2.78
—
——:
Apr; 20
Apr. 20
—_________Apr. 20
2.78
2.83
2.88
2.92
2.63
3.07
3.14
2.81
3.46
3.54
3.34
20
2.96
3.02
2.85
2.89
20.000
18.852
.
38,866
26,354
:
.
X
x
3.04
■;
oils
__*_^_._iJ_Apr.
■'
407.4
422.5
20
409.4
■ Sheets v
'
.
•
269.8
246.1
254.5
251.5
357.4 '
348.9
322.5
275.7
271.8
266.7
258.5
..X
;
'
:
^Livestock——_
241.8 I
Fuels-——
220.8'
Textiles
commodities
..
_
Metals—_ *
.
X
_
■-
129.1
comfortables—
!
.
■
173.5
158.3
212.6
X'X'
164.9 <
163.5
227.3
230.4
156.7 ;
156.7
210.8
X
Chemicals, and
Fertilizer
.
:
_
drugs—
materials————V—:
Fertilizers—Farm
All
Apr. 17
——u__——____Apr. 17
—
163.5
machinery—.
groups
137.2
_
.
y'X-''J37.2
143.7
;—___.
143.7
138.8 x-x;
-
.
X.X
Furniture
Floor
X. 126.8
China
;V
Orders received '(tons)__ii.i;—
NEW
*____Apr. 10
163,880
X. Unfilled orders
(tons)
at
188,104
139,487
136,484
188,587
165,902
103
44493
102
96
434,430
—————10'
233,919
193.572
L production (tonsi_j___—
.L_x_—
1
.Apr.lo
-4 xPercentage of activity—Apr.'lo
X
464,6-13
481,757
569,809
YORK
As
ol
Total
X
.
Cash
DRUG
oil.,
PAINT
AND
X.::' AVERAGE—100
-
PRICE
REPORTER
INDEX—1920-30
'
Total
X—
—_
146.2
146.5
151.2
145.9
hand
on
to
and
All
commodities
Farm
___
products
Foods
S, DEPT.
_
—_
_
x.xX'xxX'
OF LABOR—1926=100:
Textile
Fuel
*
Metal and
and
Chemicals
Housefurnishings
Miscellaneous
Special
Raw
157.1
'
173.8
139.6
131.7
104.0
155.9
140.3
193.2
XXX
192.5 -■: X
135.5
136.5
177.9
•
144.3
144.7
X
120.7
,
X.;r 121.0
143.7
X
X
'
•Revised
figure.
137.9
'
X
..
145.3
147.9
153.5
X:
123.6
132.6
123.7
123.6
XX. 130.6
130.5
X.
XXX
132.5
X
127:4
'X
,
138.0
131.7
127.6
>
r
"
$536,636
$576,097
410,873
591,930
596,416
677,170
debit
free
listed
listed
credit
balances-
011
other
•
64,684
07,756,696
63,158,207
67.608.063
134,166,852
136,313,176
140,977.684
shares—
bonds———4—~4
134.5
119.5
126.7
y
114.3
FINANCING
ESTATE
REAL
AREAS
—-
S.
—
Month
of
IN
70.5 'in
79.4*4
874,121
$101,427
217,026
200,531
$263,649
75.5'X
1
$235,096
'
$68,502
203,814
collateral—NON-FARM
HOME LOAN BANK
Feb. (000's omitted):
Associations
——
companies ———,-_4——_
and
Insurance
and
Mutual
U.
OF
BOARD
Savings
Loan
Trust
Savings
174.8
174.9
152.9
153.7
146.2
156.0
154.9
154.3
142.0
RECT
155.6
154.8
154.2
141.2
OF
Apr, 10
147.9
147.7
147.3
132.1
.'i*
■
65,853
79 812
46,608
226,068
211.091
33.169
49.317
35,155
——
.•——
lending
institutions——_
143.880
150,461
161,773
115,713
128,828
98,265
$909,447
$770,095
$106,764,000
$177,355,550
163.4
153.6
/
$252,290
$826,874
Miscellaneous
174.1
•
204,388
Companies——
Banks—44——_
Individuals
,_j.>_i.__Apr. 10
foods
117.5
X
-;
X
56,968
of
Apr. 10
v
144.3
150.1
396,428
of
^^__Apr. 10
;
commodities other than farm products
commodities other than farm products and
154:6
125.8
375,741
value
borrowings
120.6
X
61,064
value
Apr. 10
articles
products
1
•
X X
accounts—
Total
materials
131.6
'
150.1
137.8
price index, 12-31-24—100————
Member borrowings on U. S. Govt, issues—^
Banks
X;;
'
goods
.*X.
$549,973
Market
Member
•X
163.0
145.9
XXX
V156.6
136.8
180.1
187.1
,
X 145.1
131.7
X"
171.2
-
groups—
Manufactured
All
products
commodities
Semi-manufactured
All
.
X
131.8
193.4
allied
and
X 186.0
X; Xi 148.1
159.8
XVXX:''- 184.9
183.9
X".-. 172.4
145.5
.
lighting materials
metal products
Building materials
;
■'
174.5
186.2 ?
products
J
X">;
1265
167.6
'
Stock
160.1
183.1
-__X—
products
_.
X
160.6
_
_
:
Hides and leather
xx
128.0
130.9
balances—
Market
WHOLESALE PR1CES~-U.
XX-
customers—
in banks in U. S—_4
net
customers'
of
126.8
'
omitted): '
margin
143.6
129.5
132.4
.
154.0
—
EXCHANGE—
(000's
carrying
extended
129.0
137.2
X
152.2
X"'
X X
120.7
-
appliances-—
customers'
of
Credit
128.6
167.5 X:
•
31
lirms
143.5
139.8
139.7
129.9
4——
STOCK
Mar.
133.5
136.6
X
143.1
155.1
-
111.3
-.
X——
Member
137.8
133.1
X
130.8., /:
'
KATIONAL PAPERBOARD ASSOCIATION:
168-6
147.3
v
132.4
_4__4—4__—4_——_■
household
Electrical
153.1
-X
107.3 X:"'.
153.1
1,4—4444»44*.»v4'-_—:L4i_4;:-'
—______——.i44
Luggage
^
'
coverings
Radios
126.3
198.0
216.5
vX
144.8
134.6
138.1
X
•
—
127.6
.
143.7
216.7
X
.-XX
155.2
X,X. 137.7..
•
138.8
219.0
..
combined
203.4
156.8
Shoes
Socks.- —4—_4_—_4__—44
Underwear
4
148.4
233.4
X
.
.44^4X4,
caps.—
; In fants'., and children's wear—
*
Building materials
:
134.3
.140.1
4139.9
including overalls——_4—4—
i.—u—4—4—4*—44
Clothing,
.
216.5
x
X
XX Shirts.: and.; neckw'ear_4_—-4-_-4_4_4x.
231.1
.
-:
_
;
169.8
~
179.6
.
;X
140.6
.
,
X
137.9
———-
and
XX':
166.9
133.0 .XX
155.1
257.9
220.8
•
Underwear
Hats
141.7
132.8
137.6
•
181.5
147.0
-
Shoes
«
124.8
146.8
•
y-'X 107.2
brassieres___—4__l —i---—
.Men's apparel—
.
129.6
128.7
140.2
X444
330.4
X
241.0
173.8
and
130.3
'
4^^u——4__——_ 4-L
and
;
:
y 167.2 yx
—
,
,
xX,'
•137.9
—___i..
goods—4:
139.8
134.3
X
,
135.9
129.1
•
' —_4___.
135.2
140.3
139.2
r
147.0
Hosiery. ,_^-—_444-i—i-——4__4y X
X!/;'..,:Underwear ■
;
_______4—
245.1
233.5
,
214.1 x
—
298.6
X*
X, 220.8
174.8
.
22.291
;'
„
,4x____-x____x___4——
Purs
.
•
>.120.6
232.1
231.5
,
276.3
:
Cotton
Miscellaneous
Xy;
.
236.6
—
13.576
34,137
:
142.9
:'i-X".'i
136.3
—
Women's apparel—•
x
_
,
: *
Hosiery 4_.
._^——
Aprons and housedresses.—"
;
'
—
Grains
15.737
X:
'
143.3
;X ; 139.4
-44—Lx
wash
Blankets
FERTILIZER
and
,
.
PRICE
RETAIL
and children's.
wear__4-444-:4'X
furnishingsX444L-Xy4L4—4ZX4LX;
Corsets
products—
,
931
16.165
34.693
29,379
.
140.5
Domestics—
2.60
3.41
ASSOCIATION—WHOLESALE COMMOD' ITY INDEX ' BY GROUPS—I «35-39===10O; /1
.Fats
^ '•*"
:
12,934
r f;
-
Farm
789,551
yu
1,536
LV
apparel
Woolens.
2.71
__Apr. 20
^KOODY^COMMODITY -.INDEX__
:
V« : 1.1
;
15,867
^4v--— x
apparel
Cotton
3.16
L——Apr.'"20
^FoodsXy_X_—_XX—Xl,
£
y."
15,455
index
Piece goods—
Silks
'
(
V
7i3
1;
goods
Home
.2.53
—___.APr. 20
:————
Baa——^■«.
"Bailroad Groups.——
Public Utilities Group
"Industrials Group—
%ATIONAL
.
14,169
Infants'
U. S. Govt. Bonds
A—
861,265
894,875
(COPYRIGHTED)
1935-39=100
OF
AS
X, Women's
Average
Aa__—
106,763
996,407
,
!.
j''
-4
31—L——_
31—
PUBLICATIONS
INDEX
118.80
11524
FAIRCHILD
112.37
'
AVERAGES:
corporate—
Aaa.—_——-—-——
598,669
181,276
1,100,834
i
to
1
1
52.718
625.462
1,019,293
31—
Shipped Aug.
.
161,285
.:
31-————,
1
Mar.
Produced
''
X ;
to
1
56,505
699,635
793,114
L785.822
'v
720,332
V
43,100
—
31——U ,'X
Mar.
1,182,567
1,437,702
XXL^VX.
V
—
to
1,475,900
1,591,169
31;--fc4-4-_.L_
Mar;
Stocks
110.15
106.92
_Apr. 20
YIELD
Xv4;4vv
X.
1
to Mar. 31
Fiber (500-lb.^bales)-^-'
Men's
BOND
Aug.
128,193
85,139
86.060
1.630,288
.
120.43
110.52
,
X
_Apr. 20
Group.
111.07
x
111.62
Apr. 20
MOODY'S
191,688,000
730,334,000
■
Mar.
(500-lb. bales)—
104.48 :X.:;
Stocks Mar. 31—_____——4—_~X——-~
117.40
Produced Aug. 1 to Mar. 31———
122.50 'X4:X Shipped Aug. 1 to Mar. 31——————
100.80
:
115.53
.Apr. 20
Baa—
Industrials
158,523,000
809,982,000
X4Motes, grabbots, etc.
Govt. Bonds
Railroad
to
1
XX
31
i
Mar.
(tons)
Shipped
.
Aug.
.
Produced
'
182,203,000
933,610,000
31_
Mar.
(tons)
15.000c
-
X
72,546,000
-
(tons)
SO.O^Oc
MOODY'S BOND PRICES DAILY AVERAGES;
•
:
Stocks
iX
12.000c
31——
4'V,'
(tons) Aug. 1 to Mar, 31—Linters—running bales—
:
15.000c
•
to Mar.
1
*
n
4; Shipped
94.000c
12.000c ^
"
22.750c
■
-
—____
—L_—4.
31—
Aug. 1 to Mar. 31
—
(tons)
L Stocks
94.000c
•
17.300c
L__Apr,14
\
\<
,
21.675c
Aug.
Meal—
and
4 Hulls—
21.225c
21.200c
X.x
31—
Mar. 31—1———_
(pounds) Aug. 1 to Mar. 31—
Produced
' 17.500c
94.000c
17.500c
-
;____Apr. 14
—
;
2l.550c
Apr. 14
Apr. 14
—
21.200c
21.125c
21.200c
Mar.
X.
Shipped (tons)
,'
COM-
L-" 4:X:-;
(pounds)
Stocks
.
■'
X
at_
1
X.
OF
(pounds)
Produced
Zin<?.(East St, Louis) at——
*v
V
$33.15
3. QUOTATIONS):
Electrolytic copper—
x
Domestic refinery at
:Export refinery at-,—
Straits tin. (New York) at_.
Dead (New York) at—
'
'3.23940c
__y.;_X.——______ Apr. 13 '
>T**\ 'V"V"'
PRICES
—
■■■':,£)xixC4L;4X'4
Produced
__Apr. 13
_____
'
•
PRODUCTS—DEPT.
(pounds)
Stocks
__________________________Apr. 13
gross ton)
2,961,165
—
'•4- -4
4 Refined Oil—
Apr. 15 XV
(per lb.)
Scrap steel (per
3,869,610
3.516,895
—•
X4 Produced (pounds) Aug. 1 to Mar, 31—_ 1,089,080,000
J: Cake
(per gross ton)
3,920,323
to Mar. 31-
1
Mar,.31
to
31—^.
Mar.
SEED
Oil—
Stocks
1.
4,660,320
5,032,879
IKON AGE COMPOSITE PRICES:
Finished
Aug.
399.110
1
Aug.
(tons)
MERCE—
BRAD—
-
(tons)
2,679,761
(tons)
Shipped
A
—____
■'
$266,000,000
COMMERCE—
OF
778,339
'XXXXXXVXX ^xvXX
-
5,036,820
.Apr. 17
INDUSTRIAL)—DUN
DEPT.
—
3,190.799
.
-
$301,000,000
YORK—
NEW
OF
—
502,956
Crude
AND
BANK
31_
mills
at
.Crushed
COTTON
X'"*
STREET, INC.———
X
X_—_
':Z': ;XX:X V'.XXXXV '■■'•XXX; X\ X:" X "X X'-vX.W.'y XX ;f sXX
$311,000,000
OUTSTANDING—FED-
PAPER
March
of
COTTON
Apr. 10
Xxv
$15,251,000
SYS
y VX.xy XXXx XX yr V> xxv^. Xx 'XX'X
(COMMERCIAL
758,000
$25,619,000
'
EDISON ELECTRIC INSTITUTE:
FAILURES
341,000
979,000
^$17,481,000
RESERVE
ERAL
,
4
xxv
1,169,000
..
1,987,000
1,883,000
—__j_
1,647,000
;
.
28,846,000
12,549,000
(tons)
SALES
3,410,000
,
957,000
—
liabilities
liabilities
Total
Stocks
DEPARTMENT
—-
—
liabilities
service
1.346,000
3,714,000
—^
68,872,000
"I" Apr.
(tons)__
(tons).—y—
Beehive- coke
$110,091,000
32,729,000
24,951,000
——Apr. 15
anthracite
'
$90,318,000
$93,800,000
.
III—I Apr!
.
MINES):
liabilities
Commercial
1,634,000 %
.
^
4
__
_
S.BUREAU
and
Apr. 15
L
______
(U.
Retail
Construction
y_xw
——_
municipal.
—
OUTPUT
NEWSX
xL—y——_y_X—_X
,___
Public construction
■
vFederal
ENGINEERING
r
S.'
Private
;/
CONSTRUCTION,
RECORD:
'
•
liabilities
_LL__
TREASURY MARKET
AND
TRANSACTIONS
Net
sales
Net
purchases
IN DI¬
SECURITIES
March:
GUARANTEED
U. S. A.-—Month of
$4,700,000
—»—-—
.
46
(1790)
FINANCIAL CHRONICLE
&
COMMERCIAL
THE
Thursday, April 22,
converted to ad
The Latin American Market Today
their very nature. In succeeding priorities for the purchase of-for¬
months the number of items sub- eign exenange and by limiting ex-,
to consider the situation ject to suspension grew to include change sales to current acquisi¬
(Continued from page 8)
|
!
America has been noted, but it is
necessary
in
particular
to
indicate
in order
variation in the
the
importance of
the
United
the
the
the
on Aug.
of the an¬
authorities
of the suspension of the converti¬
follows:
as
United
States
the
took
essentials.
certain
of
following
revised
was
countries: Cuba, 79; Mexico, 61;
Brazil, 37; Chile, 20, and Argen¬
tina, 12.
Sept.
and
This
,..
list
expanded
on
ing
a
definite revision of
Negotiations for such
more
revision
to
are
be
undertaken
Trade and Employment at Haoana.
The list of luxury and semi-
25, 1948, a law was passed
authorizing the government to in¬
stitute a prior import-permit re¬
quirement with respect to all . but
a few essential commodities.
This
percentages of exports from those
thos£"#>revailing in 194Z, pend¬
Scnedule I.
a
com¬
or
delays in payment
by means of
rather than
Cuba, 68%; Mexico, 60%; Chile,
Shortly thereafter the suspen¬
28%;. Brazil, 23%, and Argentina,
sion was lifted to permit the entry
16%.
During the same period the
to
at
following the recent conclusion of
bility of sterling, the Central Bank
suspended temporarily the grant¬
ing of exchange permits for all
imports. ■:■>.
v-';.
'•
period, 193-3-1938,
United States participated in
total import trade of selected
Republics
Finally,
as
levels equivalent
rates
tions, it is hoped to -equilibrate
the balance-of-payments position
a consequence
nouncement by British
prewar
American
1,000 Argentine tariff
classifications.
22,
States
in the trade of individual nations.
In
than
more
countries
valorem
pound
strictions
on
by quantitative re¬
imports.
However,
Feb.
on
authority when fullyimplemented
may be used dir6etlyr io> restrict
imports quantitatively, ;
<
:
During the latter part of 1947,
the United Nations Conference on
articles
luxury
subject
prior
to
import license under the terms ol
a
decree
of
1944
modifications
and
subsequent
remains
in
effect,
and the Mexican Government
re¬
cently extended the prior-importlicense requirement to all good
subject
to.export license
in
th(
States.
United
considered
Mexico, 84 and 73; phasis of that country on hemiCuba, 77 and 67; Brazil, 58 and spheric development and interna42; Chile,' 41 and 37, and Argen-' tional trade. During 1947, Argen¬
tina, 29 and 15.
Available 1947 tina entered into trade and finanfigures indicate an increase in the cial agreements with a number of
respectively:
United
into
States
these
share
of
countries
mania and Switzerland.
These
agreements provide in general for
Slight declines are indicated in exchanges of specified commodiour position as a market for the
ties in stipulated amounts and, in
exports of Argentina and Brazil. I some cases, the establishment of
in
crease
our
position
market
as a
credits to cover excess imports of
JJ1? signatory country in its trade
Latin America, likewise, is of |
significant importance in the total
of
United
States
balance with Argentina.
trade.
During
1947, the Latin American Republies supplied us with merchandise
valued
of
at
$2,156,900,000,
or
38%
Brazil
.
,
_
in/fe
Braz ^ ^reim trade in 1946
I
total imports, while our
exports to that area, valued at
$3,857,000,000, constituted 27% of
q?ft nnn'?n imnnrf<T
our
cfi7n
»
are
voo^cCUPt? •♦Src4
sils
P
+
seYer?
s'
n
m
°P?fr °*
IcoX8*
rFFFuion^nno.en/raS-
uten-
apparatus,
and tools; wheat; iron and
steej manufactures; vehicles, in-
States exports to
^
machinery,
v
semj
manufactures;
paper
and
manufactures;
petroleum
prodMachinery and vehicles consti-1 ucts; and wood pulp. The United
tuted the most important
group of, States is the principal supplier of
_
$218,800,000.
cult of conversion
to
Latin
America.
The
most of these categories.
which
ures
ness of
Argentina's
restrict the
ing the last half of the year, pre¬
liminary figures indicate that 1947
represented an all-time high in
Mexico's international trade. The
demand
increased
imported
for
products
can
factors,
several
CX6<ilS&cl
"■
'
*
1
'r- >'
*
'•
.activity registered in
foreign trade during the first six
The great
,
government, for, notwithstanding
record
high value for
exports
For the first nine months of 1947
demand
products
061.000.
government's promotion
of the Five-Year Plan, which offi¬
balance
1947
and
for
its
export
the
cially
was
inaugurated
on
Jan. 1,
last year.
The
value
imports
ports
of
Argentina's
(*570.100.650)
1946
and
was
surpassed
during the period January-No¬
vember, 1947, when imnorts and
exports
were
valued
at
$1,121,864,000 and $1,394,180,000, respec¬
tively.
■;
,
May, imports exceeded exports—
a
situation not experienced since
1940—resulting in a drain upon
the gold and foreign exchange re¬
serve
of the
Argentine Central
Bank.
The
Central
Bank
on
Jan.
20,
1947, had placed all imports under
the exchange permit
system and
in May it began
suspending the
granting of such licenses for items
deemed non-essential by reason
of
amounted
However,
with
the
to
with
Brazil's
of
to
the
$81,-
import
United -States
$260,698,800,
com¬
export' balance
an
of
$5,660,400 during the comparable
period in 1946.
Brazil in
June
ordered
a
new
system
of-exchange control in¬
volving a five-category priority
schedule covering all remittances
abroad; imports are affected by
only
the
first ,and
fourth
cate¬
gories.
of
First category treatment,
preference in the distribution
exchange, is accorded specified
goods rated
as
essential to Brazil's
economy—principally raw mate¬
rials, machinery and transporta¬
tion
equipment.
All other im¬
ports fare classified in the fourth
category, for which exchange is
restricted.
more
The import
plies only to
during the third
of .the. *year, 'but this
downward ' trend was reversed in
ues
imports
quarter
the
fourth
of the year
000,
at
and
amounted to $167,479,at the year's end stood
$222,184,000.
Tn
activities during
peak monetary circulation
and holdings existed, wage levels
were the highest in the history of
the country, and foreign trade at¬
tained the greatest volume since
1920. These conditions
large¬
receipts
of ap¬
proximately 6,500,000 short tons,
ly
result
a
the
of
automobile
parts,
other commodities.
scarcities
textiles,
<
and - certain
No important
apparent,
were
with respect
except
to construction ma¬
demand for machin-;
technical equipment, and of¬
machines was keeping pace
terials, "but
fice
with
supply.
:
:
Colombia
r
of
supplies
from
during the war years, plus 4
Shortages
abroad
war-engendered prosperity, have
created a relatively large deferred
demand in Coiomoia for products
of all kinds. -This demand—and
continuing high profits of Colom¬
industries, coupled with un¬
bian
from the record sugar crop
most
which
of
sold
was
to
the
and
accrue
reduced
de¬
exchange
re¬
to
the govern¬
ment.
Subsequently,
on
Dec. 15, 1947,
items in Schedule I of the United
States-Mexico
which had
original
Trade
Agreement,
been retained at their
rates
in
the
Expansion has been restrained,
by the increasing ex¬
change problem arising from a
growing unfavorable balance of
trade as imports mount. Despite
frequent revisions and tightening
of the exchange and import con¬
system during the year, in¬
cluding the virtual suspension of
trol
granting of import licenses on
occasions, preliminary figures
that 1947 was the peak
the
two
indicate
the
in
rear
trade >pf
foreign
Colombia.
In
the
1946
value
imports
of
$230,019,742 and of exports,
were
$200,898,570.
The United States,
supplied 69% of Colombia's im¬
ports by value, and received 82.%
1.9625 cents per pound f.o.b.^Cuban
of the country's exports. /Imports
ports, compared with 4.18 cents
and exports for the period .Janu¬
per pound for the smaller
194(
ary-November, 1947, amounted to
crop. The decline in certain com¬
mercial and industrial activities $315,879,000 and $219,492,000, re¬
spectively. Exports of coffee, Co¬
was due principally to efforts t«
lombia's
principal export crop,
meet the highly competitive situ
were
expected
to«reach about
ation emerging from the compara
tively rapid trend from a seller's 5,500,000 bags in 1947. Although
this estimate places coffee exports
to a buyer's market.
at slightly less than the total reg¬
During the year, stock positions istered for
1946, the very favor¬
of most consumer goods improvec
able coffee prices prevailing dur¬
considerably, in consequence ol
ing 1947 were expected to produce >
increased deliveries on the part oi
the greatest revenue from coffee
manufacturers and, especially, the
exports in the history of the
greater
concentration
of
ship¬
country.
,
ments
cause
to
the
Cuban
market
of the absence there of
be¬
were
reported in amply supply,
although imports of refrigerators,
washing machines, -and electric
ranges still were insufficient to
meet current demand.
Principal
imports
stuffs* machinery
textile
and
fibers
food¬
were
vehicles,
and
and
manufac¬
tures—an indicauon oi the lsianu s
relatively large dependence
outside
mer
are
sources
for basic
upon
Many foodstuffs stil
in short supply, and deferred
continues
for
certair.
beverages, metals and manufac¬
tures, and textiles are the leading
import groups in Venezuela, 'and
Ihe United States is the principal
supplier.
Venezuela has enjoyed a favor¬
able
balance
of
trade
reserves
of
-nd
for
of
change and gold valued at
ex*
more
Colombian
import
control.system, nn
which does
not
exceed
$28.50.'
Merchandise is divided into vari¬
ous categories for the purpose'of
allotting available exchange Jn
with
accordance
the
importance
of the respective categories to
Colombian economy.
Further
'the
re¬
finements of the Colombian control system include the
,
assignment
of
basic individual import quotas
to
importers, pro-rated quarterly
the various categories of
goods, and the issuance of three
types of special licenses, for dhe
importation of preferential and
first category goods, to importers
who are able to arrange credit/
terms longer than those usually f.
among
granted by-commercial practices.';
,
As the year ended, controls bad
braked the alarming outflow wl
dollar
exchange experienced earl-;
and exchange authorizations'
dollar
receipts
were
ap¬
ier,
and
proaching
equilibrium.
The^re-/
strictions, of
course, had an effect
the availability of imported
goods, and numerous articles in¬
cluding textiles and building sup¬
plies were reported in short sup¬
ply.
Importers of less essential
upon
items
were
experiencing increas¬
ing difficulties in bringing in suf¬
ficient quantities to keep their es¬
tablishments operating.
.
years
dollar
exchange
import license is required for all
imports, except parcel post and
air express shipments, the value
consu¬
goods.
the
Under
ex¬
change *or import controls. Such
products as radios, electric fans,
and other hou sehold appliances
November-has
tariff revision, were provisionally
of busi¬
and industrial expansion, y
Commodity Credit Corporation a'
the
increased
average
price oi
iron-and-steel construction prod¬
ucts, /other building materials, and
government felt that an ade¬ hew, automobiles and- accessories.
quate
margin ; of protection to backed>--by
ample
foreign-exagriculture and industry no long-' change jholdi ngs tvhich continued
er
existed, inasmuch as the ap¬ to increase during 1947/
plicable tariff schedules,- which
Venezuela
provided specific rates almost ex¬
clusively, had been negated by
'Available information indicates
the
steady rise in prices since that Venezuela's
foreign trade in
1940. The upward revision, which
1945 exceeded the all-time peak
affects several thousand items, is
in both quantity and value estab¬
designed primarily to recover at lished in 1944, and that its trade
least the former rate of protection,
in 1946 and 1947 established new
although it is hoped that collateral records.
Machinery, instruments
benefits
in
the
form
of larger and
apparatus, - foodstuffs
and
revenues
rather general program
ness
were
high
the
foreign
by -.establishing
or
November, the Mexican im¬
on
the importation of merchan¬
halts
Cuban industrial
port tariff was rewritten because
will
regulations
of
Brazil do not in themselves
pro¬
some
<
were
1947,
demand
serves
exchange
imporl
balance for the first nine months
mands
priority
The
quarter.
ap¬
by the exchange
classifications.
Rather,
of
import con¬
reflected in lower val¬
restricted number
of commodities which are affected
The
were
total
licensing system
a
also
being locally produced, or ade¬ hibit
quately stocked, or because of dise.
balance
trade
amounted
pared
or
Of greater significance than the
totals thus far registered for 1947
was
the fact that, beginning in
adverse
foreign
ex¬
($1,183,189,180), the highest
recorded since 1910,
the
Effects of .the new
trols
there
commercial
and
Despite decreasing business ac¬
tivity in Mexico in 1947 and re¬
strictive measures instituted dur¬
effective¬
economic
activity
remained at a high level,
sustained by a continued strong
in
rials and fixtures, cotton
however,
Cuba
Although
declines in
Mexico
*
pent-up Brazilian demand.
lands and Greece.
sources.
(
Argentina
Kingdom, France, and Belgium,
the reentry of the Nether¬
and
exist, in pref¬
to hard-currency
erence
during that period, monthly im¬
ports were progressively larger.
In July, 1947, the government
value of items
making up this
Despite the high level of im- took steps to check the heavy in¬
group amounted to $1,666,900,000,
| ports, deferred demand in Brazil roads being made into foreign ex¬
or
43.5% or .total United States
j remains strong, particularly for change reserves by issuing two
exports to the region. Metals and
machinery and apparatus. How- decrees, suspending temporarily
manufactures,
valued
at
$514,- ever, the trend toward a passive the importation of certain goods
800,000, ranked next in impor¬ trade balance and the
consequent regarded as non-essential and in¬
tance, accounting for 13.4% of the drain upon gold and foreign ex¬
creasing import duties on an ad¬
total and exceeding
considerably change holdings necessitated gov¬ ditional selected group of com¬
the remaining groups.
ernment exchange-control meas¬ modities.
exports
majority of commercial lines. The
market
was
slow for
hardware,
household wares, electrical mate* !
a
tion of
eluding passenger cars, trucks and months of 1947, when imports
buses» and accessories; chemicals, were valued at $359,264,000 and
drugs and pharmaceutical special- exports at $223,922,000, was a
and coke; iron and steel matter of grave concern to the
?on onn^ ko ^oi' <Suf nnn°'
^PlP ^9FRnnnnn 'f n?n0i Ve£e'i tiesfcoal
*26.800,000, and Colombia,
volume of imports
materially relieved
supply situation in
Venezuela,-and, as tne year, ended,
most importers possessed substan¬
tial stocks of merchandise in the
exports to
hard - currency
to permit the importa¬
non-essential items, where
age
areas; and
,
Mexico from the leading position
rising
certainty concerning the interna¬
tional situation—has given rise to
.
.
The
increases registered for the United
be attributed to
including warTota], trad® Jor iheA Jlrl
\ created backlogs and the effect of
all United States exports.
.•'i months of 1947 exceeded that of
T.
'the entire preceding-year, with six years' emphasis on industriali¬
Argentine was the principal
exports and imports amounting to zation, which has increased the
Latin American buyer of United
$1042r376.000 and $1,096,611,000, country's over-all demand for for¬
States goods in 1947, with a total
resnectivelr
**'
eign commodities although the
of $682,700,000
thereby displacing
Principal imports into Brazil demand for certain items has de-
ai?d $670,978,000 in imports.
-
during
1947
the internal
granting of exchange only for es¬
items; to encour¬
sential category
countries, including Bolivia, expedient, from soft currency
in-[ Czechoslovakia, France, Italy, Ru- areas with which balances diffi¬
for the exports of Chile and Cuba.1
There is no exinsoiar as pay¬
for imports are concerned.
volume of European participation
in Mexico's foreign
trade, with
imports
and-an
control
cnange
ments
ery,
It is
expected that the various
include other goods
indispensable or non¬ primarily because q#^the! foreign measures taken by the Mexican
Government will operate to effect
competitive; these articles, which exchange restrictions, Brazil's
been; enumerated
specifi¬ over-all import.trade was declin¬ a balance in the country's inter¬
While most of these nations have
shared in the generally increased cally
by the Central Bank, at ing gradually, with receipts ol national payments. These meas¬
ures, of course, will affect princi¬
trade of the United States with 1 present constitute the only items goods in the fourth category ol
pally the United States exporters,
Latin America during and after for which exchange permits will priority falling off sharply; and a
substantial reduction in the im¬ inasmuch as this country in recent
the war. differences between the be granted.
>
balance with
the United years has been supplying more
countries are to be noted.
Per¬ j; Another factor of importance, port
The atti¬ than 80% of Mexico's imports.
centages of imports from and ex¬ particularly with reference to Ar¬ States was indicated.
available figures
for
ports to the United States in 1946 gentina as a market for United tude of the government toward However,
1947 indicate a somewhat larger
for certain of the countries were, States goods, is the increased em¬ foreign trade was to facilitate the
to
17
-
than $270,000,000.
1948
,.
Effects of ITO and ERP
.In the
;
foregoing discussion, the
possible effects of thq ITO and the
/
THE
Number 4692
167
Volume
&
IGOMimgiAL
FINANCIAL CHRONICLE
►
.
Jr
of * the '"cooperating It,for toton* "Fortunately, there is
European; Recovery Program have Economies
'countries,
"nq substantial body -of opinion, in
»ot been appraised: / tv
v
The effects jof the
\ At the; time this article was
European Re¬ .this! country wanting Government
Program,
upon, ;,*Latto operation; even in the event of an*
written,: the. Charter tor4he, pro¬ covery
posed International.Trade Organi¬ America,, once the program is im¬ other war, • Men prominent in the
zation was just approaching the plemented, are xlifficult of assess¬ Executive;and •.Legislative
make
final-stages (it was signed March ment, In general- it may be-said branches 4 of government
23,.1947); and the General Agree¬ that the overall effects will de¬ this* clear, both,in public and pri¬
ment on Tariffs and Trade signed pend upon (1) the extent to which vate j pronouncements.
For that
at Geneva by 23 countries, in- the Latin American countries can conviction on their part and ours
i
•
■
,<
(1791)
47
•
•<»
u!
1
v.
■
,
eluding - Brazil, Chile, and ?• Cuba,
has not entered yet into full force
and effect. The, benefits to be de¬
rived from these measures will
be
not
immediate, by reason of
many non-tariff factors currently
distorting world trade, The Char¬
ter and the General Agreement,
therefore,
parfs of
ing
must
be
regarded
as
long-term program hav¬
a
its purpose the stabilization,
as
liberalization,
pansion
of
greater
and
eventual
world
stability
trade
exists
ex¬
when
in
the
make available increased amounts
there is
of
test
some
of the commodities need¬
ed
by the program, for purchase
by the UnitedStates,!*, thuspro¬
viding additional dollar exchange
to the area; y (2) ? the I extentto
which the United States will be
able to supply needed commodi¬
ties; and (3) the degree of res¬
toration 'of European sources of
supply and markets, effected as
the program progresses, bringing
about
a
balanced
more
distribu¬
tion of the trade of the American
best, of
reasons,
(Continued from page" 13)
'"-.-.S;r
the
48
are,
industry which does not have
-40-hour. week. Our
hours
be
we
only large segment of Ameri-
can
the
"Here
say,
per
brought
men work
week, and
into
we
should
line with
workers." ' There
is
complete
a
that position, which is
this:* to the first place, these men
were
exempted
the
from
Fair
Labor Standards Act which estab-
lished
the
40-hour
week, not as
the result of anything which their
employers sought to impose on
them, but because they themselves
asked Congress to exempt them,
preferring
the
larger
'
Nevertheless, experienced rail-
road managers must view with a
deal
good
of
such
other prospective crushing increases in
-to
answer.
VpJy->-
have gone up only about 43%, as
the Commission figures it. 1
'■
.
take-home
pay that came with the longer
work week to the additional lei¬
concern
any;
on
"1^
...
'
.
.
side/despite recommendations of Hie monetary .authorities as to what
should be done to curb tl^ie inflationwhich they believe will be mora
Let
us
pronouncfd'in the futurd.
never
the
opportunity to drive
an
of these same
,
.
.
ishes
>
argument td the con¬
Those facts are these:
In
World War
I, government opera¬
tion of the American railroads re¬
sulted in deficits
paid by the
eration^ not "only
there
were
no
deficits to be paid by taxpayers,
but -the railroads paid in taxes
three. million dollars a
day, thus
making
lion
WHO KNOWS?
any
trary.
,
brotherhoods
■
•
.
.
. <To be sure, many, unknowns .areola
picture; but dire'happenings .had been forecast in the past by some
soothsayers, and. they faiiUed to materialize! in anything
homes
the
difference;. between like the form predicted.
V . Out oft this maze of imponderables,
government operation in -World however, seem to come some rather •clear-cut principles, namely/that
War I *• and private operation in interest rates must continue
low, and toe long-term rate of 2^%.must
Worldv War II.
The citation of a be maintained.'. j
Under such conditions not very much can hap¬
few- simple facts, easily remem¬
pen that will be too unfavorable to the government bond market.,..
bered, establish* a case that demol-%
.of.'experience.
overlook
World War II, under private op¬
The Raiboads in 1947 ani Altai
X
>
By JOHN T. CHIPPENDALE, JR.
=
iiv
■
:
'"'if
The government securities markets continue on the constructive
the
American taxpayers amounting to
two million dollars
a
day.
In
".V
Renublics.
the
#.**••*.•
1
>
,
Our Reporter
f;;*
>t
a
Deficit financing and lower taxes appear to be focal points in the
attack, by the powers that be, in' their maneuvering for greater power
over the money markets and the banking system. .
How can one
tell yet whether there-will be deficit financing or whether lower
taxes will be as bad as they would .lead us to believe? . . . In the past
/decreased taxes have been very beneficial to the revenues of the gov¬
ernment.
Why should the! money markets and the banks be
singled out and made examples of when there are so many other ele¬
ments in the economic system that are much worse offenders? . . . All
this talk about the need for increased credit controls in order to curb
.
.
day to the Ameri¬
taxpayers; between the two
types
of, operation.
Secondly,
were
%
freight * rate
World War I.
substantial
increases
during
very;
.
.
a
.
if they were likely to
.
Very little, it seems, will be done aside from talking about it,
;;
can
there
.
the inflationary trend wculd mean something
be used.
'-.'v.7
difference of five mil¬
dollars
.
.
since President Truman last week appears to have
disowned Mr.
Administration believes inflation is more painless politically than deflation.
;Tlie opposition seems Jo'. be inclined to do nothing but to
wait and see what will develop. ; .Election years generally: do
not .bring about any very important changes in the status quo.. ..
Eccles' suggestions, which indicates that the present
:
.
.
.
In World War II,
large freight rate increases toe railroads came out of the war
with a freight rate structure no
beyond what have already been
authorized or requested. ; It does higher than that which they had
BULLISHNESS WARRANTED
when war was declared.
Thirdly,
In-vWorld War T, there was tre¬
economy the senseless race be¬
mendous congestion and delay in
tween wages and prices should be
brought to a stop without a .third Ihe handling of the war traffic,
whereas in World War II, a great
round of
Mr. Eccles of the Federal Reserve Board wants larger reserve
requirements for the member banks and'it seems as though he will
settle for any kind of increased requirements that he can get, whether
they be "Primary" or "Special."
One of the main purposes of
the sought for increased requirements is to keep the government mar¬
expenses
would
as
make
inevi-
table
seem
that
in
the
interest
of
'
our
increases, f Every¬
lose, including the mep
themselves, if we have it.
The
.
wage
one
will
railroads
well
deal
traffic
more
handled
was
.
.
ket stable and the long-term rate at
successfully, without the conges¬
tion and delay that had charac¬
money managers seems
2lk%.
.
.
.
Every move of the
to bear out the conclusion that long-term in¬
prepared ; and
terized * railroad " operation
in terest rates will continue low. r.
Under such conditions, with a
challenge
World War I, and with half a milthird round wage
, protected market, why should owners of long Treasuries not continue
hon fewer freight cars.' So, when'
though the railroads have always
TtoncitV
increase flight.
believed that it is the money in
p " J:
# * '
In the last year, relations with anybody, even suggests that in the
Short-term rates will be allowed *to"advance, and Mr. Eccles is
the pay envelope at the > end of
event* of 'another war it might be
Soviet Russia have, of course, dethe week that buys the groceries
wise for the government to take the authority for this statement.
This increase, he indicated, wilL
rapicily.
Today
the
and pays the rent, rather than the
threat of war hangs like a cloud oyer the railroads, just remind be slight so as not to disturb the 2^2% rate on long government
rate of hourly earpings, the men
him of those few simple unconover ' the "entire
bonds...
world; and 1 we troverted
Accordingly, it is believed that a llA% certificate rate is in
have * succeeded
pretty well in
facts, and you have him
rhould be less than .the 'realists
the making whether it comes June 1 or July 1, or is eased into the
backed down.
convincing arbitration boards and
•
that we are in this industry if we
emergency boards that the proper
market in the form of an 11 months 1%% obligation.
No one knows what lies ahead
The redisdid r.ot recognize war as a dis¬
comparison is between their
for our great country, whether it oonnt
would nrobnbly go to 1%% or 1V2%, in order to keep the
tinct possibility.
No, I am not a
hourly earnings and those in out¬
is peace or war. We do know that
penalty features of this rate.
Higher short-term rates would be
side industry, with the result that warmonger. No one who has ex¬ we
have come out of what is so
perienced war first-hand, fighting
used as a mild credit restraint, so long as they do not interfere with
having built up their hourly rates
far the greatest war in history,
through such comparisons, and war, killing war, can ever do other with "an
the maintaining of the long 2J/2% rate.
unimpaired
and
unf :
:
than hope with every fiber of his
having gotten the 18 V2 -cent in¬
bombed physical
and industrial
Again the assurance is given that the long-term rate, and
being that there will not be war.
crease in 1946 that other employ¬
But when we hear the tough talk system, and with our incompar¬
accoruingly prices, will be protected.
What more do holders
ees
got in consideration of the
able system still intact.
We still
cut-back
in
hours—a
of long Treasuries want in order to convince them that the more
cut-back on both sides of the Atalntic—talk
have
tremendous / natural
re¬
that never took place in the rail¬ that; couldn't be any tqugher if
distant maturities are the ones that will be taken care of by the
sources and the ability to produce
road industry, the railroad em¬ we really were at war, we had
most of what we need, and still
money managers?
« * •
.
\
.
..
better * gird our loins .and
get
ployees "now seek, through a cut¬
help
less
fortunate ; countries.
back to a 40-hour week without ready," -The best way to guard
Above all, the recent war demon¬ FUTURE FINANCING
loss of take-home pay, an hourly agaianst war is to be ready. How
strated the magnificent ability of
What about financing in the future, when as and if needed? , . .
rate that will make them a dis¬ do our railroads stack up now for
American youth. A lot of us won¬
How would-is be done? v.
Short-term securities would be used and
tinctly preferred class in our in¬ the eventuality of another war, dered ten years ago whether we
dustrial economy.
the banks would be the ones involved, hence the request for greater
By reason of compared to their state a year were
raising a
generation
of
this proposed cut-back in hours, ago?
While we still have some
drugstore ^cowboys, who would power over reserves by the authorities in order to nullify the creation
the 1946 increase of 1814 cents distance to go in making up the
turn out'to be soft if a war came. of credit.
The belief that flotations of short Treasuries would be
Would become 22.2 cents, and the war
induced ? deferred ? mainte¬
Personally, I am ashamed for ever made to finance the requirements of the government wben, as and if
1947 increase of 1514 cents would nance, I would say that we are
having i entertained 1 any
such
needed seems also to improve the position of the long-term obliga¬
become; 18.6 cents, thus putting definitely in better shape now
thought. -The \ performance ; of
the railroad men -well above the than a year ago. In the first place
Americatr^buth was so far beyond tions, since the supply of these Securities would not be increased with
pattern increases' of those years. we are: now getting more freight
.anything wetbad any right to ex¬ the new financing. ,
.'-7 ■
Furthermore,* the railroad busi¬ cars every month than we are
pect, that those of us who served
Also if such schemes as ^Special Reserve"or similar methods
ness is one that goes- on seven junking.
In the second place, the
ijn earlier wars can only bow our
days a week, 365>days a year. In new passenger equipment is com¬
were to be adopted, it could be that the longs would
included
heads'lii;deepest respect for our
many of its phaies, the. ;4Q-hour ing in, and third, a considerable
in the securities that might be Eligible for such reserve pur¬
fighting -men, and the girls of the
week simply4-is not feasible for amount *of-work and money have
womaTrV military v organizations
poses.
c'-: 7VV']*■■
railroad operatipik and the rail¬
7; ■
gone:into the track structure. For who-batked-ithem up. As a counDoes President Truman's apparent repudiation of Mr. Eccles*
roads will have tp fight ibis third
the^next war, if we are so unfor-*
try, we liaye every right and rea¬
round movement to a finish, When tomato'a* to have
one, the rail¬ son to face the future with confi¬ idea on credit controls indicate that changes might be in the makihg
the
of
sure
40-hour
week.
Al¬
are
well staffed to meet the
.
of the expected
..
,
,
.
,
,
„
...
.
•
.
.
.
.
.
.
.
...
...
.
.
.
;
|,:'/T
f
-
.
consider that each time there, roads ask these
things to enable
raise of 1 cent an hour across them to handle the
job: First,,,a
the hoard in the railroad industry
we
is
a
steady inflow of materials
itj-causes "increased
$40,000,000
a year
realize
can
one
expense
of
to the railroads,
the
tremendous
importance of these labor cases.
Until the end of World War II the
railroads had been able to absorb
efficiency and vol¬
by increased
been
made
crease
has
in
the essential nature of the indus¬
try; third, a freight rate structure
that will recognize the higher cost
plateau to which this country has
ascended
factors beyond the control of the
railroads.
e
war,
but
since
that
occasion there has
each
on
an
crease
keeping up the plant and
equipment; second, a supply of
manpower which will recognize
the
during
time,
essen¬
to
traffic the raises granted
of
ume
tial
increase in wages an in¬
in
freight rates has been
inevitable.
in
been
prices
While
wage, rates
75%,
of
and
what
the
since
the
the
in¬
1939
increase
railroads
as
a
result
Given those three
we
in
things,
so
shall have the materials to put
,and the men, the rail¬
roads have only one more
to
make, and that is
buy has been 90%, freight rates,
allowed to
and not have the
run
their
request
tlpt they be
own
business,
government
confidence that
rian, fifty
our coun¬
run
in the Federal Reserve Board?
.
If Mi*.'Eccles and Mr. McCabe, the
; .'
not- sOe eye
continue to carry
present Chairman of the Federal Reserve Board, should
1o
eye on
matters, would the former be likely to
hundred years
from now, engaged in plotting the
on
great graph of America's destiny,
INSIDE TIIE MARKET
will
see
or
one
in
as mere
in
a
temporary oscillations
surely vascending
progress to a great
curve
destiny
as
of
yet
undreamed of.
Insurance
was
(Special to The, Financial chronicle)
CLEVELAND,
staff of
has
been
OHIO—Carl
added
/
firm to
A
a
companies for the time being are not sellers of
better market is
.
.
.
loan to
still looked
an
"Bi^ Five"
oil company....
for in the longer-term
The 214s due Sept. 15, 1967/72 are being
substantial way by banks on the West
and December 2s due
Coast, v.
.
..
bought
The June
1952/54 are still favored by many
smaller out-of-town institutions.
of the
.
J.
(to the
Maynard H. Murch & Co.,
SAVINGS BOND CAMPAIGN
The
Savings Bond campaign is off with a bang
very
bers of the
This will
Cleveland Stock Ex¬
which forecasts
sizable sales of government securities to ultimate investors.
Union Commerce Building, mem¬
change.
.
for the purpose of making a large
obligations.
Maynard Murch Co. Adds
.
governments.... The recent liquidation by one of the
in
Fielden
increasingly minor role?
an
jthe problems of the pres¬
ent
•
plant, the men to operate
it, and the money to pay for the
materials
a
that
the
including the raise granted today,
wartime
of
dence,
try will emerge from the troubles
of; the present, so that; the histo¬
market.
be
beneficial
to
both the Treasury
and the government
COMMERCIAL '&
THE
(1792)
48
first
bonds,
mortgage
ties
pon.
was
the
of
bit
on
is
slow side.
the
there
not
a
pouring of
out¬
debt issues at the
new
moment, it is expected that these
offerings
Despite the rather forceful in¬
dications that institutional inves¬
tors are not keen about looking
over new material where the yield
creasingly apparent
themselves a
couple of more "workers" as
some
people
term
offerings
Not
price
a
But
Natural
Consolidated
which
at
of
bankers
reoffer
100%s.
as
involved
The
$12,000,000
Similarly
Co.,
a
year
stock
t
sum
to
told
"conditions
Two
mar¬
called
president of
Co.,
the situation
ap¬
up
'
will
Citizens
Life
Washington, D. C..
Insurance
-
Los
new
,
•
Mmico
Sand
&
Gravel
Co., Morrisville, Pa.
April 19 (letter of notification) 10,000 shares of 8% non¬
voting cumulative preferred stock, series A (par $10).'
30-year
Lumber
$15,000,000
Angeles, for
1927
mortgage
first
as
-
ber Co. and
title to the
stock.
Price,
SINCE
tributes at wholesale
PREVIOUS
,
/
Central Vermont Public Service
-■*
Rutland, Vt.
Underwriting—None,
bonds
par),
stock.
common
Buffalo.
record
Expansion of business,
and
Underwriter
Offering—Bonds
April 14 at
<
par
are
166,950
—
shares
Doolittle
&
($1
Co.,
offered to stockholders of
"
:c
•
Corp.,
(flat) in ratio of $1.50 of bonds for
each
common share held.
Rights expire May 6. The stock
will be reserved against conversion of the bonds. Unsub¬
scribed bonds will be publicly offered
by underwriter.
Proceeds—General corporate purposes.
*
^ebrib
^
y
Steel
Corp., New York
April 8 (letter of notification) 44,443 shares of common
(par $5). Offering—Offered for subscription by
stock,
stockholders
shares
Not
held.
at
in
par
Rights
ratio
expire
of
one
May
18.
new
for
each
Working
two
capital.
Partition Corp. and its sales affiliate.-
Co.,
&
Light
Co.
Dewar,
Robertson
&
Pancoast.
Proceeds—For
property, additions and expenses. On April 15
nied, effectiveness of registration statement.
♦
Central
April
12
common
States
(letter
stock
of
and
SEC de¬
Cooperatives, Inc., Chicago
notification) 800 shares ($25
2,800 shares of 4% ($100 par)
par)
pre¬
Price,
par.
per annum.
Outstanding
th,e
^capitalization ; of
cons.sts of; a $2,500,4% term loan; 30,000 shares
$.2.25
cumulative i preferred
company
000
of
stock;
100|000 shares of $1
1
cum u
a
value
stock.
common
William
of the New York
members
to
general partnership and Albert
II, to limited partnership
May 1.
Mr. Porzelt has been
on
associated with the firm for
time.
.
2,500
,.
Y
(parent) will acquire .62,292,vshares,
program^,$Y
s r"
Dixie
*
^, .&/,;•
-
underwriter
($20 par)
named,
Price—$5 each. Business costs. No
but may be Smith-Polian, Inc.,
Y
Omaha, Neb.
.
Equipment Finance Corp.r Chicago, III.
Feb. 26 filed 15,000 shares ($100 par) preferred stock,
Offering—To be sold to employees and officers of tha
company and its parent, Curtiss Candy Co.
Price—$109
per share. Proceeds—To be used for trucks in connec¬
tion with the Curtiss' franchise method of distribution.
Esterbrook
March 17
Pen Co.,
Camden, N. J.
(letter of notification) 1,500 shares of common
(par $100).
Price—Par.
Underwriting—None.
Offering—Stockholders of record April 7 will be given
stock
right to subscribe for one new share for each four
Rights expire May 7 and subscriptions are
shares held.
payable at First Camden National Bank
For working capital. V-'YyYy ; Y,Y
/, fx
Fidelity Fund,
March 29
filed
Inc.
SAN FRANCISCO
.
'
J
Underwriters—Paul
H.
Davis
&
Co.
and
Crosby 4 Corp.
*Y Y*
BOO^
lOO6!
Co.
Me
STREET, NEW (.YORK
dealers!
HONOLULU/
Mi
IS65
York
>»l*rsol'h'cy£«hani"
v\\\\
OEu
yhv-*
ckg0
-/too
•yofc*-
m
I
i-s*
.
m
CO
Bost°n "
.
C«v
Los Angeles Stock Exchange
•
(par. $5).
.
i
LOS ANGELES
i:
,
Proceeds—For investment.
San Francisco Stock Exchange
'
& Trust Co.
175,000 shares of capital stock
de^
.
\
-
Empire Chemical Corp.K Seattle, Wash.
notification) 60,000 shares of common
Wires
Telephone BAvefry
i
:
For additional working capital,
public at $1 each.
MEMBERS
WALL
Pro-x
->•'i
March 24 (letter of
the
&
v,
Fasteners, Inc*., Chattanooga, Tenn.-«
and
Dean Witter
par).!,-Offering
be offered present stockholders.on basis of
voting capital stock.
shares
Power & Light Co.
15
HAWAIIAN SECURITIES
<14
soma
vv/V;:;&; YYsYYY-C'A: i
PACIFIC COAST
Exchange
Stock
Exchange, will admit Paul Porzelt
filed 150,000 shares ($1 par) Class A Commoii.
Underwriters—None./ Offering—To be offered to em¬
ployees, executives and management personnel. Price—
$3.49 a share; Proceeds—For working capital.1 /
($1 par) common stock. Underwriter—P. W. Brooks &
Co., Inc., New York. Proceeds—To retire secured in¬
debtedness, finance inventories and supplement working
capital.
Honolulu Stock Exchange
& Co., 52
York City,
Deetjen
New
Dec. 29
,
New York Stock
par
x
.
Street,
Y-f/ Domestic Credit Corp., Chicago
For operating and mainten¬
Private
con¬
preferred
Emanuel, Deetjen & Co. to
machinery and equipment, y
Crampton Manufacturing Co. (4/29-30)
l:
Feb. 5 filed $600,000 first mortgage 5(4% sinking fund
bonds, due 1966, with warrants to purchase 60,000 shares
Direct
v e
^
(letter of notification) 2,000;shares ($10 par)
•non-assessable capital stocky Price-—Par.For working
capital.
No underwriting.1 J
1
~
V
!
to the
No underwriting.
.,YY:
t i
stock; and 265,000 shares of $1
April 14 (letter of notification) 75,000 shafeS of'class B
common stock (no par)
of which 45,000 willvbe offered
yiyyyy#!
(letter of notification)
through sinking fund at the rate
of 5%
.
Machine Co.
Ohio
stock.
It
case.
retirement
to
Diamond HeadScrew Ce;*, Lbs Angeles
April
Cooperative Services of Canton, North Canton,
of retail stores.
subject
Co.
#'
•
Control Engineering Corp., Newton, Mass.
s
April 16 (letter of notification) 3,870 shares of class A
non-voting common stock ($20 par).
Price—Par.
To
buy real estate, plant facilities, and for working capital.
No underwriting, v
ance
also
share for each four held at $60 per.share. Texas
•
(letter of notification) 10,000 shares of stock
to be sold at $5(4 each (market price), for selling stock¬
holder. Underwriter—Charles E. Bailey & Co., Detroit,
common
40,000 shares
($100 par) cumulative pre¬
Underwriters—Lehman Brothers; Glore, Forgan
ferred.
&
Power
filed
21
(Texas)
cecds —Construction
April 15
April 12
Central
Nov.
is
Utilities
Challenger
•
accrued dividends in each
one new
-f*\
March 1 filed 600,000
underwritten.
lumber, ply¬
—Stock will
; i
der, Peabody & Co.). Proceeds—For a construction pro¬
gram and repair of flood damages.
v
/
?,,.-
(Mich.)
dis¬
and
Dallas
first mortgage bonds
and 360,000 shares (no par) common stock. Underwriters
—Names to be furnished by amendment (probably Kid¬
'Clinton
at
Feb. 26 filed 68,250 shares of common (no
^
March 30 filed $1,500,000 Series E
•
against dilution.
subject
any
time at
prices ranging from $21 per share
on or before
April 1, 1953, down
to $20.25 after April 1, 1963, plus
redemption
ISSUE
Airlines Co., Salt LakeYCity, Utah
shares ($1 par) common stock, of
/impaI-American Palestine Trading Corp;, N, Y. ■ which 400,000 are being sold for the company and 200,April 7 filed $10,000,000 10-year 3% sinking fund deben¬
000 for the account of Claude Neon, Inc. Underwriting
tures.
Underwriter—Name to be filed by amendment,;:: —None.
Price—$2; a share.
Proceeds—For equipment
.if any is used.
Proceeds — $5,000,000 in mortgage loans
purchase and general funds.
for construction oL housing in
Palestine, $2,500,000 in"
Clinton
(Iowa) Industries,.Inc« .(5/3-7)
loans to transportation and industrial cooperatives, and
March 26 filed $7,000,000 15-year debentures, due 1963.
$2,200,00 in loan to Solel Boneh, Ltd., for public works.
Underwriters — Smith, Barney & Co*/fNew .Yp^k and
Business—Palestine development.
Yv'
Newhard, Cook & Co., St. Louis, Mo. Proceeds—To re¬
Atlantic Coast Fisheries Co.
(5/7)
'
pay a $1,500,000 bank loan to J. P. Morgan & Co., Incor¬
Feb. 2 filed $556,500 4(4% general
mortgage and col¬
porated and purchase outstanding stock of American
lateral trust convertible
jPriee—Par.
changed its corporate
present form in March,
retire outstanding notes
To
par.
No underwriting.,
of
conversion
Registration
in
ADDITIONS
INDICATES
Pacific
manufactures
It
1948.
tentions of seeking the bonds.
Now
option
share
one
The
•
Emanuel
Michi-
Wisconsin
Meanwhile
stock.
is protected
Y; Emanuel,
Fly wood
&
Co. was incorporated in
Georgia Hardwood Lum¬
Georgia
4 next,
May
proceeds from
to the company.;
3(4% bonds and six groups al¬
and bank loans.
April 15 (letter of notification) 2,000 shares ($50 par)*
common
"A" stock,-to be offered at $106 each, and
6,000 shares ($1 par) common "B" stock, to be offered
at 65 each.
For fixed capital, fixed surplus and working
capital.
No underwriting.
on
all
accrue
Co.
Gas
are
are
into
-
preferred
-
Admit Two New Partners
this sale will
ready have indicated their in-
put
ferred
Corp.,
'• ?
bids
open
of
shareholders that
us
keen
California
offered
being sold for
the account of Equitable Securi¬
ties Corp., A. C. Allyn & Co., Inc.,
and Clement A. Evans & Co., Inc.
No
Southern
holder
vertible
outstanding and
is¬
arrives.
ers
in
in
made
in
at $23 per
common
The shares being
have
bond
new
on
probably
competition
when the time for opening tend¬
;
•
American
bids
result
Securities
♦
companies
utility
for
this
of
The convertible stock is
to
of
share plus accrued divi¬
per
dends and the
of dimensions that
discussions about
which
$23
.
common
share.
sues
off the proposed refinancing last
new
by
•«
stock
GeorgiaPacific Plywood and Lumber Co.
The preferred stock is priced at
Call for Bids
back looking toward re¬
of its 7% preferred
he
value
preferred
$1
10,425 shares of $1 par
stock and
65,000
shares of
cumulative preferred was
off
financing
second
of
Frazer,
Market
cumulative
vertible
&
Gas
the
rate
Georgia Plywood Stock
Oklahoma
share
Each
stock is convertible at the
handling Ohio Power
Co.'s first mortgage 3s announced
on
closing on that $40,000,000, issue
An underwriting group headed
where demand evidently picked
by
Reynolds & Co. is making
up materially in the wake of ear¬
lier announcement that the prices public offering today '(April 22)
would not be cut.
V:\Y of 69,500 shares of no par con¬
Electric/.< Co.'s
Y V;\.
499,000 for 1947.
common
offering.
of original
possible
comment
from
as
the
at
move
The group
words at the annual meet¬
Turning
2%s
as
were
Locomotive
ing this week.
price of 100.1399 and will
a
few
to
will
W.
peared to
a
the
Gas
bought
D.
slow
clared ;closed.*,,
.
American
$30,000,000
was
debentures
judging
around.
;
20-year,
it
if
well
The company and its sub¬
sidiaries, including those acquired
in January, 1948, reported com¬
bined ' pro forma sales of $37,-
of
the spon¬
soring bankers and the books de¬
of
means
ket,
reoffering to give an indicated
of around 2.91%.
return
The first issue
time
satisfactory basis. Hosts of
a
companies would be in the
ing was purchased by the success¬
ful bidders on a basis which made
of
somewhat
finally worked
aren't
opportunity
the
on
The second a smaller undertak¬
for
wears
such
2.70%.
about
yield
to
cor¬
obtaining equity capital through
to reoffer at
it necessary
time
firms
many
for
as
their tenders.
.
that
looking
,,wbkh do not move out imme- *
diately to buyers. One large is¬
sue was bought on a basis which
made
of
too im¬
none
as
closing of subscription book.7
issues which had been
5y4%
' :
on.
bought
had
are
kets.
mort-
two
on
preferred stock route becomes in¬
they appear.
This week it looked as though
they
file
and
pressed
with the prospects for
early financing in volume via the
aggressively for corpo¬
most
officials
J,
Year
rank
first
new
to fix the interest
the price in making
obligated
rate
Placed
Y/Y -/;.r
the
porate
out in
worked
Full
That
be measurably under 3%,
bankers still show a disposition to
bid
be
due course.
gets to
rate issues as
will
the
be
brought about
The last few days
was
But since
burdensome
a
of
bonds to run for 30 years,
maturity in 1978.
In this instance the bidders will
Closing Out
the issuing utilities, in¬
that investor demand
dicated
$14,000,000
gage
,
at this time."
nancing
Preliminary inquiries, following
award by
company
wood and other wood products in
both domestic and foreign mar¬
April 26 for its issue of
on
ers
its
fi¬
and
point
shareholders to attempt any
Thursday, - April 22,\ 1948
Power Co. will open tend¬
gan
view
the
from
unwise
a
price of
3% cou¬
Reoffering is set at 101%.
101.22
CHRONICLE
have continued to make it
year
seem
a
for which
paid for
Co.,
30-year
States Utili¬
of Gulf
maturity,
FINANCIAL
'
'
Volume'167
THE
Number 4692
'
COMMERCIAL
•
;:y:-April 23, 1948
'
Illinois Central RR.
Noon (CDT)__
11:30
a.m.
7
:
distribute
;/4444;/.;
April 27, 1948
Kansas
the
Gas
and
60,000 shares of preferred (par $100). Underwriters
to be determined under competitive
bidding.
Probable bidders include:
Halsey, Stuart & Co. Inc.
(bonds only); The First Boston Corp. (bonds only); liarriman, Ripley & Co.; Hemphill, Noyes & Co. and Drexel
—Names
be determined
stockholders.
//V
&
Co. (jointly); Lehman Brothers; Kidder,
Peabody &
Co.; Glore, Forgan & Co. Proceeds will be used toward
construction. I April 8 New York PS Commission reduced
bond issue to $5,500,000 and approved an issue of
35,000
remaining 350,000 outstanding shares of
stock
common
owned
by
it
to
working capital.
April 7 filed $10,500,000 first mortgage bonds due 1978/
through competitive bid¬
Probable bidders: Dillon, Read & Co. Inc.; Blyth
Co., Inc., and The First Boston Corp. Price by amend¬
ment.
After the sale, American Power &
Light plans to
—Bonds
(EDT
44/
'
Proceeds—For
New York State Electric & Gas
Corp.
&
Bonds
Michigan Power Co.
each four held.
ding.
Equip. Trust Ctfs.
-
*9
Underwriters—W. E. Hutton 81 Co. and Blyth &
Co., Inc.,
Price by amendment. Offering—To be jriade
to present stockholders at the rate of one new
share .for
capital.
derwriters—To
%
(1793)
New York.
Kansas Gas and Electric Co., Wichita
April 16 filed 250,000 shares (no par) common stock, to
be sold by American Power & Light Co.
(parent). Un¬
1948
Union Terminal Co.^J...—
Wisconsin
Foods, Inc., Oshkosh, Wis.
•
%
April 26,
CHRONICLE
obligations
and working
44." '
..-..Bonds
Glen-Gery Shale Brick Corp.„_
-
FINANCIAL
April 13 (letter of notification) 1,000 shares of 5^%
cumulative preferred stock ($100 par).
Price, par. Un¬
derwriter—Aim & Co., Oshkosh. For current
NEW ISSUE CALENDAR
4.4
Johnson
&
American
Business—Utility.
Lake Superior District Power
Co., Ashland, Wis.
March 30 filed 52,800 shares of 5% convertible second
Working Co...—-..—Capital Stock
Moore-Handley Hardware Co.—————Common
444\'
//4;4;'., April .28,
1948
-
44
Swift
common
Common
Bonds
—...
April 30, 1948
Telephone Co
3,
1948
...
•
w
1948
- May 5,
i
May 6,
—._.Preferred
May 10,
1948
.
May 11,
Narragansett Electric Co..
———Bonds
underwriting.4
M and
-
•
indebtedness, and add to general corporate funds. 4 capital equipment and working funds.
15
Merrimac
April 19
Mills
Not underwritten^
^
Casper,
Wyo.
For
a
drilling
'*
par)
Co.,
4
program.
r
Reiter-Foster Oil Corp., New York
Jan. 16 (letter of notification)
180,000 shares
Mass.
t
Inc.,
stock".
common
Price—80
W. Bennett & Co.
For
dents.
(50c par)
Underwriter—Frank
working capital.
"
;
~
4-44 Robinson Airlines Corp., Ithaca, N. Y.
,
March 9
stock (par $1). Of the total 75,384 shares will be offered
for subscription by stockholders on a share for share
basis at $3 per share. The additional
any
or
dealers will be employed.
facilities.
_
-
(letter of notification) 85,384 shares of
common
10,000 shares plus
Working capi¬
unsubscribed for by stockholders will be offered the
public at^$4, per shares. Underwriting—Company
engage an underwriter to make the
.
may
general public offerCo., South 'Milwaukee,; Wis/44 4 :;44.
4 ing. Proceeds will be used for working capital, etc.
April 12 (letter of notification) 20,000 shares of 6%
•
Romec Pump Co., Elyria, Ohio
cumulative preferred stock ($10 par) and rights to the
'
'
\
.
Midland
.
April 13 (letter of notification) 16,250 shares to be sold
by Henry B. Harsch and his wife and 15,300 shares byPrice—$3 each.
This stock is "tk> be
Underwriter-^Fpr unsubscribed units, Gardner F. Dal- 4 sold to Bradley Higbee and Claude G. McDonald,'both
ton & Co4 Milwaukee. To" buy' production machinery/ 4 of Detroit/4:4r"^44';';;'^/44;:':4;?4;- ;
,4/ m U*1
purchase of 30,000 shares ($2.50 par)
(par $1).
Underwriter — Floyd,D..Cerf Co., Chicago.
Price—preferred $10; common $6. <Proceeds — Stock¬
holders will sell 260,000 preferred shares and 250,000
com.
stock.
To be
issued pTd~r&ta. tdt- tfommoft 'stddkholders' in 'units of one
preferred share and 1% common stock rights for $10.
and
:
No underwriting.
tal and enlargement of
Stockton, Calif.
March 6 filed 385,000 shares of 60 cent convertible pre-"
ferred stock (par $5) and 325,000 shares of common stock
stock.
j
Drilling,
underwriter
Ltd., Toronto, Canada
April 16 filed 200,000 shares of treasury stock.
Under¬
writer—Mark Daniels & Co., Toronto. Price—$1 a share.
Proceeds — For mining and business,costs. ? Business—
Mining operations.
shares
Methuen,
&
Metalube Corp., Newark, N. J.
44/
April 12 (letter of notification) 448,051 shares of capital
stock (par 250).
Price—500 per share. Underwriting—
None up to. present time, but .it ,is expected that an
Mines
common
Denver, Colo.
(letter of notification) 50,000" shares ($5 par)
stock, to be sold at par to stockholders.
For
common
Addi¬
Co.,
Oil
March 23 (letter of notification) 200,000 shares
(250
common
stock.
Underwriter — John G. Perry 81
.
•
working capital.
common
Powers
Industries Inc., New York 4
(letter of notification) 8,000 shares of common
stock (par $1) to be offered on behalf of Eugene Daniel
Powers.
Price—Market (%
to $1.50).
Underwriter—
Auchincloss, Parker & Redpath. *
>
of
Flotill Products, Inc.,
•
Powder River Oil Co., Denver
April 12 (letter of notification) 200,000 shares (10 cents
par) ,common stock. Price, par. For working capital. No
4
underwriting.'
(letter, of
7% cumulative preferred stock (par $10) and 1,400 shares
A:
(4/27)4
Maguire
4 Fiske Products, Inc., Mt. Kisco, N. Y/4
April 20 (letter of notification) 2,100 shares non-voting
,
4 Pioneer Oil & Gas
Co., Oklahoma City, Oklir.
!
April 12 (letter of notification) 200,000 shares ($1 par)
common stock. Price, par. To acquire and
develop a 162acre oil and gas lease in Brown
County, Texas./ No un¬
44 ••444.; 4;'4; •/.
/" 4 4/4 "444
Wood Working Co.
filed 293,076 shares ($5
M
April 1
•
tional working capital.
•
•
Corp., Clearwater, Calif.
notification) 1,000 shares ($1 par)
common stock, to be sold by Edward A.
Pellegrin, South
Pasadena.
No underwriting.
4. 4 ;• 4, ■ 4 :;
<
Telecommunications, Inc., New York
(letter of notification) 1,000 shares of capital
stock (par $1). Price—$4.50 per share.
Underwriter—
Littlefield & Co. will act as agent. Proceeds to selling
stockholder. *
"■. ??
■
' '* ,*
Price—$10 for each class.
*/;44.>;4/;;/44/41-:":444';:
Macco
April
Bonds
Finch
Fission
of record April 15 at the rate of one for five.
Rights
expire April 29. Proceeds—General corporate purposes.-
April 19 (letter of notification) 30,000 shares ($2.50 par);
stock.
Price—$4,875.
To reduce bank loans.
pay
1948
March 31
(par $10).
'
Co., Milwaukee
stock.
derwriting/
14
44-'
4444 /'- *"'''44
4;4.4 Playboy Motor Car Corp., Tonawanda, N. ¥.
4
Feb. 13 filed 20,000,000 shares common (lc
March 26
par) capital stock/
par).' Price—
;V $1 per share. Not more than 100,000 shares will be ofUnderwriter—Kidder, Peabody & Co., New York/ Price
by amendment. Proceeds—To purchase 75% of the stock > fered to employees and officers at 87^ cents per share.
of F. Richardson Co., holder of timberlands in
Underwriter—Tellier & Co., New York. Proceeds—For
Oregon,
1948
—
Sierra Pacific Power Co
•v
•
common
No
Bonds
*
Sunray Oil Corp
Le Roi
-Under-'
Underwriters—Morgan Stanley & Co. and CoggeshaJt 8&
Hicks, New York, and G. H. Walker & Co., Providence^
R. I.
Offering—Stock offered for subscription
by holders
4
4
4 Leo Rose Co.,
•
44
common
share. Working capi-
per
7
;
and another 100 shares to the Jewish Charities of
Chicago.
Shares will be offered at $87/s each.
writer—Stifel, Nicolaus & Co., Chicago.
14,000 shares to be offered stock¬
Price—$2
capital;-/No underwriting.
Telephone Co.
Atlantic Coast Fisheries Co...
4
each
April 13
44:4//44/41.':/
(EDT).———-Debentures
I#.-
for
Inc., Chicago/
'■" /•
(letter of notification) $150,000 of redeemable
subordinate 7% cumulative debentures.
For working
Debentures
C •;
Southwestern Bell
a.m.
and
holders of Lancaster.
Way 4, 1948
"Sb^lthermeaiifornia Gas Co. 8 a.m. (PDT)—Bonds
-4' 11:30
new
Peninsular Telephone Co.
(4/30)"
March 26 filed- 35,374 shares (no
pat) common
tal.^Not underwritten.
4~.
:;i
one
cago
of that company
——...Common
Clinton;Industries, Inc.—;——
.H*
V'''
of
Proceeds—Construction program.
holders of Thomas Robinson Co., Inc.; for all the assets
1948
Crampton Manufacturing Co
r:
rate
•
•
April 29,
Peninsular
held.
now
Bonds expected in May and-
Lancaster Processes,
Inc., New York
April 8 (letter of notification) 30,000 shares of common
stock, of which 16,000 shares will be distributed to stock¬
*
/4;4:/444-4/.;..
par).
Underwriter—
Offering—To be offered
($20
Co., Milwaukee.
stockholders at the
shares
Debentures
Co....
&
Nutrine Candy Co., Chicago
April 16 (letter of notification) 600 shares ($1 par) com¬
mon
stock, being donated b,y company's President, Ben¬
jamin H. Goodman, to the Jewish Welfare Fund of Chi¬
stock, cumulative
The Wisconsin
Genuine Parts Co....—...
;
shares of preferred stock.]
preferred early in June.
preferred
M and M Wood
company 125,000 preferred shares
Price—$1 each.
For working capital.
Moore-Handley
No underwriting.
Hardware
Co.
John A. ?Zimmer.
Sandy Hill Iron & Brass Works, Hudson Falls.
(4/27)
New
Mai. 29 filed 350,000 shares ($1 par) common stock, Un¬
derwriters—Paul H. Davis & Co., Chicago and Johnston,
Gamble-Skogmo, Inc., Minneapolis
Inarch 30 filed 120,000 shares ($50 par) cumulative pre¬
ferred stock, convertible prior to July 31, 1958.
Under¬
writers—Goldman, Sachs & Co. and Merrill Lynch,
Pierce, Fenner & Beane, New York, and Piper, Jaffray
<& Hopwood, Minneapolis. Price and number of shares
April 12
York
(5/3)
(letter of notification)
Lemon &
Co., Washington, D. C.
Price by amendment. ; participating preferred stock
share.
Proceeds—Shares are being sold by Equitable Securities
Underwriter—John L.
Corp., Nashville, Tenn.; Union Securities Corp., New 4 N.-. Y. Working capital. /4-;
York;
Tri-Continental
Corp,
Selected
and
Industries
Corp.
by amendment.
Proceeds—To reduce short-term bank
loans totaling $13,850,000.
Temporarily postponed.
Segal
?:
59,000 shares class A
$4). Price—$5 per
Nolan, Inc., Glens Falls,
:;4-,.'
(par
Lock & Hardware Co.,
March 24 filed $2,000,000
Inc.,
15-year 6%
New York
convertible sink-
•
Morley Magnesium Foundries, lnc.4 Seattle
4 ing fund debentures, due 1963. Underwriter—Floyd IX
Cerf Co., Inc.
Price by amendment. Offering—to be
April 13 (letter of notification) 192 shares ($100 par)
offered initially to stockholders on basis of one
/ */ Genuine Parts Co. (4/28-5/4)
non-assessable common stock and 1,440 shares 6% par$100
March 30 filed 150,000 shares ($5 par) common stock,
debenture for each 100 shares held. Proceeds—For re¬
ticipating preferred stock ($100 par).
Price—Par for
of which 50,000 are being offered by company and 100,000
each.
To build foundry, buy machinery and for operpayment of two notes and general corporate purposes.
by five stockholders. Underwriter—Courts & Co., At¬ 4 ating capital.;."; No underwriting.
Seminole Oil & Gas Corp.,
.
^
444
Dallas, Texas
lanta, Ga. Price by amendment. Proceeds—From the
•
March 4 (letter of notification) 11,400 shares of common
Motors Metal Manufacturing Co., Detroit, Mich,
sale of the 50,000 shares.
$400,000 of bank indebtedness j
April 14 (letter of notification) 15,000 shares ($5 par) .4 stock. Underwriter—Buckley Bros. Proceeds to selling
will be retired and balance for working capital. 1 ":
stockholders.
common stock, to be sold by seven stockholders.
Price—
44
4
4
4
$6% per share. Underwriter—William C. Roney & Co.,
"; Glen-Gery Shale Brick Corp. ' (4/23)
4 Sierra Pacific Power Co. (5/10)
"
•
,
,
w
,
March 31
(letter of notification) $300,000 general mort¬ ;
gage, series A, 6% income bonds, due Dec. 1, 1957. Price
—Par. Underwriter—Warren W. York & Co., Inc., Al-
leritown, Pa. Proceeds—To reimburse treasury for
tion of
por¬
Detroit.
March 26 filed $3,500,000 first mortgage bonds, due 1978.
;
7
'
?
44 Mountain States Telephone & Telegraph Co.
,4 Underwriters—To be determined by competitive bidMarch 5 filed 191,881 shares of capital stock ($100 par).
ding. Probable bidders include: Halsey, Stuart & Co.
Stock offered stockholders of record March 24 at $100
Inc.; Blyth & Co., Inc.; Stone & Webster Securities Corp.
expenditures for permanent improvements.
Proceeds—Construction costs and the payment of $650,per share on a one-for-three basis. Rights expire April ;
000 to National Shawmut Bank of Boston for construc¬
26. American Telephone & Telegraph Co. owns 73.35%
•4 Halliburton Oil-Well Cementing Co.
4 of
tion notes. Expected about May 10.
outstanding stock. Proceeds—To repay advances from
April 20 filed 730,000 shares of common stock (par $5).
American Telephone & Telegraph Co.
4
Underwriters—Lehman Brothers and Blyth & Co., Inc.
Silver Beil Mines Co., Denver
Proceeds—Shares are being sold by certain stockholders 444:4 Narragansett Electric Co. (5/11)
4
Feb. 26 filed 125,000 shares ($1 par) capital stock. Price
and company will not receive any of proceeds.
March 30 filed $10,000,000 Series B first mortgage bonds,
Of the
—$2.50 each.
Offering—To be made to present stock¬
due 1978.
Underwriter—To be determined under com¬
shares registered 50,000 are to be offered direct to em¬
holders on a pro rata basis during first 10 days of sale.
petitive bidding.
Probable
bidders include:
Halsey,
Proceeds
ployees of company. Business — Primarily an oil and
Exploration work, working capital and in¬
Stuart & Co. Inc.; The First Boston Corp.; Kidder, Peagas service company and renders services such as oil
debtedness.
'.4: v4*4 ••,.4/-.
\,l4\.'4
well cementing, testing, acidizing and electrical well
body & Co. and Stone & Webster Securities Corp. (joint¬
•
Snowbird Mining Co., Inc., Anchorage, Alaska
services.
ly); White, Weld & Co.; Lehman Brothers and Goldman
April 9 (letter of notification) 1,000,000 shares of non¬
4 Sachs & Co. (jointly). Proceeds—To reduce short-term
•
Idaho Power Co. * >' 4 •'44444//4 ,.4/ 44'/';
assessable (10 cents par) common stock. Price—15 cents.
loans and continue a construction program.
Expected
April 16 filed 150,000 shares ($20 par) - common stock.
To expand mill capacity.
No underwriting.
May 11. ;
.c:.y ,':4, 44
4. ' 4 4-4
V ^'4' - >:;Underwriters—Blyth & Co., Inc., and Lazard Freres &
•
National Dyeing & Finishing Corp., Los Angeles
South Carolina Insurance Co., Columbia, S. C.
Co., New York and Wagener & Daly, Inc., Boise, Idaho.
April 14 (letter of notification) 1,250 shares ($100 par)
April 1 (letter of notification) 10,000 shares of common
Price by amendment.
Proceeds
Proceeds of stock.itpstock. Price—$17.50 each. Of the proceeds, $100,000 will
preferred stock.
Price, par.
For new equipment and
gether with proceeds from the sale of $10,000,000 of 3%
raw materials.
No underwriting,
be used for capital and the remainder for surplus.
No
first mortgage bonds to 11 institutional
—
.
t
—
v
investor^ Hifll
be used to repay short-term bank loans and other con¬
struction costs.
4
■
i •
National Gypsum Co., Buffalo, N. Y.
April<20 filed 422,467 shares ($1 par) common stock.
underwriters.
4
(Continued
on page
*
50)
'
50, (1794)
THE
(Continued from page 49)
South
Carolina
Electric
basis.
1-for-10 basis and the
Unsubscribed
common
(jointly); The ^ifst;Bostoh Corp.; Halsey, Stuart
Dillon, Read & Co. Inc.; Lehman Brothers;
Kuhh, Loeb & Co/-' Proceeds—To pay construction loans
common of South Carolina Power
Commonwealth & Southern Corp.
,,,
Co.
from
pre-,
provide construction funds for
investment.
/
United
>
March
the*
f
29.
filed
;.•/;
9,9501shares {(nonpar)icommon stock.
' Each share is to be accompanied by .
cedure is
for
purchase
of
States
Sheetwood
Co./ Seattle,
the
934, 810 So/
Los Angeles, CaliL, up to 8 a.m. (PDT)y
May 4. //..//7
t
V Southwestern
& Co.
1
will
be
ufced
to
advances from
repay
phone & Telegraph Co.
used
,
for
Proceeds—$95,000,000,
construction.
American
(parent), and balance
Bids—Bids
for
>
Tele- /
will be
purchase of the
bonds will be received at Room
York,
up
to 11:30
a in.
2315, 195 Broadway, New
(EDT) May 4.
;
.
-
Venezuela
Syndicate, Inc., New York 7 7? *-7/7
April 9 (letter of notification). 35,000 shares of common
stock (total not to exceed
$100,000)/ Price—Market (ap¬
proximately $3y4 per share). To be Sold on New York
Curh Exchange by Moore, Leonard & Lynch. Proceeds
to selling stockholder.
:;/-7/ /7;7-77i
,-
•
Sperti Foods, Inc., Hoboken, N. J.
(letter of notification) 30,000 shares 5% cumu¬
lative convertible preferred stock,
($10 par).
Price—
$10 each.
Underwriters—White, Noble & Co., Detroit,
West Texas
Feb. 26
and Clair
S.
Hall
&
Co., Cincinnati.
To operate
,
phar¬
maceutical, division and for general corporate purposes.
•
Stanley Works, New Britain; Conn.
<
April 14 (letter of notification) $300,000 of common stock
at the average bid price during April, which at the
present bid of $60 would be about 5,000 shares/
To in-:
crease cash
working balance and pay bank loans.
No v
underwriting.
,
•//
_
•
State
,
stock.
•
Price—Par
for
each
class.
No underwriting. 77). 7:,
purposes.
Steak
vn
For
./ //■/
corporate/
/^
participating
preferred stock,
($1 par)
and
160,000
shares (50c par) common
stock-, of which 40,000 will be
sold and the remainder reserved for conversion.
writer—White & Co., St.-Louis, Mo. Price—$8
preferred stock and
is
$2.50 for the
being offered by stockholders who
family.
are
Jj
Under¬
for the
This
common.
stock
members
of
the Belt,
Stearns
(F.
Arkansas
.u
March
C.)
Hardware,
Inc.,
of
;:■
Suburban
Little Rock, Ark.
working
"general
Service,
Inc.,
Ontario, Calif. -1
$500,000 12-year 6% series sinking fund
March 22 filed
debentures, due March 1, 1960, with purchase warrants
attached for the purchase of 50 shares of
.common
stock,
($1 par). -Underwriters—Lester & Co. and Wagenseller
Durst, Inc., Los Angeles.
Proceeds—To purchase the
&
California Butane.Co.
^
Loeb
&
Co.
and
sold
at'the
same
•
working capital.
convertible
//.v.:;7,../ ■,/.
Swift & Co., Chicago
(4/28)
$35,000,000 of debentures ($10,000,000 of
10-year serials, and $25,000,000 due
1973). Selling
April 5 filed
Agents—Salomon Bros.
by amendment.
habilitation..^*,
& Hutzler, New York,
Interest
Proceeds—For necessary
plant re¬
V ;-,y J
;/:/>../.
//;}/
Sylvan Seal Milk, Inc.,
Philadelphia
April 19 (letter of notification) 500 shares of common
stock: (no oar).
Price—$8 per share.
Underwriter—
Penington, Colket & .Co Proceeds to
selling stockholder.
•
Lake Gold
filed
Mines, Ltd., Toronto, Canada
300,000
shares (par $1) preferred stock. "
Daniels
& Co.,
Toronto, Canada.
share. Proceeds—For mine
develop¬
Underwriter—Mark
Price—60
cents
ments.
•
a
Tooth
Polishers Corp., N. Y.
April 14 (letter of notification)
3,750 shares of common
stock (par $20).
Price—Par.' Promote
business, build
factory, etc. Not underwritten.
Trans-Marine Oil
Refining Corp.,
class
Milwaukee, Wis.
March
19
filed
Price—$1 each/
850,000 shares
,,
7
($1
par)
common
Underwriter—Distribution by
Proceeds—To build and
equip machinery.
•
Tyler and Simpson
stock.
company.
Co., Gainesville, Texas
April 45 (letter of notification)
2,000 shares ($100 par)
common. stock.
Price—$110 each. For operating capital
No underwriting.
ft,,-
,,
/
<
.
Whitehall
March
22
filed
Fund, Inc.
7
50,000 shares of capital stock
Underwriter—Broad
investment.
Street Sales
Corp,
record
Price—$12
24
in
ratio
of
,
-
debentures, due
Un¬
Power
Light Co. 7
April 16 reported company is expected to? by ing aboutf
$11,000,000 new first mortgage bonds to market' around/
next June.
to
Proceeds will:be used for
Light Co/;':
"
all
an
of
additional
which
it
16
\-;7/"
•
some
*
>7 7
plans company contemplates
permanent'securities during' 1948 to
the
sale of.
finance
its
i
-
reported
-
Aviation) / Inc.),
there
,
have
General
of
been
n
7/
discussions* but
no
Motors"Corp.'s disposal of ;
£ ;
Southern* California
Edison
Co/I//
:
company
,_/>.(// -''
r
Pacific Coj
/'
7/v
'
Co.
be used to refund
outstanding 2%s, due:1967> Probable
bidders:/.Halsey, Stuart & Co. Inc.; Kidder; Peabody &
Co.; Shields 8c Co.; Salomon Bros. & I^utzler; Lazard
Freres & Co.
•-' ■/ .//■
7/ /■ /•?/• /-//; :
•
The
United
■••'•7/-
Brush
:
<
/
z^-^,v/'-eh&'i'&'itH**:.///
Manufactories, New York
P'7it««
.
Attorney General of the United States-invites bids
for the
purchase of
1,059 shares of
par)," and 210 shares class A 5%
ferred stock (par $100).
sale
of
common
Stock
(no
first
cumulative pre*
These shares constitute1 apnroxi-
common
~
,
and 35.77% of-the class A "
Company - is engaged in - the Tnamifactufe
paint brushes/having a DrincrPalroffice kt
/
118 Wooster
St., New York. N. Y. Reported net
worth of company as of Dec.
31, 1947r was $443,023* All
bids must be presented at the Office of
Alien
'
;
,
Property,
Department of Justice, 120 Broadway, New York
5, N.Y., "
on or before noon
(EDT), on May 1*8.. Stock will be sold
only to American citizens.
'
■■
.
....
v
Co*
•
instalments
April 20 company will soon put up for sale kt competi*
tive bidding $11,100,000 equipment trust
certificates; to
be dated May 1, 1948/and to mature
serially .from one to
10 years from date of issue. Probable bidders:^
Halsey,
•
Power
owns.
of April
as
conclusion
116 and
program.
Electric
in the subsidiary's common
stock,
Probable bidders: Lehman
sum
now
ai-t; fy Co.-Inc,
and
sale of $3,500,000 addi¬
bonds, the proceeds of which, sup¬
plemented by further bank loans,, will, be used to
pay
$1,485,000 bank loans due June
15,'next, and finance
California
and'
Brothers? Drexel & Co/and Central Republic Co. (joint¬
ly); Halsey, Stuart & Co/Inc.; The First Boston1 Corp.;
Glore, Forgon & Co/,and W. C. Langley &-Co.)(jointly);
White, Weld & Co.; Blyth & Co., Ine./and Smith, Barney
& Co. (jointly);: HarrimanRipley
C0.7 Inc.; Lazard
Freres & Co. and Lee Higginson Corp.
(jointly).
outstanding.
April 14 company contemplates
tional first
mortgage
1948 construction
construction
off bank debt already incurred for rthe: purpose.»
Coincident with competitive sale of the new
bonds, the'
p&rent company, American Power & Light Co., wid in- V
pay
•
Prospective Offerings
Gas
*
&
mately 10 59% of the
Under present
1968.
Florida
Union Terminal Co.; Dallas'd'4/26)*
nr'i /•/
r
Bids will be received until April 26 by
company in Dal¬
las for purchase of $4,833,000 first
mortgage bonds, to be v
dated June 1, 1948, and due June 1, 1978. Proceeds will
7^
•
Union Electric Co. of
Missouri
April 19 filed $25,000,000 of
•
Inc.; Salomon Bros.:& Hutzler; Harriman
Ripley & Co. and Lehman Brothers (jointly); The First
Boston Corp.; Blyth & Co.,vine.:. Harris, Hall & Co.
(Inc.).
Electric
Atlanta
Co.]
apd Glore, Morgan •& Co.- (jointly).
Stuart &
filed
f
•
>
per
Power- CoM will be used to redeem
$12,500,000 of 3%% of first mortgage bonds at
1021/4%
and to
repay the Central Hanover Bank & Trust Co. and
Marshall & Ilsley Bank
$200,000 in bank loans/ Expected
about May 3. Bids—Bids for
purchase of bonds will be
received by company at Room
1901, 60 Broadway, New
York, up to 11:30 a.m. (EDT) on April 26.
•'
$14,000,000 25-yearvfirst mort-1
rate and price to be detei mined
by the
competitive1 bidding.
Probable bidders: Halsey, Stuart & Co'. Inc.; Kuhn, Loeb & Co. and
Smith, Barney & Co/(jointly); The First Boston Corp.; W. C. Langley &
•;/ Southern
1978.
Wisconsin
bidding
a
has plans for sale of $20,000,000 dirst
mortgage bonds (in addition to 800,000 shares preference
stock). Probable bidders: Blyth & Co., Inc.; Halsey, Stu-
(4/26)
$14,000,000 first mortgage bonds, due
Underwriters—Names to be determined
through
competitive bidding.
Probable bidders: Halsey, Stuart
6 Co. Inc.; Lehman
Brothers and Goldman,- Sachs & Co.
(jointly); Drexel & Co. and Hemphill, Noyes &
Co.;
The First Boston
Corp.; Dillon, Read & Co. Inc.
Pro¬
ceeds—Proceeds together with
$1,000,000 from bank
loans and $1,000,000 from
the sale of common stock to
22
competitive
.
Wisconsin Michigan Power Co.
March
at
gage bonds at
•
Proceeds—For
share. 7 Proceeds—Plant
additions and purchase of securities
and assets of other
companies.
,,7.
«
Philadelphia of $14,000,000 25-year 3Y2% first mort-'
gage bonds, Equitable now proposes to issue and sell
underwriter, Morgan
.
March
,
to
Stanley, &. Co.
(par $1).
share for each eight shares
held/ Rights will ex-
plan filed last winter proposing the transfer of all
natural gas
producing; transmission and distribu-'
tion proijerties in
Pennsylvania "to its subsidiary, the
Equitable Gas Co.
In lieu of the issuance
by, Equitablea
North American holdings/ General Motors hold
1,000,000
Nbrth American shares. Probable
•;
subscrip-V
one new
to
final
32,937 shares of common stock (par
$10).
Underwriters—None.
Offering—Offered for
of
•
of its
April
filed
stockholders
festtlt'
a
offering."
Reported
-
-
Equitable Gas Co., Pifbsburgh)^//- 7/ -///^ '%vh-/
April 20 Philadelphia Co. filed with SEC an amendment
t(. North American
,,
-
irnary1 ^
^mimrrtdXi^/'
as
Rutzlen/7-
B
.,
a
and to be secured by '
$20,399,847,1 the / depreciated ? book '
1,1948, was $18,884,469* All1
bids must be received at Room
401, 135 East 11th Place, :
Chicago 5, on or bfefore noon (CDST).April 26: Probable
bidders include: Halsey Stuart & Co.
Inc.; Harris, Hall
& Co. (Inc.); L. F. Rothschild"& Co. and.
Gregory-&rSort, ;
Inc.; Harriman Ripley, & Co^, Inc..and Lehman Brothers
(jointly); Kuhn, Loeb. & Co. and Blyth & Co.; Inc.^
(jointly); The First Boston Corp.; Salomon Bros. &
capital stock, to be offered at par and
$100,000
5 % debentures.
For operating capital to launch
expan¬
sion program.
No underwriting.
7-: /
,
/
South
*
that
so
'
•
semi-annual
equipment costing
Machinery Co.,;Salt Lake City
April 16- (letter of notification) 550 shares ($100
par)
pire April 30.
April 2
underwriting..
of the
value of which
•; Wheeler (J. K.)
to general funds.
Tabor
No
its ^newF-
-
anu
capital will be raised
new
equal
•
Western States Oil Co.,
Phoenix, Ariz.
April>8 (letter of notification) 300,000"'shares of common
stock (par $1).
Price—SI per share/ Underwriter—Ari¬
zona Securities
Co., Phoenix, Ariz. To buy oil leases and
by
rates
7-7 7-
•
tion
to
Productions; Inc.,
•-Charlotte, N.;C./-
banks
Illinois'Central' RR.//(4/26
Company is inviting bids dor the purchase of 14,000,000
equipment trust certificates, seris^ Z> tojmature in'20
No under¬
April 13 (letter of notification) 250 negotiable order
notes of $1,000 each, paying
6%, due in 15 months.' For
preferred stock, series B (par $25);: Underwriter—East¬
man,'Dillon & Co., New York. Proceeds—Will be added
one
price by'Loris V. Cady, President of
Wesfem Adventure
$7,000,000 of
vest
writing.^-
25
cumulative
a
the company.
Proceeds from the sale of the firm's stock
will be used to buy and
develop
Wilson-Jones Co.
of
Proceeds—For
West Valley Realty
Co., Los Angeles, Calif.7* / ;
April 12 (letter of notification) 1,500 shares ($10
par)
Feb.
(5/6)
April 14 filed 600,000 shares
Brothers.-
Expected abbtft" April 26.
•"
\
*
Sunray Oil Corp.
../."?
Lehman
construction program.
equipment.,for drilling.
shares' of 6%
Price—Par. Un-./
■/,;■,/
Gas
Ripley & Co. and Blyth & Co., Inc.
(jointly); Halsey, Stuart & Co. Inc.; W. C. Langley & Co.;
Kidder,^Peabody & C4.; Stone & Webster Securities
Corp.; Merrill Lynch, Pierce, Fenner arid Beane; Kuhn,
notification)■> 2,000
cumulative preferred stock ($100
par).
derwriter—Southern Securities Corp.,
To - retire $65,000 of loans and for
purposes.,
Hot Springs,
.7/77777
26- (letter
/
Corp.; Harriman
property.
Shake, Inc., Bloomington, III.
Feb. 2 filed 40,000 shares of 50c cumulative convertible
77
Co., Abilene, Texas
March 29 filed $5,000,000 Series B first
mortgage bonds,
due 1978.
Underwriter—To be determined by
competi¬
tive bidding. Probable bidders include: The
First Boston
preferred stock and 3,000 shares ($10 par) class B com¬
mon
stock, to be sold at par by the company, and 1,500
J
shares of preferred and 3,000 shares of
common to be
Drugs, Inc., Wilmington, Del./. "/
)>
April 19 (letter of notification) 2,980 shares of 7% pre¬
ferred stock ($100 par^ and 2,000 shares
($1 par) com¬
mon
Utilities
the
secondary-subscription rights
of
Bell
Inc.; Morgan Stanley & Co.
with
'ol5taid;%eeded
Corp. has stated Uts' willingness to
Atlas
in advance to exercise at least
sufficient of'its
and
•
Universal Utility Products Corp., Las Vegas,,
^
Nevada/7.- '■;/ 7:7 7/7/;
/ '• / •• //'*:•7 /^'////y
Telephone Co. (5/4). ♦•♦A*
April 2 filed $100,000,000 35-year unsecured debentures/^ April 12 (letter of notification) 140,000 shares of stock.
Price—50 cents each.
For tool equipment and additional
due 1983.
Underwriters—Names* to be determined by
competitive bidding. Probable bidders: Halsey, Stuart ?• production machinery./ No underwriting.) 7;.
on
/up
.
arrangement
lbans
Wash.
(letter of notification) 300,000 shares ($1 par)
common capital stock.
Price—par;
For industrial and
chemical/research w,ork to improve manufacturing.
pro-'
now
future
credit
March 17
bonds will be received by company at Room
Flower Street,
United
7
necessary
to
snew
being taken to offef ; stockholders, in the
additional stock.' Transfeiable
rights will
be issued to stockholders which will entitle
them during1
a limited- period of. lime to
subscribe pro" rata to"the •...
new/ issue/). To ..enable company to \ firm
hear
Co.; Lehman Brothers.-,
Bids—Bids
the'
that
be necessary for
company to commit itself to obtain
capital funds from its stockholders. The
<:.r
-
properties.
1
*
/
expected
f 'v
filed
expand
//
'
Rayon Corp., New York City:
Price—$1,000 each.
•
Proceeds—To, reimburse treasury for expenditures made
to
;
subsidiary, Union
a
a "production warrant"
permitting the holder to buy a
(5/4) t ir?
proportionate share of the company's output/ .Under¬
$15,000,000 3y4% first mortgage bonds,y
Proceeds—To provide capital for the
due 1978, Underwriters—Names by competitive bidding. * -i writing^—None.
purchase and operation of a plant with an annual pro¬
Probable bidders.
Halsey, Stuart & Co. Inc.; Blyth &?
ductive capacity of 4,000,000 pounds of viscose filament
Co., Inc.; Harris, Hall & Co. (Inc.); Merrill Lynch, Pierce,
rayon and 8,000,000 pounds of viscose staple fiber,
Fenner & Beane; White. Weld &
/7.7//1
16
Vultee Corp.
April 20 Floyd B. Odium, Chairman, revealed
Southern California Gas Co.
March
Shields & Co. and The First Boston
Corp.
Consolidated
management has plans for acquiring additional
capital
through a .$20,000,000 credit with a group of banks to¬
Electric Power Co.
/"'/
"/1','VV
''■'■V. .7/
gether with the raising of a minimum sum of
•
$7,000,000'
United Fund*, Inc. ////'•'•;/<//;
through issuance of stock-to ^the «shareholders.
Mr.
April -13 filed 3,000,000 United Income Fund shares.
Odium stated: "To cure the
insufficiency oft Working
Underwriter—Herrick, Waddell & Co.
Proceeds—For , capital and obtain new
banking credit it is
other funds will be used to purchase all of the outstand-/
ing
•
inc.?
Co.
and
l-for-2
a
on
&
shares will be offered publicly
Proceeds—Proceeds together with
Price by amendment.
derwriters:
& Co.
scription by company's common stockholders, the
a
cbhstfu'OtiOirpfdgfamVIf'saTe negotiated, probable"un-"
ding.
Dec. Z filed 80,858 shares ($50 par) cumulative convert-r
ible preferred and 404,293 sAiares ($4.50 par) commOL:
for sale, and 687,293 shares reserved for conversion ol
preferred. Underwriter—Kidder, Peabody & Co., New
York) Offering—Shares initially will be offered for sub¬
ferred on
Thursday,-April 22, 1948
derwriters—To be determined through competitive bid*
Prpbabie bidders: Whlt£, Weld & Co. and Shields
•
Gas'ciftA
&
COMMERCIAL, &; FINANCIAL CHRONICLE
^ »r v:"«»i
•-
Winston
*■*
■
/n-'/i/fii"''/'!
.
t:v;.?•
&' Newell
-
Co., Minneapolis !
^
>
April 15 reported company: contemplates sale' of 40.000/
common shares
(oar $5), the proceeds to be used
for
working capital, etc.
-■*
v
Number 4692
Volume 167-
New
1
*
executives on a number
characteristics. :>
; m
68% said company heads do a
porate
; of
~
good
but
job
efficient production,
>; V
"
[
in
only
.
.
'
said
28%
y
heads do
company
a
good job in taking a real interest
in
workers,
and only
said
17%
heads do
company
a
'
job
dealing
in
convinced that corporations are
working for - the things the com¬
its
with
labor
'
or
in
man
wants,
guaranteed.
people' are saying that
does a fine job in
production but neglects the hurside:
not
it
is
machine minded,
minded.
This point of
man
view is susceptible to propaganda
about class conflicts: Corporations
produce
lot of
a
exploiting
The
basic
second
public's
as
doubts
This
workers.
wealth
but instead
goes into the cash tills of the rich
who
already fat; on profits. ..
opinion research we have
are
In
formulated what
know as the
we
ends-means
principle which goes
are ends minded;
J; they think primarily in terms of
2 goals or ends sought. They are
like this: People
critical of
not very
they
tend
to
> my* side?
*
in
on
Is he for the things
I
'20'[v:
Politicians
understand'
When
t
leaders
Is this leader
.
V1
want?
7
judge
of ends.
terms
Hence
means.
and
this
labor
leaders
principle
they* appeal for
well.
mass
sup-
port- they always talk about ends,
about the rosy dawn; about higher
and sick benefits; about
employment, better housing,
security and "Every Man
King."'
' |-
wages
full
(
social
&
-
the Kremlin
Even
gang
knows
\ this principle well for they give
; their bloodthirsty tyranny the ele¬
gant name of "The
of the Proletariat."
Corporate
Dictatorship
people
are *
means
minded.
They assume responsi¬
ve bility; they must live up to their
(obligations — deliver
on
their
( promises.
They shy away from
% talk
about ends, and they are
quick to criticize the practicality
of
]
proposed by other leadUtopian ends.
f
means
to
ers
reach
i
All
of which
angers
trusting
j souls who want to believe in the
i
better life.;
s
he
Man does not live by
j bread alone. In this vale of tears
must
have
promise
live
to
| better here
as
W: after.
1
<
and
and
by—hope of a
well as a here-
capitalism
social system is ignorance of
a
facts
about
modern
do
corporations are
the public service
to
strive
mightily to dis¬
charge their public duties. Witthe
ness
Public
the
system
Opinion
and
dedication
of
corpora-
Index
it
statement
that
the
prove
"The
worker's
standard
living is for all workers to
duce
friend
and
of
and
to
money
$6,000
employee,"
per
and
agree
companies
People think that
everybody
is
)f
everywhere
are
In
ap¬
the
price line, but
"swollen
After
corporate
V-J
thousands
Day
of
hundreds
the
ure
on
down and loaf
on
the job.
convinced that
you were
slow
But if
Opinion
Index
belief
and
ance
economic
between
control.
in
that
under
system
a
competitive economy
man
probably gets
greater benefits from capital pri¬
vately controlled than from capi¬
a
cofnmon
tal controlled
The
idea
essentially
by the State.
that
on
a
liberty is based
system of checks
and balances and that when power
is concentrated in the State, lib¬
for
erty must of necessity disappear.
Do your corporations,
gentle¬
men, have any documents that ex¬
pound these capitalistic principles
ignor¬
government
*
-
rights
not opposed to human rights;
the
has recently made ; a
dramatic demonstration of the re¬
lation
It would have great tonic
capitalistic thinking if
and that in
someone
the profits of the boss?
Public
laws
capitalism, wealth
and property under private own¬
ership does serve a social purpose,
getting rich on the sweat of
your
brow, you might feel like
slowing down too.
Why work
yourself into an early grave to
The
the
of competitive
was
fatten
its
measure
connection,
idea
loquy
operations?
People were asked how they
t
tions to the war effort; observe
;
Do your officers have a clearstood on such issues as govern¬
the
struggle of electric
power
cut conception of capitalism as a
ment control of
prices, setting top
<
companies, oil, steel, and others
social system and of your corpo¬
limits on salaries, and setting top
to
overcome
ration as a capitalistic institution?
shortages; witness limits on
company profits.
,! the
pricing
restraint
of
Do
large
you
train your foremen,
Then these same people were
r operators during this period of
supervisors, and junior officers in
shown six simple statements of
the tenets of the capitalistic faith?
| scarcity.'. * .
* '• "
of
people who saved it
$6,500 in that ma¬
How much do you pay them for
gentlemen, goes
part to the idea?
heads. A recent col¬
between
Marxist
a
the
of
using the machine?
About 4%—70 cents
Hey,
and
New
reader wrote
for
get the
you
pay him?
I sell products.
money
r
to
pay
doing
for doing $12 worth of work?
That's right.
Good Lord, man, they
belong in
the booby-hatch.
Shut-up!
That's
I
would
not
-PA
worth.
of
capable of producing more things
that people value than
any social¬
istic system yet contrived.
standing of both its
corporations
^
paying
six dollars
your
the machines
own
How did you get the machines?
Sold products and bought them.
Who made the products?
Shut up!
Adams
He might hear you."
thereupon
revised
the
materials
"Who
is
that
man
sitting
survival
fulfillment of these functions, but
also
on
working for
running
I
sell
that
SELLING MUTUAL FUNDS
machine
in
IS PROFITABLE
him?
The
get the money?
you
services
products.
fund
Who makes the products?
He and the machine he is
J
statements.
if
For
ends.:
as
»
s
and
Service
•
t
But being
■
.
minded,
means
corporations arc afraid to talk about
'
a
Someone might regard it
promise, and because of conr
ditions outside one's
.■i might
be able
not
control,
to
deliver
one
on
J: the
invested
in
an
again
\
"Most industries, when you fig¬
ure out the good years with the
bad, make only a small per cent
> promise.
This
reasoning
I misses the point. People do not profit."'
•; expect the impossible.. They, know
t
♦
that
companies
cannot
single-
handedly control the broad social
j forces with which they deal. But
what people do-want is the assur¬
ance that companies are on their
I side, are dedicated to their
:»
ice,
and
serv-
trying honestly to
the difficulties in the
are
'■} surmount
"
way.
So there
'-V-vV
is
one
new
concept of
'
run¬
business
Do you take any responsibility
for the teaching of the capitalistic
faith in your
to interpret corporate goals to the
: public. If the people understood
the public service ideals of mod¬
ern
corporations—if they became
plant communities?
students
how
on
the
economy
works are the ones
who reject
government control of prices, sal¬
aries, and profits. Those who are
,V
least
informed
of
approval
Of
show
the
government
significance, gentle¬
tests show that ignor¬
great
men,
our
ance
of
the
way
the
There is shocking
comprehension of capital¬
istic principles' even among the
various echelbrri' of management.
If
tain
managerhlnf wants to main¬
a
NORFOLK
social environment in which
AND
can
continue to work
capital¬
Manager for
NOTICES
a
fund sponsor.
Would like
firm
tion
NATIONAL
CONTAINER
with
to
fund
CORPORATION
On
AprlM2,
dend
of
Common
30c
Corporation
holders
1948,
per
Stock
of
a
the
was
payable June
record
HARRY
May
declared
National
15,
10,
on
the
leading
mutual
to
join
develop sales in mutual
field.
Commercial
regular quarterly divi¬
share
of
recent
large retail organiza¬
percentage
Willing
to
basis.
Box
&
work
S
on
48,
Financial Chron¬
icle, 25 Park Place, New York 7.
Container
1948 to stock¬
1948.
GINSBERG,
Treasurer.
Financial Writer
REASONABLE SALARY
WESTERN
NOTICE
,
■■
W
OF
ANNUAL
RAILWAY
MEETING
Meeting of Stockholders of Nor
Railway
Company will
b
held, pursuant to the By-laws, at the principal
office of the Company in Roanoke, Virginia, on
Thursday, May 13, 1948. at 10 o'clock A.M.:
(1) to elect three Directors for a term of
three years,
:
Western
(2) to
Board
act
of
upon
a
recommendation of the
Directors
to
rescind
authority
bv
stockholders
and
bonds
to
issue
S100
par
Common
convertible into such
2.
4.
authorized the payment
on
COX. Secretary.
of
6.
the Cumulative
payable May 31,
1948
to
stockholders of record
on
May 5, 1948. V
O. V. SHOWERS
Secretary
April 16,1948
convincingly.
Appraise situations based
quick field visits.
5. Write reports to
a
cents per
Preferred Stock, 4.88% Series,
stock.
April 23, 1948, will be entitled to vote at such
meeting.
By order of the Boa--' c r»<—*—
30^
Analyze individual securities.
3. Talk
Dividend No. 2
Stock
Stockholders of record at the close of business
W.
COMPANY
Stock 4.88% Series
share
Annual
and
EDISON
1. Forecast market trends.
Cumulative Preferred
dividend of
OF STOCKHOLDERS
The
folk
Qualified to:
SOUTHERN CALIFORNIA
The Board of Directors has
Virginia, April 2, 1948. '
L.
capitalism
your
COMPANY
Roanoke,
capitalistic
confined to
lack of
explaining
Meeting Notice
highest
control.
workers alone.
;-t
up
a
informed
J gation
not only to be dedicated to
the public service but the obliga¬
tion constantly and- continuously
stand
before
Have you furnished any docu¬
ments to teachers or clergymen or
system works is not
t
go
available.
now
has been Sales Promotion
years
DIVIDEND
thor-'
man
intellectual currents of the day?
/ '/v-;.
.
you
or
Analysis of this testimariy shows
clearly that people who are best
j corporate responsibility: the obli-
,
in a radio
college class
in social science and expound the
principles of capitalism?
Do you have in your corpora¬
tion the apparatus of scholarship
to link up your activities with the
forum
example, "Money
industry
buys
equipment
that
helps
workers
produce more i and
earn
more,"
,
j
Could
disagreed with the
or
a
Analytical back ground. In
ning.
.
economic facts and were asked
of
oughly familiar with the mutual
♦
.••J: Dedicating Corporations to Public they agreed
the
it to all Americans.
front of him.
do
formulate
over
me.
How much do you pay
Twelve dollars a day.
Where
other:
one
Corporations
capitalistic
faith by which they live and teach
must
A;"
What is he doing?
He's
organize
products.
environment, corporate
depends
on
successful
and
finished
SITUATIONS WANTED
;
He's
flowing
distribution of
In today's
colloquy as follows:
-there?
obligated to bal¬
budgets,
keep raw
are
their
ance
purposes and
order to survive,
In
processes.
him, he pays you
a
day to stand around and
tell him to hurry.;
' v;;Av.;;
Well, but I
would
nor
its work done if
people are hostile
and suspicious of it.
It can func¬
tion only if there is wide under¬
How many products does he.
make in a day?
•'
•
~
dollars
argue,
Capitalism, however, cannot get
/■/;:
instead
worries
you, that competitive capitalism
is perfect, but I would
argue that
this system has produced and is
.
Then
what
me!
•
Who makes the products?
He does.
Sixteen
day.
a
get this straight!
the man $12 a day
me
70 cents worth of
work and you
pay the owners
of the machine 70 cents a
day
the fol¬
I pay him to hurry.
How much do you pay him?
Ten dollars a day.
let
You
York
did you tell that man
just now?
I told him to hurry.
What right have you to tell him
to hurry?
\
Where do
job for the man.
did you get the
a
chine and charge me for using
it.
lowing to help clear up some of
Adams's misunderstanding.
.
were
invested
good
"Sun"
lot
A
lot
war.
joins the issue in an in¬
teresting way.
Adams wrote a
piece for the "Sun" on "The Free
Enterprise System."
A
there
money?
shake
men
before
even
Then, where
"Sun"
in terms of your own
V-
machine
was
factory?
a
in people's
does
any products and before there
answer,
in
work
—by selling products?
Heavens, no!
I had to buy the
a
;
antors of the continuance of per¬
sonal dignity.
Employers find it difficult to
comprehend in terms other than
men
us
earth should
on
The
company
on-
The
why
Why
their fist at
of
that private property widely dis¬
tributed is one of our best guar¬
just.
cussedness,
in
our
industry would aban¬
its lobby and permit house¬
are
losses was the meas¬
of their conviction that their
pure
our
defend
for
part
a
butter at the grocery store.
The idea that property
wage
was
ameliorate
in
idea
wives to exercise their unfettered
choice
between
margarine
and
prolonged strike in the belief that
they
could
get
pay : increases
price
increases.
Their
willingness to ,> face up to stag¬
cause
of
make
"What
the
butter
don
without
gering
pro¬
Men
products that
and
the
How did you get the machines
The
corporation
creates
jobs, pays taxes to support local
hospitals and schools, creates the
peace
of
Some 85%—or about $12 worth.
■
of
went
market
"
effect
profits."
workers
and
this
grace.
encour*-
>ge wage increases on the theory
that the difference could come out
of
free
institution,
levying discriminatory taxes on
oleomargarine are a public dis¬
After V-J Day, tne policy
Federal Government was
to hold the
favor
place.
The social repercussions of this
ignorance
the
achievements in the open market
fair, but 25% is too much.
parent.
that
it?
much
the man do?
there.
willing to compete for the pub¬
lic's
is
say
idea
democratic
a
economy. It should be
business morality that a
says
profit, people
How
their living there; many of theii
hopes and ambitions are centered
afford.
can
that competition is
necessary
the free market control of
that companies must make profits.
Ten per cent
ease
drudgery
things at
make
economic energy.
And as a corollary,
make.
make 25%
on
sales.
The public is not opposed to prof¬
practically
all
viding the means whereby the
people,
through
their
buying
plebicite can direct the flow of
companies
its;
above
The
is
say
the average
on
not
man,
tively small reward.
Again, studies by the Public
Opnion Index for Industry show
widespread
of
how
ignorance
money
common
shouldn't
How many products do they
make in a day?
About 5% of it—70 cents worth.
How much does the machine
do?
T,.
■■
,
51
Fourteen dollars worth.
your
of the elements
some
shrine,
Phelps Adams
they don't know.
much
the
volve
back
to
dis¬
30%
additional 41%
an
working model?
partner who contributes much to
the productive process for a rela¬
buy tools
equipments amounting
invited
ever
By rights, a factory should in¬
tool-supplying
people, "Owners and
of the average fac¬
up
you
The idea that the owner of capi¬
tal is a partner—a good and val¬
ued
partner,
a
stockholders
put
of
prices he
pro¬
When the statement is made to
tory
v
enemy.
That machines
man's lot, relieve him of
more."
employed
serves
its
his
im¬
to
way
...
under this
the public?
your company
Have
that expound such ideas as these:
The idea that machines are a
for
for example, is com¬
pelled to report that 48% of em¬
ployed workers disagree with the
^ Industry
v
Most
dedicated
,i
hope
some
system
miracles, then
obligation to:
The
literature
of
capitalism,
gentlemen, is tragic in its insuf¬
ficiency. We are in desperate need
of books, tracts,
monographs, pam¬
phlets, primers and case studies
for the
cause
about
(1795)
istic system of operation and tell¬
ing how
Inadequate
Industry,
wealth through
should go to workers
^
CHRONICLE
Literature of Capitalism
The
Thus
an
Formulate
Ignorance Regarding Capitalism
Side
management
assume
(a)
the way it works.
Neglects Human
man
FINANCIAL
townsmen to visit your office or
capitalistic, factory in order to show them
faith, and
1 capitalism in operation- and ex¬
(b) Propagate this faith to all. plain its principles in terms of the
public support
the continuance of capitalism
America would practically be
mon
the
unions.
t
&
production
must
t
'
good
COMMERCIAL
Concepts of Corporate Responsibility
(Continued from page 14)
■
THE
on
stockholders.
Manage Statistical and Under¬
writing Departments.
-
See samples of my work. Engi¬
neering studies and C.P.A. back¬
ground have helped balance my
judgment and train me to make
sound
decisions
speedily.
Box
J
422, Commercial
& Financial
Chronicle, 25 Park Place, New
York 8,
N. Y.
52
THE
(1796)
COMMERCIAL
FINANCIAL
&
CHRONICLE
Thursday, April 22, 1948
There
BUSINESS BUZZ
.
from the Nation's
y*
Board
Congress for
gJ X/y-v* a
ZJL1i/lt/
Capital
whatever
to
ated themselves from the Federal
Reseive
A
Belund-the-Scene Interpretations
basis
no
Secretary Snyder had dissoci¬
ury
on..
is
published near last week
end, that the President and Treas¬
reports,
to
program
additional
an
ask
com¬
mercial
bank
demand
JL 1/ It/
deposits and 4% of time
of
reserve
of
10%
deposits.
"Step right this way, boys, and get your bottle in which is the
sure cure for your draft and UMT headaches.
Only $1 billion,
one
Eccles, when
political health is guaranteed against those particular two
spirits through the November election."
In just about those words, that^
pected, however, of the White
the call that Congress is hear¬
and
vour
mented
evil
is
The fundamental
to be heeding.
For
Big Air Armada cure is of¬
seems
gress
the
fered
alone
not
the
as
sure
of
the
do
In
position
r
off
to
think
packd
very
scare
whatever you
It's
boys
would like to call
^
draft.
who
pur¬
sons
your
what Congress¬
fearing. That is just what
ward doing is what
to
her
demise—rely
they are thinking today. And that
is
why
they
went completely
overboard for the Big Air Armada
weapons.
thing.
ships
•
if
truth
the
For
if
if
When
4'4:V:'''
-
the
the boys
that
is
and
both
with
coast
of
the
on
power.
licked
were
moved
air
on
Allied
impunity
France
and
to
by
bombardment, supported the in¬
beginning to
Capitol Hill are
Germany relied
submarine
v'.
■
special
on
vasion.
With
fourth
a
of
a
get over the jitters which resulted
Navy,
of
the foreign aid bill without a cut
of any substantial kind. After first
stalled that invasion for months
in
the
being
overwhelming
passage
'yielding. Now they are
beginning to lose fear of the Red
Enemy, or at least to have more
On
scare
an
Enemy
if
they -put
draft and then the war
dies down. Maybe tomorrow
the air power which the Congress
is dreaming up will be as useful
in restraining the Reds as table
the story will be different and the
forks and wooden clubs. For
thing will swing all around again
—for exactly that mercurial is the
so
if
these
Lack
of
*
....
dent,
can
Without
look
to
no
one
Then,
ordinarily
is
ex-
too,, it
then and
told
without
was
that
Navy
M.C.
—
at
all
might
one
big
hoping
the
even
have
an
Herbert H. Blizzard & Co.
123 South Broad St.,
Clear
Philadelphia 9, Pa.
thro—Montgomery, Scott
New
York A.
Philadelphia
& Co.
that
the Con*
tipping off Japan
until
the
U.
S.
got
a
Stronger
objec¬
had
it
the
Navy
Japanese,
step
on
Japs. When
fight both
'
i?-h
if
Yet
S.
the
created, then the U. S.
was
Japs.
U.
the island of¬
up
the
the
again. for,;
other
purpose other than to.
consistent.'
The
boost in
,
slipped in to the revival of air¬
craft
production,
Renegotiation
In
this
under
other
the
program
contract
war¬
renegotiated
plies. This sets
ap¬
strong
up a
with
subsequent
ex¬
as
and
if
they
this,
approved.
are
without
moment's
a
thought being given in advance
to the
of
whole financial
war
problem
preparedness,
preparedness, if
you
or
peace
here
because
it
didn't
want
to
let
he
1948.
a
to
in
have
been
I
even
dis-;
according to the con-
trolling " GOP
The
sources.
threaten
which
substantial
amount
The committee
President of the Senate.
accomplish
two
minor.
and
take
a
purposes,
Minor
the
This will
major
purpose:
to
slap at Mr. Truman by not
a special ses¬
trusting him to call
sion if events require. Major pur¬
pose:
out
To let the Congressmen
and
really
work
to
go
harvest
on
m.s.wien&co.
'
ESTABLISHED
Members N.
40
of
an
source.
program
changes
now
passage
this
time
for
stacle.
bill
in
Y.
1919
ty
Security Dealers Ass'n
Exchange PI., N. Y. S
H,A. 2-8780
Teletype N. Y. 1-1397
:/,4
r
•
•
any
revenue.
is coming to
bill which is veto
a
.
'
the;
Trading Markets:
r
such objections.
-';'J"We will get
informed
- *.r;
,
how;
viewpoint of agreeing with the
the
Soya Corp.
Treasury is objecting to admin¬
istrative changes, no matter
desirable,
4
Tucker Corp.
exagger-j
Treasury
subject to the call of
Speaker of the House and
Tidelands Oil
go
violent
were
agreement
ated,
44
Re-;
Treasury.
committee
>
repeat
Instead,
the
Finishing
Dorset Fabrics
is,
ports that the Treasury and the/
get too far off the pasture.
for
with
Transmission i
privately is
disposition
a
Gas
"Y. U, S.
be dealt with.
committee
the
*
Memphis Natural Gas
be
to
development
second
along
the
late President Roosevelt think
Texas
particular, it is reported he is
up his recent object
excises on trans¬
portation and communication. •
it doesn't trust
1943
reported
now
the
Chairman
overall revision
proof," said an
This
4 of
has
a
•
its
Schedule
is
with lack of
principal ob¬
to
finish
Oregon Portland Cement
that
administrative
real chance of
year,
action
means
| Ralston Steel Car4
Y
i Riverside Cement A & B
Spokane Portland Cement
the
LERNER & CO.
committee
by May; 10.
'■
;the votes.
Thirty-five tentative approvals al¬
Yet you can't count on the Con¬ ready have been made in agree¬
gress getting through with its ne¬ ment with the Treasury, and are
*
'
;
:
being. But
again, then instead
of settling for a $3 billion pro¬
gram
including
55
air
groups.
Congress may,
having plunked
for 70 air groups, find itself put¬
ting out a large additional amount
for a proportionate boost for both
the Army and Navy, For if the
afraid
now
being drafted.
:
HAnover 2-0050
acts
gets
to
Firm Trading Markets
FOREIGN SECURITIES
up
bad,
take
Investment Securities
10 Post Office
Square, Boston 9, Mass.
Telephone Hubbard
1990
Teletype BS 69
.-'.44:
Teletype—NY 1-971
the
v/ill end it for the time
scare
18, the
.;:
^
V
Big Air Armada may
prove to boomerang.
If Joe Stalin
lays off for a while, whatever the
boys do between now and June
he
cessitous business by June
44'
with
less.
Susquehanna Mills
C.ARL MAMS A P.O. INC.
SPECIALISTS
50 Broad Streei
Congress will be
chances
Empire Steel Corp.
All Issues
FOREIGN SECURITIES
==
Kill, Thompson & Co., Inc.
Markets
New York 4, N. Y.
AFFILIATE: CARL MARKS & CO. Inc. CHICAGO
and
Situations
for Dealers
120 Broadway, New York 5
Tel. REctor 2-2020
.,
action ;
no
has
as
tive of repealing
showing
a
this subject. of
kind.
ready to give
like.
began this practice in
gress
of any
In
The
the Truman Administration. Con¬
is
to
bill."
that excises should
can
case
on
)
equity
Senator Taft will ask
questions
ready to back down from his stand
with the thought of being around
handy just in
referred
revision
Knutson
turns de¬
what
changes,
been
"overall
discount the.
idea that Congress this year will
take prolonged recesses after June
you
capital."
connection with the
comprehensive ad¬
for
ministrative
that
Think
;
will "study the shortage of
few
new
some
in
bill
tax
sumption that Congress will do,
likewise
are
veloping
pre¬
panded defense programs, when,
•
witnesses. It will lead to
There
words, for the aircraft procured
time
It may have
week or so
after the conventions.
Contract
the
Act.
tentative target date.
to come back for a
4'; ■'":V;VY"V'Y'
'-*4:'4 ' J
if
-
the Nazis and
.
,
indicate
to
offred
••
than
if
order.
noted
war,
preponderantly
couldn't
•
Traders
is
~
th
1200
'burp!' in the letter?'
journ
if
And it is
Truman
Discount entirely the story that
the
Joint
Economic
Committee
however, Congress is likely to ad¬
what they couldn't be
FROM SOUP TO HITS
banquet
cor¬
What the Congress didn't know
could
TO ORDERS
a
gress was howling for fighting
Japan instead of Germany first.
fensive
Leadership
J
if
early in the late
more
tions.
House
performance
re¬
pronounced, for there are a few
gentlemen who are aspiring to
shoulder the burden of leadership
and pull the Congress along with
them, albeit in differing direc¬
notice
the
There have been hints of
if
sponsible for initiating party pol¬
icy.
In an election year the divi¬
sion of leadership is all the
tactical, short-range craft to
responding Army and Navy.
majority
individual
will
you
effortlessly
could
Presi¬
a
got jet fighter
have to move
would
dead special
now
top
a
as was con¬
reserve.
;••• •>":•,••
$
if
."V4
"I wonder if he wants this
bombing would be possible. And
leadership in Congress
the Congressional
it
also
such
the
of
or
legal reserves is
proposal which now has the
emphasis. • '.,YV
4'\Yf V.. Y
that can't be done without
,.
is almost inevitable under present
circumstances.
S.
even
the
a
without
the
bases where their support of atom
■
*f
U.
the
support,
leaderless
is the Congress as well as the Ad¬
ministration.
'
!
;
if
the
*
conventional
And
?
other
hand, if it just
happen, as has been re¬
ported, that the Reds have got
thousands of jet interceptors, then
a
underlying situation,
terribly costly.
theFR
irritation
presentation
seem
should
Election
through
have
Congress is in a large
sense determining
strategy. If the
strategy proves to be good, OK.
of
happen from
might
Likewise
skeptical
fear of what will
made it
or
of the new de¬
fense program the boys began to
think
Germany
and
at
he
any
Incidentally
Germany did
for
Incidentally, the special reserve
There was nothing in the
that
that
seemingly headed to¬
in
and,
new
is aimed at achieving
by
Eccles
Calmer hands assert that what
the U. S. is'
And that is just
men are
4
induction—in this election year.
sweethearts.
Snyder
is dead.
plus the registration of youths of
draft
age without forcing their
and
Com¬
tive. .4 -.:;v
hole if they can settle for the $922
million of increased Air Power
out."
Throw him
to
be¬
are
McCabe,
secondary
aimed
very
gent
present
or
sure
the
is the one who
Aunt Susy's boy off to camp and
on
aren't
over
gress
all
only
not
odds
restriction
.
jured
Con¬
the
appears
Economic
novel program,
they are doing, but don't
much so long as they
are pulled out of a hole.
They will
think they have got out of the
ports to represent you in
/
that
expected
he
both
B.
severity,
'
Con¬
packed
"That
credit
of what
Congress, decides
hay
make
to'
bet
of
program
for
cure
not
first 4 magnitude,
44444
.❖;"-:"i'
good
a
gress
Zilch, the opposition
But Joe
sure
he
,
ailing
y.j' V *
■.
■
care
candidate for
the
that
, FR 4
Board, Chairman, endorsing the
program.
If
Snyder
opposed
this, it would be news of the 4
f
which
overwhelming House victory.
don't
much of the draft.
have got over their war
or their war hysteria, or
They
part
Congress, the
danger of having to enact both the
draft and UMT, the Big Air Power
boys got at least the first draw¬
ing on the jackpot with their
the folks back home
ever,
be
what „.was
Meanwhile, how¬
camp.
to
something
is
until
Joint
Thomas
Congress regards
offering
seemed
a
before
ings" some time shortly
election, and he is
the
By
only
Betting
favor
Force
as
the
mittee.
pleading.
Air
the
Snyder
fore
rival
unification of the services.
..'
"greet¬
street gets a
the
particular,
4 revealed
comment
at this joke which is termed the
nephew
Susy's
Aunty
down
enact
You
November.
and
special
boys stepped out of line
what will happen between now
draft.
4
get out of hand and
own
of what all the
whatever
conjecture
about
and
their
the "Ec¬
was
ducked comment.
is that
program
President allowed the
services to
Congressman,
a
party,
defense
ident's
;j
-
the
in
yourself
Put
/
also dread.
marks
for the
reason
week ago he com¬
a
only that it
program." A close examina-i
of
Secretary Snyder's re¬
tion
Congress kicking over the Pres¬
rem¬
edy for the UMT ache, as widely
reported.
It has now come to be
looked upon also as ,the remedy
iior the draft ache, which Con¬
gressmen
cles
Administration.
House over the
It also is the call that Con¬
ing.
:
President Truman had not been
briefed about the FR
program,
presented
earlier
last
week
by.
Tele. NY 1-2660
,
@FedFRASER