The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
mr
APR 2? tS5l
Volume 173
New
Number 5006
EDITORIAL
v-
inflationary forced
are
:
By LUDWIG
■
Studies in Geneva
•
of
multitude
the
casual
of
circulation and
face flight into real values and
"the knell of the currency system." Declares those in
credit expansion,
we
ment
v
Y
.
•
tion.
visions
of
uncontrolled
A number of weeks ago
;the Federal Reserve authorities
plete accord"
an
reached
public, but which evidently involved
the "pegs" on which the price of
Federal obligations had been suspended for a
long while. The notion that the Federal Reserve,
in the circumstances then existing, had become
of
Continued
on
page
von
Mises
these last 60 years
in
a
bit more.
rich
do
not
much
Continued
*
Transcript of
ference
on
the
on page
are
to
Truman's re-election
Mr.
beginning
are
rea¬
beginning
These
reassert
to
in my
opinion, go deeply into the minds
and psychoses of the entire nation
in
it
and
is
discuss
to
these
reasons,
which
should
I
sionals,
like
briefly.
Since almost all of you are
you
don't
profes¬
told
to
have
be
B. K. Thurlow
that the performance of the securi¬
ties markets since 1938 has been altogether
when measured
of
31
the
abnormal
by the standards of earlier years.
statistical
services
about
a
year
and
Continued
statements by Professor von Mises before a Con¬
of Mobilization, held under the auspices
University Law School, White Sulphur Springs,
Virginia, April 6-8, 1951.
>
IN
At present the
rise
a
on
One
half ago
page
25
Economics
of the Chicago
NOW
1948
themselves.
As the votes of
count
the
following
political and fiscal affairs were virtu•
30
SECURITIES
suggested expenditure because there
seemed to be no harm in "soaking
rise.
to
for
sons
public spending at their ex¬
There is a French dictum:
Les affaires, c'est Vargent des autres.
Business is other people's money. In
been made
removal
show, themselves, or rather, if my
view is correct, the reasons for the
long rise which started in the months
began
be
pense.
Ludwig
Street
collapse.
tried to collect them
by raising the taxesvto be paid by
the upper income brackets.
There
seemed to be enough money for any
an
can
increase
to money market management—
as
the
imminent
tional funds, one
as
which
these
accord the precise nature of which has never
in
heads
inexhaustible re¬
freely tapped.
Whenever there was need for addi¬
citizens
elections, the members of the legis¬
lative bodies were always ready to
"com¬
wisest
predicting
And yet, as it often will, the market
the rich"
the Treasury and
the
of
were
serve
infla¬
was
and the wealth of the more prosper¬
ous
:
5- •
: ,
credit side, too, there have
[been developments which have tended to quiet
asked to address this
gathering some five
bullish position represented such a minor¬
ity view that I was almost ashamed to admit holding
such unfashionable opinions. * The argument for lower
stock prices was all persuasive. Some ;-
dealing with problems concerned with the eco¬
of mobilization, it is first of all necessary to
realize that fiscal policies have reached a turning point.
In the last decades all nations looked upon the income
On the monetary or
with
When I
In
■
by government device of inflation. Concludes, bar- }
further inflation, Dow-Jones Industrials may he
Y given fair investment value around 300.
any
weeks ago, my
nomics
j waiting attitude.
taut
ring
profiteers." Asserts direct controls are absolutely use¬
less as means to prevent and fight inflation.
ously into question. One result is that buyers
rather generally have begun to adopt more of a
nerves
saved
misusing inflation to divert people's resent¬
against rising prices from government to "the
power are
not to be called seri¬
are
soon
abandon further increases of money in
observers
after the outbreak in
Korea, buying on the part of consumer, distrib¬
utor and producer bordering on the panicky was
in evidence. Inventories everywhere have grown
to rather more than substantial size.
Defense
expenditures lag. They have not yet assumed
proportions which immediately and directly limit
production for civilian use. Many have begun to
wonder if former judgments as to the extent of
pressure to be expected when rearmament finally
does reach maximum
earnings and stock prices have not moved in same
direction, and despite expected decline in earnings, there [
are
grounds for maintaining present and even higher ;
levels of market. Says postwar market situation has been f
out
us.
considerable period
a
behavior of security markets in
must be measured by new standards, points
recent years
•
Noted economist maintains if authorities do not
always-with
For
Mr. Thurlow, contending
.V Y*
Y.
Author "Human Action,'? etc.
of those who manage the affairs of the
either definitely casual observers or
governed largely by the whims and the
are
Partner] Talmage & Co.
Members, New York Stock Exchange
- -
Vienna, and at Graduate Institute of International
are
demands
By BRADBURY K. THURLOW*
MISES*
Formerly Professor of Economics at University of
too many
else
von
Economics, New York University
Professor of
less hidden from the casual observer—and all
nation
Copy
Can Continue
still at work in
this country. An arresting reminder of this sim¬
ple fact appears *• desirable at this lime for the
reason that for the time being at least it is more
or
a
The Bull Market
ir> See it
,4 s
Basic
-
Price 35 Cents
York, N, Y., Thursday, April 26, 1951
REGISTRATION
—
"An address
by Mr. Thurlow before the Association of Customers
Brokers, New York City, April 24, 1951.
West
Underwriters, dealers and investors
porate securities are afforded a complete picture of the issues now registered with
and potential undertakings in our "Securities in Registration" Section, starting on
in cor¬
the SEC
page 38.
State and
CONE MILLS
Municipal
Preferred & Common
600 Branches
R. H. Johnscn & Co.
across
Established 1927
Bought—Sold—Quoted
Bonds
Canada
Monthly Commercial Letter
INVESTMENT
'
•
.
dM, Homsey & Co.
Members New York «fc
120
Troy
Tele. BS 424
Tel. worth 2-0115
Albany
Buffalo
THE NATIONAL CITY BANK
THE CHASE
OF NEW YORK
Harrisburg
NATIONAL BANK
Scranton
Wilkes-Barre
Williamsport
Allentown
Washington, D. C.
Tele. NY 1-315
Bond Department
PHILADELPHIA
Providence
BROADWAY, NEW YORK 5, N. T.
upon request
.Y/'\
Street, New York 5
BOSTON
31 MILK STREET, BOSTON 9, MASS.
Tel. HAncock 6-8200
Y-'-.v' ' ' ■Y
64 Wall
Boston Stock Exchs,
SECURITIES
Head Office: Toronto
Bond Dept.
Teletype: NY 1-708
New York
Seattle
OF
Agency: 20 Exchange PL
THE CITY OF NEW YORK
Portland, Ore. San Francisco Los Angeles
We maintain active markets in
IMassachusetts
\
r
.
.
i
•
or
'
VANCE, SAXDEKS & CO.
Distributors of
Municipal
COMMON
Company
CANADIAN DEPARTMENT
Established
New York
1899
Cincinnati
Chicago
Denver
Columbus Toledo
Goodbody
■
Analysis
&
Co.
*
ESTABLISHED 1891
(Incorporated)
40 Exchange
115 BROADWAY
Dallas
Buffalo
NEW YOjRK
105
i
request
other Principal
111 Broadway,
Place, N©w York 5, N.Y.
WOrth 4-6000
Teletype NY 1-702-3
Whitehall 4-8161
■
Exchange
Exchangee
Members New York Stock
and
W.ADAMS ST.
#MICAGp
upon
IRA HAUPT & CO.
Grporatioti
MEMBERS NEW YORK STOCK EXCH.
CLEVELAND
Chicago,
Angeles
Brown
Corporate Securities
OTIS & CO.
Public Service Co.
BONDS & STOCKS
Development
(all issues)
BOSTON
Los
Placer
and
I
Ill Devonshire Street
New York
Bnlolo Gold Dredging
Underwriters and
Investors Trust
Pmptcttu from authorized iealtn
Internal Bonds
•
Central Vermont
CANADIAN
Dominion of Canada
Boston
N. Y. 6
Teletype NY 1-2708
Telephone: RptifpHao 1828
■
f
2
*
r>:
««*
M
.
The Commercial, and Financial
Chronicle
.
.
.
Thursday, April 26, 1951
(1746)
The
MARKETS IN
TRADING
Celanese Corp.
AVz% Conv. Pfd. W. I.
Security I Like Best
>
in the investment and
of
Government
is
bonds,
Canada
at¬
at
tractive prices
in
Rights & Scrip
dollars. An in¬
Since 1917
the 1 % % issue
i
vestment
Members
Exchange
York Curb Exchange "
York Stock
New
New
BROADWAY, NEW YORK 5
Tel. REctor 2-7815
'
120
tractive
be¬
a
t
—
York Curb Exchange,
7
Sept. 30, 1950 the
$1.10-$1.10% Ca¬
However, on uct. l, 19o0,
nadian.
and within
-
certain prescribed lim¬
with
itations
that
reasoning
investment to¬
of this
an
Inquiries Invited
Verney Corp.
Simplex Paper
Rudolph Wurlitzer
U. S. Thermo Control
Island Creak Coal
Maine Central R. R.
capital
to
respect
(Com. & Pfd.)
■
American Furniture
Industries
Board
the
branch offices
this
of
that
than,*
; The. greatest
bargains are usu¬
permitted
free trading in Canadian dollars in ally to be found amongst the se¬
tively short
Canada. As a result the discount curities of industries which are
James K. Miller
maturity pro¬
in the
United States decreased unpopular for one reason or anvides the in¬
ocner.
Such >'t '■
vestor with a 6 month investment materially to as low as 3V4%.
an industry
is
The
immediate
cause
of the
in Canadian dollars without ex¬
ine" bitumi¬
posing him to current bond mar¬ action to free the Canadian dollar nous coal in¬
ket risks. If such bonds are pur¬ was the unprecedented increase
dustry, which
Canada's
holding
of U.
S.
chased in the United States as a in
is considered
"recorded transaction" with Ca¬ dollars and gold, from $1,182 mil¬
,,by many peonadian Foreign Exchange Control lion in May 1950 to $1,790 million
pie a dying ing .L:
Board Form 106 attached, the net in September 1950. This increase
dustry .as it
cost
in terms of United
States was brought about to a very con¬
has lost some
siderable extent by open market
dollars, at-the discount of 4%%
ground to oil
prevailing as this is written would purchases of Canadian securities and natural
be 95 and accrued interest. This
by residents of the United States,
gas, partly be-but4 also reflected the general im¬
is the security I like best of those
cause, these
available either in the Canadian provement in Canada's trade bal¬ c o
mpetiti ve
ance
with this country and the
or domestic field.
fuels had price
A "recorded transaction" is one influx of private American capi¬
advantages in
where the actual purchase is made tal for Canadian industrial and
certain terriF. H. Rosenstiel
in Canada with Canadian dollars
mining developments. In the three tories and
which a non-resident has on de¬ months following the "freeing" of
strikes
frequent
movement
NY 1-1557
Mobile, Ala.
,AinhoId & S. Bleichroeder, Inc.
New York 4, N. Y.
these official rates were removed,
New York 4, N.Y.
HAnover 2-0700
day in short-term
Canada bonds is
Ca¬
Foreign Exchange Control
to
'
New Orleans, Lai-Birmingham, Ala.'
Direct wires to our
basis
the
York Stock Exchange
25 Broad St.,
Schwinn
Co., Cleveland, Ohio. (P. 30)
On
Members New
Members New
dollar of
States
its rela¬
cause
Trading Interest In
Bassett Furniture
1,
1951,' now
selling
in
Canada
at
par¬
Steiner, Rouse* Co!
B.
L.
Schwinn,
B.
believe
I
Bought—Sold—Quoted
Government of
attractive both
from the standpoint of income and
nadian
Board maintained an official buy¬ possible moderate appreciation.
ing and selling rate for the United
FREDERICK H. ROSENSTIEL
Prior
n
99.65, is
ticularly
&
the
change rate.
due November
PONNELL & CO.
of
improvement in the ex¬
ultimate
States
anticipation
in
position
of
terms
United
L.
greater discount than at
a
present time the holder s of
1%% bonds due on that date may
reinvest the proceeds of this issue
better
in 1%% bonds due November 1, not
1952
and
thereby preserve his country.
be purchased, at the present
time,
at
the
payable both as to principal and
Canadian dollars only,
Specialists in
Company —
Frederick H. Rosenstiel, Arnold
&
S.
Bleichroeder,
Inc., New
Coal
Creek
Island
*
interest in
may
j:
im¬
possible to predict but I wish to 7 York City. (Page 2)
point out that even if the Cana¬
Diamond Alkali; Co. common
dian dollar on November 1, 1951
&*U
Internal Bonds -Y
; -v
ler, The • Dominion
Securities
Corp., N. Y. City. (Page 2)
V
nor
this will occur it is, of course,
Canadian Government Short-Term
'f V'.-
...
Louisiana Securities
V.$-
dollar. When
parity with the U. S.
...
Bonds—James K. Mil-
Internal
value towards
dollar is tending in
'
Corp.,
1920
York 5
intended to he,
wb
■
particular security.
a
offer to sell the securities discussed.)
New York, N. Y.
Teletype NY 1-583
\rclay 7-5660
an
JAMES K. MILLER
The Dominion Securities-
Corporation
120 Broadway, New
8
they to be regarded, as
are
New York Hanseatic
Established
favoring
Week's
Participants and
Their Selections
a
(The articles contained in this forum are not
Central Public Utility 5 V2 /52
-
each week,
participate; and give their reasons for
6% Deb. Esc. Ctfs.
Common &
different group of experts
advisory field from all sections of the country
A continuous forum in which,
Interstate Power
This
Forum
Sanitary Products
Air Products
★
■'
★
Analyses
Request' I
on
s
Camp Manufacturing
Commonwealth Natural Gas
Dan River Mills
-Life Insurance Co.
of,Va.
|
STRADER,TAYLOR & CO., Inc!
Lynchburg, Va.
LD
posit in a Canadian bank or which
he purchases at the time in the
foreign
exchange:. market.
The
above-mentioned
F.E.C.B. Form
Development,
Placer
Limited
Build
Will
Mine and
maintained
John R. Lewis, Inc.
1006 SECOND AVENUE
Teletype SE
the net price in U. S. dollars
upon
ELlot 3040
payable
it is
the rate at
bond,
Canadian
any
solely in Canadian currency,
to
necessary
assume
dollars
Canadian
which
may
converted into U. S. dollars at
time
of
the
be
the
of, each
payment
and of the principal at
maturity. In the case of the issue
coupon
Interested in
I
Hidden Values?
uncovered
We have
an
at-
7
tractively situated unlisted
% Cumulative Preferred
stock of an alloy casting
7
company,
of vwhich
arrears
excess
dividend
the
are
in
of the current mar¬
ket price.
Frank H. Roller, Jr.,
Man:
Unlisted
Trading Department, will
gladly provide you with
ager
of
additional
our
information.
suggesting, the cost, at the
am
present time, is approximately 95
inU. S. currency. Thus the total
cost
would
bond
$1,000
per
be
$950 plus accrued interest of $7.29
or
a
total of $957.29. Assuming
the principal
converted into U. S. dollars
that all coupons and
will be
discount, the net return to
at 5%
purchaser would be $8.31 for
interest on May 1 and $958.31 as
the
principal and interest on Novem¬
ber 1, or a total of $966.62. The
net interest, therefore, would be
$9.33
for
months, which is at
approximately 1.67%
7
of
the
rate
per
annum.
'
improvement
Any
nadian
terial
dollar
effect
in
*
the
would have
upon
nielsen, gordon
& hall
New
York
120 Broadway,
Stock
Exchange
New York 5
Telephone
Teletype
BArclay 7-7340
NY 1-2733
Marion Power Shovel Pfd.
*
„
Cone Mills Common
Gersten & Fkenkel
remained the most important fuel
The long-term
million
strong positions.
prosperqus.
Just as conditions in
the railroad industry vary so much
pre-war
is
the
Since
its
at
of
end
the
of the oil
development
in Alberta and of the
iron
war
the
industry
150
Tel.
annual
in
1937-39.
Even more important is
that
there > are
coal
companies
level, manu¬
highest peak,
unemployment
practically
un¬
known. and agriculture, mining
and
lumbering
in
exceedingly
the
facturing
tons
which
from
against
396
of
average
have
a
Ca¬
ma¬
this yield. For
into
U.
S.
dollars
at
Pennsylvania Railroad
consistently
been
Penna. Power & Light
system to system that one is
South
of one
in the
strong, well
which
should
Canada
assure
of
a
set out
graphs,
I
believe
the
Canadian
Jersey Gas Common
Central Electric & Gas
Central Public Utility
'5%$
development would in my opinion
parity between
justify
fully
the
are
just breaking even or are los¬
ing
money.
.
Island
dividend
Even
in
has
Coal
Creek
unbroken
1912.
Canadian and U; S. dollars.
had
record
an
since
1932, Island Creek
affairs
of
the paid a dividend Of $2.50 per share
wnich is equal to $1.25 on the pres¬
Canadian Government have been
(there
wisely administered through both ently outstanding shares
was a two-for-one
split in 1948).
the
war
and
post-war periods.
The
,
American Marietta
nor-
mally favorable balance of trade
with the United States. Such a
financial
Henry B. Warner & Co., Inc.
Members
Phila.-Balto.
Stock
Exchange
123 South Broad St., Phila. 9,
KIngsley 5-2700
New York
Direct
City Tel.: BOwling Green
wire
to
Pa.
Bell System Teletype
PH 771
Phila. Telephone
Ames
9-4818
Emerich, Chicago
company
produces a high
and 1950 Canada The
successive annual quality coal which is largely sold
'on
long-term contracts to public
budget suroluses and five succes¬
Between
1945
reported
five
utilities and industrial users and
in its na¬
Recently, in order to i which is always in strong demand.
and continuous expendi¬
combat inflationary tendencies, the Heavy
tures maintain the plants at the
Bank of Canada has taken steps to
sive
annual reductions
N. Q. B.
OVER-THE-COUNTER
impose credit restrictions and to highest grade of efficiency and
have enabled the company to ab¬
increase interest rates. As a result,
sorb a good part of the rising wage
long-term Government bonds, at
this
writing,
are
limits.
which will be
briefly in subsequent para¬
<
Common[.
sources
new
selling in Canada
par,
Based upon facts
1
Philadelphia Electric Common
titanium and {hardly justified in speaking
single industry, there are
Labrador have
easy money
tween these two
New York 7 I
Tel. NY 1-1932
DIgby 9-1550
tons
costs.
It.
seems
that
the
INDUSTRIAL STOCK INDEX
12-Year Performance of
average
35 Industrial Stocks
worker at Island Creek
H prices some 5 or -3 points lower
is among the highest in the indus¬
the yield to the investor would
be 10.78% per annum. At conver¬ than six months ago and there ap¬ try.
In 1950, Island Creek pro¬
7,400,000 tons
(including
sion prices between 95 and par pears to be no indication of a re¬ duced
the rates of return would fall be¬
1,200,000 tons from leased mines),
turn to
verted
Security Dealers Assn.
Y.
Broadway
an
million
deposits in Quebec and
coal industry many
opened up entirely
financed and well managed com¬
of national wealth,
panies
which
are
consistently
in the not distant future
making good money while others
ore
N.
Members
•
tional debt.
instance, if the cost was 95 but the
May 1 coupon and the November
1 coupon and principal were con¬
Members
purposes.
times
determining the yield based
In
.
105
attached
incurred.
on
SEATTLE
Gen. Aniline & Film "A"
partly because
there was have induced many consumers to
a decline of but $48 million, there¬
switch from jcoal to another fuel to
by indicating that a substantial overcome uncertainties of supply.
portion of the purchases of Cana¬ The participation of bituminous
dian bonds and stocks was for in¬ coal in the total
supply of fuel has
vestment rather thah speculative declined percentagewise but it has
outlook for Ca¬ and actual production is well
proceeds transferred into U. S.. nadian exchange is probably more above prewar. In the years 1947,
dollars
without
restrictions. Of favorable
today than at any other 1948 and 1950 (leaving out the en¬
course in such an
investment a
period in the country's history. tirely abnormal year 1949) bitumi¬
certain foreign exchange risk is The
national
income
is many nous coal production averaged 578
available on request
Analysis
granted. Bonds
may.
subsequently be, sold in
Canada and the Canadian dollar
GOLD-OIL-LEAD-ZINC
Trading market
be
then
will
106
purchased with Form 106
Tungsten
Mill for Canadian Gov't
and Operate
^
r
dollar
Canadian
the
r
Teletype BS 259
:
:
N. Y. Telephone WOrth
4-5000
: —
•
^
.
TWX LY 77
39
148 State St., Boston 9, Mass.
Tel. CA. 7-0425
brief it
seems
mediate
economy
conditions.
for
per
BOOKLET
Canadian
is at least as good as, if
equal to about Wz%
of total na¬
tional
506
production
of
Continued
on
million
page
30
ON
REQUEST
National Quotation Bureau
In
to me that the im¬
outlook
output
i
'Incorporated
46 Front Street
•
New York 4, N. Y.
Volume 173
Number 5006
.
.
(1747)
The Commercial and Financial Chronicle
.
Saved by
INDEX
the Bell
Articlea and Newa
By IRA U. COBLEIGH
*'How
Make
to
The Bull Market Can
Author of
Killing in Wall Street and Keep It'*
4
a
1
-
cussedness"
and the impact of "Cossack
future stability.
economy,
decisions in our
analysis of the force of military
some
'
lot.
smug
like
awfully
With business roaring
bison
a
nomic
the
stampede,
Saved by the Bell—Ira U.
}
Deal
Fair
hierarchy
ac¬
Highly
believe
tually
that due tQ,
their
homes in
of
kinds
cial
like
we are
genius
parallel in the
yo.u'd
Why,
almost
Ira
r
u.
-
this
.
think
; carved out
•
..
their
with
opulence
incredible
all
than
you
to tank; and quicker
could
say
Andrei
•
Arthur in Blair House!
V
to
in
rung
of
terprise been spared the incidence
major depression by the ne¬
the
a
in
(one a Martian, and the
Marxian) set the pace for
fantastic
expansion
industrial
•across-the-board
A
j)
side
pro*
vast
cast
dice
like
around
Came England
in
bird
15
Sulphur
Credit Restraint
in the Voluntary
19
i
Remedy for Administrative Abuse of Anti-Trust Laws
1.
H. A. Toulmin, Jr
'-X
'
-
-
*
Banking
*«■'
'•
..
Held
Be
on
request
22
'
•
to
Seminar
Circular
.-I-,.....
.
'
.
•
'
in
18-23
June
J.F.
5
Reilly&Co.
Incorporated
20
TVA Operations
An Official Protest and a Reply on
61
'
20
Forecasts Good Shoe Business——
Cites Impact of
•
Federal Taxes
Utilities—
on
Broadway, New York 6
BO 9-5133
Teletype NY 1-3370
21
—
Deposits of Mutual Savings Banks Up $56 Million in
Direct Wires
Philadelphia and Los Angeles
March.. 25
Regular Feature9
picture,
Canadian
however, we
the idea Of
up
would
such
they
be
ever
paying
about
worry
Did
18
—
%
Investment
Dev. Res. Corp.
8
Recommendation
large portion of our peo¬
a
Bates
on
29
"Over-Full"
Employment
-
Mutual
23
—
-
•;:
&
5
Wilfred May
Observations—A.
Singer} Bean
22
News About Banks and Bankers—
*
Radioactive Products
16
the hog, return
There is one other element, a
and, with our own entry into the
"war, led to a prodigy of manu¬ fascinating and distinguishing one
in our economic way fo life, which
facture whereby, in 1944, 45% of
operates as a dynamic factor for
our
gross national product went
stability, as well as growth—addi¬
for defense!
j
tion to the plant and equipment
At the war's end the planning
of business. You perceive this as
prophets and Yalta egos of the
the big difference between British
Potomac had their innings. A de¬
and European prewar capitalism,
Copper & Steel
8
Funds
NSTA Notes
MACKIE, Inc.
HA-2-0270
Reporter's Report
s:> Our
Reporter
Our
Mfg. Co.
Purolator Products
37
Activity
Indications of Business
- -
Continental
18
____
y. From Washington Ahead of the News—Carlisle Bargeron
subsistence, or apple-selling
a
1
Guess?
You
Associated
y
20
Securities
Einzig—Britain's
empire chips)
and or¬
dered
military hardware.
That level, would be met by prompt
;;
i reversed
our
economic backspin and powerful political action.
oversea
Cover
j
is
accepted
cashed in her ple living high
to
(Editorial)
It
Dealer-Broker
with far less
fortitude today than in 1932. With
cage.
See
j Bank and Insurance Stocks__.-:-.n_.^.__.i__^-.
staggering public debt—so
a
off—all
it
As We
v
keeping the interest on it at. tol¬
erable levels. And you must ad¬
mit : that
wide
unemployment
(with money then
she had
^before
a
Gulf
that Federal financiers have
given
a
the
of
have
i
backward glance.
Tn
the 1939-40 period we were
{really bogging down — 8,000,000
unemployed, at least 20% of avail¬
able production capacity idle and
fempty' railroad■ cars rattling
Let's
Mexican
Portfolio—Kennard Woodworthl.. 17
Philadelphia
solvent.
never been so
Unemployment insurance and re¬
are thbre to cushion any fall
in the labor force. On the other
in
engine.
YORK
WHitehall 4-6551
14
Investment
an
Investment
wholesale
lief
duction since the. invention of the
steam
12
the
preparing for war. Two large, have
most
Business Man?—Sumner H. Slichter
personal savings higher than
'20s; corporations, by and
and
dictators
other
prevent
the
foreclosures; personal debt is less,
of a
cessity of
should
gages
en}
private
American
Telephone:
12
Program—Oliver S. Powell
case
transportation
:and
production
marvel
each
WALL STREET, NEW
99
i..
Investment Bankers' Role
v
by a important gains in technique to¬
bellicose, battle-minded bully —f ward that end. Deposit insurance
Hitler in 1940, and Stalin in 1950f effectively eliminates the spectre
Twice, I say, since 1939 has this of bank failure. Longer term, and
marvellous,
mink-lined,
mass- amortizing home and farm mort¬
bell
off
quote.
•
9
—Roy L. Reierson....
Managing
-
Well, brethren, I have news for Have we ironed out the peaks and
you!
Twice in' the last decade valleys of incentive capitalism?
We've, been saved by. the bell—- !■} Probably not, but we have made
a
a
Obsolete Securities Dept.
10
Credit Controls and Fiscal Policy—J. Fred Weston
-
blow-torch '—Col.
war, our economy is now able
escape
a
dismal depression?
of
1
drop
here for
Impact of Flexible Interest Rate Policy on Bond Prices
„
•
/
:
...
come
10
field, and regimen¬
.
sheets,
6
Luitweiler
C.
that, without the
say
P. Stathas
Randolph Burgess
What Next, Mr.
My, that ten years went quickly,
didn't
it?
Well, what did we
learn from it? Can we truthfully
Mac-f
of
portrait
a
plow
tation at home.
own
an
as
—J.
an
from
4
the
Stock Market Implications of Bottled-Up Inflation
just passed the peak,
land-
iments in the
old-style depres¬
sion seems, to some of these selfassured individuals, as remote and
and
hands;
—W.
new
Gromyko, once again we had reg¬
these lads had
Cobieigh
1,200,000
i
lemons
When
Banks Must Finance Defense Without Inflation
The
Our boom looked
agrarian reformers to switch
nese
annals of men.
f
•*'
back
On June 25, 1950, Stalin
order. The malicious
Muscovites told the Commie Chi¬
burped
without
boom
discount,^
hungry.
continuing
a
KID
Market
The Economic Unsoundness of Price Controls—Alan Valentine
in
9,000,000 motor
trucks,
1949!
had
it
LEMONS DROP
3
"Permanent Prosperity"—Roger W. Babscn__^
when the North Koreans got
enjoying
now
and
cars
own spe¬
a
the buyer, were
saddle again.
the
of
force
ble
irt Stock
Outlook for Electric Utilities—P.
The
appliances, and
-
be had at
could
TVs
and you,
irresisti¬
the
touted
:
Factors
Favorable
vs.
—William Kurtz
than ever before in history.
But by 1949 there grew signs of
satiety. Why, motor-car salesmen
actually called on prospects again
—a thing unheard of for a decade!
eco¬
_L
Cobieigh
luxuries for more peo¬
ple
Deal-
pundits of the New
THE
Cover
..
- ■
and
forts
We're getting to be an
Policy
Mises
von
Unfavorable
6
Fiscal
Unworkable
An
—Ludwig
on our
Page
Continue—Bradbury K. Thurlow.—Cover
*
'
Inflation:
►
Giving
$
8
—
Governments
on
40
Exchange PL N. Y. 5
Teletype NY 1-1825 & NY 1-1826
28
—
—
•
.
gression
one
loomed
after
every
—
there'd
been
war!
other
So,
Ah, yes—green-light
labor increases to bubble up buy-
and
our
1
fer
from
mortar
motor
to
car,
from tank to
tractor, from rocket
to ranch-house, was too swift for
•
the
slide-rule
Deal.
Fair
No depression ensued.
In¬
Yogis
the
of
stead, pent-up buying demands of
and
own.
terprise brought forth
was
"shooting
Over there;
boxes"
were
and
even
Plowed-back
efficient
the water, the savings were
•
Continued
on
2
.£
page
Twice
1
Weekly
Drapers'
land,
c/o
Gardens, London,
Edwards & Smith.
*
j*
are
interested in offerings of
*
and
j
CHRONICLE
|
COMMERCIAL
The
We
FINANCIAL
4
preferred stocks
-
Park Place, New York 7,
'
REctor
2-9570
HERBERT D. SEIBERT,
•
WILLIAM
Spencer Trask & Co.
Members
New
York
Stock Exchange
Members New York Curb Exchange
4
50 Congress Street, Boston 8
Hubbard 2-8200
HAnover 2-4300
Teletype—NY 1-5
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Chicago
-
Glens Falls
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Schenectady
-
Worcester
by William
'
Stromberg-Carlson
'
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6. Dana
DANA
second-class matter Febru¬
Whitin Machine
25, 1942, at the post office at New
York, N. Y., under the Act of March 8,
Subscription Rates
to 9576
Editor & Publisher
SEIBERT,
D.
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President
Business Manager
J
Other
Thursday (general news and ad¬
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Other Offices:
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(Telephone: STate
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vertising
Works
*'
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Every
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ary
Publishers!
WILLIAM B. DANA COMPANY,
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,
Copyright 1951
Reentered as
Reg. U. S. Patent Office
High Grade Public Utility and Industrial
Roving Corp.
44
27
Published
34
Says)
You
and
Di-Noc
27
Who?——
Tomorrow's Markets (Walter Whyte
Washington
Collins Radio
5
and Industry—
Then and Now—Guess
when a new or
plant was built,
more
^
Security I Like Best
The State of Trade
Baker-Raulang
38
Securities Now in Registration—
The
Air Products
25
Corner—r__
ele¬
across
more com¬
24
—
----—
Securities Salesman's
earnings, the yeast of every great
American
enterprise,
was
less
used;
21
1
Railroad Securities
man¬
more
maintained.
gantly
unrationed
populace, and the
free play of American private en¬
an
agement
41
—
Securities.-
Public Utility
hoggish and
short-sighted. They took out a far
higher percentage in dividends
'i ing power, and offset the loss of
year after year.
Whether-or not
time-and-a-half. Well, the transthe profits were there, chateaus
what to do?
Security Offerings
Prospective
Bank
$48.00
per
'
Record
—
Quotation
$30.00 per year. (Foreign postage
Note—On
the
rate of
Bought
year.
—
Sold
—
Quoted
$52.00 per year.
Other Publications
and
S.
of
in
"
Monthly,
extra.)
account of the fluctuations
exchange,
40
Exchange Place, New York 5,
in
remittances for for¬
eign subscriptions and advertisements
be made in New York funds.
THEODORE YOUNG &
must
WHitehall 4-2250
CO.
N. Y.
Teletype NY 1-3236
4
The Commercial and Financial Chronicle
(1748)
if
Unfavorable
Favorable
vs.
Factors in Stock Market
By WILLIAM KURTZ*
E. F. Ilutton
'
Company
&
Cites growing investment demand and avail¬
stock yields as bullish incentives, but warns
any sharp advance in stock prices will weaken statistical
position of market and bring about a shift in sentiment. Holds
material change in foreign situation would call for entirely
new appraisal of market outlook.
Explains "Timing Factor."
opposing force.
able generous
At this juncture in
the market,
plausible reasons for being bull¬
ish
it
as
bearish
As
is
to
find
sound
tion
there
at
valu¬
ations of earnings.
result
a
conditions generally
offered low yields and high
case.
/
past,
the
L
have
appraising the ultimate ef¬
fects of these two sets of opposing
forces on market prices, one con¬
sisting of a package of important
In
sions of opin¬
ions
among
market
ana¬
during
tfie last three
lysts
months
con¬
cerning
both
fundamental factors showing
de¬
clining tendencies and the other
representing the strong statistical
position of the market backed by
growing investment demand, it is
not illogical to conclude that the
the short-term
and long-term
prospects for
stock
prices.
final outcome will be determined
William Kurtz
largely by technical factors over
the next few months.
This latter
major favorable and unfavorable
force is not always easily meas¬
factors affecting the, market at
about the same time, it is not sur¬ ured, but must be reckoned with
in appraising the likely course of
prising - to find a , considerable
common share values in the cur¬
amount of uncertainty regarding
rent period of ' Uncertainty.
At
prospects for equity values from
this time, I believe it will gener¬
this, point on.
From the bearish point of view, ally be conceded that there is not
With
income rising and civil¬
ian
drives
the
Dow-Jones
falling,
a
new
inflationary psychology
production
of
12.5.
While
these
statistics
are
several
t
is
membered
lor
forces are still
are
at
Recent softness in some
earnings
that
that
fundamental
if
pointing downward
time, further declines in
power might be expected.
In
addition, the general overenthusiastic bullish sentiment that
economy, the downward trend
the
commodity futures index,
acceleration
recent
bank
of
months,
loans
increased
in
bank
factors may swing sentiment to¬
over the next two years
a
more
general
bullish
bright. In addition, at¬ wards
tention is called to the growing soint of view, possibly leading to
equity demand from institutional speculative excesses at the height
investors and the expected ex¬ of public optimism.
r
activity
appear
cellent earnings reports for the
first quarter of this year.
Thus
the unfavorable trends of several
the
almost
past,
a
swing
unanimous
towards
bullish
senti¬
major fundamental economic and
ment has generally occurred un¬
der the influence of some popular
financial
belief
position
forces
the
against
-
are
favorable
of
the
arrayed
statistical
market
repre¬
sented by current high yields and
low
:
In
price-earnings ratios.
This is
' *A talk by Mr. Kurtz before the Asso¬
of Customers' Brokers, New York
City, April 24, 1951.
'
ciation
.
NOT
A
NEW
the
at
"new era"
time
such
as
1937 faith in
a
continuing business
from
the depression
depths and the "postwar deferred
recovery
demand"
psychology prevalent in
late 1945 and early 1946.
In this
period it would not be surprising
ISSUE
The Common Stock of
AUDIO
affords
the
philosophy of 1929, the
investor
in the earnings of
a
a
evident that the market's current
Dangers In Sharp Market Advance
inherent in
market advance
above
the
strong statistical position could lead
sharp
on
conditions
is
of
set
a
based chiefly
to
substantially higher stock prices,
the rise would rapidly consume
the market's reserve power and at
not-too-distant
point make
clearly evident. If the stock mar¬
ket reaches
substantially higher
some
levels, its statistical position will
unfavorable trend in fundamental
weakened
be
that
be
the
at
getting
same
conditions
fundamental
time
progressively
worse.
accom¬
it
exceedingly vulnerable
to
the
several
months
from
now
in
a
Industrials
MAGNETIC
RECORDING
TAPE
Current Price $3
To be
are
about 6.3% accom¬
panied by a price-earnings
sent you on
request—a copy
-
demand
AND
AUDIGDISCS
Yield 6%
of the remarkable history of
more
than
prospects
$16.
for
Based
the
on
fundamental
31 Nassau St, N. Y. 5
•
Tel.j DIgby 9-3430
•
Tele.: NY 1-2078
cluded
factors
of
the
in
bank
loans
exhibit
at
1950's
level
or
approximately $24 per share for
the Dow-Jones Industrial Average
with
correlations between stock market
fluctuations and trends in resi¬
dential construction
awarded.
stock
prices
occurs
unless
a
severe
in
yields.
easing tendencies in
commodity prices, an¬
sensitive
In
SAMPLES
the
last
investments
bull
in
Tri-Continental
new
successful
stock market
$1
to
inspect
development in
timing?
Stock
Warrants
$85,COO
and
free
explanatory
pamphlet
and
samples of bulletins send $1
cover
handling costs.
ANALYST INSTITUTE
126 Lexington Ave., New York 16,N.Y.
market,
each
and
1942-46,
of
before
page
28
Palmer Sfendel Oil
Bought
Richfield
R.K.O.
Oil,
Common
appreciated to $44,000,
$104,000
respectively.
SPECULATIVE
OF COMMON STOCK
—
Sold — Quoted
'
JAMES J. LEFF & CO.
Incorporated
Broad
50
St., New York 4
Telephone BOwling Green 9*5920
Teletype NY 1-3018
NEWPORT
STEEL CORP.
—
Sold
Memorandum
wall
street,
WARRANTS,"
.:
Request
on
new
HAnover
co.
york 5,
n.
y.
2-9072
Top Producer
Partnership Calibre
For Member Firm
One
of
the
of
our
Clients,
York
New
a
member firm
Stock
Exchange,
Chicago Board of Trade, and other
principal stock and commodity ex¬
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a
volume producer.
Excellent pos¬
sibility for partnership status in
due
course.
in
a
man
may
write
\
confidence to Box No. 4
DOREMUS
&
COMPANY
Advertising Agents
120 Broadway,
New York 5, N. Y.
Hotel Weylin
of the
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requirements
discriminating
Central Location
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MERITS
by Sidney Fried.
Quoted
—
1. h. rothchild &
52
meets the
$500
If you are interested in capital
appreciation,
be
sure
to
read
"THE
For
on
Reeves Soundcraff
Such
Recent
WARRANTS
invest
contracts
example,
Continued
dividends
you
For
Bought
anticipated
to other component in the "timing
drop 15% or to $14 per share. It factor," have acted as warning
is plainly evident that with stock signs of an impending financial
prices going up and earnings and storm to some observers who re¬
dividends heading down, the mar¬ member a similar downturn in
ket's internal' position would rap¬ 1928 and in 1937. In addition, the
idly deteriorate
For example, acceleration of the rise in bank
assuming that a renewed fear of
to
evidence.
this article.
the
former.
However, this gap would narrow
higher
below
in
the end
taxes, in¬
creased costs and narrower profit
margins on defense work, earn¬ rapidly under conditions of rising
ings estimates for this year run stock prices and increasing bond
about 20%
fundamental factor now
In past instances
there have been surprisingly good
portant
stock
and
Among the components in the
index are bond prices which have
recently experienced a slump in
synmpathy with the decline in the
government bond market.
The
drop in bond prices has, in turn,
affected
the price
structure of
preferred stock issues and some
slump
this company, its favorable balance sheet and
earnings statement
PETER MORGAN & CO.
in
Measuring the Opposing Forces
ratio
of around 8.5 based on last year's observers feel that it is only a
results.
Preliminary indications question of time before common
of first quarter earnings this year shares feel the impact of higher
suggest rate approximately equal interest rates. Others point to the
wide gap between stock yields
to that of last year.
Earnings of
the Dow-Jones Industrial Aver¬ and interest rates, thereby sug¬
age were almost $30.50 last year gesting that the decline in bond
while dividends totaled a little prices will have little effect on
Will
great
increase
leading to subsequent liquidation
of speculative loans.
It is inter¬
esting to note that before the 1929
crash, bank loan$j increased at an
accelerated pace while in 1937, the
stock price decline was preceded
';
factors.
As a composite measure of the
panied by general over-optimism trend of fundamental forces, the
usually indicates a reversal in the "timing factor," published by the
major bullish trend.
Thus, the Analyst Institute, an investment
indiscriminate purchase of com¬ advisory service, graphically out¬
lines
mon stocks as an inflation hedge
the
relationship
between
well-managed
manufacturing products in
an
stimulating to business activity,
an
over-stimulant is dangerous,
may
This set of circumstances
participation
GROWTH COMPANY
has
by an increasing rate of gain in
largely dis¬ might prevail at the 300 Dow In¬ bank loans. The accelerated rise
February-March dustrial level would put the mar¬ of the latter in recent months is
correction in stock prices.
Thus ket in a precarious psychological designated as a danger sigh at
the
psychological
state of
the position, making it vulnerable to this time, particularly since de¬
market appears due for a shift in any sudden adverse news develop¬ mand
deposits
have
recently
the other direction with the avail¬ ment.
Furthermore,
the
cur¬ lagged behind bank loans, indicat¬
able generous yields offering rently wide gap between common ing that business debts are tend¬
added incentive to those purchas¬ stock and bond yields would qar- ing to grow at a faster rate than
ing stocks on the basis of a desire row rapidly with stock yields assets.
down and bond yields
to protect the purchasing power headed
The decline in residential con¬
headed up.
of their savings.
Therefore, while it is struction contracts is another im¬
DEVICES, INC.
tne
a
the
by
Furthermore, reports the market's earlier stages.
of large credit balances in broker¬
Having outlined some general
age accounts and the relatively observations of current market in¬
unimpressive performance of low- fluences we turn next to a some¬
priced marginal issues since this what more detailed consideration
bull market began is added evi¬ of
these forces.
With regard to
dence that the psychological state
the
statistical
position
of
the
of mind in the market leans more
market, yields on the Dow-Jones
thermore, prospects for over-all ful stimulant when and if it be¬
apparent
that
technical
increases in the rate of business comes
months
having
been
probably
reversals.
stock margin require¬
ments, prospects for higher taxes
under controlled prices, etc. On
the other hand, adherents to the
bullish side point towards the low
price earnings ratios now avail¬ to the cautious side rather than to
recklessly bullish point of
able and the high yields still ob¬ the
Thus, it appears to me that
tainable despite the historically view.
high level of stock prices. Fur¬ the market may receive a power¬
reserve and
recent
particular
significance at this time in view
of the softening trend in sensitive
prices. It is generally argued that
while
unduly out of line with longaverage
relationships be¬
tween market prices and earnings
and dividends, it should be re¬
Thursday, April 26, 1951
.
during
term
contagious atmosphere of bullish¬ prices over the last 30 years. Oh
ness
may
prove
to be a self- an operating basis since 1948, the
defeating venture, although com¬ "timing factor" indicated a buy
mitments during the current pe¬ signal in January, 1949, almost
riod of uncertainty should turn in three years after the sell signal
a
relatively
good
performance, calculated for February, 194-3. In
the
excessive optimism usually provided that warning signals are the chart below it is interesting to
several
classic
and
reportedly
There is note that a sell signal was given
found at important market tops. heeded when they arise.
time tested fundamental factors
In this connection, it is interesting no question but that attempting to in March, 1951, after the timing
have signalled a major reversal
realize capital appreciation during index had risen for more than
in
the
market's
trend.
Among to note that the short interest
the Ihst phase of a market ad¬ two years.
The month in which
these are included the slump. in figures recently reported, indicate
presence
of a considerable vance, when share values are apt the "timing factor" trend is re¬
bond prices, the deflationary ef* the
to
be
versed
is
denoted
as the "buy" or
amount
of
rising
on
psychological
pessimism regarding
fects of stringent credit controls,
A more detailed
In the rather than fundamental grounds, "sell" point.
which' are now seriously begin¬ the future of stock prices.
entails
considerably more
risk description
Qf
the
components
ning to affect certain segments past, the opposite has generally
been true before major uptrend than would normally arise during used in the "timing factor" is in¬
of
in
loans
.
been noted as
not
could create an intensified demand
The dangers
Appraising Opposing Forces
divi¬
sharp
inflation
~
rather
been
With gov¬
spending on the upgrade,
counted
displayed signs of deteriora¬
stock price levels which
have
argu¬
for the
ments
in
since
market
the
fundamental
up
consumer
has
experience for
rather abnormal
a
bid
were
stocks, especially since yields
still
exceptionally
liberal.
segments
Of the economy brought about by
credit controls and
over-buying
unfavorable fundamental market factors,
stock market internal position is an
Mr. Kurtz contends strong
it appears just as easy to present
prices
the next few months.
ernment
wave
Members, New York Stock Exchange
After pointing out
stock
sharply on a renewed fear of in¬ Industrials up to the 300 level,
flation, particularly
as
defense yields would urop to 4.7% and the
production rolls into high gear in price-earnings ratio would rise to
.
Lounge
It discusses Warrants in their different
phases—explores many avenues of their
profitable purchase and sale—describes
For reservations
current opportunities
Theodore B. Archibald, Manager
in
Warrants.
For your copy 'send $2 to the pub¬
lishers, R. H. Af. Associates, Dept. C,
220 Fifth Avenue, New York I, N. Y.,
or
send for free, descriptive folder.
PLaZa 3-9100
Madison Ave.
at
54fh St., New York 22
Volume 173
Number 5006
.
.
.
The Commercial and Financial Chronicle
(1749)
Investment
Steel
The
Production
Electric
Banking
Seminar to Be Held
Output
•
Carloadings
Retail
State of Trade
Food
Price
Auto
Index
♦,
Production
J
for
advance
meet defegse
perceptible
expanded their output to
production displayed
factories
many
industrial
overall
the
and
week
it continued
to
a
noticeably higher
be
by Laurence M. Marks, Laurence
M. Marks & Co., New York, Pres¬
ident of the I. B. A.
ago
regard
This one-week refresher course
National
ingot operation rose % -point last week to about 103% of capacity,
equivalent to output of 2,057,000 net tons.
This compares with
average weekly output of 1,281,210 tons in 1940, best prewar
in¬
itiated by Norman Smith, Partner,
Merrill Lynch, Pierce, Fenner &
Beane, New York, and Chairman
of the I. B. A. Education Commit¬
mills
are
surmounting serious
raw
^
steel
production year.
fact that weekly automotive operations have
improved, Ward's Automotive Reports warned that the industry
faces a battery shortage "of crisis proportions" unless present
government restrictions on lead are modified soon. Scare-buying
and unnecessary hoarding of replacement batteries, now in their
low production period, are cleaning out dealers' shelves almost as
fast as they are replenished, the agency added.
Despite
-
the
Production
changes last week centered on the independents,
with Hudson
lowering its rate from about 800 to 640 cars a day,
Kaiser-Frazer dropping its second assembly shift, Ward's
and
:
said.
May schedules indicate that Kaiser-Frazer's output may be
19,000 in March,
reduced to less than 10,000 units, compared with
with Hudson output also reaching lower levels,
the
stated.
However, Ward's added, as a group the independents should continue to remain the "surprise of the industry."
Production
;
'
and
sales of major
agency
household appliances in
1951
will be about 30% less than in 1950, but will exceed the 1949
volume, a recent survey by "Steel," the weekly metalworking
magazine, reveals.
" s !
The
this
results,
survey
weekly
trade
adds,
refute
rumors
\ that demand for appliances has fallen off sharply. Manufacturers
report demand is holding up well, although it is below the frenzied
demand occasioned by the outbreak of war in Korea last summer.
r
well above 1949 levels.
s
of necessary materials.
The major
problem
of appliance manufacturers is obtaining
steel.
are
■■■,■■
using imported and conversion
The steel and metalworking industries are
and procurement jobs as heretofore, pending further
details and interpretations of the Controlled Materials Plan, which
entered
served
On
by the mills.
some
DO-rated orders are being issued and
Other current regulations are being ob¬
this trade
paper,
the mills
are
.
.
Dinner addresses
on
E.
International'
Bank
struction
Development.
live
on
fense item, vary
will
be
upon
specifications.
June defense
requirements, according to "Steel," will show a
definite tonnage increase over May volume.
Approximately 1.4
million tons will be made available in the month for 24 special
programs.
In May, approximately 1.2 million tons will be pro¬
vided for 19 programs.
Eleven formal directives administered by
the NPA Steel Task Committee, including freight cars, locomotives,
ship construction, barges and tows, will get about 515,400 tons in
June.
Overall, increase for these programs will run to possibly
40,000 tons.
Freight cars, which will take 310,000 tons in the
month, will get about 22,000 more than in May.
Living costs
and
March
At
0.4% to
this basis
some
100.
new
mid-March
the
record high between Feb. 15
Bureau
of
of the
Labor
Statistics
1935-1939 average.
for
three
of
Recon¬
registrants will
the campus. Enrollments
and
■■
In
to
the
Planning Committee
it
reports,
be necessary to allot
may
registrations.
Announcement
brochures
are
being mailed to all I. B. A. mem¬
ber firm offices. For information,
address
Erwin W. Boehmler, Ed¬
Bankers
Director,
Investment
Association
of America,
33
South Clark Street, Chicago 3,
Illinois.
70,000 General Electrie Co. workers will get
Continued
on
page
32
NY
Security Analysts
To Hear Harris
WE
ARE
PLEASED
TO
President of
Works, Inc.,
will address the Luncheon Meet¬
'
A
DIRECT
WIRE
TO
Art
&
Society of
Security Analysts on Friday, April
27.
'
'■
•.
"
■ -V- '
CD.
Ronson's
operations are devoted
exclusively to the manufacture of
cigarette lighters and
increased
1600%
sales have
over
prewar
levels.
RUSSELL&
WifcF Inv. Service
Bldg.
Cleveland
14,
Ohio
DENVER,
staff
of
.
A
leading
and
Colo.
—
manufacturer of heavy
equipment
chemical,
food,
machinery
the oil, natural gas,
steel and other industries.
for
Analytical Report available upon request.
Hayden, Stone
& Co.
Chronicle)
Marcel
J.
added to the
Investment Service Cor¬
has
CORPORATION
Common Stock
Current
(Special to The Financial
Fischer
Union Commerce
STRUTHERS WELLS
,
CHICAGO
1582
Catch-All Profit Concept
Metal
ing of The New York
CRUTTENDEN
That
to
Alexander Harris,
ANNOUNCE
Ronson
'
the business- .*
maladjustments and inequities
the intra-industry situation—-and of the
addition
nature—as
applications for regisiration will
substantially exceed the quota,
and
been
poration, 550 Seventeenth Street.
r;
of a major
evident host
of minor administrative difficulties to be resolved, there remains
the renewed
misconception of the basic form and nature >o£
corporate profit. It will be impossible, even if it be attempted,
to make a hard-and-fast distinction
between inventory profitsc
of irregular occurrence (counterbalanced by subsequent inven¬
tory depreciation), and those earhings from which the inventory
element is excluded. And in practice no allowance can be made
for those companies or industries where the ploughing-back into
equipment and plant of gross dollar earnings 4s needed and done.
Surely the well-meaning Mr. DiSalle cannot relish the pros¬
pect of taking on the herculean task of resolving the plethora^ of
huge administrative difficulties, such as defining and delimiting
industries; "half-an-industry" (part of Mr. Johnstons pronounce¬
ment was that the earnings of "half-an-industry" must fall below
the 85% point before it is eligible to raise prices); and ruling
on individual cases involving
possible hardship through squeezes
Continued on page 33
approximately
Present indications are that
limited
.
profits ensuing from a. betterthe contractor, the rises in the
corporate income tax, and the excess profits tax.
. <
>
How either a former business leader (as President of the
U. S. Chamber of Commerce) as Mr. Johnston, or a eommonsense
public official as Mr. DiSalle, can have any enthusiasm for add¬
ing this additional obstruction to the determination of price by
supply-and-demand in a free market, is difficult to understand.
It must be remembered that without the "benefit" of such a governmentally-imposed price lid on "inflationary" forces, prices fell
from
1920 to 1940, and it was not until a year ago that-they
recovered to their post-World War One peak.
be held at the
All sessions will
University,
ucational
a
price index stood at 184.5%
consumer
On
15.
rose
and
»
this new for~
than-anticipated performance by
Dean,
and A.
^
law-capturing
renegotiation
College of Liberal
Northwestern ; University;
S. G. Hoar, Loan Director,
particular, delivery promises are not jumping ahead as rapidly
on DO-rated orders as they had
been in recent weeks. Even on
plates, which are in heavy demand for defense work, some ton¬
nage still can be had for July shipments against
DO ratings.
Promises on hot-rolled carbon bars, another actively sought de¬
Squeeze
'man, and accentuates the "heads-you-win-tails-I-loseV . prospect,
facing the enterpriser.
The other inoculations against the profit
..motive include: tri-monthly price re-determination, the contracts
Pennsylvania; Dr. Simeon E. Le-
Arts,
Another
r
from the question of its workability,
mula adds another to the succession of squeezes on
Also apart
Ex¬
University
Stassen,
can
ex¬
respective evenings by President
land,
considerably, depending
efficiency,
greater
industry which does manage to
>'../■
accepting DO orders for delivery into the second half of the year.
a certain few specialties shipments are still further extended.
It is notable, however, that on some major products, sheets in
On
excess
the yardstick of a
ask for price increases; but an
offset its higher costs with fru¬
gality and other .manifestations of good management, will be
penalized with frozen prices.
This compounds the felony of the
politically nice-sounding, and pleasing-to-escalatored labor, ex¬
cess profits tax, which penalizes improved management and thrift,
but rewards corporate extravagance—thus actually stimulating
inflation.*.
."V"
"
/..
with
stitutions.
(6)
clamor
public's
"profiteering") during the postwar years. An industry that now
does not offset its higher costs—from labor or raw materials—;
members of
Stock
consuming
profits tax principle, it arbitrarily and illogically
prior base period. And with the excess
profits tax, it really penalizes efficiency. Those indus ries will
be - favored
which registered
high earnings (perhaps due 'to
assumes
projects under way at various in¬
Harold
steel products, states
an
the
lessening
Apart from its many and serious administrative difficulties
(obscurities, and its absurd, industry-wide application by
Like the
in financial research
being made
1.
usual.
as
of
May
"stabilizers"; this latest formula-ized tinkering with the price"
mechanism harbors several far-reaching and fundamental flaws.
(5) A review of progress being
going about their
supply
becomes effective July
and
The organized exchanges
demonstration of the ex¬
change Firms.
•);v'
■■
Wilfred
and the
on
in
the
vertising.
order
company
any
ing offense to the strongest voting groups.
v*'
an
on
against the rising cost-of-living, without giv¬
Public relations in the se¬
business; securities ad¬
of
ceiling
■
an
1946-1949, was apparently not concocted
affirmatively to subsidzie any particular polit¬
ical nor pressure group interest; it does fill
our
Administration controllers' need to find
another measure which serves the function
A.
change by a cast of
the
Association
of
price
maintaining
scheme,
years,
curities
(4)
new
industry whose profits amount to 05% of
its average profits for any three of the four
and economic and investment out¬
ecution
Many
unchanged
•
•
this
an
School.
'
measures.
While
(2) Economic topics of current
significance—aggregative tools of
analyses; taxation and expendi¬
tures; debt management and in¬
terest rates;
the money market;
-
for gas
and
funds.
(3)
ex¬
govern¬
of tampering with the forces of
supply-and-demand
through
an
unending
plethora of disjointed and uncoordinated ideas
program
look.
politically-conscious
democracy,
will cover six
major groups of topics:.
(1) Current analyses and re¬
views of specific industries—rail¬
road, public utility, and oil and
gas; specialized phases of invest¬
ment—municipal general obliga¬
tions and revenue bonds; pension
The
which
to
officials go—without any regard for the
serviceability of the free market. It demon¬
strates
anew
the results
of
planning in a
Marks; and
the project is being carried out
by Mr. Smith and his Committee,
together with representatives of
the Wharton
Johnston's
Stabilizer
ment
tee, according to Mr.
Only in large television sets is demand off substantially.
Calls
and electric ranges, refrigerators and other appliances are
treme
officers and partners was
for
Economic
reductio ad absurdum demonstration of the ridiculous
Pennsylvania, it was announced
material prob¬
The steel
lems, maintaining production at record-breaking pace.
-
Commerce,
and
nance
a
of Fi¬
University
of
year
offers
School
Wharton
the
with
to employment, new claims for unemployment
insurance benefits rose during the latest week, that of March 31;
the decline in continued claims about made up for the increase.
With
a
Muddying of the Price Waters
unworkability,
week-end pronouncement of the government's new fantastic twist
its policies on prices merits the public's serious attention.
It
sponsored
18-23,
June
its
to
by the Investment Bankers Asso¬
ciation of America in cooperation
and about 10% below the all-time peak
reached during World War II.
;
than that of
Further
Despite
pected to attend the first Invest¬
ment Banking Seminar, in Phil¬
adelphia.
As
needs,
By A. WILFRED MAY
Approximately 100 investment
executives, representing
as
many member firms,' are ex¬
banking
Failures
Business
•
June 18-23 in Phila.
Trade
Commodity Price Index
and Industry
5
25 Broad Street,
New York 4, N.
DIgby 4-6700
Y.
£
The Commercial and Financial Chronicle
.(1750)
with¬
overloads for longer periods
The Outlook for Electric Utilities
out
last
Senior Partner, Duff and Phelps, Chicago, 111.
.,•••>
;
.
)
.
years
The
present
national
defense
program and inflationary economy
has given rise to a number of
questions
vestors
how
in
"Will
in¬
of
10
watt
practical
a very
first
us
the
examine
kilo¬
capacity of the industry and
util¬
dustry, including government
out
broad
had
to
in
all
other
•
contributing to the public
supply, at the beginning of 1940
The subject is
cover
and
projects
power
sources
ditions.
total
a
million
all
capacity of about 39
kilowatts.
that
At
time,
meeting of
people, and particularly the
public ownership advocates, pre¬
dicted a dire power shortage in
this country. ;. We did not sub¬
this
scribe
of
its
many
rami¬
fications
in
a
kind.
Therefore,
must
we
neces¬
sarily
few
narrow
down
electric
industry
and at¬
tempt only to hit the high spots.
With
respect to- the
utilities,
questions
vestors
in
the
of
some
the
be
may
electric
important
minds
of
in¬
summarized
as
follows:
meet
upon1
it
fense
or
well
as
;
the
the
industry be
expanded
arising
war
able
demands
from
the
de¬
production program
from
as
the
unsatiated
demands ©f the civilian economy?
(2) What will happen to the
'
utility earnings under such condi¬
tions, particularly in view of the
higher Federal income and excess
profits tax burden?
,(3) Are
under
such
,;;V
been
well
said
the
When the Korean situation
into play, the electric util¬
came
ity
industry had
10-year
the
period
World
well
as
War
the
inflationary
future
industry is
through
gone
which
II
era,
economy
and
of
as
postwar
this
period
outlook
a
included
subsequent
very comparable
the
as
the
was
far
a
as
utility
concerned.
Therefore,
before looking into the
future, it
is
of
important to review the record
the
of
able
about
curtailments
that there
was
63
another
and
utilities during these past
*An address by Mr. Stathas
before the
Financial .Analysts of
Philadelphia, Phila¬
delphia, Pa., April 19, 1951.
million
5
kilowatts,
million
kilowatts
added during last year, with
result th&t the available ca¬
pacity
is about three-fourths
now
greater than in 1940.
1
now
more
effective
much wider area,
both
is
a
standpoint
1950,
of course,
that there will be mate¬
rials shortages.
ent
Under the
Washington
called
DOs
issued
essential
all
to
including
the
set-up,
soOrders
Defense
or
utilities,
pres¬
industry,
merely
are
hunting licenses, but the utilities
are getting well organized and by
September of this year a materials
plan
will
kilowatts in
1940.
During World
II, net additions to generat¬
ing capacity were at the rate of
less than 2 million kilowatts per
War
for
total of about 7,700,000
a
watts.
The
additions
alone
kilo¬
scheduled
industry for the three-year
period
1951-1953
will
tween
5
million
and
be¬
range
6
million
kilowatts per year, which is
con¬
siderably more than the capacity
added during the last war.
An¬
other
important point to keep in
mind is that almost
a
third of the
present generating capacity is less
than five years old, as
compared
with
only
means
ing
the
present
tremendous
in.
1940.
are
picture
This
enter¬
with
a
amount
of new and
efficient generating capacity
will
enable
them
to
more
and
this
effect
fuel
14%
that the utilities
substantial
costs.
can
economies
In
in
addition, the new
safely handle greater
the
but
materials
required
their expansion program. .
The utilities have no war
version or
and
used
be
peace
kilowatt-hour
a'
for
both <
The
purposes..
inventory
no
con¬
readily and without
change
any
have
and
utilities
war
it
as
is
produced,
—
DISTRIBUTORS
the
and
only
in
.
INDUSTRIAL and MUNICIPAL
SECURITIES
the
As
defense
momentum
gains
program
the
on
production
utility industry has
construction
during
has been
and
years
the
past
able
5
fi¬
to
this readily. The construc¬
budget
projected
for
the
3-year
period
1951-1953
will
nance
tion
amount
to
about
$7,000,000,000.
We estimate that this 3-year pro¬
will work their facilities at
have
beneficial
a
pre-tax
effect
the
on
Television
sets,
par¬
ticularly, connected to the utility
systems during the past two years
television
set
consumption
has
been
per
found
by
test to range between 180 and 200
kilowatt-hours.
In the New York
for
example,
2,000,000
television
area,
sets
958
the
Tel. BArclay 7-8800
and
showed
is
000,000
important
thing
that in spite of
between
ties
1940
and
able
were
to
ob¬
a $242,increase in taxes
61%
or
1945, the utili¬
maintain
to
their
net
favorable
of
stock. The
common
than in
the
1940's.
early
--v-
Even during the post-war in¬
flationary period, utility earnings
well
were
1946
maintained.
1950
and
the
Between
picture
as
was
follows
Kilowatt-hour
41%.
sales
went
up
/';v
Revenues
Net
went
45%.
up
before taxes went up 36%.
Taxes went up 49%.
Balance
for
stocks
common
about
$2,200,000,000 went up 34%.
will
be
provided from internal
Common stock dividends went
sources, such as depreciation and
up 44%, in dollar amounts.
amortization
cash' and
retained
It is true, of course, that during
earnings, and still allow for ample
dividend
dustry
whole.
a
have
the in¬
industry
by
The
payments
as
difficulty
no
in
fi¬
nancing this construction program
and still keep its capital structure
the
new
cushion
still
the
but
money,
should
this post-war
investment
period, the utilities'
in
had
increased
but
the
property and plant
almost
earnings
by
were
a
third,
still
ade¬
ings.
tax
Common
more
sets
than
were
customer
Edison
in
of
Consoli¬
Company
of New
few TV
1949, when
television
area
sets
in
the
New
York
equivalentto having
about
400,000 new resi¬
was
added
dential customers
Edison's
two
very
were
in
operation,
was
kilowatt-hours.
Therefore,
addition
ofthese
2,000,000
system
years.
on
Consolidated
during
The
country
are
earn¬
some
.
months
the
low
utilities
with
of
the
institutional
for a
substantial portion of their capital
structure, net of tax deductions,
and
give
erid
short
deserved
The
have
who
vestors
of
break.
money
been
the
which
and
I
have
the
pror
other
to
Public
Utility ;
just dis¬
conclusion
care
of
in
Dealer
•
the
nation
•
in¬
cussed,- point to the
that the utilities will take
requirements
power
Distributor
well
a
contemplated
construction
gram,
together withthe
factors
•>
holding
line
facilities
present
Underwriter
rela¬
cost
of
the
Bonds
*
Stocks
good
shape. The kilo¬
watt-hour output is now running
some
15%
year,
and with the
new
such
output
well
by
more
or
more
could
than
ahead
30%
of
last
facilities,
increase
above
the
present levels in the not far dis¬
tant
The
future.
Question of Utilities' Earnings
Let
us now
happen
to
utilities
under
the
earnings
the
of
the
and
in¬
which
lie
war
flationary
conditions
ahead.
the
At
beginning
of the
last
war,
many
people took a
pessimistic
view
of
the
same
favorable.
FIRST BOSTON
examine what would
past question, but the actual perform¬
corresponding ance of the industry proved to be
equivalent
nu-
conditions of
bond market will
the
figures in the case of other com¬
panies in various parts of the
in
The unsettled
provide
the
dividends
stock
provide good
leverage for cofnmon stock
tively
earnings,
ties of the electric utility industry
tremendous.
For
example,
dated
New York 6, N. Y.
The
serve
a
tions, the load building possibili¬
York
Exchange"
only
0.4%
decline of only 9%.
high from now, but even an increase in
load around the clock, and this interest rates from the level exist¬
will improve their load factor and ing a month or so ago will still
residential
York Stock
250,000,000 of
line, the utilities will undoubtedly the corporate
operate at a very high level. They probably stabilize
added during the past two years.
The consumption of the average
Langley & Co.
a
showed
of
dividends
stock
common
more
The electric
spent about $8,000,000,000 for new
for
High Level Operations Predicted
have proved to be substantial load
builders.
The
average
annual
UTILITY, RAILROAD
investment
•<
stocks
decline
nominal
inventory problem is that involv¬ in good balance. Under the present quate to support the additional
ing operating materials and sup¬ unsettled corporate bond market securities in
good shape, including
plies, and appliances, but this is conditions, it appears that utilities
dividends
on
common
stocks.
a minor factor in the total picture.
will pay a somewhat higher cost
kilowatt-hour
Broadway
with
is-served
a
spite of this, the balance
common
earnings in good shape. This
facilities and at the higher brackets attests to the resiliency of the in¬
problems.- should
Their product is consumed as soon
hour sales.
DEALERS
115
it
as
additional
little
balance
peacetime reconversion
problems,
can
for
relatively new
adding considerably to kilowatt-
Members New
sets
for
of
freezers, two
appliances,
are
W. C.
good illustration of the
development of utility
brought -about by television
and
other
appliances, and
type of load is extremely
load
Taxes went up 61%.
But in
"
allocation
with 9 million
compared
as
Net before taxes increased 23%.
reserves
television and home
PUBLIC
a
intensive
up
pooling of the rate .schedule. Television dustry and is good evidence of the
between is certainly changing the living favorable incremental profit char¬
neighboring systems and
safe¬ habits of the people and has acteristics inherent to the utilities'
guarding the continuity of service proved to be a new substantial operations.
and profitable source of revenue
on a more economical basis.
In
the
pessimism which then
The electric utility industry will for the utilities.
prevailed, utility common stock
The
potentialities
of
new
load
be able to obtain its generating
prices showed a drop of over 50%appliances
is
obvious. between their 1940 high and their
equipment in a much larger voir building
heat1 pump,
which is now 1942 low, whereas the decline in
ume
at this time in comparison The
the experimental stage, net income available for common
with conditions existing- during beyond
World War; II.
At that time, for electric home heating in the stocks proved to be negligible as
the manufacturers of generating winter and electric cooling in the time went on. In retrospect, utility
equipment in this country had an summer, is another appliance to common stocks in 1942 were a
watch
under
peacetime
con¬
annual
production
capacity
of
good buy rather than a sale, and
ditions. For example, if the heat
about
this fact should be kept in mind
3,200,000 kilowatts.
The
manufacturing capacity since that pump were to find its way into during the present period, which
5% of the homes of this is very comparable.
time has been stepped up sub¬ only
Furthermore,
country, the residential kilowatt- at that time utilities were in dis¬
stantially.
They are now able t<D
hour sales of the industry would
favor because of the impact of the
produce
at the annual rate of
and the residential
about 8V4 million kilowatts, and: go up 40%
Holding Company Act and other
revenues
would increase 25%.
this manufacturing capacity will
regulatory problems. These prob¬
lems are practically behind us and
be stepped up to 11 million kilo¬
$8 Billion of Construction in
the
watts by 1952,
regulatory
climate is
now
I am cognizant,
Five Years
the
emergency
are
UNDERWRITERS
,
undoubtedly gram will require the sale of
The
excess
of generating ca¬ be
adopted along WPB lines, and about
$2,750,000,000 of bonds and
pacity over peak load was about this, in general, should help the
debentures, about $800,000,000 of
8 million kilowatts at' the end of
utilities to get not only priorities
preferred stock, and about $1,-
units
4
was
were
by the
that
best prophet for the future is the
past.
a
last
By
contrast, the industry at
the beginning of 1950 had avail¬
way
year
investments
has
were
the
securities, and kilowatts, whereas in 1950
common
stocks, de¬ the utilities added 5 million
conditions?
It
minor
proof
utility
particularly
sirable
advised
so
there
sufficient power to go around.
the
(1) Will
.
to
we
during
spots
where
to, the
utility
and
While
and brownouts had to be resorted
P. P. Stat has
the
to
tight
war
Ourselves
this
to
clients.
our
V-
greatly in the last this
that each kilowatt of profitable,
so
'capacity
its
such
years
over
this is
Co.
been expanded
industry
come
too
Let
tric
went
Revenues increased 32%.
Elec¬
-;
On top of this, interconnections
between neighboring systems have
approaching the. problem.
of
way
possible.
This is
ability to meet the demands
upon it.
The electric utility in¬
under
co n
minds
to
as
the
ity
the
tomers for Cincinnati Gas &
sales
47%.
Baltimore; 27,000 new cus¬
Gas of
they previously thought would be
from
10 years, as
than
work them much harder
Interconnections Extended
of utilities securities.
Kilowatt-hour
100,000 new customers for Com¬
monwealth
Edison
of
Chicago;
learned many new
war
can
of electric
power companies, and, on basis of current defense program
and other developments, predicts high level operations under
continued profitable conditions. Estimates in next three years
$7 billions will be expended in new construction, compared
with $8 billions in previous five years, and holds, despite postwar inflationary trend, utilities in general will be able to absorb
rise in operation costs. Looks for improved market in all classes
in recent
progress
to
85,000 new customers for Phila¬
tricks delphia Electric; 100,000 new cus¬
in operating their facilities, and tomers for Boston Edison; 40,000
new
customers for Consolidated
as a result they found that they
service.
By P. P. STATHAS
Utilities analyst reviews
continuity of
The utilities during the
risk
unaue
Thursday, April 26, 1951
.
..
For
example, during
the last war period, 1940-1945, the
about performance was as follows
CORPORATION
100
BROADWAY, NEW YORK 5
Telephone JVOrth 4-4000
Boston
Pittsburgh
San
Private
Chicago
Cleveland
Philadelphia
Franc'sco
Wires
to
all
ojflces I
yolume 173
Number 5006
k
the utilities made
year
a
riUrina
auring
i Q^n
1950,
the territory and possibly adverse public relaserved as well as the management tions. , On the other hand, metroand public' relations. A utility politan type companies during the
cannot pick up and move to a past five years particularly have
new service area. Other factors weathered a number of adverse
being
equal,
it can do
better factors,
substantial
in+han
tprritorv
willno normit
rroa<?p<? including
in coal nrices
and coal
government wage and price particular weight to
the
m
u
nnH
tinupd
unuea
Last
S ln is f ?
1 rv?
imwJrw
J?ipc
hnnr
(1751)- 7
Commercial and Financial Chronicle
The
.
^e11^ organi^ed presentation to stabilization program will take
a.
? to the Congress, with the backing of effect and protect the utilities
ii structure, the National Association of„ Rail- against increases of any conse1°^
r0£*. and Utilities Commissioners,; quence in the cost of doing busiconvinced
Congre:ss in
thata there
4
• .
and the bal- a
are
no excess profits
well ness. a,
chfLe
ThP
.
increased
merous cases were even
ihP
.
holever,
cr^se ofCTrmTndShClivTdind *******
The res?U
Territories
do change*, transportation rates and higher
nav^ut LJa Jd ahmit iwt af.ffeclal EET -Provision for the Considering all factors we be- For example, owing to the de- wage rates. While the country
concli
hprp
ic
inPQ^SnnhiP ?'.V.es
?!,Jcbm y°u
a lieve
that the earnings outlook for <centralization of industry and type companies
still the
havefactors
quite aI
inescapable
lamiliar and which.
ptrpctare
oparc
tho
gQ before
nere
sion
conclusion
is
mentioned
...
in
ud
hnrinpc
doing
of
cost
end"
better Dosition
a
ingswi^e
200
acted
were
cases
will be relieved when their capital structure is increased to meet
upon
favorably and promptly by regu-
latory commissions in all parts of their
construction budgets. At
the country. Even with these rate least the cost of money to such
increases, electric service on a companies, after allowing for the
kilowatt-hour basis is now still tax saving, will be negligible. For
about
3%
than
cheaper
example, if a utility now subject
to excess profits tax were to raise
additional capital of say $100,000
through the sale of 3% bonds*
the net interest cost, after fax
1940,
in
compared with a 32% increase
in the Bureau of Labor Statistics*
as
Consumers
leaves
for
room
if it
creases,
wifhout
This
Index.
Price
more
rate
in-
however, that when the underiy- cnVerr - them desirable industrial
ing value in there, the market is Hivprdficatinr. to a c*rpafpr dccrrpp
likely to recognize it sooner or +h
ih t fniinH in8 mPtmnniitan
later..! have no hesitancy in stat- •
c Th_„p n industrial niant<?
ing that sound utility stocks at the
* . pff:ripnt "u in itl? own
existing generous yields merit in- ?.
f
th'
^ ]L nnrI
vestment consideration, and in
~
,
? ctandnnmt
that connection I should like to Lf
noftn1o __J „
'
stress particularly the defensive They b ing new pe p e
ew
position of utility common stocks. YY
^ 70
are? and so
The fears in the minds of some -Jbe whole economic level.
people that utility earnings will these result in .a highly desirable
be squeezed under a war or in- -combination of growth in utility
flationary economy are not well customers and in purchasing
All of
necessary,
to the utili-
other industries. Under the old
increase
revenue
a
of the costs of doing business dur-
ditional
ing the inflationary period ! 946-
those
order to bring $1.00 adthrough to net. Under
conditions, it would have
been
unwise
ments
ask
to
and
commissions
to
,
for
nerrenta^P
the
iq50
of
rpvonnp
?
.J*
consumed by each , one of these
components remained relativelv
'
manage-
for
regulatory
grant
the v re!
stable,
quired rate increases.
Per
-
,
xt.
of
j
Operating Revenue
1950
1949
1948
1947
1946
Salaries and wages.:
18.7
19.0
19.0
19.1
18.3
Fuel
15.5
15.5
lb.O
10.0
12.2
Other operating expenses._
15.7
16.9
17.3
16.6
15.8
Depreciation
8.8
8.5
8.4
8.7
9.3
Fixed charges
5.7
5.9
5.6
6.3
7.4
Taxes
18.9
17.4
16.4
17.0
18.3
Dividends and surplus
16.7
>
100.0
of such companies closer in quality
to the metropolitan \ type. Here
agam one should not be too dogmatic,?and each particular company must be continually watched
highest grade issues. The yields on for fundamental changes. For exthe various lists are now approxi- ample, a number of companies in
mafoiv
fniirmrc..
Southwest, in addition to
mately
as follows:
hold various interests in certain
gas lands and wells, one of which
is the operator under a unit plan*
for the cooperative development'
of certain gas acreage, and one of
which operates a small strip coal
mine.
T ''
nc
'
r
100.0
100.0
100.0
100.0
ca*
the practice
have, followed
I
18.7
16.8
15.3
Utilities
minty
North DakoWyoming,
Riyer
small
classifying utility stocks into various lists numbered in accordance
with
our
conception of quality,'
with List No. 1 representing the
.
16.8
Montana-Dakota
,
xne Montana-Dakota utu ti s
Co. is offering to its common
stockholders of record. April 19
the right to subscribe on or before
May 3 for 236,755 additional shares
0f common stock (par $5) at $14.50
per share. The offering is underwritten by . a group of under¬
writers headed by Blyth & Co.,.
Inc., and Merrill Lynch, Pierce,
penner & Beane."
The net proceeds will be applied
toward payment of $5,100,000 of
notes payable to The National City
Bank of New York which were
jssued to provide temporary financing of-additions to the company's natural gas and electric
utility properties. The balance of
the notes are proposed to be paid
from a part of the proceeds from
the sale of $5,000,000 of first mortgage bonds to be issued in May,,
-----—
«
follows:
as
Cent
Blyth & Co. Group
The
,,
nat-
,
crease W
of
Underwritten by
Util
~
the various components
.
$7.00 in
both
play,
especially from the defensive po-" in order for them to attract the 1951
sition standpoint. Recent legisla-• necessary capital, than the rates
t^w* irfiii+ipcj Co
tion making the "prudent invest- of return usually allowed to com- . Montana-Dakota
e
•»
ment" rule more flexible and also panies operating in metropolitan yico[o Jfa • in uifWf,+n?tv nnpr
allowing insurance companies in*, areas.
1*.» .■' 1S a PUD11C .uxulxy ,°Perthe State of New York to invest
Another thing to remember is ating company carrying on a
3% 0f their assets in common*, that the' country-type companies"
gas^nd electric puWic
stocks will provide additional sub-^ started some years ago from a;, btisin^ss in Montana,
stantial buyers of utility shares, lower cost level and the vast im'^huth Dakota and
These stocks at present yields am-; provement which has graduallyr The company has: live subsidiary
ply protect the stockholders' pur-> occurred 'during the past ten companies, namely, Knife
vuui in
Lei 1 x iKJiiax dayctio
—
—chasing, power in this inflationary years&y both
in territorial
aspects Coal Mining Co. and four
and capital structure, brought subsidiary companies, two of which
neriod. ;
^1o 1 u u g ^
^
* ana capital structure,
11 1 ouvwvwcujr w»uFc.iuvi.,»wy v*
m
in
EPT it would have been necessary
to -obtain
Utilities in.outlying areas
but
they oh
with higher
requirements for adThis general
this additional capital. If the capi- the past
lies'
public relations. The rate
history during the past several
years gives ample evidence that
regulatory commissions throughout
the
country will
be sympathetic whenever additional rate
increases, are. necessary. The increases
already
granted
show
conclusively
that
regulation
is
not a one-way street, and, as a
practical matter, utilities are not
a
fixed-price industry.
.«
From the standpoint of" future
earnings, the utilities are now in
much better
position-than they
were during the last war and postunder the EPT law in effect durwar inflation; During World War
ing thp laqt war :
:
>
II the utilities were subject to the
'
k 1
same
onerous
excess
profits tax
Stable Operating Costs
as
into
"°m °°w'
• '
Utility Stock Offer
savings, would be only 0.2% on founded. This has been proved by P°wer.
.record of the industry, thus have shown a greater growth
tal is raised by 4% preferred and „the ;utilities are- now in a xn business and earnings,
on
stock, the net cost, after tax savr fundamentally sounder position, the other hand,
ings, will amount to only 2.2%.
than during the last war. Many have been confronted
The more equitable EPT treat- investment trusts reduced their investment
ment to the utilities under the utility holdings since Korea and ditional facilities.;
existing tax law is therefore ob- this selling has, of course, affected trend in economic, development is
vious. The nprmal ' land surtax the market on :'utility common likely to continue. In addition,
rates wJJJL* probably go higher, stocks. I see no .reason why these Companies operating in outlying
but even'at a 55% composite tax investment trusts should not be areas enjoy more favorable labor
rate, it will take only a little more back into these securities in the costs than * those prevailing in
than a $2.00 rate increase in order near future. In addition, other metropolitan sections.
What is
to bring $1.00 additional through sources of capital, particularly morfe-i*.important, the regulatory
to net. This would be much more pension funds and trust investors, commissions must allow higher
practical and palatable than the are likely to become-substantial rates of return for the rapidly
condition confronting the utilities buyers of utility common stocks,. growing country-type companies
becomes
disturbance
come
situation should be watched
so-called outlying areas, the
SSffi "SS? whS" 5." SS±S SS S
•
number of
some
the
as
p
companies had to been earning an excessive rate of
go in for modest rate - increases return. Even the few companies
during the past several years, and now subject to excess profits tax
A
rhw*"_
.
.
.
4Vi?Sied capdal per bo^f: Under-pames, and investors must there- As a result> the country-type closely.. It may well develop that,
W+ atllities - are iore be selective. It has been the companies have - shown greater relatively speaking, the "shoe may
practically exempt from excess long established practice of our, population growth, and the vari- be on the other foot" some years
and
Jparn"
.«.««—
,
List
No.
1
—
List
No.
2
—
List
No.
3
—
List
No.
4
growth, are now enjoying low fuel
costs by using natural gas con¬
about 5.7%
6.0%
about
about
at low prices.
these contracts expire, the cost
tJhese
contracts expire, the cost
natural gas will undoubtedly
tracted
6.7%
As
As
of
about 7.0%
N. Y. Bond Club to
years
ago
.
Hear Ralph Damon;
f ^"snLhfnti^lv and^thi^in
RalPh S- Damon President, of^»oiilH
Trans-World Air Lines, will* address the Bond Club of New York
n!es
at a luncheon meeting to be held*
Clarcuudcuve xui nies may well oe comronieq witn at ^he Bankers Club on Thursday,
1 The electric utility common
outside of taxes are wages paid last war.
stocks in Lists No.-2 and No. 3 turn
affprt their onerating
to operating labor, and fuel. These now have a much larger proporparticularly afford yields which results At that time such compatwo items even showed improve- tion of modern and more efficient
seem to u^
to be attractive for
mav well be confronted with
two
The
ment
as
a
major
items
nerrpntatm
of
cost
ture
than
they were during the
In addition, the utilities
+:
nf
,
- .
Bccm w U!s
j
of
uui
fuel
ox
revenue
me
consumed
aoiiar,
while
The
corre-
18c.
WWIVVU
VJ
_
HAfcV
the operating ratio. These modern account. Generally we give prefstations also require much less erence to the common stocks of
sponding figures for 1950 are 18.7c labor and therefore the wage ex15.5c respectively. In other pense, both per kilowatt and kilo-
and
companies where the present divipay-out is amply protected
dend
words,, the increase in revenue watt-hour,
is considerably re- by available earnings, other facwas more than sufficient to offset
duced. Wage rates in the industry ^ors being equal. In this we have
the substantial increases paid for during the past several years have jn mind a probable increase in
fuel and high wage rates. Even if generally been
going up at an normal and surtax rates. In other
we v/ere to
assume further subannual rate of about 5% to 6%, WOrds, to be on the safe side, pick
stgntial increases in fuel costs, but thic inrrpaco
a
number of
ing
Trading Markets In
]
;
♦
J
'
Utility
;
'
:
AND
Natural Gas Stocks
70' PINE
Private
ST., N. Y. 5
Wires
to
now pay¬
Investment
Securities
safe. The sale
stock by various
additional
companies is likely to put tempo¬
rary pressure on the market ac¬
tion of their existing common stock,
and
this
will
opportunity
afford
such stocks at a some¬
price. In other words,
new issues may present more fa¬
vorable buying opportunities.
to purchase
what lower
G. A. Saxton & Co., Inc.
Teletype NY
companies
higher percentage, the divi¬
dends will still be
of
Public
a
Distributors
Underwriters and
Type
of Company
WHitehall 4-4970
Philadelphia, San Francisco & Los Angeles
.♦
It may be of
the type
interest to consider
In
give
Corporation
New York 6
Telephone: HAnover
HARTFORD
of company we favor.
loup. analysis of utilities, we
"65 Broadway,
BOSTON
Should Be
Considered
1-609
Union Securities
2-4800
buffalo
•
•
philadelphia
•
•
cleveland
syracuse
tho
8
(1752)
The Commercial and Financial Chronicle
Dealer-Broker Investment
Recommendations and Literature
It is understood that the
firms mentioned will be
to
send interested parties the
From
.
..
Thursday, April 26, 1951
Washington
Ahead
of the News
pleased
By CARLISLE BARGERON
following literatures
In this
Fire
of
Broadway, New York 5, N. Y.
Graphic Stocks—January issue contains
large, clear reproduc¬
tions
of 1,001
1950, showing monthly highs, lows, earnings,
capitalizations, volume on virtually every active stock on the
York Stock and Curb
Exchanges—single copy $10.00;
parison—New
haps that level
Moreover, there has been
•y4, New York.,
'
/.O
Canada Limited and Traders Finance
Corporation Limited—
:
Milner, Ross & Co., 330 Bay Street, Toronto 1, Ont.,.Canada.
:.v
■
ing 5%
or
a
more.
list of Class "A" and
Speculative Merits of Common Stock
;
compact
New
York
folder)
-Stock
•
C, R. H. M. Associates, 220 Fifth Avenue,
Y.—$2.00 (or send for free descriptive
1,. N.
New York
16, N. Y.
-V. \
-
Utility
Equipment—Manufacturers
Discussion—Abraham
Co., 120 Broadway, New York 5, N. Y.
—
&
••
*
Write-up and prospectus
Coffin,
Co., 123 South Broad Street, Philadelphia
9, Pa.
Audio Devices,
Inc.—Analysis—Peter Morgan & CoM 31 Nassau
Street, New York 5, N. Y.
—
*
—
/ a
-
t
Hoffman
Also
and
&
are
this
Co.
Pierce & Co., Mercantile Bank
—
Memorandum
•
v
Utility
Corporation—Report—H.
Service
.Columbia
nut
Continental Can.
G.
Bruns
Broadcasting—Circular—Newburger
~
•
more
at
3%%
a,
his
observers
intrigued, to
the
flood
of
of
say
"
•
The
Lithium Corporation of
America
man
the
•>
Members: N.
Y.
Security Dealers Association
V
"
see
:
Telephone:
Ra
2-2400.
Teletype NY *1-376;
Private
377;' 378
Cleveland—Denver—Detroit—Philadelphia—Pittsburgh—St.
and
deals
Louis
.
the
He would look upon Eisenhower as
-trying to kick out of office his benefactors.
•
Yet there is no
it.
I
think
that; if I were in. his
position I would take my
-:
retired pay and:let the world roll by, contenting my publie activities with fighting against inflation.
.
Since 1932 Specialists in
fre¬
outlook
MEMBERS
'
:
,
^
MIDWEST STOCK EXCHANGE
VIRGINIA—WEST VIRGINIA;
make r it
NORTH and SOUTH
' <'
opera-*
CAROLINA-
for
%Y
c
MUNICIPAL BONDS J,
in, however, is what these
sales reflect in the way of thought
to
to him.
his bey. He would get sort of a consolation as
;;V$18,700
terested
.regard
as
which
the
plain that they reflect- the
.market.
wires to
over
the least, by.
and conviction of the sellers with
;
office
the motley group which conHe is not onevof them.
/'However* the scroll of destiny reads this way for him, as i
What the average observer is in¬
Trinity Place, New York 6, N. Y.
going to hear more and
Indeed, the hapless
the Democratic nominee.
market
sumably large investment trusts.
& Co.
as
stitutes the so-called Democratic party/
.
•
tions of institutional interests, pre¬
Primary Markets
Troster, Singer
these
of
about him
by running as the standard bearer of
?
ij'J
-
■•secondaries"
dimensions
quency
•'
■
seriously, from what
mistaking he would be tremendously unhappy, if not nauseated,
.
going through in-the last
fortnight./'
-
never
contribution,
has been
Mexican Gulf Sulphur
has
always thought it would be one of the worst shows of ingratitude
I have ever known for Eisenhower to run as a Republican, as a
was
Close
save
"Well, I didn't do so well myself, but look what I've given you."
-Frankly, this come about would seem fitting to me. I have
that
are
can
turn the
What Does It Mean?
page 43
crooked
him in recent months.
3.14%, until tomor-
brief lull in interest.
4
even
this
3%s.p
Monongahela* issue, .priced
101% to yield 3.29% after a
'"
on
all, six for
the
'
and
pinko and reddish intellectuals.
to be inescapably on the way out. Only an Eisen-*
them. Will he do it? He is ambitious to be Presi¬
lowly driven Democrats have been increasingly yearning for
It is a fact, too, that he can probably get
nomination without a fight.
It is this writer's conviction,
based upon" considerable information, that Truman would gladly
Co.
The s&me held true .in-the case
of
a
"
•'
it
circles
would cail them—ambitious
and
Service
indicated in dealer
pre-offering demand
assured quick movement to invest;ors.
/•/* ; V
- :
row,
&
& Co., 1342 Wal¬
Continued
'74
Public
holding together of the hetero-
dential nominee; on the contrary we are
•
a
the
99.709 to yield
>
'
,
Also available is
'V-
Street, Philadelphia 7, Pa.
/
;
to
.
latter issue was
not slated for public offering, at
Co.—Analysis—Ira Haupt &
Co.*; Ill; Broadway, New York 6, N. Y.
•review of
hinderance
Y
bids in
seven
"
Building/Dallas 1, Texas.
Co., 20 Pine Street, New York 5, N.
Y.,y
Central Vermont Public
no
rate and the other for
Building, Cleveland 14, Ohio.
Public
proved
Although
Rauscher,
—
Central National Bank of
Cleveland—Analysis—Gottron, Rus¬
sell & Co., Union Commerce
-Central
bid,
of Oklahoma's 30-year bonds drew
5, N. Y.
Electric
highest
And two bids
3*4% rate. But
coupon.
made for a
Meanwhile
analyses of Detroit Harvester Company
Central Illinois Electric & Gas
Co.—Bulletin—G. A. Saxton &
Co., Inc., 70 Pine Street, New York
Louisiana
point differ-
a
the
quick resale.
McColl-Frontenac Coil Company.
Central
almost
was
between
3«%%
were
Manufacturing Co.—Progress
report—Walston,
Goodwin, 35 Wall Street, New York 5, N. Y.
available
There
101.085 and the lowest, 100.174 for
Brown & Sharpe
-
.
,
by
e n c e
It has been proven
I can learn, envisaged
taking this route. He wants to be the Republican nominee and *
those men who are architecturing his candidacy are Republicans
and are certainly fashioning him as the Republican nominee.
**
But after MacArthur, : and
the manner in which the Re¬
publicans have embraced his cause, for better or worse, how can
Eisenhower possibly be their candidate?
In the propaganda, in
the picture that is to unfold before the American people, not a
true picture, but the one v/hich is likely to become fixed in their
mind, MacArthur and the Republicans are pro Asia; Eisenhower
is inescapably tied in with the Administration, with Truman and
Aoheson as pro Europe. I have said before that in the long run,
on that single proposition of pro Europe and pro Asia, pro Europe
would win. But it won't win in the Republican party; therefore
Eisenhower won't win in the Republican party.
In my opinion
events are sounding his political death knell there.
Mark my word, in the forthcoming months we are going to
hear less and less talk about Eisenhower as the Republican Presi-
total of nine separate bids.
•'
Atomic Instrument Co.
Betz &
and
remain in office is through a
He
$10,000,000 bond issues
public utility companies
this week really brought out the
competition. For example, Monongahela Power Co.'s issue of 30year first mortgage bonds drew a
■<;' sold
Those
They have placed
dent; of that there is not the slightest doubt.
less
The two
Timing—Explanatory pamphlet and samples of
bulletins—$1.00—Analyst Institute, 126 Lexington Avenue,
that he has been running like mad.
what is called the Democratic ticket.
They seem
As They Like 'Em
;
Market
run on
hower
more
on
price ideas, since groups are
smaller, and they certainly seem
to move out more readily.
/
that
labor bosses, frustrated
effort in bringing people together
;
avenue of
their profitable purchase and sale
and current opportunities
in warrants—Dept.
•
They permit a
operation, require
it must be
that
the
architecture.
Senator Kefauver
market;
underwriters.
Warrants—Sidney Fried
—Discusses warrants in their different
phases, the
to
,
-.become increasingly popular with;
.••
y\4.
.
came
seem
genuity of captive Southerners, Eastern gangsters—the Mafia as
-this week and last, are destined to
stocks yield-
common
which
those
; as
would
abundantly clear in the past 18 years that the only way this crowd
thing- is certain. ; That is, •
that "Street-size"- bond deals,' such:
;
A*--',/;
;
to
One
/.
"Purchasing Power" Bonds—Review of General Petroleums of
>
Also available is
a ver¬
opera¬
can
11-year period—
.National Quotation
Bureau, Inc., 46 Front Street, New York
it
this brick and mortar of
they have placed it there.
Republicans and it is with
the Republicans that Ike wants to run. He is of the better ele¬
ment, his whole build-up has been on this line. To see him trying
to rescue what is very probably the most sordid gang ever to
overlord the American people, a gang that has reduced them to
the worst moral squalor; would be something to behold. Yet it is
becoming apparent that if he expects to be President he has got
funds for investment
,investor interest in
situations that they feel offer the
right opportunities.
Averages, both
the
It had
The gentlemen I have-in mind are
keen
plus
was
are
their
of
supply
,
it; for him it
office seek him.
tire, of their insistency upon wanting him to
morass.
In this light, it is no secret in
of
out
their structure here
jjv:
tions, most of them in equities.,
These have been snapped up with
a
celerity that bespeaks ampleY
•
a
would
behind him, the influential ones—not those vocal fellows
who think they see the handwriting on the wall and want to get
in on the bandwagon—have been working like eager beavers on
;
}
over an
"rash" of secondary
itable
them
who
events is supported by the good
reception accorded recent new is¬
/■.
who
in 1952. There must be that apparency
of the people just not wanting to let him re-
Bargeron
political Washington
months, and basis for this turn of
M. Kidder & Co., 1 Wall Street,
performance
'
better than it has been in several
r.v'.
This
of letting the
And
any
/'v/,, : '.
itself for
hurt had he openly sought
was
not the way the great
way
Carlisle
rate the feeling in underwriting
circles
is
definitely
y
be
to
be that way.
to
lead
At
office.
game
definite
is within
had
who
and lovable Ike could do
sight.
sues.
Over-the-Counter Index—Booklet showing an
up-to-date comparison between the 30 listed industrial stocks used in the
Dow-Jones Averages and the 35 over-the-counter industrial
r,
the
stabilize
the market for governments, per¬
/.
stocks nsed in the National
Quotation Bureau
as to yield and market
Reserve
refunding operations, and the
tial
not present
"drafted,"
opportunity did
lruan
Reserve committed to maintaining
quarterly com¬
Hanseatic Corporation, 120
Broadway,
York
Federal
the
be President of
to
laudable ambition,
quite interested in 1948 but.
was
have been seriously
the market. But
with the Treasury facing substan¬
Trust Companies—76th
York 5. N. Y.
the
to where it plans to def¬
as
initely
"Information Please!"—Brochure
explaining about put-and-call
^options—^Thomas, Haab & Botts, 50 Broadway, New York 4,
.'New
of
view
subscrip¬
graphs of primary indexes
from 1943 to
date, basic strength graphs for 1948, 1949, 1950
and 1951,
weekly analysis reports for the next six weeks
(airmail) and newly published booklet,
"Planning for Profits
in the Stock
Market"—Dept. C-61, Investors Research Com¬
pany, Santa Barbara, Calif. '
He
indeed.
Board
like
would
he
that
secret
■
these United States, a very
sup¬
Presumably the real cue to the
term outlook is the
Prices—Primary
York Banks and
Reserve
intermediate
trend indexes
computed weekly—Special $5.00 trial
tion ofier including three-color
New York 5, N. Y.
•
port.
yearly (6 revised issues) $50.00—special offer of three edi¬
tions of Graphic
Stocks, 1924 through 1935; 1936 through 1947
and up-to-date current
edition, all for $25.00—F. W. Stephens,
15 William
Street, New York 5, N. Y.
How to Recognize the
Major Trend of Stock
New
sustained
without
New
.''_
Insurance Stocks—Analysis—A.
ingly fair haired boy of destiny he is learn¬
ing ' about the vicissitudes of American pol¬
itics. '
'■
-X •'
■•••/',■-■
1
For more than two years it has been no
giving indications of
being able to stand on their own,
charts complete with dividend records
for the
'
General Eisenhower must be a very
unhappy and wondering man, indeed. A seem¬
casualty.
been
have
of
New York.
the first political
it, is showing definite signs of im¬
provement. Treasury obligations,
the key to the whole structure,
analysis
Meeds, 120
year
situation,
investment
The
though by no means entirely out
of the woods, as most people see
& Casualty Insurance
Stocks—Comparison and
1950 earnings of 50
stocks—Laird, Bissell &
full
country it is, for the present, MacArthur, pro and con.
politicians are moving in for the battle, gladiatorial, with
their breast-plates and their flailing swords.
Over in Europe is
The
Dividend Trends—Bulletin—Francis I. du
Pont & Co., 1 Wall
Street, New York 5, N. Y.
Domestic Airlines—Re-appraisal and
analysis—H. Hentz & Co.,
60 Beaver
Street, New York 4, N. Y.
the
-
They cannot determine to their
satisfaction,
at the moment,
Continued on page 43
■
Stix & Co.
■f. w.S03 OLIVE
STREET
CRAIGIE&CO.
/-
RICHMOND, VIRGINIA
Bell System Teletype:
RH 83 A 84
Telephone 3-9137 -
St. Louis l.Mo.
Volume 173
Number 5006
.
The Commercial and Financial Chronicle
.
,
Jack H. Alexander
(Special to The Financial Chronicle)
LOS
Alexander has become associated
Pacific
with
Company
program,
,1 continue to believe in the
Cycle Theory. This means that we
ness
will
Let
have
Peace
Scdres,
War
Scares and Labor Scares, But none
of us may live
to
another
see
of
or
Heretofore
tion
for
has
due
a
or
fair. We have
f
Hope Street,
members of the Los Angeles Stock
fornia,
623
South
r a
prepared
war
for
when
we
Mr.
Alexander was saw it coming.
manager of the order department After the war
for the Los Angeles office of Wal- was over, we
ston, Hoffman & Goodwin and demobilized
prior thereto was with Bourbeau and o u r war
& Douglass and Pledger & Co., Inc. preparations
were
sudden
each
sider.
airplanes,
built
raw
and
Then
over
ground
up
for much
each
railroad
five years
for scrap,
needed
Instead
of
be
raw
a
tween
Detroit
to
Detroit; then
hauling the scrap back to Pitts¬
burgh, and—after it is made into
,
steel—hauling the steel again to
,
Detroit—and
.
oivforever!
so
'
•
.
Employment
generation
Such
would
saw
a
ment
comes.
investments.
would
It
fearful what labor leaders
business
Putting
would
reconversion
of
all
long era of prosperity
upset Sir; Isaac New¬
ton's Law of Action and Reaction,
which the famous Babson-
upon
chart
is
based.
This
great
simply means that for
abnormal
be
an
prosperity,
law
of
area
there
must
corresponding area of ab¬
normal depression. If all obsolete
a
there
Investors and Labor
will do when the next depression
and
a
not
be
need
booms
radical change from pro¬
so
is
t
This program could be a great
stabilizer for business, employ¬
am
do
machinery when fully depreciated
"ground up" for reconversion,
«
Roger W. Babson
I
to
Law of Action and Reaction
otherwise
ing
Effect Upon Business and
on
terials, according to a prearranged
depreciation charge.
railroad, operating be¬
and
Pittsburgh,
steel
floor
the steel indus¬
supply, of the latest modern
tanks, the same as we now have
improved
automobiles,
washing
the
a
profits would
socialism, A far better sys¬
would be to insist on the
compulsory
would have constant loads—haul¬
a
on
union labor
as
on
But
profits.
obsolete machinery into raw ma¬
a big slump when peace
again. Under this Cycle
Theory
ceiling
"ceil¬
a
on
"floor"
a
con¬
will have
comes
that the
is
but not
had
same
feasible.
mean
tem
which
stocks,
gripe
farmers have
the
wages, a
materials, and
investor to
every
on wages,
investors
profits, the
After
try being a feast or famine busi¬
ness, this program could make it
fairly stable. It could stabilize
machines and radios each year,
stopped.
Hence,
Parker, Martin to
be
models.
new
If
materials. This would always give
us
Exchange.
would
ones
real
LaboFs
ing"
such
prevent a
market collapse for many*
Earnings coflld be stabilized
government wants to put
indefinitely.
on
thing for
else sold to foreign countries in
exchange
ntically
so
five-year "life,"
obsolescence.
old would be
new*
converted into
constant flow
a
all the tanks
year
been
a
stock of tanks, guns,
new
more years these new models
would become obsolete and be re¬
each year, whether
is expected. Tanks, for
war
to
war
haphazard af¬
Jack H. Alexander
not
years.
to
five
etc.,
instance, have
prepara¬
materials
war
This probable program is some¬
jeeps,
tanks,
new
a
old
9
could
and fair dividends assured.
and
according to
businesses.
other
industry
stock
illustrate:
me
bombs,
1929-32.
the
most
We could have
1
-
like
new
prints
which
become stable and con¬
may
stant
a
jeeps, planes, bombs, etc. Then, at
the end of five years, we would
break these up for scrap; after
conditions becoming stable and con¬
stant, thus benefiting business, employment and investment.
Says such' a program of constant defense production could
postpone severe labor conflicts for many years.
Cali-
of
preparation
war
stocks and the rails. In fact,
ways
be ' normally
prosperous.
Each year we would use new blue
make
Mr* Babson, commenting on cycles of business expansion pro¬
duced by war and peace scares, foresees, through a constant
ANGELES, Calif.—Jack H.
time, and then
dead at other times, it would al¬
By ROGER W. BABSON
'
■
.
prosperous at one
"Permanent Prosperity"
With Pacific Co.
♦
(1753)
neither
abnormal
nor
cept from accident
This
the
armament
permanent basis,
is
or
abnormal
panics,
ex¬
speculation.
reason why I advise
Accounting.
'
one
careers in
ducing peace goods to producing provide an incentive to colleges to
train personnel to run war in¬ however, could postpone a severe
military supplies. Then they later
Joins Staff of Oakes
dustries. It would assure perma¬ labor conflict for many years. The
saw an abrupt change back again
CHICAGO, 111. —E. Cummings
nent jobs for those now in such program would keep money flow¬
MIAMI BEACH, Fla.—Frank E.
to peace goods. It may be that
war industries. The entire present
Parker, formerly a
partner of
ing into the stores to buy con¬ Wood has joined the staff of
Glore, Forgan & Co. in Chicago, this "on-again off-again" process picture would change. Instead of sumer goods and thus help both Oakes & Company,. 605 Lincoln
and James L. Martin, also asso¬ is over. The war industries busi¬ the war
industry being wastefully merchandising and manufacturing Road.
on
a
Join Ames, Emerich
.v
with
ciated
the
firm, will
same
Ames,
with
associated
become
Inc., 105 South
members of the
Midwest Stock Exchange, in Chi¬
Emerich
&
LaSalle
cago,
Co.,
Street,
Interest exempt,
in the opinion of counsel from all present Federal Income Taxation.
May 1, according to an
on
announcement by the company.
Both Mr. Parker and Mr. Martin
long been prominent in La¬
Salle Street. Mr. Parker began as
;
have
si2,600,000
:
*
.
'•
-...
•
.
salesman with Glore, Forgan &
a
Co., later was syndicate manager
and for the past two years sales
He has been
manager.
•
_
State of New
partner
a
'
■
.
,
'
;■
.
'
\
•
' 'i
"
" '
Hampshire
since 1928. He attended Dartmouth
College and has served as Secre¬
.
1.60% Bonds
tary and Treasurer of the Chicago
Bond Club. He is a member of the
Attic and Saddle and Cycle Clubs.
Martin
Mr.
...
ment
years.
He
office for the
ganized
his
the
For
&
later
firm and
own
he has
been with Glore, Forgan & Co. He
is a senior member of the Chicago
Bond Club and Exmoor Country
He
Club.
years
director
is
Legal Investment\ in
be issued for various purposes, in the opinion of counsel will constitute valid and
legally binding obligations of the State of New Hampshire for the payment of which the full
faith and credit of the State are pledged.
Chair¬
and
of Ashland Oil and
Refining and a
director of Birtman Electric Co.,
North
Shore
Ashland
Gas
Company
and
Oil and Transportation
Company. *
"
'
;
Maturity
Yield
Yield
Amount
770,000
1957
1.30%
$1,340,000
1963-65
1.50%
1.10
780,000
1958
1.35
610,000
1966-67
1.55
1.15
1,560,000
1959-60
1.40
990,000
1968-70
1.60
1,625,000
1961-62
1.45
1,080,000
1971-73
1.625
1,170,000
1974-76
1.65
Yield
Amount
Maturity
$205,000
1952
305,000
1953
720,000
1954
720,000
1955
1.20
1956
1.25
725,000
Joins Shields Staff
;
opinion, for Savings Banks and Trust Funds in New York
Savings Banks in Massachusetts.
These Bonds, to
of the Executiye Committee
man
our
and Connecticut and for
or¬
here.
company
past eight
for
Chicago
a
May 1, 1952 to 1976, inclusive
was
there
Co.
opened
Due serially
invest¬
and
Boston
Estabrook
with
21
his
began
in
career
Amount
$
1.00%
,
Maturity
(accrued interest
to
be added)
(Special to The Financial Chron.icle)
LOS ANGELES, Calif.—Jack F.
.
Clarke
has
Shields
&
Sixth
joined
Street.
He
with Edgerton,
J. A.
*■
'
.
the
Company,
These Bonds are offered when, as and if issued and received by us and subject to approval of legality
by Messrs. Storey, Thorndike, Palmer id Dodge, whose opinions will be furnished upon delivery.
staff of
West
formerly
510
was
Wykoff & Co. and
Hogle & Co.
With Pasadena
.
•
'
•
'
•
^
Corp.
DREXEL &. CO.
CONTINENTAL ILLINOIS NATIONAL BANK AND TRUST COMPANY
'
■
;*
KIDDER, PEABODY & CO.
HALSEY, STUART &, CO. INC.
r'
"
.
.*
of chicago
,
(Special to The Financial Chronicle)
PASADENA, Calif.—Harold M.
Bugher is with the Pasadena Corportion, 234 East Colorado Street.
PHELPS, FENN & CO.
EQUITABLE SECURITIES CORPORATION
SHIELDS & COMPANY
SCHOELLKOPF, HUTTON &. POMEROY, INC.
R. S. DICKSON & COMPANY
incorporated
R. H. Johnson Adds
.5
•
•
Shevlin
;
to
•
,
•
.
Mass.
—
Conrad
Co., 70 State Street. Mr. Shevlin
formerly with Hunnewell &
i
j,
incorporated
James D. Ahearn has also been
added to the firm's staff.
BACON, STEVENSON & CO.
W. H. MORTON & CO.
incorporated
incorporated
'
THE ILLINOIS COMPANY
OTIS & CO.
JULIEN COLLINS & COMPANY
(incorporated)
RAMBO, CLOSE
incorporated
Co.
1
ELDREDGE &, CO.
CHAS. E. WEIGOLD & CO.
B.
Shevlin is with R. H. Johnson &
was
incorporated
,
(Special to The Financial Chronicle)
BOSTON,
GEO.
GEO. B.
B. GIBBONS
GIBBONS &
& COMPANY
COMPANY
KEAN, TAYLOR & CO.
Staff
April 25, 1951.
&.KERNER
BLEWER, HEITNER
GLYNN
10
The Commercial and Financial Chronicle
(1754)
the
by
The Economic Unsoundness
Federal
the
all
Of P/ice Controls
skirmish around the edges of
inflation," former Director of Economic Stabilization asserts,
•
presently operated, such controls wdl not only noi keep
as
,!
prices down, but will hamper production and be expensive in
dollar cost. Urges higher taxes and more production
to defeat inflation, and concludes 1951 price controls are not
y;
y
X
justified
results
of
They
primarily
the
economic
factors.
which
inflation
'.•••'
"
'■
'
V>
•
• j
•
••
--7
.
:
.
'
•
.
•
^
,
.
.
<
No'iifg e^cepliejaally inclusive controls t established over the
bank rg system, Dr. Bargiss notes voluntary st:ps for credd
carta iment that arj Uaig uadsriaken by banks with insurance
c:nipan.es and houses of iisiie. Aessr.s people must be edu¬
any
cated
-of
their
on
around,"
inflation.
created
Executive Committee, Nat'l City Bank of N. Y.
Former President, American Bankers Association
'
'
were
inflation—fear
psychological
economic grounds.
on
Chairman of the
pub¬
lic
prophecies,
ever
since
last
December, of higher prices and
of
price controls about to be im¬
,7,
posed. The price
rises of
last
December and January were-not
terms of
V:
By XV. RANDOLPH BURGESS*
en¬
by their
inflation
couraged
a
have
officers
bilization
Calling price controls "merely
Defense Without Inflation
officers, heads of agencies, sena¬
tors, and even top price and sta¬
Stabilization
Former Director of Economic
The Banks Most Finance
have achieved no ap¬
men
propriate measures to turn down
the flame. Indeed some cabinet
By ALAN VALENTINE*
'i
Board,
Reserve
King's horses and all .the
King's
Thursday, April 23, 1951
.
.
.
re.ponsbi'.i ics while they
Aj to
being "pushed
long-bin
a. e
;
of direct controls, he concludes
use
j
effectiveness in usaLng win inflation is essentially a problem
leading
senator
an¬
*
of in/eclmeiit, and ad/oca.es firm measures to achse/e cut¬
My
assignment is to discuss said or done little to educate them nounced, whoily without knowl¬
economic stabilization in relation to the contrary. That misconcep- edge
or
au hority,
that " there
backs vn non-deiense expansion.
«
tp the Federal Government. That tion has distorted and hampered would be general price • controls
•is
an
economic
If there is cne industry which and what Mr. DiSalle and his
subject, and I any serious efforts at real eco¬ in two weeks, thousands of! piernomic stabilization. So long as the chants increased their own prices is completely controlled, or more associates have to do with wages
would like to
Admin is ration
(which
knows immediately, to get ahead of the controlled tnan any other busi- and with prices.
treat
it
here
It goes mm the
' :
"I
solely in
nomic
I
'a
■
■
'
"
'
do
to
Adminis¬
s
It
trator/
did
not work
economic.
Some
Alan Valentine
of
aspects
efforts
unavoid-
experience.
fundamental
attack
cause.
its
not
more
One
*
could
not
to
in
the
economic.
it
not
do
should
Administration
present
continue
is
thinking
and
acting
I
cannot
couraging
aspects
give
you
have
been
an
The
answer.
more
a
midwestern
eitner.
en-
let
economics
of
be
under
this
about
price
You
controls.
It
is
think
they
controls.
ally
*
*
fighting
primarily
This
since
is
of
the
a
tro)
apparent
than
the
idea
NEW
been
and
b; 40
for
the
to
bank
...
,,
approval, the cast-oi-
ing it created had done its worst.
When .Controllers
of
Wages
their
announce
thatithe
indices
Prices
will
and
opinions
mount
a i-
of price con-
sedous
even
price c[m_
been
has
.,
.
„
.
zation
ing
,
,
.
,
,
.
,,
r,
xr
,
^® OT turn down the flame. Yet,
as
for
some
matter
of
record
privately
by
the
a
arranged
$1,250,000
effective
on"y,
the
undersigned.
••
.
*
.
.'
; -
.
..;
.
7
•'
..
GOEBEL BREWING COMPANY
Steps
Politically
Are
"
'
Unpopular
the
failed
tnke
to
fu^damefttar steel
drf nniitirilrl'
obvious
h!L!Sl
o
w
Rather
Government
acMeve
Itan
eronomv
*
or
iricr^ed
of
program
moves
that
revenue
cessive
cies
would
spending
credit,
or
more
than
under which loans
a
advis-
These
over
us
of
apply
a
tax
draw' off
ex-
from
power"
intelligent
urgent
3J/2 % Notes due 1968
NAUMAN, McFAWN & CO.
18,
^n
.
be made,
can
regulations,
at
to approximately
present,
haif of
0
by
government agencies,
emergencies, but all the
!
^me
the
areas,
including instalmen, credit,
cieait
on
real estate and
on secur-
-•
-loans.
ity
Reserve Not Tough Enough
to say What we
deposits, or tne maximUm
rate we shall pay on deposits, and the Reserve System
and tbe freasury together fix the
serve
_
gives the Federal Re-
The law
power
It
sban pay on
ajreacjy
•
ih
i
hau
a
;
personal posiwa on
that, it would be that tne Reserve
ftave
business fixed
our
.
business, tnere have been various
suggestions for laying down rules
an
R*serve Powers and Voluntary
mat
it
area,
be
may
somebody will think up
Controls
coing it, but
in
that
of
ways
the meantime and
I hiight say that the program of as anotner method of approach,
vo.untary credit
control orig- we have tftought that we imgnt to
inated ^ith^^e babkers, although go to work at it ourselves, and
in tiie*torm 11 aPPeared to comf "ourselves" being not th. banks
from the Federal Reserve Board, alone, but the insurance tompa-
wantedTt
the ,ho«ses foth isfe'
-torney-General wanted
it to
to tome
come. See if we couldn't cut back some
But it was at our in.Uat.on. ' ■ of tne marginal business Wat is
' I- believe it will be reasonably
effective.:.
campaigns
of
'•
-
cised
,
.
,
T1
recent period, which
over a
I think has been one of tne outstanding achievements since the
personal savings and in- devaluation cf tne pound.
Britvest them in government
bonds ish labor has been willing to stand
rather than
apply these real without any substantial wage inattacks on inflation and risk fail- creases in spite of rising pricesi
more
to
forego
simply;, to
the
at
next
elec.ion,
it was7'\ I think the bankers
be'
may
as
to
talk about price con- effective
with
their
voluntary
trol; to demand it; to feature it as. controls rs that. .As tQ a vigorous
though it alone could do the job. use*of Federal Reserve powersj in
this passing of -the buck season and out of season, I have
was
due .to, ignorance, but sqme> advocated la much mqre vigorous
of it to cynital self-interest.
use
of Federal Reserve
powers
Some
of
This attitude
executive
was
not limited to 7 than
branch"
or"
to
has actually
taken pldce.
the jgo that as far as the banks being
Democratic members of Congress,
sacrosanct in. the
which
recent
-trols, they aren't and-will
looked like "a
demo-
an^
device
for
pressure-currents
postponing
and
stabilizers
Detroit 26, Mich.
control
Voluntarv
irg...business
It
-far
believe
it;
I fear the appearance
Continued
on
page
27
ifi the
with
.
5J.
.
,
It doesn t become
a_plan until you formulate defiftite rules and until you have an
agency for carrying them through
and require, definite commitments
from your institutions.
That is
the plan that is being worked
on
under a clause of .the Defense
Production Act that the Congress
wisely put in.*. „
- - 7
, ,
1 may say that the group that
are^working on that, are working
with tir e representatives of the
Federal Reserve System. We hold
no meetings of our group which
are not presided over and records
con-
bank—
quite
beyond what
doing with
about
In recent weeks it has looked as
though the upward trend of prices
has been stopped. I wish I could
deals
of
a
different field- from fixing prices
I
flounder.
untary control.
made by -representatives ^of the
not'be Federal Reserve System/ —
they can't desire to be.
|
The various " groups have all
matter
than in
never,more
.talking
1951
to
poli¬
soonsorin0
the
inevfable." Meanwhile the ship
of state drifts with the conflicting
April
given
we agiee
the lending which has been done
piuces
—
increase
months has
Building
System
whicn
and perhaps the most inflationary
government interest rates;
on
rather
cratic
Ford
Reserve
our
our'1 elbow.
slabilir-v
wha.ever
Government
the
15-Year
in the field of
have had the
least essential at tnis time.
Generally speaking,
Now, I agree that this is an area
Y™. c??.not !?ng C°+?tai?
small
an*
moderate
iiacpmS' these conservative bankers do that offers very great dimculties
by holding down tne lid on the (where most spending power lies!) have coftscionces. I thinx it may .and -that if >yoii simply n.ake a
kettle,
and
you'll, burn * your
as well
as
large incomes;!rather be. as sticccssiul as the program speech and say, .\Wpbt.everybody
fingers in the attempt. The Only
than to apply further controls of.
_
A
x r
real
control
IS
to
remOVC
the
.
New
•
you
prcducIS and tf what we pay are
it.attempted with its .left.-r
sound
inUation is like the steam
i?a tea ke/le over
hot flame.
'
ft
would
entirely ..and
are
sympametic
with, in their laying down of rules
easier
.
already
creuit
Federal
move
lawyer
monms
effective
most
our
hand
Drastic
real
....
...
recent
m
of
one
right
ure
-
Cor¬
-
Lid Down
ISSUE
/
Motors
to .whom
certain powers
We
without
The
were
months.
he
Sia-
„
several
can't
W. R. Burgess
Geneial
tee
Now,
who
there for
stay
goveiiu.t,
agree.
50
or
tell
uie
u
ficult fielu, as i am sure an
tooth
-
ce
poraticn
through
with
a
people
index promp.ly mounted,
Then when the plan was not ap-
unpopular
except
having
Men
in
coir
living
luxuries; to live
financing
ernment.
fine
press
before
days
.
buizer
day,-but
every
more
Cannot Hold
has
appears
it snouid sell
motor cars, and when you
begin
to do those things with reguiatory
agencies you get into a very dif-
a
the
_
becomes
(roi CDuid possibly deliver.
un-
1951.
advertisement
to
;us
Price
the
of
several
Director
national
This
the
to
Office
the
it
year
When
known
made
was
from
•
Economic Trends of New York Chap-
Underwriters,
-often
tru h
and
•
by Dr. Valentine before the
Annual
Forum
on
Current
Social
ter,
Chartered Life
York City, April 19,
said
been.
.
to exoect
especi-
government
posal of
comparison,
a
gov-
go
the pro¬
thirty-day price freeze
want
you
.twice
come
,
if
are
wlu.u
by
everything from pepper
of
refrigerators.
its
government and public still
price
.
*
both
inflation,
natural,
"
more
Remarks
nth
and
of
think
to
your
examined
i( must inflationary forces,- undoing with
Seem
fortunate that when most Americans
*
.has
enougb)
^ilj
expect me,
to talk chiefly
ti le,
nation* when
our
strong/
This
the
chase
ernment
weakens
consider
consumer;
.
those
city hall, than
us
regimenta-
by
government.
of Federal Government
stabilization
production
price control is tragic because it
...
si
a
in
We
ness.
up
ficers
its
political
Price Controls
But,
he
of
'■
^
^
1
inventories,
allocation
the
of
system was not tougn enougn and
of expanded .bureauc- other 5% by June, they make
aicnt lay t.own rigorous enough
racy 'and
rampant political pa- such aft increase almost lpevlt-,
range 0f rates that we can charge rules wnen tuey started tnat sort
tronage. This kind of price con- able,
unless
the
workings
oi for our
product within a pretty of regulation.
It remains to be
trol will prove even more costly natural economic, laws bring, saipe
cj^e range.
7 '
7l
seen wnat the result will be in the
as
it increasingly saps our free deflation 111 spite of them. More
what we are talking about in long run.
/ ;
'
77 7
enterprise and our confidence in by ignorance ana disorganization
controls is the prices at .
Now, when you come into anthe intelligence and integrity of than by
intent, our federal gov- wj1jcj1
people
do
business—we other area, the general loans to
our
This
kind
of
Machiavelli than Plato, and more
like
ab¬
laid
field
product.
'
prices. Cabinet of¬
irresponsibly predicted
pushing
consumers,
its
in
in
....
^
presently
futile because it will
down prices. It is ex-
is
work, of inflation
and uncertainty to producers, of
black markets and- shortages to
economic program, and with what
effect on that program? I regret
that
tem¬
a
tion and paper
to
not
had
proved, .as economically ur.sou.id
cost, but in terms of ham-, and unenforceable,"the sacre buy-
pering
the
.
who
is. the
u.nk-ng busi¬
encouraged others to do likewise,
submitted
tragic ven ure.
control
as
dollar
thinking politically, even about stabilization,
The
question is,
what kind,-of
politics has the Administration
been
be
to
pensive not only in terms ,of
for
condemned
be
and
not
Indeed,
Hence
so.
realized
is
price and wage con-
rise
part of its program,
any
including
one
it
country,
goods
(which,
incidentally,
have
not
basic a.tacks must occurred),
and
of course
that
the center of infla¬ augmented the immediate pur¬
that
hold
the
in¬
stop
upon,
will
in
high
normally
infla¬ shortages
upon
To
any
wholly above political considerations
a
Until
Price
expect
make
tion.
v
government
to
acted
operated
democratic
not
them—is
tion,
They will not be made withprejudice—the prejudice of even
first-hand
no
P°^ary and dangerous expedient,
and in
present chameleon
form—a futile, expensive and
current
our
are
abilization and
s
in
ness
department,
public address, congratula ed
officer
accepting that fallacy— in a
long there will be no merchants
price control.
*
control prices—or to try to
trols
the
on
stabilization
out
Dr.
com¬
po! iticaf
able.
on
that
be made upon
than
political
ments
goes
flation
bilization more
and most
of organized
sought wage.' increases to
in under the .wire. When a
labor
righ
control'
has made sta¬
by
get
here,
government
achieved
be
(which, alas, knows no better)
just
a
acting as though freeze,
on
can
lic
To
for the present
When
•:;
1
price control; so long as the pub¬
real
will
it
goes
r'
real economic
wqrk there
not
and
■
stabilization
what
tried
1
'
■
better)
eco¬
terms.
is
That
v'
•'
■
•
we
are
prices
transcript
Aside from a general committee which has met in Washingtoi?> there -are local committees
being appointed which
by
.
* *From
aS^"oed to go ahead with'the-pro—
gram-
cf
statements_ by
some
of the
are
headed
finest and
of the best people
we
some
know of ii>
t"! fhe. country, and what they are
auspices
of the
Chicago
Uiiversity
Law
v^ginia.^pru 6SandU7, i9suss' West
trying to 00
'
is
to work out
Continued
as
on page
far
33
yolume 173
(1755)
Year ended December 31
Sales
.
«
.
.......
Dividendsj Interest and other
•
Total
.
•
1950
1949
$1^100,852,265
$1,095,063,621
3,129^345
sources
V:
2,160,807
•
-
$1,103,981,610
$1,097,224,428
.
942,983,137
947,514,299
160,998,473
149,710,129
....
134,538,607
127,175,425
26,459,866
22,534,704
10,218,000
7,888,900
.........
Purchases from Farmers and
Suppliers, including Cost of
Processing and Warehousing
.
.
.
.
.
.
1
'
•
.
.
Operating, Administrative and other charges
Federal Income Taxes
federal Excess Profits
State Income Taxes
.
.
;
•
Tax
.
.
.
-
»
«
•
•
.
•
•
«
•
•
•
•
•
•
1,157,000
,
(1949—before exchange devaluation adjustment)
Deduct
.
.
276,680
8,165,580
14,605,344
14,369,124
14,605,344
13,603,884
provisions for decline in conversion value of assets
Canada
in
.
479,522
11,854,522
.
,
Net Profit for year
.
•
.
.
■
Preferred dividends paid
NET PROFIT
Applicable
DIVIDENDS
To Common Stockholders
($5.16
($2.40
per
.
•
.
••
.
765,240
.
.
.
.
.
...
.
.
.
1,036,733
13,568,611
*
"951,520
•:
Common Stock
to
per
.
•
.
share in 1950, $5.22
share in 1950, $1.2 5
per
share in 1949)
.
per
share in 1949)
.
6,400,897
RETAINED FOR USE IN BUSINESS.
$
BOOK VALUE
PER SHARE
...
December 31, 1950—based on 2,827,703 shares
December 31,
1949—based
on
12,652,364
3,213,306
7,167,714
$
'9,439,058
OF COMMON STOCK
.
.
.
.
.
.
$29.57
.
2,570,644 shares
$28.06
1PRecom/uitedSxceAd
3ax
tiiewa
T
Upward revision of the Company's Federal Excess Profits Tax Credit Base from $17,642,744
to $18,284,393* will result in a more favorable
1951 earnings bracket for Safeway
Stores. The new tax base permits the Company to earn $10,993,883 after Federal Income
Taxes and
This
loonden&edHFinancwCStatement
December 31,
.
Working Capital
.
.
.
.
.
.
.
Total
other
assets
.
Long term bank
notes
.
■j
.
.
■
—
Total Stockholders' Interest
V
■
_
V
90,834,080
31,076,500
18,696,500
.
.
.
.
•..
.
$
.
$
83,623,908
earnings
pass
a
72,137,580
United States Income
$
.....
Additional Paid in Capital
15,160,174
...
.
Net Income Retained in
; Business
.
.
.
Canadian Dividends
.
54,325,217
.
Total Common Stockholders'
Interest
.
.
;
.
.
.
Total
12,853,221
'9,945,363
,
.
Per Share before
Per Share after
Excess Profits Tax
$4.68
.
$4.24
.92
.
7.
.
.92
,
$5.60
$5.16
(
49,338,996
v.
...
\
$
.
$72,137,580
83,623,908
1
President
r
The Revised Excess Profits Tax Credit of $18,284,393 is computed
as
1948
1949
$19,744,628
$11,735,913
$11,937,119
$19,677,847
Average 3 highest
years
•'
Capital additions—Base Period
Capital additions—Estimated 1951
.
.c
Total Excess Profits Credit for 1951
$17,119,865
•
.
t
,
,
.
.
.
.
.
•
>
,
■»
...»
...
•
-
-
I
N
C
O
R
P
Stores
O
R
A
T
,
E
D
:
:
•
-
Safeway
Base Period Net Income
1947
......
*
.
follows:
1946
85%ofaverage
♦
•
or
Excess Profits Tax
.<
.
.
$
14,138,517
per
share on the outstanding common stock.
the $36,568,786 figure, the tax rate drops to 62% per¬
income, approximately 8fi
on the increased number.of shares (2,827,703)
share. This compares with reported 1950 earnings of $5.16
per share on the 2,629,760 shares then outstanding. \
In 1950 Safeway paid an Excess Profits Tax of $1,157,000, which is the equivalent of
44^ per share on common stock. The 1950 per share earnings (based on 2,629,760 com¬
mon shares, the average
number outstanding during the year) were:
BREAKDOWN OF COMMON STOCKHOLDERS' INTEREST
Common Stock
$36,568,786 falls
77% tax bracket. After the 77% tax, the Company's income will total $230,000
.Total Common Stockholders'
Interest
up to
pany's 1950 results, the net after tax earnings
110,834,080
114,700,408
the $10,993,883 base and
would be $4.27 per common
;20,000,000
.
over
approximately 13V2^ a common share on each additional pre-tax million dollars income.
If the higher 1951 rates for Income and Excess Profits Tax are applied to the Com¬
.
.
$1,000,000
mitting the Company to retain $380,000 per each additional million dollars income
41,442,937
;
.
....
Preferred Stockholders' Equity
;
■
114,700,408
.
7
.
When pre-tax
69,391,143.
44,640,172
.
working capital and
stock.
million dollars pre-tax
35,551,092 '
•
70,060,236
Fixed Assets, Investments and v
other non-current assets
•>
in the
$104,942,235
88,889,490
.
,.
preferred stock dividends, before being required to pay an Excess Profits Tax.
equivalent to $3.89 a share on the 2,827,703 outstanding shares of
credit is
V Each additional
1949
$158,949,726
Current Liabilities
common
December 31,->
1950
Current Assets
tax
$14,551,885
395,328
.
»
.
.
3,337,180
•
.
$18,284,393
For copy
of 1950 Annual Report, write Librarian, Safeway Stores, Incorporated,
Post
Office Box 660, Oakland 4, California
It
Chronicle
The Commercial and Financial
12
genie may be thus confined
time, but eventually the
and the genie
evil
for
Stock Market
Implications
Of Bottled-Up Inflation
Members, New York Stock
^
u r e.
It is
Exchange
r
J
the
high-lights
incident
political
and enough
has
said
been
In every
and w r i 11 en
lately
this
on
by the unchanging
laws of gravity. In gauging values
and endeavoring to forecast trends
it seems that one must consider
tides governed
realm, we find
the entire
country en¬
grossed with
the
change¬
from
peace
(or
is
what
the
later
or
sooner
a
dominant
the
in
factors,
factor
belief
firm
or
that
these will be the
,'James C. Luitweiler
countries outline what has tran¬
/;V
picture clarifies. And spired in their respective countries
on
the
financial
side
we
see since the end of World War II.
equally great differences of views. They all strike a rather optimistic
Developments as they occur are. note, pointing with pride to the
marvelous
recoveries that
have
pointed to first by one side, and
then by the other, as justification been wrought in overcoming the
for their opinions.
It is with this effects of war and bringing their
months
more
this
latter
economies
houses
ing
phase that Stock Exchange
are chiefly concerned.
Some able writers and.' leading
Stock
a
in
'back 'to levels' exceed¬
many cases prewar,
volume and amount.
both in
But they in¬
variably end with the observation,
or apology, that unfortunately their
Exchange firms have been
forecasting
6i market
bull to-a bear mar¬
change
governments have not been able
from a
successfully to cornb$t inflation
They point with considerable
and
their currencies ^are corre¬
weight to a number of factors in
spondingly reduced in value, in
support of their views/
in
terms of gold; and the trend con¬
times past students 6i the bysmess
tinues.
cycle have found that a reversal
In short, the factor of inflation,
of
stock
market -trend
is- fre¬
quently preceded by some six or depreciation of currencies, is
trend
ket.
.
,
by rising -.interest rates world-wide and our own situation
declining market for high- is no exception. It stems from the
grade bonds. This has been with; same cause everywhere—govern¬
us
now for some
months?' led by ment expenditures exceeding rev¬
months
and
the
a
decline
in
Governments
the wide-open break
ofj
municipals
levels
from
reached
and
in the price
early
their
high
this
year.
However, the significance of this
indicator
until
pressure.
and
rising
a
stock
followers
market
market,
there
are
attractive
in
this
is
brief
of
be
likely
duration
ployment.
should
and
regarded
ex¬
large.
may
be
doubted,
since
lately the price of Govern¬
ment bonds was
wholly artificial.
Now for the first time in years it
vol¬
in¬
of
ume
was
It
just
cient
set
in
cal
suffi¬
to
the
the
off¬
drop
physi¬
volume
inventories
for
ernment bonds, insurance,
the
H. Slichter
year
1951
inventories
same
physical
in
with
started
advice to invest such excess earn¬
of
Hence
1949.
the
the
least
half
1952
of
rise
the
times
end
the
end
the
rise
year
at
be¬
of
1951
and
—
over
four
government will
$25
billion
a
tween
1951.
of
during
the
Personal
incomes
will continue to grow
last
rapidly, and
will
of- the year
end
the
by
be
running more than $20 billion as
1950
ab'out
about
The defense outlays of
ing
about 7%.
S.
govern¬
the expenditures of in¬
dividuals.
by
was
Prof.
Federal
the
of
ment and
ventories dur¬
We are told on
ings in good equity securities that
are
not over-valued in terms of
the
in
physical
equities are continuing and
investment in gov¬
savings
bank deposits, etc. Such advice is.
sound.
But equally sound is the
a s
The in¬
crease
opinion of the writer
logical and a trend that
earnings
not
drop
a
the
continue.
is
and
in em¬
Inventories cannot be
involve
to
properly evaluates the factors in
our situation.
Investment in good
sound
inflation curb.
as
outlays
pressing the same surprise as are
some of our market analysts here.
But
securities
present lull in business will
The
a market's course.
every hand that one of the safe¬
"Lately the writer has had the guards against inflation is desist¬
from
buying
unnecessarily
privilege of hearing a number of ing
statesmen and- bankers from other the scarce goods and using excess
11
will take some
before
ary
determinant of
to a war
defense)
economy.
period there are strong
Markets do not
like the ebb and flow of the
move
business
over
encing a fall of Government bonds
currents.
cross
the
In
score.
in the year.
likelihood of holding down wage
of income tax to curb this inflation¬
Advocates increased investment by public in
payments, so suggests use
imminent change of
of earlier
down dividends to reduce personal j
incomes, but foresees little
engaged in Korea and the
building up of a new army in this
country, to say nothing of send¬
trend; they ing troops to Europe, and the con¬
also minimize the rise of the price sequent
heavy government ex¬
of industrial ^shares to new high
penditures this involves, we are
in
fact
at
war, and the effects of
levels, since the prices of railroad
stocks have lagged
behind and a war economy are inevitable.are considerably under the highs
England lately has been experi¬
an
months have been
a time of great confusion—politi¬
cal,
economical, financial.
The
MacArthur
sol¬
from
non-defense spending. Recom¬
cuts in
severe
mends also corporations cut
diers
rise.
■ even
quarter of a million of our
a
of bank credit and
come
Professor Slichter urges restriction
government and consumers,
gaged in another war. True it is
not a world war, and we all hope
it will not become one. But with
Luitweiler, discussing
marks transition from a
from busi¬
phase in which increased buying came principally
ness concerns to one in which increased buying will
for us to rec¬
in fact now en¬
not popular
ognize that we are
Professor, Harvard University
Pointing out present inflationary lull
;,*■,'■;";■■.y;;''
Wars.
SLICIITER*
SUMNER H.
By
cluding
stock market, points to
The past few
Next, Mr. Business Man?
Lamont University
great war in history, in¬
the two recent World
every
strong cross currents in present
bottled-up inflation as dominant factor,
and advises investment in good sound equities. Says, barring
a full fledged war, stocks will continue to hold level and may
Mr.
and assumes his true statWitness
the aftermath of
escapes
Luitweiler & Co.
Partner, Bendix,
What
a
bottle is unstoppered
c. luitweiler
By j.
:
Thursday, Afrril 26, 1951
.
.
.
(1756)
annual
an
the
the
above
rate
The
1950.
of
end
rate
at
supply
of
goods available for consumption,
however, which increased about
5% between the erfd of 1949 and
of 1950,
the end
all.
at
will not increase
In
fact, it may decrease.
expenditures, of course,
continue to be important; but
Business
will
shortages
of materials,
inventory
controls, and possibly restrictions
of
volume
on
will
credit
business
prevent
spending from growing as rapidly
as during the last quarter of 1950.
as two years before.
My comments on the problem of
earning power
Employment and personal in¬
inflation will be devoted in the
and future prospects.
To the ex¬ comes are very high. In March,
main to a discussion of what can
tent that the investing public acts- employment was about 2.6 million
be done to limit the inflationary
upon
such advice our securities above March 1950, and wage and
effect
of
'government
expend¬
markets will continue to hold their salary payments were running at
itures and consumer buying, but
an
annual
rate
of $25
billion
own, or rise depending upon the
I wish to say a few words on the
extent to which money flows into above
1950,
an
increase
of
of
limiting
business
them. '.This
is a
psychological, roughly 20%.-.Retail prices are up problem
rather than an economic question.•• about 10%.
Consequently, tnere spending.
Witness what happened after the has
been
a
considerable
in¬
The most effective way in which
first shock of the Korean inva¬ crease in the ability of the coun¬
sion had spent itself and again try to buy the product of indus¬ the government can limit the in¬
effects
of
business
after the support of the Chinese try.
This means that inventories flationary
Communists last fall gave us a are (Likely to be promptly re¬ spending is by restricting the use
It is significant that the of bank credit by business con¬
new
shock* We are now facing duced.
of
industrial
production cerns. This is the aspect of con¬
a
similar
shock
brought about index
largely through the MacArthur has remained virtually unchanged trolling inflation that encounters
opposition
from
pressure
last
September.
This least
incident and the disclosure that since
intrinsic
worth,
that the slack groups outside the government.
has been elimi¬ But opposition within the govern¬
ment has prevented effective con¬
overs from war to peace, repair¬
Korean parallel.
This, shock will nated, and that further increases
production will come
only trol of bank credit. It is not neces¬
ing war damage, or expansion, doubtless be weathered in similar in
and
the outpouring of currency fashion.
slowly, as new productive capa¬ sary that I discuss this well-worn
subject.
I wish
to point out,
and credit in greater volume than
Of course, the opinion herein city is constructed and as the effi¬
however, that the only reliable
the current output of goods.
expressed 1 does not attempt to ciency of labor is raised.
way
to limit the expansion
of
enues,
heavy borrowings by busi¬ the Asian difficulties are not a
to finance change- mere isolated question of the 38th
entities
ness
Many
have
countries, like our own,
engaging in a "war
been
evaluate
our
what
would
happen
strongly
in
the
suggests
economy
to
11
securities markets in the event
bank
credit
is
to
make
bank re¬
of serves scarce. There is a chance
is; being allowed to find its true against rising prices" by price of a full-fledged war with Russia. controlling inflation will soon be that the present program of volun¬
level. Chartists call our attention controls, rationing, allocation
If
one
chooses to desist from in¬
of
the problem of bringing about a tary restraint in lending by the
to; the "triple top" which the mar¬ scarce; materials, and what-not. vesting money until that picture
banks will be tolerably successful,
ket
has
made
in
the
last
six But history teaches that this is is clear, he may have to wait a large increase in the rate of per¬
but there is also a good chance
sonal
saving.
During the next
months, another danger signal of simply bottling-up inflation. The long time!
that it will not.
year
personal income will rise
rapidly, but there will be little
iv
change in the supply of consumer
What can be done to offset the
goods.
The next most difficult
NEW ISSUE
aspect of the problem of infla¬ inflationary effect of expanding
To a lim¬
tion will be to assure that the de¬ defense expenditures?
fense outlays of the government ited extent the increase in defense
$900,000
are
financed by non-inflationary outlays might be offset by cuts in
non-defense spending.
If the Ad¬
methods.
Oak Park Hospital and Training School for Nurses of
ministration and Congress were to
The present lull in inflationary
cooperate to find ways of cutting
the Sisters of Misericorde, Oak Park, Illinois
pressures marks the transition of
non-defense
outlays,
these
ex¬
the economy from one phase of
(An Illinois Corporation)
inflation
to
another—from
a penditures might be cut by $3 bil¬
lion to $5 billion a year.
Such a
phase in which the increase in
The
3%
First
Dated
-
3%%
-
3y2%
\.y
July
1;
1952,
to
and including January 1,1966
*.
^
.
Price 100 plus accrued interest
from
January 1, 1951
of
came
the
problem
principally
from
in
which
the
increase
in demand
will come in the main from the
business
Due serially each six months
beginning
t
buying
Mortgage Serial Bonds
January 1, 1951
crux
concerns
to
a
phase
government and from consumers.
Of the $47 billion rise in the an¬
nual rate of expenditures between
1949 and the
last quarter of 1950, more than
three
fifths
represented
larger
the
last
quarter of
-
outlays of business concerns. Less
than one-teath of the growth in
cut would be
would
not
in the outlays
and
most helpful, but it
prevent
net rise
a
of
$20 billion or more a year
about
of the Federal, state,
Unfortu¬
local governments.
nately the public demand for econ¬
in government does not seem
strong enough to produce
much effect in Washington.
omy
to
be
cuts
Since
are
best
offset
can
in,, non-defense
uncertain and at the
spending
only
a
small part
between
the last of the rise in defense expendi¬
quarter
of
1949 and
the last tures, limiting the inflationary ef¬
fect of defense outlays is mainly
quarter of 1951 represented a rise
a matter of assuring that they are
in government spending.
In
the
months
immediately financed by ji o n - inflationary
methods.
To
many
people this
ahead, the most important sources
of inflation will be the defense simply means paying as we go.
But some taxes are inflationary,
expenditures
Investment Securities
225 K. MASON ST.
Milwaukee. 2
*An
address
by Dr. Siichter before the
Executives' Club of Chicago,
April
13,
1951.
Chicago, 111.,
especially
Hence,
in
even
a
a
sellers'
balanced
market.
budget
Volume 173
Number 5006
.
(1757)
Financial Chronicle
The Commercial and
v.
•
•
11.
may be
been too
frequently overlooked.
Recently, several organizations
have
proposed
that
to
sales
taxes
be
taxes.
on
An
poltically
sion
the
in
1951. Can
limit their
A considerable expan¬
payrolls will result from
increase
from
may
a
employment
of
Where
If
million
2.2
the
and
week
work
a
large
States, the ability of the commun¬
would increase
would be
lion
and
a
a
year
But
These
longer work week.
the
sumer
to
done
be
ih wage rates.
pari of the em¬
creased by advances
goods, I have assumed that ployees are organized into power¬
employment would rise by about ful trade unions,, as in the United
they will continue
rapidly during
anything
growth?
in
increase
incomes
corporate
rise
annual
an,,
12 months and
budget be balanced in large meas¬
ure by increases in the
corporate
income tax and by various forms
of
by
$25
over
Federal
the
rate of are badly needed, and, in estimat¬
billion during the last ing the prospective supply of con¬
increased
inflationary.; This fact has
by'3%; The result
rise of nearly $12 bil¬
in payrolls.
■.,
■
,
payrolls
will
be
also
ity to limit the advance in wage
rates during a
in¬ pends
sellers' market de¬
what
upon
wage
unions
policy,
that
.
,
unions
violate
accept
not
do
they
and
are
these bar¬
treated as exceptions or
Continued
controls
wage
will strike or
threaten to strike unless
gains
a
make bargains
will
it
accept.
willing to
are
on page
in order to
necessary
induce some groups in the com¬
munity to submit to controls, but
such
increase
an
tionary.
prevent
price
advance
an
porate
be
would
if
Even
income
infla¬
controls
in
the
from
tax
cor¬
being
passed on, the advance would en¬
corporations
courage
finance
to
their
expenditures on plant and
equipment by inflationary meth¬
is
ods,
such
as
borrowing
from
banks, paying off bank loans more
slowly,
selling government
or
se¬
curities.
Sales taxes, which may
deflationary in a buyers' mar¬
ket, have mixed inflationary and
deflationary effects in a sellers'
market.
They
produce
higher
be
prices
the
but
not raise
price increases
of January 1, 1951
as
do
private incomes.
To the extent that it is .not
litically
possible
po¬
finance
to
de¬
fense
expenditures by anti-infla¬
tionary taxation, such as increases
in
the
income tax,
personal
they
should be financed by anti-infla*
tionary borrowing—that is, by the
•
sale of government securities to in¬
dividuals.
Indeed, the sale of
securities
ernment
limit
would
to
the
among
borrowing;
products by producing and deliver¬
record-breaking tonnage of steel to its customers while
carrying on, without interruption, its large program of
expansion.
AS
for
personal
the
supply
of
flow
available
goods
the
at
strike
end
National's net
of
1950.
and
it is.
the
belief
that
the
annual
an
rate
for
Total dividends of $20,917,690—or
converted to the
stock split
rate
of
the
AND
of
last
1900
cut
plant and equipment,
the
also
assumes
many
goods
consumer
that
crises
new
production
a
—
assumption.
daring
increase
small
of
My estimate
as
this
will not require accelera¬
summer
of
to. do.
supply of
tion of
somewhat
Possibly
a
in the total supply
goods
consumer
problem of the gap between per¬
sonal incomes and the supply of
consumer goods must be attacked
either by limiting
the increase in
personal
or
incomes
proportion
that
comes
are
of
.
.
1949
$424,892,845
57,814,974
39,311,269
National's continuous program of expansion and
furnace
Net
earnings
Net
earnings"per share*
open
operation, extensive new electrical finishing equipment.
Ingot capacity was increased by 250,000 tons, bringing
in
,
1950
$537,024,673
.
total capacity to
4,750,000 tons
as
Total
payrolls.
Total dividends
Total taxes.
paid......
•.
by limiting
personal in¬
spent for consumer
goods.
"computed
of January 1, 1951.
can
can
the rise in personal in¬
be
limited?
Corporations
help by deferring dividend in¬
creases
dends
or
in
by paying part of divi¬
stock
dividends
But
instead
represent
of
cash.
only
a
small part of all personal incomes
—less than 5%.
of
About two-thirds
incomes cofisist of
and salary payments. These
personal
wage
payments, as I have pointed out,
107,843,848
20,917,690
13,481,585
68,546,069
on
43,571,827
basis established
by the three-for-one stock split
AND
NATIONAL
CONTINUES
CONTINUES TO PLAN,
TO BUILD FOR THE
Totaljtaxes paid by National in 1950 were more than
FUTURE.
$10,000,000 greater than net earnings
underway, and scheduled approximately
for completion by the end of 1952, will further increase
National's total capacity to 6 000,000 tons—more than 50%
The program now
National's capacity at the close of World War
II, and, in proportion to size, the largest expansion pro¬
gram for the same period so far announced by any major
greater than
12
% of sales
more
than
...
more
$2,300
per
more
than
...
employee;—a forceful illus¬
tration of the terrific impact
ment on
...
than $9.30 per share of stock
of the cost of govern¬
the American economy.
steel company.
/frnert'ca
Setv/nf ^msrr'cJ/i /ae/vsfry
CORPORATION
NATIONAL STEEL
GRANT
PITTSBURGH,
BUILDING
WEIRTON STEEL COMPANY
comes
5.34
124,135,529
..............
VI
How
7.85
be
can
achieved, but this seems to me to
be
quite unlikely.
Hence,
the
the
REVIEW
IN
1950
•
that enter¬
means
prises will not be able to increase
the rate of expansion of physical
of
>
hearth facilities, a sintering plant, coke ovens,
land purchases, the new Weirton Coal Mine at Morgantown, West Virginia, a fourth electrolytic line (largest and
fastest in the world), final work on the oxygen plant now
and
of
quarter
lation of inventories is eliminated.
intend
share when
three-for-one
improvement included further development of blast
1950 to
reducing the rate of ex¬
pansion
of physical plant
and
equipment provided the accumu¬
them
a
FACILITIES WERE ADDED
EXPANDED
In 1950,
bil¬
$60.2
without
a
per
Net sales
This large cut in the rate of
investment can
be accomplished
such
$2.85
basis established by
new
after May—were paid to stockholders.
PRODUCTION
gross
1951.
But
1950 reached a new
year
Record total payrolls for a record
29,679 employees amounted to $124,135,529, exclusive of
substantial
company
payments for employee benefits.
may
about S49 billion (in terms of
in
STOCK DIVIDENDS.
be reduced
can
lion in the last quarter of
dollars)
AND
earnings for the
pretty
as
private investment
from
This
PAYMENTS
high of $57,814,974.
optimistic,
It is based partly upon
you
NET EARNINGS, EMPLOYMENT,
of
the
personal consumption ought to be
about as large at the end of 1951
as
DID
t?.
r
■
4
WAGE
most
the
a
in¬
goods
represents
difficult aspect of the prob¬
lem of inflation.
I have said that
consumer
.
dented demand for steel
rowing.
outrun
.
than its share to meet the unprece¬
ing
tendency
SALES
.
more
National Steel did
or
IN '50
RECORDS
NEW
SET
1950
activities in
its
on
PRODUCTION, SHIPMENT AND
whether they be anti-inflationary
taxes
or
anti - inflationary
bor¬
to
most
public and to customers, employees
and stockholders
by inflationary or anti-inflation¬
ary
methods — whether
these
methods be inflationary taxes or
The
and
progressive steel producers reports to
Congress
is not willing to levy much of an
income tax. In short, whether or
not government spending is infla¬
tionary depends, not on whether
the
budget is balanced but on
whether expenditures are financed
comes
largest
whom
on
inflationary
America's
gov¬
individuals
consumption
people
many
of
One
Owning and Operating
THE HANNA
GREAT LAKES STEEL
•
•
FURNACE CORPORATION
NATIONAL STEEL PRODUCTS COMPANY
•
HANNA
13
PA.
CORPORATION
IRON ORE COMPANY
NATIONAL MINES CORPORATION
V.
26
.1
Financial Chronicle
The Commercial and
14
Thursday, April 28, 1951
.
.
.
(1758)
Impact oi Flexible Interest
Rate Policy on Bond Prices
constitute
the
a
history
of
the
our
past
credit policy.
On March 12,
the Federal Reserve
the
•
unpegged
government
bond market
1949
253.8
Federal
Government——
24.3
State and loc'al governments—
18.3
Personal
consumption
180.6
Gross piivate domestic Invest31.2
ing,
structure
funds
whole,
a
as
less
o
These
...
„
developments
in
more
than
decade,
we see
a
with
the
of
many
+
9.5
—
2.2
*
46.5
+
+
+
+
0.3
+
1.0
+
2.3
+
2.3
+
5.2
+ 18.3
+
15.2
+
25.4
16.5
+ 16.6
+
29.0
+
29.3
+
2.9
—
10.6
+
3.2
—
+
equipment is expected to set new
records this year. This will mean
a
level
of
corporate
securityissues
substantially above 195Q,
8.4
2.8
0.2
2.0
plant and
Business spending on
(est.)
52.2
+
perhaps as much as $1 or $2
billion higher. Some of the cur-
two
the
stimulated
ren^ spending has been
of 1950, by the Government's liberal
this year. pohcy in granting certificates of
restraints necessity which permit accele,once again are ox doubtful va ue ra^ecj amortization of facilities for
in checking consumer buying. inCome tax purposes. Over time,
Certainly, wnen buying is motipolicy is likely to be tightvated by fears Gf_ higher puces enecj Furthermore, plant expanand talk of impending shortages, ■ sicn programs will be progresand is backed by a huge voiu.xie sjveiy hampered by shortages and
of liquid assets it is aifficult to controls over critical rm. erials
device to limit inflationary summer and early fall
demands varies according to the the other at the start of
type
of
expenditure. Federal However, general credit
as a
Government disbursements, which
in the forefront of discussion,
but actually showed a declining trend
obvious
+ 30.1
+17.8
1st Q.
4th Q.
3rd Q.
+
confront
interest rate era and
low
expenditure
1351
-1950-
2nd Q.
1st Q.
importance and in Korea, the public went on
higher interest rates great buying sprees, one in
of
efficacy
are
readily available
and a general air of tightening has
begun to spread.
becoming
billions of dollars)
in
However/ the
credit
the
throughout
and
vexing questions centering around
this new phase of credit policy.
Do these events signal the end
time
national
Grose
munity
first
working capital
(
Changes from 4th Q. 1949
4th Q.
banking, in mortgage financ¬
cial
annual rates
Amounts
policy of flexinterest
,
Gross National Expenditure
i b 1
For the
it appears that
requirements will
show an increase for the year, and
this probably means some further
expansion in bank loans.
balance, therefore,
ing table:
rapidly after the out-
(Seasonally adjusted
the members of the financial com-
e
^
accelerated
and adopted a
rates.
this inflation-
of checking
UiC
program,
month
distinct milestone in
of
events
the continue
of private credit as a
expansion
means
means
the Federal Reserve is not likely to
permit continuous erosion in government bond prices. Says
significant decline in new capital requirement may not develop
until 1952 but trend of yields on municipal bonds is difficult to
forecast because of uncertainties regarding new tax legislation.
The
and
CCIll
new flexible interest rate policy
protracted upswing in interest rates,
contends, despite heavy demand for investment
by defense
authorities
to grow more iop^timisltic,
•there might ^,el1
a PJ . f]
hesitation in the march o
The recent suuxig
strong xxtx.xcxuuxxdi.y
inflationary dx^
ary ueiintiiu
demand xht
fcr guuujaiiu
goods and ow
services, tion. Against
~
this possibility,
trrrmr+h
how>nf
surge
irge in
in the American economy The
T1 extent to which major sectors f^er, mus5t
®
which will
national
expenditure the defense program,
wnicn win
reflects the ldlgc
large lillltdbc
increase III
in total
lUtttl
OI
of
grcss
blbob
Ildliuilctl
Tl nnr»r»in rf nf in
spending which began to take have increased since the end of require increased
h1f n"
and receivables. On
hold in the spring of 1950 and 1949 is shown in the accompany- ventcries
Answering question, whether
funds
and if the public s appraisal o
the international situation ^ould
in Korea. The recent
war
action of the monetary
represents a move to restrain
F€IlcC LS
Dr. Reierson
break of
in-
Inflationary Spending
Vice-President, Bankers Trust Company, New York
of Federal Reserve
of
rates.
Current Credit Policy
By ROY L. REIERSON*
.
behavior
the
and
ditions
terest
are
throughout most of 1950 and did
n°t begin. to rise until recently,
Although the Government's stockpiling activities, the "official
government
bonds
selling
below par.
The
quences
move
of this
have
the. defense
ex¬
government
mu¬
fur¬
ther, to the entire field of financihg.
Outstanding bonds have
sions have
issues the
been even
price,
in
considerably
new
repercus¬
pro¬
more
nounced. Short-term interest rates
have also responded.
"York city, April 13,
In commer-
the
in
into which
economy
credit
a
sustained
a
requirements of
moving, it is difficult to
visualize
Roy L. Reierson
obligations to corporate and
nicipal securities and, even
for
are
we
the market for
dropped
v" "he
In
tended beyond
and
firancine9
v.pr-r
conse¬
and
level
of
the
However,
deal to tne cuiient inflation, the piopriate and effective in tnir>
d,rect effects-of increased Gov- field, and have been. employed
ernment sPendmS have not yet wlth noticeable results.
become
.........
interest
of
trend
rate
rise
in
rates.
_
direction. In order to arrive
,
of
.....
.
importance levels
no
the level of hect-
spending,
,.
}
,
ever, some time will pass before
these limiting factors make tiiemsignificantly.
felt
selves
Conse-
ef spending is
have
government out- and equipment, and other private prevail beyond 1951 and into next
continued
to
rise construction. At the same time, year.
outlook, it is necessary
5ewTorkb New some of the basic influences maJorsignifTcanee^I^ ^ecenf price policy in the past few months; the JeveiroFbi^
1951.
f
which may determine credit con- rises., After the outbreak of war motivated
monetary authorities
^been from
much undistributed
expansion toprofits,
be financed
-1
largely by have
tne aesire
uepre*
curb
investment
an
offering of these sharesfor sale, or an offer to buy, or a solicitation of an
: The offering is made only by the Prospectus. "
A
- '
C
' 'y'
<
\
,
s
*
~
'
'r
' '
'
i
I
'
offer to buy>
^
S
'
»
any
of such shares.
the
mstru-
most recent
rates
are
ment
employed to this end.
*
<.
by
spending
estate mortgage
credit, new security issues and
bank
loans.
Hxgner
long-term
real
restraining
I
,
the sector of quently, it would not be surprisinvestment
outlays, i.e., outlays ing for a high level of business
for inventories, for business plant plant and equipment spending to
to
This is not
.....
r-.':
That area of our economy which
has contributed most to the liigner
steadily but their increase is a this area is to some extent amenAlthough the area of corporate
minor factor In the current; pic- able to restraint by way of credit financing ,is not insensitive to interest rate changes, the restrictive
ture.
policy because a poruon is fi¬
fccted by many forces, not all of
which; will be operating in the
reasonable
is
determining
lays
tive conditions is likely to be af-
a
^
rrenhre—
State and local
rates under current and prospec-
at
policy
eral
interest
same
—_
present conditions, interest
under
policy involving
substantial
.
substantial^ Furthermore,-
the
reducinc
therebv
cjatiOn charges, and other internal
corporations today are in a
funds
turns, and have a flexibility in
their financing policies which is
not as readily available to other
portance for the prospective be- classes of borrowers. Finally, in
havior of
interest rates. If in- view of the present high levels of
vestment
remains high,
it will corporate taxes, an increase in
Montana-Dakota Utilities Co.
Common Stock
further expansion
look
in
the
problem of per¬
mitting interest rates to continue
field
is
that
rise
to
tu
rise
to
resort
resume
lesuinu
the
uie
support
bupyux i
On
significant decline, the monetary
authorities would find their prob¬
Subscription Price to Warrant Holders
,
lems
substantially.
eased
u..+
obligations
and
other devices to control
'
U
,
j
-n
,
j
t.
sevi
a
'
ut will decxine later
ln consequence of a
iw!iC>f
" .
npw
f
high; together with the large vol¬
of building
ume
1950
for
carried over from
completion this year, it
i.
,
,
,u
T
for
interest
effects of
.Regulation X will become progressively more important. Nonever,
for Investment
Demands
The
Copies of the Prospectus may be obtained from any'of the several under¬
writers only in states in which such underwriters are qualified to act as
dealers in securities and in which the Prospectus may legally be distributed.
Funds
?
for
demands
The
funds .that
T
investment
likely to be most
important
in affecting
interest
rate policies are the requirements
Pierce, Fenir.er & Beane
Central Republic Company
f
Incorporate J
(Incorporated)
.
Busmess
ncss
Dean Witter & Co.
.
T
the
restraining
residential construction, f artherPor?' i^ a^so expected to decline
in V?.' reflecting government
restrictions. Growing short gss of
building materials are expected to
^ an additional restraining f ctor
i."l.
i
^
•
Financing—Inthebusi-
throughout the field of construc^cn
,
'
sectch, demands for funds are
7
.
°\ nfhv mortgages
for increased working capital as Is not likely to decline
lapidresult chiefly of higher inven- ly as tne level of new constructories. The other is the demand bon £ir,lce
ref.ect, in acduion.
fcr fixed capital to cover plant J? mcrf£a2es on ne w construction,
and
equipment programs. Prcs- t
rcfinaneinto f* existing buildrects fcr 19*1 ind^ate that both'mgs at peak paces"
°n b3iance>
demarx^s will be a^high levels! ' Presenl indications support the
of
Piper, Jaffray & Hopwood
the requirements
and
private construction.
„
A. C. Allyn and Company
are
business
of
for
.
In th/ course °.£ the year. how"
rates.
a
Company
housing
funds
to
necessary
look
The Milwaukee
The out¬
for
presages a
continued high level
consider the of new mortgage financing
prospects
tjimvestment spending throughout most of |951.
and their bearing upon the out-
thus
$14.59 per share
Kidder, Peabody & Co.
'
X,?
is
It
—
residential
demands
likely to remain high fo."
are
expansion cf private credit.-..
the other hand,?if the volume ;t
the
a
to
lu
or
Ol
Government
of
major deterrent,
prove a
Mortgage Financing
monetary authorities may be con¬
fronted with the
Rights, evidenced by Subscription Warrants, tosubscribe forthese shares have been
issued by the Company tq holders of its Common Stock, which rights
expire May
i<y$i, as more fully setforth.in the Prospectus.
likely to
the
private credit. In that case
of
Par Value $5 Per Share
demands interest costs, unless drastic, is not
large
continuing
bring
for funds and a
Merrill Lynch,
rela-
good
position
to obtain
by offering attractive re-
tively
Consequently, the course of investment spending is of great im-
236,755 Shares
Blyth & Co., Inc.
business
Furthermore,
sources.
two kinds. One is The demand
.
Tr?
a
Blair, Rollins & Co.
Kalman & Company, Inc.
W. E. Hutton & Co.
Incorporated
Wccdatd-Elwood&Company
EquitableSecuritiesCorporation McCormick&Co.
■
.
Laurence M. Marks & Co.
Stifel, Nicolaus & Company
The Illinois Company
Incorporated
Pacific Northwest Company
April 26, 1951.
Whiting, Weeks & Stnbbs
,
"
-
.
!
*'■
.
,
.
,
guess
that new mortgages m 19ol
requirements. may 5e between $lV-> and $2%
have; increased very.billion lower than in
rapidly since the middle of 1950
,
Munif,il)al
Is u^s_w
Working
of
capital
business
"wthmateerialS0fand^SboT'anl ^te
has
■■;•
have leveled off for
the moment,
Continued on page 29
Voluire 173
Number 5006
.
.
Chronicle
The Commercial and Financial
.
(1'759)
of
'Credit Controls and Fiscal Policy
By J. FRED WESTON*
University of California, Los Angeles
■
■trust.
Ecularly monetary and credit controls along wi:h increased taxo en, offers as a
minimal program: (1) restoration of Federal
Reserve control oyer money supply; (2) retention of selected
controls ever cred.t expansion;
(3) increases in personal in¬
come tax rates to
yield $3 billion; (4) issue of a new "purchasing power bond" for small investors; (5) reform in cor-
.
.
For
*
to
.*
,
over
month the wholesale'
a
index
price
has
remained
.
-
for
of about 14% for fiscal
tively.stable at 183.4 (1926 = 100).
ment
the basic Aproblem of
controlling inflation will be once
again to the forefront.
index
been
nas
the
near
prices
some
,
proceed on
are
trying-to
basis
of
t^at
we
inflation
vent
and
consum¬
regarded that inflation is undesir¬
able and something to be avoided.
goods have de¬
It is worth while to pause
clined, notably
to
and
prices of tele¬
cate explicitly why it
vision
to
sets.
Recently
it.
avoid
nical
definitions
of
inflation,
startling price
useful
concessions in
inflation
advert is ed
gate effective demand
Dr.
de-
J.
Fred Weston
Do these
portents signify
the reversal of the
upward move¬
prices
which
began
harmful
the
in
early 1950?
.
of
excess
tion
effects
of
is
situation suggests that recent
price
behavior represents some
temporary -adjustments which will be
followed by a resumption of. an
have
which
been
since Korea and to ex¬
pending proposals. Evalua¬
made on the basis of the
nual
rate
City,
in
the
money
to
have
some
impact uporr
increases in each of
The
times
of
23.0
to
per
Our
upon
are
attention
the
role
credit policy
is
have
of
monetary
and
in • the anti-inflation
been
characteristically
from
January
ferent for each
1950.
The
It
turnover
of
an¬
demand
of
therefore
of
policies
dif¬
categories.
interest
in
-to. view
areas
the
to
of
each
recipients
This is not
an
-the .problems
Consumer Credit Controls
annum-in January 1953 to 37.2
Thus not
The Defense Production Act ef¬
only has the quantity of money fective Sept. 8, 1950, provided in¬
supply increased but its rate of creased authority to regulate ac¬
use
has risen
The
major
as
well.
(2)
loans;
ness
.
:
tivities in
categories
are:
of these
two
areas
.Section
6,
President
real estate loans;
to
601
authorized
the
reimpose consumer
Ac¬
(4) other installment credit control.
of con¬ cordingly, Regulation W of the
sumer
credit.
Using
data
of Federal Reserve System was reweekly reporting member banks, enacted effective Sept. 18, 1950,
for which more current informa¬ and emended Oct. 13, 1950.
The
(3)
security loans; and
loans—consisting
mainly
be secured, it is of inter¬
can
of
creased
Regulation
which
these categories has in¬
during 1950. Business
loans Increased by
ta.e loans
28.1%, real
is
cept
that
were
brought
es-
the
same
as
group
I
dip following March tax
payments for the past two years,
son:
a;
home
into
the
on
coverage
page
offering of these Sharesfor sale, or an offer to buy, or a solicitation of an offer to buy, any of such Shares.
The offering is made only by the Prospectus.
y■i
,.
: '
.I.;
.
•
w-
*/-v,!;/.
*•..'•*•••.v•
vy
■
nceorue"-
conflicts and suspicions
fl
are
it
'*■ I,
'-VV
:I
£. ■■
V
aggravated. The benefits cf be-'
coming a pressure group under
Such circumstances appear to in-
Second, an appreciable portion of
price rises in the latter half of
and there is
crease
and
Common Stock
tendency for'
a
national
the
product to be dis¬
tributed
according
to
political
and economic power rather than
on■ w'rd»r-t'vj.ty manciples.
early 1951 were due to
anticioatory buying and pricing
by consumers, wholesalers and re¬
To some extent these
rep¬
*
(Without Far Value)
resent purchases which
otherwise"
(2) Inflation impairs the mone¬
would have been made in recent
tary
VWXJ,
unit
MUiU
WC
as i-l
a UiVWUWliUfc,
measuring Xrod
vu
V/A
of
months.
Third, some firms have, accounting. Apparent costs, reve.
sought
beca
to
they
se
down
pare
inventories
represented
heavy
financial
commitments, requiring
in
cases
many
from
banks
nies.
Fourth,
become
renewals
and
situation,
basically the tenseness
affairs
has
not
to
they
data
world
,T
will
is
been
appreciably
it follows, there/
—
03
.
whose
unit
of measurement
shifting and fluctuating.
(3) Inflation paralyzes incen¬
.
tives to
1/^v
e
VV
v>J
V
in
-
m
A J.1
in order to
AVJ-
\/:
the
basis
the
for
true
email
myeyrocritf outlets
1851
the
to al
of
p
r-
sonal
consumption demand will
approximate $205 billion. The to¬
tal indicated
supply cf consumers'
go^dd at 1953 prices is about $195
billion. There is thus an indicated
inikc anary gap for calendar 1951
$13
billion.
result in
lf\-1
i-
—
is
likely to
i
.
secondary spiralling
Jt
—
effects
This
price rise of 7 to 9%
a
ior Rol when
are
i
taken
,
into
account.
This may be translated into a rise
of 15 to 18 points in the consum¬
price
index from
its
end
of
1950 xevel. For fiscal 1952, wnich
overlaps the last half of calendar
1951, a gap of the magnitude of
$20
billion
is
indicated.
This
is
predicated
upon a level of gov¬
ernment expenditures of some $75
billion with cash receipts of about
$61 blllicn.
»
*An
address
fore the
ment
of
This would result in
by Prof?ssor Weston
Institute
on
Industrial
ference
cf
Relations,
Junior
be¬
Emergency Govern¬
Controls soonsored
California, in cooperation
27,
A. yj
Bar
by the Institute
University
with
The
Members,
1951.
of
Con¬
March
-
m-:o.,,e
preserve
his
Merrill
tions
difficult to
characteristic
abroad
has
Lynch, Pierce, Fenner & Eeane
Stone & Webster Securities
W. C.
utilize."
of
Central
A. G. Becker & Co.
Langley & Co.
Republic Company
(Incorporated) '
Schwabacher & Co.
Ehvcrthy & Co.
Hallgarten & Co.
infla¬
that
been
White, Weld & Co.
Corporation
Incorporated
Inflation makes -it advan¬
s
to ho-rcl rial goods. A
striking
Smith, Barney & Co.
medium
and
receiver-icr:--whom;
are
Incorporated
.
vhioh -will.
tie purchasing power of
fluids
(4)
taged
Harriman Ripley & Co.
The First Boston Corporatioti
Dean V/itter & Co.
If 'especially'
crpai■
of
sized
ers'
Elyth & Co., Inc.
To
a
calendar
„
V.
save.
w
WV1
period of inflation is to
observe the capital value of one's
sEcve
longer range
considerations, it appears that for
of
writers
seriously in error because
are
based on quantitative
military preparedness which: funds be eroded by a decline in
have an.
increasing impact; the purchasing power of the prin-
upon the economy in the future.
share
Copies of the Prospectus may be obtained from any of the several underonly in,states in which such underwriters are qualified to act as
dealers in securities and in which the Prospectus may legally be distributed.
information r/ y
become
the
altered.
Fifth,
fore, that there is need and likelihood of continued expenditures
for
accurate factual
although
of
Price $52 per
become
may
cisions which must be based upon
compahave' somehow
accustomed
international
profits
meaningless for practical use in
operating businesses. Business de-
loans
finance
we
more
of
and
nues
the
physical quantity cf goods has ac¬
tually
dried
Peoole
tOLAAjr
iV-v* un.
vcy.
x
wvyAw are
V unCHI
willing to exchange ^
eoods -whose
value in i^c-.pctary to'-ms is ris¬
ing for money whose value in
terms of real goods is continuous¬
ly diminishing. :
■ - / /
l.h •
Hill, Richards & Co.
Brush, Slocumb & Co.
William R. Staats Co.
Incorporated
Walston, Hoffman & Goodwin
Mitchum, Tully & Co. a Shuman, Agnew & Co.
_
(5) Inflation results in
ture cf
tions
prices and business
which
porary
a
rests
noon
a
Bateman, Eichler & Co.
,
Davis, Skaggs & Co.
struc¬
opera¬
Lester & Co.
tem-V
deflation
with
its
unemployment of
Irving Lundborg & Co.
E. F. Hut ton & Company
Pacific Company of California
J. Barth & Co.
accompanying
resources
and
Wu'lff, Hansen & Co.
Wagenseller & Durst, Inc.
Sutro & Co.
Raggio, Reed & Co.
Paine, Webber, Jackson & Curtis
a
Weeden & Co.
Henry F. Swift & Co.
substantial decline in the real in¬
available for distribution by
the economic system.
The
First California Company
Davies & Mejia
-
and artificial basis. Char¬
acteristically and historically, the
maladjustments induced by infla¬
tion have brought on a subsequent
come
Crowell, Weedon & Co.
■
;
objections
to
inflation,
therefore, are that the real income
:
April 24,1951.
^
>
-
I
' ' ;
' "
'
'
ex¬
improvements
Continued
369,643 Shares
v*• v-'v;'
that
expired June 30, 1949,
by 23.3%, security loans
v ■
entially.
this judgment may be
First, we have noted a sea-
and
hence will be discussed first. Title
of com¬
(1) busi¬
income recipients obviously suf-
cited.
and
possibilities of effective control.
•
d the relatively fixed
a
ex¬
these
times
£8.6'
from
is
amine
except
times in December 1950.
each
centered
first
■
redistributes..
arbitrarily
it
reasons for
tailers.
December
increased
upward movement in the absence fer. The relatively uncontrolled
of effective counter-action.
The * ana the organized benefit differ-
1950
tain
priees.
interbank and
government deposits in New York
tion
Monetary and Credit Controls
the income and wealth of society
in a manner unrelated to desirable
economic incentives. Fixed income
present
increase
supply which was, of course, cer¬
est to examine the extent to which
avail¬
inflation
the
of this paper Is to
monetary and fiscal
objectives enumerated, V
aggre¬
over
to
18.9
annum
mercial bank credit
The purpose
amine
be to regard
may
stantial ;
following:
(1)
A longer view of the
an
are
adopted
-
a
supplies of goods and serv¬
ices, resulting in a substantial rise
in the general level of prices. The
stores.
in
as
stability,
level
price
measures
able
partment
ment
approach
to
review
time to consider alternative tech-
we
have observed
sales of
indi¬
is important
taking the
Without
con¬
political and economic freedom.
briefly
to
from
per
■
1950
preparedness. and preservation of
*
"inflation"
define
Immediate
hign priority,
as
selections between alternative
1
control devices are made, in addi¬
tion
times
of deposits,
freedom.
nomic
pre-
durable
dis¬
high level of real
a
cerns.which require
is generally
it
real
'
(4) stable utilization
(5) preservation and
development of political and eco¬
the
generany
creased
maxi¬
equitable
(3)
of
(2)
consumers'
resources;
.
end
February.
The
er
for
.
falling since
of
income;
-
defense;
of
temporary readjustincome;
two or three months,"
a
28-comrnodity sensitive price- therefore,
Uoo«
national
tribution
The
no?
weekly
reporting member banks increased
by 27%. This represents a sub¬
which
role,
by
commercial bank- credit of
;
1952.
mdov
the
increased
—
Over this period the total
this out. In addition to an increase these.categories has caused
public
this
a n a ly s i s
is
in the money supply, there has concern
for
their
consequences*
primarily to the need for
been
am increase in its rate of use.
and has called for regulatory pro¬
:
j achieving stability in the price ■The annual, rate of turnover of
grams to -control the increases.
:
level, other objectives of economic
demand
deposits, except interbank
! policy should
/ Each of
these-: areas
of bank
also be furthered
and government, in the weekly
by measures adopted. The correla¬
lending presents its own individ¬
tive' objectives
may
be briefly reporting member banks in the ual characteristics and. problems
enumerated::
(1)
-Preparedness leading cities of the country in¬ and the'control efforts therefore
rela-
After
34.1%.
banking and credit policy have
played in the recent price rises.
The subsequent analysis will bear
\
mization
~
and I .understate
credit
consumer
•oriented
eld $3 billion.
y
by 13.6% and other loans—mainly
have
loans
Although
i
.
income tax; and (6) increases in selected excise levies
pora^e
•
I
In the past year, bank
increased by approxi¬
program.
stability of the social and political
institutions, since our society de¬
pends upon mutual confidence and
Prof. Weston, after defining inflation and its effects, and after
re/kv/Ji^ legislative r.nd other moves to check its rise, par-
,
because
impaired, because incentives to mately 10 billion dollars and bank
produce and sell are stifled. The deposits have increased' b,y ap^
billion
dollars.
arbitrary redistribution of income proximately '6
and wealth undermines the very These
figures
both
exaggerate
Associate Professcr of Finance,
:
diminished
society is
the basis for accurate decisions is
15
34
16
The Commercial and Financial Chronicle
(1760)
NEW ENGLAND Fund's
Spiess & Co. Inc.
Spiess
formed
Street,
Co.,
&
with
Inc.,
offices
has
been
37
Wall
at
in
\
■
Mutual Funds
New York City, to engage
By ROBERT R. RICH
INVESTMENTPROGRAM
InvestmerfTAccount
V
<
of
one
OF
the
trend
a
large
program
prospectus
upon
toward
mutual
RESEARCH
120
request
SECURITIES
&
BROADWAY, NEW YORK 5, N. Y.
longest term gov¬
policy, Most of the proceeds, it
stated, were placed in shorter
Term
Treasury issues and some
The
underwriter
for
the
10
Keystone Funds — representative equipment trust certificates for
with
stocks
mon
CORPORATION
of bonds,
;
temporary investment.
total
of
assets
The
the
proportion
five
invested
in
•
the
conservative Funds had
more
increased
from
1950 to 65%
62%
Jan.
on
1,
report listed
issues
volatile
more
principal
the
in
and
-
war
beneficiary issues. These included
the oil, metal and
ipining, rail¬
road, railroad equipment and steel
year
April
on
By
of this HANDLING
economic, financial,
proportion and
business
developments
in
the
1,
period also indicated a
decided trend toward
more con¬
a
shareholder
in
language
calculated
interest, the
simple
Purchases of shares in the same
15-month
servative
balance
accounts.
Approximately 71%
of
in the first three months of
88%
1951.
'
vamped
the
increased
the
interest
in
Funds
is
conservative
more
attributed
partly
rebalancing
to
of shareholder accounts
operating
under fomula
planning, it appears
evident that man.y of Keystone's
Prospectus from your
approximately 50,000 shareholders
and
the
investment
company's
or
dealers
.CALVIN BULLOCK
Established 1894
taking
are
servative
con¬
more
a
condi¬
current
of
view
three
of
cations
192,000
year' since 1941.
of
assets
net
March
on
mutual
100
31,
1951,
increase of $133,Dec. 31, 1950, and
March 31, 1950,
compilation by the
over
a
Sales of
shares during the
dealer
of investment.
brought
also
are
to date on Investors Mutual's
portfolio/ Highlight of the cur¬
is
10 years.
"two
in
invested
securities
and
shares during
fund
tual
compara¬
from
income
of
dollars"
income
fixed
charted
a
mu¬
the past
'•
•
of
assets
1951
March 31,
to
$425,218 on
Net asset value
$857,754
compared
March
1950.
31,
the
previous
$84,325,000
the
for
last year.
the
mutual
or
fund
that
the
it
had
stock
members
of
FUND
taken
market's
658
to
from 41,-
rose
during
68,483
boosted
the
same
IN
BONDS
(Series B1-B2-B3-B4)
(Series K1-K2)
may
be obtained from
Tke Keystone Company
of Boston
50
Congress Street
Boston 9, Massachusetts
March
the
about
was
31,
1951,
year-end.
Some
of
$1
at
value
par
$4
purchase
to
stock.
common
will
warrants
holder
entitle the
the common
through March
running to
share through March 31,
share
per
31, 1952 and at prices
$8
per
1958.
Inc. and its subsidi¬
Plywoood
engaged in the manu¬
facture and sale of plywood and
aries
are
the
is
It
items.
related
fifth
1950
assets
cording to management estimates.
same
the
at
32%
as
of
These
on
in cash and high-grade bonds
was
term
the
of
S.
U.
latter
short-
were
Government
obliga¬
tions; preferred stocks accounted
7.8%; and common stocks for
for
60.2%,
with
compared
73.7%
a
(Special tp The Financial Ciihonicle)
year ago.
FUND
recorded
$11,595,544 increase in net
an
of $166,082,157 on March 31,
Net
value
asset
$19.37
last,
lagher has become associated with
David A. Noyes & Co., 208 South
as¬
the first quarter to a total
sets in
share
a
share
three
March 31, 1951,
on
Dec.
on
1951.
to
equal
was
with
compared
as
111.—James P. Gal¬
CHICAGO,
WELLINGTON
31,
$19.03
a
the
number
1950.
In
month
period the
outstanding increased to
8,575,675 from 8,120,162.
of shares
Plywood Debentures
Offered With Warrants
Offering of $1,500,000
Plywood
6%
Inc.
sinking fund debentures,
A, due April 1, 1963, with
series
7-year warrants to purchase 150,shares
000
tached,
of
stock
common
New York and
group headed by H. M. Byllesby
& Co. Inc.r and P. W. Brooks &
Co. Inc. The debentures
was oversubscribed
the books closed.
the
Of
ceived
net
will
the
from
bentures
of
sale
and
>
to be
proceeds
erly vice-president of Thomas E.
King & Co., and prior thereto was
manager
of the trading depart¬
ment for Dempsey & Company.
re¬
the
approximately
de¬
$535,000
F. M. Roberts Pres.
used to redeem outstand¬
be
sinking fund debentures
1967; approximately
$160,000 will be used to complete
due
Aug/ 1,
the
erection
Midwest Stock Ex¬
Gallagher was form¬
changes. Mr.
priced
at 100% and accrued interest. The
are
members of the
Street,
Salle
La
made on April 23 by
was
Gallagher
P.
James
at¬
a
stock
February peak
advance
with
$21.09
to
cash
a
reserves
gradually invested in
were
stocks which the
current
quarterly
com¬
Fund, in its
report
stated,
"appeared
unduly depressed or
good long-term values." These
included
trical
The
equipment,
$20.42
a
insurance
also
had
disclosed
sold
a
from $1,804,477
and compar¬
27%
three months earlier,
Of Minot, Kendall
and
that
earn¬
dividend an¬
nouncements, price quota¬
tions, registration notices,
and other comprehensive
ings reports,
statistical
The
data
plant
a
standing
March
at
85,560
three
months
Commercial
Financial Chronicle.
and
used
of
the
amount
A
purposes.
reimburse
to
be
may
the
company
subsidiaries
approximately
of
$140,000 for plant construction
or
to reduce
existing bank loans. Any
proceeds
received
ercise
from
of warrants
will
Co.,
&
ident and director.
Peabcdy
Wilh Kidder,
PHILADELPHIA, Pa.
—
New York
that
Street, member of the
Stock
Exchange,
James
G.
announce
Lamb, Jr., has
with
Kidder,
123 South Broad
Peabody & Co.,
associated
the
be
dall
the
and
funds
these
for advances made to
them
as
become
a
regis¬
ex¬
added
tered
representative.
to the company's general funds.
Redemption
prices
of
the
bentures range from 104%
de¬
to par.
62,470
a year
earlier.
April
filed,
23,
Funds
registration
a
"A
led
CUSTODIAN
KEYSTONE
Current Financial Comment
31,
against
earlier and
statement with the Securities and
covering
Commission
few
re¬
April
rations.
need
asset
to
on
value
small
small
of
more
per
increased
.share
$6.43 from $4.94 for the same
period.
■
\.
their
of
corpo¬
greatly
the
stockholders,
stocks
investments
for
more
most
trusts.
As
it
becomes
the
an
outlet
upward,
how
do
for
great
economy
realize
not
the
a
is.
revenue
—
Cicero
of
H.
Of
Institutional
Shares,
Ltd.
Distributed
HARE'S
19
RECTOR
NEW
YORK
by
LTD.
STREET
6,
N.
Y.
Slichter
University Professor
Harvard
Funds)
Investment
(Mutual
trend
money
Sumner
Lamont
Stock and Bond Group
Shares
the
millions of small savers."
Men
Shares
Insurance Group
invest¬
run
that
Bank Group Shares
most,
shares
in¬
vestment trust will grow, rel¬
ative to the savings bank and
the government savings bonds,
as
is
the
are
apparent
prices
for
suitable
investors
Aviation Group Shares
not
are
savers.
conservatively
ment
of
increase
common
with
compared
be
rising
may
of
American corporations
to
number
but
March 31, 1950; net
last,
18,
$11,102,000
on
savers
prospect
prices to buy shares of
"Far
FUND
ports net assets of $15,595,000
small
the
by
suitable
No underwriter,
750,000 shares.
regularly
in the Monday Issue
portion
BOSTON,
ing with $1,275,798 a year earlier.
There were
105,217 shares out¬
substantial
MUTUAL FUNDS'
of
compared
earlier. Net as¬
$2,283,074 at March 31,
KNICKERBOCKER
appear
per
three months earlier
of
gain
$21.70
to
a year
sets totaled
Exchange
report
Fund
and
equal
March 31, 1951,
finance, container, elec¬
merchandising groups as well as
several
growth
stocks
in
the
chemical and office equipment ip-
the
FUND, Inc. reports net
value
on
reduce
holdings slightly.
some
of
corporate
general
in
year-end.
share
COMMON STOCKS
(Series S1-S2-S3-S4)
and
to
asset
dustries.
PREFERRED STOCKS
531,169 from $15.99
469,884 respectively at the
standing
reports
advantage of
in February to
peak
new
as
'
position
10i% to par.
$500 debenture
will carry a detachable common
stock
purchase warrant for 100
shares and 50 shares, respectively,
Each $1,000 and
largest company in the industry
maintaining
both warehousing
and manufacturing facilities, ac¬
defensive
England Fund's
$10.21
number of ing 5%
from
the
and
$12.53
shares outstanding
HUDSON
WELLINGTON
mon
investing their capital
New
ing capital to finance inventories
As the market declined from its
INVESTMENT FUNDS
on
compared
and operation of the
company's
expanding business and for other
Association, but does not in¬
common
Certificates of Participation in
outstanding
1951,
total net assets to
clude the closed-end members.
Funds
31,
$8,747,174 on March 31, last. Net
quarter
and
asset value per- share increased in
first quarter
the three months' period to $16.47
and the number of shares out¬
The report covers all the openend
Custodian
The
Fund.
with
220,279" three months earlier and
200,404 shares a year earlier.
on
increased
share
crease
K, iystone
March
of
investment
the
offering
net
reports
FUND
CONCORD
quarter compared with $52,606,000
for
t
in
shares
227,517
suggests
up
to
the
from
money
Sinking fund redemptions may be
made at prices from
Mass.—Minot, Ken¬
Inc.,
15 Congress
:. -i ,/:v
j;;
/'Cy /V' ■,
Street, members of the Boston
372,000 during the last quarter of period.
installation
of
machinery
and
Stock "Exchange,
announce
the
1950 and $140,356,000 during the
DELAWARE FUND .reports a $1,- equipment therein; and the bal¬ election of Waldo S. Kendall as
March quarter a year ago.
Net
ance
of
approximately
$680,000
234,855 increase in net assets in
honorary President and director,
sales,
after
redemptions,
were
the first quarter of 1951. The in¬ will be used for additional work¬
and Frederick M. Roberts as Pres¬
$73,227,000 during the March, 1951,
amounted to
$177,696,000, compared with $135,-
PHILADELPHIA 2, PA
derived
new
how experi¬
enced
investment
management
can
best determine the type and
capitalism;
per
new
against
combat communist smears
were
an
over
$544,300,000
according to
in¬
assets have
Total
first quarter of 1951
from
Mutual
study
Association.
or
discusses thrift as a
asks Investors
Fund shareholders to help
different
$2,663,755,000,
Prospectus
The gain since
a year ago.
the 1950 year-end was
Thursday, April 26, 1951
.
for freedom;
basis
tive
every
commodity
some
shortages;
quarter of 1951, the National As¬
Total
investment
of
appearance
sociation of Investment Companies
funds
your
of "The Mutual In¬
vestor," for example, touches up¬
on such diverse topics as the dis¬
issue
creased in
fmUNGTONp
easy
rent
announced.
wide range
chatty style.
a
terse,
shareholders in an
conversational prose, this
first
the
during
attained
were
funds
mutual
Services, Inc. cover
Shareholders
and sales of shares of mutual funds
re¬
managed by Investors Diversified
ysyVtf f' flj ;/ v;/;''-'/- kind
tions.
NEW HIGH records in total assets
New York
<"^^^^i^^^r6spec]as
31, 1951—a gain of
over the $3,200,000
publi¬
shareholder
new
month's issue
While
to
investor
hold
total sales went into the live more-- of topics in a
conservative Funds in 1950 and
Talking to
One Wall Street
March
than 25%
—most
stocks.
by Jan. 1, 1951.
had increased to 69%.
dealer
on
the
in
reductions
stock
common
the end of the first quarter
investment
000
was
two of preferred and four of com¬
ar.d
the
invest¬
$220,000,000—reported today that
NATIONAL
net
figure
amount of
ment companies.
:of four grades or classes
Details of
/
Report
nearly 5%,
Although market value in the
more
cautious investment is re- ernment issues before removal of
increased in both pe¬
wealed in a survey of the share¬ support in anticipation of a pos¬ portfolio
holder accounts and purchases of sible change in government bond riods, the largest part of the gain
NATION.,
Open
r
Trustees,
Consecutive
public today, reported total
assets of the Fund at $4,050,-
more
EVIDENCE
An
78th
made
in the securities business.
\
the
..
University
Prospectus may be obtained from
the above or local dealer.
Volume 173
Number 5006
.
.
The Commercial and Financial Chronicle
.
(1761)v If
reduce management
judgment
to
planning and- cept which allows for relative case of
mechanical; basis flexibility and freedom of choice. Amory.
a-
ment.
By KENNARD WOOD WORTH*
Vice-President, Eaton and Howard, Incorporated
Mr.
Woodworth
rates
as
ysis than they
analysis.
qualities:
intellectual curiosity, judgment, initiative, patience,
flexibility, hard work, and contacts. Concludes fund
managers should guard against over-optimism or excessive
pessimism; and always deal in terms of investment values in
courage,
lieu of
We
,
all
are
interested
in
how
very happy circumstance if I
could come before you this after¬
a
and pre¬
noon
sent
sim¬
some
ple method
some
problems
communication
of
it must have been
Nations
or
be¬
apparently
so great that all of their reading
never
produced any solutions of
investment problems. I think that
were
sort of United
a
New
Approach in 1931
run
a
small
a
fortune.
truer
a
tion
capital
Over
and
of the
stake
sober
more
difficulties
of
and would in¬
ized
in
the
of
the "no management at all"
as
approach.
Investment
after
swung
1929
sentiment
violently away
from management. There appeared
manage¬
ment
character¬
the
at that time
investment
a
phenomenon called
•
.fixed-investment
fund-portfolio.
.1I
am
not
all
how¬
vestor
aware,
of
ever,
magic
any
Kennard
Woodworth
means
trusts.
recall, in those
offered
was
As
cases
an
you
the
in¬
opportunity
don't
define
our
one
underrate
investment ob¬
procedures that will permit
us
list of companies, and only under
what
exceptional circumstances was the
can insure -success.'; list
of holdings to be changed.
All I cah do is describe some of Investment management was con¬
thq
difficulties,
problems,
and sidered a liability and the spirit
frustrations that go with investing, of the period was that the investor
apd then tell you how we try to at all costs must be protected
meet these problems. We all talk
against the hazards of manage¬
about
appraising management— ment. The interest in fixed trusts
but what are those qualities that waned after 1932.
Other philosophies of manage¬
make for good management? The
psychology research laboratories ment of investment funds have
at the Harvard Business School
appeared from time to time during
that
consider behavior
patterns the years. -Some have enjoyed a
and all of the other factors in
period of popularity and disap¬
connection with human beings are peared
promptly.
Others have
know
like
before
Inasmuch
tives
your
you
can
target looks
shoot at it.
not necessarily be the
may
it is very important that we
define the particular objective we
the
same,
of industries and individual
major
with
panies.
able
tration
at
consistent with
ment program.
calls
for
both
principal
a
the
vestments,
highest level
prudent invest¬
The objective also
gerous
reasonable
growth of
income. "We,
the managers, call this an invest¬
as
the
complete investment pro¬
gram. This concept was and is the
of
scene
the
serve
the
and
operations
ob¬
qualities, the thinking,
reactions
ment manager.
how
and
the
of
invest¬
There we shall see
administers its
management
responsibilities.
Very simply, this
means, what does it take and how
do they do it?
History Reveals Changes in
Investment Management
ticed and recall some of the phi¬
losophies that have governed in¬
the
able both in scope and magnitude.
cite
me
I was in London in 1931 study¬
ing the management of investment
trusts.
I
trusts
and
visited
found
several
that
of
one
individual
one
man
operated
on
simple philosophy—maxi¬
diversification—highest ob¬
yield.
Buy a little of
everything that yielded more than
7% and hold on to it. We today
a
very
mum
tainable
would
hardly dignify this method
of investing by the name man¬
agement.
•
investment
An
well
known
at
that
trust
York
an I
being ushered into a
large room and being told by my
guide tlr' in this room there were
investment
36 differ^
>
newspap: m,
every
gonia
ar
la
a'
tralia.
thing
I
*A
talk
t
Eastern
,
vestment
ica,
experts speaking
reading the
and
studying eco¬
t languages,
"
financial reports from
1 from Siberia to Pata¬
from Alaska to Aus¬
to
to
of speak
doubt is
ave
40
a
wonderful
people capable
g 36 languages, but the
Mr. Woodworth
'
before
the
P* " -\sylvania Group of the InT
-leers Association of Amer¬
April
of
the
,
1951.
it
was
devotees.
The
satisfaction
reason
in engineering developchanges in - economic
thinking, in fact in the whole
that
practice.
in
I
investment
in
conceived
other than
our
emnhasi/P
that
own
day;
we
for following an investment
policy which incorporates balance
types of securi¬
ties—bonds, preferred stocks, and
common
stocks—as well
diversification
broad
as
between
invest¬
industries
It is
and
a con¬
not spend
a
speaker,
velocity of
He, too, made
^
v
n
third
The
speaker
without
security, but also involves
that is. thp sn-raUpd
that
is, the so-called
Prudent Man Rule which
forth
by
Court
in
was
value
in' the
as
set
.
search
What do
applied
we mean by
to securities?
Reduced to the simplest terms-it
Massachusetts Supreme
1830
J
£for. value.
Continued
celebrated
on
from
an
offer to sell
the
nor a
solicitation of
an
offer to
buy these securities.
only by the Prospectus.
New Issue
120,000 Shares
a very con¬
on
Dee re & C o m p a n y
the pro¬
a
Common Stock Without Par Value
.
Naval
Observatory at
Arlington and read the future in
the stars.
-
More recently we have heard a
lot of people discuss formula plans
.
as
a
fact
method
as a
of
investing
There
are
tures about formula
to
Price $64 per
in
attractive.
talk
to
certain fea¬
planning that
If any of you
the
managers
of
of the college funds who re¬
are obtainable from only such of the undersigned and other
lawfully offer these securities in the respective States.
Copies of the Prospectus
■*
dealers
as
may
portedly have adopted formula
plans but set their sights at a very
low figure, you may learn some¬
thing of the other side of the story,
and why a formula plan in itself
is not the
As
have
we
see
been
that
Harriman
Ripley & Co.
Incorporated
answer.
over
the years, there
many
methods
techniques of investing and
more
share
substitute for investment
judgment.
very
or
we
Blyth & Co., Inc.
Lazard Freres & Co.
The First Boston Corporation
and
many
Merrill Lynch, Pierce, Fenner & Beane
Smith, Barney & Co.
have not mentioned.
In the last
these
analysis, almost all of
techniques have.a* common
bond
between-them,
Union Securities Corporation
Shields & Company
/
feeling
that
is,
the part of the investors
that investment management has
not proved
infallible,
Harris, Hall & Company
•
.
'
(Incorporated)
a
on
as some peo¬
ple hoped that it might, and there¬
fore an attempt has been made to
Bacon, Whipple & Co.
April 25, 1951.
*
judgment
'j1
all familiar*
all
familiar;
The offer is made
doubt unique.
He got the celestial observations
gram was
*
l tfw*
ment inVOlV1es not Only
measuring the quality of an indi-
as to the attractiveness
T
,tj
of the price at which a security
from Boston, I could.
available
Ai basic* nhilo^obhv
not lose an opportunity to
call'V
attention to one of our guiding
^
never-emitafi
philosophies with which you are n_r
J,
^5^
and
money
their time
Coming
This announcement is neither
a
their
which
Calvin Coolidge and Herbert
vidual
Massachusetts Prudent Man Rule J:
program,
Not
in
return of the days
^
there are differ-
ences
adjust
the world
liveSand
wishing for
^
are
every
Investment
worse.
must
thinking to
objec-
Hiffpr
or
managers
these
that
eyes
our
is dull and its results wiU be
mediocre
but merely t<5
thprp
developments
unfolding before
in-
concen-
cite
scientific, industrial and
economic
like the Lore-
is
in
gamut of
ne-
.TSn?ibe?UrIhaVe/ny?^"(°f
rels with objectives and methods?
its
giving sharehold¬
between different
capital
y-','
-
a
vincing case based on what had
fiappened in the past.
;v ::
care
approach to investment
management. I remember visiting
method of
private
own
a
their research department in New
nomic
same
some
:
his
appearing on
maintained that
he could achieve equally remark¬
able results in handling invest¬
ments, forecasting the market's
course through his interpretation
are
was
that time chose
different
•j 40
Another
the
comprised the total management.
That
Theory
to
only tool necessary for man¬
of investment funds.
credit.
few examples.
a
a
from
and
proved conclusively that this was
the
Let
ers
individual companies.
Dow
agers
portfolio management.
changes that have occurred
over the short span of this century
are truly significant and remark¬
beginning
very
because
of
back into history and see some of
The
inter¬
very
account
ments of different
the methods and techniques prac¬
vestment
a
ment
Security Analysts several
years ago.
The speakers at that
time portrayed three different ap¬
proaches to management. The first
speaker was interested in the Dow
Theory, and he talked learnedly
of resistance levels, breakaways,
open
gaps, and the ,rest of the
jargon that is common shop talk
speaker
It is illuminating to look briefly
.
attending
re¬
feel
we
timing
on
differences
and
esting luncheon sponsored by the
member
I
as
progress,
lei, beautiful to look at but dan-
a
Boston
.
the Townsend
even
many
invest-
for large aggregations of
public
ment,
com-
While recognizing the
cessity for accurate timing of
Plan still has its advocates.
understand
am
research efforts to the study
particularly familiar.
The objectives of this fund are
to produce a regular and depend¬
am
income
-
-
.
and
mutual
) I intend to examine the methods
and techniques of managing the
portfolio. I am going to go behind
I
hills
connected devotes its
fund
those managing
management,
limited
on
valleys turn out to
The organization with
investment
precepts
for
programs for individuals
as
both
industries—
which I
continued
their devotees.
certain
discussing. For this purpose
I am selecting the objectives of a
are
probably more qualified to answer
that question than I am.
"
to have
to
be mirages.
which I
far-
Its
followed
preconceived idea.
a
de-
and
geographical areas. Some feel that: Essential Management Qualities
a high rate of portfolio activity is
i would rate very highly
among
evidence of alert management— the.
qualities of managementothers favor a long-term approach intellectual
curiosity—a thirst for
and disregard short-term market
knowledge, and an ability to disfluctuations.
Some
people con- tinguish fact from fiction, truth
centrate their efforts on timing,
from belief, and accomplishment
They-vstudy the economic hills and from hope. . A management that
valleys, even though sometimes is
not
interested
in
scientific
all investment objec¬
as
wep
court
wise
principal,
others that concentrate
to
objective. You first have
to
of any
ment
attrac-
po*lcy requires an open-
upon
This
of
one
seeing implications.
better
particularly
the probable income
was
by
limited
jectives, it will probably be sim¬
pler to comprehend the guiding
management philosophies and
qualities, and the administrative
reach this
cision
years
^
how
the safety of the capital
as
invested."
pects
appear
observe
such
as
endowment funds, uniguiding feature is versities and institutions.
The
that the managers of such a fund
application of these precepts has
are free to appiy their best judgproved
sound
and
constructive
ment to
the
attainment
of the.
over the years
-£l IW/l'fl
AA+l-TTAO
fund's objectives.
Now, let us consider some of
There are other funds with dif- the"
qualities that I would consider
ferent objectives—some that are essential to
success
in portfolio
Defining the Investment Objective
we
of
be
been
based
ability.'
If
to
policy permits
securities
well
as
have
The
oversell
to buy a participation in a selected
simpie rule that
or
management but
considering
securities
minded approach rather than one
management has tempered
extravagant expectations of
early investment trust en¬
its
be
can
of
to
affairs, not in regard to speculation, but in regard to the permanent
disposition of their funds,
known companies where the pros-
j
of
their
investment
an
invest¬
ment
in
This
are
opportunities for
investment in cyclical
when
He* is
of
prudence, discretion and
intelligence manage their own
seeks
holding
realiza¬
which could
1931.
Such
cretion.
men
to be undervalued in price.
appear
to
up
also
industries,
period of years,
a
advice—don't
route
profit
profitable
for them what they had been un¬
able to do for themsfelves; that is,
I would like to add
sure success
"
suc¬
thusiasts.
vious
<
few
a
speculators, believed that
investment trust would do
word
A different
the
but
opportunities in
services,
certain older industries which
approach to invest¬
ment fund management appeared
or
de¬
even some
also
and
It
the
magic
formula
processes
spectacular winnings of
the
debating society.
ucts,
growing and expanding the markets for their goods and services,
every
tween each other
faithfully and exercise sound d&*
itable development of new prod-
with security
are
versuft
-
account
not
are
more
College
only participation in the prof-
observed,
Some years ago investors, with
their
appetites whetted by the
cessful
purely speculative risks.
management operates. It would be
of
Such policy takes into
concerned with stock market anal¬
investment management
necessary
As you will have
these methods
most
Harvard
The Court said in past:
"A trustee shall:conduct himself
~
that will eliminate the human ele¬
Rodman & Linn
page
24
SfaU VV»M W>V u"~
S.J" iiil f U
The Commercial and Financial
Bankers Offer Brad
Britain's u
Bank andlnsurance Stocks
Foole Gear Works Slk.
By PAUL EINZIG
of
shares
150,000
Offering of
stock
-
satisfactory solution to the economic and
financial aspects of her rearmament problem, Dr. Einzig maintains this policy is bound to lead to further inflation.
Sees
new British budget fostering price rises and excessive taxation.
'
from
•
'
Proceeds
'
•working capital.
"•The prospectus
-
these
of
sale
the
of
.
that "In
Gunder?son (President) j-together with a
-group
of
associates,- purchased
the
of
states
the
At
company.
*
•
•
-
i
••
•
■
■
4
,
,
f
.
The "Spectator" Chestnut and 56th Sts., Philadelphia, Penn¬
sylvania has recently published its 1951 Fire Index, t.:e eightythird annual issue.
\
\
. . .
•>
Eng.—The
;;-f.
is decided upon,
results
others, in excess of $20,000,000.",.
Gear
Foote
Brad
*
REPORT
CONDITION OP
OP
;
Underwriters Trust
Company
y
York 4, N. Y., at
on
April 9, 1951,'
published in accordance with a call made
by the Superintendent of Banks pursuant
to
the provisions of the Banking Law of
,
'
Broadway,'New
50
of
I the
of
State
.the
business
of
close
\>
York.
New
y
.
ASSETS
"Cash,
,
balances with other
institutions,
in¬
reserve
balances,
-
<
V
•
,
cash
and
items
I
or
12,012,523.47
guaranteed
Obligations
of
and
States
debentures
eluding
•
drait.;)
Furniture
vaults ^
;
•Demand
$36,278,942.66
;
..
..
; .
'?.?
deposits of individ-
and
partnerships,
uals,
—
$20,765,666.71
deposits of individuals,
Time
s partnerships,
and
corpo¬
United
States
rations
5,095,354.35
_____
Deposits
of
Government
—
431,478.57
____
of States and posubdivisions--—
; Deposits
of
banking instiDeposits
|
l
5,963,022.34
litical
•
304,305.94
tutions
«
jOther
deposits (certified and
!
601^265.57
checks, etc.).
officers'
TOTAL
i
f
DEPOSITS $33,161,093.48
i
,
(Other
143.773.80
liabilities—
TOTAL LIABILITIES
]
(not
subordinated
} ! t
including
;
obligations shown below) $33,304,867.28
ACCOUNTS
CAPITAL
$1,000,000.00
750,000.00
1,224,075.38
t———
Surplus fund——r
Capital
profits.,
Undivided
I
TOTAL
f
-
«'!
__
CAPITAL
LIABILITIES AND
] CAPITAL ACCOUNTS
tThis
common
these
institution's
stock
with
„
.
„
.
$36,278,942.66
capital consists
total
par
value
,
over-full employment
There
assigned to
secure
liabilities and for
:
other purposes—^—*—
'(a-) Loans "as shown above
arc
after
serves
,
of
means
$3,105,858.12
deduction of re¬
of
an
equally
.tail production
46,288.75
~
Securities
as
shown
above are after deduction
.'Zi:
_
a
ways-in
which over-full employment
of
2,420,225
2,463,474
2,412,052
2,236,811
___L—
1,242,555
incurred.
1,040,382
underwriting profit.—
129,115
1,006,750
1,019,423
955,357
885,234
274,704
112,836;
written
premiums
Premiums
Losses
earned
Assistant
institution,^
hereby certify that the above statement is
true to the best of my knowledge and. belief.
X,
of
Landfare,
W.
Kenneth
Treasurer
production
the* above-named
number
,
KENNETH W. LANDFARE
-
of
and
ment
could
drastic disinflation or
discriminatory -control.
end is achieved
for
more
Statutory
expenses
_
incurred
Losses
to
>
Assistant Treasurer
,
' '
Correct—Attest:
C.
W.
a
*r
,■
KORELL
v.. tamney
SUMNER
1
or
by
a
a
apply pressure to cut
order
essential
by the discriminatory,
to
release
purposes.
allocation of
a^
raw
no
an
end the
5.4%
38.9
7o
12.3%
5.6%
38.8%
39.6%
'.
overall increase in net premiums
Premiums earned were higher'
by 7.8%. The largest and most-important change in the figures
was
the sharp increase in losses and loss adjustment expenses.;
This item gained by over 23% and was the primary reason for
the decline in statutory underwriting results.
.
I
The above
written
figures show
the
for
year
an
8.7%,
of
.
w
sustained by insurance-
Had'it mot been for .th« severe losses
the windstorms ;.of last November, a muc.i. better
been made in the statutory figures of 1950.
companies in
result
have
would
However, there was a general increase in tne relationship be ween
losses and premiums among most of the insurance lines.
As it
underwriting
the
was
r
in 1949'
from $274,703,594
profit declined
companies to $129,115,178 in 1950. Nevertheless, the1
total underwriting profit was B ill above the $112,835,658 of 1948.;
for .the 372
figures also show up in the ratios.
These
•
The ratio of losses
premiums earned increased by 6.5 percentage points, an amount'
which exceeded the improvement in the same ratio of the previous
to
The
year.
ratio of expenses incurred to premiums earned was'
slightly higher.
only 5.4%
was
.
1949 .and
for
:
hoWeveT
;
J ."-'If/:'''
,
1950
compared with the favorable margin of 12.3%
the 5:6% of th^ previous period. Overall profits
as
larger iri
were
'•
•
' :
-.
>
which figures,
the.
accounting for over 4.3%.
premium writings. Other lines in order of importance
important single underwriting line
most
"of the total
physical* damage, extended coverage, inland marine and
auto
tu:;]
marine.-
ocean
of losses paid <excluding
The ratio
;■
.
compiled by the "Spectator," the fire lines are by far
were
aie
; •
-
.Among the 372-stock insurance companies for
+:
result
1950 than in 1948 primarily as a
volume of business handled.
of the largest
>
y.y
'The ratio of underwriting profit to premiums earned for
-
adjustment expenses)- to
premiums^written for 1950 and 1949 for these 1ir.es -were
"net
35.9% and 38.6%, auto physical damage;; 36.1%
coverage 41.0% and 28.1%, inland marine
40.9% and ocean marine 49.8%r and 48^8%.: v
4;h i'
respectively fire
/
and
32.4 % f extend,ed
38.9%
and
& ANALYSIS
EARNINGS OF
COMPARISON
OUR
by
OF
THE
1950
50 Fire &
NATIONAL BANK
present state of over-full employment.
Head
'
.
Will
■
be
.
sent
on
Officer
.
request
Branches in
Laird, Bissell & Meeds
Members
-
120 BROADWAY, NEW
■_
...
'
j
t
,v-;
26,
London,
India!
Colony,- Kericho
Paid-up
YORK 5, N. Y.
Reserve
Burma, Ceylon,
Capital
Fund
.
Bishopsgate,
E. *C.
Kenya,
Zanzibar
Subscribed Capital
,
.
and
Kenya •
Aden
t
' '
_
;•
£4,000,000
£2,000,000
_£2,500,000
"
detail.
Telephone:
Bell
BArclay 7-:i500
Teletype—NY
1-1248-49
.
.
(L. A. Gibbs, Manager Trading Dept.;
.
-
and
'
New Yerk Stock Exchange
Members-New York "Curb Exchange
contrOlb,
bring
.v-
.
Bankers to the Government in
Kenya Colony and Uganda
.
Insurance Stocks
this
materials
INDIA LIMITED
oi
Casualty
■
sufficient
hope in existing circumstances to
FORD
to
50.5%,
43.9%
Underwriting profit to premiums earned-
dewh
Whether
mistake to be dogmatic in opposing such
Without which there is
45.0 %
42.7%
Expenses incurred to net prems. written.
It is for the Govern¬
discriminatory curtailment of credit is a matter of
It would be
51.5%
43.1%
premiums earned
Expenses incurred to premiums earned..
f
;
;
RATIOS—
*
i
3,069,153
2,211,750
expenses
Underwriting
ci^r-direction, unless accompanied by
employment,, in
workers
5,489,378
adjust¬
including
incurred,
•
„
$
2,677,271
other: -Indiscriminate disinflation might
in the wrong
$
Surplus to policyholders, Dec. 31_._ 2,770,649
Net
Demand ..for labor must be /
ment to decide in which direction to
165,907.76
of reserves of
long as
v 1943
-
$
H.
drastic, controls.
certain degree of
ag^in
prevails.
end—by means
reduced oneway or
(b)
•
are-two
be' brought, to
,
'
everything
;
4,728,161;,
2,756,101,
1,973,354.
1,972,060;
2,230,74812,017,493;
Unless
is_what has happened again and
MEMORANDA
,
,
conceding practically
during recent months, and will continue to happen so
of
of
Assets pledged or
•
to
1949
'
assets, Dec. 31—6.222,312
Total liabilities, Dec. 31__—__j__ 3,451,663
Unearned prem. reserves Dec. 31__ 2,465,689
workers for the sake of avoiding loss.of produq-
tion through strikes^,This
J$l,000,000.00.
t
simply amount
days
-1950
-
Total admitted
-
•demanded by the
/
;Y\.».;
rexceeds .the.number oi those looking for jobs. Under mere fyjl
-employment-r-when. theT number of vacancies equals to that ;of
unemployed—it would be possible to settle wage disputes by
means
of compromises.
As it is, "settlements" of wage disputes
$2,974,075.38,
—
;
1948
(Fire ahd Marine)
000's
an
li#oSed W the ' smaller incomes haf heeii tapcellecT
out by concessions made in other directions. But even if he im¬
posed all the additional taxes of some £ 170 million on the lowei;paid workers it would not have solved the problem. For theworkers are in a position to claim corresponding wage increases!to
compensate them for the higher-taxes, and to enforce their claims.
Likewise, if the cost of living had been raised through the aboli¬
tion of food subsidies, amounting to some ,£400 million,-the result
-would have been corresponding wage
demands. • Consumption
could only have-been reduced during the time-lag between the
rise in taxation revenue or prices and the rise in wages.
If there existed only full employment instead of over-fhll
employment -the industrial balance' of power would not be iso
overwhelmingly in f$vor of the workers, and they might be In¬
duced to" agree to some lowering of • their standards of living
for the sake of national security through rearmament.
As it iiS,
they hold all the trumps and they know it. Any industrial worker
who would lose his employment today would have the choice
between a number of alternative employments. Indeed the reason
why the -present situation can be regarded as one of over-fyll
'employment is precisely because the number of vacancies ^ar
AC-
COUNTS
TOTAL
j,'-
"
until a stage is reached
productive capacity needed for rearmament would have
their replacement.
As things are there seems to be no hope to expect a solution.
Mr. Gaitskeir$ Budget for '1951-52 imposed most Of the additional
taxation on the larger incomes, and the effect of such taxes as
.
80,289.03
-
corporations
,
>
4 LIABILITIES, r;
■
f
prevail.
1
"
!■'
__________15,351,939.24
and,, fixtures and >;
-,88.137.68J
have heen
TOTAL ASSETS—
:
workers, and
as over-full
to be diverted to ensure
over- v
assets
Other
i
(in-
$1,057.07
in eresting
-
Totals of 372 Stock Insurance Companies
at which
159,150.00
——
discounts
and
Loans
"
•
•
Comparative Aggregates—1950, 1949 and
sumption would continue to be depleted
t
882,548.88
political subdivisions-^—
bonds,
notes,
and
Other
(■
•
Einzig
their
;"._•»
and
direct
Paul
purchasing power is reduced—whether by means of taxation
increase of prices unaccompanied by a corresponding in¬
crease
of wages—the existing stocks for essential civilian con¬
"
$7,704,354.36
__—'
particularly
is
that
comparisons
periods.
Dr.
solution for the economic problem.
sanct, there can be no
process
Government
States
obligations,
T
in
collection..
of
United
these
aggregates
presented below as taken from the "1951 Spectator Fire Index";
are
the loss, expense and underwriting ratios for the respective,
prevail¬
they must be faced.. ;
,
*
long as the standard of living of the industrial workers,
which has been raised since before the war, is considered sacro¬
cluding
and insurance lines, the
groups
very
of 372 stock insurance companies (fire and
marine) for the past three years. Also shown in the compilation:
So
banking
•
of
One
the
is
and
b.;..
by
helpful in evaluating the broad results of
the fire insurance industry or those of a particular company.
is
information
matter of common sense
elementary
an
shown
breakdowns
the
and
has shifted strongly in favor of the industrial
is bound to remain in their favor so long
is
the Fire Index is presented from
insurance underwriting operations and not from
that of the stockholder who is usually more interested in the
financial results.
However, because of the comparisons madethe standpoint of
that, in order
to be able to rearm and to maintain a reasonable volume of
export trade, Britain must reduce the volume of civilian consumption. It is, or should be, equally obvious that this can only
be achieved if the purchasing power of the great masses of con¬
sumers with limited means is
reduced. Even if all the wealthy
and well-to-do people were to be reduced by confiscatory taxation
to starvation level the reduction of civilian consumption thus
achieved would not be nearly enough. It is not the consumption
of the thousands of rich people' that matters, nor even that of
the hundreds of thousands of people with medium-sized incomes,
but the consumption of the millions with small incomes.
From
a
humane point of view this is deplorable.: But facts are facts,
It
•
manufacturer in the country.
gear
it
employment continues to
diversified
be the most
to
claims
power
that
Inc.
Works,
by groups is shown.
Much of the information in
further increase
Aircraft Co., and
craft Co., Beech
United States'
reinsurance and
companies. In addition, informa ion on pre-'
arid losses by lines for the past two years and undeiwriting'"
miums
'
ing in Britain today it is bound to lead to a
of prices. The basic fact of
the situation is that4he economic balance of
Co., Bell Air¬
Motor
'Continental
in the circumstances
detailed information on ihe
370 stock companies as well ask
issue eontaini
current
of foreign
branches
.
Engine Co., Highway Trailer Co.,
the
underwriting operations of over
data on certain mutual,
"
'
in
similar
These facts do not
prevent Socialists from claiming today that
'was
acquired, its financial con¬
dition had become precarious and
they alone stand for full employment Un¬
-its backlog of orders amounted to
fortunately they stand for more—they stand
only $400,000. Since Mr, Gunder- v for over-full employment, which is not'the
same thing., If Keynes knew to what use his
son and his associates have taken
control of the company, "it has
proposals have been turned he would turn in
his grave.
'
'
; '
•
•
"received - large
orders
directly
Over-full employment effectively prevents
from the Government and from
Britain from v/orking out a satisfactory solu¬
Cadillac Motor Car Co., American
tion to the economic and financial aspects of
^Locomotive Co., Cleveland Diesel
her rearmament problem.
Whatever remedy
since 1868,. the "Spec¬
Recognized as an insurance .authority,
„
tator"
ployment after the war.
control of the company
the
•time
Stocks
This Week—Insurance
-
;
u.
.
JOHNSON
H. E.
^
'July of 1950, Gunnar E.
control
-
•
a
policy- aiming at full employment is
not a Socialist invention.
It is the invention of Lord Keynes.
When during 1929-31 a Socialist Government was .in office in
Britain, it refused to adopt the policy recommended by Lord
Keynes. During the war the Coalition Gov¬
ernment with1 a
Conservative majority de¬
clared itself in favor of aiming at lull.em¬
-
•
.
.
working out
LONDON,
additional
•shares will be used for
By
Britain
Asserting over-full employment effectively prevents
of
Brad Foote Gear Works, Inc. "as
<a speculation" was made on April
>24 by Gearhart, Kinnard & Otis
and White Co. at $2 per share.
20 cents)
(par
common
;
Thursday, April 25, 1951
.u
.
uptfflftuwiMtfw twmwwwtwww'r wv
(1762)
18
f
Chronicle
*51* twws"t'
.
.
Specialists in Bank Stocks
.
The
Bank
conducts every description of
and exchange business
-T
benking
-Trusteeships and Executorships
also undertaken
,
-
<
-
Volume 173
Number 5C06
.
.
The Commercial and Financial Chronicle
.
10
(1763)
*
cash in
Investment Bankers' Role in the
Voluntary Credit RestiaintProgram
Member, Board of Governors, Federal Reserve System
After describing inflationary background of current economy,
Governor Powell outlines motives and procedures of the Volun¬
labeled, "Learning
With National
to
and
inflation
an
in
Outside
States
day in spite of the gold exports in
the last year and a half.
There was a respite in the prob¬
genera¬
lem during World War II. In fact
United
tions
found
has
it
pos¬
we
were
very thankful to have
such large gold reserves for these
side
out¬
•
enemies
Government
securities
in
huge
living
find
our¬
the
and
bank
creased and
went to work
greatly in¬
these bank deposits
for the purchase of
civilian goods, price advances oc¬
curred as soon as controls were
in the behavior of bank
nomenon
deposits.
This
the fact that
wqs
the turnover of hank deposits had
defense items while maintain¬ turnover of demand deposits from
ing the supply of civilian /goods 31 to 37 times, was considered
at as high a level as possible.
normal
for
leading cities.
By
If the total demand for goods 1945, this turnover had been re¬
exceeds the supply, prices go up.
This is inflation. It hurts the civil¬
deposits
ian
the monetary work that it did in
and
the
increases
defense
A
considerable amount of price in¬
program.
has already occurred
the Korean War began.
crease
duced
the
16
to
was
dollar
of
doing only half
of
that
so
a
There has been some
1920s.
increase in deposit turnover dur¬
since ing the postwar years, but even
the sharp increase since the Ko¬
The restraints against inflation¬
rean
War started has not brought
price advances must cover a the turnover rate above 23 turns
front. First of all is an a year.
If the owners of bank
adequate tax program. Then, peo¬ deposits were to use these deposits
ple should be encouraged to in¬ with the efficiency shown in the
crease
their savings. Abnormal 1920s, prices could increase sub¬
profit margins
should be
dis¬ stantially from present levels
ary
broad
couraged.
without
If commodity prices can be held
in check, further rounds of wage
increases
should
be
avoided.
all, individuals and busi¬
encouraged not
to
buy * more than
requirements.
any further increase
bank loans or investments.
No additions to the national
operations in
mittee have been made up to the
v
with
one
particular phase of inflation
con¬
deals
some
economics. Since
with inflation,
that
an
we
we
should recall
when the money supply increases
more
rapidly than the volume of
or
in the control of inflation.
ers
reluctant
when
the
of
rate
increase
in
gold
re¬
serves which are the base of the
which
make
it
gold
possible
Voluntary Credit Restraint
years
grow
can
in 1950 and in the
1951.
the
was
monetary
into
the
to
in
to
three
deal
major
field,
Production
up
Act.
The
the program
delegated to the Federal Re¬
Board,
serve
consult
with
which
the
body
Federal
$2 billion
commercial and industrial
these
at
during
banks
showed
the
The
made
field
'
that
loans
to
heavy
important
action
next two
the
or
moves
their headquarters
at New York,
and San Fran¬
The .national
committee
Chicago,
Dallas
cisco.
that
fortunate
it
to
,
outstanding
must
has
been, extremely
obtain
as
regional
members
,•
m e n
a
group
of
representing
Considerable progress has been
made in other directions.
The
Trade
committee
has
also
asked
Federal Reserve Board
statistics on the
operations
of
insurance
companies and on the issues en¬
tering the capital markets. Thu.s,
similar improved
credit
we
will know where the trouble
spots
and will be able to
currently the progress of
are
measure
the program.
Task of Investment Bankers
While
the
development of
ments
of
raised to
member
banks
A tentative
take
will be less in 1951 than in 1950.
gram.
Thus, the capital market will be
part in the Voluntary Pro¬ breakdown of their loans so that
For this purpose a letter the national committee can ascer¬
Was sent to some 90,000 lenders, tain
periodically
whether
the
the broadest list available to the volume of bank credit is rising or
Federal Reserve Banks, The next falling and the cross currents due
called
on
for
a
large amount of
Continued
on
page
April 24, 1951
NEW ISSUE
151,250 Shares
The Public National Bank and Trust Company
of New York
Capital Stock
:
Holders of the Bank's
outstanding Capital Stock are being offered the right to*
the above shares at the/rate; of one sha/e for each
four shares of Capital Stock held of record on April 20,1951. Subscription War¬
rants! will ■expire at 3:00 P.M.j Eastern Daylight Saving Time, on Miv 9,1951.
subscribe
their
the
were
at
#40 per share for
agreed, subject to certain conditionsYto pur¬
unsubscribed shares and, both during and following the subscription
period, may offer shares of Capital Stock as set forth in the Offering Circular.
The several Underwriters have
chase any
;
,
f :
Copies of the Offering Circular may be obtainedfrom any of the several underwriters only in States in which such underwriters are qualified to act as dealers
in securities and in which the Offering Circular may legally
be distributed.
*
*
■
V
substantially their upper
by Governor Powell before
Pennsylvania Group of the
Investment Bankers Association of Amer-
bonds
Holders
instead
securities
as
of
long-term
of
treating, those
true
investments
ica, Philadelphia, Pa., April 13, 1951.
<
came
to
consider them
equal
to
the
Voluntary Credit Restraint Pro¬
gram
up to date has
revolved
principally around the commercial
banking aspects, investment bank¬
ers have an important .task to do
which will grow in relation to
other parts of the program until
the peak of the defense effort is
passed.
The estimates of plant
problems in relation to the
Voluntary Credit Restraint Pro¬
program was drafted by a group gram.
The first, bulletin dealt
of investment bankers, commer¬ with ..the
subject of inventory
cial bankers and insurance com¬ loans.
In view of the rapid in¬
pany executives at the request of crease in inventories, particularly
the Federal Reserve Board.
This at the retail and wholesale level,
program,
with certain changes, the committee decided that this
expansion by American'industries
was
approved by the Attorney was /its
number one problem. for the year 1951 total Up to the
General on March 9, 1951.
The Progress, has also been made in
staggering sum of $24 billion. A
organization of the prqgram has collecting be 11 er statistics to
portion of this capital outlay will
been proceeding rapidly since that measure the developments in the
come
from
internal savings of
date.
credit field.
The largest banks
business, but with higher taxes
The first step was for the Fed¬ in the United States have already
and higher costs of operation, it
eral Reserve Board to request all begun reporting
weekly to the
lenders in the United States to Federal Reserve Banks a detailed seems likely that internal savings
proval of the latter.
Both-
in
the
to obtain
substan¬
contract
three
bankipg problems, four for
weeks similar information will be
and. twelve
for
available
for
the larger banks
commercial banking. Investment
across the country.
The national
banking regional committees have
and
the
Attorney national committee has issued the
General of the United States and' first of a series of bulletins on
the program must have the ap¬ credit
,
to
in¬
insurance
Commission
monetary authorities have
of
loans
past:
dustry presumably for defense in
large measure increased $43 mil¬
lion during the three weeks end¬
ing April 11, whereas loans to
commodity dealers, retail trade
and light industry decreased $84
Within
ment
been
in¬
"
credit
the
;
The First Boston Corporation
United
♦An address
Eastern
and
with
There are four
million.
committees for invest¬
regional
toward inflation control in
early months of
;•
■.'
effects.
the
picture of
committees
problems
lending fields.
life
To complete the
of bank credit
"This
.
of credit have
regional
with
funds, for mortgage loans and for
many other types
been reduced.
\
Voluntary
The national committee has set
up
bank deposits, and second, a
rate of turnover of deposits which
it
has
been
demonstrated
in
cally unusable for several months.
was the employment of open
States, adding further to the basic
gold reserves.. From that time on, market operations which were de¬
the problem of monetary authori¬ voted almost solely to maintaining
ties has centered largely around a pegged price for long-term gov¬
The pegging
the management of these large ernment securities.
gold reserves in such a way as .to of the government bond market
prevent
undue manufacture of had deep-seated and pernicious
of
to
excluded from the
Program.
and
*I?ank credit pyramid. In the next legal limits.
One of the most important tools
few
years
after devaluation,
world events caused a tremendous of inflation restraint was practi¬
inflow
are
Hold¬
dump them on the
market and as a result supplies of
in
increases to a inflationary effects of these in¬
point where the' monetary work creases. Last. August, the discount
of
the
Federal
Reserve
done by "the money supply is rates
were
raised
somewhat.
greater than needed for the Na- Banks
tion's business., This story really The consumer credit regulation
A new regula¬
starts back in 1934 with the de¬ was reestablished.
valuation
of
the
dollar.
That tion dealing with real estate credit
Reserve require¬
event
immediately
created
an was imposed.
■enormous
government regulations and thus
of those securities have been
turnover of money
•
in
elementary bank credit ahd the turnover of
bank deposits increased sharply
are dealing
increase in prices occurs
-business
reduction
recent
of long-term government
bonds has had far-reaching effects
we
beginning, I want to take tially above -today's levels.
to
The
This
compared
increase in
is not a' large decrease
year.
However, it is a move in
present time since many types of the right direction. Furthermore,
lending are already under various a detailed analysis of these loans
have two difficult fac¬
supply to deal
first, large basic reserves
Thus,
former
trol.
back
pegged bond mar¬
com¬
industrial
and
loans decreased $41 million.
tors in the money
their normal with:
The Inflationary Background
you
a
For the three
ending April 11, New York
commercial
City
City
York
New
Difficult Factors in Money Supply
crease the amount
As a
spokesmen' for other
Federal types of lenders on this committee.
Reserve authorities to cease their
authority to set
the Nation
The problem resolves itself into declined, steadily from the 1920s
of increasing the production until 1945.
In the 1920s an annual
address
include
to
as
war
of
Thy
be made if it seems desirable
large, medium and small institu¬
tions and widely distributed geo¬
graphically.
of
selves
be
possible for the
can
Defense
the
of
one
should
your
from
commercial banks.
weeks
Chairman. Further ad¬
as
deposits
close
stand¬ found itself with bank investments
ways and faced with
■the problem of rebuilding a strong
national defense.
nesses
at
committee
limited
Above
with
ditions to the national committee
,
inaugurated under the
provisions of Section 708 of the
the
removed.
These
price advances
World, able to depend on other would have been much greater ex¬
countries for protection only in cept for a little-understood phe¬
the
representatives,
pany
speaker
bank reserves
manufacture
'
available
com¬
has
a
•
most
power¬
ful non-communist country in the
of
This
bankers and four insurance
developing
j
economy
Reserve
the rising volume of defense
lending and the desired decrease
in other types of loans.
"
Excellent figures' are already
to
commercial
bankers, -four
feels
we
cost
~
price.
same
ment
there is the Voluntary Credit Re¬
straint Program.
This program
at home. Now
,
a
moves
ard
very
of
quantities to provide for
and to devote money for war over and above the
its
energies amount provided out of national
completely to savings and taxes. However, at
higher
Oliver S. Powell
chase
appointment
to
sible almost to reserves made it possible for the
forget defense banks of the United States to pur¬
against
Federal
the
sell
could
prices
com¬
the
was
caused the Federal Reserve Banks
ket.
modity prices. This holds true to¬
of actual war-time conditions, the
the
at
it
change to support of an
orderly government security mar¬
Live
Defense."
for
credit
to
that
sure
ket and to
advances, inasmuch as
$24 billion of new capital issues are overhanging market and
threatening to boost inflation further.
The title of this talk might have
them
became
mercial banks in screening loans and
been
be
the whim of the holders of gov¬
ernment securities.
Recently, it
tary Credit Restraint Program, set up under the Defense Pro¬
duction Act. Says investment bankers should join with com¬
;
a
could
Banks
By OLIVER S. POWELL*
step
national committee by the Federal
In its original
could be sold to the market , Reserve Board.
fixed rate and the market form, it consisted of four invest¬
they
iat
*
liquidity. In fact, they were
equivalent of cash so long as
the
Blyth & Co., Inc.
Goldman, Sachs & Co.
Lehman Brothers
Ladenburg, Thalmann & Co.
Merrill Lynch, Pierce, Fenncr & Beane
Paine, Webber, Jackson & Curtis
Kidder, Peabody & £o.
Carl M. Loeb, Rhoades & Co.
C. E. Unterberg & Company Wertheim & Co.
32
20
The Commercial and Financial Chronicle
(1764)
The 15th annual banquet
of the
An Official Protest and
Canadian Securities
Quarter Century Club of the Na¬
tional City Bank of New York and
City Bank Farmers Trust Co. was
held April
hundred
world
of
domestic
total
hosts
of
of
Brady,
of the Board;
a
guests
were
Gage
Burgess,
Eleven
members
1,870
Wm.
Chairman
dolph
Hotel Astor.
Jr.,
W. Ran¬
of the
Chairman
Executive Committee of the Bank
find Chairman of the Board of the
Trust
Reply
By WILLIAM J. McKAY
in the Grand Ball
19,
Room of the
A
LETTERS TO THE EDITOR:
Nat'l City Club Dinner
|
Thursday, April 26, 1951
.
..
Canada will watch with anxious
interest
what
to
appears
the
be
view
the known
of
Conservative
on
a
TVA Operations
tW. L, Sturdevant, Director of Information of Tennessee
views on this subject it is highly
Valley
-Authority, takes exception to conclusions made by Cornelius
W. Wickersham, Jr., concerning operation costs of Wilson
of the first
introduced by a
though it could never be ex- Conservative Government would
hydro-plant in article in "Chronicle" of March 29. Mr. Wick¬
pressed, the fall of the Labor be the promotion of emigration to
ersham offers a rejoinder.
Government
could
only
bring Canada. Such a step would not
Mr. Wickersham's
Rejoinder
hopes of a brighter era for Anglo- only contribute toward the solu- Editor, Commercial and
Canadian
relations.
This would tion of Britain's problem of mainFinancial Chronicle:
Editor, Commercial and
similarly apply to other British taining a population far beyond
Financial Chronicle:
7
We have just seen the article
Dominions
where
the
political the economic capacity of the Brit- ."Roadblocks
to
Progress"
by
In
my
article "Roadbacks to
trend has recently swung to the ish Isles, but it would also help
Cornelius
W.
Wickersham,
Jr., Progress," I made the point that
right, and also to this country. It to meet Canada's crying need to
page 13 of your March 29, 1951,
government operation being re*
can not be denied that the narrow
populate
the
Dominion's
vast
issue, in which he suggests com¬ moved from the "discipline of the
doctrinaire
climactic
stage, of Britain's
political
crisis.
protracted
long
Al-
probable
that
measures
to be
one
,
-
Company;
C.
Howard
,
.
-
Sheperd,
President
National
of
City, and Lindsay Bradford, Presi¬
dent of the
ward
Trust
Mitchell
F.
Chairman
assisted
this
of
by
Company. Ed¬
Committee
was
affair,
year's
and
Wehr
Harry P.
principles of the
years
retarded
ment
in
toward
Randolph S. Merrill.
7
.
natural
ment in Canada of satellite towns,
Provincial
the representatives of the
have
Government
appar-
•.
Wilson, "it
was
the
Corporation
Board" of Trade
the ill-fated African
clearly
chicken ventures have, at the ex-
demon-
by narrow doctrinaire prejudices,
British representatives failed
completely to envisage the tremendous
possibilities of; broad
imaginative
collaboration y with
the most
promising member of
the British Commonwealth.
L
the
CANADIAN STOCKS
restrictions
'
New York 5, N. Y.
1-1045
Boston 0, Mass.
industrial
Canada world¬
as a leader
in
v'.r-;*''
,,
In the event oJ
.
and
ticle but has failed to
which
will
sons."
major
Electric Corporation
and
require
only
41
.
per¬
>
watts and its supervisory,
maintenance
and
to par¬
receive
This
,
Of Harriman
its
strong
encouragement.
clearly-, demonstrated
during
debate last year in the
of
Commons
on
Anglo-
a
Co.
trade.
It
had
been
have been of somewhat of
Members:
there
was
is
Ripley
Bay St. Toronto, Canada
catch
Windsor
the
Brampton
with
M.
servative
numerous
P.'s
Con-
still
trying to
Speaker's eye. During
the
discussions
President
Harold
Wilson of the.Board of Trade
severely
by
was
opposition
o
„
R pley &
Olive^E Sefbert
Citv
City, Oliver E. Seibert
the
Company
to succeed the
a
professional engineer ac¬
countant, that if TVA had to com'-
new
pete
TVA's
modern
sonville,
plants—say John-
which
will have
an
in the
completed
of
when
the
installed capacity
persons.
v-
]-
-
We believe
the
you
in
error
■
"
•
originally given to Congress that
sale of power
your
of
of
navigation.
ness
-
/
former
tional
v
C:
of
Commerce
of
New. York
r
.
7) '■
yours,
7
WICKERSHAM, Jr.
W.
April 23, 1951.
Forecasts Good Shoe Business
salesmen's confer¬
predict heavy consumer demand will raise sales, despite
talk about heavy inventories and rising production.
business chase of shoes should cause shoes
but with to move quite freely. There is
the possibility of price increases every reason.to feel that the shoe
unless leather costs are brought business should be good this fall,"
Forecast for good shoe
in
the
under
into
months
control
line,
ahead,
or
themselves
fall
from
top execu¬
International Shoe Com¬
came
tives
of
pany
that addressed salesmen in
surge
of
April 19. 7
consumer
took
buying
place in January and
February
included :
buying
shoes,
of
of other
some
scare
consumer
Board of International Shoe Com¬
Bank
,
New York City,
but not to the
goods,"
Byron A. Gray, chairman of the
Na¬
improvement
14 Wall St;,
Authority,
Knoxville, Tenn.
April 12, 1951.
extent
with -the.
the
.
Sincerely
.
Information,
Tennessee Valley
which
hanking busi-
would be merely a
of
by-product
/
W. L. STURDEVANT
Director
thereby
terprise contrary to the assurances
Very truly yours,
)
and
Wickersham's
7
>
sales
its
limiting the field for private en¬
will agree that
Mr.
story should be corrected in
columns.
enlarging its
extending the
is
facilities,
of
area
■■
■.
region, instead of this
same
government
power
675,000 kw. and employ about 330
.
-the
filtered
with
basis
equal
an
on
private power companies, it would
comparisons
St. Louis, Mo., on
Seibert
Mr.
pay
sum
require. However, 'have to double its rates and then
are to be drawn,
its. rates would' be
higher than
they should be made with one of rates of private power companies
if
"The
R. Eppel,
fails to
anywhere near comparable
to taxes on a private utility.' It
has been alleged by Mr.
C. J.
plant and the smallness of
William
late
its
pany,
said.
not feel
"Evidently people did
were going to
that shoes
Mr. Gray said.
.
> "("7
Following Mr. Gray's remarks,
Edgar E. Rand, President of the
company, said: "National income
is high and will be higher, there¬
by causing heavy consumer de¬
mand for goods of all kinds. In
spite of talk about heavy inven¬
tories -of
shoes,"
the company
president said, 5'we do not believe
that
shoe
production in
490,000,000
pair-.—
1950 of
only
3 3/2%
above the slow year of 1949—was
excessive..
Our
reports
do
not
show
a
seriously
overstocked
other things, condition
and
later
for this time of year.
ure
either
to
promote
Angloparticularly
items
made
of
metal,
joined
the
.We are confident that the com¬
Canadian trade or to preserve the
electrical appliances and so on.""
Oliver E. Seibert
staff
of
The
ing, season will be a good one." C
customary cordial relations with
Chase
N'a■
Referring to the condition of
"Unless a
the Dominion.
price regulation is
At the same time
tional Bank of the City of New shoe
inventories
at
retail, Mr. issued which brings leather into
the Conservative members indi¬
York. He became associated with Gray went on to say:.. "Probably line with the hide
cated that they were of the gen¬
prices estab¬
the
National
City Company of the greatest danger is the possi¬ lished under Ceiling Price Regu¬
eral opinion that Canada was the
New York in February, 1929, and bility that retailers, finding them¬
lation
land of promise of the coming
2, or unless the leather
joined the staff of Harriman Rip- selves short of capital, may go to market itself moves lower, we
decades.
••
"
* '
"
* '
jtsy & Co., Incorporated at its extremes in cut-price liquidation will be compelled to raise our
In addition to new outlook on
organization in 1934. He .was ap¬ sales in order to reduce their in¬ prices subject, of course, to our
Anglo-Canadian
trade,
a
Con¬
pointed ." Assistant
Treasurer
in ventories and to pay their bills.
servative administration in Brit¬
price ceilings. If; leather prices
March, 1946.
"We are inclined to agree with
ain would bring about a welcome
are revised
downward by further
those
who* take
the
view
that
change of policy with regard to
action of the OPS, our shoe prices
With
H.
Af
Riecke
;
the question of British emigration
good merchandise today is like
to
Canada.
PHILADELPHIA; Pa. — Mrs. money in the bank to the retailer are not likely to be reduced be¬
Under- the
existing
who
can afford to hold on during
cause
the cost figures set up for
regime the financial restrictions Margaret * Lawrence
has joined
members
INVEST IN
criticized
of
board
it
and
books
its
on
personnel
proud of its
criticized
States
the staff it will
ence
,was
eiecteQ
Treasurer
of
animated debate that
an
terminated
of Canada
per¬
On the contrary
functory nature.
Exchange
The Investment Dealers' Association
a
<£,
^k
New Y0F,k
ex¬
pected that the discussions would
United
a
glad to know that Cen¬
are
steam
Oliver Seiberf Treas,
the probable fall
was
-
the
the
report for failure to charge
interest costs in a proper amount
-
Hudson
General of
Comptroller
yet
Green,
We
•)
perhaps the show¬
'
*
The TVA is
1949
operat¬
totals 92.
tral
to
endeavored
I
premise
ar¬
my
impair the
piece of our American socialism,
We're
ing,
-
prove.
1
International Shoe Company executives at
..
Canadian
Brantford
.
replacement, by a
Conservative„
At a meeting of the
administration, British, economic..
Urt
cooperation with Canada would directors of Harrtman
assist you.
Sudbury
en-
of the Labor Government and
House
Hamilton
»n
recognition
this field.
ticipate in Canada's growth.
330
offi-
private
British
leading
wide
long experience with Cana¬
dian industry will be of benefit
to you in
selecting suitable in¬
The Toronto Stock
British
planes, have giv
IN CANADA
&
narrow
long ' been stifled by Socialistic
regimentation.- "
During the week there was lit-
.
-
Our
jMLilner, Ross
Gas
details of
certain
'rected
erating plant of the Central Hud¬
son
.
INVESTMENTS
through which
onerous
ing from the scene of a government that no longer has the support of the long-suffering British
people will at least give
greater scope to private enterprise
and individual industrial
and financial genius that has so
somewhat surprising weakfirms of world-wide repute have ness
of
the
Canadian
dollar,
migrated
to
Canada in
recent Stocks were mainly firm, with
years and have made a valuable
interest principally centered on
contribution
to
the- Dominion's the- paper
issues led by Great
economic strength.-A notable exr Lakes, Eddy, Price Bros., Brown,
ample is the new airplane man- and Fraser which reached new
ufacturing industry founded
in high points for the year. ; The
Canada
by the Hav.ker-Siddely base-metals and golds were also
group.
Already the products of steady but the Western oils with
their vast plant at Malton, Ont., a few exceptions shov/ed a tenthe Avro jet airiiners and fighter dency to decline,
suit
Fifty Congress Street
can
peanut and
terprise has done its best to take tie activity in- either the' external
advantage
of the
opportunities .or internal sections of the bond
offered
for profitable
establish- market but the internals were
ment in the Dominion. As a re- marked down on the continued
Two Wall Street
NY
the
and
outlook
cial
A. E. Ames & Co.
by
impeded
Although
'
with the
men,
60,000 kw. steam electric gen¬
new
not to be expected that the British
Labor
Government
would
respective view- pense of the tax payer,'received
points of Canada and socialistic the blessing of the inexperienced
Britain v/ere poles apart. Blinded- Socialist administrators. The passthat
strated
We
erate requires 200
.
of the
President
Municipal
incorporated
60,000
sorry to spoil the neat¬
all sentiment in look too kindly on a scheme that
their dealings with the senior Do- would place a strong segment of ness of Mr. Wickersham's example
minion.
During
the
visits
to" British industry out of reach of by correcting his error, but the
Canada
of
former
Chancellor bureaucratic control.
Instead, Wilson hydro plant has an in¬
Cripps and the recently retired state enterprises of the order of, stalled capacity of 436,000 kilo¬
Government
vestments
TVA's
of
Parliament was for the establish-
democratic
the
of "the operation of the profit motive" is less efficient
kw. hydro-electric •than private operation. Mr.
plant at Wilson Dam, which to op¬ •Sturdevant of the TVA has cor-
parison
made
member
entJy eschewed
'
4-2400
suggestion
Conservative
a
spite of the generous Cana- .whereby certain industrial cities
dian gestures toward the Mother in Britain would be reproduced in
Country both during and after the Dominion.
It was of course
Labor
WORTH
by
greater economic freedom,
a-
In
CANADIAN BONDS
•
empty spaces,
One striking
moveworld
the war,
■
La-
bor administration have in recent
for his. lamentable fail¬
be as'-short
as
many
,
CANADA'
Information
7
Canadian
Available
all
Securities
on
Robertson
Montreal
MEMBERS
on
&
request
Morgan
Stock
Exchange
The
Toronto Stock Exchange
Montreal Curb Market
266 Notre Dame St., W., Montreal
38
'
King Street W.
"
.
Toronto
61
Queen St.
Ottawa
imposed
to
on
Canada
.would-be
emigrants
demonstrate
the
un¬
H.
A.
Walnut
Riecke
&
Street,
Co.r
Inc., 1528
of the
members
a
period of low sales.
"A little later
on
the cut in out¬
these
willingness of the Socialist Gov-
Philadelphia-Baltimore Stock Ex-
put of durable goods and the ac¬
ernment to encourage a
change,
cumulated demand resulting from
on
the
dent
movement
in
this
population
direction.
In
as
a
Registered
Kepre-
sentative and assistant statistician.
consumer
postponing his pur¬
new
lines
ticipation of
leather,"
a
are.
based
on
an¬
much lower price
the
concluded.
company
presi¬
Volurre 173
Number 5C06
.
.
The Commercial and Financial Chronicle
.
(1765)
Cites
Public\
Impact of Federal Taxes
taxes
along with swollen construction
utilities securities' favor with
International Hydro-Electric System
•
International Hydro-Electric System was organized during the
1929 "hey-days" of holding companies, with a typical inflated
capi¬
resulting from the high prices paid for its utility
some years it was controlled by International Paper,
& Power Company, which owned the entire class B and common
These stocks
only to
with
lapse
the
turn
of
events.- Some
time
the
threat
h i g
h
.
in
yearly
expenditures
Consolidated
the
of
Gas
.
~was
spending
the
on
for
cost
this
swollen
con¬
i
g a
n
i
the
in-
n g
favor
vestors'
curities.
-
Both the preferred and class A stocks have been strong in the
past year, but the A stock has outstripped the preferred, with the
Mr.
.Charles P. Crane
,
result that
creases
.;
taxes
problem jfor
v
end of
1950 we
of
know,
you
money
bond
of
obliged
were
;
P.re-;
we
sold
,
basis.
issue,
Even
after/
preferred
our
We
are
hopeful
that.
would
you
whether
be
we
like,
expect
bonds
to
our
know
>
next issue
4
stock. Of course,,
proximately $18,500,000 per year.
1950 alone we expended $25,- ;we are governed to a large extent
rjs
serious
a
reaiize
$29,000,000. : :
over
or
that
\
by market conditions at the time
Of issue and by the Company's.ability to support from its earn-;
rapidly
utility companies
they must generate
of
managements
* expanding
have
"There
little
a
«Th€
,
companies/'
utility
537,000 for new plant and faciliour capital budget for 1951
tfeg
...
poses
stated:
Crane
j
com-
40.5%.
stock, common stock and surplus
aggregated 50% of our total capi-,
to
"
-"The burden
Federal
surplus
<in
their1 se-
for
of
talization.
.•to finance a capital budget of ap-
and
j
formed
these funds will satisfy our capital we
averaged $5,200,000 per year; requirements
until the end of,"
during the first half of the 1940's 1951, but we may be obliged to,A
the average was again $6,500,000
go into the market again before i
per
year whereas, from
1946 to the year is over. I am sure most
!
in
i
average
->pansion of all kinds; in the 1930's
utilities
ag-'
securities
our
represented
most
Electric
with
industry
of
$25,000,000 of bonds in the latter
part of January, 1951, on a 2.74
1920's
Light and Power Co. of Baltimore
serious
problems
for
in
our
g
the
As
have
costs
brought' about the great increase
poses
they have been selling recently in a ratio of only about
51/2-to-1 (89 and 16respectively). The gain in the class A
from/,
1951 low of 10% seems due to three factors:
(1) the increase/
with
•'additional facilities. In the
struction costs
the
construction
total
our
ferred stock, common stock and,
surplus formed :54.4% of the total.;
growth and
$6,500,000 per year for capital ex-
of
already been very substantial in- not only electricity and gas whieh
in .Federal
income ; tax: wili
the standards set by
ings
the
higher
cost
of
equity.
money. I could not tell you at this)
time what form our next financ-..
ing will take, but I will repeat
that our management is definitely.*;
interested in preserving a sound /
and well balanced capital struc-.
sword
ofDamocles. .' Utilities
,"iarge volume which will find ture and by that I mean the issu-*;
which are not allowed to
earn
;favor ;in the eyes of the investing ance of equity securities whenever' <
over 5%
to 6% on their net
rate:;public Qnly a reiatively small feasible."
1 and
rates
hanging
increases
further
.
.
are
the
heads like the 1
our
over
not .have
do
bases
-
a
sufficien
of earnings to withstand.
raargrn
these continued tax rate increases.
.....
)
As a result of these developments a new plan seems to bev
gradually evolving. Last year the company retired the balance of
its debentures through sale of
part of its holdings of Gatineau
Power and through a $9.5 million bank loan (now reduced to about
$8.5 million). This loan must of course be paid off as a first step'in
regulatory agencies, but they
must also prociuce
securities in
portion
of
the
necessary
new
capftai 0f a utility company can
1
and
that
uiat
sioners
loners
Frank Foiled Joins
bg 0ktained from internal sources.
It,
^S .°Sy.- y} Association
a■^t^or
of., the .National
Railway
of
instance,
a
$30,000,000
Watsfon, Hoffman Go.
cap^aj requirement, we would ex^
obtain only $7,000,000 or
Utility
Commis-;
utility
utility
1
industry
n u u s n y , ^
^
nnn nnn
mlr
ta/?mmitte^ were^able'to^vert'
plan, and this could be done through sale of Eastern New
Conversations have been held with Niagara Mohawk
Power officials regarding possible sale to that
company of East¬
ern's hydro-electric generating plants, together with various water
rights, most of which would fit into the Niagara System. Eastern
FRESNO, Calif.—Frank C. Fol-
aenrpHation
iJ^/'s/be^^eeured
any new
■
'
York Power.
-also
owns
ings to less than 4% on their ratebases. Tnis would of course, have
seriously impaired the credit position of the utilities and militated
and leases to International Paper Co.-nine water power
-properties in New York and Maine-.
According to the grapevine, a
.plan might be evolved to sell these properties to a large insurance
.company, which would then renew the lease with International
Paper cn a long-term basis (the present rental from these proper¬
ties constitutes
about 40%
.earning-power for
.of taxes to
valuation
more
than
that, under the sale plans
might be realized.
?
would not
$8-10 million.
But it
to warrant
seem
has
been
V
,
ing rate increases. As I have said,
a
ihat: p"ariicula7 "danger
fied by an offer of six shares of Gatineau for
one
preferred,
assum¬
ing that the stock
were underwritten at 17.'This would give the
share (or more) against their claim for par and
totalling $108. Such an .underwriting seems impracticable,
preferred $102
arrears
a
a
premium in varying degree for
new capital.
The more costly
its
money,
„
service
the
the
ptiblic
supplied.
heeii * has
has
,
but
we
;
may
rates
higher
_
preferred stockholders might be satis¬
key ,of good financial credit.. Any iett has been in Wall Street with'company which does not enjoy the New York Stock Exchange
good financial standing must pay member firm of Hardy & Co.*
higher
Therefore
further inordinate increases in the-.
normal
assure
the
I
rates.
surtax
can-
that every one of us in
Consolidated's
devoutly
may
and
you
hopes
sound-financial cononly because , of. the
rates-which the ^public Pays, but
have to seek are kept in
compensate for- dition, not
yet
to
:
the
direct interest m
a
Katzenberg, Sour & Co.
Being Formed in N. Y.
the
utility
for
avoided at least for the time being,
,
that representatives of the
.
new
Company and other utilities would.'
rates
to
have been obliged to seek stagger¬
/V
,
such a
^ ,key which will unlock change and othei. principai stock
the-public s security boxes on ad- and commodity exchanges. '
vantageous terms and that is the
For ^ past 24 years Mr, Fol-,
the
reported
Assuming that Eastern New York can be sold and bank loan
retired, the next, step would be to retire the preferred stock
through an exchange for Gatineau stock. It was rumored recently
the
meet,
Had
under discussion, a larger amount,
now
expansion necessary
public's demands.
law been enacted, our
tal to finance
to
of the company's revenues).- Eastern's
stock in recent years (after adjustment
common
separate return basis)
a
of
against the securing of new capi-'.
1
Katzenberg, Sour & Co.,
is
chtage,
being
formed
action
such
not be necessary.
.
Assuming that the preferred
could be
(with the approval of the SEC and
fashion
'
retired
a
in
some
such
Federal Court)
only
the class A stock would remain.
The next problem would be to
persuade the SEC to permit the company to become an investment
trust, thereby taking advantage of the huge tax loss on the invest¬
ment
New
in
about 8%
would
England
Electric
System.
Since
This advertisement is under
for
•
sale,
;
'
or
-
_
•
aCquire from Harold P. Muris the policy of our Man- phy; and Lucien Katzenberg, lim-.
agement to keep the Company's ited partner.
; "It
$1,500,000
it currently owns
or
Plywood Inc.
holdings to less than 5%—the maximum percentage which the
usually consider in granting exemption from the Holdring Company Act.
rently
seems
being
be
to
investment
converted
precedent for
some
trust.
Central
into
an
States
open-end
While
it
many
6% Sinking Fund Debentures, Series A
conversion
Corp.
is cur¬
investment trust, and
fixed (managed) trust
also expects to
of its holdings.
.
-
With 7-year Warrants
150,000 Shares of Common Stock Attached
Dated
on
■
-
-
-
<
;
•
1963
Price 100% plus accrued interest
around
disposes of its
It is conjectured, based
gas
interests for
a
good price.
Copies of the Prospectus
several
Underwriters,
may
on
net cash generated in the
program
to yield 6%.)
United Corp. is
a
outlined above
were
reinvested
currently paying 200 tax-free divi4%% yield basis. On a similar yield basis
Hydro A might be worth about 22% if it could afford
to pay
Dividend payments could
probably be continued for many years
a
tax-free basis, since the New England Electric stock was
purchased in the old days at about 7
or
8 times the current price.
any
undersigned,
State only from such of the
may lawfully offer these
as
securities in such State.
H. M.
Byilesby and Company
(Incorporated)
$1.
on
be obtained in
including the
the above assumptions, that International Hydro-Electric might, after
retiring its bank loan and the
preferred stock, be able to earn over $1 for the class A stock and
possibly pay $1 dividends on a tax-free basis. (This assumes that
dends and sells around
•
Due APril
April 1, 1951
difficult
able and the company
/'
'
the
break-up value might work
$18-$20 a share. The estimate would be bolstered
by an improved price for New England Electric in the event that
that company restores its $1 dividend
rate, which seems a possi¬
bility within the next 12 months if water conditions remain favor¬
at
Purchase
re¬
-
sale of Eastern New York Power the
out
to
to
estimate
liquidating value of the
completion and consummation of such a plan,
likely that if a substantial price were received from the
A stock based
it appears
is
disposing of
ultimate
Electric
United Corp. hopes to achieve the status of a
within a few months. Electric Bond & Share
main alive after
of these securities
an
Electric it is conjectured that the SEC
distribution of sufficient NEES to reduce
SEC will
an
circumstances to be considered as an offering
solicitation of
of New England
require sale
There
no
NEW ISSUE
the
into
a
April 23, 1951
Of
also because of the type of qferv- g Sour, who will hold the firm's
1C® which the utility company is Fxcbange membership, which he:
offer to buy any of such securities.
The offering is made only by the Prospectus.
as
as
May 4 with offices at 15 Broad
gtreet> New York City: Partners.
are ^jiton R. Katzenberg, George
management^ able t0 render.
that
mem-
be~a;^he'New 'York StocklS"'
for the time
being at least. Possibly the offer might be "sweetened"
.to make up for the
slightly lower level at which underwriting
might be feasible.
"
'
<
:<
.
around
■■■';
swollen
/
f
bal¬
proper
outstanding
Debentures
stock
common
together
in
2.7%; preferred stock 13.9%; and
axes
o n
has been before the SEC for some
time, but recent events seem to
be thrusting it into the
background.
land Electric.
Con-
Light and
surplus.
bined
"Our large customer
Fed¬
e r
t
eral
ad
ago
price of Gatineau Power (principal holding) from the old level
15 to 18% (now
17%); (2) reports that the company may
be able to sell its 100%
equity interest in Eastern NewiYork Ppwer
Corp. for a substantially larger amount than would seem indicated
by the earning-power; and (3) recognition of the potential value
of the parent company's
big tax loss on its holdings of New Eng¬
Electric
and
investing public.
usage
42.9%
gregated
costs threaten to affect
customer
warned:
more
•Trustee Brickley filed a simple plan to issue Liquidating Certifi-:'
cates, to be distributed to all shareholders in the ratio of eight to
each share of preferred
stock, and one to each class A. This plan-
/
Gas
of
Charles
of Balti¬
pany
later transferred to
the former three-cornered light between the
holders of three
kinds of securities, and concentrated it among holders of the
pre¬
ferred, and the class A stockholders.
Various plans have been filed with the SEC over the
past
decade,
Club
28,
Power Com¬
.,
r
Bond
March
President, of the
solidated
liquidating trustees
and in 1941 were declared worthless and cancelled;- The remaining
capital structure consisted of debentures, preferred stock (on the
Curb) and class A shares (Stock Exchange).
In 1944 the U, S. District Court
appointed Bartholomew A.
Brickley of Boston as Trustee, and after many false starts a def-i
inite move toward liquidation was initiated
through payments
against the debentures, wnich had become due in 1944. The bal¬
ance of tace value was
finally paid off last year. This step ended"
were
the
on
P.. Crane,
structure
holdings. For
stocks.
Addressing
Baltimore
bonds
mortgage
Light'
Club, higher '
•
structure
At the end of 1950
ance.
Charles P. Crane, President of Consolidated Gas Electric
& Power Co. of Baltimore, tells Baltimore Bond
Utility Securities
By OWEN ELY
tal
capital
Utilities
on
21
-•
".
,
•;
-
'
P. W. Brooks & Co.
i
Incorporated
22
The Commercial and Financial Chronicle
(1766)
priee all shares not subscribed for
by stockholders.
E. Chester Gersten, President of
News About Banks
CONSOLIDATIONS
-NEW BRANCHES
REVISED
CAPITALIZATIONS
A. C. Simmonds, Jr.,
President of
the Bank of New York and Fifth
14 Wail Street,
Bank, at
Avenue
New York announced
April 24
on
in the
main office, John U. Grissinger,
Trust Officer; Joseph A. Hannan,
Jr., Assistant Vice-President;
Grover C. Jensen, Assistant Trust
the following appointments:
Officer; Ralph H. Nay, Assistant
Treasurer; in the Fifth Avenue
Office: H. E. Muecke, Trust Offi¬
cer and John B. Dunning, Assist¬
*
State
*
Lyon,
of State Banks
on
Banks,
of
President
Association
tional
York
New
Superintendent
chosen
was
#
A.
of the Na¬
of
Supervisors
April 20, it
was
stated in Associated Press advices
from
Albany
April 20, which
on
also said:
"Mr.
Lyon was selected by the
Executive Committee of the Asso¬
ciation at the close of
meeting.
two-day
officers chosen
Other
a
First
Vice-President, Alex¬
ander Chmielewski, Rhode Island
Bank Commissioner; Second VicePresident, Ben A. Welch, Kansas
Bank Commissioner; Third VicePresident, Benjamin O. Cooper, Il¬
linois Auditor of Public Accounts;
Secretary, Edward H. Leete, New
York Deputy Supervisor of Banks;
Treasurer, Homer B. Clarke, Ten¬
nessee Superintendent of Banks."
were:
National
and
Bank
Trust
Company, announced on
April 23 the following promotional
appointments at the main office
of the bank: Joseph Moss, an As¬
sistant Cashier, appointed an As¬
sistant Vice-President, and Harry
Jacobs of the Comptroller's De¬
institutions partment, appointed an Assistant
both
of
May 23, according to a joint
announcement
of the two
Cashier.
by officials
Following the
banks.
*
*
made
Simon Bolivar is the subject of
15-window display unveiled on
a
rededication of the statue of The
beginning May 28. Stockholders
of The Commercial National Bank
59th
April 19 in the Rockefeller Center
office at Avenue of the Americas
and 48th
Street, of Colonial Trust
Company of New York.
Timed to
coincide with ceremonies marking
Liberator at Simon Bolivar Plaza,
and
Street
Avenue
of
the
this Americas, the exhibit features
figure being based on an appraisal original portraits of Bolivar by
as
of April 17.
A statement of such noted artists as Sir Thomas
condition of The Commercial Na¬
Arturo Michelena and
Lawrence,
Also included
Tito Salas.
are
as
shows deposits
presently a director of Commer¬
cial National, will also, join the
board of the combined institution.
will
Bankers Trust Company
ac¬
Steel
Bethlehem
*
fi:
fit
■
Greater New York,
trust company
following his grad¬
Georgetown Univer¬
made
was
an
As¬
sistant Secretary in 1939 and As¬
sistant Vice-President in 1949. He
recently completed the
course
Banking at
Rutgers University and his thesis,
"The
Import - Export
Bank
of
was
one
of
those
chosen for the ABA Library. Mr.
Trundle is a member of the Amer¬
ican
Bar Association, New York
State Bar Association and Robert
Morris Associates.
❖
A
^
of
merger
and Queens.
tional
the
$
The
Commercial
National Bank and Trust
Company
with Bankers Trust
Company, both
office will
At
the
14th
in
#
*
.
special meeting of stock¬
a
holders
of
The
Public
National
Bank and Trust Company of New
York, held
April 19, approval
given to the proposed increase
was
in the
on
capital funds of the bank
by the issuance and sale of 151,250
shares
additional
of
The
stock.
stockholders
approved the offer¬
ing of the stock, at $40 per share,
to all stockholders pro rata, on the
basis
of
one
new
share
for
each
four shares held of record at the
of
close
business
stock may
on
May 9.
both
institutions, and the merger
proposal will be submitted to the
be
city and the 9th in Manhattan.
of New York
City, was approved
April 19 by the directors of
emerging for
The Commercial Na¬
*
at
the Graduate School of
Washington,"
12
April
issue,
page
1556,
new
stock
will
the
The
20.
be subscribed for until
As indicated in our April
the
sale of
increase
the
bank's capital stock from $10,587,500 to $13,234,375 and surplus from
Standard & Poor's
Rating A-l
$13,412,500
000,
City of Seattle, Washington
Municipal Light & Power Acquisition
capital
will
be
$32,993,000
present.
at
Warrants
shares, at $40
per
share,
are
on
tion
rights
May 9.
will
terminate
on
The First Boston Corpo¬
1922
ration heads
Street, New York
HAnover
funds
$39,050,000, compared with
the basis mentioned. The subscrip¬
sullen & Company
—
With
being mailed to stockholders
2.00-2.30%
Municipal Department
TeL
total
about
new
2%
Established
$16,815,625,
evidencing rights to purchase the
Bonds Series LM
SO Broad
to
undivided profits of about $9,000,-
$100,000
1970-19T6 Yield
2-2600
of
$100,000.
*
*
*!
George
Richards and
C.
Vern
Solari, executives in the corpora¬
tion and bank relations depart¬
ment Of the Bank of America
National Trust & Savings Associ¬
Insurance ation of San Francisco were pro*
moted to the rank of Vice-Presi¬
Newark, which stated that Mr.
Donnelly had been Cashier thelast three years at Union National
Bank, and before that was 14 years
with
Federal
Corp.
as an
Deposit
Examiner.
ffi:
fis
Through the sale of $450,000 of
dent, L. M. Giannini, President of
the bank, announced on April 18.
Mr, Richards represents his de¬
stock, the First National
of Erie, Pa., has increased partment for the Bank of Amer¬
ica in eastern states, with his base
capital
from
$1,050,000
to
in New York City, and Mr. Solari
$1,500,000 effective March 27.
heads
the
department's Italian
fis
fi:
fi:
section.
Former manager of the
According
to
the Pittsburgh
Haight-Clayton
branch of the
"Gazette" of April 10, George D.
bank in San Francisco, he held
Lippert, Assistant Secretary of the
the post of Director of Staff Train¬
Colonial Trust Co. of Pittsburgh
until last month, has been elected ing in recent years. He was trans¬
ferred to his present duties a year
Assistant
fit
fit
Vice-President
of
the
*-y
•:/
Mr. Solari is the bank's con¬
for patrons with Italian
financial interests, a job which he
ago.
First National Bank, Palm Beach,
Fla. He
in charge of Colonial's
was
fi!
fi!
The Greeley
sultant
too
credit department.
in
over
employed
fit
National
Bank
of
Greeley, Colo., increased its capi¬
He
1936.
Manager
d'America
1912,
as
Of the Banca
d'ltalia
e
in
to 1926
and served from 1921
Assistant
first
was
the bank
by
in
Genoa,
tal, effective April 6, from $200,000 Italy.
A
Remedy for Administrative
Abuse of Anti-Trust Laws
By COL. H. A. TOULMIN, JR.*
Attorney, Dayton, Ohio and Washington, D. C.
v
Asserting Justice Department's administration of anti-trust taws
is
whittling away freedom of enterprise and is fostering social
regimentation, Col.Toulmin proposes creation of an "anti-trust
authority," composed of representatives of business, labor
and the public, to replace Justice Department as a policy¬
making agency in connection with anti-trust activities.
Gulf Oil
Co. and Creole Petroleum Corp.
The merger
-in
its
❖
of the Power City
Trust
the first time in Brooklyn, Bronx
sity in 1930. He
Bank
.'
Trundle entered the service of the
uation from
Assistant to $300,000 "by a stock dividend of
Commerce, of Newark, N. J., ac¬
cording to the "Evening News" of
Corp.,
Company of Niagara Falls,
quire the lease on The Commer¬
cial National's banking quarters at N. Y., with the Marine Trust Com¬
Appointment of John M. Keyes 46 Wall Street, which S. Sloan pany of Buffalo became effective
Apr. 21, Stockholders ofbothinstituas
a
Second Vice-President/
jpf <?olt, President. of Bankers Trust
iions ratified the terms of the merg¬
Guaranty Trust Company of New Company., termed as "being of
er agreement at meetings earlier in
York, is announced.
Associated considerable importance in view
the week. Concurrently, the name
with the bank since 1929, he con¬ of the expanded requirements of
tinues as an officer in the Organi¬ our main office departments and of the bank was changed from the
Marine Trust Company of Buffalo
zation Division, where he is now facilities."
to the Marine Trust Company of
in charge of personnel.
Bankers
Trust
Company last
During
World War II he served three year opened a new office at 1002 Western New York. The four Ni¬
years with the Navy in the Pacific, Madison Avenue (July 3), acquired agara Falls offices of the Power
attaining the rank of Lieutenant. the banking business /of Title City Trust Company will now be
*
Guarantee
and
Trust
*
*
Company operated as offices of the Marine
Trust Company of Western New
Henry C. Von Elm, President/ of (Aug, 7) and merged with Law¬
York. These will be known as the
Manufacturers Trust Company of yers Trust Company (Sept, 18)
and with Flushing National Bank Power City Trust Office at 225
New York, announces that
Sidney
Falls Stre'et, the Power City Peo¬
(Dec.. 18). Following these com¬
A. Trundle of the bank's office at
ples Office, 1631 Main Street, the
Fifth Avenue and 43rd Street, has binations, Bankers Trust operated
Power City Pine Office at 1901
been named a Vice-President. Mr. a total of 13 offices throughout
.-V,.
as
The
se¬
of March 31, 1951,
of $192,129,776 and lected original miniatures from
"Simon Bolivar and His Contem¬
loans of $63,458,013.
In making the announcement, poraries," by Arthur Szyk. Arthur
officials of both institutions indi¬ S. Kleeman, President of Colonial
cated that all of the officers and Trust Company, stated that "the
employees of The Commercial Na¬ passing of time serves to enhance
tional have been invited to become the accomplishments of Simon Bo¬
members of the staff of Bankers livar and to give us an ever deeper
Trust. It was also announced that appreciation of their importance."
John M. Budinger, President, and The display, which will remain
William T. Taylor, Vice-Chairman until early May, also includes ma¬
of the board of The Commercial terial indicating the economic and
National, will become Vice-Presi¬ strategic significance of Bolivar's
dents and members of the board native Venezuela, as a source of
of
directors
of
Bankers
Trust oil and high-grade iron ore. Ex¬
hibitors include U. S. Steel Corp.,
Company, and B. Earl Puckett,
tional Bank
at
Bank
which is subject to ap¬
proval by the stockholders of each
institution and by State and Fed¬
eral supervisory authorities, it is
planned. to conduct the business
of the merged institutions under
the name Bankers Trust Company
merger,
Donnelly
Vice-President
new
#
will receive $75.58 per share,
ant Trust Officer.
William
stockholders
on
Public
Bankers
and
NEW OFFICERS, ETC.
the
E. Michael
Thursday,- April' 26^ 1951
*.
4
a
group of 11 under¬
writers who have agreed severally
to
purchase
at
the
subscription
Pine Avenue, and the Power City
LaSalle
Office
at
8676 Buffalo
Bank officials announced
Avenue.
that
no
mer
board of directors will
personnel changes would
result from the merger. The for¬
tinue "to
Board
fices.
those
serve
for
the
as
an
Niagara
con¬
Advisory
Falls of¬
This merger, in addition to
five other banks which
of
will be completed soon, will make
available in Niagara Falls the fa¬
cilities
of
a
bank
with
resources
In this talk
today, I want to
re¬
view briefly what our anti-trust
laWs are doing to business, and
secondly, I want to outline
gested remedy
a
sug¬
w
u a
h i
c
ened
to
tive
and
fighting
wars.
w
a
ag¬
rforming
oduction
miracles
H. .A.
Toulmin,
Jr.
for
stronger
a war
a
ministration
Division
of
Justice has
continuous campaign
Department
on
a
of
over
$500,000,000
in,
excess
.
methods of operation which have
enforcement
and
Anti-Trust laws.
.
lifted American business to world
in production and in-
vention.
r;
.
The major portion of this liti¬
gation campaign was not for the
purpose of protecting the public,
the individual, who could not proof tect himself—it was for the purpose of protecting one class of
competitors from another, for the
'
h
The Department of Justice, with
purpose of giving unearned ad¬
capital its
nearly $4,000,000 appropriation vantages to the less successful,
$36,000,000. for its Anti-Trust Division, is a
and penalizing the successful, even
These five banks are the Marine
law, unto itself—a completely in¬ though the consumer suffered. In
Midland Trust Company of Albion,
dependent bureaucratic power un¬ my judgment, it has resulted in
the Medina Trust Company, the
til it reaches the upper courts, a
complete defeat of the purpose
Niagara County National Bank and
when it is too late for the help-*
of the Anti-Trust laws.
Trust Company, Lockport, N. Y.,
less litigant. It, is sole judge of
of
funds
.
voluminous records r./
proceedings show-
Anti-Trust
supremacy
fight¬
of an entirely different
legal war from within
against the harassments of the
Department of Justice in its ad¬
our
us
during the past decade to destroy
our
successful organization and
country.
—
the
the
carried
On the other hand, it is
ing
disaster. The
r
gression from
without, by
type
from
and its genius for research
developments.
anti-trust
that
the
against
our
us
new
Yet,
of
fighting
t he
p r
save
On
hand
one
pe
of life is threat¬
capacity of American busi-
ness,
is
is
-
,
j
than other nations is the produc¬
America today
it
way
our
by foreign aggression, every¬
thing that makes
one
in
Business
the
productive
When
world.
the
American
it
n o-w
exists.
two
the greatest
as
in
the
tion
h
force
body—the government atf well as....,
public—turns to it, relies on
for the chaotic
sit
hailed
and
of
the First Trust Company of Tona-
its
own
actions:
•
who
it
should
The
whole
basis
of
our
<
mer¬
manufacturing
success is attacked by destroying
pany of North Tonawanda. When
according to the social ideas of
our
American methods of doing
these mergers have been accom¬
its men—and if businesses do not
plished, The Marine Trust Com¬ agree with it, the Department of business, such as exclusive dealer- >
ships, building, plants in advance
pany, of Western New York will
Justice, Without review of its ac¬
of demand in order to serve the *
operate 51 offices in 19 commu¬
tions, can sue, indict, expose all
public, conducting research, and
nities.
An item bearing on the
corporate private affairs and hurl
cross-licensing competitors, giving
mergers appeared in our issue of terrible
accusations—all without
uniform patent licenses to even
March 22, page 1255.
liability; and, if it loses, without
competition,
the acquisition
of
fis
fie
fie
recourse for the loss to business of
non-competing but supplementing
The First National Bank & Trust money and reputation.
companies to effect economies, etc.
Co. of New Canaan, Conn., has
That is not fair play.
The government now seeks de¬
increased its capital Horn $100,000
Besides, in 30% of its criminal crees compelling you to cancel
to $500,000, the enlarged capital
cases, the Department of Justice your supply contracts with cus- *
(which became effective April 11)
has been wrong—it lost its cases. tomers beyond one year, to give
having been brought about by a
A strange and unfortunate situ¬ your competitors your technical
stock dividend of $100,000, find the
know-how
and
to
give your
ation exists. American business is
sale of $300,000 of new stock.
patents to your competitors free
fie
*
fie
*An address by Col. Toulmin before
of charge—in short, appropriates
the
Controllers
Institute
of. America*
Announcement
was
made
on
your property without compensa- '
Eastern
Conference,
Baltimore,
Md.,
tion. There is nothing in the law
April 16 of the appointment of April 20, 1951.
wanda and the
■'
State Trust Com¬
sue,
how business should be
run,
chandising
and
r
[Volume 173
Number 5006
#
.
.
The Commercial and Financial Chronicle
'
(1767)
V
to
justify
demn
it—good
morals
con¬
it.
philosophy of individuals through litigation and
the medium of these
The Anti-Trust laws
meant
business
whittling away of freedom of
enterprise and its constant con¬
to insure fair play—not to change
version to narrower and narrower
methods
of
channels of activity, are apparent.
business
organization.
to
regulate
were
of
methods
business
destroy
or
the
at
time-
same
laws, and the wifl be in the public interest:
(1)
I
that
recommend
>
the
"Anti-Trust
an
define
the
Authority,"
and
powers
and body of laymen control their
scope
activity of the "Authority." It
of
can
dividual
and
are
tions—that is what any
directors would do.
of administering the anti¬
trust
laws
—
the
by
five-year
period.
business
in
Government
has
one
of
Every type
subjected
been
to
threats of'litigation.
This
complex-situation has the
most
serious
and
implications,
especially since
now
are
we
en¬
gaged in another gigantic defense
effort.
The
policy
announced
of
the Department of Justice is that
it will continue its relentless pros¬
ecution
war
of
or
business—
American
no
This
war.
policy
was
made clear by Assistant Attorney
General H. Graham Morison, on
January 24, 1951, shortly after he
became
Chief
Anti-Trust
the
of
Division, when he declared, in
an
address before the New York State
Bar
Association, that "the litiga¬
tion program of the Anti-Trust
Divison
will
abate."
not
He condemned the
system pre¬
vailing in World War II, whereby
applications for the suspension or
postponement of anti-trust actions
made
were
directly to war agen¬
cies, because the defense of such
proceedings would interfere seri¬
ously with the performance of war
contracts.
But
.
,
existing
"under
now,
ar¬
rangements," he declared, all re¬
quests for postponements of anti¬
actions
trust
directly
made
be
must
of
Deparment
the
to
also
action,
could
"if it is factual and
direct
considered
be
only
demonstrates
substantial interfer¬
and
with the defense
ence
program."
he said further:
And
sim¬
"We
ply cannot deal with 'pleas to the
general issues.' A request for sus¬
pension, based upon the undeni¬
inconvenience
able
trust case,
of
anti¬
an
clearly is not enough."
in
the
I
address
have
expressed
Mr. Morison,
of
interpreted it,
and
as
others have also interpreted
it, is that war or no war, business
many
must conform to the economic and
social
non-partisan
include
board,
system of price regulation as the
only salvation of our economy—a
thing business men long ago dis¬
covered
representatives
of
should be the administrative and
democracy than any other
they
because
so
broad charter for busi¬
are a
control,
ness
is
This
country.
our
history of
character
in
general
sweeping
so
are
and
so
in
conception that the regimentation
of
business, industry and com¬
merce
into almost any economic
pattern
that
Justice
and
the
decree is
may
While
Department of
Court
the
the
Supreme
possible.
Supreme
recent years has been increasingly
rejecting the views of the Depart¬
ment of Justice, the damage to
business by unwarranted litiga¬
tion
the
is
is
Court
Supreme
late
Reversal
tremendous.
(3)
by
often
too
to
"Authority"
be
delegated
ing
what
and
are
what
not
are
serve
as
which
advisory
might
an
business
agency
go
THE BOND
to
to find
out whether its activities or
The
the
of
serve
a
as
It
statutes.
lowing
current
regimented state.
vent
and
arbitration of
disputes, and its pri¬
objective should be to pre¬
needless
litigation and to
settle
anti-trust
institutions they
be
evil and
so
so
aS
heights
Fred E.
greatness, if the pattern of
American - business,
which
has
made this nation supreme
as a
force,
productive
not
had
been
that
developed.
We
when
shall certainly
rue
the
the ingenu¬
initiative,
the day
ity and the strength of American
business are so throttled that its
productive
cannot
progress
con¬
tinue.
philosophy which the De¬
Now what can be done to relieve
of
Hunter
V11
ately
after
nesses
the
were
confronted
themselves
to
busi¬
find
with
anti¬
war*. many
surprised
the
fair question also to ask,
a
partment of Justice consider "sub¬
stantial interference with the de¬
fence
opinions likely
view
the
m"?
p r o g r a
of
their
Are
coincide
to
with
which
business,
is
of doing the prbduction job, or of
armed forces in the front lines
lives
whose
depend
on
business
keeping the armaments flowing to
them?
The;t record
Division
its
in
Justice,
of
the
of
Anti-Trust
the
Department
of
administration
of
the anti-trust laws in recent years,
does
not
us
assurance
anti-trust
ment
Justice
of
students
Many
proceedings
convinced
come
has given an
anti-trust
in
have
of
be¬
the Depart¬
that
recent
years
interpretation to the
laws which
is not spe¬
cifically justified by the language
the
of
Justice
of
to
bureaucratic status,
irrespective of national defense,
emphasize the necessity for an
impartial organization to deal with
anti-trust problems by adjustment.
its
Business
cifically
needs
what
it
know
to
It cannot
out.
if
tainty
violation
technical
trust
find out with
operations
its
the
of
may
the
^
tmorrow.
As
never
statutes
intended
and
by
which
was
the Congress
in the enactment of the statutes.
When
the
trust
analyze the course of
administration
of the
anti¬
of
17
(Capt.), Manson, King, Voccoli, G. Montanyne...
18
Serlen
(Capt.), Gersten, Gold, Krumholz, Young.....—
15
18
13
20
13
20
the
of the pressure
commerce,
increasing tempo
upon business and
of
the imposition of social
the
entirely
istered
laws
and
and
without
as
Co.)
won
(Hunter &
three
•
FRANCISCO
The
San
to
games
10 23
Co.) and Joe Donadio (J. F. Reilly
place themselves in a tie for First
-
:
■
Francisco
any
'
Security Traders
their annual spring party June 8, 9
Club, Diablo, Calif.
•
.
■
SECURITY TRADERS ASSOCIATION
Association
will hold
and 10 at the Diablo Country
.
of record only and is neither art
of these securities. The offering is made only
offer to sell nor a
by the Prospectus.
NEW ISSUE
150,000 Shares
Brad Foote Gear Works, Inc.
Common Stock
(Par Value $.20 per
Share)
Price $2.00 per
has
really
anti-trust
new
anti-trust
so
(Capt.), Smith, Farrell, A. Frankel, LaPato..
change
Share
any
laws.
That
major weakness of the present
set-up. We need to establish an
we
laws,
(Cap!.), Kaiser, Growney, Gronick, Rappa.
Meyer
SAN
in
a
tical
___
matter of fact, no agency
a
government
tion
Ghegan
Klein, Cohen, Manney,
""
anti¬
specific power, in war-time or in
peace-time, to suspend the opera¬
is
(Capt.),
Place.
by consulting the
of Justice. The De¬
partment of Justice
rules
17
Duke Hunter
laws even
Department
14
16
QtvOllCC
cer¬
are
to
approach—if
are
to
enforced
be
in
economical
Copies of the Prospectus may be obtained from any of the several under- *
writers only in States in which such underwriters are qualified to act as dealers in securities and in which the Prospectus may legally be distributed.
the
admin¬
a
prac¬
manner,'
needless
litigation, and
keep American business
Gearhart, Kinnard & Otis
Incorporated
NEW YORK, N. Y.
strong;
April 24, 1951
Here, I believe, is a constructive
plan -which will prevent much
'
1
A
14
19
HPl cnVl
opotvi o
and cannot
can
do—certainty is the foundation of
operations. There is no place
that business can go today to find
14
Valentine, M. Meyer, H. Frankel__
WT
This advertisement appears as a matter
buy
*
15
&
government had
solicitation of offers to
19
Y
Q
19
\
spe¬
its
country will not be disrupted
weakened.
or
in
Department
^ YO
12
21
(Capt.)", Sullivah, Stein, Wechslhr, Siegel..^.
-
12
16
H.
the productive machinery of
that
our
arouse
the
preserve
the problem
weighed down with
our
of
.
Burian
efforts of the Anti-Trust Division
It is
Work-
Kriserrij(Capt.), Bradley, Montanyne, Weissman, Gannon.
partment of Justice may lay down business of the
;
uncertainty which requested them to do.
today, and which, of course, it'
prevails and to remove the fear
Congress can ^nact legislation
might change tomorrow if it so of harassment and of
endless,
authorizing, the establishment of
wishes—even
if
the
productive
time-consuming litigation?
machinery of American business
It seems to me that the jealous
is thereby dangerously disrupted.
what will the lawyers in the De¬
Whiting,
(Capt.), Krasowich, Nieman, Pollack, Gavin.—__
Bean
suits, filed by the Depart¬
ment of Justice, for doing those
things
Won Lost
O'Connor,
(Capt.), Weseman, Tisch, Strauss," Jacobs!...-!--
Mewing
trust
very
Bowl¬
21
Goodman Capt.), Lax,
Immedi¬
laws.
DeMaye,
_
/ P nnl
vw w*
Kumm
II, many busi¬
encouraged by gov¬
(STANY)
of April 20, 1951 are as follows:
as
(Capt.), Lytle, Reid, Kruge, Swenson——
Greenberg
Leone
anti-trust
'
regular June golf
'
(Capt.),
meister
agencies to do things
the production program
technically in violation
were
the
y
Ungeher, Rogers & Tracy, Inc.—Publicity.
TEAM
Donadio
war
to further
Chair¬
Oldershaw, Blyth & Co., Inc.—Membership.
Security Traders Association of New York
War
were
ernment
as
Fenton, Ames, Emerich & Co.—Program.
ing League Standings
Public Board.
nesses
serve
SECURITY TRADERS ASSOCIATION OF NEW YORK
Civjl
of
will
outing to be held at the Nordic Hills Country Club on June 30.
the
World
below
The first event of the season will be their
Interstate Commerce
Commission
for
Carriers,
the
In
listed
Casey, Doyle, O'Connor & Co., Inc.—Finance.
W.
Hallock B.
Aeronautics Authority for
ment of Justice. I cannot believe Aviation, and for Labor and Agri¬
culture—why
not business gener¬
that American business in general
has not operated for the public ally?
In short, Justice must jus¬
good. I cannot believe that Amer¬ tify its litigation to an impartial
ica could have risen to its
directors
committees:
George F. King, White, Weld & Co.—Bowling.
for
Board
Reserve
and
various
Arthur
settlement cannot be ef¬
Federal
the
Banks,
they are painted in the. many
instituted by the Depart¬
the
Fred J.
problems by ad¬
features of the
wrong
actions
officers
of
justment.
repre¬
were
year:
The
men
plan. This plan of
I cannot believe
that all the operation is traditional with us in
various companies and talented many other agencies of govern¬
executives and able lawyers and ment. We have such protection in
can
of Chicago announces that the fol¬
appointed to serve as directors for the
Club
George F. King, White, Weld & Co.; Hallock B. Oldershaw,
Blyth & Co., Inc., and Fred E. Ungeher, Rogers & Tracy, Inc.
anti-trust
a
CLUB OF CHICAGO
Traders
members
should
forum for business-like
adjustment
mary
TRADERS
Bond
con¬
templated activities are in viola¬
where
completely
Notes
violations of these laws. It should
Department, of Justice so that it fected by adjustment and arbitra¬
cannot
plunge headlong into a tion, should the Department of
campaign to change the entire Justice be empowered to bring an
aspect of our society and convert anti-trust suit.
it from a democracy into a form
These are the four fundamental
of
crown.
responsibility of interpreting
the anti-trust laws, and of decid¬
than exists today be
the
Department
the
(4) Only after this "Anti-Trust
Authority" acts, and only in cases
on
from the
NSTA
this
To
agency.
should
remedy the injury. It is
imperative that a better check
placed
Con¬
This impartial "Authority"
policy-making
tion
in
Court
essential.
busi¬
to
our
often
labor and the public.
ness,
laws enacted in all the
is
sistency is the jewel that is absent
should
and
supplementary and collat¬
eral statutes, are more dangerous
The whole philosophy
a^
their
with
laws,
that
re¬
any
quest for suspension of anti^- trust
a
anti-trust
our
sent
that
asserted
bear in mind
to
thirty
the great
Justice.
He
It is well
]
the
"
filed
ac¬
board of
limit the powers of the Depart¬
Six months ago the Department:
policy-making ment of Justice, so that it will act of Justice would criminally indict
as
a
law
enforcement you if you agreed on a fixed price.
be taken out of the hands of the merely
Department of Justice. The De¬ agency and can only file suits Today it has been breaking its
after the "Anti-Trust Authority" neck to
get control of the present
partment of Justice should act as
power
in¬
going
has acted and has failed in its ef¬
on
in our midst. American busi¬ an enforcement agency and noth¬
forts of adjustment or arbitration
States than in all the prior his¬ ness is in
a
state of complete ing more.
of questions that may arise. When
tory of our anti-trust laws—that uncertainty.
Corporations must
(2)
I
recommend
that
an
a group of lawyers in the
Depart¬
is, from 1890, when the Sherman now be organized for a legal war,
ANTI-TRUST
AUTHORITY"
ment of Justice average loss of
Act was passed, to 1938. Three as well as for
production, because should be established. This "Au¬
30% of their cases, it is time a
hundred and forty-two suits were Federal litigation is so great.
thority" should be an impartial,
regimentation
regimentation
Social
Since 1938, more anti-trust suits
have been filed in the United
.28
White & Company
ST. LOUIS, MO.
24
The Commercial and Financial Chronicle
(1768)
Even at recent high dollar levels
the stock is selling little more
than four times 1950 earnings.
Railroad Securities
Probably there has been some
disappointment over the delay
in the start of trading even on a
when-issued
basis of
the split
stock following approval of the
Western Pacific and Nickel Plate
split by stock holders. In a rail¬
road case, however, it is neces¬
Probably the outstanding fea¬ proposal to split the common five- sary also to get Interstate Com¬
ture in the railroad group in the f or-one.
merce Commission permission for
past week has been the common
Generally speaking stocks sell¬ a split. While there appears to be
in their plants
space
determine
or
whether they have the most effi¬
cient
production
layout.
We
ing as high as 200, or more, have
sively, day by day in the closing a minimum appeal to the specu¬
part of last week and the open¬ lating public. Also, Nickel Plate
ing session of the current week, common has admittedly had a
stock
the
face
of
the
in
further
moved
laggard,
reactionary,
or
particularly sharp percentage ad¬
the
in
vance
past
year
or
so.
rail market gener¬
trends in the
Finally, it is still not on a divi¬
ally. In at least one of those days dend basis so that it is lacking
the stock was among the most in appeal to
large groups of po¬
active on the New York Stock tential investors, particularly in
Exchange (a .notable performance the
institutional
field.
These
when the size of the issue is con¬ handicaps,
however, are generally
Monday it moved considered as merely of a tem¬
high for the year. porary nature. As they are elimi¬
It is the opinion of many rail nated it is the feeling of many
analysts that even with the recent analysts
that, the fundamental
move
the stock is still
among strength of the whole picture will
sidered) and
ahead to
on
new
a
the most attractive in the field.
f
again assert itself and the stock
appeared again attract
An article on this road
a
large
following.
in this column about a month and
half ago—March 8. It has men¬
a
tioned
In¬
Convertible
the
that
Continued
from
17
page
time is that the ICC will come out
decision around
its
the end
lished,
prepared to make
We
estab-
now
,
direct contact with com-
a
we
oniy
resisted " 6uch
when
cornered
give
any
visits,
but
they refused to
information.
You
know, gentlemen, to what extent
no question but that the Commis¬ times
have changed.
Hardly a
sion will approve, there is neces¬ day goes by in Boston without a
sarily a time lag for the mechan¬ visit from some industrial or pub^ics. The best guess at the present lie utility official from some part
with
still were not
a-commitment.
think, over a panies in the field. We- traveled
developed some from our office in Boston" and
ability at appraising corporate called on the officials of the lead¬
management.
Some yearn ago, ing companies, we made inspec- '
managements were aloof to visit¬ tion tours of the plants. We inter¬
ing investors.
In fact, they not viewed managements; trying to '
.have, however,
period of time
,
stock of Western Pacific. Succes¬
we
Thursday, April 26, 1951
.
.
.
of the country.
us
to tell
us
They come
their story.
to see
appraise their thinking, to learn
for the future, to un¬
their plans
We liked
We be- '
lieved the company had* growth
ahead.
We predicted increased :
dividends for stockholders.
We/,
believed that the market was not/
derstand their problems.
what we saw at Celanese.
placing a correct appraisal on the/
company's" stock. At $18 a share,/
it represented a true value. I re-/
turned to Boston from my surveys.,
or
the beginning
Time has also built up our con¬
question of the end¬ tacts, with people in the invest¬
ing of the long dividend drought, ment banking business, with and within 24 hours! we had a:
on the other hand, will probably
commercial bankers, trust com¬ commitment in Celanese stock, I
be longer delayed. Those close to panies,
economic
organizations, might also add that shortly after- :
the situation look for action some government
economists, research wards we made commitments in;
time late in the summer or early organizations.
I
They are a price¬ other rayon companies also.
in the fall. The general expecta¬ less asset to
any organization and merely cite this as a specific ex¬
tion is that a regular $3.00 rate can be developed
only through an ample of some of the processes/
may be established on the new interchange of ideas based upon that we went through, the time¬
table of appraisal, and the fact
stock, affording a liberal return mutual respect and confidence.
of over 7% on the basis of recent
This is the age of specialization. that we translated the final favor- *
prices for the old, unsplit, stock. We must rely on specialists.
In able contacts with the company .*
managing the portfolio, we get into immediate action. Our action, 1
help from the investment banker, however, as you can see, was not •
broker
atld
investment
dealer. hasty. It was based upon the careWe rely upon them for ideas, sug¬ ful study of the background.
of
month
the
of May. The
.
common
into the
(convertible
4^2 s
come
of
basis
the
on
two
Managing an Investment Portfolio
of bonds)
redemption is the price at which a security
on May 1, 1951. Funds for the re¬
sells in relation to its intrinsic
demption were provided for in worth.
Value and market popu¬
shares
had
sale
the
each
$100
called
for
for
been
of
of
issue
new
a
new
Mortgage S^s. With the
stock now selling well above the
conversion price there will ap¬
parently be little question but
that the entire amount ($6,287,000
as of the; end of last year) of in¬
come
bonds will be converted.
First
larity rarely go
hand
in hand.
Price tags are often more impor¬
tant than name tags.
Good in¬
vestment management as we try
tp practice it, with the emphasis
the word
on
little
to
do
short-term
investment, has very
with guessing the
fluctuations
in
the
Thus, the feeling has spread that' stock market. The fact, however,
the money that would have been
remains that markets go up and
used
the
of
retirement
the
for
sometimes down, making for difficulty and opportunity even for
those
of us who question our
preferred out¬
ability to foresee its exact, pat¬
;:t
l
tern, except in retrospect.
The
incomes could now be diverted to
the
in
reduction
the
5% participating
standing,
Whether
be
so
asmuch
not
or
used is
a
of
the funds will
daily ebb and flow of security
prices reflects the hopes and fears
still of investors and
speculators. We
moot queslion in¬
the
as
amount
management
has; in mind the expenditure of do not measure the value of an
large additional sums on prop¬ investment on the basis of the
erty
improvements,
Obviously,
popularity or the size and impor¬
however, whichever the released tance of the
company alone.
funds may be used for this de¬
A further trait that the invest¬
velopment
will eventually re¬ ment
manager must possess is the
dound to the long-term benefit
ability to decide and to translate
of ; the
stock
common
Meantime, -the
holders.
earnings
road's
continue to soar and the operating
to show
Net
in¬
performance continues
improvement.
marked
of
come
$1,296,450
for
the first
two
months of 1951 was more
than 100% above the level of a
year ago.
/
In contrast with the recent
of
Western
another
Pacific
the
of
one
ac¬
common
time
long
speculative favorites
has
been
notably lackadaisical. That is the
common
stock of New
York, Chi¬
as it is com¬
cago & St. Louis or,
monly referred to, Nickel Plate.
This stock, which is still selling
aj>ove $200 a share and is for this
reason
alone
an
oddity in the rail
group, attracted quite a
a
short
decision
into
Infor¬
action.
and
knowledge in a file
drawer, or in your desk, or even
in your own mind, is worth abso-r
lutely nothing unless it is trans¬
lated into action.
be to
The action may
security or it may be
security.
Decision by
is no decision by - man¬
agement.
The
essence
ol
management is decisive action,
buy
sell
to
a
a
default
Nickel Plate
tion
the
mation
time
ago
following
when the last
Investment
must
be
cieties
committee
more
and
meetings
than debating so¬
forums.
educational
when
stock
overwhelmingly
holders
in
voted
of
a
the
which
on
tion setup must facilitate decision
and action.
Two other factors
that I would
consider important and should be
a
part of
me
investment manager
able to foresee possi¬
that the
be
bilities
in
industries
and
indi¬
we rely upon
contacts with companies.
in
large organization
a
team with
Now let
of indi¬
working in very limited
favor
We
areas.
Administration
We do not believe
specialization.
viduals
small
a
expert
flexibility of appi-oach
turn
finally to the and directness of action.
organization that
Let me give you one or two
conducts investment management.
actual examples of portfolio man¬
No one man today can hope to
agement.
Naturally, I'm going to
be abreast of all developments
tell you about our success stories
us
administrative
along the political and economic
front
developments and
occurring in industry.
well
as
changes
as
and not about
have
our
We
both.
failures.
We
mistakes,
make
but in the long run we trust the
plusses will ouiweigh the minuses.
agement and labor problemsIn 1946, we began to explore
legislation—and the ebb and flow the rayon industry. It had * cer¬
of business prosperity—contribute
tain characteristics that appealed,
to the problem of evaluating the
to us.
We studied the industry
worth and future of securities.
statistics and the statistics showed
The investment manager's use of
that
the
industry had growth.
the facts, which is dependent upon
We
were
convinced
that
the
his judgment, is measured in his
product was essential.
We knew
accomplishments.
that new uses were
The
advances
of
science—man¬
There is nothing mysterious
being uncov¬
RAILROAD
Selected Situations at alt Times
the
courage
will
be
New York 4,
many
You
prac¬
them yourselves.
You all recognize that probably
•the most important single factor
in gathering and correlating in¬
formation is hard work.
With it,
there
must
be1 organization,
Knowledge and informed opinion
with many sources of information
and an omniverous ability to con¬
sume the information, reduce it to
of
try were
and
of
were
Wet also
old ones.
the
learn from
duction
our
relatively
studies that pro¬
in a
concentrated
was
N. Y.
Telephone BOwling Green 9-6400
Members Nat'l Assn. Securities
Dealers, Inc.
the
few
units
I
good:
a
if aircraft manufactur-:
people's idea of quality.
have
tried
this
afternoon
■.
to
sketch for you some of the prob-*:
lems and some of the methods «f;
management. Historically, we havelooked at some of the techniques:
and some of the
philosophies that;
a period of;
have been tried over
years
toto.
and discarded in part or in;
We have defined our target:
our objectives. We!
painted broadly the prudent;
man philosophy and then have de-,
scribed the qualities of character*
outlined
and
have
in management that appear essen-~
thus limit¬
limited
mendous
because of the tre¬
investment required.
A
further factor that appealed to us
go
and
see
contacts
with
of companies.
We
them and they come
We study their re¬
ports, and we listen to their think¬
ing.
We discuss their problems.
and
We
see
delve
them,
we
us.
into
the
future
with
We visit their plants and
visit their properties.
We are
to stay with it or the not engineers, we do not attempt
intestinal fortitude to withstand to get out "and' measure the floor
standing.
Having
-
become favorably im¬
pressed with the statistics and the
background of the industry, we
then went to some
friends
who
pf our banking
were
familiar
with
can
be
and
no
finally' de¬
assurance
blance to perfection.
that
At times, it.
might appear to have only nega-t
tive merit. There is no
ducking/
issue that ownership Of1
capi-J
tal for investment
puts the owner,
complicated and difficult;
position, and any business to be:
successful must be well managed.
I think I can speak for many of
us in the business when I say thata
sometimes
we
feel like
the
man
who was
vejy^ generally lion,
rayori' companies
success
There
threat of new competition to the
established units in- the industry
was
of judgment is
time,
investors
Experience
cannot considered the
maintain
to
into
obtained
We
tial
the
foundations
managements
courage
purchasing
are
even
ing stocks do not measure up to:
some
ing the possibility of disorganized
competition.
Furthermore,
the
digestible
vestment
overruled by them. Having made
the decision to invest in a par¬
ticular security, he must have the
you
management will have any sem¬
tice
methods.
also brings contacts.
cessful investment manager must
rule. his prejudices and not be
that
value
could
these
buttressed if they are based upon
sound knowledge/
A good in¬
must be pre¬
pared to make unpopular decisions
and stick with them.
The suc¬
a
management of investment funds.-
with
And
appearing.
were
synthetically, only as upstart relations iri the textile
Time
well time produces experience.
family and gave theiri a very poor
manager
favorable industry
such
developing new fibres
improving the quality
management of investment
portfolios.
You are all familiar
be
and
SECURITIES
with:
outlook,
tal at 75 cents on the dollar
scribed the organization methods*
and techniques employed in the:
the
initiative
share. We think that;
buy working capi->
a
we also
knew that the units in the indus¬
experience.
The'
$20
when you can
pursued or
the tools and techniques used in
generally recognized, .and
having taken the initiative he
must have the courage to make
investment.
der
ered—new applications for rayon
size, and dish it out was the steady downtrend in the
then promptly and effectively. One of price of the product^Aft the same
Specialists in
Lockheed stock when it was un¬
and
the
also add somewhat parenthetically
at this point that their organiza¬
investment
program is erected.
funds, the managers must possess
the power of decision.
I would
vidual companies before they are
25 Broad Street
judgment must be the plat¬
form
secret in the methods
should
favor
and
In the management of investment
the equipment of the
part of the dividend arrears on investment manager are initiative
the preferred stock were paid off and courage.
Initiative means to
and
One other instance of a slightly *_
them for
We rely different nature may also be iilu- •
unfavorable popular opinion.
It upon them to keep our ideas fresh minating. A few years ago, when
is primarily when general opinion and alert.
We always find that the Finletter Commission report *
is bearish on some company or our
good
investment banker was published and the war clouds:
industry that its securities are friends have numerous sugges¬ began to look black and people;
likely to be available at attrac¬ tions involving exchanges in our talked of building up a 70-group/
tive levels.
air force, we looked at the bal-1
portfolio—all of which are aimed
On the other hand, pigheaded- at
ance sheets of the aircraft manu-:
improving quality and invest¬
ness or stubborness should never
ment position;
I won't say that factoring companies- and-saw that1
be substituted for courage.
Con¬ we accept every suggestion that Lockheed Aircraft stpek was sell-*
ditions do change, new circum¬ we have made to
ing for only 75 cents on the dollar
us, but I will
as far as net working capital wasstances arise that probably could
say that we consider them and we
not be foreseen, and under the
concerned.
Its plants, Contracts, >
consider them seriously.
new
set
of
circumstances
and
All of this requires organiza¬ organization, and reputation were *
conditions the
industry or the tion on our part.
It requires a being given away. We know Bobby >
Gross who runs the company. We >
company must be reappraised and team,
On this team are industry
compared with all other available specialists, research analysts who were prepared On the background
industries and companies.
That concentrate on a number of indus¬ —we were again in a position toY
act. We did act, and we acquired ;
is Why I reiterate that knowledge
tries.
We do not believe in over-
gestions;
put in the cage with the;
when the lion tamer said/
"I don't expect much
of you, my
boy, but go in there and do the
best
you
can."
Managements
should never be static. Manage-*
ment
should
be flexible and ag¬
gressive. It should guard against
the common pitfalls of over opti¬
mism or excessive pessimism. It
should
always try to deal in terms
and
avoid
the industry and with the leading
of
companies to. check our findings
and to see where we might he
purely speculative risks. No man¬
agement can succeed without im¬
agination, patience, courage, at
times, and a conscientious effort
wrong.
were
Our favorable impressions
confirmed.
Our
the situation increased.
interest
in
However,
investment
to SUCCGfid.
values
*
Volume 173
Number 5006
.
.
The Commercial and Financial Chronicle-
.
Continued from first
page
the records of 20 of the best
aged
companies
their
sales
profit
twice
over
published
compilation of
a
earn¬
ings and prices of the Dow-Jones
industrial
stocks
which
showed
that over a ten-year period mar¬
ket prices and earnings moved in
the same direction less than 20%
.of the time.
I don't want to bore
with too many statistics, but
you
the
case
vides
how
history of Santa Fe
pro¬
excellent illustration
Bn
of
far this
divergence in trend
actually went. In 1937,'the rail¬
the
unit
of
taxes
is
per
it
as
man¬
country,
before
high
as
after taxes
Can Continue
in
should find that
you
The Ball Market
namely,
why
cline in business
take
place.
If
it
was
activity failed to
were
one
a
gov¬
German and Japanese
competition
certain markets, more than
proportional growth in the pur¬
chasing power of the lower eco¬
FDR, that "we planned it that nomic
classes, and the enormous
way." When the first signs of in¬ amounts of
largesse given away
for
ernment
supporter one could re¬
peat the well-known statement of
ventory
liquidation appeared in
by the government to veterans,
spring of 1947, the govern¬
farmers, and other voting groups,
the
By JOHN DUTTON
course very superficial,
taking into consideration the
growth in unit business which has
that taken place since 1939, owing to
the much-advertised postwar de¬
growth in population, removal of
ation:
Securities Salesman's Corner
then,
was
little less than that.
a
This is of
but
ment produced the Marshall Plan,
ostensibly to save Europe from
25
(1769)
reaches
one
the
conclusion
that
Many
field
securities
United States Congress.
salesmanship
discover that they can deliv¬
soon
er
Arthur did it last week before the
who enter the
men
new
of
excellent talk about
an
ities but when it
And
secur¬
for
are faced
with the inevitable: "I don't know;
it
over;
Not
sometime."
see
a
well.
as
Send
copy
can
again
me
columns
■)
stop. This
to
of "Silent Selling." It
provide a valuable addition to
your practical study in the field
of salesmanship.
ing in the orders they
I'll think
for
goes
to bring¬
comes
when
know
only
are
new
salesmen bothered with this prob¬
lem but many
Deposits of Mutual
Savings Banks Up
who have been sell¬
for
intangibles
ing
years
are
well-managed companies troubled with it. The main reason
road showed earnings of $0.60 a
Communism, • but - effectively to net
earnings, dividends and assets is, of course, the speech was too
share and sold as high as 95.
By channel off large quantities of should be about double 1939 lev¬ good! As a one sided talk it was
1942 the earnings had risen steadr
surplus goods which were being
els, assuming a comparable degree excellent. The listener didn't have
ily for five years to the astronom¬ produced by our overexpanded
of
prosperity.
Translated
into a chance, and the one thing he
ical figure of $27.79 a share and
A. Livingston Keiley, President;
industry. This strategem appeared stock market terms
this means could do, which was give you the
the stock had
gone on a $6 divi¬ to stave off the trouble until early that in 1949 the Dow at
of NAMSB, says it is largest gain
160 was order,
he withheld
to himself.
dend basis, but the price of the 1949 when
industry, even with
of year, and compares with only
considerably cheaper than it was There he was boss. You made a
stock had dropped to under 28. Marshall Plan
aid, was beginning in 1938 at 100 and
approximately good speech but he held back the
$1,700,000 gain in February.
During the four-war-years earn¬ to show signs of trouble. This
as
cheap as it was in 1942 at 90. order. He just didn't have enough
ings dropped
steadily
until
in time support programs, insurance
It implies that barring any further opportunity to get in there too,
Deposits in the nation's 530 mu¬
1945 the stock was showing $9.56;
company-financed
railroad
car
inflation of the currency the Dow- and start helping you to make the tual savings banks increased $56,but iri 1945 the stock sold for 112.
subsidies, and a technical rebound Jones Industrials
might be given sale.
'
000,000 during March, to reach
;
Five years later, at the outbreak from an oversold
inventory and a fair investment valuation at
I have purposely refrained from $20,105,000,000 at the close of the
of the Korean War, the stock was 'Stock
market condition brought
around 300 (the prewar 150 level).
month, accord¬
still selling at 112, although it a
making any recommendations of
recovery
which
might have In a
ing to A. Livmajor speculative orgy a sales
was
then' earning at the rate of lasted
literature,
books
and
pamph¬
through 1950. Before one level close to 400
ingston Kei¬
might be seen.
lets in this column but this is one
$30 a share.
" .*
'
could
;
tell, however, the attack on
ley, President
for most
$56 Million in March
,
Obviously something other than -Korea, which
:
earnings
was
responsible
;
for
;Santa Fe's remarkable behavior, ment,
!but don't
think for
a
moment that
do not believe
we
manufactured by the govern¬
was
again
of
out
the
took
the
fire.
chestnuts
Since
August
it was unique that all other stocks heavy industry has been swamped
behaved in the conventional man¬ with orders which may not be
To
ner.
superficial
most,
at the records for the
der
glance
period
un¬
filled
for-several
(as long
years
the semblance of
as
a war
is main¬
tained
somewhere), while con¬
of stocks in a variety of indus- sumer goods producers, with their
tries acting much the same as .well-known ability to double or
Santa Fe. I only spend so much triple production at the drop of
discussion
*
will
show
dozens
>
,
this because a large seg¬ a hat, have been on a real spree
of those who disagree with .whicn is now showing signs of
.time
on
the market's future
bearish
are
because
course
they. do
not
believe earnings can possibly hold
at last year's boom levels for any
appreciable length of time.
.
this
Keeping Santa Fe's history in
mind, I should like to reappraise
the whole theory of earnings as
determinants of stock prices. Gen¬
.tapering
off.
Whether
goods
letdown
by
act of God
I
an
don't
know
protected
government,
or
and
soft
this
be
can
shall
not
try
to guess
just now.
Marketwise,
.1 suspect its importance has been
In
considering
tions to
which
the
manipula¬
business has
been
numerology.
I have tried
and
gory
that
cate¬
written
as
where
that
suggest
booklet
far
as
instance
of
Much
business falls into
I
would
you
obtain
called
like
"Silent
to
of the National
little
a
Selling,"
Association
-
servative
charge
tions
the
of
speculative projec¬
Dow
under
today's
conditions may be arrived at by
several approaches.
•.
)
Before
point to
which
I
an
can
ing
still be used
other when
their
bull
a
they
close
run
on
to
that those who purchased their
and
reminder
that
again
I
have
person¬
human failing as
a
to all of us—and
curs
make
an
conservative
in¬
subjected since 1947,
the public has been
we
find that
no
mistake
this
a
period
very
when it
was
The fact that
down.
essential
if
wish to do the best sort of
willing to buy stocks at 10
were
times what they
thought would he
the next year
year and a half. This, it seems
me, is very significant and lies
the root of much present-day
the
or
to
at
earnings
confusion.
over
It goes far
to explain
why stocks sold at such absurd
'levels during 1947 through 1949.
For
people
then
were
expecting
the decline in business which had
followed
major
every
,projecting
were
which
bottom
could
be
such
of
and
war
the
earnings
at the
expected
a
decline.
Today
ideas had
their first test in
is
far
will
they
have worked, although
time they have destroyed
each
of the confidence of intelli¬
some
gent people in the future purchas¬
ing power of the dollar. Someday
we
will
dare
be
say that our situation
really bad and the print¬
logic
same
couple of
may
be
used
years, as everyone
The
now.
currency, but this
too imminent right
important
question
amounts of Series E and G bonds
prices
may move higher because
improvement in price-earn¬
ings ratios.
In other words, Gen¬
1952
many
will
be
1951
and early
extended
Expand Quarters
Seligman,
Lubetkin
of their offices to
larger quarters
at 30 Pine Street, New York City.
Otto Jensen, a partner in the firm,
has
been
admitted
membership
to
enthusiasm
in business
activity it
seems
logical that investors will not be
to
paying 10 times or
the earnings they anticipate.
more
that
are
we
not
predicting
the
a
future, but merely indicating
phase of inflation which began
and may become
visible for the first time this fall.
many years ago
on
panding business of the firm.
was,
Give the other fellow
Postwar Decline
Business Activity
in
-
The
around
cost
of
100%
living
since
has
1939
risen
and
al¬
Now," leaving, the subject of most everything
but common
prices and earnings, let us con¬ stock prices have made the full
sider another aspect of the situ¬ adjustment. "If
you look through
trouble
much
story.
mind
at
time.
You
doesn't
His
so
know your
it.
know
It
is
man
history of
did
Into
The
it at
Court
his
fireside
chats.
in
deposits
regular
the
fact
that, for
the investment market.
Act.
of
Mac-
In recent
Government bond
holdings have been liquidated to
provide the money needed for curr
rent mortgage commitments that
months, U.
was
not
S.
available" to
other
from
the
banks
In
March,,
however, the increase of $145,000,000 in mortgages and $19,000,000
in corporate and municipal securi¬
ties was accompanied by a de¬
sources.
of,
$259,000,000 in U. S.
a gain of $161,000,000 in cash.
crease
Governments and
J. Barth Co. Adds
SAN FRANCISCO,
Calif.—John
J.
Cimino, former tax consultant
and
investment
counselor,
has
joined J. Barth & Co., 404 Mont-)
gomery Street, members of the
New
York
and
Stock
Exchanges,
representative.
San
as
a
Francisco
registered
With Chilson, Newbery
KINGSTON, N. Y. — Chilson,
Newbery &
Company, Inc., 48
Main Street, announce the asso¬
ciation with them
of Frank Ben¬
nett in Southern Ulster County.
I
Prompt Wire Service
N. Y. Elects Officers
FOR BROKERS AND DEALERS
Arthur W. Mischanko has been
elected
R.
Wright has
Western Markets in
To
Vice-President and Comp¬
troller and Harold
LOS ANGELES
•
SPOKANE
•
DENVER
SALT
•
LAKE CITY
been elected Treasurer and Secre¬
tary of American Trust Company,
of
New
York, it
was
announced.
J. A. HOGLE & CO.
Mischanko
formerly was
Vice-President, Secretary and
Treasurer of the organization. Mr.
Wright formerly was Trust Officer
ESTABLISHED
Members
and
associated for 26 years.
he
was
Tel.:
WHitehall 3-6700
New
other
50 BROADWAY
of the Bank of New York & Fifth
Avenue Bank, with which
in
Portfolio policy of the mutual
savings banks during March re¬
flected the unsettled conditions in
who put it over,
Audience
France. Roosevelt did it when he
made
reflects
great sale and you will find
out that the
Put
only absorb
can
him. Read the
to
every
a
He
gain
chance
a
a
human
March
further
an
American Trust Co. of
Mr.
Why Stocks Can Still Advance
Why No
high—their
good—the only
It Was Too Good.
new
gain
how
and
will
be
cashed
in
by
anxious owners in search of some
nize
shined—
were
was
was
associate; Ben Franklin
the New York
Curb Exchange to handle the ex¬
could as easily sell other form of investment offering
earnings of $6 and better
cost-of-living
protection.
of $4 as it could sell In this connection you will recog¬
earning $12 during 1950. As
lorg as no serious decline is fore¬
They have
listened to
point before you start
jamming another down his throat;
then
another, and another, The
Seligman, Lubetkin Co.
tial
regular depos¬
ceeded withdrawals.
talks—they read the
pep
with
dividends
averse
their
digest
Motors
80
at 50
-
buy?"
Exchange, announce the removal
seem
the
talk
A. Livingston Keiley
the
substan¬
you
job in
opportunity to sell
himself—stop talking and let him
paper-backed
doesn't
all
books—their shoes
change your mind and —give him
Co.,
of an
seen
you
without it.
why—they
be¬
Stock
maturing in late
at
fore
rise
to
&
dicts, but at the same time stock
eral
market have
the
members of the New York
to
pre¬
right, the only real question to
present-day; Bears is "How far
ing of money as a cure will result
in the annihilation of our faith in
today is how far confidence has
-support the belief that earnings already been destroyed; in other
may well decline over
the next words, how many of the huge
the
If my line of reasoning
reached.
1933,
their second in 1938, and then an
annual test beginning in 1947.
So
office
wondered
the
first
the first time this year, amounts
deposited in regular accounts ex¬
of
prob¬
reaching the 10 times figure only
a
forum
like this
can
still
be
occasionally, and then apparently ably .he his fate to have his ideas
championed
the
loudest
at
a
time fairly evenly divided on its mar¬
by pure accident. However, if we
ket opinions is strong indication
look
back
at
these periods we when he would be the first to
with
them.
Keynes' that the end has not yet been
shall find that investors generally disagree
witnessed
im¬
it—then
about
understanding of this
portant point is
oc¬
failing it is,
when the
remarked that it would
once
over
R.I. The month
an¬
months sales work.
public was selling will
misled and
I have time and again watched
vestors have held that a stock
have
the
an
ample
government
has saved
the
opportunity to people react to a soft voice and a
should sell at 10 times earnings
situation by one simple device— change places with them when
humble manner. I have seen men
nnd 15 times dividends in a mar¬
inflation.
This easy solution for they finally change their minds.
ket which was neither particu¬
go out with their briefcases under
all the ills resulting from over¬ Logically
there must. be many their
larly high or lew.
Historically
arm, their jaws firm and a
production was first suggested in more investors, professional and determined look on their faces
.(since 1938) good stocks have sold
the early '30s by John Maynard amateur alike, who disagree when
nt anywhere between one times
attempting to get the order. I have
the market is up as there were
also watched them come back to
earnings and 150 times earnings, Keynes, a brilliant speculator who
erally speaking,
Savings)
Providence,
they had the ball, and its this year and the increase com7
having just the best pares with a rise in total deposits
time carrying it. When of only $1,700,000 last month. The
of
such
10
the bottom,
a
Ins t itution
were
sort
"dogs" should
times and peak
should
sell¬
ally felt the urge to interrupt
low,
appreciate .ten
stocks
need
Time
times the volume
so
often
who
Providence
for
I
are
us
President,
and
"We talk.too much—and too fast."
close, I should like to
old speculative theory
as
less expensive.
even
believe that all of
argument. That is that in a major
bull market, good quality leaders
should go up at least three times
from
is
of
SavT
Banks
ings
tainable from the Updegraff Press,
Ltd., 20 Harwood Building, Scarsdale, N. Y. Single copies are in¬
expensive and, in quantities, the
and
Mutual
by Robert Rawls and ob¬
possible to stay away from the
tempting game of numbers.
But
the figures of 300 and 400 for con¬
volume
overstressed.
greatly
of you as being irre¬
some
sponsible
on
ment
me
These statements will doubtless
strike
York
1915
Stock Exchange
Principal Exchanges
NEW YORK
4, N. Y.
Teletype NY 1-1856
26
The Commercial and Financial Chronicle
(1770)
rnnti'niipfl
frnm rtrtne
^
J
F y
Tbe
11
is
What
unless
the
modi-
policy is
opinion
Public
demand
net
rpJraints
that
of
use
cotton
nn
nocking
SadinV
their
issued
was
m'pat
a
real
Since the order
nnwpr
li^itini wa?e^increases
rih 97 Tin
in wool
chinhiiildirie
wage' increases
ex
increas
to
saving
takes
rally public opinwage increases, one
agaihst
the
conclusion
that
the
straight-time rates is likely
be
at
least
early
in
the
to
-7%.
Such
large
as
Second
it
as
World
War
to
iast
mercial
a
economists
level
billion
During
estate
the
credit
945,
fi-
com-
and
1950
be
'/'
Present
long-term
the
opinions
,
movement
In
ag0.
fact,
Since the prospects for limiting
the rise in personal incomes are
bright, the control of the deconsumer
goo<fs must be
accomplished mainl# by reducing
:
-
the
:
comes
-
goods.
proportion
that
of
opinions to turn out to be
some
There
doing this:
-sonal
two
are
(1)
income
raising
tax;
the
and
creasing the rate of personal
sav-
a
personal
mate the gap
between
r
would
prospect
of
the
that
prices
long-run
will
be
up-
greatly reduces the attrac-
an
of
saving bank deposits
investment for small savers.
conservatively-run
can
lems in
period of
a
in-
help the small
solve his investment
reserve
prob-
taxes
prices
it
•
encouraged.
standpoint to talk about such
rise
a
is
in
the
income
doubtful
tax.
whether
gut
Indeed
the
Con-
come
taxes requested
fhe
should
;
^e°ntm
:
Whether another $4 billion inthe personal income tax
would be bad for incentives would
depend
probably
go
discourages
harder.
point
f
how
upon
personal
Indeed
from
can
working
J? eat'
Cufi01Sf.iff, SJt
of
far
an
thus
in
re-
goods
consumer
govern-
the
government
nothing
to
mo«?t
sjze
0f
of
the
the
thp
gan
sav
™s
rpHurtinn
between
has
stim-
increase in personal
that
•
in
fho
nersonal
I P, Detwee.n Personal
Spflct SSia-i
addlt^?.nal
that the present
securities of the government are
savers- ,the Treasury should
a variety ot savings bonds
w£
to
wJaklnPH
-
fnr
'
h
lnc«e«
still
There
is, of
course
backlog'of
large
a
demand
for
housing. The backlog will not
be
diminished, but it will not be
increased.
,ov
t'hp
niirintf
wi
war there
indebtedness
t
cppnnri
drnn
n
"
indebtedness.
e rm
in
nerLnai
particuLrlv
short
Consumer
credit
outstanding dropped from
billio
at the end of 1941 to
$8 8
billion
$4 6
the
By
at
end
the
end
ig45
Qf
u
creased to $5 6 billion
lagt
of
1943
in*
hag
Durin* the
quarter'0f 1950' there*Was
reductio]1
gQme
djvidual
0ffset
by
the
mortgage
The
short-term in-
large
debts
that
it
but
'rise
was
in
the
individuals.
of
increases
great
ment
in
indebtedness
occurred
in
employ-
during
the
helped to raise
personal incomes after taxes reladebtedness. This
tive
to
much
short-term
do
to
in
crease
1945
personal soiicita--1948—the
fiation.
indebtedness
consumer
between
and
period
During
the
end
postwar inthis time total
increased
$5.0 billion to $14.5 billion.
The
year
1950
of
-
of
credit
consumer
in-
consumer
undoubtedly had
with the rapid in-
saw
an
from
r<'g
increase
induce considerable securities.
,rate
than
dudng
the
Sec£md
World War.
Personal holdings of
currency and demand deposits in¬
creased from $16 7 biilion at the
end of 1941 to $45 7 billion at the
savjn2 will be purchased in
end °f 1945; personal holdings of
substantial measure out 01 capital
It is appropriate to close this time deposits from $24.6 billion to
radler tban ou*
income» unless analysis by asking whether the $44.4 billion; and personal holds*ePs are taken to prevent it. economy on balance is building ings of government securities
Pr°bably the best way of dis- Up future inflationary or defla- from $8.2 billion to $41.6 billion,
couraging purchases out of capital tionary influences. An upheaval
(4) Since the Korean War there
would be to make the new bonds as great as the huge increase in hag been a rapid rjse jn shortnew
.
.
non-negotiable and to limit die defense expenditures is bound to
^iantlty sold to any maividual. have important aftermaths. Some
There seems to be a widespread oU these
inflationary;
be
may -
a61?3".? u°'
£ax"®xemp£ bond- others deflationary. During the
A bond should be offered to meet Second World War a great deal of
tblj demand. If interest werc tax delayed inilation was built into
iS
•
m 8 1
?
the
by
^ induce an increase in saving.
is
a
business
contrast
War
with
when
indebtedness
the
this
Second
-
in
World
indebtedness
in-
creased only slowly.
If shortbusiness
indebtedness
is
term
jarge
when
the
government
dea
can
au±flcient
by many prospective-deed, believed that
buyers to compensate them for would be followed
There
term
beSLrZZ
^ons StS^ fense expenditures dropped,;bethe
e resaraea as sons aid not realize tnis_ana, in repayment of these debts
considerable demand
among prospective investors for
"inflation
hedges"—investments
inflation.
not
It
is too
war powerful deflationary influence,
deflation,
early at
-present to judge whether the ae-
Lse progrLm^nd the
public and
A
w
^avorable
year*
...
tn
^nflatfnn ^eleral
to inflation seve
are thedbllowing^,
policies associated with
(D The ultimate drop in Fedmainly building up post- eral expenditures will be rnuch
poSed inflation or are laying the less deflationary - than the drop
business
it
are
foundation for
it
is
.
Ui persons
nd
.
n
vm
Since
only a small fraction of
inflationary gap can be elimmated by taxation,
reducing the
gap must be
of
be
pur-
of purchasing
in a
fixed amount
power.
.
Treasury is
Such bonds have been criticized
stiu attempting to sell the same on several grounds—all of them
type of E bond that was offered ill-founded. For example, it has
about 10 years aS°- In the mean- been said that purchasing power
however
have bonds would represent "built-in
conditions
large
a
early,
deflation, which followed the
however, to
.
....mi
vnnohlv
rftern^th 'of
wlr^fe'us
<he
the
deflationa-v
Among
the
the
Wor d
and
ment savings bond in 1951 is much
like attempting to sell
,
,
t
an
or
out-of-
refrig*
'
TheTon
The dr°P wtl"
wl1}
inflationary
will
sbift? to a replacement basis. The
goods after
^nttXLtfgh^nd'ex^end:
some
of
innltionarv
trends
limA™£f d™4nd
^10 or
blIllonoccur when the
lar«e arm«d
forces have been suPPlled wltb
needed original equipment and
when thfi buying of war g ds
briefly
note
nfh^nces
same
Lcond
for
that
fWs^a^lmodll'* 7™°!^
accomplished mainly date model automobile
rise in personal saving. There erator.
"
-■
payable
would
.u® chased eagerly. The
a
the
and preferences
buyers and that
needs a hedge against infiaiion-that is
prospective a bond
too
not
,
■
ofpersons
i'Snmo ti
yI®
}f„nm alia ^ r®hduclng. exemPefnal ratef
ra'Smg m3r"
rat6S-
a
demand.
0f
Second World
War when expenditures dropped
note some of the principal de- from $84.8 billion in 1945 to $31.1
velopments.
billion in 1949. It was this huge
Willingness to ernment is to do a
good job of there is a widespread demand
Tf
nlftin
+hfl. Tranv nf thpsfk
prospective drop that led many
hV.fi? income
-S probably.
stimulating saving, there must be that wage payments be protected develonments are in sharp con- Persons to expect deflation after
tax
a merchandising point of view in
against inflation/The Treasury -fra^t with develonments of the the war* The drop that will occur
tG n
Y the Treasury. This means that the should offer a bond designed to sGffon(Tworld War Conseauentlv in
expenditures for defense
ad®9uate offsets Treasury must design and offer meet this widespread demand for
means certain that the
(Probably about 1953 and 1954)
better
by
automobiles and other durable
goods,
output
will
be
large
enough to meet current accruals
Second World War
wlder variety than it now offers, volunteer -ales t°rce is just as
that is sufficiently essential as a high-qualily line of
ftrfn Ph^fclenSS;
cfiscourag^ng
miUion^
®
i:,.rttv,
partly catching
demand. In housing, as in
Persuading millions of persons
to start saving or to increase their
offer organize for a nation-wide face- a to-face-jelling campaign A good
not attractlve t0 non-institutional
buyers* In. 0ther words' the gov- that wil1 not lose in purchasing
causes thei
ernment has scarcely started to power if prices rise. In fact, the
■SHE?* to fn^r T^°'heleSS dGal with the very crux of the demand for protection against inln!irngriQlc «?lf lrln.their own-problem of inflation. If the gov- fiation extends beyond savings—
before it
represented
on
.
feet
'^•SaVTW +5espite th?
in
hkh
•
and
up
W. n- 3 .w
..m" o£ about $4-8 biIlion in the hold"
8
'
'
8
curities that ca" b ^'y b- ^cb" ings
of currency and bank de¬
.Since there are differences in resented as; meeting the needsot posits by individuals The risei
the Preferences of prospective non-institutional bujers, it should though large, was at a slower
certain:lncomes aJJd the supply of con- the risk of loss in the purchasing
sumer g°?ds must.be achieved by power of their principal and thus
mnfp
bonds.
power
as.?e Sovernment provides itself
u
innnmo'
The nersnnai
L
encouraging
played by the
£?«(D Se
can
Sc«"DS
also
in
and
playea By tne govern
virtually
ulate
raised.
tax
up
to a
taxes" nn
encourage effort
tax
done
quite high before it
personai
come
was
income
men
higher
om
it
be
Thus
crease in
The
role
saving
output
by the Pres-
Went.
,
maior
ducing the size of the gap between
personal incomes after taxes and
will be willing to vote the
$4 billion increase in personal in-
■
a'
personal
gress
■
Merchants
*op
management thought- the tion, the same kind of salesmancustomers ought to eat—not the ship that, gets people to buy life
^ind
*be customers wished insurance. Consequently, as soon
Repayment of the large debts in-'Any *ecurity
cur'red by individuals in buying attractive to
after
and the supply of consumer
houses ' during
the
last
several
goods by the end of 1951.
It is, of:
years will help about personal incourse, unrealistic from the politicomes
and should be
cal
markets.
be done only by
saver
elim-
incomes
make
took to* serve the kind of food
vestment trusts
that will have arisen
personal
that
financed'out of personal savings,
Perhaps
tax
income
If they are
the
ought to want. A few years ago
a
large restaurant chain under-
as
or $17
in the yield of the
year
methods
from
1951 than in 1950, but a much
higher proportion, of it should be
tiveness
An increase of $16 billion
billion
••
these
".that has occurred in the last nine
months, there cannot be much
years ago, or even
residue of scare buying that would
and it is opinions be
precipitated by purchasing
different
very
sion of the problems of inflation
and in view of the rise in prices
saving cannot be done by ballyhoo, or by advertisements: over
the radio or in the magazines or
in streetcars or subways—it can
ward
•••".
'
lag-
of
inflationary.
movement
per-
in-
Both
are
The
of
(2)
other words by an ex-
tive securities in which to invest,
consumer
ways
advertising a probably shortage
a'" d
presumably
encouraging
early people to buy in advance. In view
correct of the long and thorough discuslate
happen. But whether present-day
opinions are right or wrong, they
Reserve
hardly news.
And the establishment of price control machinery
is a fairly good advertisement of
the danger of a rise in prices,
Likewise, every time the govern-
years
—though I do not think this will
Federal
avalanche
an
these
of
ment securities by insurance com-
the
precipitate
ment issues an order cutting down
prices .the future use of this or that mawere terial in civilian production, it is
too
govern-
(4) Offering individuals attrac-
in-
consumer
spent for
are
any
the
effectively discouraged, personal long ago discovered that the way
saving as a method of financing to sell goods is to give the cushousing will be encouraged. There tomer what he wants, not what
will be less residential building in the seller thinks the
customer
/
liiand for
control—
rise in
objected that
price
buying
in
anticipation
of
higher prices. In this age of newspapers and radios, however, the
danger that prices may rise is
the
panies
fate
vn
not
not
by the sale of
least
at
five years ago,
ent rates.
is
it
for
es-
v
of
roughly
financing the purchase of real
pres-
about
just as wrong as
opinions of five or ten
opinions of ten
$17 billion after taxes at
of
of
quinquen-
be
of
rate
the
and
to
would
1960, the price level
slightly below the level
credit.
about
annual
job
prevented
in prices and that this admission
1915.
among
that
'was
that by
of 1950 and the end of 1951
an
is,
government that the government
may be unable to prevent a rise
to
are
as
be-
that
It has been argued that the mere
(2) The output of housing durissuance
of purchasing power ing 1951 wjn aiso be about twobonds would constitute a danger- thirds as large as last year when
ous admission on the part of the the output was abnormally large
1946-1950.
in-'may
was
the expansion of
bank
pur-
billion of
real
in
per-
j
pansion of Federal Reserve bank
billion
ratio
words, there will be little or no
accumulation of deferred demand.
During the Second World War
the production of cars for civilian
use virtually ceased for four years
and there was an enormous acassets that they would part with, cumulation of deferred demand.
the
during
quinquennial
1946
to
1950
would
aVerage about 6 per cent above
Banks—in
or
•
these
the total growth in the compensalion of employees between the end
before taxes and about $16 billion
.
estate.
about $2
year
nanced by
This
longer work week, will make
$21
-
real
of
vestment
rise, together with that produced
by the rise in employment and
the
year.
a
in
opinion
prjce
would
$5 billion
or
Administration
dominant
lion
chase
add
payrolls.
Credit
The
njai
Increasing the use of
Sonal savings in financing the
was
increase would
an
billion
$9
over
followed
one of the agencies of the Farm
dissaving among the well-to-do
by strict credit controls, it can
probably be out by about $4 bil(3)
between October, 1942 and Octoher, 1943, when the increase was
•
two-
the highest incomes. By reducing
reaches
■
dis-
The
among
occurs
all
ofi
strong upward pressure of unions
on wages, and the inability of the
-rise in
.
one-third
fifths of the spending units with
ion
the
as
normally large and represented
to considerable extent catching
prices. It is also
up on deferred demand,
output
purchasing power bonds would this year will be about sufficient
add
to
inflation
if they were to meet normal demand. In other
that
deposits in-
currency and demand
account of the
one
government to
-
than
More
lations,
When
would be
war
same
liabilities and income
perfect
a
belief
general
a
(1) offering in-
£avln/' DlssavlnS 0CC"rpS,7ternnlnpe
spends more than
ones income.
bv
y
s
exceptions to the regu-
as
was
prices,
World
Second
coyPordtlonssno"iaiaKe'
^nH
mod
tSat theWfncreases^
negotiated
the
g
t
unions
ing the first half of the year the
output of cars will probably be
would exist if the''government as large as the output of last year,
sold conventional bonds and did Since output last year was ab-
tween
Sends^
government
tieat
cisely the
individuals con- creased from $16.7 billion to $45.7
venient opportunities to reinvest billion. The general expectation
This is a step that many that
the postwar movement of
corporations should take
Prices would be downward is refleeted in a survey of 62 non(2) Reducing the amount of disg0vernmentai economists made by
which
The unions evidently
the
pect
has
1951
'
Offering
(1)
ccnsiderablve^
amounts
the
there
War
of
movement
Throughout
which to invest.
rail-
and other industries have
ii^otiated
that
and
Thursday, April 26, 1951
.
by a slump and that the trend
dividuals convenient opportunities of postwar prices would be downto reinvest dividends; (2) reduc- ward. As a result, not only were cashed and the proceeds spent for
inS the amount of dissaving; (3) people willing to buy government goods during a period of rising
increasing the use of personal sav- securities' on a large scale, but .prices. But so long as people exinSs in financing the purchase of they were also willing to hoard, pected prices to rise still further,
real estate; and (4) offering in- Between the end of 1941 and the .the
purchasing
power
bonds
dividuals attractive securities in end of 1945, personal holdings of .would be among the last of their
does
accent
involves
the
unon
ivirtfaininf*
present
at
1941
expectations concerning the
increasing that the
of
ways
personal savings:
unions
that
nolirv
xvnf?e
several
are
lied to allow them.
in
change
between
future
Next, Mr. Business Man?
wage
principal
occurred
.
.
and
^^^
the
10 between the babdlties
(1) The output ot cars a
development of new or improved
created for the government by other durable goods during the kinds of weapons and equipment,
purchasing power bonds and the present year will be roughly two(2) Wages will rise more rapnational
income
would
be
pre-
thirds
as
much
as
last
year.
Dur-
idly than prices. This will neces-
*
Volume 173
sitate
Number 5006
ultimate
an
.
.The Commercial and Financial Chronicle
.
increase
|n
\'
27
(1771)
Continued from page 10
'
prices.' i -.V ; r '' /
v
(3) The increase in the length
.-
of the woik
the economy
postponed
the need
wee*
about
certain amount of
a
time
the
wage
earners
sating
did
they
that
the
To
just
the
in
succeed
as
they
extent
that
obtaining
(4)
Some
the
of
tax
increases
undoubtedly temporary. This '
probably true of some of the
tax,
in
the
the
rate
income
the
two
The
tax.
expansion
during the next
three years will increase
the
crease
possibility
when
itures
of
government
drop.
Taxes
;
.
prices
-
labor
and
wholesale
prices,
reflected
in
cutting
in
basic
costs,
and
are
be
temporarily high build into the
economy postponed inflation.
such
largely
the
added
in
consumer
in
un¬
costs
will
on to
higher
retail
prices.
3.
There
shortly
be
some
those
resulting frbm present and
possibly new escalator clauses in
Advertising Award
;
Merit
Certificate"
for
(A)
the
members
of
from
4.
3
page
partner
firm is for
a
of
the
Saved
he pitfalls investors
>
monly place in their
\ Standard
,
tificates
own
com¬
competition
was
and direct mail
on,inflation..
'
•'
big
the
I './■*
'
but
of
•;
.■
.
.
.
c \
w
.
Charles
7 the New York Stock
ca¬
almost
says
10%
we
1950!
over
Production
Director
allocate
can
of output for
15%
for
war
$24
■
billion
bigger
business
the same voice
political system.
With wider stock ownership, ap¬
«'
But where does the money
our
preciation,
understanding,
and
much
how
greater
standard of living,
tained economic
be
could
and
our
sus¬
our
growth. What
we
really need is perhaps not a good
5-cent cigar, but a good $5 stock!
Well,
with
you've been real patient
today. We've raced over
me
and write off somewhere
.
40% and
100%
of i
s
between'
cost in
Mr.
of
military
we
making
3
or
plans
may,
gigantic
10
years
for
a
necessity?
plans,
into
the
World
You
be
today,
even
gazing 2,
future—
III
War
that
may never
be
I
world disarmament.
can't I?
How would
can
we
a
dream,
cope
with
Utopia?
Howard *G. Peterson Co.
five;
Howard
G. Peterson is forming
of time!
jl
Lucien L.
c
„
,
;
;
f,:
Bailey Admits;
KNOXVILLE, Tenn;—David T.
Bailey has been admitted to part¬
borrowing
the
winter,
terialized; a
March
in
from selling
Hamilton National Bank
—America, the land of enterprise,;
the home of the 10-millionTshare
1.
!
t
"
«
r
•
"•
-*i
*
Building.
-
-
.
Bache Co. to Admit
stock!
Insured Inv.?
Edward
J.
Agency
Samut
is
universe—and
stock
a
securities business
engaging
from
Admits Partner
CLEVELAND, Ohio—Arthur D.
Metzenbaum has been admitted to
subscription
On May 3 Francis K. M. Hunter
York
City,
York Stock
members
of
the
Exchange.
New
in
our
enough
capitalism
stockholders.
today.
Only
yet
ma¬
in
early April, resulting
assumption
would
be
that
defense
slowed
or
Board
Control
government
A
—
Political
Expediency
We
hardly
expect
the
price control program to
can
present
be
in
economic
was
never an
sound
because it
It
concept.
concept,
economic
conceived
was
in
haste
by wishful thinking out of
political expediency, In its formu¬
the
advice
economists
and
perienced in
of
of
World
sound
men
War
ex¬
II
con¬
trols
was
largely
disregarded,
possibly in the bliss of ignorance
or
the smirk of cynicism. The
initial
"freeze"
tended
to
be
was
in¬
never
than
more
stop¬
a
gap measure, an expedient, a sop
to public demand—to be modified
time
as
permitted.
authors
said
created
merely
control
of
to
One
the
if
illusion
the
and
its
of
that
me
economic
it
of
appearance
soundness,
it
In¬
stead, the initial "freeze" has be¬
would
come
its
serve
the
purpose.
foundation upon which
expedients
have
been
erected piecemeal.
Is this .system working? No one
can prove
to what extent it has
troublesome to the productive in¬
dustry
is
of
the
essential
to
nation.
Productipn
inflation,
defeat of
and the short-term value of price
control may already be more than
offset
by its impairment of
duclion
pro-
and
production
incen¬
get Tower prices,
thank the ; operation of
re¬
fiasco
had two important
prices. The first was
defla.ionary
but
unfortunately
only temporary. Due to labor's
effects
we
do
withdrawal
freeze
Not has been associated with the firm
15,- for
some
time
as
manager.
grounds.
.,
.
on
of
from
wages
longer than
the
Board,
had
the
continue
to
Goebel
Brewing Zlk%
Privately
Notes Placed
The Goebel Brewing Co., ac¬
of cording to an announcement made
the Board, and of some govern¬ on April
18, has arranged to place
ment officers. Pressure for wage
privately through Nauman, Mc"adjustments"
has
meanwhile Fawn & Co., of Detroit an issue of
the
to
had expected,
anyone
discomfiture
of
labor,
been building up. Now that ma¬
chinery to effect changes is again
being organized; now that or¬
$1,250,000 15-year 3%% notes due
1966, with the following institu¬
ganized
surance
labor
battle and
has
will
half
won
its
probably win the
tional
investors:
labor
arguments for
one
likely to increase
more
be
added
or
and
The
Life
As¬
Massa¬
Insurance
Life
In¬
Co.
of the
purpose
advances
Brewing
Co.
wholly-owned
to
loan is to
Goebel
the
of
California, • s
subsidiary locatec
in Oakland; also a portion of the
they be¬ proceeds will be used to modern¬
as
complicated
and there
and
ize
will
Plant No. 1 in Detroit.
temptation to circum¬
ignore them. The Stabili¬
recent I statement
Life
Manufacturers
replace
round of wage increases.
6. Irritation with price controls
Sun
Canada,
Mutual
simple wage concessions. These
increases will force up prices and
become
of
Co.
surance
more
Co.
chusetts
other half, we may expect many
concessions { to
labor
beyond
time-demanding,
partnership with Eugene S. Halle
financing only the toenails of this. in Will S. Halle &
Co., Swetland
will become a limited partner in gigantic industrial ipbot!
Building, members of the Midwest
Bache & Co., 36 Wall Street, New .;
It all goes back to a basic defect Stock Exchange. Mr. Metzenbaum
.
the
come
Think of thisi
day, the investment center of the
and
orders
is
or debt
perfectly in
nership in LucIemL. Bailey & Co.,
not
and Russia drawn from events
zer's
am
have
temporary and un¬
optimism about Korea
justified
vent
form; and. I
to
discovering that the pre¬
held prices
down, but one can
shortages, which- led to
prove that it has been worse than
psychological
inflation
through
of¬
some
expected
resistance
upon
ashamed to have to tell you that fices at 221 West 22nd Street, New
not more than 2% of this whole- York City, under the firm name
deal—the $24 billion-^will come, of Insured Investments Agency.
in
Price
further
to
bow
dicted
.
will some from
always
history, discussed how duced; the good effects;of credit
injected .. new life curbs and government bond rate we can
natural economic forces far more
enterprise started to changes;
and
greater-than-exebb, examined the status of our pected production of some civilian confidently than the prestidigi¬
tators of price-control.
defense effort, and our new pro¬
goods like electrical appliances.
From all this I conclude the
duction equipment. But we didn't These
factors
can
change back
1951 price-control has not
answer the $64 question—will we
just"
again just as rapidly.
fied
its existence on
economic
always have to be "saved by the
5.
The
Wage
Stabilization
Over $4 billion in Howard G. Peterson & Co. in New
new plant will grow and flourish: York
City to engage in the securi¬
via this route.
U, S. Steel, Jones, ties business.
Mr.
Peterson was
& Loughlin, many chemical,
air-; formerly with Babson's Reports,
craft, and
rail roads, .will have J Knickerbocker Shares and Karl D.
some brand new assets on "a five-i Pettit & Co.
•>.
years
not
edicts.
exces¬
leading
consumer
attempted to con¬
basic agricultural
as
cur
,
there's;
mark-downs;
are
or
not
prices, have risen less than many
prices which they. Rave theoreti¬
tives., If
(and for this we pray)
fought. Close your eyes for a
minute. Imagine Stalin poisoned,
paid out in dividends.! That'sr
Russian
revolution
led
by the
where part of the money hails
from.
Depreciation charges - fi-; Ukranians, a democracy in Rus¬
sia, a Chinese Abraham Lincoln,
nance a lot of this expansion, and
new
mark-downs
some
will
measures
even
such
dictators
two
when
Newman is a partner in Newman
& Co.; which is being dissolved as
year plan" (American,; not Rus-;
of May 5.
Mr. Behal has been a sian
style!).'- ,•
partner in Gruss & Co. ;
1; Other capital fon plant growth
'■
up¬
10 years of
know
plant.
our
system,
in
shared
bell"
and gadgets of the
stockholder to share in
a
gimmick—the certificate of
necessity.
Armed
with this; a depressions in such
company can build a new plant,;
City - Partners * will
be
M. Newman, member, of
partners.
Be¬
industrial
since the Korean outbreak
Exchange; Jay Richard Ken¬
nedy}, Arthur B. Behal, general
partners, and. Abram Kardiner,
Stanley ; P; Young, and Richard
limited
or
will
tops, out of 150,000,000 temporary influences
population. Why, everybody ought sive inventories now
re¬
obsolete
an ;
capacity.
our
is
come from?' Well,
la^t year only
42% of corporate net income was
a
trie
Glauber,
even
to operate the upward trend
be
resumed.
Among these
cease
-
Exchange firm of Newman, Ken¬
nedy & Co. will be formed with
Offices at 30 Broad Street, New
York;
this,
-
Forming in New York
On May
of
new
the goods
A
;
.
for
for
factory,
abundant life.
Newman, Kennedy & Co.
J
not
goes
,
And today
and still meet civilian clamorings
advertising
•
was
billion
$24
year.
war-worn
wonder
Wilson
■
jv
slice
this-year
: ■;
I
a
replacement
unit,
No
is Doyle, Dane,; Bernbach,
New York. V" V,
'
national
1948, $18^ billion
whopping expendi¬
in
newal of-a
expanded
news-,
campaign
New York,
-
the
Whew!
■
between
gross
almost
of
January,."-1950.
i-
of
planned for this
for
agency
The
000,000
to be
pacity at the end of 1951 will have
Stock
&
The
10%
1950, and
Co. has been running their cartoons in metropoli¬
tan New York newspapers and in
the "New Yorker Magazine," since
Dreyfus
cus¬
customers!
somewhere
us,
billion
cause
siarted
for. a combined
Exchange
paper
!
awards
January is the Boston
more
and
ture
centers
since the
5%
in
in fi¬
throughout the
The
winners
of
the
monthly awards will be juog_;i at.
the end of .the year to determine
the;-. national
-winner.
Among
.last
—and
$19
awarded each month
who've'! received
to
on
equipment. This is not hay! It
country.
those
sufficiently passed
product goes each year into re¬
newal of, or addition to, plant and
path.
for outstanding promotions
nancial
not
With
and Poor's Merit Cer¬
are
cost)
wage
price movement is due to
temporary causes, and when they
by the Fell
tomers in the form of lower prices
member
series of institutional
csrtoon advertisements which sin¬
gle out
labor
being
present halt (and
occasional reversal)
of the
,
senior.
of
ward
investment
community" it was announced by
John
T.
McKenzie,
advertising
manager of Standard and Poor's.
The
Merit
Certificate, which
was
presented to Jack Dreyfus,
.
hence
technically
increases.
Continued
op¬
benefit of
the
(and
without
sponsoring
the mutual
erates "for
creases, which will also be used
to permit an increase of labor in¬
(B)
come
advertising campaign that
Sfn
contracts, from "fringe" in¬
wage
The Stock
Exchange firm of
Dreyfus & Co., 50 Broadway, New
York, has been selected by Stand¬
ard and Poor's Corporation to re¬
ceive their "Advertising In Action
trol,
lation
will
increases in direct wages, and also
other
costs
of
labor,
such
as
Dreyfus & Co. Gets
have not
have
entirely passed
or
control
increased
by the recognition
that prices which our controllers
not been
prices
as
expected. But they
as was
which
be
retail
trol-policy of margin control,
der
price
cally "frozen." Economic laws do
soon.
up
increases
upward. Thus price con¬
become increasingly a
fiction. Public esteem of
paper,
other causes,, in¬
will be felt soon, and especially
ielt under the present price con¬
expend¬
which
to
Recent
rapidly
the yield of all taxes and thus in-*
them
will
material
economy
or
be
trol
2.
part of the increase in the corpo¬
of
will
will push
personal income
profits tax and
excess
tem¬
1. A greater delay than was an¬
ticipated in the effect on con¬
sumer prices of large government'
defense
orders
recently
placed
or soon to be
placed. These orders
in,
are
increase
whether
cluding the following:
"
is
But
not, the halt in the
upward index is due less to> price
or
controls than
com¬
increases,
wage
deceptive.
porary
in prices will be necessary.
creases
Of Price Controls
is
govern¬
expenditures drop,
will seek: cbmpen^
1946.
pensating
Page 29
to
Wnen work¬
wage increases
in
If You Can't Turn
reduced to normal,
are
defense
The Economic Unsoundness
Guess Who?
at. least
or
—
postponed inflation.
ment
■
will build into
inflation
ing hours
■
certain amount of
a
for
■
that
the
In
was
bottling
plant
at
Goebel
1950, the Oakland brewerycompletely modernized and is
with
in the final stages of completing
be re¬ a new stock house. These ad¬
will not ditional facilities have doubled
make controls more popular. And the
capacity of the Oakland plant
the closer we approach election
permitting
the
introduction
of
day,, the less rigorous enforce¬ Goebel *beer into the Los Angeles,
ment is likely to be, and the more
Calif., market.
good
luck
controls
within two
moved
liberal
the
may
years
allowance
of
excep¬
tions.
7.
since
Nearly
the
allowed
and
will
every
initial
permit
order
has
Arthur Greenbaum
Arthur
Opens
Greenbaum is engaging
price increases, in a securities business from of¬
future price fices at 1575 Thieriot Avenue, New
"adjustments" that York City.
further
nearly
price
"freeze"
every
28
The Commercial-and Financial Chronicle
(1772)
Continued from page
business; an overstimulant is dangerous and an in¬
vitation to subsequent deflation.
Over-stimulation is indicated by
Favorable
vs.
Factors in Stock Market
1946
residential semi-war
the
peak,
figures
began
around
' * t i
The
for that year.
The sharp rise in
stocks during the first half of 1948
weighted
accompanied by an advance
in the residential contract totals,
factors.
with both series thereafter show¬
ing declining trends into 1949,
although the residential construc¬
tion series turned up before stock
Going back, quite a
ber of years,
the
1929
n
economic
combination
may
itself)
a
of
much
of
discussion
each
Stock Prices
(1)
From month
to
the
month,
interest rates
as
Statistical
Strong
The
factors
above
Position
others
and
that
may be classified
mental
forces
paint
as
prices
usually
trend in stock
nation
sition
London
As
stalemate
cyclical
one
prices to
some
ex-,
trend
the
over
sensitive
period.
to
general
in
changes
supply and demand conditions in
the primary commodity markets.
prevailing suggests that
(5)
Residential
Construction
more optimistic side
Contracts paint an advance pic¬
would act as a powerful market
ture of the huge building indus¬
stimulant, stock prices may yet
try, which so vitally affects all
go substantially higher before be¬
now
shift to the
a
vulnerable
This
decline.
to
stable
in sentiment
shift
reliable
more
in
Some of the
this
signs to watch for
already been seen. Buyers are still reluctant to place more
but, on the other hand, the size of these orders
has been enlarged in many instances. This is a healthy develop¬
than scale orders
high
of
low.
or
York
New
come
this standard.
(9) Commodity-Stock Price Ra¬
may be
commodity
reduce real pur¬
stimulating,
high
prices
to
tend
next
sharp
broad
advance
in
decrease
the
are,
short
shares, such
common
renewed fear of inflation.
of
in¬
in the
"timing factor"
conceivably be relied on for
fairly
when
signal.
false
a
factor"
"timing
of
cline
in
individual
These
—
giving
of
trend
assumed
a
the
until
greatly
material
stantial
is
ket's
sion
for
call
an
based
chiefly
of
of
part
end—to
be
the
Board
by
subject
will
be
the
Ferro
(7) Bank Loans represent debts.
While loans by commercial banks
a
the
was
as
case
is
not
when Federal
but
this
was
in
the
supply of funds that
declining Treasury
•
shorts
John Ricksen Forming
Bank credit not
Mr.
Ricksen
was
Auchincloss,
Parker
&
' :
and Peter P. McDermott &
Co.
'
far
too
either,
must
that
ance
the government
maintained,
and
this
means
::
":H:: :i:i;: v::I:::::: r::
in
cashing
of
marketable issues.
certain obligations in
order to
MO
will be
tso
at
240
rmnt
this
more
than scale buying is purely a matter of
time
because
by the changed
yet
230
successive decline
run
open
funds,
Where the level will be that there
the yield buyer.
it' is
credit
buyers of
th,ese securities more attractive to those that have
especially
if f: :i::: iit::"r::;:
evident
that
the
market policy of the
conjecture
caused
liquidation
authorities has not
its course, although it probably does not have too
further to
in
purchase the
While the market is going through the
limiting process, there has to be great caution among
makes
:r-■
protection
The orderly or flexible
bring support in prices at levels that will prevent
will
market
be
market from time to time.
interfere
There is a bal¬
this would
because
the financing of the rearmament program.
with
r' " ■' : '
'
Two-Edged Sword
hand, credit limiting policies of the authorities
carried
be
for¬
Redpath,
are
easy
'
cannot
the
an
longs, at least until
or
On the other
Company in New York
still to make the creation
matter, whether it be from
the period of the emergency has
policies of the authorities
market
of Reserve
Treasury obligations, but at the same time each
;
"
be put into
can
the short-term obligations of the Treasury in a not
creating
reserve balances.
Nevertheless, it does seem at the moment that
the near-term maturities are taking on aspects of stability, which
should make the risk not as great as might be encountered in the
more distant maturities.
Yet it is not indicated that the shorts
will be without some elements of uncertainty because the open
A
TIMING FACTOR
270
in nearly
protecting
.■
reduction
passed.
merly with Daniel F. Rice & Co.;
crease.
commitments,
prior
volume
dissimilar position from the longs when it comes to
too
Direc¬
Corpora¬
Corporation.
in¬
an
of
care
puts even
Weaver,
of
Carson Pirie Scott & Co. Mr. Wea¬
business.
followed
sizable
is being felt in not a few instances. The change in the
market policy of the monetary authorities is also creating
other problems in the money markets, because there is the ques¬
tion of refundings and maturities that must be faced in the not
distant future. This uncertainty, added to those of credit limiting,
significant change in
demand deposits is
John
R.
Ricksen
is
forming
decreasing, there may be trouble
John Ricksen & Co. with offices
ahead; conversely if the rate of
at
21
Maiden
Lane, New York
decrease
is
decreasing,
these
City, to engage in the securities
troubles may be approaching their
the
assumption of continuation
a
CHICAGO, 111.—R. A.
of increase in
en¬
on
active
money supply is represented
by demand deposits. If the rate
new appraisal of the mar¬
outlook.
The above discus¬
is
most
take
as
pinch
re¬
To Hear at Luncheon
A sub¬
the
Under
substantial de¬
prices would be
would
and
—
to
market, is going to have an influence upon the loaning policies
of insurance companies, savings banks
and commercial banks
sooner
or
later.
Even at the present time, it is reported the
Chicago Invest. Analysts
ver's
Deposits
Demand
There
The
opposite direction.
Enamel
(6)
increased.
However, a
change in the foreign
situation
tirely
by
tors of the Ferro Enamel
in the rate
interpreted as
enough to accomplish what the authorities
has been less liquidation of government
steep
do.
open
versed
the
that be, which is
of the.powers
limiting action
non-government investments, because of the
composite
continue
to
Defensive
defensive.
changes are
composite.
is
up
is
more
in the
components.
component
weighed
The
signals
Chairman of
favorable.
a
market
decrease
making
and
eliminate
helps
false
the
on
prices at pegged levels. On the other hand, with the absence of
buyers it does not take much selling to keep the market ion: jthe
However, the proper combination
the various components in the
most
credit
the
individual
an
gives
component
there
results,
satisfactory
times
are
The
being well bought on the way down.
are
wanted
obliga¬
tions in order to get funds that are being put into other invest¬
ments since quotations of Treasuries went on the skids.
Never¬
theless, there is still some selling that has to be done in order
ponent
could
useful.
de¬
obligations
about
com¬
signal indicated is tion, will address the Investment
significance.
Con¬ Analysts Club luncheon meeting
on April 21 at the Georgian Room,
the
"bearish"
of
the above set of circumstances, the
probabilities of
increase
of
these
of accessibility of Reserve Bank credit more risky
difficult, continues to keep the government market on
the defensive. The price decline in Treasuries, it seems, has been
more
primary
more
even
versely, a slowing
a
as
rate
creasing,
a
terest, heavy trading and sharp
price increases in marginal
stocks and the prevalence of one
dominating popular motive for
buying
to-
distant
to
individual
issues eventually went the way of the other
Treasuries, under par, but there are reports that
more
The
"over-sold" stock market.
each
are
side.
light
of
Market
are
rising at a faster rate than
commodity prices.
Conversely, a
lagging decline of stock prices
behind the commodity price trend
may indicate the approaching end
of the general economic decline,
an
offerings
because
partially-exempts also still seem to be interesting to out-of-town
deposit banks.
.
power. A strong "bull"
market is occurring if stock prices
chasing
While
market,
the
buying to bring
too much
take
not
in
The longer bank
rising ' prices
tio—While
the
on
owners
basis for
is the
1935-1939,
stabilization
some
Also, the level is low enough so that
Treasuries, bought at higher prices, are not likely to
let them out, even if there should be further rallies. The shortterm market is showing signs of settling down, and this might
be a forerunner of what will take place throughout the list.
still
prices which prevailed in the most
recent
economically normal pe¬
riod,
be heralding a change in the buying attitude
an interest in acquiring governments for in¬
It would
purposes.
about
stock
London
to
may
that have
of those
relatively
The average ratio
it
and
ment
comparison for testing
whether stock prices are
construction
total
is
index
the
If
detecting excessive optimism in
the
than
are
contracts, and thus give a clearer
picture.
The rate of change in
able when defense production de¬
velops more steam.
They
sensitive
and
trends
become increasingly notice-'
may
industries.
other
serious
a
stage,
has
„
coming
still in the indeterminate
government market is
loans.
of
resolved by
(4) Sensitive Commodity Prices
with regard —Certain raw materials are most
months'
several
stock
in
to affect another,
apt
are
The
despite the growing belief that the bulk of the price adjustment
and
conditions
Governments
on
increasing rate of decreasing bank
Be¬
—
conditions.
trade
Since the relatively cautious atti¬
tude
earnings, bond
tent reflect the outlook for world
fac¬
current
the
be
may
extent,
these
of
result,
a
market's
the
next
large
a
influences
technical
to
to
effects
adverse
tors.
In reflecting
as the out¬
lead the
prices.
economic
that
prospects but, as noted earlier,
the market's strong statistical po¬
the
to
a
rather cause of England's importance in
of stock market international trade and the fact
ominous picture
offsets,
tend
London Stock Prices
(3)
funda¬
—
well
look for corporate
A
—
prices
stock
Bond Prices
(2)
market.
*
com¬
ponent.
follow their own trend.
,
(by
reliable.- Below is a
more
brief
1937, the latter levelled
of
market
sometimes
while
ahead
health
cessful market indicators becomes
num¬
it will be noted that
considerably
a
false signal, the
these usually suc¬
give
composite
top in stock prices was
in
is
While each factor in this
led by over a year in a decline of
residential construction contracts
off
.
factor"
g
combination of several
fundamental
was
prices.
i
m
an
credit
standard of
"THE TIMING FACTOR"
Reporter
By JOHN T. CHIPPENDALE, JR.
improvement in bank
is preceded by an
loans;
(8) Level of Stock Prices — The
London stock market is a useful
EXHIBIT
making
their postwar
May,
1947, when
stock prices were near their lows
decline,
lows
until 1953, at
economy
least.
to
Our
increasing rate of gain in bank
an
the
Thursday,/April 26t 1951
stimulate
Unfavorable
contract
.
thus
inflate demand deposits and
4
..
much
What are the opinions of those that are master-?
go.
220
minding the market on the down side?
210
-1.
v.
-
'
_
200
■
'"ri<
i
-
■
_
-.flips
£
'iai-i
:■ •-1-1.
- '4
- Dim
■
x-i-r-y
,
'
■"
considerable "Support
is
■
the longest
190
be
190
170
:
.i."
190
HiiaSsKiill
-V
-
^
"
i
ijj
.
t
ysj-o-—
J
j
-
j
_
basis for
is to
authorities.
Treasury obligation is about as high a yield as
expected under the credit limiting program of the
It will take time to
get the answer, because at the moment the
real
market
of
plague
the
is the absence
of buyers,
not the
r\v
,
of confidence
i'jfin
ties
i':#-
' y,
vv-"
i
130
The leveling-off process and the restoration
will not come until there are signs that the authori¬
weight of offerings.
■
-'z~
It seems as though there
the; feeling that a 2.75%
.
__
160
140
for
the decline
believe
has been sufficient to accomplish what
The trend of loans will be one of the important
watch because a decline in these should have a favor¬
they set out to do.
factors to
120
effect upon the
able
government market.
110
"SAPr,-
--
•
Although they are not a
•"
factor of too great importance in
too
the market
yet, the short-coverings of
20
had
•0
s
r
-
--
.
.
J-I-
i mr
70
•
"
r
•0
"
•
-
90
>
<
-
•
■
\
•
? =-!■_ iL
liiiiiiSI^'m
"
V
2
.
£ •!
:
,f?L-
I
,~'r'
W
=■
*"
--afe---
r
•
^
more
•
r
too
JJ; S
time in certain
banks
that
are
looking
buying from
for yield.
There is,
disposition on the part of these purchasers to do
make limited commitments, because funds are not
no
than
"
4i
(
dealers and traders have
influence from time to
The bank issues are getting some scale
out-of-town
however,
u>,»
.□a
the
stabilizing
minor
obligations.
'
-
a
''i
believed
a
The shorts are still being well taken, and it is
income quarters that this sector of the list is entering
plentiful.
stabilization area.
.Volume
173
Number 5006
.
.
Chronicle
The Commercial and Financial
.
Continued jrom page 14
W
#
-
the Federal Reserve has
pegged
wj|
bL.1a
of
f lPXlulfi Interest
llilGIvSl
of
V* Flexible
*
MftljfUVI
Rate Policy on
Thin r^fwtc
rise
in
nprdcfpnt
construction
outlays
ot
of
States andmi
btates
n
and municipalities
ifies and
and also
also
a
cover
cline
cnne.
debt
interest
of
dollar volume
of
that
are
State
and
the
rate
local
------
construction in 1951 will be some
what above 1950.
present
controls
over
and
construction will doubt-
,
keenly
and
new
building
materials
,
—-
""
have
not
use
P01^! ^ Fed~
likely to be even
of
of the
the obliga-
psychology,
if this
even
^ce0±thtdisun^g-
local securities.
beyond what
maintain
Here,
complicating factor is
introduced by the tax-exemption
feature,, which "in the past has
be required to
may
"orderly" market.
an
caused municipal issues to fluctumore volatile fashion t
^n
Government and
~
porate bonds In 1947, for instance
Velon for some time the monetary municipal
bond
yields
rose
s0me
ume,jne
monetary
'ov,llc
•<"c-----r—
*
^ ----a
.
.....
^}Sf
sharply
not only because of general conditions in the bond mar¬
to perin
erosion
„
_
'ate in
the
ket, but also because of the aoticipated reduction of income tax
prices of these securities,
has
Reserve
some
——
"
'
1HIIV3H b
OV.
they are Hies above 10 years.
Some insignificant vestment institutions, notably the
Furthermore, some se- iife insurance companies, have
this year.
Jta
.
effect,
likely to be
curities will be
very
issued
under
the
sold
rpiion
+o
believe
nf
C°nS1
and"
debt
continue
to
that
Treasury
fi-
management
ainst
operate agai
of
susbtantia
susbtantially
amounts of long-term
prospects
in recent
months
bWer interest rates.
replaced them with shortbonus issues will be
t
several
months,
substantially term securities; the life insurance
below the levels of former
United
States
savings
years,
companies alone may
hold
as T
dg
have
Consequently, the outlook is much as $1.5 billion of short-term
lagged conspicuously,
that the volume of
whiie holders or such obligations
State
and
government
obligations.
These
ve
municipal issues in 1951 will not could be allowed to run off to
aispiayed increased eagerlarge
Housing Act of 1949. On the other
governments
hand', however, the volume of and
a
conclusions of this analysis
are
even
though a substantial
investment demand for long-term
Government bonds may not de-
Basic Limitations—In addition
h
tfht
around
S600
million
of ta the problems of debt manageernment trust
funds have pur1(^nger_term bonds, thereby modperiod ahead, the unchased about $214 billion o
g;
price decline.
There inhibited use of general cred
ernment
securities
wnh matnr"
Inderal
'
.
should involve support operations
w4) autho«t'es
are not likely
mit
continuous
which
responsibilities
place in the accompany^tne
So far in 1951, d
financial .system.
the
in
aware
aware
taken
recently
investor
rates. Again, after the outbreak of
in' Korea,
yields on taxexempt securities declined rapidly
war
_
_
less
is
.
more
has
management.
eral Reserve
;n
in
tions
prospects
probQuite
contrary
is
probably
the
Having
achieved
some
measure
of success in its quest
•
Current
fur-
no
the
de- for greater flexibility
development
important
with
more favorable price basis. The
interest to the members ofMthe
monetary authorities are doubt- Municipal Forum is how these
less aware of the need for pre- forces operating in the securities
venting a general deterioration in markets will affect State and
a
case.
•
An
un-
bond
the
against the
prospect of any really serious
volume-of borrowing to
bonus payments to veter-
that it has
mean
concern
lems of
Bond Prices
factors which militate
sizable
flexible
^er
now
government
has adopted a policy
interest
rates,
this
and
does not
^
vear<?
the
market
lltinact Al
29
(1773)
restraint
device is
herent
as
with the expectation of substanti-
anti-mflationary
by the inof 'the defense
an
ally heavier taxation.
precluded
features
consideration
event
economy,
out
which
Measures
reduce
availability of credit and
its cost
the
of
general
a
war
rearmament
construction,
increase
0L
ume
a
further
A
that
was
in
or
effort,
and hence
public
the
municipal
new
important and generaccepted
instruments
for
are
the
all-
an
vol-
issues,
WOuld be greatly curtailed.
ally
Recently, municipal bond prices
combating inflationary spending; have
declined
sharply.
To
a
drastically employed, • they. have
significant extent, this developfrequently succeeded in breaking' ment reflects the
higher interest
cag^ their securities.
It a speculative
meet investment demands withinflationary boom. rate
policy
of
the
monetary
ot hkely that the monetary The
out putting the bond market uninflationary pressures in our authorities.
Furthermore,
Conauth0rities will permit the yielas
der pressure.
economy
since the outbreak of greSs is
Thus a substantial
demonstrating an increas^
marketable bonds to rise to war j,n
cushion
Korea,
however,
bear
only
already has been proua
jng
reluctance
to
enact
new
tax
nmvi^p
a
fur.
i
be far below the
1950
level.
Be-
.
cause
of the
tax-exemption l'eature, the terms of new issues aie
probably determined
-i T
<
not only by
oMnterest rates,
-
the~ge^g^Jevei
.
but
to
the
prevailing
rates
In
-
-
an. important
event,
interest
by
prospective
and
Federal income
of
any
degree
the
rates
significant
rise
probably not
new
a
mu-
.
nraicaic
P
u
*
ppear
foiegoing
-reasonable,
new
the
uic
money
requirements in the form of busi-
financing,
and
State
mortgage
and
local
credit
issues
are
likely to be at very high levels
throughout most of the current
although
year,
they
A
nificant
canital
riPfUno
decline
in
xvipcq
these
requirements does not
prospect until later in
not
may
will'
help
situation, .include
the
sigin
annear
1951
and
develop
until
3952
has
nas
ana
and
couvexieu
converted
nonmarketable
into
them
inem
issues.-,
Also,
the
volume of savings expected to be
available
to
savings institutions,
pension funds, is esti-
including
mated to be
million
least $500 to
at
higher
than
Finally, in appraising the
f0r
pects
bond
prices
uuuu prices
fe,JLS iUi
es ra
u?Uu
-
-
$750
last year.
pros-
and
cinu
-
interhilci-
+1
together with other
vestment
Yields
/The
anticipated
demand
for
through
the
aorears
as
high
level
investment
better
an
of
part
imnnrtanf
of
funds
1951
fain
theoutlcfokfor^toSratesand
b
dim
bond yields in the months ahead.
It is well to recall that in
order
to finance the postwar investment
boom,
institutional
investors,
especially the life insurance
Sanies
.and the
mutual
banks, had to sell
com-
savings
considerable
a
volume of government bonds. In
1947 and 1948, this entailed substantial
support purchases by the
Federal Reserve banks in order to
keep bond .yields from rising. In
second half of 1950, the
high
the
demands
once
—
for
—-
investment
funds
brought sizable selling
of government bonds; the life in¬
surance
companies and the mutual savings banks sold about $2
more
w
billion
of
government
bonds
in
that
period.
However, as other
buyers, including pension funds,
added significantly to their hold¬
ings, the portfolios of the Federal
Reserve
banks
trust
ment
the
and
funds
only
'buykig Seinterest6' in
term
government
bonds
outside
Treasury and the Federal
Re¬
The increased yield spread
between government and corpo¬
bonds
duced
.
pension
ors.
In
tempted
funds
and
fact,
to
government
amount
purchases
other
some
replace
of
by
invest-
being
their
are
part of
holdings
re-
—-
--
the
bond
have
to
appears
drastically
government
with
cor-
porate issues.
All
there
these
may
liquidation
XUVJ±\^
well
of
J.
be
suggest
that
further
some
government
all,
djfc/AVAAJ
miKA
,
probab1ty curtail
of
nificant
degree.
VAAA^f.
the
investment to
new
Even
vol-
a
a
sma
change the basic situation
bond market.
0n
in
the
is
war(j
for
further
some
pressure
However,
mands
the
bond
on
prices.
that de-
prospect
investment
f0r
down-
funds
bonds
are
months,
various other
is difficult
the
monetary authorme moneiary
auwwi-
to.
to. visualize
visualize
to
program
drastic
{hefear of"war
Under such
a
pQlicy
economic
flationary
^
a
defense program, the
concomitants
credit
and
even
a
uC-
are
difficult
•„.
i.>
.
.
...
,
in'
this
and
though
the Treasury
contemplate substantial
even
'
a
not
of£eJrjngs
of
th
authorities
the
in
might
the
concerned
possibility
unsettlement
tinued
well
in
that
con-
the
bona
reflected
be
for
market
m
monetary
be
must
the
bonds
long-term
future,
market
help
Gov-
securities market. How-
eraaient
ever
will
The
short-term
Government issues.
A'
--
of the defense program
and of tax legislation. If the current feeling that the international
situation has improved should
spread and grow, the factors that
could strengthen the municipal
bond market are likely to remain
progress
W
1
he
available,
'
•-
r*
limited.
indeed should
and
be facilitated, whereas the fi- the
Pressucl-
J
-
a,'if( '
ti
A
T
k
nnnraisine these problems
" t
m
keeo
i/
it
State
projects
be_
d^erentiate pe^
ess®n^{
ost suitable
^m^ds is nc ^th^ most su tawe
device^ lor ^conwo g
unaer present cuuu
is
prospects,
^
municipal
be
other
certain
the
place
in the
0f
current economic environ-
shining
the point of view that the mone-
^ent,
of Governments
^h": authorities
and
hdpe
by inothers,
that,
by
gradually reducing their support
Interest
Rate
Outlook
in
the
Defense Economy
in
ail
and
a
market
dedicated
economy
they ...will
purchases,
tc
There
find
to
its
indications
are
la«e'mUUaJ
the
complex
the
of
many
task.
Furthermore,
which
arguments
were
raised against a policy of
higher interest rates in the post-
war
own.
level,
that
since
liquidation.
'
v
However,
if
the
monetary
authorities / should
permit
too
marked a
decline in long-term
.
still
are
Viewed in
protracted
in
interest
'
Debt
The
this
upswing
Problems—
authorities
long hesitated to permit
ment
of
rates
the
because
public
in order to
mitments
Management
monetary
a
have
rise in
of
debt.
the
at-,
While
higher Fed.
^ demand
bonds
may
k
sensitive
and
prospects
unpredictable
m
international
field.
Did You GUESS?
i"ates
search
means.
Even
as
Here's the
of the
interest
the
were
being raised,
continued for other
on
two
page
1951
4
version
angels appearing
27.
'•
de-
vices of credit control.
a few weeks ago, the
Restraint
credit
initiated
in
Voluntary
Program
was
attempt to cope
with the problem on a cooperative
an
^ thiS community,tbat this P'au^ucce^
being ad- Government bonds, there is a very
light, the real danger that the result may
movement of long-term govern- be to stimulate rather than disment bonds below par, despite its
courage further selling. Investors
spectacular character, is not like- who foresee the necessity of sellly to signal the beginning of a
ing
Government obligations in
years
vanced.
restrictions
r
construction
SSWS ^
begun t0
and
the
enable
local
carry
ditional
?n^estors
tighter
rather
support
.
by
factors concerning
interest rate policy
if
should
the
for tax-exempt s<
to ^ enhance(
u
mind the basic
fortified
of
and
vestors
,
considerations
hand,
months
and
taxe^
.
These
oilier
the
few
prospects
on
which does no
tween
On
next
fi
1
bring new war scares, with
nancing of less essential projects
should
be
discouraged and resoouia ue uiscumaBeu
tary authorities are not likely to
'
Consequently,
municipal
bond
of.
"
1
1
the short end of
of
several
JJ" a ^ natural^ana m.dqstrial re- prices from, this point on is likely
nee^-e e^co^raged to depend to a large degree upon
b ggressive y stimulated.
the many forces that affect the
Ui
accruals
effects
for
rates.
trend,
•"
Another obstacle to the full depects are that the Treasury will velopment of general credit reJely" heavily upon the use of straint in the defense economy is
short-term issues in its forthcom- that not all forms of credit should
ing financing 'operations. Large be curtailed. Credit needed for the
ara0unts of short-term corporate military program or for essential
funds wjn become available from civilian purposes must continue to
|ay
effort
interest
the
—
pros-
_
defense
appraise. In
general,
it
appears
that
their
prices
have
been
substantially
adjusted to the recent increase
^ rige and wiiere the full employment nQt Qnly of manpower, but
^
not likely
ticularly difficult to
to
continue
must
are
restrictive
i0ok
defense economy,
a
production
issues
the
Under
unaer inese
these conditions,
conamons, ine
the outoucfor municipal bonds is par-
sociunpalatable;
more
as
months.
de-
a
^
policy
poetically
are
reconciie with
where
of
wuwuiua„w
be
was
new
feel
to
the
cv;ullwluu.
as
of
ume
=
absence of
may
anticipated some
months ago. Also the amount of
public construction and the vol¬
committed, and by
are
^rket
interest
However, there
in prospect, it
grams
and, if this, situation
?omf tkfratefmal
rates
**
not
interest rate policies to an
extreme
length.
Consequently
ually
f
the
current open- there ' is
widespread conviction
pressure on bond prices will ease
policy of the Federal Re- among Governmental;
over
the longer term.
This ap- ^ark*t poll.cy ontne *
a^thoriUes
^
the
S10n
0f private
praisal, based on current invest^rnv_fonof
Federal Reserve bank ^redlt
must
,be
curbed
by adment
tendant problems in the manage-
coming
$13.5 billion of outstand-
ing Treasury bills.
With these large financing pro-
are
peak and will graddecline suggests that this
prices
the
fjnance
their
near
with consequent pressure on bond
over
Treasury will have to refund $27
Million of maturing notes and re-
with
balance, the near-term out-
look
from the market. In addition, the
sig-
shift along these lines might well
rates.
factors
Above
rent prospects suggest, scarcities
ume
will be called upon to
raise
some
$6
r $
possibly more,
of new money
we
Treasury
long-
serve.
rate
an-
°J
m?terials and ^pmentmight
develop more rapidly, and this
rearmament
littte
be
can
if the rearmament program should
make
faster progress than
cur-
govern-
increased
nominally.
the
outlays than
ticipated at this time.
would
the
In
the Treasury
year,
rearmament
which
large financing program.
second half of 1951, the
of securities markets. Present
measures
restraint, may exercise a
greater restrictive effect upon in-
Conditions and Bond
a
large
the
one should take into ac- ities continuing for too long poliP°ss].bi!ity that the cjes that would permit" growing
ln^erest rates, unsettlement in the Government
i
credit
Market
middle' 0fthe
*
A1
tax
around
beginning
1~1
^ -semblance to those of ^islation,
a
in-
to redemptions.
Also,
recent'^eMW*exch^e"i.erak
®
treasury excnange opera^ fiaa
faces
be
may
slightly less than in 1950.
possibly
the
which
billion of long-term, marketable
ap- government bonds off the market
•
conclusion is that the
ness
factors
tion, which has taken nearly $10
nicipal financing.
further
centive
Other
in
—*
-
^safes^
mands for investment funds,
ease
is
m^STe
help to
anticipated large de-
current and
taxes.
recent
deterrent to
Summarv
ShS
cover
investment
com-
decide to anticipate their needs in the fear of
further declines in bond prices. Or,
other
holders
of
Governments
may decide to shorten their maturities in the hope that the operation can be reversed later on
may
and that all forms of lending or
investing which are not necessary
in our economy be checked by
the good sense of the financial
institutions
themselves.
If
this
appeal to the restraint and reAlortzo
H.
Lee
H.
Morfcld
Alabama
Secu-
Laward
sponsibility of the financial com-..,
munity should fail, the results
Alonzo Ii.
Lee, Sterne,
(A)
may well be the promulgation of A£ee' &"Leach"'First"' National
harsh and drastic measures of g^jding
Birmingham
3
Alacontrol
over
the
entire
field
of
Presjdent
credit and investment.
The
Outlook
for
Municipal
Securities
of
the
rity Dealers Association.
•
(B)
feid>
Edward
H.
Morfeld, Mor-
Moss & Hartnett, 721 Olive
Against this background of in- Street, St. Louis 1, Mo.; President
policies and prospects, of the Security Traders Club of
terest rate
the question which is of particular, St. Louis.
<
V.
30
(1774)
The Commercial and Financial Chronicle
Continued
from
During
has
Creek
that
expects
there will be increased demand in
that its production will
increase more than the average of
1951
and
likely
to
benefit
from
hasty, intensive rearmament. The
the
at
is
moment
a
security capable of participating
whole, due to the with
profit
in either type of
high quality of its product. The economy.
company reports that many utility
My nomination for this diffi¬
and industrial plants, which were cult assignment is the Diamond
previously converted to oil, are Alkali Company, second largest
now being reconverted to coal and
company in the alkali field and
it.says that a coal-burning turbine important producer of more than
gas locomotive, which is in the a hundred chemical items. The
process
of
development,. shows fact that the chemical industry is
promise of surpassing the Diesel a growth industry needs no re¬
locomotive; this may regain mar¬ iteration. In the case ox Diamond
kets lost through the dieselization Alkali there are additional fea¬
the country as a
of the railroads.
Island Creek
owns
the largest resources of
high-grade, low sulphur coal for
metallurgical
and
coke-making
purposes; its reserves are suffi¬
among
cient for about 70 years of produc¬
tion at present rates.
"
110
of
dividend
basis
in
put
1948
Price
The
days.
.
Chemical
Dow
a
Book Value of
Annual
Com. Stock and
Share
Long-Term Debt
Co.—
Ratio
Sales
3.32
8.7
11.9
11.9
5.73
12.0
15.3
13.5
9.9
8.6
8.6
4.45 -v;
Diamond Alkali Co.——
Allied Chem. & Dye Corp. y 4.65
4.30
Union Carbide & Carbon.
its in
Monsanto
will be higher than in
1950; the excess profits tax ex¬
emption of the company is esti¬
mated at about $5.30. The $3 divi¬
dend appears quite safe.
The
There
10.1
12.7
16.6
18.3
5.37
12.5
11.4
14.8
E. I. du Pont de Nemours.
6.59
12.7
23.5
American
8.99
8.0
11.2
is
simple.
25,269
$6
preferred
shares outstanding which are noncallable and entitled to $120 in
liquidation. They are followed by
1,187,730 common shares; they are
are
Chemical
Co.__
Cyanamid'
Texas Gulf Sulphur.—..
With
Capitalization
12.7
11.4
the
for
on
Exchange.
little
as
New
the
Alkali
begins
6.74
show
to
York
14.0
,
York,
It
er.
Boston
is
active
as
Excess Profits
Taxes
Their high since 1948
mines and coal fields
are
82
share without
considering
shares), after the
ally
receiving
y
over-
in
New
ceri s
made evident last Decem¬
was
ber when
per
the best in Diamond Alkali's his¬
of
its
products. Yet the
modernization and expansion pro¬
does
not
bear
a
in
a
L. B.
SCIIWINN
company
families who founded
The
L. B. Schwinn & Co.,
company
developed them. The Fords,
and
its subsidiaries is the out¬
Firestones, Rockefellers, Donnells
growth
of
the
work
of
John
Deere
and families like them have been
Diamond Alkali Co. Common
replaced in
and
Cleveland, Ohio,
Member, Midwest Stock Exchange
fnen
When Tolstoy chose V title for
his
famous
classic, "War and
Peace,", he also provided a name
for the current phase of the stock
market.
day there
one
are
On
rumors
of
a
conclusion
to
Our
mili¬
tary efforts in
Korea and the
instances with
many
lacking
the
executives
denying
no
the contributions to American in¬
made
families.
by
The
Diamond
Evans,
certain
noted
President
of
Alkali, Mr. Raymond F.
the
is
of
son
one
of
the
company's founders and former
Presidents,
Mr.
T.
Raymond
possibilities of Evans.
domi¬
peace
nate
invest¬
think¬
ment
ing.
in
Interest
war
babies
begins to wane
and
stable
issues
tract
another
massing
and
for
the
are
major
offensive
for stocks
the
over
the stock is not selling at
inflated
level.
Diamond's
an
market
price to earnings ratio is low for
the
industry,
parison
the above
as
shows,
stantially
range
years
high.
which
in
commenced
in
the
United
Canada.
tion
1837.
Cur¬
of
States
Early this
a
modest
and
year
amount
in
one
produc¬
of
war
products was started, and tooling
and pre-production work are now:
■in progress on other war products. '
and
it
has
higher.
during
has
the
been
The
past
33%
Employees
numbered
26,963
"
been taking place
period of Treasury surpluses, and a declining volume
public. Th 2 central
should be quite premature in congratulating
improvement in the prospect for
permanent escape from inflation.
we
ness,
ourselves upon a great
Sales during 195Q totaled $336,while net income was
$42,756,902, equal after preferred
dividends to $13.51 a share on the
stock. Dividends of $5.50
common
per common
share
ing 1950.
were
paid dur¬
:
bious about this
John Fell Director
eleven
81%
Brothers,
has
been
elected
that be.
,7
director of Texas Pacific Coal &
Oil
Company. Mr. Fell is also
director of
Company.
There Is
But—and there
a
of
owners
12
months, and
a
"but" in this picture—
great many cases are substantial
a
obligations
of these
blocks
"But" in This Picture
definitely is
would-be borrowers in
of the Treasury.
will
securities
Some sizable
mature within
the next
Other large blocks are re¬
even sooner.
deemable upon
if
demand by the holders/ What will happen
presently borrowers or would-be borrowers who cannot
obtain accommodation from their banks
permit their hold¬
ings of government obligations to run down, or if they
demand cash
the purpose
If this
Them?
will be
for redeemable
thing.
one
all, of
course,
now
for
deny
happens extensively, the Treasury obviously
oblige d to find
*/Ii tax collections
is
bonds,
of obtaining funds which the banks
very
are
substantial funds,
adequate for the purpose, that
But he would certainly be
an
optimist-
regardless cf the surprisingly: good shewing being made
in
collections at present—to suppose that large volumes
of debt repayment
will
could be achieved through tax collec¬
Large E bond redemptions added to regular
during the next
year or
possibility that
a
borrowings by the Treasury.
tion: Would
deficit in current operations
regarded
Now, let
very
us
substantial
put this ques¬
large loans to the United States Treasury via
the bond market—even loans
be
ma¬
two—to say nothing of
presently develop—would require
a
Mergenthaler Linotype
y;:vyy'-:'
>.■
the definite
a
recently by the powers
tary credit restrictions initiated
turities
John R. Fell, partner in the in¬
vestment banking firm of Lehman
increasing volume of loans, particularly
perhaps as they have been employed as a base for ex¬
panding inventories. It may well be that this trsnd will
presently disappear or even reverse itself — and do so
without a great deal of reference to the so-called volun¬
tions.
<
a
tently supported such an increase by buying governments
and thus adding to the reserves of member banks.
But
commercial banks themselves have grown somewhat du¬
oh
been
market
low,
1
all this has
that
banking system, so-called, of the United States during a
period of declining Federal debt in the hands of the pioLc,
and during most of the time when refundings were con¬
fined to weekly issues of bills—in such a period the cen¬
tral banking system is net only unable to reduce its
holdings but must consistently add to them! It seems to
us that unless and until an end is put to this sort of busi¬
Feb. 28, 1951.
com¬
though most chemicals sell sub¬
On
popularity revives
a
chemical
range
greater
day headlines
in
indicate
the
Reds
,
own
selling just above book value al¬
attention.
papers
other
to
its
or
at¬
utilities
Leslie B. Schwinn
like
years,
development of tillage tools
482,810
Compared
issues
in the
the
of
their
by
Diligent,
though
the
modern
may be, there can be
dustry
business
personal touch
rently the Deere organization op¬
predecessors.
erates 16 manufacturing plants, 15
competent and sincere
provided
also
of Federal debt in the hands of the
■
or
Treasury's.
note
a long while past have been
good deal to say about the rising volume
of commercial bank loans. They have, however, consis¬
The huge expansion program was
men
the sidelines, the 12 Reserve banks
adding to their holdings of
Reserve authorities for
baby label.
war
Take
inclined to have
An underwriting group headed
by Harriman Ripley & Co. Inc.
gram of previous years had been planned and
paid for in anticipa¬ yesterday offered to the public
largely completed.
tion of peace. In considering how 120,000 shares of commoi} stock of
Deere & Co., a foremost manufac¬
It appears likely that investors Diamond Alkali would fare in a
turer of agricultural implements
in their search for high-quality in¬ postwar period, it is not irrele¬
and farm tractors. The stock was
vant to note that profits were re¬
vestments
will become
increas¬
priced at $64 per share.
ingly aware of the excellent earn¬ ported throughout the depression
The offering does not constitute
ing; and dividend record of this of the thirties, and dividends in
The
and/or
stock
were
paid financing by Deere & Co.
company which stands comparison cash
1*' with any industrial corporation every year throughout the vicis¬ shares are currently outstanding
and
were
the
last
acquired by the under¬
and which has even some growth situdes of
twenty-one
writing group from Charles Deere
characteristics.
I
would
not be years. ,;v:; vy
■;
Wiman,
President
of Deere & Co.,
surprised to see these shares sell,
From the standpoint of manage¬
who continues to be a substantial
over a period of
time, on a 6% ment the company occupies a
yield basis instead of 9% as at unique position. Few corporations holder of the company's stock, and
from executors under the will of
present.
in America are still directed by
the late Dwight Deere Wiman.
the
preferred
on.
Call it preserving an "orderly market" or
appropriate, but the fact remains
Reserve system has been regularly supporting
the market for
•
Pittsburgh
and
are gradu¬
national attention
Income and
$1.65 compared to
steadily, and when the Reserve system
supposed to be
that'the
y
16.9
Diamond Alkali is traded
the-coun
Cleveland. The shares
were
downward rather
governments!
,
the
understanding of what has been takmg place in fiscal and
market areas is lacking. Observe, first, that dur¬
ing all these weeks when Treasury obligations were being
"left to their own devices," wh:n prices were moving
whatever else may seem
42.5
37.5
its real quality. Net earnings per
share after provision for Federal
Stock
remains to be deter¬
be, it is clear that full
money
30.1
•■•yy
But however all this may
mined.
have from week to week been
obviously valued at
a very low tory.
The company has derived
price. Net liquid assets increased indirect benefit from rearmament
in 1950 from $10,207,000 to
$12,- in that some of its customers are
072,000 (equal to about $10 per busier now and are bigger buyers
common
goods under possible tax changes
was
one of the oldest, largest
share in 1950. In the same and mos; highly regarded mutual
period du Pont reported $1.26 per funds announced the purchase of
has been $40, their low $24.
At share versus
$1.15 the previous 25,000 shares. The stock, in my
their present price of about $34,
year. Mathieson Chemical earned opinion, is a suitable investment
the shares yield almost 9%.
The
for any investor who is legally
book value of the common 'shares $1.08 against 81 cents in 1950.
allowed to buy common stock.
,1
is about $25 but this means very
The first quarter in 1951 was
traded
such money market development actually
occurred? What will happen to civilian goods production
when rearmament expenditures assume full planned vol¬
ume remains to be seen.
Likewise, demand for civilian
'
the publication of results
first
quarter of
1951,
Diamond
.
the basic in¬
Actually Happened
What Has
on
of
Earning
has since been maintained at this
level. It appears likely that prof¬
1951
Per Cent
Cent
to
Per
appear to assume,
some easy reasoners
But has any
Pfd. Stock)
Earnings
Mathieson Chemical Corp.
$3 annual
the split and
on
after
Thus,
flationary factor embodied in Federal Reserve financing
of the Treasury has been removed, and the government
bond market at length left to stand on its own feet.
were
on
took most issues below par, and
certain of them through 93.
several of them below 99 and
A
Per
widespread.
decline which
tinued
its en¬
larged capacity produced 48% of
net
earnings for
1950. At the
year's end the full benefits of the
program
of inflation" had
destined to remain "an cng_ne
was
The idea was exercising very sub¬
stantial influence in several strategic quarters. It suffered
severe shock when governments began a rather long con¬
Earns. Earns. (Less Div.
strike during
working
was
and
become
The company estimates
joyed.
first page
We See It
As
„
were on
298
Continued from
not yet being en¬
crippling strike closed
down vi.al plants of the company
for ten weeks in the period fol¬
lowing the Korean invasion. As
a
result, although the company
tures to recommend it. The com¬ improved vastly
its showing of
pany's common s.ock has all the the year before, it did not make
earmarks of what some statistical a spectacular record In compari¬
services call a "special situation." son with other units in the in¬
From its very beginning, forty dustry. The following table re¬
years
ago, Diamond Alkali has veals the relatively poor showing
/
followed a policy of paying for in 1950:
Earnings amounted to $4.15 in
1950, $3.36 in 1949 and $5.37 in
1948;
1949
earnings
were,
of
course, entirely irregular as the
coal miners
policy
conspicuous
1946
more
desideratum
this
years
especially
company's affairs. From
througn
1949 capital ex¬
penditures
amounted
to
$38,000,000. Of this amount only $14,000,000 was borrowed and the
loan has already been reduced by
$4,000,000. Benefits from tnis selfimposed financial discipline are
now beginning to accrue.
Security I Like Best
Island
tons.
recent
been
the
in
The
Thursday, April
expansion largely out of earnings.
2
page
.
as
by the commercial banks—
"inflationary" in the current voluntary
Volume 173
Number 5006
.
.
The Commercial and Financial Chronicle
.
credit restriction
program?
to ask such
even
a
nancing
Of course, it is almost silly
other
v
question.
What if
tion
between
and
.
.
Of
from that
(directly
or
individual
same
enterprise,
of govern¬
business enterprise?
believe—might
be
or
be
direct
inevitably
a
methods
would
and
tne
avoid
can
going to
if they mature,
or
needed).
evident,
prepared for
a
.
prolonged
or
it
so
continuation of
a
to
seems
that
us,
divert
people's
Let
money.
tne
Era
an
to
come
exception
of
and
of
some
ions
what
end.
an
the
United
the
has
British
been
ability-to-pay
has
been
sorbed
by
taxes.
of
Domin¬
the
wealthy
completely ab¬
No
further
government'spending will have
to
be
financed
masses.
•.».
States
any significance can be
from them.
Henceforth
collected
all
the
called
the
of
citizens
funds
With
by
taxing
the
European
nations
con¬
cerned are not yet fully aware of
this fact because they have found
substitute.
a
They
Marshall Plan aid.
In this
It
perhaps
the
taxes and
personal
progressive.
billion
$3
or
$4 billion by
corporation
taxes,
profits
dering
rhore
possible
$2
even
creasing
excess
still
is
additional
an
would
be
in¬
by
by
ren¬
income
But
only
to
or
tax
even
present conditions.
fraction
a
Thus, also in
this
country we are at the end of
period of fiscal policies.
Also,
this country, the whole phi¬
losophy of public finance must
unaergo a revision.
In consider¬
a
in
gested
and
pros
will
of
cons
expenditure
of Congress
no
the
a
sug¬
members
longer be able
think:
to
Anyway, the rich have
enough; let them pay.
For in the
future the voters
they depend will
Inflation
;
;
:
a
on
whose ballot
Inflation
more
is
to avoid
than
Temporary
from
assume
government,
a
opinion fades away, inflation
to
a
catastrophic ; break¬
down.
•
' V';" :
Y'; v.-y.The
If
certainly
Housewife's
the
not
frying
a
policy,
than those
can
we
the
never
be
have
fact
more
to
that
than
temporary makeshift.
flation
cannot
be
For in¬
continued over
a
long period of time without
defeating, its fiscal purpose and
ending in a complete debacle as
was
the
in this country with
Continental currency, in
the
case
needs
thinks:
pan
In order to
things
tney
which
money
spend
must
from
away
they
tnose
ior
buy
longer
no
consume.
again,"
its
fiscal
bank
this
their
crease
As
purpose.
people share
breakfast table of every
the
in
wartime
guest,
sits
it were,
as
the
In
meal.
an
invis¬
GI
a
wno
citizen's
the
car,
stays not only the family
but
besides — invisibly — a
tank
or
is
a
The important
plane.
that
GI
tins
needs
more
food, clothing and other things
he
than
used
to
consume
out
wears
much
than
civilian equipment.
of
modern
a
The costs
enormous.
are
war
quicker
additional
part of the
a
is absorbed
money
this increase.
But
•
then
later—a
as
they in¬
holdings and
cash
comes
—
turning
by
ing
the
needs
funas
tne
.
point.
from
But
the
the
of
for
job.
or
The
'
■
V
,
is,
But
regard.
It
power.
she
Then
thinks:
"I do not need today
frying pan; I shall need
one only next year; but I'd better
buy it now because next year the
price will be much higher."
If
this insight spreads, inflation is
a
new
.
done
to
Then
lor.
all
people
rush
buy.
Everybody is anxious to
holding of cash because
he does not want to be damaged
by the drop in the monetary unit's
purchasing power.
The phenom¬
appears
called
was
ues."
The
which
"flight
knell
of
in
Europe
into real val¬
the
currency
system involved sounds.
have
We
not
yet
it
in
the
inflates.
is
time
the
flation.
this
second
and
every protracted in¬
But if the authorities do
very
ther
of
soon
attempt
amount
of
abandon any fur¬
to
increase
money
in
and
to expand credit,
day come to the
pleasant result.
one
the
circulation
we
shall
same
un¬
most
''..
\
.
borrowing
one
means
the
masses,
to
the
of
In
the
not
consumption.
democratic, reactionary and
nomic royalism.
inflation
eco¬
But the truth is
is
a
typically anti¬
It is
measure.
a
pol¬
icy
from
hand
and
lower
strata
the
fi¬
income
whose
brackets,
members
A
are.
Up to
now it was customary
predominantly the corpo¬
tax
rations
and
higher
incomes.
have
tell
to
openly that they must
the
voters
pay
higher
the
individuals
But
experts
it
is
with
these
sadists.
of taxation
It is
the
rest
a
government
to
part of the bill to
people and to resort for fhe
of expenditures to inflation.
a
triumph if they can say:
Everybody's
income i is
rising,
everybody has now more money
in his pocket, business is boom¬
ing.
Deficit
spending
It
was
is
not
a
new
during
the
the
part of the 19th century
preferred fiscal method of
were
those
governments
not called democratic
and progressive—of Austria,
and
Russia.
Austria's
Italy
budget
I do not want to examine
what value has to
direct
controls
be
attached to
from
is not
declared
to
the
tax
I
disagree
The
purpose
to
affairs
hurt, but to
makes
it
neces¬
for the government to force
people who used to buy nylon
stocking's
and shirts to shift, as it,
to other du Pont products,
were,
namely munitions.
Kant
in
Peace"
ment
his
are
suggested
should
be
wars
by
nance
expected
would
that
govern¬
to
dwindle
warlike
all
if
would
have to pay
wars.
However,
can
"Eternal
borrowing.
the
that
on
forbidden
in
But
There
mantic
Co.,
Inc.,
on
April 24, publicly
369,643 shares of Pacific
Lighting
Corp.
common
stock
(without par value) at a price of
$52 per share.
offered
Proceeds
stock will
is
commer¬
is nowadays a very rep¬
even
dangerous,
confusion
that
from
of
se¬
makes
it
sale
of
the
by the system
Lighting Corp. sys¬
largest distributor of
the
in the United States,
of number
gas
the
standpoint
customers
served, supplying
approximately
1,541,778
serving an area with a
to
population
in
of
excess
5,500,000
located throughout the major por¬
tion of Southern California.
The
territory is
of highly
one
diver¬
sified economic activity and is one
of the fastest growing areas in
the
bonds.
government
the
used
The Pacific
tem
meters
cash for their
from
be
to finance in part its construction
and expansion program.
He
spirit
countries
borrowing from the
rehensible,
A nationwide
syndicate of 68
underwriters headed by Blyth &
gas
no serious objec¬
be raised against borrow¬
invest
means
Blyfh Group Offers
Pacific Lighting Stk,
fi¬
ing from the public, from people
who have saved and are prepared
to
want
I
a
absolutely useless.
natural
book
meta¬
any
prevent and to fight inflation
its consequences, direct controls
or
coun¬
sary
United
States.
Earnings
available
,
for
the
Lighting
sharply in
stock of Pacific
common
Corporation
increased
1950 compared with 1949.
net
income
after
In 1950
all
charges
to $14,500,000, equal to
$5.88 per common share.
This
compares with net earnings of $8,amounted
200,000,
equal to $2.86
per
com¬
difficult for the non¬ mon share in 1949.
The corporation has paid div¬
grasp the true state of
Inflation, as this term idends on its common stock every
extremely
expert to
affairs.
always used everywhere and
especially also in this country,
year
increasing the quantity of
nual
means
money and bank notes in circula¬
tion and of bank deposits subject
to check.
But people today call
result
this
of
is
deplorable
that there
is
to signify the cause
•in prices and wages.
left
of this rise
There is no
KANSAS
Finucane
Avenue.
thereto
called
inflation.
It follows that nobody cares about
inflation
the
of
in
the
traditional
term.
You
share.
a
CITY,
has
City
Mo.—Frank
I.
associated
become
for
&
has
He
been
now
$3
with Bache & Co., 1000 Baltimore
manager
to
Since 1938, div¬
(Speeial to The Financial Chronicle)
longer any word available to sig¬
nify the phenomenon that has
up
of
Bache in Kansas
confu¬
term
no
rate
Frank I. Finucane With
flation, that is, the tendency of all
prices and wage rates to rise. The
sion
since 1908.
idends paid have been at the an¬
inflation the phenomenon that is
the inevitable consequence of in¬
number
a
been
resident
for Lamson Bros. & Co.
was
of
years
with
and
prior
Harris, Upham
Co.
sense
talk
cannot
about
something that has no name
you cannot fight it.
Those
who pretend to fight inflation are
W. P. Herbert Jr. With
and
inevitable
consequence
Their ventures
failure
because
try to
firmly
of
are
must
As
infla¬
they
do
not
They
while
policy
necessarily make
long as this ter¬
is not en¬
minological confusion
tirely wiped out, there cannot be
question of stopping inflation.
any
"Inflationary
(Special to The Financial Chronicle)
LOS
doomed
keep
prices low
committed
to
a
soar.
Francis i. duPont Go.
what is the
attack the root of the evil.
What
invention.
the
sad fact that the evolution
a
world
them
a
prefers.
rev¬
raise the money the
country needs
to rearm and to
fight in Korea.
which
for
We have learned
the
even
have
necessary
people until it hurts.
taxes because expenses have risen
agreeable
with
about
virtues of
they preserve the individual's
liberty to choose the grocer he
would only cover a fraction
Some
that
considerably/ But it is much
more
lot
a
the
that
try needs today.
to
truly; democratic government
been told
necessity and
to
to
tion.
of affairs
inflation.
The policy of the
Treasury, and nothing else.
try.
honestly what the costs of their
would
consume
that makes
physical point of viewV
only to stress one fact: as
in fact only fighting
conduct
the
r,
It is the government
our
the much greater part of the total
amount consumed
in this coun¬
of governments who do not
have the courage to tell the people
precisely
the
handy
a
Perhaps somebody will qualify
what I am saying here as anti¬
which
the increased govern¬
expenditure
by collecting
on
very
responsible for the rise in
prices and the ensuing necessity
ment
and
a
Administration, but big business,
the
"profiteers," the merchants,
financing
taxes
is
greater
We have not to choose between
public
of
democratic
more
was
i'
resentment
present only
today in this country
reached
the
from
it
limited
people from the government.
that
collect
ing additional bank notes and
expanding the amount of deposits
suoject to check; it is inflation.
inflation
is
the
eyes
to
taxes, it will be necessary to lay
a burden
greater than hitnerto on
sham,
a
hopeless venture.
direct controls.
public, the
Treasury in¬
convenient makeshift for those in
uivert
wants
one
inflation, price control is
a
the
Brackets
If
no inflation, price con¬
superfluous.
If there is
is
We have
Must Go After Lower
cial banks is tantamount to print¬
A Convenient Makeshift
to restrict
consequently prices will al¬
and more.
deficit
of
by
of money
a
But
war
expensive method of financing a
war; it is socially disruptive and
should be avoided.
'
that
more
proud
the
banks,
can
appear
rise
trol
Part of
or;, borrows
commercial
Inflation
the
if the
amount
circulation
housewife discovers that the gov¬
ernment will go on
inflating and
ways
pro¬
provided
be
also
borrowing
creases
government
conuuct
taxation.
may
citizens.
do
the
funds
for
of i course,
the
:V:
sooner
If there is
spending and to call it progress.
tion
The adequate method of provid¬
'
view,
balances, and
be
to
a
as
civilian, and that military equip¬
a
"Now
long
19th
of
reason
of
too
are
no
the government may decree.
ever
the
economics, Dunajewski,
Minister of Finance, restored the
budgetary equilibrium.
There is
consump¬
pone the purchase until
not
account
who
of
orthodox
of the additional funds
There is no need to dwell upon
high; I will post¬
they arop the disastrous, consequences of in¬
All people agree in txiis
inflation can still fulfill flation.
prices
a
to postpone for
short time the neces¬
to be raised against any
inflationary
Behavior
housewife
which
inflation
must
and
comes
final stage
into
must
that prices will drop again
future. * If
belonging to the rich minority.
If, fcr the sake of argument, we
leave
aside
all
the
objections
take
It
rise in prices
not-too-distant
a
or
other people
are
with
on
than to the policy
causes
the
enon
sity to resort to taxes to be lsvieu
to other
fiscal
a
reduce his
have to pay.
Makeshift
means
ascribe the general
$4
of what the Treasury needs under
ing the
go
in
a
funds
is the ignorance of
The people must ig¬
system and plans to
inflation
endlessly.
of
for
its
the fact that the government
chosen
new
country things- went not
as they went in other
countries.
raise
possible
as
The American
far
as
it
inflation
getting
are
taxpayer fills the gap.
yet
public.
nore
has
terri-
this
.
The
inflation
by
the
mandats
increase
and
take
the
ment
to
Key
garage
Germany with the
makes
government
to
otnerwise
snares
1923.
What
Now this period of fiscal history
has
in
mark
End of
i
con¬
tnis, it is necessary to tax
Uiem
in
the
schemes
peacetime channels to¬
citizens,
fact
with
upon
inila-
avoid
military goals.
At
Policy!
France
'80s
an
outright confiscation of these
would
'
toriaux and in
Let
efiorts
useless
upon
production
ward
Inflation: An Unworkable
tne rich pay, was the slogan.
Diocletian
Kevolution.
our
in
-
from
tion
ible
other
Emperor
of
not
citizen
ally
when
as
Price
What is needed in wartime is to
and
Fiscal
fessor
deficit from 1781
a
late
tne
century,
enues
inflationary trends during
..
control.
Taxation the
rearmament program at least.
Continued from first
page
yearly
until
on
discussing
by
problem how to
tion,
must be
one
should
control, work
French
acmeve
It is
we
is going on.
punishment could
price
sequences.
Would it in such circumstances alter
'.V'V'
•its course?
catas¬
how to conceal its inexorable
tually make purchase of the bonds by the banks more
attractive. The Federal Reserve has been
accommodating
enough to date in providing reserves (so far as additional
reserves are
a
inflation
make,
the
Treasury—in which case lower prices-would not be
deterrent to the present holders while
they would ac¬
a
price
concentrate
us
market—leaving that
any
rto the
_
if
days
the holder
pe¬
innauon
into
time
our
capital
i^ven
At least, some influence of the sort
be felt. But if the obligations are re¬
deemable at the option of the
holder,
•
prices
the
probably
fiscal
a
long
a
think,
I
of
gations already held.
a
can
control cannot prevent tne rise in
not
as
leads
not waste
much further
very
over
Continued
Tnerefore,
in
indirect
or
instrument of
an
deterrent to the sale of obli¬
act
inflation
showed
trophe.
decline in the price of
governments in the open market
—assuming that it is permitted to occur, which many do
not
instrument
an
policy,
riod of time.
business
a
One may concede that
ways.
be
never
can
policy continued
indirectly)
or
the purchase could
course,
various
j
purchase
the
on
.
.
individual
-an
inflation
by
fiscal
oi
great deal of difference in basic effect
loan to
a
bank
ments
a
it
nand; simply because infla¬
never
But is there
31
(1775)
liam
&
tionary
There is inflation or
the absence of inflation.
If there
is
increase
in
Jr.
Calif.—Wil¬
has beepme
722 South Spring Street.
formerly with E. F. Hutton & Company. In the past he
was manager of the trading de¬
partment of E. H. Rollins & Sons'
Los Angeles office and headed the
firm of Herbert-Reynolds Co.
was
With Cantor,
Fitzgerald.'
(Special to The Financial Chronicle)
BEVERLY
the
such thing.
Herbert,
Co.,
He
Pressures"—
silly term, "infla¬
pressures."
There is no
at
ANGELES,
associated with Francis I. duPont
A Mistaken Term
Look
P.
HILLS,
to
the
Co.,
C.
Zink
has
been
added
Inc., 224 North Canon Drive.
the quantity
Vernon
of
with
Shields
Santa
Monica Boulevard.
money
and credit increases,
prices and wages must rise, what¬
'
staff of Cantor, Fitzgerald &
of
money and no credit expansion,
the average height of prices and
wages will by and large remain
unchanged.
But if the quantity
no
•»
Calif.—Otto
Shields & Co. Adds
(Special to The Financial Chronicle)
BEVERLY
HILLS,
Leader
is
&
now
Calif.
—
affiliated
Company 9478
32
The Commercial and Financial Chronicle
(1776)
Continued
jrom
'
.
i
1
1%
m
ma
•>,
«%
1
■
.
"
■
Role
Inveslment Bankers
mm
al
I
ior credit restraint in this period
looking past
Even
assuming
plant expansion, the ini'lationary pressures would be tre-
great
mendous
which
eminent
an
from
To ouote
letter
a
received yesterday
I
just don't
from
banker-economist:
how
see
that
much
tion
without
J"/1?168.
could add
to
the situa-
inflation, and if this
program goes forward it would go
a, bank adds
.bank crcdR-'and
relation
^he
capital
of
issues
102.9%
as
effectively as the
Hon
business loan. Thus,
and
of
of the
steel
by
a
lems
*
" -
will
be
going
action
into
ain't
You
plan sets
forth certain
priorities for all types of credits
which by definition include equity
issues as well as true credit flo¬
tations.
Since the
plan is entirely
voluntary,: the screening of issues
and the postponement of less im¬
portant issues will depend entirely
the persuasive powers of in¬
on
vestment
bankers and
the under¬
standing of the national problem
by would-be borrowers.
It is to
be
hoped that all major pros¬
pective
issues
will
be
estimated
the regional
mittees.
suggest to avoid
these committees
I would
overburdening
that
for
some
com¬
the
beginning,;jat
'minimum
should
be
size
mil¬
pressure
the
be generated.
can
Under
Capital Issues Plan of 1918, it
practically essential for
became
the
flotation of
bear
the
statement
been approved
that
that
it
to
had
by the Capital Is¬
Committee.
sues
possible
issue for it
an
It
would
similar
a
seem
badge
desirability could became
of
im¬
an
portant part of the announcement
of
future
issues
under
conditions.
today's
'
,
'
Borrowing again from the
•
:
a
proposal
u?;ed
in
the soundness of
this:
was
Capital
on
issue.
Issues
compatible
The
statement
"Passed
by
Committee
with
the
the
not
as
national
interest, but without approval of
legality, validity, worth or secur¬
ity."
■
.
.
In
checking issues for essential¬
ity, the committee relied upon (a)
i
the
claims
ported
the
of
applicant
by such evidence
tracts with
war
sup¬
con¬
as
agencies, (b)
the
opinions of interested government
agencies, (c) the knowledge and
investigations of the district com¬
mittees.
A special
of
problem arises in the
public issues.
It
is
fully
recognized that states- and munici¬
palities are autonomous in their
handling
At the
are
as
of
same
much
their
interested in the
tional welfare
zen.
finances.
own
time, public officials
as
na¬
any private citi¬
Investment bankers
are
fre¬
quently the financial advisers of
public
officials.
It
should
be
possible in many cases for
bers of the investment
mem¬
Industry
Business
failures
increased
22%
in
March
to
less numerous than in March of either of the two
Casualties
and
a
an
,y
'
.
y
,
use
the
scarce
materials
projects
immediately essential
fense effort.
to
are
the
not
de¬
5.2%?
or
above
total represented an increase of 70,604 cars, or
corresponding week .in 1950, and an increase of
1.6% above the comparable period of 1949.
■
the
Output Continues Upward Trend in Latest Week
States and
Canada the past week,
according to "Ward's Automotive Reports,"
165,487 units, compared with the previous week's total of
162,839 (revised) units and 151,613 units a year ago.
totaled
For the United States alone, total output was 155,717 units
against last week's revised total of 152,909 units, and in the like
of last year 144,637.
Canadian output in the week totaled
9,770 units, compared with 9,930 units a week ago and 6,976 units
week
for the like week of
-Total
7,100
Index, which extends the monthly failure rate
adjusts for seasonal fluctuation, increased
involved
March
in
March
failures
than
in
the
Commercial
increased
the
month.
than
All. groups
$5,000
fewer
March, 1950, sum of $448,893,654, and the second
cessive month to fall below the level of the
preceding year.
by
on
consumers
how
little
to
true
the
and
"The
Iron
Age,"
or
of the steel trade.
No
how honest the motives
of
$7.31
of
a
of
avail¬
"essential"
Index
ago,
year
index
(3) Free market
general
manufacturers
w;th
no
hope
of
getting
no
and
metal
hoe.
metal
producers fear official statements from
Washington have lulled their customers into expecting
metal for regular peacetime uses than will be available.
distributing "free"
little is left after
Statements
on
CMP
tonnage
allotments
themselves
are
—
no
more
matter
by
By the time present basic metal expansion plans
are
price
per
pound
how
reassuring.
completed
Index Marked by Irregularity
on
the corresponding
due
firmer
a
unfavorable
the
outlook
tone
during the
wheat
for Winter
political situation.
damage to the Winter wheat crop was confirmed
Department of Agriculture report indicating that 23.4% of
56,000,000 acres seeded to Winter wheat last Fall would be
abandoned
The
age.
as
the result of
corn
ately, aided by
market
a
the
southern
strength
demand.
on
drought, Winter killing and pest dam¬
quite active and prices rose moder¬
was
steady export demand.
Planting of the
in
developed
markets
to
a
the
corn
new
sections
of
crop
the
was
reported well under way
showed independent
Oats
belt.
small offerings in the cash market met with steady
Activity in grain futures increased slightly last week.
the Chicago Board of Trade averaged about 28,700,000
as
bushels per day.
This
was
slightly above the previous week and
compared with 36,700,000 bushels in the like week a year ago.
Domestic
fined
flour
business
continued
quiet
with
activity
con¬
of bakery flours.
Liquidation and hedging
mostly to small-lot replacement buying
Export
are
total of the
V
unsettled world
the
Sales
made.
availability of metals by 1953
sum
and its chief function is to show the
earlier, and with 252.23
grain
largely
Extensive
them
wonder
the
use,
-
■
week
a
Leading
week,
will vanish
copper
a
date last year.
of total supply.
under the Controlled Materials Plan have a
In all probability they face increasingly drastic
mandatory restraints to keep their procurement in line with
vanishing supplies of "free" metal, states "The Iron Age."
It's
Downtrend
Gradual
It was,
represents
foods in
31
with 323.01
v
to
Extends
Commodity price movements continued to be irregular in the
Within the next six months free market steel will shrink to
of total production.
(2) Free market virgin alum¬
from domestic producers will shrivel
.to less than 10% of
total output.
(This doesn't include imports or secondary alum¬
row to
group
year ago.
past week with the general level showing a slight drop from a
week ago. The daily wholesale commodity price index, compiled
by Dun & Bradstreet, Inc., closed at 322.65 on April 17, comparing
startling results:
some
(1)
allocated
a
and Mild Decline
less than 25%
tough
this
decline of 2.5 % from the 1951 high
however, up 24.4% over the $5.73
and 19.6%? above the pre-Korea level of $5.96.
Feb. 20.
.
authority asserts.
means
Failures in
with 152
more.
general trend of food prices at the wholesale level.
govern¬
uses—then sub¬
civilian
Applying this formula brings to light
This
the
casualties
in
concentrated
was
or
Wholesale Commodity Price
The difference is
the total free market metal which will
be available for nonessen¬
tial uses, this trade
25%
in
151
failures.
Price
on
The
tracting the total from estimated production.
produced from scrap.)
to
preceding^week, Dun &
principally for the decrease in business
$7.08, and represented
was
national metal-
summary
statements,
so-called
the
total of 316 for the similar week,
$5,000
of
in
gradual downtrend movement, the wholesale
food price index, compiled by Dun & Bradstreet, Inc., dropped
slightly to $7.13 on April 17 from $7.15 the week before.
This
brought the current figure to the lowest since Jan. 23 when it
by adding metal requirements for defense, special
ment programs
less than
.
declined
failures
172
decline
week's
*
to
123.042
total of
This decrease brought casualties below
and 1949, respectively.
Failures were
1950
liabilities
Food
are
being misled by statements from Wash¬
steel, aluminum and copper will be needed
these
of
198
of
construction
What the metal consumer
really wants to know is how much
metal will be available to him for
regular peacetime production.
On the basis of information
so far
available, this can only be fig¬
inum
a
suc¬
Approach Record High Level
Ago
prompting them, they paint a false picture of the future
ability of basic metals, the magazine adds.
ured out
of
up
mortality during the week with casualties in this line dropping
to 80 from 98.
Lesser declines took place in manufacturing and
commercial
service.
An
increase appeared in
wholesale and
Month
working weekly, in its current
how
made
States and
Continuing its
the defense program, states
matter
from
19
Retail trade accounted
below the
of
and
involving
building permits for 215 cities during the
of March came to
$431,630,560, Dun & Bradstreet, Inc.,
notes.
While showing a seasonal rise of
31.9% over the short
February month with $327,241,738, this was a decline of 3.8%
Metal
was
fell to 108 from 126 last week and compared
Total valuation of
Output Scheduled
188
Most
except
numbered
industrial
and
April
down 52% from the prewar
month
ington
ended
Bradstreet, Inc., reports.
moderately
of February, but were about
previous
involving liabilities of less
failures than in March last year,
Steel
week
and 2,670 trucks built in Canada.
cars
week
those
•
current
Business Failures Continue to Fall
per 10,000 listed enterprises from 26 the
This rate compared with 33 in the same month of
$10 million less than in March, 1950.
Failures in all liability size
categories except those for more than $100,000 were more numer¬
in
the
32,675 trucks built in the United
basis and
annual
to $17.7 million from the $16 million
ous
1950.
output for
and
cars
:
,
tinue
which
cars
Combined motor vehicle production in the United
were
ects
where
increase of 38,466
an
week's
above
Auto
preceding years.
in March, 1950,
postwar high of 884
a
total of 1,322 in March, 1939.
Dun's Failure
to
with
compared
732, but
Copper producers are already urging the National Production
Authority to take over complete allocation of copper when CMP
starts July 1.
But most steel and aluminum people want to con¬
or
'
16,511,000 kwh. above that of the pre¬
was
week
10%
profession to advise effectively for
the postponement of
public proj¬
banking
was
6,730,464,000 kwh., according to the Edison Electric
Railroads, representing
preceding week.
inum
case
the electric
by
the
5
expe¬
the Capital Issues
carefully
refrained
Committee
distributed
energy
'
rience of 1918,
from, passing
electrical
Carloadings Rise 5.2% Above Week Ago
adjustments reflecting changes in living costs, are not affected by
March 15 figure.
Their next adjustment is due June 1 on
the basis of the April 15 index.
Liabilities
World War I, a great deal of moral
year
Loadings of revenue freight for the week ended April 14, 1951,
totaled 777,989 cars
according to the Association of American
last year.
Judging from the experience of
A
week, 884,828,000 kwh., or 15.1% above the total output for
ended April 22, 1950, and 1,404,951,000 kwh. in excess
of the output reported for the corresponding period two years ago.
the
the
Plan of 1918
;j
the
vious
nine-cent hourly wage boost, retroactive to March 15.
The in¬
crease is to compensate for the rise in
living costs over the past
six months.
Auto industry contracts, which call for quarterly
month before.
Getting Back to Capital Issues
industry, compared to
rate was 103.5% and
ago it stood at 100.3%
entire
ago
industry for the week ended April 21, 1951
The current total
slightly to 29 casualties
lion.
the
month
Institute.
a
issue
$1
,
talking religion now—
fhe State of Tiade and
least
of
adopted—say,
at
12,046 cars, or
submitted
for approval to.
page
tons
ago.
Shows Modest Decline in Latest Week
of
power
The
jrom
for
A
ago.
within 4,000
come
month
a
rate is equivalent to 2,065,000 tons of
castings
and
amount
light and
:
Continued
expected to
are
operating
week
a
point that the in-
the
of
ingots
mills
high point attained
week's
The
immediately, and you will hear you is talking business."
vestment banking committees of much more from them in a very
Applying this story to today's
the
Voluntary Credit Restraint short time.
I wish to close with problem, we must all recognize
Program will find much work to two comments.
First, the success that inflation control is not somedo.
The Statement of Principles of the Voluntary Credit Restraint body else's business.
It is ours,
this
at
record
increase of 0.4 of a point.
or an
the
Electric Output
I have necessarily talked this son remarked, "but is you sure
evening in generalities. The Vol- that you is going to lay aside
that these long-term undertakings untary Credit Restraint Program sin?"
ail involve the use of bank credit is just getting under way.
The
"Yessuh, ah'se done it already,
at
one
time
or
another
by national committee and the four
"An' is you gwine to pay up
plumbers, and Contractors, ■ and regional committees set up to deal all yo' debts?"
equipment manufacturers, and so with investment banking prob"Jest wait a minute, parson,
is
this week
of the old capacity and amounted to 1,912,000 tons.
long way toward defeating our
credit program.
One reason is
It
Institute announced
Steel
steel
of
production yielded 2,069,000 tons.
Pal securities available for bank
Down South a shiftless colored
investmfnt,
less inciease man proudly informed his minister
there will be in the money supply Hiat
had ug0t religion."
trom this source.
"Dat's fine, brothah," the par-
a
forth."
week
2,057,000
I can illustrate my
little story,
lender.
smaller the supply of munici- point
*
.
and
rate
week ago,
a
This
underwriter
borrower,
Iron
operating
This
to
,e this problem. Second, the probank gram will need the full coopera-
deposits just
*.
.
infla-
the
,
granting of
a
clients
your
nonary problems of the day and
The purchase of se-
banks.
"I
we
pressure
issues are particularly attractive
tnis
for
an even more important
explaining fully and care-
"to
fupy
American
the
immediately ahead, concludes
tough months
many
companies having 93% of the
steelmaking capacity for the entire industry will be 103.3% of
capacity for the week beginning April 23, 1951, based on the
industry's increased capacity of Jan. 1, compared to a rate of
play
can
roje
the
of
mechanics of inflation, municipal
strategic
that
available
were
standpoint
The
that
.
the
From
goes
be
this trade authority.
standing by press releases, public
.
money if this program
forward without restraint.
be we can have a guns-plus-butter economy—that
operating on an industrial plane undreamed of a few
But that is still at least two years away. And it is
well
may
we'll
months ago.
the
in
•%
.
it
fullest
the
on
public understanding of the need
Voluntary Credit RestraintProgram
new
materials
depends
Program
19
page
_
Thursday, April 26, 1951
.
.
.
flour
resulted
in
demand
for
demand
moderate
cocoa
remained
declines
was
slow
slow..
in
and
cocoa
the
futures.
spot
Accra
Manufacturer
grade
dropped
.Volume 173
slightly
Number 5C06
below
ceiling
.
,,.
The Commercial and Financial Chronicle
levels.
The
coffee
and
sugar
markets
(1777)
Continued
from
showed
some
improvement over recent dullness. There was a
broader export demand for lard and prices moved slightly higher.
the, government
guaranties
of
housing, the RFC and foreign
lending, which is, of course, in¬
flationary, much as it may be
10
page
The Banks Must Finance
Spot cotton prices held at ceilings; futures moved irregularly
slightly higher levels than a week ago. Trading in spot mar¬
kets was relatively slow.
Sales in the ten spot markets totalled
74,200 bales, against 72,600 the previous week, and 89,500 in the
corresponding week last year.
at
.necessary.
Defense Without Inflation
Inquiries were quite numerous but mills as a rule limited
their purchases to small lots for prompt shipment. Export demand
wks reported slower than for several weeks.
»
,
.
^Exports of cotton for the first seven months of the season
ending with February, according to the Bureau of the Census,
totaled 2,578,009 bales against 3,068,000 in the similar period a
year ago.
Daily average consumption of cotton during March,
according to a preliminary estimate, showed very little change
frpm the February level.
Unseasonably low temperatures and
making loans.
think
active
tical
and
standstill.
awaited
Prices
continued
to
sharply
drop
as
ended
>
in New York
last
week dropped an estimated
19% from the like period of last year.
In the
preceding week a decrease of 7% (revised) was registered below
the similar week of 1950. For the four weeks ended April 14, 1951,
change was recorded from
that of
year
a
to date, volume advanced 14% from
year
year.
;
,
■/
ago, and
for the
the like period of last
''' "
/
,
i
,
Observations
or
other causes.
example,
took
to
I
a
believe
The present state of confusion in
retail circles
great deal
follow
Fair Deal measures have been
even the Labor Government of Messrs. Attlee and Bevan.
And it must be relevantly noted that Mr. Attlee has stood firm
by
for welfare spend¬
against the demands to sacrifice rearmament
ing, even going to the "length" of imposing a 50%
socialized medicine's spectacles and false teeth.
In
charge on
the
same
than the
symptoms of inflation—by logically combining a curtailment of
non-defense spending with a nonrpolitical pay-as-you-go" tax
vein,
let us
in free
America treat the roots rather
lower-bracket incomes that are actually
Otherwise it may happen that the.socialist state will
policy levied against the
available.
be
located
on
the Western instead
Atlantic!
of the Eastern side of the
.
we
time
same
I
necessary, be made
five
and -moved
direct controls?
-
There
was
effective Capital Issues
Committee, for example, in World
War I, that was staffed by people
who were being controlled, which
turned down some $900 million
worth of capital issues and approved about $2% billion, but did
its job extremely well under the
chairmanship of a banker.
These voluntary committees can
be incorporated into the government system in that general way
without too great difficulty if we
a
very
^ 0" ltS
We already have direct controls
bank loans,
something like
on
50%
of loans—we have it in real
estate, in securities, and
credit,
we
have
it in instalment
I
those
who
have
..
then pro-
•
,
leads
-
to
one
a
■?
?
second
eco-
nomic situation is at times very
much more sensitive to a change
in money than it is at other times,
In the earlier '20s, the change of
-
lk% in the rediscount rate
,
agree that there you
that you can't deal
the
or
the
some of
tr^men^ous
nr
"notner.
State and municipal expenditures are between $3 and $4 bila year.
That certainly can
be cut back, and you can do that
Partly by cooperation, pulling the
governors and mayors together
and agreeing on some sensible
standards.
1
The
hasn't
building
been
.
that
..
to
'
the
if
program,
reduced
it
by
Regulation X—and I doubt if it has, and
there- are many exceptions—I believe has got to be cut back. Control oY that is'after all in govern-
ment's hands because most of it
is done under
work.
"
ve
•
in some way
anniw
to change the trend of prices and
,
-Yu fi?"?'
;
anties.
business Jrom timq, to time; '28
and '29 was impervious j to those
same
program
have a force
with solely
1
or purchase of $200 million
of government securities appeared
Applying
mih
at the pace we have been
doing
without inflation, no matter if you
put the interest rate up to 57
I
sale
over./towards changes..
more
to do
had built up a huge
limitation which is that the
.
effec-
more
we
.
with
.
easier. When '28 and '29
tried to reverse it and
Sensitivity to Money Change
can't deal with this
May I also say that this set of
voluntary credit controls can, if
We
want
We
government guar-
to
do
things
that
trying to do two
things' here.
That is the thin®
that'we need to bear in mind
We
are
trying to finance the defense
effort, number one; and, secondly
are
present
time, I think the recent rise in we are trying to do it without
the price of money comes at a- inflation.
That delicate balance
time when the situation is prob- js where all our problems will
ably highly sensitized to it, and come.
I would say that 85% of
it may produce more results than the loans that I have seen go
it would at other times.
That is through our bank have been dideveloped in the National City rpctly related to doing a defense
Bank "Letter" of April 1 that we job and maintaining the produc-
distributed. Let me say it comes
at a time when many people are
overinventoried, when there is a
bubble, as Professor Harrod has
said, that could be pricked, and
tion
of
15%
higher than
an
ag0.
at
economy
it
level
a
was
a
year
-
it
Now
ahd
inh
a
;h-
j
.
it
tn
j
,
dn
...»
SK.'&SS. ^ ^ Pr0teS °f -jgSVI
The
effectiveness, of course,
lies in the holdings of government
securities.
The banks find themselves in a position where additional loans can be made only at
•
Washington Bond Club
Annual
Outing
the price of a
sale of government
worked with the Federal Reserve
securities at
loss.
System
to sell government securities at a nual outing of the Bond Club of
loss.
It comes also at a time Washington will be held at the
when many banks are heavily Manor Club on May 18. Robert T.
loaned, perhaps overloaned, when Norman, manager of the Washingthe country banks are coming to ton office of Stein Bros. & Boyce,
us to try to get us to take over is Chairman of the outing.
"
think
of
us
firmly convinced of
of money as a major
development in economic changes,
perhaps the most powerful of all.
I am delighted to see the econoare
power
back
turn
to
a
study
of
as
effective
more
trollable than
While
to
a
and
very
enter
more
con-
fiscal policy.
believing
like
depicted as manifesting our unwitting swing into state socialism,
on
the British pattern.
But, ironically, nothing like our own
Administration's new pricing philosophy (?) has been inflicted
the'
we
That
situation except by dealing
it on all different fronts,
lic's
Out-Socializing the British
have
program, and carry on at
time a private building
thJ°£awe g°! to;plug
volume of money that
ceeded to be used.
be accomplished
can
been
by money policy.
it because
democracy that
a
while at the
that
agree
policy is
Possibly a civilian-type dictator duplicating the pub¬
image of General MacArthur could perform the administra¬
miracle and get compliance—but surely nothing less!
or
now
fathers
found it almost impossible
by trying to educate people in the
line of conduct that they should
yardstick.
Many of the New Deal and
in
has
^WM^MtablyTue'thft'In
came,
We intend
compared with fiscal
policy because of a belief that it is
resulting from the imposition of uniform mark-up assuredly lends
little encouragement to the practicability or justice of a uniform
tive
all
drives,
it
because
it
time, but it was a
very successful move.
to do it again.
money
•
The
expansion here would make their
do
lot of
a
mists
0
bankers
we
War Loan
the
on
vantage
the
Continued from page 5
from
years
been
We did it for nothing.
It was not
to our short-term economic ad-
According to the Federal Reserve Board's index, department
store sales in New York City for the weekly period of April 14,
1951, advanced
inthe
an
since
our
.
his honor here in New York.
no
have
as
eaten sour grapes and the chil-
recovery
For
While current orders of the nation's wholesalers increased
on a modest scale during the week, total order backlogs con¬
tinued to be markedly above year-ago leveis.
Inventories' of
wholesalers bulked large in comparison with those of last year.
The number of buyers attending various wholesale markets was
trade
we
tage.
;
Retail
on
and
longer.
capital DroDosals
hope dished
by the Department of ComWe have been merce
alone
viith this Hetense
even
people at the same
them around,
will get a lot further,
that you push
worked
+18; and Pacific
10% under the level for the like period one year ago, due, accord¬
ing to trade observers, to the great interest in General MacArthur's
arrival, his address to Congress and the reception and parade in
turn
and
four and five
war,
their immediate economic advan-
11 to +15; East and South
partment store sales registered an advance of 14%.
can't
off
plenty of '20s we embarked on an easyhistory of vol- money policy, partly as a favor
untary action where you appeal to our British friends and the
to something in
people besides rest of the world in the hope that
comparable week in 1950 which followed the
Easter holiday.
Regional estimates varied from a year ago by
these percentages:
1951, declined 13% from the like period of last year. This com¬
pared with a decrease of 9% in the previous week and 1% for
four weeks ended April 14, 1951.
For the year to date de¬
You
and
time
There
duced level of the
the
infStfoneei1Vbel1llen h!?!'"®
to educate our
illustrations in
Total retail dollar volume in the period ended on Wednesday
Of last week was estimated to be from 13 to 17% above the re¬
Department store sales on a country-wide basis, as taken from
the Federal Reserve Board's index for the week ended April 14,
one.
on
pitching our economy
tlationary plane ever
economic man.
Plenty of Precedents
Apparel merchants launched vigorous promotions in many
parts of the nation, thereby helping to bolster an interest among
their
patrons which had been lagging since before
Easter.
Women's Spring suits and toppers were sold in increased volume,
while marked interest in lightweight dresses, sport separates,
handbags, lingerie, hosiery and costume jewelry was also notice¬
able.
Shoppers bought slightly more articles of men's clothing
than in the week before demand being largely for men's gabar¬
dine and light worsted suits and for sport jackets and slacks.
slightly below both last week's number and that of a year ago.
immediate
the spigot
to have it operate,
people acting
on
and you may
suggest .that
ture, and I think that by trying
perhaps
on
+12 to +16; Midwest and Northwest +14 to
Coast +13 to +17.
I don't be-
time like this you
a
to
inventory bubble
we
what
of
me
an
tially with the problem of investhave to look at the longer- ment. You simpW cannot finance
term influence rather than the ,n this
country $24 billion of new
you
citizens, we have
responsibility for the whole pic-
Total consumer spending in the-period
England and Southwest 4*
This leads
That brings me to express \approval of thv Harrod's suggestion.
that while we may have pricked
get'a leveling off here, the long-
that carries over into
this period. The money policy of
today may affect the economics of
a
ago
New
in
ideas
and
more
' Longer-Term Influence Vital
As American
Wednesday of last week also exceeded the level of a
by considerable dollar margins, although in terms of
units purchased spending was less noticeable above the year-ago
level, Dun & Bradstreet, Inc., reports.
year
done
rely solely
can
For the first time since before Easter shoppers bought more
than in the previous week.
democracy
a
like the classical
prac¬
dealers
Ago
be
lieve that
Retail Trade Reflects Substantial Rise in Dollar Volume
Over That of Year
in
try to give them
ceilings.
announcement concerning price
some
a
that
should
prices for print cloths and bag sheeting were
In the Boston wool market business remained at
t
.......
>,
freely by the possessors of it.
don t just push people around. You
land preparation and planting in most south¬
eastern and south central areas of the belt.
Cotton textiles were
more
"'
■
time which has been used
Now, I don't claim that this is
going to cure the situation. I do
soils delayed
firmer.
'
-
aSjthey can some rules of-pro- but by money created before that
cedure in
Don't Push People Around
wet
'
r
An Investment Problem
^
i.t_
33
that
money
influential, I would
a
dissent from the
a
We don't like
of their portfolio.
It is a
Officers of the Bond Club of
tight, situation, I assure you.
Washington are:
Austin RolirEven more tight is the situation baugh, Rohrbaugh & Co., Presiof the insurance companies which dent;
Edgar B. Rouse, Rouse,
come
into this period heavily Brewer & Becker, Vice-President;
overcommitted for mortgages and Millard F. West, Jr., Auchincloss,
part
corporate
bonds,
perhaps
com-
complete belief in the document .mitted» for their income six
put out by a group of Chicago months to a year ahead.
They
professors which I think vastly counted on
selling government
overstates the
case
icy.
distressed
polthat the
pamphlet took no account whatever
of the velocity of circula-
securities.
They now sell them
at a loss, and they have locked
up a substantial number in the
hew 2%% bonds which are at-
am glad that your
here does,
and calls
So I think it is fair to
say that the average insurance
company has cut its program for
taking new mortgages by as much
as 50% and that they are screening their corporate loans much
more vigorously than they were,
so that these conditions will impinge not only on the volume of
short-term credit, but on the
long-term as well.
A third qualification—-we have
set the stage for five years with
the outpouring of easy money and
I
was
for money
tion, though I
statement
attention
in
the
to
the
fact
that while
past year production has
15%
or
thereabouts,
increased
prices have risen, say, 8 or 10 or
12%, and the cost of living some
5
or
6%; that the volume of
mohey has risen 6% and velocity
15%, depend-
has risen from 10 to
what period you take,
is, this inflation has been
financed not primarily by the
ing
on
That
money
created during the period,
WASHINGTON, D. C.—The ah-
tractive.
Parker
&
Redpath,
Secretary-
Treasurer. Bernard J. Nees, Johnson, Lemon & Co., and Thomas L.
Anglin, are Directors.
New York Stock Exch.
Weekly Firm Changes
The New York Stock Exchange
has announced the following firm
changes:
.
Transfer of the Exchange
bership
of
Arthur
B.
mem-
Behal
to
Gruss will be considered
JoseDh g
Josepn b.Gruss wm oe consiaerea
by the Exchange on April 26.
Transfer of the Exchange membership of the late Adams Batch¬
n
Jr
'
to
Charles
K. Dickson
'
W1^ be considered by
change on May 3.
34
The Commercial and Financial Chronicle
(1778)
.
.
Thursday, April 26, 1951
.
-
that most stocks
Tomorrow's
per
-
-
all
In
ratio.
Markets
Walter
low
a
seem
Whyte
Says-—
clines.
for,
bulwark
a
what
worth
By WALTER WHYTE:
yet to see
against de¬
Stocks are always
as
they're selling
no less. If stock
no more
B sells at 50 its worth
50, not
•
^
be
The market now appears to
jockeying for position from
which it
start
can
an
up move.
It is quite
likely that such a
move may be on its way by
the time you read this.
If it sells at 10
penny more.
that's
it's
all
don't think
bank
a
and
you
try taking it to
much
how
see
its
than
more
If
worth.
so
current
price
borrow.
you can
'
Whether
,
or
not such
The
a move
majority opinion still
following de¬ has it that stocks will go
pends on one's agility and higher after they go lower.
success
in picking
out the As you read in this space last
right stocks. Off hand I would week, I don't agree. My belief
is that stocks will go higher
say that the market has again
entered its romance stage, or without going lower, and then
will
worth
be
era. It can when the reaction comes, it
strength of will be much sharper than
against that of generally anticipated.
the
crystal-gazing
be
seen
in
alloy steels
the
the
as
conventional steels.
more
of
As
this
writing the fa¬
One of the sparks that will miliar averages are about 256,
help move this market up is or almost a full point over
the short interest. According their old highs seen last Feb¬
to the latest figures, the cur¬ ruary. The rails, however, are
rent short position is more about
eight points under their
than 2,500,000 shares, which old
highs. To satisfy the Dow
the largest short
since May 1932.,
represents
theorists the rails would have
interest
to
•
You're
probably wondering
if all this
I'm
means
now
duplicate the action of the
For
industrials.
I
all
know,
that, even
be¬ they may do just
coming bullish. Last week, if if I doubt it.
you'll re-read my column, I
In any case, however, I be¬
was anything but optimistic.;
lieve the industrials will add
Let me hasten to say that I'm
about 15 to 20 points to their
still pessimistic.
I can turn current levels, or get to about
around quickly enough if con¬
275, before they'll turn down.
ditions
I
warrant.
don't
see
anything in the immediate fu¬
around.
The
major
such
course
a
,
move
is
worth
following. But with an
a turn¬
anticipated ' obstacle ahead,
any participation must be en¬
against tered into with misgivings.
ture to warrant such
;
Of
reasons
You
can
take it from here.
article
Pacific Coast
Securities
author only.]
Schwabacher & Co.
New
York
Curb
'
Stock Exchange
Exchange (Associate)
Francisco
Stock
Exchange
Chicago Board of Trade
'
14 Wall Street
COrtlandt
7-4150
Private Wires to
San
New York 5, N. Y.
Teletype NY 1-928
Order
Advance
now
1001
for
ne£"
CHARTS
show
monthly highs, lows — earnings
—dividends — capitalizations—volume
on
virtually every active stock listed
on
N. Y. Stock and Curb Exchanges
covering nearly 12 years to May 1,
1951—out about May 10.
Single Copy (Spiral Bound). .$10.00
Yearly (6 Revised Books)...$50.00
Principal Offices
Francisco—Santa
F. W. STEPHENS
Barbara
Monterey—-Oakland-—Sacramento
down
mum
maturity
for
durable
goods.
biles
15 William St., N. Y. 5
HA 2-4848
.
Per 100 Shares Plus Tax
•
>
OPTIONS
*
U. S. Steel... .@44% Aug. 30 $325.00
Republic Stl. @44% Sep. 18 287.50
Penn RR
@21
July 25 187.50
JN. Y. Central.@22
July 17 100.00
St'd Oil Calif..@46
5 mos.
375.00
Kimberly-Clark@46
5 mos.
325.00
Int'l Tel. & Tel.@16% 5 mos.
162.50
Radio Corp.... @19% 5 mos.
237.50
Int'l Packers.. @13% 5 mos.
137.50
Curtis Publ.,.@ 9% 5 mos.
137.50
Murray Corp..@22% 5 mos.
250.00
NY Chic St P'l@26% 6 mos.
225.00
General Tire..@50
6 mos.
275.00
Electro Aut'lite @57% 6 mos.
287.50
.
Subject to prior sale
or
Explanatory pamphlet
price change
on
THOMAS, HAAB & BOTTS
"ir
Association, Inc.
Broadwa',, N. T. 4, Tel. BO 941470
CALLS (plus tax)
Ohio. .19% Oct. 13 $350.00
Long Isl. Light. 13% Sep. 25 212.50
St. Paul
262.50
24% Oct,
Bait. &
Pet. ..85
July
Int. Tel. & Tel.. 16% 4-14-
225.00
Corp.., .19%'Oct.
St. Regis Pap.. 14% Oct.
Schenley
35% Oct."
Amer. Woolen.38
May
212.50
Phillips
250.00
Radio
Act
provided
fifteen
15%.
The maximum
all of
months.
down payment
is
ments
these
The
-cases
is
minimum
for home improve¬
10%; the maximum
ma¬
turity is thirty months. The Reg¬
ulation is applicable to articles
costing only $50
or more. It does
apply to items selling for less
this
The
amount.
Homestake Min.39
St'd Oil
(NJ). 110
Mfg
8%
Pepsi-Cola
10%
Bait. & Ohio. .20%
Avco
...
U. S. Steel... .44
St. Paul
Booklet
24
on.
Puts
and
materials needed for
conserve
conversion
to
fense effort.
credit
analysis
by
nificance. In
amounted
billion.
re¬
de¬
stepped-up
a
The role of
controls
consumer
be evaluated
may
of its economic sig¬
1S29, consumer credit
something over $6
declined
by 1932 to
to
It
about half of this
level, rose again
$7 billion by 1939, declined to
to
a
time low of
war
$5 billion
some
since the end of the
and
somewhat
to
lion.
Clearly the volume of
credit
sumer
in
cance
is
the
bil¬
con¬
signifi¬
spending.-
some
level
Careful study
$20
over
of
has
war
risen
of
of the role of
con¬
credit in the business cycle
however indicates that it is not
sumer
major originating factor.
a
Put
Dealers
&
Con¬
depressions to take place.
On
the other
a
hand, it is important as
reinforcing factor magnifying a
derivative
effects
account is
an
into
taken
are
influence of not in¬
considerable
magnitude
on
the
The 1950 Survey of
economy.
of the
purchases
credit
made
were
arrangements of
one
type or another.
An
leveled
in
they
has
ratio
as
of loan
sale
have
controls
discriminated
lower
income
against
It is
groups.
charged that
consumer
trols
ration
goods
with
the
wealth
that
is
in
and
credit
con¬
accordance
income
of
individuals.
However, this criti¬
cism ignores the realities of a lim¬
ited availability cf consumer dur¬
able goods.
If there had not been'
rationing of
consumer
durables by
credit
controls, their
prices would have risen sharply
due to the pressure of strong de¬
The limited
supply would
then have been rationed through
high prices. Consumer credit con¬
trols did not deduce the quantity
of
consumer
the
to
lower
durable goods going
income groups.
It
did make it possible for the lower
income
to buy consumer
lower
prices ' than
groups
durables
at
construction.
new
is
value
to
Tne
In
summary,
the advantages of
credit controls
relatively
are
are
that
impersonal;
could
150.00
the
effect
212.50
felt
and
allocate
be
was
made
imposed
quickly;
relatively quickly
it
possible to
relatively
re¬
scarce
mate¬
rials for preparedness uses.
A full
225.00
of
other
broad
requires
devices
utilized
hT the
50%
to 75%
reduced
price
exceeds
maximum
a
value
loan
of
ap¬
real
of
estate
extended
to
residences
houses
credit
apply
control
to
Feo.
1,
On
Marcn
1947,
such
tneir
basis.
30,
19*9.
zj,
1949,
they
dO %
to
increase
in
January,
Regulation U applicable for loans
by banks and under Regulation T
for extensions of credit
and
dealers
by
loans
by brokers
listed securities.
on
Empirical
loans
studies
indicate
brokers
by banks
and
not
are
that
security
very
re¬
sponsive to changes in margin re¬
quirements. That is when margin
increased
be
so
that
might
substantially,
no
stock
hotels
than
more
four
Maximum
loan
unit are similar to
per
when stock prices have been fall¬
ing
have been raised when
prices have shown a ten¬
dency toward a vigorous rise. The
and
fundamental
rise
in
not
a
Even
provided in the regulations
12, but somewhat
lower.* If the value per familyunit is not more than $7,000, the
housing, cooperative projects and
Administration
Veterans
loans
also prescribed.
were
On
Feb.
1951, the amended
was broadened to
in¬
construction
of
building
well
new
decrease
on
non¬
making for
market
prices
a
are
available.
credit
in
cash market the prices
a
continue
rise.
to
Credit
secured
by
listed
securities ; does: nqt
change immediately for the reason
that
margin
ne»w
requirements
effective only
are
actions and
for new trans¬
not applicable to
are
existing account holdings. For the
longer period, borrowing on stock
does
15,
regulation
clude
"
forces
stock
usually greatly dampened by
those
set forth on Oct.
not
the
when
decrease
requirements
volume
margin
raised
are
of
because
stock
trading and
their improvements if they exceed
is not likely to be re¬
stricted by margin increases and
hence the level of borrowing con¬
15% of the appraised value of the
tinues
residential
.
non-residential
loan
mum
The
set
are
of the
as
at
50%
property.
the
objective of Regulation X
market and through
of construction
reduction
ac¬
to provide materials and
labor required
for the defense
program.
With regard to housing
production alone, it was estimated
at the time of the promulgation
of Regulation X that the rate of
tivity
home
building in the Fall of 1950
to be reduced
was
that
so
not
by % for 1951
than
more
800,000
housing units would be built in
1951. It will be noted that in
restrictions
the
real
on
lower
priced
the
estate
credit
units
which
presumably are of greater in¬
terest for purchase by the lower
income
groups
X. is
it
higher
Thus
subject
not
that
argument
carry
ratios.
loan-to-value
lation
may
Regu¬
discriminates
against the lower income groups.
objectives
of
Regulation
commendable.
desirable
course
more
While
homes
circumstances
properties,
with the
of.
we
basic
on
and the
cating
them
the
are
are
is
to
of
have
present
business
-
confronted
economic
limitations;
In
under
more
sources
uses.
always
and
X
it.
problem
available
re¬
necessity of allo¬
among
competing
circumstances
of
a
tion
with
the
changes
in
in
in margin re¬
they 'prevent
borrowing
from
.
margin requirements tends to
cushion
decline
a
in
borrowing
stock prices.
and
Again
of
this
other
estate
direct
namely
nature,
control over
credit and
consumer
real
with
as
controls
the
transactions,
un¬
derlying forces in the market
are
of
the
greater
price
the
rises
is
forcing
there
be
factor
hand,
an
rises
is
in
originating
price declines/On
or
other
factor
than
significance
financing
the
financing
in
influence
declines.
or
contribution
a
made
by
requirements
reen-
Hence
that
can
regulating margin
in an anti-cyclical
fashion.
In
the present
situation
an
ob¬
jective of varying margin require¬
ments is to
attempt to restrain
the
somewhat
which
prices
rise
has
in
security
of
the
effect
limiting the extent to which firms
use
the equity market for
financing. This limits the ex¬
may
new
tent
to
upon
additional funds to finance
which
investment
firms
can
expansion.
draw
The pre¬
paredness program of course does
require
investment
However,
to
by
normal
over
X may
for its defense effort.
that
at a greater rate than it
otherwise would be, or a decrease
secure
significant role in maintaining the
is
increase
ing,
a
v.
being
preparedness program Regulation
be expected to perform
somewhat,
increase
to
The significant point in connec¬
the
to
,
quirements
is to restrict the flow of funds into
the mortgage
prices
Maxi¬
structure.
values
the value
as
strength of the American economy
reconvert
March
io
recent
apartment
as
apartment
or
was
the
to
raised
were
effective Janu¬
lowered
were
multi-unit
high level prepared¬
program
been
ary, 19ol. This is io say that tne
maximum loan, value using stocks
,
firms
more
expansion.
controls
channels
must
of
financ¬
attempt
funds
which
,
.
imposing
additional
channels
economy to a
ness
consideration
requirements
margin
from
Units whose requirements are changed
$20,000 carry the volume of borrowing
It is generally conceded that the
otherwise.
small.
has
proximately 50%.
Maturities in significant
increase
hoes
take
general are limited to 20 years. place.
Similarly
when
margin
Veteran's preference is provided
requirements are increased, the
by making down
payment
re¬ volume of loans does not fall off
quirements on loans in the price greatly immediately. The
expla¬
range' between $6,000 and $12,000 nation for this is as follows. The
lower by 10%, wiih the prefer¬ volume of
credit is no longer a
ence
narrowing to 5%
on
the fundamental
force
determining
higher price levels.
stock prices. Margin requirements
On Jan. 11, 1951, the coverage generally •
have
been
lowered
been
bitter denunciation, of
credit
consumer
the
which
argument
increase
for high priced units.
of
they
Inc.
well
as
ex¬
second hand real
loan value is 90% of the value.
Consumer Finances indicated that
137.50
WHitehall 3-9177
im¬
were
and aggravating a decline.
example, since January, 1949, maximum loan value is 83%. On
consumer credit has increased by
units 'of value- over $23,500 the
ever $6 billion; this is an increase:
maximum loan valeu is 50%. De¬
in spending power and when its'
tailed provisions covering rental
boom
425.00
Assn.,
30 Pine St., N. Y. 5
Reserve
For
July
Oct.
Oct.
July
May
July
&
credit
or
units.
or
of
Oct.
The coverage includes
values
consumer
Brokers
estate
real
family
major
a
experience had been developed in
utilizing the machinery so that
Call
tial
posed.
fluence in causing booms to begin
not
rate
12, 1950, 1951. The margin requirements
was
promulgated.
Effective Oct. have been set by the Federal Re¬
12, 1950, restrictions on residen¬ serve System since 1934 under
effective
System,
include
is
by stock
loans is relatively
1' at
Accordingly, Reg¬ whicn level they continued untjl
purchases.
ulation X of the Federal
which
evaluation
Members
on
es¬
for
in¬
credit
sumer
they
Filer, Schmidt & Co.
restrictions
tate
secured
of real estate as security is now 25%. Margin
purchases. Sec¬ requirements had been 75% from
sphere are to de¬ The maximum loan values vary.
buying power, to restrain For units having a value between
the upward rise in prices and to $2,500 and $5,000 the maximum
187.50
162.50
and
the Defense Production
crease
262.50
Request
financing
regulation
credit in connection with real
objectives of Regulation W estate
225.00
on
the
isting homes
July
Calls
of
construction
the
was
-
of
category
comparatively small. Nevertheless,
in the economic
175.00
request
Members Put & Calls Brokers A Dealers
50
SPECIAL
never
6 of
maturity in
than
W and
tion
V3, for appliances % and
durable
consumer
by Regulation
heretofore subject to
is
for furniture
not
major
goods not covered
direct control
mand.
CALL
The
payments and maxi¬
those
are
security
Real Estate Financing
on
major con¬
The mini¬
down payment for automo¬
sumer
consumer
Fresno—Santa Rosa
SPECIAL
1949.
Regulation W specifies the min¬
ready for Profit-wise Action
GRAPHIC STOCKS
York
June 30,
imum
half
When Market indicates its next move,
on
Pacific Coast Exchanges
San
over
tightened Controls
not
those of the
be
New
were
somewhat
with
Members
-terms
major
of corporations. Trie magnitude of
Their
the
and
views
do
third
loans
Credit Controls and Fiscal Policy
expressed in this in the purchase of durable goods
necessarily at any in 1949, such as radios, televisiontime coincide with those of the
sets, refrigerators and new and
Chronicle. They are presented as used
automobiles, approximately
[The
Orders Executed
Margin Requirements
15
page
The
mum
a
from
are
watched them I've
that
Continued
to be
selling at
share - earnings
the years I've
decline
any severe
direct
are
to
through
subject
control
by
governmental- authorities. Hence
the financing activities,; by being
Volume
173
Number 5006
.
.The Commercial and Financial Chronicle
.
35
(1779)
subject
to
used
authorities
the
of
one
as
control
greater
governmental
quickly and effectively. However, priate credit policy by member stitutions. In this
manner,
the
since, the
early days of World panks can then be restrained. (Ac¬ over-all
voluqie of credit may be
War II, the freedom of the central
tually the extent of required ac¬ appropriately
controlled
at
tne
bank to use its open market op¬ tion
by Federal Reserve author!* same time that the special needs
by
be
can
devices
for
rationing or allocating scarce ma¬
terials and labor to investment
expansion
which
the
make
contribution
to
the
of
progiams
will
tne
eration
.supporting
type
preparedness
The
'
1
-
h. The
fourth
bank, credit
•
,
'
tne
;
commercial
major
is
category
this
of
reserve
control
have
category, business loans, are
of unusual significance
that time.
While
of
one
purchasing power in the nation
may
be increased or decreased.
Tne
traditional
monetary
.control
ments
needs
of
served.
by
credit
total
that
so
-
trols
and
the
responsibility
the
bank
an
the
the
The
selective
to
advocates
of
is
therefore
seen
the Reserve
-of
con¬
traditional
grounds
that
til
hobbled.
that
of
means
total
payment.
is
supply
money
of
indi¬
they shall
If
central
Since
changing
reserve
bank
and
since
there
the
banking
responsibility
authorities,
the Federal Reserve
the
control
erations.
re¬
to
cost
of
of
The
result
of
bank
made
operations from June 21,
member
crease
bank;
With
in
member
bank
ences
;
the
Reserve System
:
The'-traditional
-
powers
of
»
the
System used to
control the supply of money are
Federal
f(l)
Reserve
controls
the rediscount
over
market operations
and (3) changing reserve require¬
ments. Singly and in combination,
these powers are presumed to give
(2)
rate,
the
open
Federal
control
over
authorities
Reserve
the money supply in
order to vary,
it to meet the com¬
mercial and business needs of the
.economy.
-
'1; ,/.'"' """
Federal
The
discount rate
Reserve
was
•
Bank
re¬
in fact raised in
between
Federal
may
other
the
demand
The
is that
costly to the Treas¬
changing
the
•
central
rediscount
interest rates
cause
have
to
of. credit
by
raising
its
price. Since the early 1930's, how¬
ever^ member banks in the United
'States have not been heavy bor¬
rowers
from the Federal Reserve
System. Changes in the rediscount
rate1 have been influential only as
signals of a general policy by the
bank to tighten or ease
;central
.the flow of credit.
The
which
instrument,
the
enforces
central
the- signal
indicated
by
banks
and
can
extend credit. This
be done on a national scale
and
even
their ability to
a
regional or local basis
charged
be
may
on
the
be
a
loan
is
less,
guaranteed
with
the
up
the
interest
of
guaranteed, portion
loan if the percentage of
'
be
pro¬
'
"
a
;
of
borrowing.
form
has
been
prepared
Federal Reserve
by
of
follows. A price level
as
5
even
the nation
as
10%
or
is
more
government and to
whole than
a
a
sub¬
However, it is
regard
the
false issue to
a
debate
centering
as
whether a difference of Vs
V\% or % or 1% interest should
upon
or
be
paid by the Treasury. The real
consideration
is
not
interest rates
paid by the Treasury
higher
billion
debt
dollar
and whether
rates
♦
whether
should
the 250
outstanding
on
increase in inter¬
an
would
restrain
borrow¬
ing by business firms. The
tial
point
interest
that
charges
should
the
on
pattern
of
government
such that
be
essen¬
it
need
be supported
serve
the
is
be
open
central
by Federal Re¬
market operations. If
banki-regains
the
power to pursue open market op¬
erations
the criterion
appropriate money
guided
of providing an
by
supply for the economy, inappro¬
data
supplied
by
as
bank
has
a
good and
fective
the'recent
taken
changes
place
in
tax
the
in
re¬
of
received
required
then
returned
agreement.
credit
although over-all bank
may be limited by appro¬
priate central bank action, special
devices
the
may be used to
credit
flowing into
channel
during
a
has
the
are
that
com¬
of
The
some
consoli¬
budget
therefore,
1951
cash
it
for
in¬
was
is
estimated
that
receipts and cash pay¬
approximate 49 billion
and
neutral.
this
on
This
basis
has
it
is
erroneous
for
First the
reasons.
deficit
would
number
of
sulted
anticipated
1952, and the
for
make
in
substantial
has
of
buying
formerly idle
Furthermore, since
the emasculation of monetary control over bank credit expansion
has
resulted
in
a
preparedness
in
the
substantial
reductions
eliminated
were
corporation and individual in¬
taxes
come
individual
increased.
were
income taxes
The
in¬
were
creased, not by changing the nor¬
mal tax and sur.ax
rate, but by
removing from the law for 19.51
and
later
of
to
the
of
the
arrive
tax
liability.
the
figuring
1950,
burden
amount
increase
of
in
by
began
1950, in
for
tax
taxes
was
reducing
the
tax
by 13% of the first
of the next $99,600 and
$400, 9%
7.3%
amount
technically
Since
accomplished
tentative
tentative
net
quarter of
the
the
the
tax
last
percentage
total
at
increased
with
the
years,
reduction
tax
the
of
tentative
in
tax
ex¬
oi
$100,000. The rates form¬
erly had been respectively 17, 12
and
9.75.
with
For
1951,
beginning
years
percentage
no
deduc¬
tion is allowed.
The
-
changed
in
>v
fashion.
increase
June
rate
38%
level
to
30,
increased
was
was
'■
was
substantial
amore
The
the
from
f.
Corporate income tax
to
The
45%.
begin effective
For the calendar
1950.
year, therefore, the tax rate
flected a type of average of
old
and
rate.
new
The
rates
for
re¬
the
methot
The
of computing the tax was
fied.
and
For
$50,000
tax
June
applicable to
simpli¬
30,
1950,
corpora¬
between $25;■
eliminated
was
beginning aftc
25% normal tat
years
a
is applied.
rate
An exemption 0
$25,000 is allowed for surtax puii
and
poses
to
surtax of 20% appiin
a
corporate
this
net .incomes
minimum.
For
abo\
corporatio
with income up to $25,000, there
fore, the tax rate is 25%, for in
comes above $25,000 the tax rat
is 45%.
This however, was modified
b;
the corporate tax law passed Jan
3, 1951, which
in
crease.
it
to
the
included
surtax
still
be
returns
and
over
in
profits
excess
passed.
Both
and the
excess
termination
profits tax
the
re¬
In addition,
tax'
law
the surtax
was
increase
profits tax law be¬
effective
came
would
above
sulting 47 % tax rate.
an
2%
a
rate, raising
22%.pA penalty tax of 2%
consolidated
on
<
July
date
was
1,
1950.
the
on
I
exces
placed at July 1
1953.
It will be useful to
marize the
excess
briefly sum*
profits tax lavt
to comment somewhat
nomic
effects
and
on
its
then turn to
an
its
role
part of the fiscal system.
in¬
enced.
Hence
we
must do
better
tax
eco
as
<
We shal
evaluation of th<
devices.
An
guarantees for defense production
cal
to
simply balance the cash
1951
and
to
reduce
the
pro¬
under
authority of jected deficit of $16%-billion for
the Defense Production Act, this fiscal 1952. It should be observed
type of loan can be made un¬ that on a cash basis, the consoli¬
dation
Federal
cash
budget
for
'
.
effective tax rate
^
exces.
on
profits of 77 % is to be levied. Ex¬
profits
profits over
cess
than
receipts and cash outlays for fis¬
usually attractive for lending in¬
tax
and
money
By a program such as
the Regulation V program of loan
inaugurated
revenue
possibility Of additional taxes an
supply, it in this
process we shall apprais*
was
necessary to achieve a budget
the economic effects of alternative
surplus to attempt to offset the
crease
increase ^increase in the other major sec lor
desired in which money supply is influ¬
program.
closing
the
substantial changes in the tax bill
that was in process.
The excise
re¬
anticipatory
cash balances.
.
a
items. scarce,
utilization
and
sent to the Federal Reserve Bank
Thus,
1950
loophole
offset
to
by reducing excise taxes. The
developments
in
Korea
caused
of
large volume of Federal spending
the bank for execution and copies
of the guarantee
fiscal
which
provisions
loss
aspects
is true
cash
and
rate
dollars
dollars.
Federal
Federal
to
for the preparation and execution
billion
it
primarily of excise tax
notch
receipts
cash
dated
two
opinion has been
the copies of the credit
are
to
initiated
that time
tions with incomes
relatively neutral in
billion
had been
tax
reductions
000
revenue
:
to
43
be
This
Legislation
was-
close
analysts
been said that the budget position
of the Federal government will
binding
1950.
law
comes
must
for fiscal 1950 amounted
some
dollars
tax
be
spending side,
to
both
this
agreement
Recent Tax
A
system
of graduated
corporations with in¬
below $25,000 and the 53%
which
on
to
was
ments will
credit agreement is ef¬
and
(3) the bank has a
After
near
attempting
soon.
misleading. It
fiscal
binding obligation of the guaran¬
tor.
of
flationary by 2 billion dollars. For
the
obligation with regard to the note,
the
actually
may
revenues
41
of
by the credit agreement that (1)
the
-(2)
stantial rise in interest rates.
much too
pared
Banks, it is sent
opinion of its counsel
competing uses for the
the
achievement
of
its effect oh the recent substantial
opposition to these views the
•to the borrower for execution and
position held by the Federal Re¬
serve
authorities has been sub¬ borrower is requested to furnish
stantially
a
price rises. Such observations
guarantee
agreement
and
note
under
which
the
borrowing is
made
single
resources and
dislocations
budget
the
the loan
the
in
achieved
the
budget, the statement
frequently been made that
on
function of im¬
After
as longmillenium
the
hampered by present and
quite
Lawyers have
of
as
be
may
limited
Turning
guaranteed exceeds 95%.„
expansion
budget operations.
of the
of
be
detailed
to
guarantee
received
budgets in¬
Commendable'
So much for the
charged by the Federal
Bank
range
from 10%
or
1952
long-run objectives
too
amount
.
host
a
term
of
and
With
agency.
rate
be
can
welfare programs, notably
not
interest
maximum
argument is
government must
not
member
This
In
debt
of
of
guarantee
do in connection with other types
States
market operations. Open
market operations can be used to
increase and. decrease the excess
reserves
have
attempt to
duce the inflationary
impact
government operations.
cess
resources,
for
the
busi¬
upon
tected.
changes in the rediscount rate are
its open
application
the loan by
not
sufficient
reduction
programs
day.
agrees
portance in connection with the
granting of the loan as they often
effect
little
decisions.
ness
est
however, by
bank actually
If
an
come
does
with
objectives,
can
guaranteed
fee increasing to 40 to 50%
presumed
are
reinforced by the Treasury asser¬
tion that the credit of the United
-
supply
these
The
70%
and would not affect the vol¬
ume
of business borrowing be¬ /
reducing the
rate was effective in
a
Space
and
education.
run
ury
costly to the
bank,
institution
better
housing, "public. work?, health
appropriate guaranteeing
if
rise in in¬
a
files
Reserve
Treasury
interest rates
-
and
date.
1951
some
and
.
guaranteed loan is 5%. The guar¬
been
terest rates is
in
antee fees
view in support of a low level of
rise
heavy borrowers from the
the
of
essence
;1V2% to l3A%. When banks were
August,
have
it
which
and
Treasury
financing
loan,
a
providing
institutions.
the
inefficiencies
clude continuation and
-
financing
area
in
might
detail
The
is
subcontractor
or
both
achieved.
of
*.
that there is need for
spot-lighted.
1950
(about two
Weeks before the passage of the
Defense ' Production
Act)
from
late
the
Reserve
by
of
substantial
in -defense
production
contact his local bank or
engaged
-
Traditional Powers of the Federal
banks
contractor
A
an
expansibility in member
banks' loans by a ratio of 5 to 1,
this
would
provide for an in¬
crease
to
substantial
a
realism to provide assurance that
loan
of
is
later
a
ficient
ia
effort
source
reduction
through reduction of
inefficiency may be achieved. The
facts have been supplied in suf¬
secure
type
dollars
major
here permit a recapitulation even
of the specific areas in which cost
man¬
engaged
An
this
make
to
guarantees.
average
payment
at
facilitates
firms
for
production.
attractive
by
reserves
two billion dollars.
credit
The
reduction,
which
grams
action,
to
billion
75
1951
the postponement of desirable pro¬
play. If member
positions
are
through central bank
cost
elimination
reserve
defense
open
properly,- the question may ap¬
propriately be ra.sed as to* why deposits by approximately 10 milion dollars.
1he meanJs of prrment ha/:
t
This has occurred because of
in fact been subject "to the desiXed
a low interest rate
policy by the
close control of the banting au¬
thorities
and why
it lias been .Treasury which, until compara¬
necessary
to
resort
to
direct tively recently, the Reserve au¬
thorities
have
supported. Since
qualitative controls.
:
August, however, sharp differ¬
,
role to
fiscal
increased
•
there
for
tightened in the appropriate
ner
market op¬
open
net
the
for
nowever, careful analysts of the
Federal
budget
have
indicated
borv it will be difficult for some firms
through October 11, 1950 for
some
the
especially
of
the
deterrent
all member banks has been to .in¬
credit,
System, is to
means
in
the
as
useful
effectiveness
qual¬
of
se¬
Loans
the
real estate loans, or security loans.
Since
V
orders
rowing, attention - centers on re-; with v defense
storing to the reserve system the loans.
Regulation
V
1950
.
changes
through raising the
is little
on consumer
type
unwilling to purchase
use
market
itative control
rapid
a
every
this regard that Regulation V has
is
the increase in the money supply,
properly
need for direct
of
fiscal
spending
of
course
is
increased
outlays for
the military services and interna¬
tional security.
requirements has not traditionally •firms engaged in defense produc¬
been an important weapon of the tion would still remain.
It is in
regulated, it has been urged, there
or no
such
occur
investors
dollars
approach
of
great danger
severely limited, the problem of
supplying the actual loan needs of
tary and credit policy should op¬
to, control the total means
of payment but should not insert
decisions
The
billion
and
rates
With, the total supply of credit
bank
how
interest
for
43 billion dollars. They
were
that
of
to
that
Regulation
rate
the
review
the
of
estimated to be approximately
50
System to control
discount
as
it
danger
curities whose principal is paid in
terms of a,fixed dollar amount.
tiveness
into
the
there
that
considerable dispute on the effec¬
viduals
that
is not
that
rise
banking system nave oeen un¬
recently
almost
completely
.
Government
preserved,
somewhat.
the supply of money provided by
the
States
for fiscal 1952.
monetary and credit policy should
be general and impersonal. Mone¬
itself
passing
made
be
government
curities
a
erate
;
be
become
powers
condemned
the
the
on-
Jt
United
second
the
are
is
the
of .that the three traditional
be
may
credit
are
in
of member banks' loans.
,
economic
country
referred
principles
best
increases
review
pay¬
to
which
role of government on the spend¬
would
volume of credit they
to
snould
should be
to the
ability to market government se¬
rise
supply through expansion
themselves
regard
observed
changing member
requirements to en¬
possible
money
the
•
of
than
more
ful
legislation
;
appraising the fiscal role of
government,
extending.
must
of
way
reserve
in
policy is to
means
in¬
1950
in
prac¬
decreased.
or
em¬
are
of the
of
effective
creased
output
consisted
total
the two
by; which
had
credit
more
With
requirements
additional two per¬
any
is
and
In
which
supply and volume of
ployment
primarily
not
in
the
Federal
ration
were
reserve
before
it
would
apprais¬
ing the nature and necessity of fu¬
the ture tax
increases, it will be use¬
represents
arena
nave
Before
Treasury argument that the credit
their
able the central bank to restrain
routes
decrease
become
city banks to
reserve
strategic importance. As indicated
tical
banks
main
these
increases
reques.ed.
before Korea and at
central
centage points. At the present
time, therefore, little can be done
is
member
because member bank
existing law would be for
December 1949 of any of the cate¬
the
thereby
frequent
.raised by
credit
other
money
reserves
for
output. Cash expenditures of the
relatively
greatest amount of increase since
of
the
policy
is
passed
and
signed by the President Sept. 23,
have
bank
Fiscal
been
It
tax
ing side. The increased spending
activity accounts for an increasing
proportion of the real national
ing but, in addition, represent the
of
of
funds.
that
member banks
the
regulation
Fiscal Policy
increase in the
an
these
since
solute amount of credit outstand¬
The
loans
of
reasons
make
of
simply
changes in
unaer
amount
because
,
^
.banks
to
be provided
economy may
for.
mention
ab¬
gories.
willing
of the
higher
a
member
loans
,
at
were
less
be
by the
govern¬
on
billion cash flow into trust
funds,
which is not Federal income but
expensive to bor¬
rowing business firms but because
been
loans
greatest
yield
higher level of, risk involved, in
such lending activities.) Business
there
pid interest. Not only do business
the
diminished
level,
business
in
reserve
requirements
1948, the only alteration now
possible in reserve requirements
therefore
represent
woulu
original Reserve Act of 1913.
istence.at
be
securities
average
re¬
not.contained
was
ment
Banking Act of 1935 gave tne
central banx tne power to. double
the reserve requirements in exr
signifi¬
to
measures
ties would
fact that if the
interest
The
cantly larger than all cf the re¬
maining categories combined.
Analysis
to alter
power
quirements
Business Loans
,
i
of
rates on
■"
t
pattern
a
United states government
securities.
maximum
program.
'"
been subordinated to
has
1952 will* show a deficit of
only
$12.8 billion because of nearly $4
mum
is
are
and
defined
above
as
a
those
maxi¬
defined in the statute which
described
tax credi*.
World
War
as
the
excess
Two methods
II
Law
are
Continued
on
as
profits
in the
provided
page
36
The Commercial and Financial Chronicle
Continued from page
35
'
Ciedit Controls and Fiscal Policy
the excess prof¬
One is the average
for determinating
credit.
its tax
As
completely worked out.
consequence, it was neces¬
722
tion
a
ject to two major restraints, how¬
ever.
First, high personal taxes
will at some point have undesir¬
able effects upon incentives and
thereby hamper output increases.
considerable extent
income tax is selfassessed. The higher the rates, the
Second,
the
to
a
personal
ad¬
the other is sary for tax accountants and tax greater the tendency for the
ministration of the personal
the invested capital method.
For lawyers to file a section 722 claim
come taxes to break down.
the average earnings credit
the to ascertain whether their client
was in fact entitled to recognition
Consequently, to the extent
base period is defined as the three
for his special circumstances.
appreciable sums cannot be
best years 1946 through 1949. 85%
credit
earnings
and
the
is
this
of
profits
made
excess
Provision
credit.
is
tax
for
capital changes after the base pe¬
riod, a growth formula is pro¬
vided and base period abnormal¬
ities are taken into account. Rec¬
ognition is given to new products
services ana depressed indus¬
or
Special exceptions are pro¬
transporta¬
tries.
vided for utilities and
companies.
tion
credit is
12% of the first $5 million of in¬
vested capital, 10% of the next
$5 million and 8% of anything
over $10
million. Invested capi¬
*
equity
of
capital and retained earnings and
75% of borrowed capital. If bor¬
rowed
j#,
100%
include
will
tal
capital
invested
The
V
provided in World War II. Under
the former method, the company
in
sources,
purchas¬
presume
to provide measures of
values of assets or in¬
capital, book values of in¬
vested capital may bear no rela¬
tionship to the current values of
those assets and may bear no re¬
purchasing power bond. Details of
the purchasing power bond and
arguments in its defense have
been presented by
Professor
current
vested
ing
power
whatsoever
to what Slichter. He demonstrates con¬
that
the
purchasing
present stockholders have paid for vincingly
their shares in the corporate en¬ power bond has considerable merit
terprise. The inequity of an ex¬ as a fiscal device.
In
my
judgment the excess
cess profits tax is therefore likely
to be quite serious.
profits tax should not be changed
in
the attempt to secure addi¬
Some
of the difficulty is, of
lationship
alleviated
course,
providing
by
alternative standards, an average
earnings standard and an invested
frequently
But
standard.
particular situation of a firm
not sufficiently recognized or
the
of
be calcu¬
lated in two ways, either on the
basis of a new assets approach or
on the historical capital approach
alternative
consumers'
from
cured
reduction
se¬
should be achieved by
offering
an
attractive
saving
medium. This is represented by a
subject to tax.
can
in¬
even
are
that
Since accountants do not
is
capital
base
in¬
greater.
capital can be de¬
ducted from the company's income
borrowed
Invested
capital
the
with
difficulties
The
vested
only capital
included,
is
capital
'25% of the interest payments on
the
provided for even by the option
the alternative standards. This
is
particulary
neither
have
a
earnings record nor large
torical
an
revenue
is
appraisal of an
over-all
profits
excess
an
imprecise method of at¬
an
tempting
an
attempt
the
tax
If
to
differential
identify
to
incomes.
made
under present con¬
best
At
ditions.
tax
use
is
to
se¬
high a proportion of the
government's
revenue,
serious inequities will be
too
cure
its
placed
individual
upon
Any unused portion of the $25,000
however cannot be so
shifted.
that
A
not
stipulates
than 62% of any
tax
more
firm's income in
high
profits
an excess
and
ceiling in order to avoid the
deliberating effect of high cor¬
ate
porate taxes upon cost control. It
is widely recognized that an ex¬
tremely high corporate income tax
corpora¬
complex
administratively
come
of
exemptions and relief
usually dependent upon the con¬
preparedness is that
differentially from
sideration that the government is
or
period
a
benefit
the increased national income and
business activity.
paying for
any outlay.
lize firms which do not differen¬
tially benefit from the increased
tempo of economic activities re¬
sulting from a war or prepared¬
Tax
program.
in
profits
The theory is that
of what would
excess
have been earned if the abnormal
had
occurrences
be
should
taken
not
subject
the
to
place
differ¬
ential tax.
voiced
to
standard,
is really
the
average
it
argued
no
which
riod
even
profits tax.
time excess
gard
against
is
a
war¬
With
previous historical pe¬
can, with high reli¬
ability, be regarded
all
firms
tempt
and
as normal for
industries. An at¬
make
to
abnormalities
adjustments
between
firms
for
and
industries for the base period gets
into
endless
complications and
brings
lief
the requirement of
on
provisions which
tive
of
are
considerable
re¬
produc¬
litigation.
The complications in the adminis¬
tration
were
at
no
of
section
722-of
course
aggravated by the fact that
time
were
definite
stand¬
ards for the administration of
sec¬
that
on
revenue
ately
would be
thereby encouraged, tax revenues
under the personal
income tax
would increase. This proposal em¬
bodies
very
desirable elements
since it reduces the present double
of
taxation
and
corporate
earnings
system in the
the tax
moves
direction of greater
direct taxes
reliance upon
of income.
as a source
Another
principle
of
signifi¬
and importance which could
cance
well
is
observed
be
provision for
continue
to
over-all limita¬
an
applied to the aggregate level
of wage returns or any
tributive share. When
other dis¬
a
historical
undesirable
An
aspect
the
of
which
with
additional
reve¬
made.
been
have
tax
program
brief
reasons
is
A
sum¬
presented
for the
plans
proposed.
The bulk of increased tax reve¬
should
nues
in
come
from increases
the
personal income tax. The
chief merit of the personal income
tax is that it is
a
direct tax. It is
shifted to any
great extent, so that one may se¬
cure an understanding of its im¬
presumably
pact.
in
cut
not
There is much to commend a
exemptions from $600 to
raise an addi¬
tional $4 billion. Further, the sur¬
$400.
This would
tax rates should be
at
each
increased 4%
bracket. This would
also
add
approximately $4 billion.
Although an increase in taxes
hurts all of us, inflation carries
even
in
achieved
be
context
this
increasing
by
luxuries.
on
excises
amounts.
Luxuries
in
be defined as
whose prices do not enter
items
may
into the cost of living index. Price
excise
official
adjustments.
wage
these items provide
excessive
the
in¬
would
taxes
affect the
therefore
for
from
resulting
increases
creased
not
basis
Further,
outlet for
an
buying power.
Consequent price rises are shared1
consumer
directly with the tax authorities.
increases
these
From
close
to
in
excise
billion
taken by
ditional revenues may be secured.
the combined corpbrate
income
net
and
tax
the
profits tax by the application of a
ceiling. The present ceiling of 62%
represents
since
this
principle
desirable
a
the
reduces
effect
of
waste
and extravagance which may be
encouraged
by
high
marginal
rates. The advantage of a reason¬
ably moderate
ceiling
is
that
high marginal tax rates
this
of
the
need
kind
on
reduced
are
detailed
for
relief
provision is reduced.
Related
the idea
to
of
a
proposal
a
profits
excess
an
is
''humped curve" in
such
tax
or
pecially appropriate for
profits tax
earnings in
earnings
could
cor¬
a
be
might
an excess
defined
by statutes
into segments.
broken
20%
be
es¬
For example,
of the normal
excess
as
first
The
levy.
the
of
taxed
at
earnings
excess
an
profits tax rate of something like
50%;
the
taxed
10%
80%
rate,
rate;
90%
the
10%
next
at
next
might
64%
a
might
rate;
be
taxed
at
be
the
an
the fourth 10% at a
and all over 50% of
might be taxed at an
excess
intermediate
rate
such
60
as
or
75%.
Thus, by getting over the
hump with reference to what it
achieved
has
a
in
the
of
ad¬
base
period,
Conclusions
In summary, on
the basis of the
prospective outlook, the following
proposals appear to be appropriate
credit and fiscal
policies to pro¬
mote
stability:
Restoration of
(1)
Reserve control
Federal
money supply. (2)
selective:
controls
expansion.
effective
To
credit"
over
the
control
the
over
Retention of
extent
that
the
total
over
money supply
credit controls
is achieved, direct"1
are likely to be at
the
more
time
same
less
effective and,,
in
Increases
(3)
necessary.
personal income tax rates to, yield
additional
an
provision of
$8 billion.
(4) The
purchasing power'
a
bond for small investors.
(5) Re¬
form of the corporate
income tax
major changes in the ex¬
with
no
cess
profits
the present.
for
tax
Increases in selective excises
to yield approximately $3 billion.
(6)
The
above
be
to
appears
*
a
minimal program. The need for it
is
great, since there is little basis
hope that the international
for
tensions requiring substantial
military preparations will, in the
near
tive
future, be moderated. Effec¬
demonstration
is
required
that the erosion of the
purchasing
power of money can be halted.
corporation receives recognition
in
the tax structure for increases
in output and efficiency. The ris¬
ing
portion
tended
to
the
of
reduce
is
curve
the
Put & Call Brokers to
in¬
Hold Annual Dinner
importance
attached to the base period and to
reduce
the injustice done to con¬
which find their base to be
cerns
inequitably low. The falling part
of
$3
excess
the
acts
schedule
to
induce
On the basis of economic
ciples, therefore,
prin¬
The
Call
and
Put
Brokers
and
Dealers
Assocaition, Inc., will hold
its annual meeting at the Hotel
New Yorker on
April 27, 1951,
at
5:00
At
p.m.
this
yearly meeting
a
testi-;
monial dinner will be tendered to'
Sid
D.
Harnden, the Association'?
President, who has served in this
capacity for 10
years.
modifica¬
some
tions in the nature of the present
corporate
net income
tax
are
circumstances,
called for, but it should not be
corporate
used as a source of any appreci¬
earnings. The proposal contained
able increase in revenue.
in the final report of the Com¬
Another tax which
has been
mittee on the Federal Corporate
proposed is a general sales tax. A
Net Income Tax of the National
even
correspondingly
Second,
increases may appropri¬
dollar
taxes
is
corporate net income tax, correc¬
tion
of which
should be made
basis
tion in the amount of taxes to be
applied to other dis¬ companies to strive for increased
tributive shares, its lack of basis efficiency profits after which they
are enabled to retain a larger por¬
on logical grounds becomes read¬
tion of their earnings.
ily apparent.
standard
are
valorem
ad
increased
have
in
which
excises
an
on
that dividend payments
under present
Tax
Au¬
published
Association,
difficulty with
a general sales tax
is that it is somewhat cumbersome
1950, deserves recognition.
to administer. Its major impact is
nues nqcessary to achieve a sub-,
It was suggested that at a rate of
on the lower income groups, but
stantial cash budget surplus. It
45%, the tax should be divided be
in a period when one is trying to
is not possible to review here the divided into two
segments. The
many
alternative tax proposals full 45% would be paid on re¬ control inflation, this is a virtue
re¬
earnings
that there
of
sources
mary
Many objections, however, have
been
Prospects
Having analyzed the nature of
recent tax changes, we now turn
to the future to consider alterna¬
tive
is
question-begging, especially since
the standard could equally well
be
rate
26%
a
been
GoHron, Russell Co.
is the double taxation of
To increase tax
rates across the board is to pena¬
ness
high percentage of
a
of such historical standards
use
or
levied
portion of earnings distributed as
dividends. Of course, to the extent
porate income tax levy. It is
provisions.
rate makes business decisions un¬
of
wartime
level
firms
extreme wartime conditions,
that the combined corporate
tax rate have a relatively moder¬
theory of
for
tax
profits
except under
regular corporate
Appraisal of Excess Profits Tax
The
excess
very
alty tax may be taken. Thus an
overall ceiling of 62% is provided.
tax
the
ceiling
profits taxes and 2% pen¬
excess
that
tant
rate not be too high
viduals,
has
period when the general
price level has greatly increased,
other
rate on
bracket for indi¬
This
1942.
while
and the 24%
surtax
recommended for
are
since
rate of 50%
the first
the law will have to be¬
or
tobacco,
fixed
a
and
tions
and
increase since they have remained
during
either
retained earnings, subtract
minimum
ef
Thursday, April 26, 1951
.
propriately be the difference be¬
tween the corporate income tax
wastes
its assets including
compute
partially, compensate for the lower
rate on dividends actually paid.
The rate on dividends might ap¬
Federal
because
capital.
invested
In
which typically
favorable his¬
firms
small
and
the new
for
true
tional
Proposed increases in the cor¬
excess profits tax, it ihust be ac¬
its knowledged that it has some role porate income tax have been
liabilities arid add its net loss dur¬ to perform in a war period. As a justified by some on the ground
that they
would merely reduce
ing the
1946-49 period or the part of a general program of im¬
1940-49 period, whichever is posing limitations on the earnings corporate income levels to some¬
where near th£ 1948 levels which
greater. Under the historical ap¬ and wages of all types of income
are
regarded
as
an
unusually
proach it will base the figure on recipients, the passage of an ex¬
its original
paid in capital and cess profits tax seems essential to favorable level of profit. The dif¬
surplus, plus any net accumula¬ secure general assent to a broad ficulty of using historical stand¬
ards such as this is that no con¬
tion of earnings over the entire program of controls during war¬
is
given to possible
period of its existence. Provision time. Probably the major reason sideration
is made for Capital changes after for
the
passage
of the Excess growth" in the invested capitals
of corporations in the aggregate.
the base period.
Profits Act of 1950 was political;
Furthermore, the relationship of
A minimum excess profits tax it was to a considerable extent
corporate profits to the size of the
credit of $25,000 is allowed. The at the behest of the labor groups.
total
economy
as measured
by
law in addition permits net op¬ There is also an economic basis
gross national product or national
erating losses of a given year to for the tax during a preparedness
income is not taken into account.
be carried back or forward. Losses period or abnormal economic con¬
ditions. While there is a role for Finally, changes in the price level
may be carried forward five years
are
given insufficient considera¬
or back one.
Unused excess prof¬ an excess profits tax, the unre¬
tion in comparing corporate profit
its tax credit can be carried back
liability
of
the
definition
of
levels between the two dates. The
one year or
forward five years. normal earnings makes' it impor¬
will
'
..
(1780)
36
heavier
burdens.
Increases
personal income taxes are sub¬
gust,
rather
than
defect in
a
the
pro¬
lower per¬
cent, for example 30%, paid on posal.
Under
present circumstances a
dividends paid. These two levels
were
chosen to attempt to inte¬ general retail sales tax should not
be adopted.
It would result in
grate the corporate net income
tax with the first bracket level of price increases which would be
tained earnings and a
effective
income.
rate
At
of tax
the
time
personal
on
of this
pro¬
reflected in the cost of
contributing
to-
wage
living, thus
increases
further
price. spiralling ef¬
posal, it was suggested that the
fects. Preparedness or semi-mobi¬
corporate income tax, which was
activities may
continue
then at a level of 38%, be raised lization
over a
long period of time. If a
to
45%
to
compensate for the
and
revenue
loss
casioned
by
would
that
the
be
lower * rate
oc¬
on
dividends. Since the corporate in¬
come tax has been already raised
to
47%, the income
to
be
made
fashion.
The
up
in
basic
retail
is
a
a
sales
tax
were
used, there
danger that it would become
permanent part of the tax sys¬
tem
and
this
is
not
rate
Hence, unless present mobilization
other levels are required to be increased,
could
be
Ohio — Gottron,
Co., Union Commerce
Building, members of the Mid¬
west
Stock Exchange, announce
Russell
&
the installation of
Cruttenden
a
direct wire to
&
Co., 209 South La
Salle Street, Chicago, members of
the New York and Midwest Stock
Exchanges.
Extend Put & Call
Directors
Brokers
and
of
the
Put
Dealers
Options
and
Call
Association,
Inc., have ruled that Put and Call
Option Contracts which expire on
any Saturday during the months
of June, July, August and Sep¬
tember this year will be automati¬
cally extended to expire at 11:45
a.m.
on
the
following Monday.
Directors took this action because
the
New
York
will be closed
on
Stock
Exchange
these Saturdays.
desirable.
would have
some
Wire to Cruttenden
CLEVELAND,
I would favor the continuation of
Joins Lee Higginson
(Special to The Financial Chronicle)
selective sales taxes which are
BOSTON, Mass. — Myles D.
Huntington has become affiliated
beyond represented by excises.
First, excise taxes that are fixed withr Lee Higginson Corporation,
which the corporate income tax
should not be permitted to go) to in dollars, notably those on liquor 50 Federal Street.
raised to 50%
is
a
(and this 50% level
persuasive
symbol
,
Volume 173
Number 5000V.
The Commercial and Financial Chronicle
i
*'"•
"
^
<
[e
n
'i»,*
,
37'
(1781)
The
Indications of Current
Business Activity
AMERICAN IRON AND
Indicated
steel
STEEL
operations
week
INSTITUTE:
(percent of
following statistical tabulations
latest week
capacity)
or
or
month available.
month ended
on
Latest
Previous
Month
Year
Week
Week
Ago
Ago
Apr. 29
103.3
102.9
103.5
ingots
castings
(net
tons)
Apr. 29
2,065,000
2,057,000
2,069,000
AMERICAN
Crude
PETROLEUM
oil
and
INSTITUTE:
condensate
output
—
daily
average
(bbls.
of
42
stills
to
runs
daily
(bbls.)
(bbls.)
Gasoline output
Kerosene output
Gas, oil, and distillate
Residual
fuel
average
—
fuel
oil
(bbls.)
output
(bbls.)
Apr. 14
6,120,200
6,126,800
6,042,750
Apr. 14
4,998,800
116,127,000
6,092,000
6,401,000
Apr. 14
5,116,000
19,371,000
19,306,000.
20,341,000
16,820,000
Apr. 14
2,691,000
2,628,000
Apr. 14
2,044,000
8,492,000
8,792,000
6,767,000
oil
output (bbls.)
Apr.
Stocks at refineries, at bulk terminals, in transit and in
pipe lines—
Finished and unfinished gasoline (bbls.) at
Apr.
Kerosene
(bbls.)
at__,
,—Apr.
Gas, oil, and distillate fuel oil (bbls.) at
Apr.
Residual fuel oil (bbls.) at
Apr.
.
2,301,000
8,988,000
14
8,834,000
8,877,000
9,473,000
7,541,000
14
139,728,000
13,533,000
141,007,000
133,458,000
14
139,431,000
14,337,000
13,084,000
12,686,000
14
43,203 000
42,354,000
44,966,000
37,499,000
14
36,826,000
36,532,000
37,753,000
Steel
(number
of
cars)
777,989
739,523
745,365
707,385
691,086
699,053
708,312
627,834
CONSTRUCTION
ENGINEERING
—
construction
Private construction
Public
construction
State
and
OUTPUT
Bituminous
(U.
S. BUREAU
and
coal
lignite
Pennsylvania anthracite
Beehive coke-(tons)
DEPARTMENT
STORE
Apr. 19
98,768,000
I Apr.
OF
at
end
BUSINESS
Retail
$159,761,000
$236,708,000
59,776,000
155,753,000
of
output
99,985,000
79,955,000
Apr. 19
52,653,000
53,418,000
83,330,000
16,655,000
67,800,000
12,155,000
Apr. 14
9,973,000
9,110,000
11,584,000
__Apr. 14
529,000
465,000
9,920,000
412,000
778,000
Construction
132,600
"113,300
149,300
115,600
Commercial
Total
SYS-
Retail
Apr. 14
288
"292
292
254
CIVIL
-
Apr. 21
v
AND
INDUSTRIAL)
DUN
—
A
6,730,464
6,746,975
5,845,636
151
172
170
.Apr. 17
4.131c
4.131c
4.131C
3.837c
.Apr. 17
$52.69
$52.69
-$52.69
$46.38
service
U.
S.
.Apr. 17
$43.00
543.00
$43.00
(E.
J.
M.
A
$28.92
QUOTATIONS):
-Export refinery* *t„
Straits tin (New York)
-
Lead
Lead
'
Zinc
at-
;
(New
York) atJ_^__l
(St. Louis)
(East St. Louis) at
-•Apr. 18
24.200c
24.200c
24.200c
19.000c
lApr. 18
-24.425c
24.425c
24.425c
18.425c
-Apr. 18
142.000c
150.500c
•134.000c
76.750c
17.000c
-Apr. 18
.
17.000c
17.000c
10.500c
;
U. S.
*
;
11,105
11,117
80,769
76,446
coal
and ignite
(BUREAU
OF
(net
coke
!Beehive
_—Apr. 24
115.43
115.63
116:80
Apr. 24
113.89
114.27
116.02
119.61
\
110.52
110.88
.
112.56
115.82
.—Apr. 24
106.04
106.92
108.52
108.70
Apr. 24
107.98
108.70
110.52
of
Apr. 24
111.25
111.62
113.31
117.00
Apr. 24
115.04
115.24
116.41
120.02
599
884
$5,169,000
$6,134,000
$12,241,000
7,859,000
2,777,000
1,399,000
1,706,000
$17,652,000
$16,009,000
$27,900,000
——$1,406,456,000$1,271,045,000
$993,453,000
EN¬
—
of
932,612,000
623,415,000
522,098,000
344,574,000
338,433,000
370,038,000
260,680,000
294,178,000
177,524,000
77,753,000
75,860,000
»
—-
(tons
of
S.
"53,594,000
"3,522,000
4,882,000
634,400
"603,200
302,100
6,001,616
♦6,791,828
"6,076,872
1
5,398,379
(net tons)
1,100,157
1,068,695
.1
'
.
:
,
Government
Bonds
Apr. 24
2.64
-Apr. 24
3.09
...
—
2.62
'
•,
2.53
2.29
..Apr. 24
•Aa
.
■Baa
.'
Railroad
■
Public
Group
Apr. 24
-Apr. 24
—
Utilities Group
^—
Industrials Group
'
,
3.07
2.99
2.88
2.87
2.81
2.60
2.96
2.94
2.85
2.67
3.H
3.12
3.03
2.86
3.39
3.34
3.25
3.28
,_A.pr. 24
3.10
-Apr. 24
2.90
,
2.84
A.
Refined
—
YORK—
NEW
INC.
$381,000
$369,000
$258,000
341.7
'329.0
2?8.2
(1935-1939=
in
*
———
For
month
U.
S.
March
of
A.—
._—
90,671
"81,598
90,358
pounds)——
112,933
'101,054
113,464
116,793
"99,485
123,054
55,609
59,324
60,276
pounds)—*
2,000
of
(tons
2,000
of 2,000
stocks
copper
of
pounds)
at
_—
of
end
period
"
•
•
pounds)—
2,000
DEPARTMENT
SERVE
3.24
3.14
.3.08
2.99
2.80
2.89
2.83
2.65
Without
INDEX
COMMODITY
seasonal
521.1
-Apr.
Apr. 24
515.5
528.0
Orders
.
Production
-
(tons)
__Apr. 14
Percentage of activity—
Unfilled orders (tons)
at
199,937
328,223
365.4
248,406
253,702
245,852
171,468
250,490
286
326
274
280
261
257
$64.08
"$63.67
102
7.06
10G
88
726,783
7?8,034
751,036
379,118
of
S.
OF
DEPT.
.,
February:
manufacturing
—
'
goods
goods-
'
Hours—
193,925
—Apr. 14
———Apr. 14
HOURS—WEEKLY
ESTIMATE—U.
AVERAGE
Nondurable
Apr. 14
—
Earnings—
ASSOCIATION:
(tons)—
received
Average=100)
adjustment
EARNINGS AND
FACTORY
Durable
PAPERBOARD
,'-;i >.;
3,09
All
NATIONAL
1'
RE-
(FEDERAL
March:
of
LABOR—Month
MOODY'S
SALES
Adjusted for seasonal variation
3.24
■
STORE
SYSTEM—(1935-39
Month
655,132
•
customers—
to
(tons
_
~ 3,956.139
37;967
'■
,
U. S.
'Average corporate
3,994,106
"714,956%*,
603,237
OUTSTANDING—FED-
March
of
(tons
Deliveries
U.
39,032,000
2,183,000
——
BANK OF
production
Crude
44,490,000
,
—
!
BRADSTREET,
Refined
In
884,358,000
(000's omitted)--
31
INSTITUTE
Copper
AVERAGES:
-
3,317,000
PURCHASES OF COMMODITIES—
&
COPPER
111.44
74
732
2,228,000
toift)—
tons).
PAPER
100)—Month
121.04
.
59
3,292,000
1,375,000
Oven coke stocks at end of month
COMMERCIAL
i DUN
102.75
116.22
80
69
1,891,000
tons)
(net
RESERVE
99.52
60
4,357,000
(net tons)—
(net
(net tons)—
coke
March
113.31
83
MINES)—Month of Feb.:
ERAL
98.21
116
402
5,605,000
—
tons)
As
111.81
206
69
304
2,211,000
Month
—
107
88
i
-
(net
10.500c
97.82
59,776
55,433
377
-c
—
anthracite
coke
10.300c
111.44
'
,
CONSTRUCTION
Beehive
17.500c
Apr. 24
77,946
74,700
March:
16.800c
;Apr. 24
115
,
——
Pennsylvania
16.800c
.—-Apr. 24
MOODY'S BOND YIELD DAILY
64,784
(BUREAU OF MINES)—Month
17.500c
Railroad Group
Public Utilities Group
Industrials Group
•
70,285
70,845
(tons)
-•__.
municipal
16.800c
__
--;A
,
80,450
BRADSTREET
NEWS-RECORD
17.500c
corporate
'
5,134,780
•
—
CONSUMER
Aaa
Aa-
7,487,036
6,904,688
of
—
-Apr, 18
Government Bonds
Average
..
'7,765,701
5,776,229
liabilities
-Apr. 18
MOODY'S BOND PRICES DAILY AVERAGES:
&
construction
and
Oven
•■
period
construction—
Production
•'Electrolytic Copper— - r
^Domestic refinery at_.
(tons
construction
Bituminous
COKE
PRICES
9,050,000
,,
liabilities—
—i
Federal
of
V
Feb.—
number
ENGINEERING
Public
EBON AGE COMPOSITE PRICES:
Finished steel (per lh.)____
of
—
liabilities
COAL OUTPUT
METAL
123,769
produced
liabilities
Private
188
of
„;
liabilities
State
Apr. 19
(per gross ton)__
Scrap steel <per gross ton)__
156,264
March:
Total
6,847,786
BRAD-
—
"Pig iron
3,731,943
228,769
155,180
liabilities
*
STREET, INC.
234,838
number.
Total
-
...
(COMMERCIAL
4,084,481
4,743,234
233,741
(tons)
number
service
69,562,000
1
FAILURES
5,134,336
4,533,443
number
Commercial
Wholesale
RESERVE
end
number
122,980,000
kwh.)
000
4,922,364
number
Construction
INSTITUTE:
(in
Ago
Month of March:
GINEERING
Electric
Month
including alloy
tous)—Month
period
at
Manufacturing
INDEX—FEDERAL
castings
March
FAILURES—DUN
—
69,376,000
TEM—1935-39 AVERAGE=100
IDISON ELECTRIC
Month
INSTITUTE, INC.—Month of
orders
122,029,000
Apr. 14
j
Yea*
INSTITUTE:
zinc smelter output, all
grades
lbs.)
_i
Shipments (tons of 2,000 lbs.)
MINES):
(tons)
of that date:
March:
19
(tons)
SALES
$311,168,000
188,188,000
f
Previous
2,000
Apr. 19
municipal
Federal
COAL
$220,797,000
for
of
met
Manufacturing
Apr. 19
either for the
Month
Slab
NEWS-
:
STEEL
steel
ana
AMERICAN ZINC
Wholesale
S.
are as
therms)
AND
stainless
Unfilled
Apr. 14
IRON
<M
tons)—Month
and
39,881,000
Apr. 14
sales
gas
ingots
(net
RECORD:
U.
For
—
therms)—,
Shipments of steel products,
INC.
Total
ASSOCIATION
Natural gas sales (M therms)
Manufactured gas sales (M
Stocks
Revenue freight loaded (number of cars)
Revenue freight received from connections
ENGINEERING
(M
gas
AMERICAN
ASSOCIATION OF AMERICAN RAILROADS:
CIVIL
GAS
Mixed
1
•
are
Latest
therms)—
gallons each)
Crude
of quotations,
cases
February:
Total
1,912,000
.
AMERICAN
in
or,
■
of
and
Dates shown in first column
that date,
100.3
Equivalent to—
Bteel
production and other figures for the 1
cover
Durable
$56.37
59.47
•
'
53.06
•
41,7
——
goods
—
39.7
"41.0
41.0
goods
Nondurable
"67.52
"58.76
.
manufacturing
-All
68.55
58.43
•,
"41.5
-
40.1
40.1
"40.3
39.3
$1,563
♦$1,553
$1,420
Hourly earnings—
OIL, PAINT AND DRUG
All
REPORTER PRICE INDEX—192C-36
AVERAGE=100
".
^
154.8
Apr. 20
S 154.2
,
154.5
manufacturing
Durable
121.0
STOCK "TRANSACTIONS
LOT
,
;
DEALERS
FOR THE ODD-LOT ACCOUNT
AND
SPECIALISTS
; EXCHANGE—SECURITIES
.
.
N.
POLICYHOLDERS
Death
—_
it Dollar-value,.——_—
Apr;
7
30.980
28.514
33.189
25.262
Apr.
7
896,196
821,113
958,212
770,822
.Apr.
7
$38,575,902
yr.OCd-lot"purchases by dealers (customers'--sales)—
...
!
Number
-
.i*
."
-
Customers'
short
sales—
Customers'
other
sales.
total
-Apr.
'''
Customers'
short sales
Customers'
other
sales
.
.-.•Dollar-value~——:
Round-lot sales- by- dealers—
1
;
•
: ;•
.
-
,.
Other .sales
'V
-
25,798
7
728
,
•
.
.
$41,738,785
$30,239,610
30,559
28,801
-Apr.
7
-Apr.
7
25,070
24.399
7
713,919
691,592
-Apr.
7
27,004
-Apr.
7
686,915
674,611
-Apr.
7
$29,017,008
$27,785,049
447
■340
,
'
16,981
.
■?
'
-Apr.
7
Apr.
7
7
:
:
,
of shares
28,634
812,260
12;41«
1
6,237
827,941
806,023
$28,677,102
„
198,160
j
198~160
J
203,710
260,730
261,850
U.
8. DEPT.
203,710
260,730
26i~850
339,090
355,510
243,750
OF
370,870
LABOR—
(000's
,
than farm and
•*-"Revised
foods
metal
and
Total
—*
——
NEW YORK
31
.
27,999,000
19,434,000
53,161,000
59,391,000
49,887,000
66,004,000
51,007,000
47,168,000
$304,142,000
$371,059,000
$288,708,000
of
$1,557,000
$1,303,000
$1,489,000
486,000
424,000
514.000
420,000
628,000
434,000
$2,463,000
$2,355,000
$2,437,000
$1,303,605
$1,366,817
$1,018,337
March
—
fNot
available.
^Corrected
figure.
EXCHANGE—As of March
omitted):
(000's
firms
carrying
customers*
of
net
Credit extended
—Apr. 17
201.2
"2C1.3
204.6
158.1
Cash
Apr. 17
189.5
188.5
187.0
169.6
Total of customers' free
268.0
268.7
272.9
194.4
-Market
value
of
186.8
185.7
187.9
154.4
Market
value
of
Apr. 17
272.0
273.6
212.2
Apr. 17
171.7
"171.9
172.1
146.4
Apr. 17
184.4
184.3
138.9
138.9
139.0
131.1
189.8
189.9
189.3
168.8
Apr. 17
227.5
227.6
227.7
164.9
185.1
-'-Apr. 17
358.9
358.9
358.9
-Apr. 17
144.5
"144.9
143.6
466,000
barrels
of foreign
crude runs.
136.4
X
UNITED
listed
borrowings
STATES
BUREAU
(000's
Exports
debit balances
OF
credit balances—
shares
on
CENSUS
—
97,397
411,646
290,999
918,245
952,827
666,252
79,482,749
125,846,076
98,112,284
100,245,611
115,801,060
60,779
132,425
112,995
803.326
629,107
609,536
$972,000
$764,000
1,021,000
600,468
S. Govt, issues..—
...
IMPORTS—
Month
.
Feb.
of
,
—
$1,073,000
*
907,000
117.0
'Revised.
46,539
54,023
391.325
114,382,062
other collateral
EXPORTS" AND
omitted):
—_—
,
—
in U. S
listed bonds—
Member borrowings on U.
Member
accounts—
margin
to customers
hand and in banks
273.2
Apr. 17
?Includes
on
Apr. 17
—Apr. 17
—
products
STOCK
152.5
1
products-
willed
figure.
$124,549,000
38,750,000
7,800,000
'"Industrial
183.9
: ——:
materials
Chemicals
9,487,000
INSTITUTE
———--
"183.0
1
lighting materials—
Building
.
other
products
and
50,869,000
7,959.000
22:573,000
omitted):
183.2
Apr. 17
and
—
INSURANCE—Month
LIFE
OF
Apr. 17
-
Grains
Fuel
J—_
PURCHASES
Ordinary
Total
Farm products
Metals
$157,309,000
41,556,000
,
———„"
—-—————
INSURANCE
Member
commodities
$129,006,000
—
^
Total
LIFE
■
Textile
.j
——
—.—
„_—
values
Policy dividends
'
7
192&=^100:>
All
payments
.
OF LIFE
February:
•
Apr.
WHOLESALE -PRICES NEW SERIES
All commodities
1.483
1.350
167
30,219
.: 840,359
$34,100,807
.
of
—;
endowments
Surrender
24,846
-Apr.
-Apr.
■
"
1.458
TO
PAYMENTS
INSTITUTE
Annuity payments
;
^
,
Round-lot-purchases by dealers—
'
r
"Number of shares—Total sales
Short sales ——1-
Number
—
benefits
Matured
Disability
"
1—.
•
$34,246,152
'
sales
Number of shares—Total sales
r
,
•
orders—Customers'
of
INSURANCE—BENEFIT
LIFE
STOCK
:
shares.
"1.627
OF ODD-
Y.
COMMISSION:
(customers' purchases)—
Number of orders
Number of
THE
•
1.457
goods
INSURANCE—Month
Odd-lot sales by dealers
•
ON
EXCHANGE
1.644
goods
Nondurable
Chronicle
The Commercial and Financial
38
.
.
.
Thursday, April 28, 1951
(1782)
<
Registration
Securities Now in
Hollywood, Calif.
stock. Price—At
Corp.,
80,000 shares of common
filed
1
Mines
Gold
Alhambra
Nov.
($1 per share). Underwriter—None. Proceeds-rFor
further development of mine and for working capital.
par
American
Feb.
Dairy Products Corp., N. Y. (5/1)
shares of preferred stock (par $4)
16 filed 300,000
stock (par 10 cents) to be
offered in units of one share of preferred and 1.3 shares
of common stock.
Price—$5 per unit. Underwriters—
Emanuel, Deetjen & Co. and Barrett Herrick & Co., Inc.,
and 390,000 shares of common
Proceeds—To acquire plant, to pay
both of New York.
and for
indebtedness
American
working capital.
&
Television
(5/1)
Radio Co.
(letter of notification) 200,000 shares of com¬
March 30
share. Un¬
Proceeds—
Office—300 E. Fourth Street, St.
stock (oar 50 cents). Price—$1.50 per
derwriter—George F. Breen of New York.
mon
working capital.
Fox
Paul 1,
•
Co.
Edison
April 24 filed 40,000 shares of common stock (par $5).
Price—To be supplied by amendment.
Underwriters—
William H. Staats Co., Los Angeles, Calif.; A. C. Allyn
& Co., Inc., Chicago, 111.; and Refsnes, Ely, Beck & Co.,
Phoenix, Ariz. Proceeds—To repay bank loans and for
construction;
new
oversubscription privileges; rights to expire on May
stock (par $1),
offered for subscrip¬
tion by common stockholders of record (for a 21-day
standby) at rate of one share for each two shares held
(with a right of oversubscription). The remaining 50,000
shares are to be sold to certain employees. Price—To be
supplied by amendment. Underwriters—Lee Higginson
Corp, and P. W. Brooks & Co., Inc., New York. Proceeds
•
Arwood
notification)
Underwriter—None. Proceeds—
Office—70 Washington Street,
share).
capital.
1, N. Y.
($25 per
working
For
Brooklyn
4,000 shares of 5^%
stock. Price—At
non-convertible preferred
cumulative
par
Casting Corp.
Precision
(letter of
18
Electric Co. (5/8)
April 15 filed 117,200 shares of common stock (par $10)
to be offered to common stockholders of record May 8
at rate of one share for each 10 shares held; rights to
Atlantic City
expire May 28. Unsubscribed shares to be offered up to
May 25, 1951, to employees and to stockholders on an
oversubscription privilege. Price — To be supplied by
amendment. Underwriters—Union Securities Corp. and
Proceeds
Smith, Barney & Co., New York.
struction
—For
/
program.
Berkroy
For con¬
/■•*. *
*
*; ~
—
Products;Jfhc., 'ins Angeles/ Calif.**4
April 18 (letter of notification) $62,000 of 5% convertible
income debentures to be offered to stockholders in de¬
nominations of $100
verted
into
Each debenture may be con¬
each.
shares of
50
Price—At
stock.
common
(payable in cash
5% interest.
writer—None.
indebtedness.
—401 Taft
Central
or in one year at
Proceeds—To repay
par
Under¬
Office
Mines
Silver
'of record March 15, 1951, at rate of one share for each
two shares held (with an oversubscription privilege);
expire on or about April 28.
Price—At par
(10 cents per share). Underwriter—None. Proceeds—
rights to
development of ore.
Utah.
Office—218
Lake City 1,
Brown Co.,
Felt Bldg., Salt
Berlin, N. H.
preference stock (no par) and 144,151 shares of $3 cumu¬
lative second preference stock (no par),-together with
voting trust certificates representing the same, offered
in exchange for 144,151 shares of $6 cumulative con¬
vertible preferred stock on basis of one sh^re of each
class of preference stock for each share of $6 preferred
stock; offer extended from March 26 to April 30. Georgeson
& Co. soliciting exchanges.
Statement effective
stock
5
filed
reserved
future
possible
for
•
issuance
&
Chanslor
ferred
unit.
!
.
tal.
Lyon-Palace Corp., San Francisco
•
April 16 (letter of notification) 5,000 shares of cumulative preferred stock (no par) and 500 shares of common
stock (no par). Price—$9.90 per share for preferred and
$1
for common.
Underwriter—None,
Proceeds—For
working capital.
Office—70 Hanson Place, Brooklyn,
New York.
Crossett, Ark.
notification)-8,350 shares of common*
stock (par $5).
Price—$23 per share.
UnderwriterEquitable Securities Corp. of Nashville, Tenn. Proceeds
—For general corporate purposes.
"
Cuban-Venezuelan Oil Voting Trust
,
Underwriter—Kidder,
Peabody
&•
Co.,
New
York.
Proceeds—For additions and improvements to plant and
equipment. Offering date postponed.
stock.
improvements.
Street, Chester, S. C.
ceeds
—
r
tion. expenses
For
plant
Office —109
-
Wylie
of
common
of
one
writer
stock
share
—
of
44th St.,
$5 and to public at about $6.77 per share. Underwriter
may be underwriters.
Proceeds—For invest¬
ments in railroad and kindred securities. Statement ef¬
March 26
balance-of purchase price for
Office—704 American
working capital.
'
Consolidated Engineering
•
Inc. (5/1)
refunding mort¬
Eastern Corp.,
April 5
stock
May 1 at 4 Irving
•
Price—100/115ths of $5
share. Proceeds—For working capital.
exercise of stock option.
(5/14)
'~<o.
April 4 filed $50,000,000 of sinking fund debentures due
1976. Underwriters — To be determined by competitive
Probable bidders Halsey, Stuart & Co.; White,
Webber, Jackson & Curtis (joint¬
ly); Dillon, Read & Co. Inc., Morgan Stanley & Co. and
First Boston Corp. (jointly). Proceeds—To purchase se¬
curities of operating companies, which will use the funds
bidding:
Weld & Co. and Paine,
for their construction program. Bids—To
office of company, 30 Rockefeller Plaza,
N.
,
Pittsburgh
San Francisco
Private Wires to all
offices
Chicago
Cleveland
Y., up to 11:30
a.m.
(EDST)
on
be received at
New York 20,
May 14.
Consolidated Textile Co., Inc., New York
shares of capital stock (par 10 cents),
offered in exchange for 200,000 shares of common stock
of Bates Manufacturing Co.
(Consolidated now owns
Dec. 27 filed 220,000
51,400 shares/or approximately
shares of common stock (no
Bangor, Me.
(letter of notification) 2,500 shares of common
(par
$10).
Price—At market (approximately
$19.75 per share). Underwriter — None.
Central National Corp., New York.
Corp.
Consolidated Natural Gas Co.
.
effective April 6.
April 16 (letter of notification) 1,115 shares of common
stock (par $1) to be purchased by William D. Nesbit
;
building ($20,000) and for
' ;
Power Co.
March 22 filed 126.255
bonds, series G, due May 1, 1981. Underwriter—To
be determined by competitive bidding. Probable bidders:
Halsey; Stuart & Co. Inc.; Morgan Stanley & Co.; The
First Boston Corp. Proceeds—To repay Bank loans and
for additions and "improvements to property.
Bids—
on
Under¬
.V
par)
being offered to common stockholders for subscription
on basis of one share for each 10 shares held as of April
6, 1951, with an oversubscription privilege; rights to
expire on May 1. Price—$75 per share. Underwriter—
None.
Proceeds-^For construction program.
Statement
Duke
gage
(EDT)
rights to
Oct.
—
11 a.m.
on
Duggan's Distillers Products Corp. *
v
t \
27 (letter of notification) 340,000 shares of com¬
mon stock (par 10c).
Price—75 cents per share. Under¬
writer—Olds & Co., Jersey City, N. J.
Proceeds—To pay
Seattle, Wash.
York '
March 9 filed 50,000 shares of cumulative preferred stock,
series of 1951 (no par). Price—To be supplied by amend¬
ment. Underwriter—Eastman, Dillon & Co., New York.
Proceeds
To prepay short-term bank loans and for
working capital.
Offering date postponed.
opened at
of record
only), on
May 5, 1951. Price — $20 per share.
writer—None.
Proceeds for working capital.
expire
Consolidated Cigar Corp., New
be
shares of capital
(par $10), to be offered to stockholders
March 14, 1951 (residents of South Carolina
basis of one share for each five shares held;
(letter of notification) 400,000 shares of com¬
mon stock (par 1 cent).
Price—25 cents per share. Un¬
derwriter—Leverett G. Tallman of Seattle. Proceeds—
Place, New York, N. Y.' Statement effective April 19.
Co., Greer, S. C.
(letter of notification) 6,000
stock
capital. Office—321 East
exploration and equipment.
Building, Seattle, Wash.
11.
Dixie Fire & Casualty
To manufacture projectors
For
$5);
—Dealers
New York.
Colorado Ohio Corp.,
•
V
shares are to be offered to stockholders
127,364 shares to Dublic. Price — To stockholders at
and
notification) ,10,000 shares of 6%
stock (par $10) and 10,000 shares,
(par 10 cents) to be offered in units
each. Price—$10.10 per unit. Under¬
—
4
of which 4,818
of
None. Proceeds
Offering—Date postponed.
Chicago, III. (4/28)
Oct. 23 filed 132,182 shares of common stock (par
Projector Corp.
filmstrips and for working
and
$10,000,000 sinking fund debentures due
capital.
fective April
(letter
...
Culver Corp.,
cumulative preferred
per
Boston
and working capital.
1, 1966. Price — To be supplied by amendment.
Underwriter—Halsey, Stuart & Co. Inc. Proceeds—To
reduce bank loans by $9,000,000, and the balance added
to working
-
June.
16
Un¬
April
Chevron Petroleums,
April
comr
Proceeds—For drilling and explOra-.
Cudahy Packing Co.
Ltd., Toronto, Canada
March 14 filed 900,000 shares of common stock (par $1)
to be offered "as a speculation." Price —50 cents per
share. Underwriter—Willis E. Burnside & Co., Inc., New
York. Proceeds—To take up option and develop oroperties.
Offering—Not expected before the middle of
*
upon
Philadelphia
share of one and two cent par
24 companies.
Price^$2 per unit.
one
in
March 23 filed
To
Calby Chemical Corp., Baker, Ore.
(letter of notification) 300,000 shares of com¬
mon stock.
Price —$1 per share. Underwriter — None.
Proceeds—To construct and operate a liquid and dry ice
plant. Address—Box 12, Baker, Ore.
March 19
stock
derwriter—None.
Consolidated Edison Co. of New York,
(par $100). Price—To be supplied by amendment.
New York
representing
mon
Co., Chester, S. C.
(letter of notification) 360 shares of common
Price—$100 per share. Underwriter—None. Pro-
units of voting trust certificate%
March 29 filed 1,5.00-,000
15
March 30 filed $40,000,000 of first and
300,000 shares of convertible preference
Lumber Co.,
..
Chester Telephone
March
Price—$1,500 per;
working capi¬
111.
v
shareholder-dealers.
to
shares
April 13 (letter of
Inc., Brooklyn, N. Y.
Laboratories,
Chester
1,250 shares of common
of preferred stock (par
in units of 10 common and five pre¬
Underwriter—None. Proceeds—For
Office—365 East Illinois St., Chicago,
Crossett
11,111 shares of capital
stock (par $5). Price—At market (estimated at $9 per
share),
Underwriter—Hooker & Fay, San Francisco,
Calif.
Proceeds—To six selling stockholders.
Office—
730 Polk Street, San Francisco, Calif.
'•
(letter of notification)
6
Feb.
III.
Co., Chicago,
&
$100) to be issued
of Gulf common
quire not less than 429,600 shares (80%)
Statement effective March 12.
stock.
Cotter
April 16 (letter of notification)
stock (par $100) and 625 shares
by the company to holders of common stock
outstanding. Underwriter—None. Purpose—To ac¬
then
Tex.
due 1965. Price,
—At face value. Underwriter—None. Proceeds—To pur¬
chase debentures of Statler Dallas Co., Inc., which com¬
pany will construct Dallas hotel. Business—A non-profit
corporation under sponsorship of Dallas Chamber of
Commerce to secure construction of hotel.
sale
and
,
Burlington Mills Corp.
March
Cosmopolitan Hotel Co. of Dallas,
$1,500,000 of 2% debentures
Dec. 13 filed
250,297 shares of common
are
Consoli¬
Inc.
stock (par $10)
and 21,480 shares of 4.5% preferred stock (par $100), of
which the preferred stock and 214,800 shares are being
offered in exchange for shares of common stock of Gulf
Public Service Co., Inc., on basis of 4/10ths of a share
of common and l/25th of a share of preferred for each
Gulf common share held as of record March 13.
This
offer will expire on May 1. The remaining 35,497 com¬
shares
standing Bates shares) on basis of 11 shares of
dated for 10 shares of Bates stock.
Exchange
April 17
;
Jan. 25 filed 144,151 shares of $5 cumulative convertible
Feb. 21.
Offering—Expected
week.
Classroom Filmstrip &
Co., Salt Lake City, Utah
March 2 (letter of notification) 1,633,124 shares of com¬
mon stock being offered for subscription by stockholders
For
corporate purposes.
Louisiana Electric Co.,
filed
25
Bldg., Los Angeles 28, Calif.
Bristol
general
to be made next
'
•
384,604 shares are to be
of which
ISSUE
offer to
Statement effective March 2.
t
Continental Car-Nar-Var Corp., Brazil, Ind.
March 5 (letter of notification) 150,000 shares of com¬
mon (voting) stock (par $1). Price—$2 per share. Under¬
writers—Sills, Fairman & Harris, Inc., Chicago, and
Gearhart, Kinnard & Otis, Inc., New York. Proceeds—
For working capital and general corporate purposes.
Continental Electric Co., Geneva, III.
March 2 (letter of notification) $300,000 of 6% sinking;
fund debentures due Dec. 1, 1975 (to be issued in units
of $100, $500 and $1,000 each). Price—91% of principal
amount.
Underwriter—Boettcher & Co., Chicago, 111.
Proceeds—To retire indebtedness and for working capK
tal. Office—715 Hamilton St., Geneva, 111.
Biscuit Co.
Carr-Consolidated
ADDITIONS
PREVIOUS
expire April 30.
March 30 filed 434,604 shares of common
18.
Price—$10 per share. Underwriter—None. Proceeds—
For working capital. Statement effective April 18.
B. C.,
April 20 filed 200,000 shares of capital stock. Price—At
par ($1 per share).
Underwriter—Harry M. Forst. Pro¬
ceeds—For exploration and development work.
mon
Carpet Co., Inc.
March 27 filed 78,556 shares of common stock (no par),
to be offered to common stockholders of record April
25 on basis of one share for each four shares held, with
SINCE
Canada
-
Artloom
April
Copper Co., Ltd., Vancouver,
Canam
Jan.
Minn.
Arizona
•
INDICATES
13% of the 391,500 out-
.
Fairchild
Camera
&
Proceeds — To
Instrument Corp.
(5/3)
April 13 filed 69,406 shares of common stock (par $1)
to be offered to common stockholders at rate of one
share tor each five shares held.
Price—To be supplied
by amendment. Underwriter—Glore, Forgan
York/Proceeds—For expansion program.
Foote Mineral Co.
& Co., New
•'
(4/30)
March 30 filed 23,206 shares
of common stock (par
$2.50)
expected to be offered to stockholders of record April
27, 1951, for subscription at rate of one share for each 10
shares held; rights expire about May 10.
Price—To be
supplied by amendment.- Underwriter—Estabrook
New York.
Proceeds—For expansion program.
& Co.,
Fosgate Citrus Concentrate Cooperative, Forest
City, Fla.
March 2 filed 476 shares of class A membership stock
(par $100); 801 shares of class B preferred stock (par
$100); 8,000 shares of class C stock (par $100); 2,000
shares of class C stock (par $50); and 4.000 shares of
stock (par $25). Price—At par. Underwriter—
Proceeds—To construct and equip plant. Business
class C
None.
—To process
form.
citrus fruit juices to a frozen
,
,
concentrate
Volume 173
Number 5006
.
.
The Commercial and Financial Chronicle
.
(1783)
39
$
•
Gamble-Skogmo, Inc.
April 24 filed 304,270 shares of common stock (par $5),
Price—To be supplied by amendment.
Underwriters—
Goldman, Sachs & Co.; Merrill Lynch, Pierce, Fenner &
Beane, and Piper, Jaffray & Hopwood.. Proceeds—To a
selling stockholder.
•
1
Telephone Corp.
April 19 filed 150,000 shares of
April 28, 1951
Culver Corp
common
:
Common
Kerr-McGee Oil Industries, Inc.
April 30, 1951
Foote Mineral Co
market
March 22 (letter of notification) 10,000 shares of common
stock (par $1) to be sold to Lehman Brothers, New York,
for investment. Price—$19 per share. Proceeds—To T. M.
.Common
price either for the month in which payments
completed or for the next succeeding month, which¬
ever is lower, but in no event more than $35 nor less
than $25 per share.. Proceeds—To make additional in¬
vestments in common stock equities of subsidiaries and
American Television & Radio Co..........Common
temporary
Consolidated Edison Co: of New York
are
the
to
May 1, 1951
in connection
and for general corpo¬
11
rate purposes.
28
Israel
159,142 shares of class B common stock
Price—To be filed by amendment. Under¬
writer—Glore, Forgan & Co., New York. Proceeds—
•For working capital and general corporate purposes.
Ontario
•
Bonds
Telegift, Inc.
Kiawanda
Under¬
writers—Union Securities Corp.; Geyer & Co., and Shel¬
by Cullom Davis & Co. Proceeds—Together with other
funds, to retire presently outstanding preferred stocks.
Utilities
Ohio Edison Co.,
11:30
Co
•
Bonds
(EDT).
a.m.
Pfd. & Com.
May 3, 1951
.
Fairchild Camera & Instrument Corp
Globe & Rutgers Fire Insurance Co. (5/1)
March 30 filed 10,000 shares of convertible second pre¬
ferred stock (par $15) to be offered to common stock¬
24
Leadville
Common
basis of
on
one
Atlantic City Electric Co..
Long Island Lighting Co.
May 9, 1951
privileges.
Tri-Continental Corp., owner of 53.4% of
stock, has agreed to subscribe to its pro rata
share and to purchase any shares not subscribed for by
other
stockholders.
ment.
other
Price—To
funds,
—
stocks.
None.
be
■
to
shares each.
May 14, 1951
supplied by
Proceeds
Consolidated Natural Gas Co.
—
11:30
a.m.
(EDT).
Debentures
_•
-
■
ii,
■
■
May 17, 1951
Golconda Mines Ltd., Montreal, Canada
April 9 filed 750,000 shares of common stock.
Price—
At par ($1 per share).
Underwriter—George F. Breen,
New York.
Proceeds—For drilling expenses, repayment
of advances and working capital. Offering—Date not set.
Thorer &
Hollender, Inc., 11
June 5,
16.
on
Lorain Telephone
Co., Lorain, Ohio
(letter of notification) 6,705 shares of common
stock (no par), to be offered to common stockholders
at the rate of one share for each 10 shares held March 1Q;
1951
Georgia Power Co
Bonds
rights to expire
July 17,
April 10 (letter of notification) 60,000 shares of common
stock (no par) being offered to common stockholders of
record April
(EDT)-.Common
up
Price—To be decided later.
March 13
Greenwich Gas Co.
.
a.m.
(5/2)
of new common stock of
be offered common stock¬
the ratio of one share for
oversubscription privilege;
Unsubscribed shares first
to a maximum of 200
Underwriter—
None.
Blyth & Co., Inc., has been engaged as DealerManager
to
obtain
subscriptions.
Proceeds — For
additions and improvement to property. Offering—Ex*pected early part of May for a two-week subscription
period.
*
*■ ' '
rights to expire on May 18.
be offered to employees
Denver & Rio Grande Western RR.._Eqp. Tr. Ctfs.
amend¬
Together with
to retire presently outstanding preferred
Underwriter
Common
preferred share
common
Lead Corp.
April 6 filed 574,949 shares
which 524,949 shares are to
holders of record May 2 in
each six shares held, with an
May 8, 1951
shares held, with oversubscription
common
—
Office—139 No. Virginia St., Reno, Nev.
April 20 (letter of notification) 88,236 shares of com¬
mon stock.
Price—At par ($1 per share). Underwriter-*
None.
Proceeds—For drilling and corporate expenses.
Office—500 E. & C. Building,. Leadville, Colo.
-
each
Products, Inc., Reno, Nev.
working capital.
1951
Common
Montana-Dakota
Proceeds—For
April 17 (letter of notification with the SEC covering
200,000 shares of common stock. Price — $1 per share.
Underwriter
None.
Proceeds
For construction and
Common
Long Island Lighting Co
Globe & Rutgers Fire Insurance Co. (5/1)
30 filed 30,000 shares of prior preferred stock
for
Underwriter—None.
—
March
holders for'subscription
market.
investment.
Debentures
May 2,
Price—To be supplied by amendment.
Keystone Custodian Funds, Inc., Boston, Mass.
Price—At
Bonds
(Province of)
Offering—Deferred indefinitely.
.
Kerr, two selling stockholders.
Preferred
(State of)
filed
Xpar $1).
(par $15)
H.
April 23 filed 750,000 shares of series B-2 capital stock.
(EDT)
a.m.
•
Inc.
Globe & Rutgers Fire Insurance Co...
Gleomore Distilleries Co.
Dec.
and Geraldine
American Dairy Products
Corp.__Preferred & Com.
subsidiaries
with their construction programs
^
stock (par $20)
to be offered for sale to employees of the company and
its subsidiaries. Price—Fixed at $3 below the average
advances
York
April 9 (letter of notification) $250,000 of 15-year in¬
come notes, due May 1, 1966, and 30,000 shares of com¬
mon stock (par 10) to be offered in units of a $100 note
and 12 shares of stock. Price—$119.92 per unit. Under¬
writer—None. Proceeds—To repay loans, for equipment
and working capital.
MEW ISSUE CALENDAR
General
-
Kee Zipper Corp., New
V
■
1951
writer—None.
Mississippi Power Co
basis of 2.045 shares for each share
Preferred
"""J*
\
.
J,
'*»*>«
•
-p>.
on
.>>*. »i*i «*•>»■*
July 1. Price—$20 per share. Under¬
capital. Office—
Proceeds—For working
203 West Ninth
St., Lorain, Ohio.
r
Loyalta Oils, Ltd., Edmoaton^Csuiada
1*
April 16 filed 750,000 shares of.capital'stock (par $1).
Price—$50 per share. Underwriter—James T. Chiles of
Denver, Colo., who will conduct offering to public by
means of a mail campaign directed from Edmonton, Can¬
ada. Proceeds—To carry on drilling program.
t
held; rights to expire
L.
on
September
,4
April 26.
Price—$5 per -share.
Co„, Boston, Mass. Pro¬
ceeds—To-retire bank loans and for capital additions.
Underwriter—F.
Putnam &
Alabama
Power
11,
1951
Co..
Bonds
'
Hamilton
Fire
Insurance Co., Philadelphia
notification) 64,000 shares of capital
stock (par $5).
Price—$4.50 per share. Underwriter—
Jenks, Kirkland & Grubbs, Philadelphia, P$. Proceeds—
To increase capital and surplus in order Jco offer addi¬
tional lines of insurance, including automobile casualty
and liability coverage.
Financing indefinitely delayed.
Oct.
2
(letter
of
I
1 Hawkeye-Security Insurance Co.
April 18 (letter of notification) /110 shares of preferred
stock (par $50) or 55 shares of preferred stock (par $100)
and 575 shares of
common
;
;
(par $10) to be offered
Retirement Plan. Price—At
Profit-Sharing and
Office—1017 Walnut St., Des Moines, la.
Hilton Hotels Corp.,
Chicago,
March 30 filed 153,252 shares of
now
offered to holders of
dorf-Astoria
Corp.
III.
common
common
stock
stock
(par $5)
of Hotel
Wal¬
in
New York.
.•... Howe, (Charles) Corp., Newburyport, Mass.
April 16 (letter of notification) 4,366 shares of common
.stock (par $1) and 4,266 shares of 5% cumulative par¬
ticipating preferred stock (par $10).
Price—At par.
Underwriter—None. Proceeds—For working capital and
equipment. Address—P. O. Box 511, Newburyport, Mass.
Idaho Maryland Mines Corp.
27 (letter of notification) 6,500
shares of com¬
Price—At market (estimated at $2
per share). Underwriter—E. F. Hutton & Co., San Fran¬
cisco,. Calif. Proceeds—To Siegfried Bechhold, the sell¬
stock
(par.$l).
ing stockholder.
Inter-County Telephone & Telegraph Co.
12 (letter of notification) .3,000 shares of 5% cu¬
mulative preferred stock, series B.
Price—At par ($25
per share).
Underwriter—Florida Securities Corp., St.
Petersburg, Fla., and H. W. Freeman & Co., Ft. Myers,
.
March
Fla.—Proceeds—For general corporate purposes.
Inter-Lock-In Furniture Corp., N. Y.
April 21 (letter of notification) 10,000 shares of pre¬
ferred stock, of which 9,650 shares are to be
publicly
,offered, 200 shares issued in exchange for 20 common
shares and 150 shares in exchange for I6V2 shares. Price
—At par ($10 per share). Underwriter—Mrs. Mary Nell
Druke (Secretary and Treasurer). Philip C. Curtis, Giles
,•;?
H.
Florence
Erwin
and
Redmond
J.
Toohey,
all
in
care
of
Druke, 2505 No. Central Avenue, Phoenix, Ariz.
working capital and machinery. Office
Proceeds—For
—128
East 56th
Street, New York, N. Y.
International Life Insurance Co., Austin, Tex.
March 30 filed $1,200,000 special stock debentures to be
sold in units of $500 each by regular licensed insurance
agents of the company. Price—At par. Proceeds—To in¬
crease capital and surplus.
Israel
National
Construction Corp.
Ludman Corp., Opa-Locka,
Broadway, Los Angeles 14, Calif.
19
(State of)
(5/1)
filed
$500,000,000 of "Independence Issue"
bonds, in two types, viz: 15-year 3%% dollar coupon
bonds due May 1, 1966; and 12-year dollar savings bonds
to be dated the first day of the month in which issued
and to have a maturity value of 150% of par. Price—At
100% of principal amount. Underwriter—American Fi¬
nancial & Development Corp. for Israel. Proceeds—For
economic development of the State of Israel.
OfficeAuthorized agent is located at 11 East 70th St., New
York, N. Y.
Statement effective March 28.
Israel Steel Corp.
Jan. 2
stock.
(letter of notification)
Price—At
par
($10
15,000 shares of common
per
Underwriter—
share).
None.
Proceeds—For corporate purposes and the pur¬
chase of merchandise (steel) for resale. Office—Care of
Efrein
March
mon
American
Office—756 So.
March
exchange for their holdings of
such stock on a. share-for-share basis; offer expires on
May 28. Dealer-Manager—Carl M. Loeb, Rhoades & Co;,
>
Israel
stock
under
par.
•
April 20 (letter of notification) 2,281 shares of preferred
stock (par $25) and 570 shares of common stock (par
$1). .Price—At par.
Underwriter—None.
Proceeds—
None, since stock offering is for promotional plan under
which three promoters will receive one share of com¬
mon for every share sold but not to exceed
2,500 shares.
&
Metrick,
320
Broadway,
New
York,
N.
Y.
Metal Products
Mfg. Co. Inc.
(letter of notification) 25,000 shares of class A
voting common stock (par $1). Price—$5 per share.
Underwriter—James T. DeWitt & Co., Washington, D. C.
Feb. 12
organizational expenses and working cap¬
Office—Wolfe and Jackson Sts., Fredericksburg, Va.
Proceeds—For
ital.
9
Mid-Continent Airlines,
Kalman & Co., Inc., Minneapolis, Minn.
purchase of six Convair aircraft and for
new hangar.
notification) 193,000 shares of common
Price—$1.50 per share. Underwriter—
stock (par $1).
D. Gleich Co., New York. Proceeds—For production of
motion pictures for theatrical and television purposes
working capital.
Minneapolis Gas Co.
Stuart & Co. Inc.,
which was returned unopened. Offer¬
indefinitely.
Statement effective
14.
.
4
Jersey Central Power & Light Co.
Feb. 21 filed 40,000 shares of cumulative preferred stock
(par $100). Proceeds—From sale of preferred, together
with proceeds to be received from the sale of 350,000
additional
common
shares
to
General
Public
Utilities
Corp., the parent, will be used for new construction.
Bids—Only one bid, from Union Securities Corp. and
Salomon Bros. & Hutzler
of record
April 19 in ratio of one new share for each ten shares
held; with rights to expire on May 2. Price—$15.50 per
share. Underwriter—Kalman & Co., Inc., St. Paul, Minn.
Proceeds—For cost of additions to property. Statement
Montana-Dakota Utilities Co.
Feb. 21 filed $1,500,000 first mortgage bonds due in 1981.
Proceeds—For expansion program. Bids—Only one bid
was received
by company on March 27, from Halsey,
ing—Postponed
of common stock (par $1)
effective April 20.
•
Jersey Central Power & Light Co.
March
Proceeds—For
construction of
being offered for subscription by stockholders
Jerry Fairbanks, Inc., Hollywood, Calif.
and for
Kansas City, Mo.
Inc.,
April 24 filed $2,000,000 20-year 4%% convertible deben¬
tures due May 1, 1963. Price—To be supplied by amend¬
ment. Underwriters—Lehman Brothers, New York, and
March 30 filed 118,426 shares
Feb. 16 (letter of
Fla.
April 16 filed 250,000 shares of common stock (par $1),
of which 25,000 shares will be offered to employees. Any
unsubscribed shares, plus the remaining 225,000 shares,
are to be offered to public.
Price—$3.50 per share (with
an underwriting commission of 35 cents)
to employees;
$3.75 per share (with an underwriting commission of
60 cents) to public. Underwriter—Floyd D. Cerf, Jr. Co,,
Chicago, 111. Proceeds—To redeem 1,873 shares of 5%
preferred stock and $75,000 of 3% debentures and for
general corporate purposes.
(jointly), was received March
27, which was returned unopened. Offering—Postponed
indefinitely. Statement effective March 14. Amendment
—Filed April 24 seeks exemption from competitive bid¬
ding. Preferred may be privately placed.
March 30 filed 236,755
shares of common stock
(par $0)
being offered for subscription to common stocKnolders
of record April 19 on basis of one share for each 4%
shares held; rights to expire on May 3. Price—$14.50 per
share.
Underwriters—Blyth
&
Lynch, Pierce, Fenner & Beane,
To reduce bank loans and for
Statement effective April 19.
Co., Inc., and Merrill
New York. Proceeds—
construction program.
Montana-Dakota Utilities Co.
'
•
.
(5/2)-
,
April 12 filed $3,000,000 of first mortgage bonds due
April 1,1976, and $2,000,000 of first mortgage serial bonds
to mature $100,000 each April 1 from 1952 to 1971, inclu¬
sive.
Underwriter — To be determined by competitive
bidding. Probable bidders: Halsey, Stuart & Co. Inc-»
Blyth & Co., Inc., and Merrill Lynch, Pierce, Fenner &
Beane
(jointly); Kidder, Peabody & Co. Proceeds—To
construction program.
■
reduce bank loans and for
Continued
on
page
40
40
from
page
39
Casper, Wyo.
notification) 100,000 shares of common
•tock (par 10 cents). Price—60 cents per share. Under¬
writer—Lasser Bros., New York. Proceeds—To Gordon
R. Kay, the selling stockholder. Offering withdrawn.
Morton Oil Co.,
Feb. 21 (letter of
Vance Bldg.,
April 30.
Price
At par ($100 per share). Underwriter — None.
Proceeds—To repay advances to American Telephone &
Telegraph Co., the parent, which owns 900,801 shares,
or 83.52% of outstanding stock, and for general corporate
purposes. Statement effective March 28.
expire
shares held; rights to
for each five
on
—
Minneapolis, Minn.
1,000 shares of common
stock (par $10).
Price—At $18 or $20 per share. Under¬
writer—J. M. Dain & Co., Minneapolis, Minn.
Proceeds
—To Willis King Nash, the selling stockholder.
Finch
Nash
Co.,
April 13 (letter of notification)
National Gypsum Co.,
Buffalo, N. Y.
March 14 filed 68,652 shares of common stock (par $1)
being offered in exchange for 22,884 shares of National
Mortar & Supply Co. stock in ratio of three shares of
National for
Underwriters—None.
share of Mortar.
one
Statement effective April 3.
Plumbing Pipe Corp., Columbus, Ohio
National
(letter of notification) $250,000 of 15-year 5%
income debentures due April 1, 1966. Price—At par (in
denominations of $500 each). Underwriter—None. Pro¬
April 4
ceeds—To
•
purchase
30
St., Columbus, O.
American
Par
($1 per share).
Las Vegas, Nev.
Milling Co.,
Underwriter—None.
Proceeds—To
purchase machinery and equipment, to construct a mill
in Mexico and for general corporate purposes.
Panhandle
Massachusetts
notification) $93,000 of 4% debenture
July 1, 1951 (in denominations of $25 and
multiples thereof) and 3,200 shares of class A preferred
stock (par $25) of which $38,000 of debentures are to be
offered in exchange for bonds and notes of Eastern Co¬
bonds
dated
operatives, Inc. of equal face value, and $55,000 of de¬
the class A stock
bentures and
to be offered in ex¬
are
change for preferred stock of Eastern. Address—Dorothy
Kenyon, 50 Broadway, New York, N. Y.
•
Norris Oil Co.,
Bakersfield, Calif.- * - .-.i
:.
notification) 500 shares of capital
stock (par $1).
Price—$4.50 per share. Underwriter—
None.»Proceeds—To Arthur W. Scott, the telling stock¬
holder.
Office—Haberfelde Building
Arcade, Bakersfield, Calif.
Aprii
20
(letter
of
North American
Acceptance Corp.
March 20 (letter of notification) 15,000 shares of 60-cent
cumulative convertible preferred stock (par $5). Price
—$10 per share. Underwriter—Michael Investment Co.,
Inc., Providence, R. I. Proceeds—For working capital.
Offering—Postponed temporarily.
•
(par $1).
April 24 filed 192,500 shares of common stock
Price—At
price "not less than the closing bid on the
first business day (except Friday or Saturday) on which
shares close at $7.75 per share or better." Underwriter—
White, Weld & Co., New York. Proceeds—To Atlas Corp.,
the selling stockholder.
a
Peabody Coal Co.
March 26 filed $6,000,000 sinking fund debentures due
April 1, 1966. Price — To be supplied by amendment.
Underwriter—Halsey, Stuart & Co. Inc., Chicago, 111.
Proceeds—For new construction. Temporarily postponed.
writer—None.
Proceeds—To erect
Office—201 Main
ment.
Ohio Edison Co.
common
Under¬
mill and buy equip¬
a
St., Colfax, Wash.
26
filed
shares of 5V2% prior preferred
160,000
(par $25).
postponed.
•
ner
& Beane and
Bids—To
vices
be
received
at
office
of
Commonwealth
on
May 2.
up
Ser¬
to 11:30
a.m.
stock
(par $1).
Price—To
Price—At the market.
(Province of)
(5/1)
filed $50,000,000 of 20-year
of
Underwriter
Price—To
debentures
due
be
Ontario
to
be
used
in
part for capital
expenditures in connection with the Commission's capi¬
tal
construction
be
supplied
amendment.
by
'
stock (par $1).
Underwriter—
Weeks, New York. Proceeds—To Charles
Hahn, Jr., President, who is the selling stockholder.
Offering—Indefinitely postponed.
Seaboard
Container Corp.
(letter of notification) 12,000 shares of class A
common stock (par $1).
Price—$5.50 per share. Under¬
writer—Barrett Herrick & Co., New York.
Proceeds—
March 1
Frederic
R.
Mann,
President, who is the
stockholder.
selling
/
Seminole Oil
& Gas Corp.,
Dallas, Tex.
April 9 (letter of notification) 2,300 shares of common
stock (par $1) to be issued to Hays, St. John, Abramson
Schulman
of New York in cancellation of
Price
Gould
&
—
Co.,
$1.74
New
per
share.
York,
who
an
indebt¬
Underwriter — J. W.
will reoffer shares to
program
and
to
repay
the
temporary
stock.
Price—At par
($100 per share). Underwriter—
Ball, Burge & Kraus, Cleveland, O.
Proceeds—For
working capital.
Office—5 So. Jefferson St., Dayton 5,
\
*
2 (letter of notification) $300,000 of unsecured
non-cumulative
convertible 10-year debentures.
(in denominations of $100 each).
Price—At par
Under¬
writer—Hugh J. Devlin, New York. Proceeds—To retire
debt and for working capital.
Office — 46 Oliver St.,
Offering—Expected next month.
Newark, N. J.
Superdraulic Corp., Detroit, Mich.
Feb. 23
(letter of notification) 100,000 shares of 6%
non-cumulative convertible preferred stock (convertible
into
stock
common
fered
to
common
par
$1,
share-for share)
now
of¬
Price—At
($1
per
stockholders.
par
Underwriter—None.
Proceeds—For working
Office—14256 Wyoming Ave., Detroit, Mich.
capital.
Telegift, Inc., New York (5/1)
(letter of notification) 60,000 shares of com¬
mon stock
(par $1). Price—$2 per share. Underwriter
—None.
Proceeds—To establish and operate a "GiftsMarch 20
by-Wire" service to be known as the Telegift Service,
for operating capital. Office—40 East 49th Street,
New York 17, N. Y.
and
Transmission Co.
Tennessee Gas
March
100,000
filed
7
shares
of cumulative
stock (par $100).
Price—To be supplied by
Underwriter—Stone & Webster Securities
Weld
bank
&
and
loans
New York.
Co.,
expansion
for
postponed.
Temporarily
(>
Trans-World Oil
•
preferred
amendment.
Corp.
and
Proceeds—To repay
of pipeline.
Offering—
1
*
v
.
}|
i
Co., Seattle, Wash.
April 16 (letter of notification) 29,975 shares of common
stock.
Price—At par ($10 per share).
Underwriter—
Proceeds—For working capital. Office—2235—5th
Ave., Seattle 1, Wash.
■_/.
-
Van Lake Uranium Co.,
;
Van Dyke, Mich.
'
^
Msych 23 filed 500,000 shares of common stock. Price—
At par ($1 per share). Underwriter—None, but company
has negotiated with Titus-Miller & Co., Detroit, Mich.,
which "is seeking other dealers to cooperate with it in
the deal." Proceeds—To develop uranium deposits in the
Montreal River area in Algoma, Ontario, Canada.
Vat-Craft
Corp.
Aprii 13 (letter of notification) 1,000 shares of common
stock
(par $1). Price—$80. per share.- Underwriter—
None. Proceeds—For working capital and for operating/
expenses.
Office—547 West 110th St., New York, N. Y.
Veterans
•
Broadcasting Co., Inc.
April 19 (letter of notification) 26,575 shares of capital
stock. Price—$5 per share. Underwriter—None. Proceeds
—To construct a television station.
Office—17 Clinton
Ave., South, Rochester 4,
Video
N. Y.
Corp. of America
April 20 (letter of notification) 36,000 shares of common
stock (par 10 cents). Price—At market (about 34 cents
Underwriter—None.
share).
per
stockholders.
Proceeds—To selling
Office—229 West 28th St., New York, N. Y.
Iron Works, Wilkes-Barre,
Vulcan
&
Final
Co.,
Ltd., Los Angeles, Calif.
March 22 (letter of notification) 12,561 shares of common
stock (no par).
Price—$7.25 per share. Underwriter—
Pacific
Coast Securities Co., San Francisco, Calif. Pro¬
ceeds— To selling stockholders. Office —4510 Colorado
Pa.
(letter of notification) not to exceed 30,000 shares
common
stock (par 50 cents).
Price —At market
of
(about $3 per share). Underwriter—Straus & Blosser,
Chicago, 111. Proceeds—To John A. Roberts, Chairman
of the Board, who is the selling stockholder.
Warren
Blvd., Los Angeles 53, Calif.
Telephone Co.
(Ohio)
(letter of notification) 3,000 shares of $5 divi¬
preferred stock (no par) to be offered for subscrip¬
tion by present stockholders in ratio of 0.27695 of a
share for each share held. Price—$100 per share. Under¬
writer—None.
Proceeds—To reimburse the company's
March 23
South
April
9
State
filed
Price
stock.
by
—
Uranium
Mines
amendment
At
par
($1
Ltd.
384,000
per
(Canada)
shares
share).
of
capital
UnderwriterProceeds—
commissions, exploration and development
working capital.
expenses,
dend
construction costs.
•
Standard-Thomson
Corp.
(letter of notification) approximately 13,750
shares of common stock (par $1). Price—At the market
(approximately $7 per share). Underwriters—Lee Higginson Corp., Carreau & Co. and Reich & Co., New York
Proceeds—To four selling stockholders. No general pub¬
lic offering planned.
March
12
Stanley Works, New Britain, Conn.
April 20 (letter of notification) 5,450 shares of common
stock (par $25).
Price—At the market (approximately
$55 per share). Underwriter—None. Proceeds—To repay
loans
and
for
working capital,
Office—Lake St., New
Steak'n Shake, Inc., Bloomington, III.
April 4 (letter of notification) 18,180 shares of common
stock (par 50 cents).
—None.
Price—$5.50
per
share. Underwriter
Office
Proceeds—To three selling stockholders.
—1700 West Washington St., Bloomington, 111.
Virginia Coal & Coke Corp.
West
April 16 (letter of notification) 3,700 shares of common
stock (par $5). Price—At the market (not less than $18
Underwriter—Tucker, Anthony & Co., New
is
share).
per
York.
Proceeds—To Charles Dorrance, President, who
the selling
stockholder.
Corp.
$14,238,900 of
Wheeling Steel
April
•
Britain, Conn.
k
Jan. 30
Smart
1951, to $35,221,465.
selling stockholders.
6%
Ohio.
loans of the Commission which, amounted at March 31,
•
Opelika Manufacturing Corp.
April 25 filed 200,000 shares of common stock (par $5).
Price—To be supplied by amendment.
Underwriter—
Glore, Forgan & Co., New York. Proceeds—To certain
April
•
Skyline Broadcasting Corp., Dayton, O.
April 13 (letter of notification) 250 shares of common
com¬
supplied by amendment.
Underwriter—Harriman Ripley & Co., Inc., New York.
Proceeds—To be advanced to The Hydro-Electric Power
Commission
\
Hornblower &
and
of
Ontario
April 20
May 15, 1971.
capital.
St., Los Angeles 14, Calif.
Optionee—Robert Irwin Martin of Toronto.
Statement effective April 18.
—None, but Van Alstyne, Noel & Co., New York, will
act as broker. Proceeds—To two
selling stockholders.
•
working
(La.)
Battler's, Inc., Buffalo, N. Y.
For
mon
For
March 22 filed 200,000 shares of common
•
Olympic Radio & Television, Inc.
April 16 (letter of notification) 8,800 shares
Co.
notification) 5,416 shares of capital
Price—$15.95 per share. Underwriter—
None. Proceeds—To Sunny Hills Ranch, Inc., the selling
stockholder.
Address—Box 31. Fullerton, Calif.
of
April 2 (letter
stock (par $1).
None.
Proceeds—For construction program.
Inc., 20 Pine St., New York 5, N. Y.,
(EDT)
—
Kidder, Peabody & Co. (jointly); Mor¬
Stanley & Co.
gan
Proceeds
None.
Los Angeles, Calif.
Telephone Co.
March 29 (letter of notification) 400 shares of capital
stock (par $50), of which 140 shares are to be issued
to C. C. Tomme in liquidation of a debt and 260 shares
are to be sold to the public.
Price—At par. Underwriter
—None. Proceeds—For working capital.
public.
Bear, Stearns & Co. (jointly); First Boston
Corp.; Lazard Freres & Co.; Union Securities Corp., and
Wertheim & Co. (jointly); Glore, Forgan & Co., and
White, Weld & Co. (jointly); Merrill Lynch, Pierce, Fen-
—
Ringgold
latter issue will be offered for subscription by common
stockholders May 2, 1951, on the basis of one share for
Brothers and
requirements for operating insurance business.
Scottsdale, Ariz.
meet
White,
•
edness.
each ten shares held, with an oversubscription privilege;
rights to expire on May 18. Price—To be named by the
company. Underwriters—To be determined by competi¬
tive bidding. Probable bidders for preferred stock: Mor¬
gan Stanley & Co.; Lehman Brothers and Bear, Stearns
& Co. (jointly); W. C. Langley & Co.; Glore, Forgan &
Co., and White, Weld & Co. (jointly); The First Boston
Corp.
Probable bidders for common stock: Lehman
Price—
,
Office—520 West Seventh
30 filed 150,000 shares of preferred stock (par
$100) and 436,224 shares of common stock (par $8). The
March
'
Prudential Acceptance Corp.,
Underwriter
&
(5/2)
To
share).
Peabody Coal Co.
stock
—To
Northwest Gypsum
Co., Colfax, Wash.
April 16 (letter of notification) 200,000 shares of
stock (par 10 cents). Price—25 cents per share.
.
stock (par 10 cents).
$55 per share for the preferred and 10 cents per share
for the common stock.
Underwriter—None. Proceeds—
Super Electric Products Corp.
April 19 (letter of notification) 8,000 shares of 6% pre¬
ferred stock (par $25) and 2,000 shares of common stock
(par $1) to be offered in units of four shares of preferred
and one share of common stock.
Price—$110 per unit.
March 29 (letter of
shares of class B common
Refining Co.
Producing &
•
England Cooperatives, Inc., Cambridge,
April 19 (letter of notification) 5,000 shares of class A
10% cumulative preferred stock (par $30) and 10,000
"
•
Price—To be supplied by amendment.
Underwriter—A. C. Allyn & Co., Inc., Chicago, 111. Pro¬
ceeds—For construction program. Offering—Tentatively
New
Insurance Co., Scottsdale, Ariz.
Sunny Hills Mutual Water
Cambridge, Mass.
April 16 (letter of notification) 2,000 shares of common
stock
(par $1).
Price—$27 per share. Underwriter—
Paine, Webber, Jackson & Curtis, Boston, Mass. Proceeds
—To William A. Coolidge, the selling stockholder.
National
•
> ■■
Life
Sunland
Office—106 E. 1st Ave.,
200,000 shares of common stock. Price—At
24 filed
March
Research Corp.,
to be
by common stockholders of rec¬
and for construction program.
Pan
April 20 (letter of notification) 10,000 shares of common
stock (par $1).
Price—$4.50 per share. Underwriter—
Wagenseller & Durst, Inc., and Lester & Co., both of Los
Angeles, Calif. Proceeds—To Richard Harris, the selling
•
April 6, 1951, at rate of one share for each share held.
Price—At par ($1 per share). Underwriter—None. Un¬
subscribed shares to be sold at public auction in Hono¬
lulu.
Proceeds—To retire short term promissory notes
Jan,
Thursday, April 26, 1951
stockholder.
ord
Office—305 North
lease plant.
or
Seattle 1, Wash.
Refiners, Ltd., Honolulu, Hawaii
filed 750,000 shares of common stock
offered for subscription
of capital stock being offered
to stockholders of record March 30 in ratio of one share
Corp.
Pacific
March
$ Telegraph Co.
States Telephone
Mountain
March 9 filed 215,709 shares
Oil
&
Gas
Northwest
Pacific
April 12 (letter of notification) 400,000 shares of common
stock.
Price—At par (25 cents per share).
Underwriter
—None.
Proceeds—To drill for oil and gas.
Office—326
.
.
.
Service, Inc., Upland, Calif.
Suburban Gas
•
Continued
Front
Financial Chronicle
The Commercial and
(1784)
May
11
1, 1965
offered
to
14-year debentures due
(convertible for a 10-year period), to be
filed
common
stockholders of record April 26 on
debentures for each 10 shares of common
stock held; rights expire May 10. Price—To be supplied
by amendment. Underwriter—Kuhn, Loeb & Co., New
York. Proceeds—For improvement program.
basis of $100 of
•
Whitehorn
Properties, Inc., Reno, Nev.
April 20 (letter of notification) 3,000 shares of common
stock.
Price—At par ($100 per share). Underwriter—
None. Proceeds—To construct hotel and guest cottages.
Office—139 No. Virginia St.. Reno,
Nev.
[Volume 173
Number 5C06
.
.
The Commercial and Financial Chronicle
.
(1785)
plans to obtain necessary funds through shortborrowings.
company
Prospective Offerings
Alabama Power Co.
Feb.
6, it was stated that
company
and
sale
first
of
Central
(9/11)
contemplates issuance
bonds. Under¬
writers—To be determined by competitive bidding. Prob¬
$10,000,000
mortgage
able bidders: Halsey, Stuart & Co. Inc.; Morgan Stanley
& Co.; Blyth & Co., Inc.; Harriman Ripley & Co., Inc.;
Shields & Co.
&
Hutzler
(jointly);
Drexel & Co.; Union Securities Corp. and Equitable Se¬
curities Corp. (jointly); Kidder, Peabody & Co.; The
and
Salomon
Bros.
Fii;st Boston Corp.; Lehman Brothers. Proceeds—For
pansion
opened
ex¬
Bids—Tentatively expected to
Sept. 11. Registration—About Aug. 10.
be
program.
on
Algonquin Gas Transmission Co.
system
in New
England
to
certain markets in
supply
Massachusetts, Rhode Island, Connecticut and New Jer¬
which, it is estimated, will cost $30,477,800.
It is
planned to finance the project through sale of 20-year
sey,
bonds (with interest to be about 3V2%, equal to 75% of
its capital and sale of common stock in an amount equal
to
25%
be
to
stockholders.
first to
offered
Traditional
underwriter: Dillon, Read & Co. Inc., New York.
American
Natural
Gas Co.
March 30, William G. Woolfolk, Chairman, said it is ex¬
pected
additional offering of
during the year to
provide subsidiaries with necessary equity funds for
their expansion programs. No underwriting likely to be
will
company
shares
common
to
make
an
stockholders
its
involved.
Appalachian Electric Power Co.
Feb. 5 it
about
was
stated the company
$18,000,000
of
first
plans to issue and sell
bonds in May or
mortgage
June.
Underwriters—To be determined by competitive
bidding. Probable bidders: Halsey, Stuart & Co. Inc.;
Kuhn, Loeb & Co. and Unicn Securities Corp. (jointly);
The First Boston Corp.; Harriman Ripley & Co., Inc.
Proceeds—For property expansion and improvements,
l>n >vhich company may expend up to $90,000,000 during
the next three years.
Arkansas
Feb.
it
1
&
South
construction program.
Stockholders will on
vote to increase authorized common stock from
May
15
8,000,000
on
Securities Corp.
Feb. 6 it
000
"
Power
••
•
&
Light Co.
reported that the company will sell $8,000,first mortgage bonds, probably in late
early fall. Underwriters—To be determined
was
or
by competitive bidding. Probable bidders: Halsey, Stuart
& Co. Inc.; Lehman Brothers and Stone & Webster
Securities Corp. (jointly); Equitable Securities Corp. and
Central Republic Co. (jointly); Union Securities Corp.;
The First Boston Corp.; White, Weld & Co. Proceeds—
For construction program, estimated to cost about $20,000,000 in 1951.
-■-r
Boston
Jan.
Edison
Co.
*
J. V.
30,
Toner, President, announced that com¬
pany plans to issue $32,000,000 of securities to aid in
financing its construction program, which, it estimated,
will cost $65,300,000 through 1954.
He added that no
common stock financing is planned until 1955.
•
mortgage
mid-1951.
Probable bidders for bonds: Halsey,
Inc.; Smith, Barney & Co. and Carl M. Loeb,
Rhoades & Co. (jointly); Shields & Co.; Merrill Lynch,
Pierce, Fenner & Beane and Kidder, Peabody & Co.
(jointly); White, Weld & Co.;'Blyth & Co., Inc. and The
First Boston Corp. (jointly). The previous stock offer¬
ing was underwritten by Blyth & Co., Inc. and The First
Boston Corp. Proceeds would be used to retire $11,000,000 outstanding bank' loans.
about
Stuart & Co.
California
March
the
21
Water
Service
stockholders
Co.
approved
authorized
preferred stock to
471,743 shares and the authorized
proposals to increase
971,743 shares from
common
stock
from
500,000 shares to 1,000,000 shares. Probable underwriterDean Witter & Co., San Francisco, Calif.
Calvan Consolidated Oil
&
Gas
Co., Ltd.
(Canada)
April
3 it was stated registration may be made of
1,000,000 shares of capital stock. Price—About $5 per
share.
Underwriters—Hemphill, Noyes, Graham, Par¬
sons
& Co., New York, and Gardiner, Watson & Co.,
Toronto, Canada.
Stanley & Co.; Kuhn, Loeb &
(jointly); Blyth & Co.,
Inc., and The First Boston Corp. (jointly); Union Se¬
curities Corp.; Glore, Forgan & Co. and White, Weld &
Co. (jointly); Lehman Brothers; Harriman Ripley &
Co.,
Inc.; Merrill Lynch, Pierce, Fenner & Beane.
Proceeds
Inc.; Kidder, Peabody
Co., and Merrill Lynch, Pierce, Fenner & Beane
(jointly); Smith, Barney & Co.; The First Boston Corp.;
W. C. Langley & Co. and
Glore, Forgan & Co. (jointly).
will be used
•
for construction
bonds,
probably
privately,
be
Dec.
it
7
Commonwealth
Jan.
10
it
was
Edison
announced
additional
Neither the
financing
has
bonds
or
debentures:
& Co.
Proceeds
been
Co.
the
company
nor
determined.
through
the
contemplates
the sale of
time
Probable
of the
bidders
new
for
Halsey, Stuart & Co. Inc.; The
First Boston Corp.; Glore, Forgan & Co.; Morgan Stanley
are
Consolidated
of
New
York,
Inc.
March 23 company applied to New York P. S. Commis¬
sion for authority to issue and sell $25,000,000 of first
and refunding mortgage bonds, series H, due May 1,
1981 (in addition to $40,000,000 series G bonds filed with
the SEC on March 30). Underwriters—To be determined
by competitive bidding. Probable bidders:' Halsey, Stu¬
art & Co. Inc.; Morgan Stanley & Co.; The First Boston
Corp.; Merrill Lynch, Pierce, Fenner & Beane and White,
Weld
&
Co. (jointly).
Proceeds — To redeem a like
amount of Westchester Lighting Co. 3J/2% general mort¬
gage bonds due 1967. Offering—Postponed.
Denver
&
Rio
Grande
Western
be
bidders:
determined
Halsey,
by competitive bidding.
Stuart & Co. Inc.; Morgan
both due Jan. 1, 1993.
SEC for authority to build
a
natural gas pipeline system
$3,595,295, to be
[financed by the sale of first mortgage bonds and the
'issuance of junior securities.
Central
April 3
Underwriters may include
Co., Charlotte, N. C.
Maine
Power Co.
estimated
outside cash require¬
ments for 1951 for construction and other purposes will
company
that
be about $10,000,000.- No definite plans for permanent
financing have yet been formulated, and -in the interim
&
•
Tentatively expected to be opened
Glass
April
Denver & Rio Grande Western RR.
(5/9)
that the company plans to
issue and sell $2,670,000 of equipment trust certificates
to be dated June 1, 1951, and to mature in 30 equal semi¬
annual instalments of $89,000 each.
Probable bidders:
Halsey, Stuart & Co. Inc.; Salomon Bros. & Hutzler; Har¬
riman Ripley & Co. Inc. and Lehman Brothers (jointly);
Harris, Hall & Co. (Inc.). Bids—To be received on May 9.
was
announced
it
on
June 5.
*
,
t
reported that company may do some
financing later, this year. Traditional un-
was
stock
derwriter—McCormick & Co., Chicago, 111.
Green
Mountain
Power
Corp., Montpelier, Vt.
Feb. 23 amendment to plan for reorganization was filed.
This plan, among other things, provides for sale of
104,094 shares of new common stock (par $10) through
underwriters, subject to the right of present preferred
•
new
shares.
Gulf Oil
Corp.
April 24 directors stated that plans for expansion to
meet military and civilian needs will be of major pro¬
portions during 1951 and will cost in the neighborhood
of $200,000,000.
Gulf Power
Feb.
6, it
Co.,
reported that this company may sell se¬
curities "for new money" this year. In event of preferred
stock issue, probable bidders may be Kidder, Peabody &
was
Co. and
White, Weld & Co. (jointly); Equitable Securi¬
Corp.; Union Securities Corp. and Salomon Bros. &
(jointly); Harriman Ripley & Co., Inc. But
definite plans have not as yet been formulated.
;
ties
Hutzler
.
Harrisburg Gas Co.
April 9 company filed an application with SEC for
authority to issue and sell $1,000,000 of 3.15% first
mortgage bonds due 1976. This issue may be placed
privately.
r.:
Power
Co.
Feb. 6, it was reported that this company
will raise $18,500,000 through sale of securities this year. It is believed
that this financing will be through sale of mortgage
bonds and preferred stock. Bond financing may be pri¬
vate, while preferred stock may be underwritten by
Wegener & Daly Corp., Boise, Idaho. Proceeds would go
toward expansion program, which, it is estimated, will
cost nearly $23,000,000 for 1951.
Co.
April 23 it
16
common
*
1
Fibres, Inc.
Idaho
12, Wilson McCarthy, President, stated that due
to prevailing market conditions, the company has post¬
poned to an undetermined date the taking of bids for
the purchase of $40,000,000 first mortgage bonds to be
dated May 1, 1951, and to mature on May 1, 1981. Un¬
derwriters—To
(jointly); The First Boston Corp.; Kuhn, Loeb & Co.;
Securities Corp. and Equitable Securities
Corp.
(jointly). Proceeds—For construction program. Bids-—
Union
RR.
April
Probable
&
Co.
to be used for construction program.
Edison Co.
mated cost of the proposed facilities is
Corp., Charlotte, N. C.
Co.;
Co.; Lehman Brothers; Harriman Ripley &
Inc.; Shields & Co. and Salomon Bros. & Hutzler.
(jointly); Blyth & Co., Inc. and Kidder, Peabody & Co.
Drexel
stockholders to subscribe for the
financing
nature
construction.
of first mortgage
bonds.
Underwriters —
To be determined by
competitiveJaidding; Probable bid¬
ders: Halsey, Stuart & Co. Inc. i Morgan
Stanley &
may
Proceeds will be used for expansion program.
new
$20,000,000
placed
issue and
sell $35,000,000 of new securities in the Spring or early
summer. Probable bidders for debentures:
Halsey, Stuart
& Co. Inc.; Morgan, Stanley & Co.;
Kuhn, Loeb & Co.;
Salomon Bros. & Hutzler; Lehman Brothers; Merrill
Lynrii, Pierce, Fenner & Beane and White, Weld & Co.
(joi/itly). Probable bidders for common stock, in event
of competitive bidding: Morgan Stanley & Co.;
Goldman,
Sachs & Co. and Union Securities Corp. (jointly); Mer¬
rill Lynch, Pierce, Fenner & Beane; Lehman Brothers;
Shields & Co. and R. W. Pressprich & Co. (jointly).
be
Georgia Power Co. (6/5)
April 12 company sought SEC authority to issue and sell
'•
was
was reported company plans to sell
$5,500,000
bonds late in June or early in
July: Underwriters
new
ceeds—For
Columbia Gas
System, Inc.
reported that corporation
Service Co.
determined by competitive
bidding. Probable
Halsey, Stuart & Co. Inc.; Blyth & Co., Inc. and
Kidder, Peabody & Co. (jointly); Lehman Brothers; The
First Boston Corp.; Merrill
Lynch, Pierce, Fenner &
Beane and White, Weld & Co.
(jointly); Union Securities
Corp. and Harriman Ripley & Co., Inc. (jointly); Pro¬
Co.
Will
program.
Offering—Expected
program.
bidders:
reported that the company may do some
debt financing to raise additional, necessary funds for its
construction
Gas
—To
was
to serve certain areas in North and South Carolina. Esti¬
Gas
fourth amended application was filed with the
R. S. Dickson &
of
Inc.; Blyth & Co., Inc.; White, Weld & Co.; The First
Corp.; Glore, Forgan & Co. and W. C. Langley &
Co. (jointly).
1951
$8,000,-
April 20 it
Boston
Power
stated company expected to sell
Proceeds—For expansion
in June or July.
or
Colorado Central
was
$10,000,000 of
&
E^ctric Illuminating Co.
4 it was reported company may in the fourth
quarter of 1951 issue new preferred stock or first mort¬
gage
to
new bonds this summer.
Under¬
writers—To be determined by competitive
bidding. Prob¬
able bidders: Halsey, Stuart & Co.
Cleveland
& Co. and Bear, Stearns
(jointly). Proceeds — Together with treasury
funds, to redeem on June 1, 1951, $35,062,200 oustanding
first mortgage 3%-4% bonds, series A, and $8,666,900 of
Denver & Salt Lake income mortgage"3%-4% bonds,
a
000
program.
Stanley & Co.; Kuhn, Loeb
Carolina Natural
Feb. 20
Corp.
Stuart & Co. Inc.; Morgan
securities.
stated that company plans to raise more
through the sale of $6,000,000 new first
bonds and 250,000 shares of common stock
was
than $11,000,000
stock. Kidder,
Peabody & Co. and
Pierce, Fenner & Beane.
common
Florida Power
Co.
Co. and Salomon Bros. & Hutzler
$181,000,000
California Oregon Power Co.
April 20 it
writers for
Merrill Lynch,
March 29 it
additional
summer
bidding. Probable bid¬
may include Kidder, Peabody & Co. and Merrill
Lynch, Pierce, Fenner & Beane (jointly); Salomon Bros.
& Hutzler; Harriman Ripley &
Co., Inc.; Equitable Secur¬
ities Corp.; Union Securities Corp.
Probable under¬
was
April 13 it
company
Corp.
reported company expects to market late
this year or early in
1952 between $25,000,000 and
$30,000,000 of new bonds. Probable bidders:
Halsey,
April 7 it
Union Securities Corp.; Smith, Barney & Co.; Equitable
announced
Power
ders
April
Louisiana Gas Co.
Traditional
Smith, Barney & Co., New York.
common stock (par
$7.50) was
increased from
1,600,000 shares to 2,500,000 shares
and the authorized preferred stock
(par $100) from 120,000 to 250,000 shares. Underwriters for
preferred stock
to be determined by competitive
Probable bidders: Halsey,
Stanley & Co.; Lee Higginson
Corp.; Harris, Hall & Co. (Inc.); Drexel & Co.; Kuhn,
Loeb & Co. and Salomon Bros. & Hutzler
(jointly); Har¬
riman, Ripley & Co., Inc.; First Boston Corp.; Lehman
Brothers; Paine, Webber, Jackson & Curtis; Kidder,
Peabody & Co.
Electric
possible financing in this connection.
any
Florida
possibility.
&
ap¬
March 29 the authorized
Stuart & Co. Inc.; Morgan
Gas
plans to sell
company
Chemical Co.
underwriter:
Refunding of the $14,662,000 first and refunding
mortgage 4V4% bonds, series D, due Sept. 1, 1962, is
obtain short-term bank credit to finance
its construction and improvement program.
Preferred
stock sale, if negotiated, may be handled by Dillon,
Read & Co., Inc.
Probable bidders for any bond financ¬
ing are: Halsey, Stuart & Co.' Inc.; Dillon, Read & Co.
Arkansas
Dow
1, 1952.
Cincinnati
announced
April 5, Leland I. Doan,
President, stated that the com¬
pany plans to spend $65,000,000 on
plant expansion in
the current fiscal year
ending May 31, 1951, and expects
to spend somewhat more in
the following fiscal year.
He added, however, that no decision
has been reached
non-callable consolidated first mortgage bonds due
July
a
was
—
Chicago & Western Indiana RR.
April 16 reported company will probably issue in the
near
future some bonds to refund the
$49,988,000 4%
be
it
program.
10,000,000 shares.
also said to
19
proximately $35,000,000 of first mortgage bonds early
this Fall. Underwriters—To be
determined by competi¬
tive bidding.
Probable bidders: Halsey, Stuart & Co.
Inc.; Coffin & Burr, Inc., and Spencer Trask &
Co.
(jointly); Morgap Stanley & Co.; The First Boston
Corp.;
Dillon, Read & Co. Inc. Proceeds
For construction
West Corp.
plans issuance and
sale of $27,500,000 new first mortgage 3% bonds, the pro¬
ceeds to be used to repay bank loans
($20,125,000 at
Nov. 30, 1949), to retire $3,500,000 funded debt incurred
in 1950 and for construction program. The sale of these
bonds is contingent upon approval by SEC of Arkansas
Natural Gas Corp.'s plan to split itself into two new
companies. Probable bidders: Halsey, Stuart & Co. Inc.;
First Boston Corp. and Lazard Freres & Co. (jointly);
was
March
April 10 it was announced company plans to issue and
sell approximately 400,000 shares of common stock
(par
$5) late in 1951 or early in 1952.
Underwriters—May
be determined by competitive bidding.
Probable bid¬
ders:
Blyth & Co., Inc.; Smith, Barney & Co. and
Harriman Rinley & Co., Inc. (jointly); Lehman Brothers
and Lazard Freres & Co. (jointly);
Kuhn, Loeb & Co.;
Carl M. Loeb, Rhoades & Co.; Ladenburg, Thalmann &
Co. and Wertheim & Co. (jointly).
Proceeds—To be
used to assist subsidiaries to finance a part of their
to
Feb. 27 FPC authorized company to construct a pipe line
Detroit Edison Co.
bank
term
41
Illinois
Power Co.
April 4, Allen Van Wyck, President, reports that com¬
pany plans to raise $35,000,000 of "new money" ($12,000,000 in 1951 and $23,000,000 in 1952) to cover part of
the cost of new construction in the next two years. It
was
stated
Sold to
that
cover
some
stock
common
the 1951-1952 total.
for equity financing:
will
have
be
The First Boston Corp. and Merrill
Lynch, Pierce, Fenner & Beane.
Iowa
to
Probable underwriters
•
Public Service Co.
March 23 the company's report
revealed it is anticipated
Continued
on
page
42
The Commercial and Financial Chronicle
Continued from page
it
.
.
.
(1786)
42
be
will
cubic feet.
305,118, and includes approximately 791 miles of pipeline
extending from a connection with United Gas Corp.'s
system near Kosciusko, Miss., through Alabama,- Ten¬
nessee, Kentucky, and Ohio to a connection with Texas
Eastern's existing system near Connellsville, Pa.
The
company's financing program includes the sale of $78,4
000,000 first mortgage bonds (to be placed privately), the
replacing of a $10,000,000 bank loan with a new bank
loan of $20,000,000, and the sale of $45,000,000 of pre¬
ferred stock, $20,000,000 of which already has been sold.
Traditional underwriter for preferred stock: Dillon, Read
about $4,000,000 new
construction program.
provide
to
necessary
to finance its 1951
money
Smith, Barney & Co.; Harriman Ripley &
March 30 it was announced
Panhandle
April 4 it
sion
15, it was announced that company plans to raise
$4,200,000 through the sale of debentures or first mort¬
gage bonds in the spring of 1951 (this is in addition to
recent sale of 10,950 shares of $5 cumulative preferred
stock (no par) at $105 per share plus accrued dividends
and 133,812 shares of common stock (par $5) at $15 per
share (the latter to common stockholders).
The bond
financing early last year was placed privately through
Central Republic Co. (Inc.), Chicago, 111. The proceeds
are to be used for the company's expansion program.
of new bonds this
Otto, President, stated it appears likely
will sell additional mortgage bonds
time this year to finance its 1951 construction re¬
is giving
March 29 it
"new
struct
will carry
into northeastern Ohio for the first time.
plan includes the issuance and sale of
operate pipeline facilities which
and
natural
gas
Financing
.,.
Mississippi Power Co. (7/17)
reported that this company contemplates
issuance and sale of $4,000,000 of preferred stock
Feb. 6, it was
and
1
'
Glore, Forgan & Co. and Sterne, Agee & Leach (jointly);
Blyth & Co., Inc.; The First Boston Corp.; Kidder, Pea-
the company to
(jointly); Lehman
Brothers; Union Securities Corp. and Equitable Securi¬
ties Corp. (jointly); Merrill Lynch, Pierce, Fenner &
shares.
crease
Proceeds—For
construction
Tentatively expected to be received on July 17.
tration—Scheduled for June 15.
•
the company has 925,863 shares out¬
The company's expansion plan, recently an¬
nounced, will sharply increase ingot capacity, pig iron
and coke output and finishing facilities.
The additions
and improvements are to be completed over the next
Bids—
program.
Regis¬
Utilities Co.
Montana-Dakota
April 19 it was announced that if the proposed acquisi¬
tion of the gas utility properties is authorized by the FPC
and consummated, the company plans to issue and sell
Utilities
Co.
of
Michigan,
•
this
repay
V
was
reported
be placed
Boston
common
privately.
is considering issue
$12,500,000 of first mortgage
issue.
If bonds, they may
company
stock
Traditional underwriter:
Corp., New York.
Proceeds—To
outstanding short-term bank notes which
end
of the
The First
Proceeds would be used for
additions and improvements to property.
due
announced stockholders
*
sell 100,000 shares of new
Virginia Electric & Power Co.
March 6 directors announced tentative plans for
approximately 450,000 shares of additional common
stock to common stockholders at rate of one new share
for
each
10
shares
and
other
Webster Securities
struction
program.
June.
held.
Price—To
conditions.
be
determined
Underwriter
—r
stockholders
19
Stone
by
&
Corp., New York. Proceeds—For con¬
Offering — Tentatively planned fo*
V
1
:
Wagner Electric Corp.
March
^
increased
authorized
common
stock from 600,000
1,000,000
stock
April 25 will
the sale
of
market
on
Works
announced company plans to issue
for
shares (499,016 shares outstanding) to
shares in order to make available additional
issuance "when, as and if it should be con¬
sidered advisable."
•
Washington Gas Light Co.
March 8 it
was
issue ap¬
obtain bank loans (or
during 1951 and apply the
announced that company may
proximately $9,000,000 of bonds
some
combination thereof)
or
proceeds toward its construction program. Probable bid¬
ders for bonds: Halsey, Stuart & Co. Inc.; Blyth & Co.,
Inc.; Smith, Barney & Co. and White, Weld & Co. (joint¬
ly); W. C. Langley & Co. and The First Boston Corp.
(jointly).
•
about
April 20, E. S. Williams, President, intimated that com¬
pany may decide at a later date to attempt to refinance
about $15,500,000 of first mortgage bonds due in October,
was reported company plans to issue and sell
$45,000,000 of new bonds late this year (see pre¬
vious columns for preferred and common stocks now in
registration). Underwriters—May be determined by com¬
petitive bidding. Probable bidders: Halsey, Stuart & Co.
Inc.; Stone & Webster Securities Corp. and White, Weld
& Co. (jointly).
Feb.
27
Eastern Transmission Corp.
authorized to construct facilities
daily capacity of its system by
feet to approximately 1,206,500,000
company was
which will increase the
sidering refunding outstanding $6,500,000
465,700,000
cumu¬
was
March 6 it
Texas
Oklahoma Gas & Electric Co.
was
Corp., and Smith, Barney & Co. (joint¬
and
convertible second preferred
stock (par $50). Underwriter—F. Eberstadt & Co., Inc.,
New York. Proceeds—Together with funds from private
sale of $4,000,000 of 20-year sinking fund notes, to be
used toward expansion program.
March 30 it'
on
Dec. 20 D. S. Kennedy, President, said company is con¬
are
year.
Tennessee Gas Transmission Co.
construction program.
New York State Electric & Gas Co.
and sale of $10,000,000 to
Inc.
increasing the authorized common stock to 2,500,000 shares from 1,500,000 shares.
Company expects to
sell between 250,000 and 500,000 additional shares "at the
first favorable opportunity" through a public offering
through underwriters. The. proceeds are to be used for
new plant and equipment and for working capital.
Tra¬
ditional underwriter—Paine, Webber, Jackson & Curtis.
Offering expected about mid-May.
Expected late Summer and early Fall.
a
Co.
include Halsey,
refund the presently
may
Southern California Gas Co.
vote
(jointly); W. C. Langley & Co.; Smith, Barney & Co.
Securities Corp. (jointly); Kidder, Peabody
& Co. and White, Weld & Co. (jointly); Salomon Bros.
or
&
Probable bidders
Sylvania Electric Products, Inc.
and Union
bonds
announced company
issue of more than $8,000,000 by fall of
Underwriters—May be determined by com¬
March 31 it
Drexel & Co., Kuhn, Loeb & Co., and Lehman Brothers
1951
its new
Inc.; White, Weld & Co.; Lehman Brothers; Merrill
Lynch, Pierce, Fenner & Beane and Harris, Hall & Co.
(Inc.) (jointly).
stock to General Public Util¬
For
to finance
April 4, the company indicated that it would soon be in
the market with $18,000,000 of senior securities. Prob¬
able bidders:
Halsey, Stuart & Co. Inc.; Blyth & Co.,
>'
—
(par $10)
issue $1,800,000
outstanding $4,000,000 of 4Vs% first mortgage bonds and
ities Corp., parent. Underwriters—For preferred to be
determined by competitive bidding. Probable bidders:
Proceeds
may
bond
year.
Stuart
New Jersey Power & Light Co.
Feb. 19 it was reported that company tentatively plans
to issue and sell $2,500,000 of preferred stock to public
April 4 it
a
petitive bidding.
80,000 shares of preferred stock may be initially offered.
Probable bidders: Harriman Ripley & Co. Inc.; Lehman
Brothers; Kidder, Peabody & Co,; First Boston Corp.;
Merrill Lynch, Pierce, Fenner & Beane; W. C. Langley
& Co. Proceeds to be used to repay bank loans and for
common
stock
company
Jersey Gas Co.
Smith, President,
before the
$1,500,000 of
Peabody & Co.; Lehman Brothers, and Bear,
Co. (jointly); White, Weld & Co.; Salomon
Bros. & Hutzler; First Boston Corp., and Blyth & Co.,
Inc. (jointly); Union Securities Corp., and Smith, Bar¬
ney & Co. (jointly); and (2) for stock: Blyth & Co. Inc.;
W. C. Langley & Co., and Glore, Forgan & Co. (jointly);.
&
Stearns
Victor Chemical
stated
Earl
24
plans
Coldwater,
construction program.
was
capital
South
April
500,000, to be financed by issuance and sale of first mort¬
& Hutzler.
it
continuous buttweld mill expansion.
gage bonds.
and
29
additional
Between 70,000 to
pro¬
five years.
company
will be required prior to Dec. 31,1952.
1951
Kidder,
Sharon Tube Co.
New England Power Co.
Jan. 24 it was estimated that $32,000,000 of new financing
during
Union Securities
sought FPC authority to construct
about 76.7 miles of pipeline, at an estimated cost of $1,6
company
ly); Lehman Bros. & Bear, Stearns & Co. (jointly);
Kidder, Peabody & Co., and Merrill Lynch, Pierce,
Fenner & Beane (jointly). Proceeds — To repay bank
loans and to provide additional construction funds.
Michigan
March
announced
standing.
March
$2,000,000 of preferred stock and $3,000,000 of additional
first mortgage bonds. This is in addition to present stock
financing and proposed bond financing as reported under
"Securities Now in Registration" in a preceding column.
National
$30,000,000 from $15,000,000 and to in¬
At present,
was
to issue and sell 200,000 shares of common stock
and estimated $10,000,000 of first mortgage bonds. Under¬
writers—To be determined by competitive bidding. Prob±
able bidders: (1) For bonds: Halsey. Stuart & Co. Inc.:
.
authorized capital stock to 2,500,000 from 1,000,000
it
8
Light Co.
poses
■
Steel Corp.
March 27 stockholders voted to increase the debt limit of
body & Co. and White, Weld & Co.
March
•
Power &
Utah
150,000
Sharon
placement of an issue of $2,500,000 debentures in
March, 1950.
construction.
new
(par $100). Underwriters—To be determined by competi¬
bidding. Probable bidders: W. C. Langley & Co.,
tive
Beane.
vate
York P. S. Com¬
of first mortgage
additional shares of common stock
(the latter for subscription by common stockholders on a
basis of one new share for each seven shares held). Bonds
may be placed privately, with the common stock issue
underwritten by The First Boston Corp. Proceeds—For
bonds
Inc.
April 11 it was said company plans issuance and sale of
between $2,000,000 and $3,000,000 additional debentures
or bonds this year.
Kidder, Peabody & Co. handled pri¬
Electric Co.
Gas &
Rochester
March 21 company applied to the New
mission for authority to issue $5,000,000
$1,075,000 in bonds to Stranahan, Harris & Co., Inc.,
Toledo, O., $225,000 in preferred stock and $150,000 in
common stock.^ & W
;
.', :
the
United Utilities,
expansion, together with the company's participation in
ore mine developments will result in additional expen¬
ditures of over $150,000,000.
Pipe Line Co., Cleveland, Ohio
Feb. 15 FPC authorized this company to acquire, con¬
*
which will include construction of approx¬
imately 1,000 miles of pipeline, at a total estimated cost
of $111,861,749.
Company will finance construction by
borrowing $150,000,000 from its parent, United Gas Corp.
(which see above).
Republic Steel Corp.
Shore
Lake
.
sion program,
preferred stock from time to time for
money."
April 2 company announced it has started on a $75,000,000 expansion program in Cleveland, O. Other plans for
and Merrill
Shreveport, La.
Feb. 27 FPC authorized company to carry out an expan¬
announced company plans to sell addi¬
was
tional convertible
$6,500,000 31/2% bonds due Dec. 1, 1965, through the is¬
suance of possibly $28,000,000 of new bonds. Probable
bidders: Halsey, Stuart & Co. Inc.; Goldman, Sachs &
Co.; White, Weld & Co.; Lehman Brothers
Lynch, Pierce, Fenner & Beane (jointly).
United Gas Pipe Line Co.,
Pitney-Bowes, Inc.
its out¬
Corp.
announced company plans to issue $145,-
bonds: Halsey, Stuart & Co. Inc.; Dillon, Read & Co. Inc.;
Equitable Securities Corp.; Harriman Ripley & Co. Inc.
and Goldman, Sachs & Co. (jointly); The First Boston
Corp.
White, Weld & Co. (jointly); The First Boston Corp.
Feb. 1, 1965, and
standing $19,000,000 3%% bonds due
Spring to provide funds for expansion
Halsey, Stuart & Co. Inc.; Glore, Forgan & Co. and
ders:
Gas
was
000,000 debt securities and will loan the proceeds, to¬
gether with other funds, to its subsidiary, United
Gas Pipe Line Co. a total of $150,000,000 to be used for
the latter's construction program. Probable bidders for
If market conditions are favorable, it is also
planned to sell an additional $15,000,000 of bonds to re¬
fund a like amount of 3% bonds due 1956. Probable bid¬
current fiscal year, he said,
31, 1950. It was also stated that the company
consideration to early refinancing of
Feb. 27 it
program.
about $10,000,000 may be spent for new construction, of
which more than $4,000,000 had been spent up to Dec.
serious
United
.
Peoples Gas Light & Coke Co.
April 6 it was reported that company may sell $20,000,000
Co., Inc.
company
During the
-
received at the
be
of 6,445 shares of capital stock (being 100% of the out¬
standing stock). The sale does not represent new finane-*
ing. Business—Imports and sells furs, mainly Persian
Lamb, in the United States.
'
\
Kidder, Pea¬
early Fall.
Blair, Rollins
Department of Justice, 120 Broadway, New York 5, N. Y.;
on or before 11 a.m.
(EDT) on May 17 for the purchase
body & Co.; Harriman, Ripley & Co., Inc. Proceeds—
For 1951 construction program. Expected late Summer
or
Traditional underwriter:
Hollender, Inc., New York City <5/17 K
Office of Alien Property,
Thorer &
Bids will
Ripley & Co., Inc. Probable bidders for preferred stock:
W. C. Langley & Co. and Glore, Forgan & Co. (jointly);
Kuhn, Loeb & Co.; Smith, Barney & Co.;
stated stockholders will on May 23 vote
Co., New York.
k
Fenner & Bearie;v Urftbir-Sectirities
Co. (jointly); Equitable Secur¬
ities Corp.; The First Boston Corp.; Kuhn, Loeb & Co.,
Lehman Brothers and Drexel & Co. (jointly); Harriman
Corp. and White, Weld &
& Light Co.
was
2,000,000 shares.
&
,
Incorporated
increasing authorized common stock to 3,000,000 from
on
Merrill Lynch, Pierce,
Jan. 30, R. W.
quirements.
March 30 it
bonds: Halsey,
will cost $96,-
Inc., New York.
Textron
by competitive bidding. Probable bidders for
Stuart & Co. Inc.; Kidder, Peabody & Co.;
termined
Laclede Gas Co.
some
plans to issue and sell
$3,000,000 of first mortgage bonds, $2,500,000 of preferred
stock and $2,500,000 of common stock (latter to General
Public Utilities Corp., parent). Underwriter—To be de¬
$14,000,000. Probable bidders for bonds: Halsey, Stuart
& Co. Inc.; Blyth & Co., Inc.; White, Weld & Co.; The
First Boston Corp.;
Glore, Forgan & Co.; Equitable
the
& Co.
Pennsylvania Electric Co.
Feb. 16 it was reported company
April 4 it was announced stockholders will vote May 5
on proposals to increase the authorized preferred stqfck
from 200,000 shares to 400,000 shares and the authorized
amount of unsecured indebtedness from $9,000,000 to
that
Kidder, Pea¬
Traditional underwriter:
program.
Feb.
Securities Corp.; Harriman Ripley &
reported that the company may issue and
provide funds for its expan¬
was
body & Co.
Kansas-Nebraska Natural Gas Co., Inc.
Power
Co. Inc.
Eastern Pipe Line Co.
sell additional securities to
30,000 shares, par $100.
Kansas
Probable underwriters: Lehman Brothers;
tion program.
I-T-E Circuit Breaker Co.
stockholders on May 5 will
vote on increasing the authorized indebtedness of the
company to $3,500,000 from $1,500,000, and the author¬
ized but unissued preferred stock from 15,000 shares to
This project, it is estimated
lative
of
preferred stock (par $100) with an equal amount
preferred stock with a lower dividend rate and may
issue additional common stock (par $10) provided mar¬
ket conditions warrant such action, to finance construc¬
41
Thursday, April 28, 1951
cubic
Western
Maryland Ry.
1952, which remained outstanding after expiration of an
exchange offer in January, 1950.
Wilton Woolen Co.
April 6 it
was
reported company expects to file with the
registration statement covering an
common stock.
Underwriter—
SEC about April 20 a
undetermined amount of
A. C. Allyn & Co., Inc.
j
•"
Volume 173
Number 5006
.
The Commercial and Financial Chronicle
.
.
Continued from page 8
.'■■our*
(1787)
present hospital at a cost of $1,474,000 under a fixed contract.
Loewi ft Co. Offers
:
Deder?BrdteK;lii»eih«^»«^T?^wPMt t""
^ i'"
a"
wi
&
of
Co.
offering
are
an
$900,000 of 3%, m% and
the
hospital and school, whose
land, buildings and additions will
have
estimated
an
.
value
£im~rn©rtgage bonds of Oak $3,903,480.
•
„
Diversey
Corp.—Memorandum—Aetna
Corp.,
Securities
Ill
Broaaway, New York 6, N. Y.
International
System—Analysis—Newburger,
Hydro-Electric
Loeb & Co., 15 Broad Street, New
Kearney
York 5, N. Y.
issue
current
Corp.—Analysis—In
Trecker
&
Park Hospital and Training School
for Nurses of the Sisters of Miseri-
corde,
"Over-the-Counter Bulletin"—J. Arthur Warner
of
& Co., In¬
corporated, 120 Broadway, New York 5, N. Y. Also in the
issue are brief analyses of Collins Radio Company,
same
Oak
Park,
111.
They
bonds
dated
are
proceeds, together with
Republic Insurance, Iowa Southern Utilities- Co** Lear Inpor-.
other funds, are to be used to
porated and Seott Radio Laboratories, Inc.
plete
McGraw-Hill
Publishing
Inc.
Company,
—
...
r
;
^
addition
the
to
stockholders
52
Wall Street, New
Norfolk
&
New York 5, N. Y.
Pabst Brewing
and
ness
Digest"—Loewi & Co., 225 East Mason
Harshaw
Chemical
Company.
Philadelphia, Pa.
regular
(75^f)
dividend
of
Seventy-five
share has been declared
per
Common Stock of The
the
upon
American Tobacco
June 1, 1951,
on
to stockholders of record at the close of busi¬
May 10,
ness
Checks
1951.
Harry L.
will be mailed.
Hilyard, Treasurer
National Bank & Trust Company
way,
New York 5, N. Y.
phia 2, Pa.
Building,
_
Philadel¬
memorandum
Card
—
Rudolph Wurlitzer Co.—Analysis—Raymond & Co.,
148 State
Street, Boston 9, Mass. Also available are analyses of Verney
Corp., Simplex Paper, U. S. Thermo Control. Maine Central
Railroad, Sanitary Products and Air Products.
DIVIDEND
An
Inc., 32 Broadway, New York 4, N. Y.
Springfield Fire and Marine Insurance,^Company—Analytical
study—Paine, Webber, Jackson & Curtis, 25 Broad Street,
York
4, N. Y.
.
. ;
Struthers Wells Corporation—Current analytical report—Hayden, Stone & Co., 25 Broad Street, New York 4, N. Y.
.•
Trailmobile Company—Analysis—Cruttenden & Co., 209 South
Street, Chicago 4, 111. Also available are memoranda
Bowser, Inc., Chicago, Aurora & Elgin, and Filtrol Co.
La Salle
per
No.
SHEETS
Paramount
PILLOW
&
holders
stock of J he Bprden
E.
April 24,
No. 161
1951
L. NOETZEL
of Directors
declared
a
40^
share
sent merely switches
curities,
i
whether
or
the
that
into other se¬
sellers
they
prefer
mean
be
to
in
"cash" just now.
per
J
of 14-year convertible
first
10 years.
payable June 9, 1951,
stockholders
THE
of
record
close of business
CORPOKATIOH
The Directors of the
bids
Consolidated
on
bank loans and for im¬
provements and additions to prop¬
go to pay
Stock and
Common
Stock;
no
H. G.
Rights
here
when
Consolidated
Natural
indicated
have
intention of
Wheeling
MEETING
NORFOLK
SITUATION WANTED
AND
international
harvester
DIVIDEND
dividend
WANTED
ing and Order Room,
resentative
Also, Registered Rep¬
with Retail
Accounts,
requiring
of
One
Dollar
($1.00)
has
pany
little time to service, seeks connection with
York Stock Exchange Firm.
Salary
New
and
Commission
mercial
Place,
&
New
basis.
Financial
York
Box
M
Chronicle,
13.
Com¬
25
Park
7.
per
today
been
declared
Com¬
of
out
the
June
on
at
15,
1951,
to stockholders
the close of business
of
May 15,
on
MAHER, Secretary.
WESTERN
Directors
No.
131
close of business
on
GERARD
of
one
dollar
and
Company
May 5, 1951.
DIVIDENDS
Hooker Electrochemical
Company
$4.25
Cumulative
Preferred
Stock
Dividend
J. EGER, Secretary
CUMULATIVE
4.08%
The
of
Board
1951
declared
$1.0625
per
Company
on
quarterly
a
share on
tive
Preferred
1951
to stockholders
close of
of
payable
of
business June
April
18,
dividend
its $4.25
Stock,
Hooker
record
of
Cumula¬
June
27,
of
the
as
1, 1951.
NO. 5
CUMULATIVE PREFERRED STOCK
4.88%
Directors
PREFERRED STOCK
SERIES
DIVIDEND
Electrochemical
meeting of the Board of Direc¬
a
tors
of The Gamewell
Company held
on
April
the
RAILWAY
April 4, 1951
dividends
20,
were
1951,
following
voted:
for
a
term
of
three
years.
Stockholders of record at the close of business
W.
The
to
per
of
COX, Secretary.
of
1951
declared
record
at
the
Stock,
Directors
per
payable
stockholders of record
business May 1,
A
end dividend of
payable May 15,
stockholders of record at
W.
$.25
per
SERIES
DIVIDEND
NO. 14
The Board of Directors has
authorized the payment
of the
following quarterly dividends:
25V2 cents per share on the
Cumulative Preferred Stock,
on
May
25,
1951
to
of
its Com¬
1951
to
of the close of
30V2 cents per share on the
Cumulative Preferred Stock,
4,88% Series.
The above dividends
are
pay¬
able May 31, 1951, to stock¬
holders of record May 5, 1951.
Checks will be mailed from
1951.
WILCOX,
2nd,
Secretary.
the Company's
office in Los
Angeles, May 31, 1931.
p. c.
hale,
Treasurer
the close
May 4, 1951.
C.
18,
dividend
share
as
Hooker
April
May 4, 1951.
year
of business
of
on
quarterly
a
ANSLEY
share
Dividend
Company
Fifty Cents ($.50)
share payable May 15, 1951
stockholders
close of business
Board
Stock
Electrochemical
mon
$.25
April 20, 1951, will be entitled to vote at such
meeting
By order of the Board of Directors.
L.
California
Edison
4.08% Series;
The Annual Meeting of Stockholders of Nor¬
and
Western
Railway Company will
be
held, pursuant to the By-laws, at the principal
office of the Company in Roanoke, Virginia, on
Thursday, May 10, 1951, at 10 o'clock A. M.,
three
Southern
Company have declared quarterly
dividend
At
ANNUAL MEETING
OF STOCKHOLDERS
elect
,
NOTICE
J. J.
NOTICE OF
to
McHENRY,
Secretary.
1951.
folk
Wide experience in Over-the-Counter Trad¬
payable June 13,1951
stockholders of record
the close of business on
1,298,200 shares of Common Stock
on
record
seek¬
COMPANY
POSITION~
of
surplus of net profits of the Company for the
fiscal year ended December 31, 1950, pay¬
able
company
Gas
NOTICE
Roanoke, Virginia,
COMBINATION
Stock
Gas Com¬
Dated: April 24, 1951.
ing this business.
Steel
Natural
New York, April 24, 1951.
seventy-five cents ($1.75) per share on
expire the preferred stock payable June 1,
1951, to stockholders of record at the
way
Common
Company
FAHLBUSCH, President
scribed portion to be underwritten
bankers.
the
pany,
Secretary
J Railway
3rd,
M., April 30th, 1951.
The Directors of International Harves¬
unsub¬
share has been declared
on
Southern
H. D.
divi¬
ter
any
A dividend of 62j^ cents
Southern
\
Holders would
with
gas
June 1,1951.
fractional shares, all payable on May
1951 to stockholders of record at 3:00
of debentures for each 10 shares of
held,
,
per
to
Coipmon
Meanwhile,
GRIFFIN,
company
at
erty.
»
V
southern.
to
the
at
May 4, 1951.
W. D. Bickham,
iCo. of New York's $40,000,000 of Co. is slated to open bids for $50,.first and refunding bonds series
000,000 of sinking fund debentures
i G, due in 30 years. Proceeds will due
in
25 years.
Three groups
i
May 15, 1951.
E.
payable
stockholders
on
deben¬
Thereafter, nothing in the
Edison
to
Birmingham, Alabama
declared
Partici¬
pating Preferred Stock, a dividend of $2.50
per
share on the Class "A" Participating
Stock, and a dividend of $3.50 per share on
the Second Preferred Stock; also a dividend
of Twenty-five cents (25^) per share on the
Class "A" Participating/ Stock, Class "A"
!
Next Tuesday three hefty bank¬ of
large-size corporate undertak¬
ing groups will face the deadline ing is on schedule until May 14,
for
declared
Common Stock Dividend No. 49
Byrndun Corporation at
its meeting held on April 19th, 1951,
a dividend of $1.50 per share on the
get the right to subscribe for $100
common
to
15,
the outstand'
on
April 19th, 1951.
May 10.
Several Large Ones
1951,
today
ing capital stock of this Com'
pany,
tures, due 1965 and convertible for
by
31,
quarterly dividend of
Treasurer
record at the close today, $14,238,-
•whether these transactions repre¬
May
the Common
on
been
natural
A
the
May
Dividend
The Board
April 24, 1951
Corp., is due to offer to holders of
Our Reporter's Report
record
INCORPORATED
share
900
:
of
regular quarterly dividend
has
SH^tS
without par value of Southern Railway
8
A
record
Theatres—Bulletin—Ira Haupt & Co., Ill
Continued from page
payable June 1, 1951;
stockholders
share has been declared
business May 11, 1951.
Common
of
OIL COMPANY
Broadway, New York 6, N. Y.
:
declared
Stock
CASES
dividend
the 5% Con¬
vertible Preferred Stock has been
on
of 300 per. share
daily dividends of luxurious and
cents
Company, payable June 1,1951, to
stockholders of record at the close of
dend
SC.
SOCONY-VACUUM
165
dividend of sixty
the capital
on
Inc.—Special review—John H. Lewis & Co.,
Street, New York 5, N. Y.
63 Wall
to
quarterly
share
per
1951.
P.
California.
United Air Lines,
1951
1951.
regular
31140
M.
Company, 110 South
M. Dain &
pany,
•
interim
(60tf)
Minneapolis 2, Minn.
Safeway Stores, Inc.—1953 annual report—Librarian, Safeway
Stores, Incorporated,\P. O. Box 660, Oakland 4, Calif.
Seneca Oil Company—Special memorandum—J. May & Com¬
United
25,
the close of business May
Old Colony Trust Company,
of Boston, will mail checks.
15,
A
OonhttfS
Sixth Street,
of
May
on
of record at
The Nation Sleeps on PEQUGT
Co.—Analysis for general
St. Paul Fire and Marine Insurance
on
25,
restful sleep.
Lerner &
Falls Machine Co.
New
Naumkeag
at a meeting
1951 declared a
Fifty Cents (.50) a share,
dividend of
payable
of
Company
April
|
Secretary-Treasurer,
Co., 10 Post Office Square, Bbston 9, Mass. Also available is
a memorandum on Gear Grinding Machine Co. and on Seneca
distributions to dealers—J.
Cotton
on
pay
•
—
held
of New York—Table
i
Riverside Cement Company
of Directors
Board
Steam
PEQUOT
Corporation, 100 Broad¬
Exchange
Stock
Incorporated,
pany,
The
President and Treasurer
Inc.—Analysis—H. M. B.yllesby and Com¬
Purolator Products,
WOODALL | NPDST RIES
25," 1951
RUDOLPH C. DICK
7
v
•
232
April
Stout &
Ltd.—Analysis—John R. Lewis, Inc., 1006
Second Avenue, Seattle 4, Wash.
of related values—The First Boston
No.
Cents
Placer Development,
Public
MASSACHUSETTS
183rd Common Dividend
Co., 50 Broadway, New York 4, N. Y.
*
The Board of Directors has authorized
of a quarterly dividend of
fifty cents ($.50) per share payable June
8, 1951 to holders of Common Stock of
record May 25, 1951 who on that date
hold regularly issued Common Stock
($1.00 par) of this Company. '
CHAS. F. BRADLEY, Secretary
One Broadway, New York 4, N. Y.
Steam fatten
April 24, 1951
Inc.—Analysis—Eisele & King, Libaire,
Paul,
DIVIDEND
JOHNS HOPKINS. Treasurer
April 24, 1951
SALEM,
Also available is an analysis of
Street, Milwaukee 2, Wis.
Peter
NewYork3,N.Y.-
Company, payable in cash
Company—Analysis in current issue of "Busi¬
Financial
lil Fifth Avenue
A
Heller & Co., 30 Pine Street,
Common
Stock
DIVIDEND
Also available are brief reports on Union
<
Company
THE UNITED GAS IMPROVEMENT CO.
/
mcorforatel)
Company—Analysis—Amott, Baker
Bag & Paper and Pittsburgh Coke & Chemical.
King
.
May
NAUMKEAG
Co., Inc., 150 Broadway, New York 38, N. Y.
Otis Elevator—Brief data—Stanley
record
W
Northwest Com¬
York 5, N. Y.
Southern Railway
of
notices
Exchange Building, Seattle 4, Wash.
pany,
Building.
with
Chamber of
the payment
dividend
Newport Steel Corporation—Analysis—L. H. Rotnchild & Co.,
Commerce
Inc.,
31, 1951.
rated, 61 Broadway, New York 6, N. Y.
-
Co.,
United States Lines
Reilly & Co. Incorpo¬
Montana Power Company—Bulletin—Pacific
&
is
dividend of 35c
share on the
Capital
Stock, par value $13.50 per
share,
has
been
declared,
payable June 30, 1951, to
Brochure—Smith,
Barney & Co., 14 Wall Street, New York 5, N. Y.
Mexican Gulf Sulphur—Analysis—J. F.
100-bed
a
com¬
Merritt
Calif.— Ray¬
Johnson
per
1,
1951, and are due serially each six
beginning July 1, 1952, to
and including Jan. 1, 1966.
The net
ANGELES,
D.
dividend notices
A quarterly
Jan.
months
American Phenolic Corp., P. R. Mallory & Co., Inc., Globe &
of
LOS
mond
dividend notices
are
priced at 100, plus accrued inter¬
est from Jan. 1, 1951.
The
With King Merritt
(Special to The Financial. Chronicle)
The bonds
are a direct obliga¬
tion of the corporation
comprising
.
43
BECK, Treasurer.
April 20,1951
1
of
44
The Commerciat and Financial Chronicle
(1788)
*4
ay
'
building
BUSINESS BUZZ
Behind - the - Scene Interpretations
from the Nation's Capital
all
happened
the
over
in
JL. Cr IM/
Senate
the
to
the
Defense
Housing bill providing that mort¬
often, also the build¬
gagees (most
ers) of housing projects shall
far, specific controls
So
WASHINGTON, D. C.—There is
a
with
ple the world over;
would
Will this tremendous MacArthur
.
iri
business
itself
in .motion
set
forces sufficient to
bring about a
sharp change in U. S. foreign and
military policy?
question
Congress
the
If
.
whether
■,
-some
were
only
take
the
in
action
affirmative
•
might
victory
no
not
controls
of
and
no
peace
If this
cutting out
the
that
fact
the
who
here
recognize
refrig¬
erators, et. al. In time it will be
impossible to hold these controls
against public opinion if there is
no war in which the aircraft and
the tanks can be employed, al¬
though this time may .not arrive
construction of houses, cars,
unprecedented
adulation
was a
of General MacArthur
compound of several things.
Principally it is
reflection, they
a
think, of the great, disfavor with
which the White House is regard¬
The
chuck
to
or
A
First, Mr. Truman proposes that
Secretary of State, as was
published last week, shall have
over-riding authority over ECA
and all foreign programs. This is
is national dissatisfaction with the
theoretically an accomplished fact,
frustrating
situation
of a
war
since the President has ordered
which cannot be won and cannot
ed by tens of millions. Second, it
be settled, a tremendous rebellion
against the
idea
stalemate with
of
the
a
perpetual
only
alterna¬
tive surrender, by whatever name
it
called.
be
may
Third,
among
other things, it represents an in-*
stinctive
cry
kind
leadership
of
for leadership,
that
any
is
hot
bound hand and foot waiting the
initiative
of
London
or
Moscow
before acting.
this.
Second, Mr. Truman will submit
proposal that the legal death
of ECA in 1952, decreed by Con¬
the
As such a compound, the adula¬
tion
of
General
MacArthur,
ommendations for
an
extension of
The really new wrinkle in this
military opposition to Communist
China, In a pinch, a good many prospective proposal is that of
whatever sum is requested, any
votes at the Capitol would reflect
part thereof could be employed;
this thinking.
,
.
the
On
for "Point IV" aid to the
other
hand,
the Mac-
Arthur business could have broad
and unpredictable effects because
of the / emotions
arouse
which
it
might
in the present rulers of the
backward
areas.
In
so-called *
the
theory,
President could, for example; al¬
(or
any
$4 billion
other sum) for "Point IV",
$4 billions for economic aid, and
only $3 billions for military aid,
although, of course, it may be
palaces while the mobs go wild doubted that the President has any
over their adversaries. Presidents
such fantastic notions.
by be-
ing indifferent to vehement
hatred
of
mass
their
leadership,
whether they have been life-long
successful
politicians
or
even
presidents more or less by acci¬
dent.
And in
gard
as
fit of what many re¬
erratic thinking induced
by the emotion
over
aggression by
North Korea, Mr. Truman sudden¬
not
only how much of the sum
of these
should be spent for each
objectives, but also how much of
it should go to any particular area
Accepted
theses
This package
would do
ber of things to which the
Unhappy is the Administration*
tion,
It would raise "Point IV" to an
propriation of $34.5 .million for the
current fiscal year, a crumb tossed
ing which Mr. Truman needs so
much to keep the public .behind
the "military build-up" as a fresh
out in
a
"take it and for heaven's
sake shut
This
up" mood.
package proposal
anti-inflation connote the idea of
(This column is intended to re*
fleet the "behind the scene" inter¬
pretation from the nation's Capitals
and may or may not coincide with
the "Chronicle's"
"Now why
own
views.)
$12,600,000 Bonds of
do you suppose Peabody would have to
purchase etchings?"
State of New
Hamp.
A good the President's new Wage Stabili¬
many in
Congress : believe that zation Board set-up.
"some"
Through hand-picked Charley
foreign
economic
aid
A syndicate headed by Halsey,
might be continued profitably, McCarthies on ►.the so-called De¬
Stuart & Co., Inc., and Kidder,
particularly where it was distinct¬ fense Mobilization Advisory
Peabody & Co., and including,
ly subordinate to, and assisting in, Board, the President got recom¬
among others, Continental Illinois
military aid. They don't embrace mended 12' to 4 a proposed Wage
National Bank & Trust Co., Chi¬
Stabilization Board empowered to
an indefinite ECA.
aid
program.
Offered for Investment
cago, Drexel & Co., and Phelps*
nonFenn & Co., made public offering
Taft-Hartley Act)
on April 25 of $12,600,000
1.60%
issues as well as wage disputes.
bonds of the State of New Hamp¬
Business and industry provided
shire
at prices to yield
1% to
the four votes against.
1.65%, according to maturity. The
This thus constructively evades
bonds, issued for various purposes,
the Defense Production Act's stat¬
mature serially on May I from
utory requirement that there be 1952 to
1976, inclusive. The full
agreement among the parties be¬ faith and credit of the State are
fore such a Board be established,
pledged for payment of the bonds
for the industry and business rep¬
and, in the opinion of the bankers,
resentatives opposed.
The "pub¬ the securities are legal investment
"recommend"
This program involves the idea
wage
vast dis¬
discretion
of giving the President a
in
cretion
spending,
a
which would be bitterly
opposed
if Mr. Truman were
a
pop¬
ular President.
Finally, it would put the con¬
ECA, and, in many respects, over
the military, for it would be the
Secretary of State who would ad¬
vise the President how the funds
lic"
(i.
settlement of
e.,
members included such, pro-
for savings banks and trust funds
pro-Truman men as in New York and Connecticut and
former Democratic publicity chief for
Savings Banks in Massa¬
and
OPA
Administrator,
Paul chusetts.
That the President is seriously
Porter, and William H. Davis, who
planning a package program of helped the War (II) Labor Board
this character illustrates the gulf
'.
For ■
push up wage and fringe benefits
which
separates the
President for organized labor.
Large Appreciation Potential
from the thinking, even among his
It would also appear to evade
WE SUGGEST
friends, in Congress. Such a pro¬ the Act's seeming ban on such a
gram is most unlikely to carry in board
handling matters covered
any where near the
form the by the
Taft-Hartley Act.
President wants it.
The legal sleight-of-hand used to
CLASS B (common) STOCK
This program also offers another get around the DPA Act was that
should be allocated both
as
among
labor
the three main
objectives and as
among beneficiary countries.
and
MVERSIM CEMENT CO.
illustration
fluence
of
of
the
.
dominant
Dean Acheson
in¬
in the
councils of the White House. Con¬
gress once
fused
to
before .specifically re¬
the
allow
have
Secretary of
leading hand in
a
the
*
*
#
shall
disputes,
not
settle
non-
but
only
issue
"recommendations."
when' the
which
Federal
refuses
to
However,
Government,
enforce
Taft-
Hartley, and also is the employer
of
ECA.
board
wage
much
of
industry's
capacity,
backs these "recommendations"
ing about MacArthur's return, the
initial reaction
was
small toward
leading producer of cement
in
fast-growing Southern
California.
r
:
Analysis of this Company and
a
review of the Cement Indus¬
try
available
request.
on
Selling about
$13.00
as
it
Because everybody was think¬
A
most certainly
will, industry
usually will have to capitulate.
As happens nearly every year
the
left-wing crowd and the
LERNER & CO.
Investment Securities
10 Post Office Square, Bostorr9, Mass.
Tel. HUbbard 2-1990
major¬
business to give him was an ap¬
j^ogram already is moribund.
profit upon comple¬
build defense
won't
ity of Congress is violently hostile.
among
The
they
houses.
a num¬
Washingtonians in and out of
official life is that there is noth¬
emergency.
tussle-has
country.
ly jettisoned the policy of aban¬
ennobled stature of billions. In the
doning Korea and staying out of
first two years after his inaugura¬
thd land mass of Asia, and ordered
tion, despite the most intense
countey-resistance to that aggrepressure, the most that Mr, Tru¬
sio'n.
man
could persuade a Congress
In this connection, one of the hostile to the entire "Point IV"
most
this
of
over
not take their
State to
Nevertheless, he would be free
to determine in his own judgment
or
a
on
,
low himself to expend
Administration. Neither kings nor
presidents like to cower in their
do not become presidents
variation
It recognizes that if builders can
troversial Secretary, of State over
$11 billion, shall be appropriated
the •in a lump sum with the President
cooler heads feel, does not repre¬
free to determine how much of it
sent a complete "sale" of the pub¬
shall be utilized for economic aid
lic for the General's specific rec¬
and how much for military aid.
^
H
ii.:
by 1952, shall be repealed.
Third, the President will pro¬
that the entire foreign mil¬
itary and economic aid program,
which some say would run around
Title
see
is allowed for
insurance, which
money
virtually- every
housing bill since the end: of War
even
pose
new
out in several days.
gone
after the Administration
most solemnly assured all con¬
cerned that ECA would do the job
gress
left-wing crowd will
no
FHA
runs
economic
the
go
it..
the
that
foreign
Congress on
aid, i in the near future.
government to
Yet the left-wing crowd is tell¬
explosion will occur after
offers his special
message
housing industry
the
ing the industry it better take this
President
the
stayed in the bill in final
would tell the
gets straightened out
an integrated and detailed foreign
before he takes the plunge, Pres¬
and supporting military policy,
ident Truman is fixing to touch
Mr. Truman could probably count
off a new controversy in Congress
upon enough Democrats and in¬
which by comparison with any¬
terna tional-minded Republicans to
back him^albeit by no impressive thing but the MacArthur dispute,
will be a major and bitterly con¬
majority.;
tested issue of the 82nd Congress.
heads
excluding trade dis¬
cost,
enactment,
Unless he
^However, there are a great many
net
counts.
future, without the stimulus until after Congress has settled
of
some
fresh Russian-inspired,
the battle bf what kind of con-r
.aggression, to overturn specific¬ trols it shall write to operate fol¬
ally some major established pillar lowing the expiration of the De¬
-of foreign or military policy, the
fense Production Act on June 30.
answer probably would be "no."
Mr. Truman, however, obviously
Apart from the fact that it is means to avoid war if he can.
almost mechanically impossible
*
*
*
for a legislative body to lay down
cool
costs shall include materials
more,
at
near
■
must be returned. Further¬
excess
(little felt as yet on
the civilian economy)
physical im¬
without profit. Any
provements,
acceptance
encourage
cer¬
proceeds
do not exceed cost of
this seat of
ing question on the minds of peo¬
that the mortgage
tify
aimed
responsible observer at at diverting raw materials from
government who can the civilian to the military econ¬
at this time answer with the re¬ omy have not aroused great re¬
motest confidence the one burn¬ sistance. A prolonged stalemate
-scarcely
De¬
Long got an amendment adopted
V /||f
jfji I vlAs
'
wrestling/
are-
fense Housing Act. Left-wing (son
of the late Huey) Senator Russell
...
fl/1f
/■
industry
with each pushing his thumbs in
the other guy's eye.
It
on
Thursday, April 26, 1951
.
..
•
an
Allied Electric
Products
*
k
f
Prospectus
on
'
request
Hill, Thompson & Co., Inc.
Trading Department
would
indefinite
and; monejtarily-vigorou^ foreign
70 WALL STREET, N.
Td. WHttdull
4-M40
Y. S
@FedFRASER