Full text of Commercial and Financial Chronicle : April 6, 1950, Vol. 171, No. 4896

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ESTABLISHED 1839
jmjs. adm,

IUbrary

Volume 171

Number 4896

Price 30 Cents a

Thursday, April 6/ 1950

New Yorki N. Y.,

Copy

r.?j

«n

WTORIAL
£D)
i '

As We See It
\

has

There

That Bogey
been

; ~

of Unemployment
disposition for some time

into a dither over
possibility of mounting unemployment. As
against 10 or 12 million unemployed during the,
darkest days of the great depression of the early
and middle 1930's, and against a million or two
less after a half decade of New Deal effort to
relieve the situation, the unemployment figure
past in some quarters to get

the latter amount. The memory

Prominent writer of stock market literature

lower than averages suggest.

obtaining work during most of the time from
1931 or 1932, until World War II altered
the basic nature of the situation, still lingers
of

I have chosen the

porary

continuing
It accounts in substantial

some

of the

opportunity" in the
years to come.
In point of fact, politicians and
seekers after political preferment have for a good
while past been earnestly endeavoring to make
political capital of these "dangers" which lie
growth of "job

contend

The

stock market.

for

Special

Investment

reach

the

momentous

most

monetary

The Meaning

Hooper

Let

[

bond

see

UNDERWRITERS

page

is "redeemable."

A $10 Federal Reserve
"This Note Is Redeemable in
Lawful Money."
But lawful money (legal tender) con¬
sists of notes.
Thus, our $10 note is convertible into

which in turn
Note

before the Boston
'

carries the imprint,

Continued

50.

AND DEALERS
r

in Securities of

Funds,
-

Natural Gas

Companies

550 Branches

Custodian

Franklin

across

inc.

Canada

A Mutual Fund

Monthly Commercial Letter

COMMON STOCK FUND

upon request

PREFERRED STOCK FUND

THE

BOND FUND

White,Weld&Co.
Members New York

40 Wall

Stock Exchange

Street, New York 5
Chicago

Boston

UTILITIES FUND
INCOME

Prospectus

FRANKLIN

THE NATIONAL CITY BANK

CANADIAN BANK

(BALANCED) FUND
on

OF C0MMEBCE

OF NEW YORK

request

Head Office: Toronto

DISTRIBUTORS, Inc.

64 Wall Street, New

York 5

Bond
"

Dept. Teletype: NY •'
1-708
%
■■

New York

Agency: 20 Exchange

Seattle Portland. Ore.

Investors

{
Underwriters and
Distributors of

Second Fund

Municipal

and

■

CANADIAN

canadian

Stocks

San Francisco Los Angeles

•'

Massachusetts

BONDS & STOCKS

and

bonds

Corporate Securities
Prospectus from authorized

SAN'DE11S A CO.

*VA NCK.
-

Ill

dealers or

Doxwiox Securities
OTIS & CO.
Established

BOSTON

Los

Angeles

1399

MEMBERS NEW YORK

STOCK EXCH.

CLEVELAND
Chicago

New York

■

New York

Cincinnati

Chicago
Columbus

Denver
Toledo

Grporatioji

ESTABLISHED 1891

(Incorporated)

Devonshire Street

goodbody & co.

Dallas
Buffalo

115 BROADWAY

NEW YORK

105 W.

Exchange Place, New York 5,N.Y,

ADAMS ST.

CHICAGO

in exchange $1 in currenc
piece of paper, called a note,

you

That boils it down to a

a complete analysis of new corporate
"Securities in Registration" department

our

Just what does the

for?\ The one on your bank account
that if you so wish, the bank or the U. S

PROSPECT—For
market,

dollar.

of the Dollar Sign

begin at the beginning.

means

Treasury has to give

with

page

Dr. Melchior Paly!
has
struc¬
tend to revolutionize the
with, are based on, and
fundamental shift or twist

Dollar Sign stand

to you
of the

consider with me

up¬

thinking

place?
That the whole
ture of public policies which
economic system all started
follow with iron logic from, a
in the concept of money—of a

transcript of address by Mr. Hooper
Club, Boston, Mass., March 29, 1950.

FINANCING

are

realize, that in our own

taken

Continued

scheduled

heaval

;

CORPORATE

or even
lifetime the

I would like to have you bear

moment while I ask you to

there

economists

fact,

;

In the first place,

problems of economics.
The sim¬
plest "facts of life" escape attention.
How many of us pay attention to the

quasi/

have

this time is not
an economist?—the less interest there
seems to be in the truly
significant

the commentator, has
he prepares these
wisdom,

situation

the

understood.
around—and who by

I am going to be very frank. Per¬
haps I may be disillusioning, but I
am going to be wholesome and honest as I talk
about this
problem of solving the mysteries

growing popu-

issues

ties

V V '<. 'J •.;

against which they and their party
know how to defend us. It is, of course, not

page

wisdom.

and

(or normal rationality)—or what is
it—the stark reali¬

to be done about

tonight to push aside

emanationsof

squarely. If we want to know where
we are heading — what the
chances
are for a return to rational normalcy

talk about
fundamentals with which

Continued

Urges commitments based
value, and holds most
price fluctuations.
r

veil of mystery, and

the

difficult to demonstrate that with a

Preliminary Note

Apparently—this article deals with a topic of no imme-,
diate practical relevance.
But I believe that the subject
is of utmost importance to businessmen and investors, the
more so since it seldom is being faced

thought.

the analyst, or

alone

discourages

I would like

talk about the necessity
"expanding economy," and about measures

ahead

;

concentrate political efforts toward
"thinking in gold" with restoration of automatic gold coin
standard and an "over-balanced" budget.

calf. Urges citizens to

analyst, and I write popu¬
financial
literature, stuff. that

part for the continuous

insuring

perishes with the using. Sometimes
it is right, and sometimes it is not
so good.- But I hope that above
all,
it will be entertaining and helpful,
and make a contribution to contem¬

upward trend of unemployment

;

text, or subject, "Solving the Mys¬
for good reasons. In the first

talk.

lar

these things

accordingly, natural enough that the pol¬
now in office shiver a little at the thought

for the next few years.

Financial
,

place, this subject is vague and allows me to talk about
anything.
In the second place> it is an attractive text,
and that leads you to come and hear

fresh in the minds of the voters.

and attributable to public's acquiescence and nonrealization of-transition from the golden calf to the paper

teries of the Stock Market"

poignantly in the minds of hundreds of thousands,
even
millions of the people of this country —
thanks to the hardships then endured and to the

iticians

investment

investors overstress
*

about

It is,

fundamental

of the difficulties

assiduity of politicians in keeping

National Federation of
Analysts Societies
-

••

ess,

cyclical approach to investment problems, asserts politi¬
cal factors always overstressed, and points out limitations
of charts and systems. Finds level of stock prices is

something like half

creeping up toward

now

PALYI

psychological climate |

gold to paper—was gradual proc¬

toward money—from

Members N. Y. S. E.

Former President,
.

the

E. Hutton & Co.,

change

observes

Economist

HOOPER * *

By ITJCIEN O.

Market Analyst, W.

By MELCHIOR

Mhcosceptions

Market

Teletype NY 1-702-3

WHltehall 4-8161

page

(1402)

THE

TRADING

MARKETS

The

City Power & Light

American Power & Light New

SELIG ALTSCHUL

PRICES

(Lockheed

Aircraft Corp.)

The aircraft industry is current-

Corporation

strategic position with

of the interna-

tionalsituation

is likely to accelerate and

Rights & Scrip

augment aircraft

Since 1917

procure-

ment

pro-

grams.

Among the
companies fa-

McDonnell&fo.
120

Stock

York

Curb

*Govt.

REctor

40%

+ CkA

Madison

The coming form of

R. F. NEWMAN
Counsel,

Wis.

Aircraft

^ f^tionof Masonite CorX b°"t

bank indebtedness completely
eliminated. At the 1946 year-end,

United

in debt to the tune

million.

$40

Employees Corp.

siderable

Peter P. McDermott & Co.

Tel.

For

Tele. NY 1-1817

credits resulted in
about

e. ^yestor

J1 o 1<din g

was

saving of

in taxes to the
Similarly,^ during 1949

American Turf Association
Common

war

u m b e r of
dohars of his
principal rem a 1 n s the
same. JMasonhe
Common
1S attracti ve
t o t h e l nvestor with a
a. substantial

BANKERS BOND

1949

over

Incorporated

The

Floor, Kentucky Home Life BIdg.
2, KENTUCKY

about

LOUISVILLE

sales

company

21%

of its total backlog is

fo?

its

Constellation

amounts to about

series.

This

48% of the

en-

*15

Nat'l

Assn.

to 1937.
A small increase
shown from 1937 through the
years but the big expansion

Securities

Dealers

2-5500

Tele.

structure,

stockholders
in

com¬

invested

the common

$600,1929; per¬

$400;000 had been invested
previously. Preferred stock and
bonds at the
Newman

143

Portland,

Mei) Enterprlue 2904
Hartford, Conn. Enterprise 6800

Open End Phone

haps

R. F.

Inn.

75 Federal St., Boston
10, Mass.

to New York Canal 9-H1M

Winters & Crampton

000

end

1930

$2,347,700; therefore,
able leverage existed.

National

Asfn,

South Broad

Phila. Telephone
PEnnypacker 5-2857

wn?th
5hnrJTvStirfill™fr?h£

New

Securities Dealers

St., Thila. 9, Fa.
Bell System Teletype
PH 771

York City Tel.: 'BOwiln? Oreen 9-4813

^
stock

Henry B. Warner ^Cd., Inc.

123

<*uced n°t

P^ieired

Issues

Members

ana'

Light Common
Philadelphia Transportation Co,

From 1930

from $1,000,000 to_ $2,300,000. PreJ
.0G ™as Increased to $V
'
9 .in. A i
? ^e~
u

Allan Wood Steel Com. & Pfd.
Penna. Power &

totalled

yaar>

Harshaw Chemical

Philadelphia Electric Common

consider¬

diversified portfolio for the fol--.ho 1937, the bonds were paid off
lowing reasons:
;
and
working capital increased

t01

,uy
common
provided the only capital™'
In L.u '
i
V
j

$117,667,000. by the late William H. Mason,
unique in that who enlisted the financial assist-

represented by commercial orders

Bell Tele. LS 186

J. B. Maguire & Co., Inc.

Members

Atlantic City Electric

mon

<S13

$60,seem

Tel. HUbbard

As to the capital

interesting aspect in the of the State of Delaware in Seppicture is the well-de- tember, 1925 under the name of
fined production outlook, ranging Mason Fibre Company In March,
well into 1951. With a total back- 1928, its name was changed to
log of $229,746,000 at the 1949 Masonite Corporation. The prinyear-end, 1950 sales and billings cipal products and the processes
are likely to show a
sharp increase for manufacture were invented

™

having increased
almost
$12,000,000 during that period to
$17,500,000.
>,■'

The

Preferred

count

Lockheed

Kentucky Stone Co.

branch offices

has taken place since
1945, depre¬
ciated plant and equipment ac¬

Common

Long Distance 238-9

net

suare

1929

States

the company picked up in, earnings, tax adjustments belonging to
Masonite Corporation, a leadprevious years, and amounting to ing manufacturer of
hardboard,
$1,155,988 or $1.07 per share.was incorporated
under the laws

American Air Filter Co.

1st

$2,800,000

company.

the

1949,

net

profit of
$5,491,000, equal to $5.10 per share,
This compared with $6,239,000 or
$5.80 per share for 1948. However,
during 1948, the carry-forward tax

Street, New York 5

DIgby 4-7140

stability.
showed

company

Members Now York Stock Exchange
Members New York Curb Exchange

our

TRADING

In
recent years,
Lockheed's
earnings have demonstrated con-

Mobile, Ala.
Direct wires to

level

Property account of not quite
$2,000,000 was little changed from

Bought—Sold—Quoted

forecast-earnings of

Der

remaining

NewOrleans,La.-Birmingham,A!a.

MARKETS
saw

ingiy> sales of $50,000,000 to
000.000 in 1951 to 1953 would

herftL £„

prepaying $6 Governmentthe notes fonds since
extending to July, 1951, the comhas been
pany liquidated its entire debt late litn J u ,red»
a1'
in 1949.
1
though < the
of

Corp.—

of not quite $37,000,000 attained,
'
with net earnings of
$7,000,000.
Percentage of net earnings to sales
has changed very little. Accord-

The
in e
has made long recovery P°™
k
strides during recent years.
Its security i Me Pest is hedged by
former cumbersome inventory po- t^e belief that there is no perfect
sition has been cured and heavy
e n.

was

Garden

The year 1948

years.

Milwaukee,

(Masonite Corporation)

company

Square

ment commitment in the
group.

Corp.
t°rp.

million

44 Wall

turbo-prop
Robert L. Scheinman,
Ralph E.
jet development of commerSamuel & Co., New York City.
cial transports are merely continuing manifestations of the con- United Carbon
Corp.—George F.
stantly changing aspects of Lie
*
"
Shaskan, Jr., Partner, Shaskan
aviation
industry which dictate
& Co., New York
City.
close surveillance of
any invest-

Govt. Employees Life Insurance
Govt.

Bought—Sold—Quoted

and

heed

Selig Altschul

2-7815

Requests

•J-

With

earnings.

year.

spect is Lock¬

Employees Insurance
Report

Louisiana Securities

Corporation-

Lockheed

Aircraft

AltsctojL

paid

of reported

ated in Ihic y»0—
this re¬

Exchange
Exchange

BROADWAY, NEW YORK 5
Tel.

Lockheed

Alabama &

Selections

during
1949,
Av~
amounting to $2 per share, while
iatl0n Consultant, N, Y. City.
up from the $1.50 per share disMasonite Corporation—R. F. Newbursed dunng 1948, were less than
man, Investment Counsel, Mil-

vorably situ- Investment
rs

Members
York

Participants and

Their

sus-

intensification

Specialists in

New

This Week's
Forum

tained productions levels virtually

Teletype NY 1-583

New

Thursday, April 6, 1950

waukee,-Wis.
the heavy debt retirement pro'
Sram completed, it is conceivable New York, New Haven & HartST|T|||rp |ffl||QF> X Ha
guaranteed for key segments dur- that
with increased sales and
ford Series A Convertible 4*4s w 1 UWHl» ■•wiwi. w WU
of
Members New
York Stock
2022—Winfried H.
ing the next earnings prevailing for 1950, there
Exchange
Oppenfew
years. wdl be strong pressures for inheimer, Partner, Oppenheimer,
25 Broad St., New York
4, N. Y.
Vanden Broeck & Co., N. Y. C.
HAnover 2-0700
Further, any creased dividend payments this
NY 1-1557
ly in

1920

120 Broadway, New York 5
BArclay 7-5660

Dividends

Independent Aviation Consultant

New York Hanseatic
Established

CHRONICLE

which, each week, a different group of experts
in the investment and advisory field from all sections of the
country
participate and give their reasons for favoring a particular security.

Cincinnati Gas & Electric

NET

FINANCIAL

A continuous forum in

Pacific Gas & Electric

Security I Like Best

American Natural Gas

Kansas

COMMERCIAL

|9a9rrnsn(Sjr

^ ^oo,uuu

ana,

7^97«

iqa»

lyio,

?{jar^ w?e«rjy®,n in Pay™ent for

ance of wealthy and successful
residents of Wausau, Wis. Shortly

the Marsh Wood Products .ComPan.y> a company engaged in the
business of decorating Masonite

after incorporation, the principal
manufacturing plant of the com-

V* tirereported to commercial Bureau near was large timberland Miss., Duolux Marlite. Marlite plasticindustry's the U. S. orders pany to located at Laurel, holdn^dboard, with the trade
as
_i

RUDOLPH

the

1949

business,

year-end.
once

the

prevail for, military bookings.
Listed
unobstrusively in
the
company's recent annual report

Revised analysis available
on

original development cost is completely amortized, carries with it
much higher profit margins than

WURUTZER
m

Census

Commercial

request

but

publicly for the first time, is

adaptable to
the
process.
Principal hardboard products of
the

company

sold

under

are

the

Wallboard,
Pressdwood,
TernPressdwood,
Presdwood
Temprtile, Masonite Loftingboard
and others, certain of which are
registered as trademarks in the
various products
company

1951

148 State St., Boston
9, Mass.
Tel. CA.

7-0425

planes

Teletype BS 259

N. Y. Telephone WOrth

4-5000

this model.. The F-94
jet'all-weather fighter

also

•

booked

steady

are

kitchens, bathrooms, living
many

quar-

types of exteriors

throughout 1951.
The jet mili-; are almost innumerable.
There
tary trainers, designated T33Aand. are certain farm applications such
are scheduled for a steady as silos, grain bins, barns, chicken
rate of output for the first half of shelters
and the like.
Increasing
T02,
this

year

and

reduced

rate

thereafter into the fall of 1951.

Mexican

Railways

BONDS

It is this steady flow of producof
given
series -of
Dlanes

tion

which

conducive

efficient

and

Bought—Sold—Quoted
Analysis

economical; operations,
advantageous to the government in

lower

costs

and

desirable

the

company because of greater profit
on

request

incentive.

industrial uses are being found,
Appearance, durability and price

are

various

increasing

company

sales

products.

Sales in 1929 exceeded $2,100,-

000, with net earnings
after

dends

preferred

of $316,stock divi-

$94^000.
Net ..earnings
increased to $1,000,000 in 1935 and
■

Nearly all of Lockbusiness received $1,600,000 in 1937. Net earnings of
last year was under the so-called $1,000,000 were reported• in the
¥target-type" contract. This type relatively bad .industrial year
of contract provides the
manage- 1938.
In 1941, sales reached the
ment with a
strong incentive to $13,000,000 level, with net earncut costs by
placing a premium on ings of 1,900,000. A poor tax base
heed's military

•vanm&i

ZIPPIN & COMPANY
208 South La Salle
St., Chicago 4
Trie. RAndolph 6-4696
Tel. CG 451

improved efficiency,

restricted earnings during the war

companies

and

in affiliated j

Canada,

Australia

the-Union of South Africa,

Important

earnings from these ?
be reflected in Ma- j
sonite figures for 1951 or 1952. An
sources

BUY

SAVINGS

BONDS

Average price increase of Masonite products since 1939 is about,
30%, contrasted with almost 100% ;
in the average of all other building products. Masonite has a sub- J

important factors aiding the s,tantial^ investment

continually

000

ls conservative.

investment dealer

PHILADELPHIA 2, PA.

loan to the Equitable in 194^ and
a timber .loan of $900,000 at 2/2%;
"I part Payment for the Califor-t
y: The present ratio
debtto n®* worth (one to four)

1,000 uses." Applications
to offices, public buildings, stores,

your

panc^d through ^a $5,000,000 3%

stated by the
wonder

"The

wood of

ters and

$1 per snare in 1933. Expansion
since the war was partially fi-

from

prospectus

resulted from reinvested earnings.
^ast reported book value per*
snare was $37.48 contr^tea witn

United States Patent Office. These

*nat, oi the present net worth or
$25,000,000, about $19,000,000 has

pered

assuring

series

produced and
Masonite

names

the receipt of an order for 45 additional P2V search-patrol

planes
the company a steady
production schedule until the fall

finished panels are of great
beauty and durability tor ceilings
a*ld w* r?:
seems lair to' say

ings

Over-the-Counter

Quotation Services

may

for 37 Years

important new plant in California,

sf5veu eiga^ Western t
Jjtates> snould be in operation j
thls summer and be a factor m
sales and earnings by the 1951
S,
year.
^

g00c*

r<~;atl®ns arJf Q11116

a^d The attitude of the manContinued

page

National Quotation Bureau
<

Incorporated

Established 1913

46 Front Street
CHICAGO

45
V

New York 4, N.Y.
SAN

FRANCISCO

j 1 At\n\

COMMERCIAL

THE

Number 4896

171

Volume

INDEX
Page

Cover

Economy—Melchior Palyi_>

Prevalent Stock Market Misconceptions—Lucien O.

Wartime

"'^Prosperity—Arno H. Johnson
Adams

Final

Shattuck

Rise

Market

Still

Wilfred

—A.

Ma.y

—Beardsley Ruml

purchasing
6

our

the

fore

war

Tightened

—Thomas
"

View of Current World Trade—A.

A Birdseye

Imports,

Cause of Reduced Equity

;
..

Treasury

Gets

Canova

Thomas

—

Post

—

Comptroller to

(Boxed)

Past?

Don't Expect Too Much
Plant Expenditures to

a--

1—

25
25
31

—

From Point Four, Sproul Warns

Decline 11%

Regulation of Bank Holding
Independent Bankers Association Reports_____

Debentures

--J-

Extension of ERP Seen as Key

to Avoid Major World

Depression

See

Stocks

—

___

Securities

Canadian

___

Dealer-Broker Investment

Mutual

the

18
9
8

Reporter

May

mature

the

For

Public Utility Securities

___

—

♦

;

Security I Like Best

___

—

(Walter Whyte Says)—

Tomorrow's Markets

Washington and You
on

1929 Pre

depression high_
Depression low
year

Drapers' Gardens, London,
land c/o Edwards & Smith.

COMMERCIAL

annual

over

TJ. S. Patent Office

Company

REctor

2-9570 to

25, 1942,
York,
N.
Y.,

Thursday, April 6,

post office at New
the Act of March

at the
under

1879.

190.8

191.2

200.0

sense

Manager

1951—

by Mr. Johnson before
Savings Bond Conference,

address

are

Offices:'135

HI.

South La Salle St.,

(Telephone:

iMi

EXCHANGE

complete record of

potential corporate financ¬
ing consult

Real

our

"Securities
section.

Registration"

Purchasing
Power In

1940 Dollars

(Billions)

$67.6
48.8

72.0

100

4.178.8

171

169

188.0

•

113.2

165

179.4

j
|

75.7
<111.8

•

121.2

employment and to advance
further our standard of living if
only we will make the small additional effort needed to create the
- demand.
•
The fundamental elements of
,our high purchasing power and
-high productive ability still exist
and

** ^
did in Our prewar
history and justify the belief that

Di"

Continued

on page

interested in offerings

YOU PROFIT

from their interest
Because

they want all the news,

community leaders in
cities,

towns

11,000

and villages turn .j

State 0613);

New York Times. That means

of
'

;

•

High Grade Public Utility and Industrial

advertising is read by an

your

interested

audience all

U. S. with money to

PREFERRED STOCKS

over

the

invest. And

airplane delivery of The Times

Spencer Trask & Co.

Countries, $42.00 per year.

Members

Other

•

1950

Thursday (general news and ad¬
vertising issue) • and every Monday (com¬
plete statistical issue — market quotation
records, corporation news, bank clearings,
state and city news, etc.).
Chicago

STOCK

prediction 'tain our high level of production

in 1950

unemotional analysis of
have taken
place since 1940 in our national
productivity and real purchasing
power will indicate quite clearly
that it will be possible to main-

Subscriptions in United States, U. S.
Territories, and Members of
Pan-American Union, $35.00 per year; in
Dominion
of
Canada,
$38.00
per
year.

New

puts

cation in

sale the day of publi¬
than 100 key cities, j

Members New York Curb Exchange

York Stock Exchange

Other Publications

Every

billion—

46.3

in 1940.

Possessions,

Other

}■

Consumer

75.7

any

Subscription Rates

Publisher

SEIBERT, President

WILLIAM D. RIGGS, Business

MEMBERS

all

Real Purchasing Power

45.1

the basic changes that

1950

St. Louis l.Mo,

reach

122

second-class matter Febru¬

ary

9576

HERBERT D. SEEBERT, Editor &
WILLIAM DANA

;

COMPANY, Publishers

Park Place, New York 8, N.

$78.8

Reg.

$12

fast

Personal

E. C., Eng¬

WILLIAM B. DANA

rate

4 times

$82.5

for

accumulate

Price Index

come

street

regularly and confidently to The j

and

FINANCIAL CHRONICLE
'

continue

(1940=100)

1949

This is in

potential for increased standards '- For
of- living.
And personal savings

(Billions)

of events to

SECURITIES

olive:

509

power

could

services'

and

(Billions)

prewar

INVESTMENT

MIDWEST

expenditures

Consumption
Expenditures

B°n<iS
1

Stix & Co.

would
1940 by 60% and
6%. Personal con-

After taxes

March,

Published Twice Weekly

••

prices

present

by over

goods

—

page

Mast.

Tel. HUbbard 2-1990

$200

income

purchasing

•

•An

The

1949

Personal

but

___

for

\sumption

about could

just

1948

disposable

Disposable

With

taxes.

real

Disposable Income, Consumer Expenditures &

1940 Last

43
___

—

The State of Trade and Industry

10 Post Office Square, Boston 9,

and to
higher

■•••;'v.':', $188 billion or about $10 billion
years we have greater than 1949—an increase of '
constantly with over 6'% in the immediate 1950'

1950 Goal

in Registration

Securities Now

exceed prewar

future.

the

reetion

Securities Salesman's Corner__,

article

—
,

for,

LERNER & CO.

of the American people after cor-

the face of all these predic-

___

Railroad Securities

*See

last

bombarded

months
In

1933

Prospective Security Offerings

The

which are beginning
in rapidly increasing

population

Governments

encourage,

after

billion

Income

___,

Report-

$9.25

Investment Securities

present production

1950,

importance from now on is the
large volume of U. S. Savings
Bonds held by the mass of our

Our Reporter's

income

is the huge backlog of ac¬
cumulated savings.
Of particular

Wilfred

Selling about

and
would provide over
$200 billion of disposable personal

—

Observations—A.

5M>

over

vigorously

based

Huge Savings Backlog

7
___

—

News About Banks and Bankers

Our

work

predictions of an imminent post¬
war
depression with heavy un¬

Sterling Area"—

Funds

and

ernment

important factor influencing
stability of our purchasing-

been

___

of Business Activity

Washington Ahead of the News—Carlisle Bargeron_

From

Indications

___

Recommendations

Einzig—"European Payments Union vs.

pros¬

of 1929 or
times the de¬

employment

employment—usually

Events in the Investment Field

Coming

of living of our people.

standard

amounts.

Man's Bookshelf

Business

most

our

review of the Cement Indus-

try available on request.

years

character in relation to standard of living for the Amer¬
distribution and participation ican people. Only an advancing
in the labor force; with our in¬ standard of living can provide the
creased- ability to produce; with markets for our increasing ability
the
increased
real
purchasing to produce, or can provide em¬
power
of our population;
and ployment at satisfactory wages
with the opportunity for a sub¬ for our growing labor force.
A
conservative goal for 1950
stantial further
increase in the

.Cover

(Editorial)

Insurance

and

Bank

times

prewar

of cement
Southern

changed

Regular Features
As

power

37
37

H. Drumm
FIC Banks Place

1940

changes have to do primarily with
our
increased population and its

Square Deal, Says James

Foreigners Must Give Our Capital a

over

pression low of 1933, is a basic
challenge to business and to gov¬

Cos.,

Federal

Favor

Bankers

22
24

Satisfactory

Business Outlook Very

An Unhappy

10
17

Strongly Attacked

Treasury
Terms

and

•

fast-growing

age

Deflationary Trend
Truman's Proposal to Transfer Currency

tional

expanding

(common) STOCK

Analysis of this Company and
a

present high level of na¬
income, which now stands

living.

Interruption in

Price Upturn Seen as Temporary

Farm

;

perous

of America

GLASS B

A leading producer

Present High Income Level

Johnson

Arno

RIVERSIDE CEMENT CO.

at the highest

was

b, i gher
standard
of
a

Senator Flanders

Modified Frear Bill Offered by
Branch Banking and Bank

'■

Jj.

:'f

Webb

Closing the Dollar Gap—Hon. James E.

prices

total

This

offered

markets

WE SUGGEST

California.

be¬

For

so¬

NEW YORK

Large Appreciation Potential

services.

problem

bond.

WHitehall 4-6551

in 1949, and so
personal consumption
expenditures for- all goods and

must

lution

over

obsolete

WALL STREET,

in postwar

were

yond the

Financing

Sakolski

—A.

that

loy-

Finance—James B. Ramsey, Jr

Low Interest Rates—One

—

creased

nemp

become

hopping

that

the

get

basic

of our population after full
correction for both taxes and in-.

level

ment

can

power

inevi¬

Else—Curtis E. Calder

Why I Chose a Career in

W. Zelomek__ 12

Insomnia—M. Paul Reynaud

The World's
Increase

table

——

seri-

depres¬

sion

in the

You

Telephone:

high of $191.2 billion in 1949.
Likewise, the real purchasing,

be¬

any

that

o u s

Holding Companies' Control Should Be
B. McCabe

Bank

into

those

cash

office .with

for

clamoring

woman

Easter hat?

necessary

we can con¬

spite of hampering
as

little

the
new

industries, coal and steel, the total
disposable personal income after
taxes reached an all time yearly

stampeded

lief

Dow-Jones Industrial Averages

Duncomb

—John

Housing Activity in the Nation—Ewan Clague
Needed

and

strikes such

be¬

allowing
ourselves
t o

■

—Ralph A. Bing

Changes

since

economy

that must be taken

into consideration before

Outlook for Commercial Banks

The Earnings

tions

Some basic changes have taken

place

Is
a

our

indicate that with small effort
tinue advancing our prosperity.

power

Director-Trustees

and

Management

Corporate

volume of maturing Savings Bonds

purchasing power. Maintains basic eco¬
changes since 1940 in country's productivity and real

nomic

Them)

Charles Sawyer__

FOR A BONNET!

will stabilize nation's

___

___________

____

Business!—Hon.

for American

God

Thank

Mr. Johnson holds large

—_

Coe__

Ahead—Jacques

SWAP A BOND

J. Walter Thompson, New York

Fiduciary Field—

—_____

(How—And How Not—to Read

Financial Pages

The

■___;

By ARNO H. JOHNSON*
Vice-President and Director of Media and Research,

Continued

__________—____

Investment Trust Securities in the American

Mayo

Savings Provide Strong
Cushion lor Continued Prosperity

Hooper_Cover

for

Cushion

Strong

Provide

Savings

(1403)

Wartime

Article$ and News
Our Paper-ized

CHRONICLE

FINANCIAL

Bank

and

Record — Monthly,
(Foreign postage extra.)

Quotation

$25.00 per year.

Note—On account

of the fluctuations In

the rate of exchange,

remittances for for¬

eign subscriptions and advertisements
be made in New York funds.

must

25 Broad Street,

50 Congress Street, Boston 8

New York 4

Hubbard 2-8200

HAnover 2-4300
.

Teletype—NY

Albany

Chicago

Glens Falls

.»

1-5

' \

Schenectady

$(jc
"All

Worcester

fork SinwjJ
the News That's

Fit to Print"

■

••

rt rtH-nr'»ns '

(1404)

THE

COMMERCIAL

man, excepting always
lew public policy

Fiduciary Field

By MAYO ADAMS

SHATTUCK*

American itgai
the

field.

one

ited

vored

the

Professor

set

wills

includes,
a n

also,

enormous

number of

re¬

lated compan¬
ions of a rela¬

tively i
mal

Mayo A. Shattuck

o r-

and

very modern nature.
transaction may be said to be

duciary in
one

nature

A
fi¬

possesses

central

characteristic, i.e.: that
person, or
corporation, or
committee, or board, is charged
some

with the custody and management
of some other person's money, for
some
specified purpose; whether
the purpose is charitable or pub¬
lic or strictly private in nature.

not

the

Street

certain

cne

that

the

thing in Wall

which

obvious

strength of the internal structure.

never

securityconscience, of another, is the
mindeci
eyes
single invention of the have
been fo¬
Anglo Saxon legal mind. Of course
cused

The

English Background

the

aver¬

Clear-Cut Classification

see

standards

bond
bond

to 102 for the last few
months.

they

would
jump.
Clustered
for
a

cause

relatively

narrow

moment, pretty much

vestigial remains

The

Dow

Jones

below

101,

would

concern.

(e) A

cyclical
period
in. the
stock market based on the 41-44month

area,

sense, were rudimentary and non¬ the hope of selling out eventually
commercial, to say the least. The to still more enthusiastic bulls,
idea, for example, that a trustee usually find themselves frozen.
disordered might trade the farm or the
trust
as

prices.

figure has been around 101%

breaking

well-defined

'.-/K-

wonder¬

distinc¬

are,

some:

rection

long period in

important for our
the fact is that in each briefly,

weakness

ing in what di¬

ages,

;

I hope I won't bore
you if I take
moment
to
show
you,
very

are

the

tomers' debit balances.
(c) Av-40% to 50% reduction in
the average short interest
(which
right now is still at its peak).
(d) A declining tendency for

market

reflect

(a) Unusually
high
volume
averaging in excess of 3,000,000
shares daily for several months.
(b) Substantial increase in cus¬

greatest

very

and

Here

managed for the benefit in equity,

distinctions

But these labored

on.

tions

shall
No

one

bull market.
The

formal,

indentures.

Maitland,

important break now would
interruption before final excited stage of the

mean

English legal scholars, once happens — and
the
unexpected
observed, I think rightly, that the often does.
conception of the trust idea, that
During these
is, the idea of possession of legal
past
t wo^SaSil^HSI
title by a fiduciary to be held and
months
all

which your businessman cre¬
for his family or some fa¬

charity. These

merely

u.at

Co.

even

Jacques Cee
how the fiduciary device
the obvious
such arrangement there is a fidu¬ developed at the English law and
implications were that if they
ciary function, the management of if I then indulge in a few combroke out on the down
side, we
the
property of others
on
an ments upon how our social econ¬
were in for a substantial
reaction;
and our fiduciary proced¬
agency or trust basis, and that omy
conversely if on the up side—a
what we have to say about the in¬ ures appear to me to'be
evolving. brand
new
bull market swing
vestment
powers
When the will and trust were
possessed
by
would be under way.
these
managers,
and
about the new in England the ancient feudal
It is as simple as all that.
Just
eligibility of investment company economy was holding
strongly. wait
for the signal to buy or sell—
shares in those portfolios, is to
Money markets and dealings in
then jump in and
some
collect the
degree or other applicable negotiable securities did not ex¬
to all of them.
v
To be sure, in our ist.
The fiduciary function con¬ profits.
i
cumbersome and very largely out¬ sisted
As a matter of historical
very largely of a sort of
fact,
moded sets of laws bearing
more often
than not, any "mass"
upon protective holding of some res, as
these investment powers one may the
lawyers call it; as, for ex¬ buying on obvious bull or bear
discover various types of stand¬
ample, a farm or other tract of signals usually turns out to be un¬
ards: one for a
church, another for land, and of yielding the
profitable.
When it happens on
produce,
a
cemetery association, one for a whether it was wool or wine or the bull side, the type of
buying
guardian, another for a trustee, food, to the use of some bene¬ which follows the
popular bull
one
for a government
fund, an¬ ficiary, very often the church. The signal usually exhausts itself very
other for a private fund like a active
functions of the trustee, soon
thereafter; consequently
pension or profit sharing fund, and while
managerial
in
a
limited those people who jump in with

decedents
in

and

s .ow

lavesrmeet expert declares

been

purposes:

genera¬

tions been
forth

are

have

for

ates

ssic trusts

which

stoA>

the

social

you real¬
ize, is not limsure

has

that invention did not spring full
so-called charitable
born
and
full shaped from any
religious corporation,
one brain, or out of any one situ¬
on
the one hand, like churches,
ation.
Our law is not built that
schools, fraternal orders, library
way, thank Heaven. We do things
and
cemetery
associations, and
the slow way.
true or express
trusts, like the
between

That

field,

trust

COE

Senior Partner, Jacques Coe &

great

certainly ancient restrictions on trustees'
be removed, and their purchase of investment
company securities legitimized.

By JACQUES

the

usefully
adapted to almost every kind of
business and family transaction.

flexibility—and

fiduciary

Market Rise Still Ahead

very

against Perpetuities and the
allied
rules
effecting
restraints
upon
alienation.
English
and

politic-economic trends,
aggregate wealth <s being more widely spread, problems of
family's capital management becoming more pressing, diversi¬
fication e/er more .mportant and various media for diversified
investment grow.ng more valuable.
Hence accumulated fidu¬
ciary accounts must be managed with greater imagination and

My job, on this pleasant occa¬
sion, is to try to portray the oppor¬
tunity for investment company se¬

Thursday, April 6, 1950

Rule

Director, Boston Fund, Inc.
President, Massachusetts Bar Association

curities in the American

the

those known to the lawyers

Mr. Shattack maintains under present

must

CHRONICLE

limitations, like

The American

powers

FINANCIAL

glo Saxon trust is limited only
by the imagination of the drafts¬

Investment Trust

Former

"formula."

ferred

(Often 'r re¬
previous bulletins.)

July, 1950, is the median month,
and

historically, ,a top could be
five months
early or five months
late, so that either we could al¬
ready be in the high period
it

could

also

run

zone

long as
Nevertheless,

November,
1950.
broadly speaking,

are

the

danger zone.
(f) Our own

"Index of Confi¬
calculated relationship
certain speculative and

dence" is

between
investment stocks.

According to
this
index could be turning down some
time in June or
July.
a

moving

(g)

average

matter

the

record,

formula,

motor

historical

over

broad period of time have a
hsbit
of making their
average highs and
lows from three to four
months
ahead
of
the
overall
market

averages.

market

this

writing,

have

averages

the

continued

their

advance, but the motors
is
no
satisfactory way past. We must know about them, res for some other
made their high around the mid¬
Merely an Interruption
thing of value,
classify or categorize these fi¬ to be sure, in order to know the and thereafter account
dle of
for
the
February, so that if the
For
the first time
since last
duciary transactions. Distinctions degree to which we can be of
motor group fails to make a new
proceeds, didn't begin to occur to
are often drawn, for
June, 1949 ("Throw Away Those
example,- be¬ service in these fields, but we can anyone until there took
high between now and the middle
place that Dark
tween charitable trusts, on the one detect in the Prudent Man
Glasses") we are beginning of
Rule, world
shattering series of eco¬ to
June, one of the most signifi¬
suspect that an important in¬
hand, and private trusts on the of which I shall speak in a mo¬ nomic and social
cant red flags will be
changes which
waving the
other.
terruption in the rising trend may
Distinctions have also been ment, a tide or drift of legal de¬ we now
recognize under the his¬
danger signal of "look out below."
not be too far away.
drawn
between
so-called
court velopment which we hope may toric term
This inter¬
Industrial Revolution.
The $64 question
ruption would mark the end of the
trusts, like testamentary trusts, on greatly simplify a very confused When at last that
really is
series of social
whether the coming interruption
the
one
second phase before
hand,
and
non-court picture in the forseeable future.
beginning the
changes had been completed the
is going to be
third or final phase.
trusts, like life insurance and per¬
major or minor.
In one of
theory
of
trusteeship
likewise our
Trust Technique Flexible
With the data at our
previous bulletins, we traced
sonal property or real
disposal, we
changed; emphasis shifted from
property
the classical
One thing I might speak of in the
pattern
of a bull ought to be able to make a pretty
concept of preservation and
trusts, on the other hand. Dis¬
good guess, but in the meantime a
passing.
The trust form is at protection of
market, separating it into its vari¬
There

tinctions
•An

have

address

also

been

drawn

Mr. Shattuck

14th

Annual

the

once

the most flexible and useful

all

managerial

Central States Group
Conference,
Investment Bankers
Ass'n
of

legal nature.

Chicago, March 29, 1950.

said the

America,

use

notions

res,

to preserva¬

tion and maintenance of the value
of the res.
This second

ous

has

As Austin Scott has

been

called

the

Quantum

market

concerned

vation

with

the

preser¬

intangible and com¬
paratively liquid wealth than he
with the tangible sort of

was

previous centuries

course,

United
rural

some

States,

districts

—

areas

entire

particularly the
New England,*

INVESTMENT

BANKERS
>

Exchange and Other Leading Exchanges

UNDERWRITERS AND DISTRIBUTORS OF
INVESTMENT SECURITIES
~

BROKERS OF BONDS, STOCKS,
COMMODITIES

Wyotf Wires

•

Home Office: Atlanta

•

Phone ID-159

not

greatly

need

the

art

tell

you

trusteeship

waxed in the golden
days of Vic¬

toria, both in England and in the
United

States.

United States of
most

followed
Old

the
in

The

expanding

America, through

nineteenth

French saying, "The more
changes, the more it remains

the

It.*

page

Members

m e

when

York

Curb

Exchange

York

Chicago

useful

the

have

one.

proven 1

Exchange

Exchange,
of

Inc.
Trade

Exchange

And other Exchanges

Cotton

NEW

Exchange* BlcJg..

YORK 4, N

.....

guided by certain tech¬

signals which

Cotton

Board

New Orleans Cotton

CHICAGO

nical

Exchange

Commodity

ferent," hence the market is bound
to go much higher.

the-1 i

Stock

New

effect

Portents of Future Troubled

York

New

be many

the

New

that "this time everything is dif¬

will

1856

H. Hentz & Co.

finally reach the top of

market, there
logical arguments

footsteps of the should

Ccntinued

Established

same," should be applied to
stages of all bull markets.

Country in developing what

Liquid

—

DIgby 4-2727

final

This

century,

Refined

Exports—Imports—Futures

(some¬

The
it

this

how

—

is over or nearly
practically all previous
culminations, there

have been distinguishable

When
The Respect for Property

SUGAR
Raw

market

where along the line of the crest)
a number of red flags.

often finds examples of fidu¬
ciary administration in both types
of property.
one

STREET

aspect
In

over.

res

the

WALL

NEW YORK 5, N. Y.

clusion that the bull market in its

bull

although,

harm.

LAMB0RN & CO., Inc.

dollars, with which he started his
^
The third and final phase al¬
long expedition. With the advent,
ways turns out to be the most
particularly in the nineteenth cen¬
period—with excessive
tury, of every sort of trading mar¬ exciting
buoyance and
with
everything
ket; markets for real estate and
going to "500."
. ,
, . . |
produce, bills and notes of hand
Presently, we see nothing in the
and, ultimately, participations in
business enterprises like shares of broad overall picture to warrant
stock, the trustee became much either the assumption or the con¬

Members New York Stock

selling here and there should

not do any

theory; under it the trustee was
recognized to have performed his liquidating
while -far - sighted
duty rightly and adequately if people are accumulating.
during the period of his trust he
During the second phase the
had
preserved
intact
the value public
gradually acquires a be¬
calculated in pounds
sterling, or lated realization of business im¬
in legal tender
Troy ounce gold provement.

and form of the An¬

little

Briefly, during the first phase
discouraged and tired holders are

theory

periods of particular

behaviorism.

DETROIT

GENEVA,

%
: 1

PITT3E.URGH

SWITZERLAND

past—indications
f
{

»-j

COMMERCIAL

THE

Number 4396

171

Volume

(1405)

FINANCIAL CHRONICLE

Modified Freer Bill
Offered

by Flanders

Electric

State of Trade

Ralph E. Flanders, Re¬
on March 29

the

Frear Bill

the

duction rising

would

its reg¬

Ralph E. Flandera

firms

The

million

300

proposal

Flanders

new

corporations, ir¬
respective of size, to send out once
every 12 months "a statement in

would require all

detail

suf-icient

all

enable

condition

poration at

such

cor¬

time not more than

days prior to the date of the
mailing of such statement."
solicit

would make it unlawful to

"unless the solicitation is
accompanied by a statement in

proxy

sufficient detail to enable the per¬
whose proxy, consent,

son

thorization
tain
of

the

solicited

corporation

au¬

ascer¬

condition

financial

true

such

date

not more than 90

days prior to the
date such solicitation is made; or
knowingly to include in any such
statement any false, inaccurate, or
misleading matter or information
omit

from

statement

such

any matter or information the ef¬
fect of the omission of which is
to

render

curate Or

such

inac¬

statement

misleading."

Senator Flanders

explained the
of his action as follows:

purposes

offered
it

cause

abuses
almost

substitute

the

seemed

be¬

the

that

instanced

by the SEC lay
entirely in lack of infor¬

latest

reports,

3,000 miners

large producers advanced prices at the mine 10 to 30
ton after the contract with the John L. Lewis union was

cents

signed last month, but many found it necessary
increase to hold their customers.

for

to wipe out the

fuel oil into the market

sharp have been the inroads of

seaboard, it is understood, that large
in the metropolitan area have had offers of coal at

coal along the Eastern

consumers

prevailing before the wage

prices 15 to 35 cents a ton below those
agreement.
*

past 18 months.

Virtually all major steel product classifications are in buoyant
demand
with specialties getting more attention, the magazine
notes.
»
•
*
'

the building season gets
continue pressing with no let¬
down sighted barring labor trouble now brewing.
Railroad needs
are
heavier and small fabricating shops are getting more tank
and similar work.
Appliance manufacturers, too, are having a
good season.
'
'• .'"''-V:
Structural steel needs are rising as

under

way.

Auto requirements

amendment

aims

that

assure

New

first quarter of 1950
record and 18% above the like 1949

construction put in place during the

$4,400,000,000,

stockholders will be provided with

totaled

information

quarter, the Departments

the

company

statute

enforceable

courts.

will

legislate

reaucratic

Federal
necessary

extension of bu¬

' 7

of Commerce and Labor report. Private
construction rose 17% and public building rose 21%.
Non-farm
home building accounted for 44% of the quarter's total, against
35% in 1949.
Construction in March was valued at $1,500,000,000,
8% above February and 18% higher than March, 1949.
.
:

The

(Special

The

Mack is

now

during March,
those of March,
nine months of
1 is expected to be close to 5%

from

receipts

income

OHIO—John

that began last July
like period of the previous

the fiscal year

under

the

year.

phenomenon, a tabulation of the
market's transactions pre¬

stock

confine my

May

account

the

tion of
to

financial

time,

most

course

apply

general

journals —and

electric

to cover the following

iron

(1) A brief description
financial section, and of

the

it.

The

members of

Coverage

and

Makeup

Bearing
averages

Newspapers

the stock market
stock and bond

their

itself:

first consider our

own

—

daily,

monthly,

variety.

fed

and

"lay"

their

section of the newspaper,
the day's developments
in
politics, world affairs, local
doings, society events, editorials,
court decisions — and even in¬

useful

♦

ies

A
on

pocket-

But it is in

particular.

lecture

in a ser¬
for Womea,"

by Mr. May, fifth

"Investment Planning

given under-the auspices of
Co.,
Hotel Barbizon, New
March 28, 19S0.

have adopted the
daily publication
of
the
past day's "most active
stocks," in box form on a volume
Most

sports, deaths, cartoons,
and shipping news—there may be
items
having direct or indirect
connotation on finance in general

individual's

which incidentally is
growing army of

the

technicians.

cluding

the

daily charts of the mar¬

own

ket's trend,

carrying

Some

that

realized

every

and

(on an hourly basis).
the
papers
publish

and Sun"

should

papers

technique

basis. The "Times"

giving

and

"Tribune1"
Street

and the "Wall

15,

Journal"

issues.

(In carrying the implication of
importance, such ranking of stocks
-

Shaskan &
York City,

lieu

Ccntinued

page

volume

market
page37

39
VIE ARE

PLEASED TO

THE

are

pleased to announce that

KENNETH

COLUMBUS, OHIO—Harold B.
become

OFFICE

Co.,

J. HOWARD
AT

and

associated

ANNOUNCE

OPENING OF A

CHICAGO

McDonald

and

yearly basis—are published
daily by the N. Y. "Times" and the
newspapers, of which the nation
"Tribune," the "Tribune's" consist¬
has 300 morning editions with 29
million
circulation,
and
1,450 ing of 100 stocks broken down by
industries, and the "Time's" of 50
>'PMs" (afternoon editions) with
stocks.
The "Wall Street Jour¬
40
million
circulation. Of this
nal" uses the well-known Aver¬
grand total about 80-90% carry
ages of its affiliated firm of Dowfinancial news of some kind, al¬
Jones, as do the "Journal of Com¬
beit much, including that in the
merce," and the "World-Telegram
tabloids, is of the pink-pill spoon¬
Let

the

(Special to The Financial Chronicle)

with

HAROLD L. GUMES

West

SOUTH

231

Broad Street.

have been admitted
'mmiiiiiiiiiiiiiiigimiiiiiiiiiiiiiiHii

our

TELEPHONE:

General Partners

firm

ANOOVIR

LA SALLE

UNDER THE

STREET
TKLEtrPEi C<5 1875

3-8741

MANAGEMENT OF

Trading Markets
American Furniture Co.

Bassett Furniture

Ind.

*■

Scott, Horner &

Salt Lake City
Beverly

Mason, Inc.
Lynchburg, Va.
LD 33

tmmmiiMUiimiinwiimtimnm!

M. SEABER

Established 1915

and other

Tale. LY 83

Stock Exchange
Principal Exchanges

Members New York

Dan River Mills
it1

MR.

J. A. HOGLE & CO.

Broadway, New York 6, N.

Los Angeles • Denver • Reno -• San
Hills • Riverside «' Boulder • Butte

Ogden

Spokane

•

Wm. E. pollock

•

Missoula

20 PINE

Diego

■

STREET

NEW YORK

5, N. Y.

Telephone: HAmover

April 1, 1950

weekly

as:

Inc., Union Com¬

McDonald Co. Adds

has

course

production,
production.

Market

(3) How to

it; and (4) How not to read
"' ■■'••V
: •

read

power

and steel

Stock

(2) Who reads

financial section;

the

wealth

tion, railroad carloadings, oil pro¬
duction, department store sales,

to trade publica¬

how it is made up;

prices,

figures of automobile production,
bank clearings, business construc¬

tions and services too.
I propose

finance,

and

business

financial

all

course

offered

specific indices on the

the

observations and conclusions will
of

the

There

dailies.
my

—

tions

sec¬

daily newspapers, and

our

bases

financial

of reference to the

Midwest Stock Exchange.

Hackett

along with a resume
usually leavened with
author's individual explana¬

vious session

lecture

specific

Wilfred

specific

news

If this trend con-

Continued

associated with H. L.

Building,

taxes

according to early estimates, will be 15% below
1949.
Its revenue from all sources for the first

Financial Chronicle)

Emerson & Co.,
merce

Treasury's

of business, finance

restric¬

this

book

Joins H. L. Emerson

CLEVELAND,

new

for. that

government

purpose."

Federal

in
be

not

any

financial

news

re-

tions, I will in

the spotlight in the
week.
Frantic con¬
sumers, especially of the light, flat-rolled products, are contracting
increasingly for premium-priced steel.
Practically all automobile
companies, including strike-bound Chrysler Corp., are buying
conversion metal.
Smaller manufacturers, such as miscellaneous
stampers, over the past several weeks have been adding to the
clamor to get on converters' books.
This all adds up to what
trade authorities describe as the most hectic conversion situation

account of the day's
developments in the world

to a running

grounds:

Ingot conversion tonnage again holds
market, says "Steel" magazine, this

in the

one's

time

steel

has access

dare not miss. Here he

and industry;
companies, in¬
financial cluding their earnings and divi¬
j o u r n alism dend action; and a statistical rec¬
are
crucially ord of several thousand prices
of
items
varying
from
stocks,
bound up with
basic
invest¬ bonds, money, basic commodities
and textiles, to the cash and fu¬
ment policies
and practice. ture prices of farm products. And
is
that
most
popular
Because
of there

same

•

plete coveiage of events and in¬
formation which he, as investor,

action

the

Most

section

the assurance

specific, concentrated, and com¬

what to avoid

coal, both

mation provided stockholders. The

status

caveats

result of the industry's new wage agreement
now being felt.
.
•*,

Leading coal operators predicted that the number of displaced
bituminous miners would reach 50,000, or one-eighth of the
national total of 400,000, by midsummer under the combined pres¬
sure of price resistance and higher labor costs.
y.

Senator Flanders' proposal also

that the reader gets

the

For

Pennsylvania coal fields have been made idle through the closing
of high-cost coal mines in the four weeks since the industry signed
its new wage agreement with the United Mine Workers.

stockholders to ascertain the true
financial

and initial
week ended

the adverse effects of higher prices of

employment are
According

than

stockholders.
,

respect

However,

assets

the

1949, which resulted in overall industrial pro¬
moderately above that for the corresponding 1949

soft and hard, as a

pow¬

all

emphasize the im¬

March 18.

brought

under

mined

coal

soft

to employment figures, continued
claims for unemployment show a slight drop in the
With

Commission

have

(4) How not to read it.

the financial and business

the "How Not" part
my announced topic, and that
is in no way a sub-title or
parenthetical.

week.

Exchange

having

week

similar

Securities and

ulatory

First let

previous week approxi¬
mated about four times the tonnage dug during a strike in the

by t h e

which

change in aggregate industrial output
with the figures for the

describes: (1)

and how it is made up; (2) Who reads

portance of

Production

spon¬

sored

preceding period.

pending legis¬
lation

Financial Chronicle"

financial journalism Mr. May

it; (3) How to read it; and

for the nation last week when compared

the

for

virtually

was

lecture

the financial section,

J
There

substi¬

milder

ers

Banking and
Currency. This
comprises a
tute

Business Failures

Senate

Committee

MAY*

Executive Editor, "Commercial and

Auto Production

and Industry

subcommittee

By A. WILFRED

Commodity Price Index
Food Price Index

substitute amendment to

Pages

How—And How Not—To Read Them

Retail Trade

publican of Vermont,
offered

Output

Carloadings

Senator

The Financial

Steel Production

The

i /

APRIL 3.

19BO

2-82441

& Co., inc.

232 S.

BEVERLY DRIVE

BEVERLY HILLS,
Telephones

CALIF.

BRadshaw

2-8440

(1406)

THE

COMMERCIAL

widespread.
in

ities

to undertake

telling public of facts about business
His

istic

depends

system

continued

general

ing Secretary of Commerce, in my
town of Cincinnati, I ad¬
dressed the Advertising
Federa¬
home

ist

This

that

"It

audience,
is

that
i

a's

believe

This

Committee

responsibility
it¬

world

is to

—

maintain

stated

Business Leaders

the

services

and

the

Department of Commerce is
vital to the national welfare. It is
vital because its
primary function

the

most

pervasive

facts

Practically

city,

business

modern

life.

known

fact

which

eral

times

day,

years

with

business—without
apology. In these

day,

the

buy

with

fc.

Mifc?,*

some-

sell

spite

houewife can
for less than it

peas

during the depression.

inflation

in food prices
the increase in the
wages of
industrial workers and the much
and

ter

have

what

should

tried to

success

that

others

Today,

say.

ex¬

Be^rdsley Ruml
business

business

do two

things: It

great

living;

and

accomplishments
part

pros¬

must

sys-T

doing business has affected deeply
the way we live and
even the way
think. Business methods and

must

our

must continue its

contribution

perous

itself

been responsible

tality

have

and

variety

for

large
the

vi¬

American

method acquaint the
Ameri¬
can
people with the extent and
value of that

life. Business has set fhe
tempo of
our living. It has
produced a civi¬
lization in which the

How shall it continue
that con¬
tribution, and how shall'it dis¬
close what it is
doing? In each
of these fields

and

some

contribution.

frequency

part. I

think

another
ment

the

ness

would become of
American

made
as

advertising

knew

what

offered

for

found

she

wandered

through

herself. Even

means

the

business

Business

of our lives that

startling statement

the States of

own

all

much

part

have taken it

and

gon

highly

where

areas
new

tin

address

probably true that today
a higher favor in

fore American

business enjoys

Agencies
vertisers,

the minds of the American
people
than it has

during the

cently

passed.

There

years

have

plants

peas

are

the

grown,

of coating steel with
electrolytic methods,
a

market expanded

tensive

by wise and

advertising,

and

ex¬

better

methods of
moving and deliver¬
ing the product to the consumer.

This story is typical and could
multiplied a thousand times.

The

volume and scope of Ameri¬
business pass the

concur¬

115

affiliated to

announce

BROADWAY,

GUINNESS, MAHON

NEW

YORK

& CO., Merchant
Bankers, London

the appointment of Mr.

Anthony W. Guinness

Vice President and Director and
the appointment
of Miss Jessica
Tyndale as Treasurer and
April

I; I950.

these

private government. A

business is
within
and

the

government

law

the

conduct

its

because

authorized

organized to make

rules

affairs.

for

private government because the
rules it makes within the law are
final and are not reviewable
by

any public

that

the

body.

Some might say

reason

business

owned

private

but it seems to

ness.
over

that .year business
paid
billion in wages and
to
its
employees,
and

$115

salaries

spent hundreds of millions of dol¬
lars in scientific and
industrial
re¬

search.

late

shivered

'48, and

with

result

fear

inventory

accumulation

by American busi¬
dropped by approximately

ness

$12

billion

the

following

So vast is American busi¬

that

dislocation in only one
part
of
its
activity took more
money out of the stream of na¬
a

tional income than
the

Marshall

Plan

have spent
the last

individuals,

contemplate the collapse or
the weakening of this
great
is frightening.
Those

Utopian theorists who in the
clusion

se¬

and
security
of
their
tamper* so nonchalantly

studies

with the structure and the
meth¬
ods of American business

should

realize that American business is
delicate as the organism of the

human

bod.y.

years,

has

places

grown

over

perhaps too

fast and too far, but for the
most

part in
and

healthy and normal way,
functions today not only for

its

own

the

are

one

govern¬

all

capacities: (1)
vendor

tomer,

business
possible

stockholder, (2)

(4)

Let

supplier, (3)

take

these

cities

which

relation

the

them.

stockholder

what

capa¬
may

sense

subject

powers

which

cus¬

the

benefit but for the benefit
American public—with a

smoothness and

efficiency and

Continued

way
ers,

the

•

which

their

are

The

making
the busi¬

for

own

which is to them

ness

customer.

rules

applying to vendors
cover all
the specifications made
by the purchaser on the things
that

are

purchased, the price that

will be paid, when it will be
paid,
the quantities, qualities and
nature
of the things

supplied, the date of
delivery, provisions for return of
damaged or unwanted goods, re¬
strictions
and

the

all the

rest.

understanding
terms

sale
The

between
In

others,

contract

which

embodied

are

these

two

sovereign
into such a

entering

business treaty, both parties
give
up

subsequent

some

measure

compared

making

their freedom

action.

because it

They give
advantageous

with the alternative

arrangement at all.

Customers

other
have dealt with in
consideration of vendors. Most

businesses
our

customers, the tens of millions of
them,
are
individuals

buying

Superficially,
customer

at retail.

the

seems

individual

Continued

great

page

the
busi¬

has

Offer

page

power

TRAD

instead of

being subjected to it.
The
elect
the

stockholders
Board

Board

collectively
Directors, and

Directors

elects

management.

election,

stockholders

the

time

and

hence

CORP.

Coi»i«>on

change

Price 35

They also have the
right to vote on specific rules for
the running of the business
that
may

have

been

*An address

University's
New

Social

proposed

But,

by Mr. Ruml

third

annual

Orders

New York

conference

Meaning of Legal
York City, April 3, 1950.

Concepts,

executed by

tellier &

co*

Established 1931

except at
at

Cents per

the

managers.

Proxy Statement.

s,oek

have

legal right to change the di¬

rectors

the

around, that the stockhold¬
being the owners, would have

rule-making

usually, but not always, other

businesses
rules

placed his
One might have thought

savings?

vendors

semi-finished

another, utilities, transporta¬
tion, and the like. The vendors
are

business and

rule-making
ness

things and services

four

any

stand

examine

employee.

the

are

raw

The third group of the
governed
are the customers.
The businesses
which
are
customers
of

four

those

rule-making

Business

Vendors

group among
under the

The

governed

keeps

governed.

he
Tne

that it would have been the other

re¬

been

private

can

in.

materials, manufactured articles
for resale, or services of one kind

treaty

the governed?

locked

keeps,

business

states.

How We Are Governed
by

two years.

are

price

may
bet¬

second

business
the

/.•

suppliers of

of private
authority is more
significant than the element of

are

governed

ence

not

The
The

that the exists

which

Nevertheless,

himself

because

private government is

ment, who

Secretary.

lars—four-fifths of our national
income—came from private busi¬

the

ownership.

institution

incorporated

business

its rules when
possible, and com¬
them when necessary.
It is in no sense a
figure of
speech to refer to a business com¬

imagina¬

tion. In 1949, over 200 billion
dol¬

even

GUINNESS MAHON REPRESENTATION CO.

does

another

get

promising

pany

government

all.

stock¬

under

choice.

things? ■ A business does these
things by making rules, enforcing

is
be

ness

Washington, Ore¬
the building of

process

months.

Neither businessmen
others should take American
business for granted.

Idaho,

efficient

for granted.

win-

and

this

written

nor

by Secretary Sawyer be¬
Association of
Advertising
Association of National Ad¬
White Sulphur
Springs, West
Virginia,. March 31, 1950.

employment.

Millions of Americans

except
while
she

display in

their

a business or
receive their
income from investments in busi¬

being

store

for

part of

sale

upon

ness.

was

can

emphasis

a pragmatic as well as
flex¬
attitude which is not
dupli¬
cated elsewhere in the world. Mil¬
lions of Americans depend

busi¬

—

Behind

been

the

ible

en¬

*An

one

mind

and

strength of advertising. To
appre¬
properly the value of ad¬
vertising one need only ask what

housewife

with

getting
things done, as well as
doing them
better, has given to the American

ciate

without

have

and

Business

contrary, busi¬

would be a
shrunken
pitiable thing if it had not
joyed
the
stimulus
and

ness

contacts

of those who

advertising is an ad¬
ventitious appendix of
American
On

greatly in¬
of enjoy¬
have been multiplied
many

creased

that

business.

extent

advertising plays times.
one

not

How

least

manner of

continued successful
operation of
American business.

business

of,

a
doing business is insepa¬
fascinating story of
rable from the texture and
business achievement—a
pattern
story of
of our civilization. It is
teamwork by
scientists, farmers,
difficult,'
if not
impossible, to think of busi¬ Investors, engineers and distrib¬
utors.
ness on the one side
It involves the use of for¬
and our cul¬
ture on the other. Our
merly unused summer-fallow land

possible

more
firmly than before, I be¬
lieve that the success of
the capi¬
talist system
depends upon the

American

aware

too few think about—that
tern of

—

than

are

become

may

company

things ready for use. Second, in
doing this work of production and

conditions.

people

he paid for them.
And,
an income on uis sav¬

wishes; he is

distribution,

laws, the
safeguard

True, he may not
his holdings for

citizen

free

job

the
final

please him little better

£f

primarily,
the

holder

o u r

sell

business

world? / First
is

much

ings,

complicated

stock.

able

if he wants

modern
and

his

many,
many
times in every

against business rule-making that
he may find
uncongenial—he may

addition

stockholder has

business

does

Stockholder by Choice

and

else has

American

a can of

cost her

business and government can find
ways to serve
the public more

two

power.

practical 1y
eve ry bo
dy

illus¬

meeting, the stockholders or¬
have
no
rule-making

dinarily

sev¬

cuse

ers'

with

business

higher returns to the farmer, the rently provides people with
pro¬
processor, the wholesaler, and the ductive activity—something use¬
■;■■ f,vness is essential to
the successful effectively.
//;-/
retailer, this product—improved in ful to do—and a social setting in
"How shall American business
operation of our social, economic
quality—is bought by the con¬ which to do it. Third, and
and governmental
finally,
continue its contribution to our
systems."
sumer at a lower price than it was business makes a
place where the
prosperous
living?"
To
discuss bought
V Thus, at the earliest
during the period of low inevitable savings of the people
opportunity this question
intelligently, we must prices and
I made plain
my intention to help
depressed
/ //
economic can be put to work.
recognize a truth which too few
American

the time and
place of a stockhold¬

everybody who lives
town, or village does

trates the way in which
American
business benefits the
people. To¬

their evaluation. I
hope and be¬
lieve that through this Committee

is to help American
business, and
I am one of those who
believe
that the success of American busi¬

little

with

results

one

can

rendered

looking forward

interest

great

The accomplishments of Ameri¬ year.
business have been extraor¬ / What i s i t
dinary. A few weeks ago I learned that
business

by the Department of Commerce

convinced "that the work of

was

Business

.Extraordinary

survey

writ¬

Business Accomplishments

competence and idealism. Already
they have started to work on a

position of

Secretary of Commerce because

are

Advocates election of
director-trustees rep¬
of customers,
vendors, or employees, in

addition to the stockholders.

"maturity" of

thing to

by their

also

executive officers.

tive.

I have met this
group of leaders
and have been
impressed

that I accepted
the

ad¬

vertising

Impressed by

economic

the

efficiency and justice require new concept
directors, to be rule-making body superior to

resenting interests

universities

our

about the problems and

its

strength."

Mr, Ruml declares
of the board

tyranny.
This has made
be-: capitalism look much more attrac¬

the

By BEARDSLEY RUML*
Former Chairman, Federal
Reserve Bank of New York

was

solute

cause

robust

own

statement

strong appeal to the radical
mind, has not fulfilled its prom¬
ises, and has moved steadily to¬
ward, and finally arrived at, ab¬

business, selected
they had shown creative
imagination in relating advertis¬
ing to the welfare of the nation.

today—to

self and to the

—a

well-known

leaders

our

Harvard,

capitalism and
less about its abandonment. Com¬
munism, which had—and still has

advertising.

composed

less about

potentialities

the

importance of advertising I have
formed an Advertising
Advisory

ment of Commerce to

economy. Journalists

ing

Because

greatest

Charles Sawyer

our

adver¬

Committee to suggest ways to im¬
prove the services of the Depart¬

ex¬

aggeration
say
A m e

abolished

tising.

tion of Amer¬
ica. I stated to

even

scornfully of profits.

Young people in

done

so-

hostility" to the capital¬

system.

sign on a store is ad¬
vertising; those things would not hear
or

and

professor

Thursday, April 6, 1950

Corporate Management
And Director-Trustees

attack

the

extravagant and untrue, but it was
not wholly untrue.
Today people

operation

bureaus,

do not speak
dow

book published the first
year/
the war, spoke of the "almost

universal

American business.
In my first speech after becom¬

under

was

of capital¬

success

successful

Advises

in lieu of vague

conclusion is that

own

universities,

pulpits.

political activ¬

regain influence lost to labor and farmers.

statements.

our

ment

business

urges

CHRONICLE

called ."liberal press," in govern¬

Secretary of Commerce

Secretary Sawyer

FINANCIAL

times when the chorus of
antipa¬
thy to business was strong and

Thank God for American Business!
By HON. CHARLES SAWYER*

Broadway, Hew Tork
Tel. Dlgby 4-4500

4, N.

Volume

THE

Number 4896

171

(1407)

CHRONICLE

FINANCIAL

COMMERCIAL

for

From

Ahead

eral business activities recede and

Federal

of the N.ews

will

Sutro & Co., San Francisco, Calif.

Head, Investment Dept.,

Analyst expects present strong trend of bank earnings,
Investigating Lobbyists, headed by
Representative Buchanan of Pennsylvania, which, as I understand
on

important workings of Democracy, could do no
better than

make

study of the recent fight
around the Kerr bill. This is a measure,1 still
a

Presidential
veto, and tremendous pressure is being exerted
on the Chief Executive to veto it, which would
prohibit the Federal Power Commission from
regulating natural gas at its source, as it goes
into the pipe lines.
There is no controversy
over the commission's right to regulate it after
it enters the interstate pipe line system. '
The story behind this fight is one of the
most interesting of the Washington bureau¬
subject

this is

written,

;

ists

do.

The
Carlisle Bargeron

'',

bill

until this bill

who

by Senator

multimillionaire oil
came

up,

was

general

nomic

darling of

campaign contributor.
He felt impelled to introduce the bill
the Supreme Court ruled sometime ago that the FPC
could move into the regulation of natural gas at the source if it
wanted to and two of its five members promptly whetted their
to

It is at least doubtful that he would

told friends recently that he

with

which

time

life to

his

been

has

show

is fed

get

up on

playing for
some

sense.

came

; The

was

any

long, and feels it about
Nevertheless, it was quite

in the House several months ago

general

which

because it is cheaper and to the anguished
It simply won't move in if there is

over

other

most

V-

business

clear that it is amazing that these column¬

be President.

right in this struggle against evil.

will

only

felt

selves

facts

These

bank

for

market

Sec¬

ond, in our "Keynesian" era, de¬
private business sec¬

we s

tor

likely

most

panied

flation

and

accelerated fiscal in¬
deficits; as private-

lending opportunities contract,
commercial banks will step up

"govern¬

investments

their

ASSOCIATION

accom¬

The 2 for 1

split-up in Bank of America's

Johnson has been

and
and

theless

constitute

these

view

secondary1
times.

cushions, the

prospective
decline in lending volume and in¬
combined effect of the

rates

terest

seems

erating
may

likely

holdings more readily

their

income

much

how

depends,

net

in-

will

management

operating costs. Wide
differences in
managerial poli¬
cies call for a careful analysis of,

Branch Banking Builds a Golden Empire in
\

pulse of our economy, it seems
likely that, in a few months, the

partnership

Silcox

with J. Heyward

Heyward

2o., 36 Broad Street.

Silcox

Ferguson
staff

has been

Vic

Wikle

added to the
&

Associates,

Inc., Citizens Bank Building.

„

the West. Just on

the press.
!

;

V-v

individual case.

(Special to The Financial Chronicle)

IND—Ralph

Outlook for General Business

Although the settlement of the
coal strike is now speeding,up the

ANDERSON,

comprehensive and well illustrated booklet,

operating
course,

able to trim

every

our
.

levels., The effect of such an
decline

to build up

and to price the stock within

pocketbook reach of many more people,
We specialize in Bank of America stock and invite your
orcjers# We suggest also that you write, on your letterhead, for

earnings

small stock- *

defense line in slack

Vic Wikle Adds

admitted

capital stock is

while yields are now in
effect, as of April 1. Its purpose is to enable
meager
may/decline evenfurther, such investments never¬ holders among the Bank's 160,000 shareholders
ments,"

Activities

chell

bonds

years

news

NATIONAL

flation in the

come

back to
the House.
This body had been turned completely around and
the bill got through only by the skin of its teeth.
The Administra¬
tion is now terribly afraid that the Republicans will make an issue
of its selling out to the oil and gas interests, and politics being
what they are, that is exactly what the Republicans will probably
do.
But it all started with two little ambitious Bureaucrats.
minor amendment, the bill had to go

C.—F. Mit¬

eligible

ahead, unless the
Treasury, at last, changes its polthe

panfe of Hmetita

them¬

make

gradually.

tected.

point up the pres¬

which would develop in the

of many banks"
balance not shrink more y0Ur COpy
than some 7.5% to 10% from 1949J ^

CHARLESTON,

iiJi?*!!

banks.

Timely

the Senate by only four votes and the propa¬
what it was, you found Republicans, wedded
to the philosophy of free enterprise, voting against it on the
grounds that there came times when the people had to be pro¬

J. H. Silcox Admits

indirectly,

bonds available

dearth of eligible

lines

relatively moderate; the total op-

The bill passed

market sales

open

by the Fed could only

period of years, deflation¬

pressures

ary

ganda having been

now

Re-

First, to the extent that loan'
and investment maturities extend;

amazing what this group of propagandists accomplished.
Truman had earlier given the bill the green light.
Now, he turned
around and directed the Democratic National Committee to throw

Because

—

Federal

lack.

It is

its influence behind

period of general business de¬
cline, the very nature of modern
commercial banking will provide*
a
cushion for operating income

could not have seen
the Leftist Bureau¬
cratic game.
But over a period of weeks they kept up a steady
demagogic chirp about the Kerr bill.
They gave a tremendous
propaganda blow-up to the "brilliant" professor, Senator Douglas
of Illinois, for his analysis of the bill.
This, according to one of
the columnists, was one of the most enlightened studies ever made
by a mere member of Congress and it proved Douglas' ability
for the Presidency; well, at the least the vice-presidency which
Douglas was never giving a thought to because his idea was to
be a good Senator, but this, according to this admiring columnist,
the very way to

Federal debt

gross

the

ists, all well educated, one a Rhodes scholar,
them even if they are overly anxious to play

was

The

thus,

variety;

sure

Fiscal Prospects

decline
15%,
and in an average decrease in in¬
terest rates of some 10%.
During
10%

volume

loan

of the other two fuels.

serve, only a neglible part con¬
sists now
of
the bank-eligible

conditions may result in a

etbooks, this in spite of the fact that there is probably no com¬
modity in the country today more competitive than the three
fuels; oil, gas and coal.
Naural gas is moving into the markets

These facts are

the

tentialities

certificates and notes. - However;
J]J the next 3 years, over 70% of
those bonds will mature or be¬
come callable. Of the $7,1 billion
bonds held

about equal to the boomtime 1949
Gross National Product of $257
finsmpin* and
billion—is likely to continue its icyr
t
iSftinni
two, a resumption of the uptrend in the coming years. As refunding
Recent indication^
downtrend in business in the past few years, pressures
Continued 071 page

year

Now, they sold these gentlemen the story that here was a
bald attempt by the natural gas tycoons to gouge the poor people,
that if the Kerr bill was passed, natural gas costs would be boosted
to take hundreds of millions of dollars from the consumers' pock-

further, which we doubt (in fact,

However, it is the contention of
article that, from a longerrange viewpoint, i.e. over the next

gas.

price gouging.

earn-

trend

this

in the four most widely syndicated columnists in
Washington and told these gullible gentlemen, whose gullibility
comes
from their wanting to believe, that the selfish interests
were about -to betray the people, the poor consumers of natural

any

bank

ment spending (Federal plus local),
unless
the
international
situation deteriorates substantially

throughout the country.
will probably extend
into the latter part of 1950.

This

called

against oil and coal

eligible Treasury Bonds was je-

export

crease

mentary on the impression that honest and conscientious public
servants simply seek to enforce the laws given to them to enforce.

woe

out to be even

turn

However, over-all figures are
telling the whole story,

fantastically destructive poof the H-Bomb may
well help reduce the actual danger of a new world war).
Thus,
a 10% to 15% decline in general
moreover,
the volume of high--economic activity over the next'
yielding consumers'and real estate year or two would seem to be a
loans has, so far, continued to in- legitimate assumption,

this damned "liberalism,"

the two EPC members did their work and

They

;

current,

ings is, of
course, mainly the result of the
1949-50
growth
in
investment.
volume made possible by; lower
reserve requirements, and a slight*
recent stiffening in interest rates;

intervening months before it came up in the Senate,
what they did is a com¬

But in the

Ralph A. Bing

because he has

passed with slightly

was

figure may

higher.

duced for the , third consecutive
year. As at the end of 1949, commercial banks held approximately
$44.5 billion in Treasury Bonds
or roughly two-thirds of their
The combined deflationary ef- total investments in U. S. Governfeet of these factors is likely to mept obligations, wiur the^ reoutweigh the increase in govern- maining third committed in bills,

strong trend

a ripple.
Only a few members thought
justification for the Federal Government's
regulating the price for which the natural gas producer sells to
the distributor than for fixing the price at which the farmer sells
to the market, the price which the mine operator gets for his coal
or the price of oil.
The bill passed easily.

there

the

riod ahead.

possible for him to have been won over.
When the Kerr bill

securities be¬

new

:far from

continued shrinkage in our

immediate pe-

have done

30, 1951, and the actual

beyond

third member, Mon
Wallgren, Truman's friend, who was turned down by the Senate
for chairmanship of the National Resources Board, but permitted
to become a member of the commission, to go along with them.
had

worth

markets, and a growing convicthe
tion that present farm support
work for any levels cannot be maintained inprojection of definitely, both from : a political
bank earnings" and economic viewpoint.
•
lay
ground-

because

They

analy-

sis has to

but

the New Dealers because he was listed on their side and a gener¬

chops.

lion

„

ous

Bureaucratic

ex¬

into the early early summer of -and the Treasury exerts vast
last year. Among the well-known ■ additional influence upon money
deflationary forces, we mention markets and commercial bank
the declining rate of private ex- earnings by the type of debt manon
trends
in penditures
for new
plant and agement it chooses. v
' /
fiscal
and equipment (excepting e 1 e ct r i c
Since the Victory Loan was
m
o n etary
utilities), the improving balance. floated in 1945, the Treasury has
policies. in the market for housing facili- not offered any new long-term
marketable bonds to investors,
Therefore,
a ties, the anticipated disappearance
general eco¬ of backlog demand for new cars, and in 1949, the supply of bank

upon

Kerr

man,

works

the prospects for
business conditions and

pends

sponsored

higher

distribution of
mutual

CHRONICLE

Pennsylvania Brevities

Coast

FINANCIAL

compared

Fred Marshall Joins

Rnfus Garter

COMMERCIAL

SCRANTON

•

LANCASTER

Volume

COMMERCIAL

THE

Number 4896

171

tive

By THOMAS B. McCABE*

Chairman, Board of Governors of the Federal Reserve System

Reserve Board head states although

possible dangerous abuses. Interprets pending bill as
accomplishing the following purposes: (1) overcoming the

give
and

believe

the bank

could

never

forget

that it

re¬

lation, because when your Com¬
mittee in the Spring of 1948 was

into account and give

conside ring

gestions

tion

received

have

well

sug¬

appraise them.

known

never

have

effect to the

bill which

the

Board,

serve
one

your

chief
the

Legislative Purposes

with

then

will

you

recall

ing questioned
some

was

matters

back

the

homework

sort of

that

the

prin¬

post¬

and

Committee

after

submit to

examination.

other

words, the basic objectives 'of S.
2318

the

are

those

same

S. 829 which your

lation had been carefully

ported favorably in the last Con¬

this

consid¬

by this Committee and had

been favorably

reported; and, in

connection, I would like to
that the report of this

endar

this connection, I

had

re¬

that

such

was

possible to act

time,

Committee

re¬

Although the Senate Cal¬

gress.

request

would like to

not

was

bank holding company

that is composed of a

829, the
bill in the

Congress, be inserted in the
record. Your careful study of that

resentative

together with the fact that
the present biH ;(S. 2318) is in
large part similar to it, would

acts

last

bill,

render

unneces¬

advisory capacity to
Board)
and :of
numerous

our

Committee

fact

the members
for attention

there

that

of this
and

has-been

the

some

the

majority

sary

bank
In its report,

tion

pending in the last Congress,
Federal
Advisory
Council

the

banks

829

banks

among
was

In¬

branches.

these standards in

consideration of "the

national policy against

restraint of

trade and undue concentration

economic

and in favor

power

field of banking."

for

In S. 2318

been changed to

the language has

consideration

size and extent of a bank holding
company

consistent

system

with

beyond
adequate

sound banking and the

terest."

(Sec. 5(d).)

limits
and

public in¬

I will com¬

have

important of

Now,

changes.

helpful.
bank

new

one

holding

company

know, not a
the Congress.
Bank

problem is,

you

holding

ommended the enactment of legis¬

lation to

law.

sion

(Sec.3(c).)
also

2318

vision

adds

permitting

soon

nonbanking company.
We
this provides a reason¬
able exception to the requirement
for the divorcement of nonbank¬
ing assets without in any way
breaking down the principle
which is involved.
(Sec. 4(e).)
contains

2318

new

in the existing law and

construed
to

this

respect to new legislation.

State,

extent not inconsistent with

power

which it

exercising

from

Act,

same

now

and

the

May I
panies

the

and

say

at this point that we
bank holding com¬

being

necessarily un¬

desirable; in some instances, they
have been helpful in providing
better

management for banks, in'

assisting them financially, and in

jurisdiction

banks, bank holding companies,
and subsidiaries thereof." This is
tion that Congress

Congress;

do not regard

has with respect to

intended to eliminate any

troduced

Board, as well as others, has con¬
tinued to urge enactment of ef¬
fective legislation on this subject.

section

any

Since

then, various bills have been in¬

"shall not be

preventing

made cer¬

tain broad recommendations with

specifically providing that the en¬
actment of the bill

out in some detail the deficiencies

that

prohibit further expan¬
holding companies

bank

require their elimination as
practicable.; In its annual
report for 1943, the Board pointed

pro¬

any

feel

and to

new

bank holding

company to own up to 5% of a
nonbanking company or to own
an investment company which in
turn owns not in excess of 5% of

the maintenance of competition in
the

before dis¬
cussing in more detail the pro¬
posed legislation and the inade¬
quacies of the existing law, a
word
concerning the nature of
bank holding companies might be

the

implica¬

encouraging
improved - banking |
service.
Nevertheless, dangerous *
abuses are possible in the absencq t
of effective regulation.
One of
these is the unlimited expansion

Continued

in enacting this

page

offer to sell nor a solicitation of an offer to buy any of these securities. The
only by the Prospectus. ■ This is published on behalf of only such of the undersigned
as are registered dealers in securities in the respective States.

This advertisement is neither an
is made

offering

New. Issue

pointed out that such legislation

urgently

was

and

necessary,

would like to submit for the rec¬

American

Since

80th

Bankers

100,000 Shares

Moreover, ; I

Since S. 829 was under consid¬

eration by the 80th Congress,

the

legislation has undergone further

the

half

have had numerous

informal conferences with repre¬

sentatives of a number of groups
who are interested.
These in¬

Bankers As¬
sociation, the Reserve City Bank¬
clude the American

sociation

Corporation or their
As a result of

representa-"
these disbe¬

i f>.*Statement of Chairman McCabe
fore Senate Banking and Currency Com¬

March 1, 1950.

Share)

Association

Price

by the In¬

Bureau

$105 per Share

Plus accrued dividends from

April 1, 1950, to date of delivery

the

legislation designed to provide for
more

effective

has

not

draft of

control

Copies of the Prospectus may be obtained from any of the under¬
signed who are qualified to act as dealers in the respective. States.

bank

although he
approved any particular
companies,

bill.

I should like to

emphasize that

this bill is not all-embracing.

Stone 8C Webster Securities

White, Weld & Co.

Corporation

dpes not provide a death sentence
companies; it
does not provide for freezing all
companies in their present situa¬
tions; it does not forbid a bank
holding company to establish of¬
fices across State lines; it does not

for

bank

holding

Association, the National As¬
of Supervisors of State
Banks, the Independent Bankers
Associations, and various bank
holding companies.
These meet¬
ings, in most instances, were at¬ bring an individual under the retended by the Comptroller of the trictions applicable to bank hold¬
Currency and the Chairman of? ing companies; "and it does not
the
Federal *r Deposit
Insurance require holding companies to ac¬

ers

(Par Value #100 per

Budget that the President favors

consideration by the
holding
Board, and over a period of a year
c'a'^eJJul

any

4.60% Cumulative Preferred Stock

Associations.
advised by the

Director

Tennessee Gas Transmission

Bankers

dependent

Congress

mittee,

provisions of the
certain stand¬
ards
to
guide
the supervisory
agencies in passing upon acquisi¬
tions
by holding companies or
respect

bill which prescribe

the

described

earlier bill,

believe

but

829,

adequate for the purposes of the

the

Consideration

tives.

that with

and important.

change

therein

contained

formation

holding company legisla¬

the

and has been reiterated

and

Others,

other differences be¬

are

the major

Committee mem¬ ord at this point a letter received
going to assume that in the last few days from the
you may not have clearly in mind Council, which indicates its gen¬
eral approval of the pending bill.
some of the points regarding this
legislation, and I will proceed to
The Recognized Need
state as briefly as I can the more
The need for the enactment by
recent developments in connec¬
tion with the proposed legislation Congress of appropriate and effec¬
and the reasons why the Board tive bank holding company legis¬
feels that its enactment is neces¬ lation has been recognized by the
change

bership, I

com¬

(Sec. 13.)

There

tween S. 2318 and the

banking organizations, as well as*

the

upon

the

other matters which continuously
press

Federal Reserve Districts and that

holding companies.

any

banker rep¬

each

from

comprehensive state¬
ment on the subject at this time.
However, in view of the many
sary

kind.

this

; a

this bill.

The

holding

except

field,

power

"bank

term

this

companies had a rapid
operating four or more branches, growth during the 1920's, most of
rather
than
a
bank
operating the major companies being organ¬
merely one or more branches as ized in that period. After exten¬
provided in S. 829.
We feel that sive hearings which began in 1930,
the
definition
as
applied to a Congress recognized the need for
and undertook to provide for the
bank with one branch is too in¬
clusive. (Sec. 2(a).)
regulation of bank holding com-*
In connection with the author¬ panies. This legislation was a part
How¬
ization to examine bank holding of the Banking Act of 1933.
companies and their subsidiaries, ever, the inadequacy of the law
soon became apparent, and there
S. 2318 contains a provision, not
in the previous bill, authorizing were recommendations and pro¬
posals for new legislation.
For
use of the reports of examinations
made
by other supervisory au¬ example, in a mesage to Congress
thorities to the extent that the in¬ in 1938, President Roosevelt rec¬

omitted. •;

the bill at that provide

Advisory Council of the Federal
Reserve System (a statutory body

quest that the report of this Com¬

seem

retain

you will recall that S. 829; "whether or not the effect of feuch
the support of the Federal acquisition may be to expand the

mittee with respect to S.

almost

feel,' that

cluded

of this

purposes

time bank holding company legis¬
ered

still

desirable

nies to

report

completed. At that

was

dis¬

matter, notably the In¬
Bankers groups, felt,

believe

provision

Some

legislation
(a) to overcome the inade¬
quacies of the present law relat¬
ing to holding company affiliates,
(b) to regulate the expansion of
bank holding companies,
(c) to
require bank holding companies
to give up their investments in
nonbanking companies, and (d) to
to require bank holding compa¬

bank holding

course

company

McCabe

back and take

graduate

Thomas

length

told

recall

would

are

that after be¬

dependent

2318.

whom

however, felt that it was particu¬
larly objectionable and should be

cipal

bill
pending
in Congress.

company

will

You

holding

Some

cussed the

with

groups

and

con¬

cerns was

power

After

included in

not

by all
parties who might be interested
or affected than has this bill.
^

and

consideration

and

economic

pany" in the new bill includes any
company which controls a bank

centralized
control
of"
listening to the va¬
viewpoints expressed as to
the desirability of this declaration
of policy, it was the Board's feeliVig that it might properly be
omitted from the bill, and it is

extended

careful

study

danger inherent
of

„

The

rious

had

1 Re¬

er a

the

upon

5(e).)

statement

the declared policy of

was

banks."

the

su¬

by the Federal agency in
the proposal. (Sec.

acting

through

member of the
e

eration

preamble

appropriate Federal

These must be taken into consid¬

"generally to maintain
competition among banks and to

to take

constructive

most

have been able to

nomina¬

and

best

mention

Congress

changes
so

should

contained

concentration

been made in the bill

829

principal differences

included

829

minimize

various

cussions,

think

which

periodic examinations.

holding company legis¬

between the two:

quiring them to register with the government and to file reports
and submit to

bill

banks or
which requires

that

pervisory agency notify the bank
supervisor in the State in which
the acquiring bank is located of
the" proposed transaction so that
he may submit his views and rec¬
ommendations
on
the
subject.

Congress, but at this

of the

some

the

that

•

which they have in
where
such
would be inconsistent with

of any power

acquisition

branches

indicated, S. 2318 is

80th

point

holding
holding

alleged inadequacies of the existing law relating to
company affiliates; (2) regulating expansion of bank
companies; (3) requiring bank holding companies to
most of their investments in non-banking companies;

have

the

legislation is depriving the States

connection with the consideration

of bank holding
The bill is in no sense

similar

the

to avoid

very

necessary

are

change

Another important provision in

revolutionary; it is evolutionary.

bank holding companies

necessarily undesirable, effective curbs

not

are

this

little later.

supervision

companies.

further

ment

ceptions,
of the
ownership
of
companies not engaged in the
banking business; it provides for
the
regulation of expansion by
bank
holding companies; and it
provides a means of more effec¬

Bank Holding Companies'
Control Should Be Tightened

(1411)

CHRONICLE

FINANCIAL

cumulate

W. C.

greater reserves
present law. On the

other hand,: the bill does

holding

themselves,

companies

with

rid

reasonable ex¬

Incorporated

Smith; Barney 8C Co.

Langley & Co.

•

Union Securities Corporation

Merrill Lynch, Pierce, Fenner & Beane

Paine, Webber, Jackson & Curtis :.

require
to

Kidder, Peabody & Co.

Harriman Ripley 8C Co.
>

Lehman Brothers

Glore, Forgan # Co.

The First Boston Corporation

Goldman, Sachs & Co.

any

than does the

bank

Blyth & Co., Inc.

April 4,1950.

(1412)

THE

COMMERCIAL

and

ports

Birdseye View of

&-FINANCIAL

exports—provided

trader knows the situation

spot

Current World Trade
■

ZELOMEK*

By A. W.

present-day

Union
Versus Sterling Area

decisions
quickly. Even

trade

must often be made

the
the

he
This last is
%
*
;
'

often most important.

Remarking on the great amount of wishful thinking traditionally pervadng views of world trade, Mr. Zelomek cites numer¬
ous unfavorable factors in our
present outlook. Calls attention
to increasing imports, non-solution of dollar deficit, and grow¬
ing competition facing American exporter. Concludes, never¬
theless, that profitable business is still available to those on
the spot and daring.

be entered

can

new

a competitor
possibilities.

These comments do not indicate
that I

pessimistic

hopeless.

If I knew of any way in which a
person

could

make

living

good

without doing any work, or with-

LONDON, ENG.—After months
of

■:

Correspondent cites following objects of present British
plan :
(1) Ilmimg possible gold loss; (2) maintaining Britain's
special relations with sterling area; (3)
safeguarding sterling's
international trading
currency role; and (4) maintaining bar¬
gaining power in bilateral trade negotiations.
Reports British
feel Americans fail to understand vital importance of main¬
taining Britain's sterling area position.

beiore

exploit the

'By PAUL EINZIG

;

large corporations Will miss op¬
portunities unless quick decisions
can be
made, wnen goods have to
be rerouted, trans-shipped or bar¬
tered; or new trading areas nave

Economist, International Statistical Bureau, Inc.

Thursday, April 6,; 1950

intimately, and provided

has the right contacts.
:

CHRONICLE

negotiations

and

must

limit

hesitation, Britain should

beyond

;

which

not go.

Britain has now produced a
plan
competing, or without taking
sterling Strength to Europe's
under which she is
only prepared
ing has probably been done about way t0 Set along is to work harder any risks, I would be happy to do
Interest
to
enter into 1
<v^4nrr,
and more intelligently than the it, and I am sure I would have a
There is a strong feeling that it
competitor.
There simply isn't great deal of company. Just be- limited part¬
is to the interest of
singie
uoj
'
Europe as well
enough business for all the com- cause we face facts, and admit to nership with
I refer now
as of Britain and the
sterling area
panies that expanded during the ourselves that profits no longer the countries
to the average
that sterling should be
strength¬
of
Western
war, and for all the new companies fall into our laps, does not
imply,
ened rather than weakened.
person — the
The
E u r o p e. So
that have been formed since. The
despair.
It simply indicates that
'Mi
man in the
position is often compared with
successful manufacturer or mer- we are
long as there j
taking a normal viewpoint
street—rather
the one prevailing on the eve of
was
a
chant increases his sales or pro- toward
possi¬
operating problems.
than to the
\ L
the Battle of Britain when Mr.
^ '
duction at someone else's expense. *' ' '3
t ^
\ bility of lim- 2
export manChurchill decided to retain the
/
v.
Arithmetic.V * iting the scope
*ager. Youpeo- '
main strength of. the Royal Air
Kindred International Situation
v/'
of the pro¬
j
f
I won't spend much time on the..
pie have been
|j Force for the defense of Britain
posed
Euro- ;
in touch with
vl1? j
f^
arithmetic>* of exports. -.Foreign
rather than fritter it away in a
■world trade. More goods are compean
Pay-':
buyers have to have dollars, .if
foreign devel¬
hopeless attempt to stem the Ger¬
ing in from abroad; the high level
ments 3: Union
they want to buy ip the'United
opments in a
man tide on the continent. *His¬
of government foreign
there was a
spending states.
direct com- ;
They probably won't have
tory has proved that decision; to
has .not solved the .dollar deficit,
possibility of
as many dollars as
mercial
sense
be right, for Britain's
they had last
capacity :to'
Britain par-;
and
know;
resist the German onslaught has
Lh*Hav
Dr. Paul Einzig
increasing competition as each day year- •> furthermore, some of the ticipating in
much more
dollars they do have may be kept
| subsequently led to the liberation
passes.
it on an equal. ■;
A. W. Zelomek
j
\
in reserve..
about what has
k"
cof Western Europe. It is now felt
been going on.
')!Behind the competitive condiHow much ECA and otl)er forms
h~
t1131' should heavy gold losses unKnowing that I would be here tions which are now arising, a 0j
loans will be off, won't finally tw the European Payments Union dermine confidence in sterling, in
PavTipntc Union
that the
th0
today, I naturally followed some basic transition towards a new in- be decided
lQng run Western
I think that more wishful think-

petition is back, and that the only

out

ov,„

STaif4„S

„

P'^dent

°h»f

PiiroiISfn

for

of the comments made at the Chi-

ternational division of world trade

World Trade Conference late is hidden.

cago

last

month.

that:? many
stressed the

happy to

was

prominent

see

speakers

It is worthwhile to

ognize this

and

process,

competitive nature of if day

reducing

even

further.

Nor

that there will be

its

re-

believe

day transactions often

deceptive.

;

Most of my own clients

primarily

gaged

tivity,
have

think

in
I

are en-

domestic

can

ac-

wide contact in that field,

and that the realistic

the moment has little

for gen-

that ECA will

have

the

which

restoration

the

find

favorable

'much

favorable

does

not

attention.

un-

receive

too

Everyone I

now

place for themselves in

a new

world trade.

The

same

to Latin-

America.

get

Total
will

This

Point,IV Quantitatively

city, March 2i, i9so.

open

Process, but

will

substance

tules out British

the

fund.

pared

for the

their

Britain

the

provide

balances

verse

borrowing from

While

needed

British

plan
for Britain's participalender to the fund, but

provides
tion

the

settlement
of

pre-

sterling
of ad-

various

trade with

coun-

sacrifice of gold involved in the
operation of the multilateral cur-

Britain, rency scheme would undoubtedly
use of
command much more respect if

she does not wish to make

balances

Sir Stafford Cripps displayed an
equally
firm
determination
to
avoid losses of gold m other diBritain intends to rections.
At home the disinfla-

with

other

Euro-

program

for

American

"underdeveloped

aid

countries"

will

iars-

However, the Import-Export

it will also Bank and the International Bank
Continued

page

countries agree to

have

maximum

tionary effort aiming at a reductl0n °f domestic consumption has
retain sterling, not gone far enough to safeguard
ceiling, if they exportable
output for overseas
on

their

markets.

means

that,

releases of sterling balances which,

favorable balance

British

trade.

This

announcement is not an

•

;

•

offer

to sell

or a

The

offer
The offering is made only by the Prospectus.

buy these securities.

plan pursues four(1) It aims at limiting the possible loss of gold Britation

the

through the operPayments
Union

scheme.

(2) It aims at maintaining Britain's special relations with
the sterling area.
(3) It aims at

$7,000,000

safeguarding the role of sterling
as
an
international trading cur(4) It aims at maintaining

.'V

rency.

Britain's

Metropolitan Edison Company
First
Dated

Mortgage Bonds, 2 %% Series due

February 1, 1950

Due

bargaining

power

lateral trade negotiations.

American,
British

much

1980

insistence;

participation
bitter

feeling

in bi-

•

gold.

full

months

lost

I if •?

"
MnL?
in
Lnhrn
fi!pr?tJn with Fiironp"
Jlncy ?°°Pe^atl^ ,with Europe.
®

v^re f1S

priority of

the^owtries
nlmt

wnnin

de?s^h Dr\oriti

aer such priority..
American

causing
over
here,

The experience of

when Britain

Price 101.644% and accrued interest

irresponsible

1SJSi ™

largely because of fears ;that: it
would result in very heavy losses

February 1, 1980

the

British

ain would suffer

solicitation of an

And

instead
of
borrowing from i the Judging by the terms of the reUnion, Britain would borrow from cently concluded agreement with
its individual members.
r
'
- Israel, continue unabated, convey

fold objects:

This

Directions

This argument has a weak side
that it is only applied to Western Europe and not to domestic
affaiars or to sterling balances,
Britain s effort to minimize the

Unimportant
pean countries.
1 do not believe that Point IV retain the system of bilateral pacts
under
which
the
participating
of President Truman's

possibilities for im-

new

join in the scheme.
In

trade

amount to much in terms of dol-

reorientation

Cub,Z N^'Vork painful

the facilities provided by the fund
for the settlement of her adverse

f.reC?xport

a.in's opacity to be of real asqictannp would wpakpn
" ! would, weaken.
^
;>--Miist Avoid Gold Losses in All

the limits to which it is prepared

tries

government loans

applies to providing

Southeast Asia and also

run

into says quite frankly that com-

have to

being able to

principal back.

probably be at least $1 billion,

economies

were wrecked by the war.

These countries will

decline in

accom-

plished anything beyond helping

eralities. Speculation as to whether
outlook

confidence

tered when ECA ends. It is doubt-

viewpoint at in
use

were built up,

and they will probably be shat- interest

that I ful

say

Hopes

ish Government decided to define

expansion in

private loans of any great proportrade; and spent more time in dis- absorb the export manager's full
tion. There are not
many areas in
cussing problems and difficulties time.
'
the world today where the
private
than they did in proposing easy
The last few years have been lender can send
money with any
solutions.

Eu®ope

yet.

quests and Congress may even cut

to draw down

practical conclusions,

some

rec-

ECA>

months

some

Misunderstanding of

British Position

There is

widespread feeling in

Britain that American official cir-

cles, political circles and public
1947/ opinion fails to understand the

matter of

practically the entire dol-

lar proceeds of the American

vital

point

ling

importance, from a British
of view, to maintain ster-

loan,
owing to American insistence on

and to maintain Britain's

premature

convertibility,

remembered.:

that

And

still

it is expected

should Br'tain allow herself

to be persuaded into

•The

Prospectus maybe obtained in

any

State in which

of the undersigned and other dealers

may

this announcement is circulated
from

lawfully offer these securities

HALSEY, STUART

4-"
.

•

■

*•

TKOMAS 4 COMPANY

SCHMIDT, FOOLE & CO.

April6,1950.

CO. INC. V

DeHAVEN A

FAUSET, STEELE
R. C.

v«...

•

SCHMERTZ

...

full

only such

E. W. &.

European

accepting Jhe
scheme,
history

would repeat itself—with the difference that this time it is not the

international currency

position
the financial centre of the ster-

ling

area.

While

losses arising from

Britain's

gold
the European

Payments Union scheme could be
compensated out of Marshall Aid

payments, the loss arising through
a
disintegration of 1 the sterling
area
would be permanent.
The

A EtODINE

R. C. MILLER A CO.

,YNAPMOCtI
INC. i

"cushion" represented by the
proceeds of the American loan that
would be lost but the remains of

British plan is presented as

the

TOWNSEND, CROUTER

&. CO.

•;

in such State.

;

ain's role

that

gold

reserve.

realized

Amercan opinion, cannot be

disregarded, and the only question
is how much gold the
Treasury can

a corn-

promise which would retain Brit-

Europe
role
area.

partner in Western
.without; sacrificing her
as

the leader of the sterling

The full significance of the

a'ford to lose for the sake of sat-,
proposals cannot be judged until
isfying American ooinion.r While all details become available, and
it is admitted that the U.
S-.is en- until negotiations" on an official
titled to take awav. with one hand- level have made it-clear to
what
the Marshall Aid it has
given with- extent Britain is prepared to go to
the other hand,"-it" is felt there meet American
opinion. - :

tin

THE

Number 4326

171

Volume

OUT? AATTPT 1?.

wmAMntAT

our

temporary eva

history, when we united our Europe in two.
Before the war,
coipiiits,Between.tne Eastern . Western Germany exchanged its
anu; Le Western giants,; tnere is -i n d u s t r i a 1 goods for Eastern

speed toward unified defense
Nations. Declares

French statesman urges greater

Having

for

see

from

and

coast,

experiments and there is

atomic

myself
No

soundness.

question of production being
crippled by strikes.
To the 200 million Russians, you
must add
100 million satellites,

total of 300 million
side of the Iron

doubt,
the
problems of

which makes

commodity

Curtain, in Europe.

lution

with
as

Paul

level
deprived

prewar

have

those

who

crisis of

counted

Reynaud

all hope
postwar

readjustment to weaken
diminish

the United States and to

affairs.

world

role in

its

the

contrary, it is in a position to ex¬
ert decisive influence on the mak¬

ing of a United Western Europe.
The component countries have two
for

reasons

union:

such

and

invasion

viable from

make

avert

would

suffered

any

the

For

ap¬

Three Crucial Questions

hanging like
the minds of

Three questions are

who,

over

America

and

Firsts in the wage of the ;ecowhich result-

detected

situa¬

two or four years?
be

still

safeguard for

Curtain?

Thus, we

expect in the near future, a
certain atomic equality.
In that
event we must look to the classical
arms.
On the Eastern side of the
Iron Curtain, there are 175 active
divisions, as there were before the
war, and the Russians, if they de¬
cide to declare war, can mobilize
may

free will?

Have we ever seen

sincerely desired and
called for by a portion of each one
of the nations not yet conquered
conqueror

by him?

Do you

fall

prices,

shedding

the

came

0f my

imports, the quotas,

the

time

such

an
one

operation - without
drop of blood? One

British Labor colleagues

Strasbourg European Assem-

August: "If the
uniting of Europe involves unem-

distress,

bly said to us, last

small scale,

ployment, even on a

workers will tell you: 'Go to
by the war, with each coun- the devil with your Council , of
try
producing -for its military Europe, and give us back our salneeds and to keep its people alive, ®fies and our work.
I ansyvered
without regard to the cost.
Thus him: I fully understand that state
were
born agricultural * and in- °t mind, but let me tell you that
dustrial enterprises which are not your workers—and ours—seem to
And

this

situation

was

aggra-

our

vated

But still,

viable in times of peace.

That was not all. iast.

they are there.
The

war

brought about ex-

also

change controls.
•

And

finally,

it all, the

Russia

that

status quo

the

Rut it will not last:

will

J The

Marshall Plan will be over soon,

accomplished

And if we haven't

;

to top

permitted

Allies

believe

anything toward making a united

cut Europe then we

alization of the exchanges and

payments. Moreover, it would
restore the practice of paying in

the

It would also be a step in
of union.
At the

gold.^
the

direction

February OEEC
Sir

proposal.

this

meeting in Paris,
rejected
He had said that

Cripps had

Stafford

Great Britain could
be
see

her

war

England's

increasing
of the

world

since

con¬

debts

sterling

and Egypt,

toward India
Bank

must

point, Britain

his

sider

not afford to

terms of gold.

debtor in

but the

reserves

are

the devaluation

pound and, after all, in the
today,

choice

waiting

for

one

the

are

alternative plan

Continued

shall have more

has only

risks.

among

on page

offer to buy these securities.

This announcement is not an offer to sell or a solicitation oj an
The offering is made only by the Prospectus.

feel safe?
Europe has the At¬

■

course,

Pact,

lantic

and

arms

ready been shipped.
are

perform

each
nation tried to defend .its producers as best it could.
;

Europe? Who knows what is going
on and what will be going on be¬
hind the Iron

restrictions

take an interest in their
safety. Will Soviet Russia stop, about 20 million men.
at last, after so many conquests
What of our side? On the Eu¬
in Europe and in Asia?
Have we ropean continent, West of the Iron
ever seen, in the history of man¬
Curtain, there is the equivalent
kind, a conqueror stopping of his of 20 to 30 Russian divisions.
Europe,

own

nomic crisis of 1929

Will
present superiority continue?

your

clouds

Europe's

will be the

What

Russia.

tion in

a war

been

has

explosion

understanding with
Will it
world. But if launch¬

those

being,

time

safety is based on the American
atomic bomb stock. But an atomic

much

repel

never

storm

coun¬

the

withm

lie

event,

tnat

ahead for America?

of aggression is the first
of crimes, to close one's eyes to
the peril and not to prepare to
face it is surely the second.
■>

ing

and

the eastern

try

Europe

economic point of

has

proach to

through the two world wars that
she

European

Western

other

comparable

business every

m(Jus- abnormal conditions, there are tries. So that this 5Q% falls to
union in other normai industries, created before:
countries."; First of all, we .must the crisis and the war.
In each 10% of a country's total foreign
become worthy, on .the economic; country>
some
of them:- would purchases. We are far, yet, from
shall predicted a new victory for
V :
level, of membership in; an Atlan- benefit by the unification of Eu-i the Europe of 1930
Stalin. Suppose the Eastern con¬ tic union
European union must rope.; But others would suffer
The European Payment Union
queror could lay his hands on come first.
'
and perhaps disapear.; Another
these 250 million, you would then
Last
December, the economic
:.*■ The Obstacles on the Road
; class of corpses. Of course,
have to face a mass of; 550 mil*
/
uniting Eastern Europe and per- committee' of the
Assembly of
lion, to say nothing of the 400
Of course, it was one thing to haps more than that, doesn't mind
Strasbourg recommended to the
million Chinese. The Western fruit
unite the 13 American Colonies a mere matter of corpses—of any
governments a system of clearing
is all the more tempting for the
with industry and in its infancy kind—but we democratic people for the settlement of commercial
hand of the Eastern conqueror in
and it is quite another to unite the do.
v • transactions
between
European
that it would represent the com¬
highly industrialized nations of
These recommendations
There you have the fundamental nations.
plete control of the huge indus¬
were proposed
present Europe. It is all the more /HffYYiiitv
by the OEEC ex¬
trial centers and, particularly, of
difficult that, for the last 20 years,
,
...
..
perts to the council of the OEEC,
the Ruhr,
France, Luxembourg, these nations have marched back,save EurpPe by uniting it at its February meeting. The ad¬
and Belgium's steel works.
What
ward, along the road to united . calAs f°r a s"rgl«>l operation,
vantage of this system is that it
a temptation!
' ;
^
Europe
without anesthetics, - The surgeon, would bring about the multilatermust be clever but is it possible to
what would

view.
France

giant hidustrves of the

Russia,^

80% above the
must

the'

countries

industrial

production

great number of
highly skilled

years,

...

that

fact

;■

stacles laid down, during these

there still will remain, for
thing that would bring closer to- this century: the stoppage of Eu- us, to build a united Europe. But
we must, first, remove these ob¬
gether the nations of the Atlantic ropean emigration to the New
community.; But,; as to an eco- World, which blocked the safety^ stacles from the road. •' So, you
nomic union, there is, no doubt valves of European overpopuiated: can imagine the weight• of our
task.
Now, just where are we on
that unaer present conditions, as countries like Italy
On the 2nd of last
Mr Will Clayton said last Jan. 23
go
much
the
difficulties the road?
November, the
Council of the
micaused by the mistakes or
OEEC decided to lower quotas by
mittee, if the
^European economic crjmes 0f men But there is an- 50%. That sounc s like a lot. But
and America formed an
other Qne> which is more funda_
it is important to note that this
cw
mentai. Outside of these indus- ' 50% is 50% of private purchases
United States in certain, ipass protries, children of the economic ,
and oniy of purchases made from
duction fielas, would put out of crise's or of the
war, creatures of *

working class. ,,: A .
The other day a Russian mar-

but

the

and

scientists

danger, in this
the others,

including

peans

so-

democracy

This, then, is the decisive fac¬
million Western Euro¬

and

fraught

eastern

tor: the 250

level are'

difficult of

the

prices and the
wage

for

which is of great importance

moral

and

Europe, a large market for theseEurope.
And I say nothing of an
250 million, I am in favor of any- event which came about early in

Cripps' alternative plan.

I have been able
its physical

North to South,
to

this country

traversed

coast

and

permanent

for. a mo- .Europe's

Says

become part of European union.

clearing union depends on

Europe, not.

General Staff for all Atlantic

common

Western Germany must

from

Consultative

European

out

a better

;

France

Commission of the
Assembly

President of the Economic

with

'/ -

REYNAUD*

Former Premier of

future,

Not

1952.

leading to

agricultuial / products.», nopeiess evil.
That speech is not made to
sa^c of European states. How could
The Iron Curtain makes such extne small countries of a divided
changes virtually impossible. So please the c.owd, but there are
cases
when duty demands that
Europe-—that broKen mirrorthat, today, Western Germany is
we do not please the crowd.;
compete with the two giants of/ a new Britain, without Coramontne World? The purchasing power wealth, without a merchant maWhat Have We Done, So Far,
of ti.e 150 million Americans is i rine and without a city of London. ■
to Build a United Europe?
equivalent to ti.at of 450 million:
Such are the facts which make
Once we have removed the ob¬
Europeans." Create, iiq ^Western ;more difficult the task of unifying
for

room

By M. PAUL

unemployment

i.s

The World's Insomnia

(1413)

FINANCIAL I CHRONICLE

COMMERCIAL

mtsi

al¬

have

For this, we

$15,000,000

most grateful.

But do you feel safe? Don't you
citizen
of a people which is on the front sometimes ponder on what Bald¬
lines on both fronts: in Europe win said one day in the House of
Commons:
"A democracy is al¬
and in Asia,
v >

I have come to you as a

Georgia Power Company

usual, the ways two years behind a dictator."
Are we really facing up to this
democracies. In
danger?
Asia, we have been shedding our
My opinion is that we have to
blood for five years, in our fight
for
the
common
cause,
against go farther and faster. We must
unify Europe for her defense and,
communism.
as this problem
is too much for
J
Europe alone, we must have a
The Security of Europe and the
common General Staff which will
Fate of America
In Europe, we are, as

advance guard of

If the immediate danger is in
Asia, the main danger is in Eu¬

rope.

It is in Europe that the fate
will be settled. Let us

of humanity

glance

There is

the world situation.
fact which plays an im¬

dispose of all the Atlantic
To

the

European

capital part: it is manpower.
There are 150 million Americans
on one side, and on the other side,

should

include

200 million Russians.

These Rus¬

behind the Ameri¬
cans from the standpoint of edu¬
cation and standards of living, but
what about efficiency?
Granted
sians

are

far

not

•An

address

American

Committee

"Cosmopolitan

March 30, 1950.

Club,

Reynaud before
United Europe,
New York City,

tinction.

•

Making
It would

The Prospectus may

important dis¬
'

munism.;

which this announcement is circulatedfrom

only such

lawfully offer these securities in such State.

Viable Europe

HALSEY, STUART & CO.

Inc.

be useless to create a

Two

consecutive

the Marshall Plan. Now,
tell us: "Do
did ih the early period of

saved by

bur American friends

BEAR, STEARNS &.

wars

OTIS A. CO.

CO.

HAYDEN, STONE & CO.

BURR A COMPANY, INC.

CARL M. LOEB, RHOADES & CO.

COOLEY A COMPANY

GREGORY & SON

ONCORPO-ATE®)

brought about by man's madness
and crimes put Western Europe

be obtained in any State in

of the undersigned and other dealers as may

European army if it were to be
undermined from within by com¬

accrued interest

hesitate to

German army, but

in danger of sinking into commu¬
they are backward mechani¬
nism. Because of the lack.of raw
cally and technically, but fanati¬
materials, which could be bought
cism and terrorism bind the So¬
only with dollars, Europe f was
viet worker to his job so thor¬
threatened with widespread un¬
oughly that the efficiency is high.
employment and revolutionary
.Human
life 'weighs very little,
troubles. Up until now, it has been
'

Price 102V&% and

forces.

that

..at

Due April I, 1980

1950

armies, part of

German troops—an

;

Dated April 1,

Bonds, 2V%% Series due 1980

Atlantic Forces,-1 personally

think

portant, and perhaps, in the long
run, a

First Mortgage

HIRSCH A. CO.

STERN BROTHERS & CO.

'THOMAS A COMPANY

J. C. BRADFORD A

CO.

•"

April 6,1950

HILL & CO.

CLAYTON SECURITIES CORPORATION
J. H. HILSMAN A CO., INC.

HELLER, BRUCE A CO.

MULLANEY, WELLS A

.ncoa*OAATEI>

BACON, WHIPPLE & CO.

COMPANY

F.S. YANTtS A CO.
iNCOWPOJtwre*

evy.'.

(1414)

THE

COMMERCIAL

and Share Co.
National Vice-President, NAM

increase

imports

nomic

fiscal

and

only alternative—"an

absurdity"—is continuing the

large-scale gifts and loans abroad.

national wealth in unrequited
exports would

energies and

our

Our Chairman has ably outlined

the

nature

and

problem

under

construction

have

tonight

that

not

maintain

exports

paid

cept

because I

continuing

cannot

program

we
tend to export
more than we

anything other than

import;

and fiscal

Please do not

the

problem
not

bolstering exports

only

related to

problem
of

but

absurdity.

me. I did not reach
that conclusion in criticism of our

imme-

seems

general

While

the

and

foreign aid

program.

gold or
other
assets.
Curtis

He has pointed
out that the

Calder

American people. Most of us are
convinced that our contribution

toward

problem is
urgent because we possess a

now

substantial

gold

and

part

other

reserves which

clear

with
tion

what

termination

goods

far

balances

the

should
our

ques¬

the

to
of

excess

aid
have

world

what

^ould expect to get paid for.
He has

shown how

foreigner

gets dollars with which to
pay for
the goods he desires to
purchase
from us; we give him or lend him
those dollars or permit him to
them

earn

rendering
we

by selling something
us

service

for which

willing to pay. He has
indicated the extent to which we
are

have
our
—

been giving him
taxpayers' dollars.

has

pointed

out

economy is geared to
of exports.

dollars—
that

our

high level

I accept that thesis.

relief

hunger and

distress, and toward the restora¬
foreign productivity, have

tion of
been

worth

that

while.

assistance

our

hope to

new

those

But

who

believe

has

brought
friends across

our

the

thousands

his

against

vantages

have

prepared

the

uncertainties

prosperity

...

men.

But it must be obvious that
cannot
indefinitely continue
out

pour

our

national

unrequited exports that • are
drain
tent

our

that

wealth
a

net

economy to the ex¬

they

are

not

compen¬

sated by imports of foreign prod¬
ucts.

We cannot

indefinitely

con¬

tinue to place our
taxpayers' gift
dollars at the disposal of other
governments for the purchase of
their requirements in the Ameri¬

less

risky.

faced

with

long-continued

economy,

and

labor,

contraction

agriculture

industry. The $64 question to

which

must

find

the

national energies and
If

answer

are

resources.

agreed

that

are

not
"

An address
by Mr. Calder before the
Foreign Trade Gap Dinner, co-sponsored
fcy the National Association of Manufac¬

turers, and the Export Managers Club of
New York, N, Y. City, March
21, 1950.

going to attempt to maintain
high volume of exports by giv¬
ing them away, let's return our

attention to the means
by which
a

It will

fit.

and do

foreigner

may

earn

The

United

Continued

page

new

issue of Bonds has been sold
to

certain institutions

through the undersigned without

also

learned

with

tomers

increased,

was

up to me to

satisfield

that

the

capital gains,

White, Weld & Co*
April 5, 1950.

investor

and

Any¬

the

various

this

was

particularly
all by

field

that the portfolios of my cus¬

see

the larger the increase in the portfolios,
customers I would have, and the more

performing
proper

most

and useful service
it might be, to all.

necessary

counsel, such

the

price

steel, or Middle East oil on the present
structure of mid-continent crude.
From now on, I will have
associate myself with the study of nuclear
energy, rare
earth compounds, titanium, and the
to

awakening of the

giant, television, and what not.
How does

build up

one

new

„

clientele?

have the satisfaction
it would.

All

one

seeing it turn out the
Vv"V1";-'

Joins

jThe Financial Chronicle)

CLEVELAND, OHIO—Haven
Zebold

has

become

associated

with

Kidder, Peabody & Co.

•

needs

average personality and intelligence, and I
guess customers
just grow. As for myself, I am definitely in the
development
stage. I have plenty of room for
expansion, but in the mean¬
time I can see daylight, and I am
enjoying it. The greatest
thrill one can get is to make a correct
recommendation, and

(Special

Incorporated

giving

banking system, or perhaps
newly discovered iron ore in Venezuela

the influence of the

Harriman Ripley & Co.

One day, I would be
occupied with studying political de¬
velopments, and the next, measuring the effect of the gold
reserves held in
Kentucky on our

Zebold With Prescott

deny it.

profits that would accrue to me.
Each investor's problems
be totally different.
I had the conviction that I was

only.

Due March 1, 1975

can

may

sure

country.

important factor was that our industry is com¬
number of Stock Exchange and investment bank¬

itself.

any

Series "Q", 3%

Dominion Securities
Corporation

the

into

resided.

Mortgage and Collateral Trust Sinking Fund
Bonds,

Dated March 1, 1950

men

brief period of incubation, I learned
which most investment

concerned

Shawinigan Water and Power Company

First

top

banking firms are
divided, namely, selling, trading, syndicate and new business.
I discovered that partners come from all
of the divisions, and
each one is
equally important.
The selling end, however,
had more appeal to me.
To sell properly, one had to have a
knowledge of securities, and be familiar with tax laws, not
only of the country, but of the states in which the investors

$15,000,000

The

the

underwriting deals together.

After

public offering
purchasing the Bonds for investment. This /

announcement appears as a matter of
record

with

fluctuating prices and changes in economic
conducive to excitement, and investment bank¬

are

divisions

the
This

con¬

takes

banking does not lend itself particularly to monopoly. There
too many sides and angles to the
picture. There are no
things as patents, or control of natural resources.

Government

and

are

assist, it is true, by negotiat-

dol¬

numerous

large scale, with adequate capital,

such

their willing¬

States

were

for making

There is a community
houses that is not paralleled in other lines.
While there is plenty of
competition, this cooperation has a
tendency to make for close friendly relations.
Investment

and ability to create condi¬
tions within their borders that will
make these investments attractive.

can

opportunity

of interest among

foreign invest¬

upon

anyway, and was bound

no one company or corporation is
large
enough to dominate the field completely.
In fact, it is the
policy, through syndicates and various accounts, to cooperate

possibility of expanding the

depend

the

bring back
undoubtedly

ing houses, and that

ness

later,

must

together

you

Another

investor decides to

volume of private
ments

Street of
to

The fundamental character of the business
was fascinating
me.
It has always held
my interest.
Sound investment

posed of

stay out of business in the foreign
field, or not to add to his foreign
commitments/he cannot be com¬
pelled to change his decision.
The

the

methods, etc., finds its

arising from preju¬

sees

Some pubHowever, public

apathy.

way sooner or later to the Street.

un¬

If the home

the

The speculative

part of

ing is certainly an exciting business. Few
thing of importance, new industries,

sufficiently to afford real
assistance in bridging the
can market.
No nation, however
foreign
of export volume carries serious
trade gap, will depend almost en¬
rich and
productive, could long
implications to every segment of
tirely upon the recipient countries.
withstand such a drain
this
upon its
sharp

such

situations

not

discrimination

or
the exploitation of an invention after
discovery.
Other factors which influenced me were
associations which

are more

existence

banking and business techniques had now arrived.
It was
development of the mining business after prospect¬

home.

ing,

dollar trans¬

home

was

here.

like the

dice against the foreigner. And he
is free to use his
profits, after

taxes,

speculative

place in the Street.
to

clearly
though his profits
large, they are also

and

less

the

living wherever transactions

ducted

ad¬

There

Furthermore,

may

the 'Fifties,

had brought with them

come sooner or

healthy.

threw

fair treatment

would have

in¬

known

into

improvement in morals tended
into favor.
This development

industry

real

Here his property is
illegal seizure. Here the

of peace
dom of trade between free

the

foreign

for

safe from

defined,

necessity for

fer problem.

that

strengthening things
broadening
nourishing the roots
and enlarging free¬

the

conducting business.

regulation and realization

him \

investing

rules of the game

hold dear

hold

the

At home he has

ground for expanding trade among
nations, We hope that they may
thus result in
we

future

come

lie distrust and

individual

will

to account if the capital is lost

of communism.

gifts

been

definite

had

James B. Ramsey, Jr.

if the investment
proves unprofit¬
able. He must balance the hazards

vestment

Our

had

'Thirties, and with it many changes had
developed in the methods" and manner

against him.
American business¬

stockholders—who

and

very

SEC

has to consider the interests

man

had

college in droves, as it formerly did, and
no
longer could fortunes be made by boy
wonders
overnight.
Furthermore, the

stacked

are

Usually,

Street

knew that the financial district no
longer
attracted the young men just out of

background of experience
foreign investment field

the seas, and has strengthened
their resistance to the blackjack

after

foreign

which

away

depleted

adverse

under

giving

world's

they formerly used

He has posed

program
been

nations'

their

us.

the

Wall

it is to get them.
It is not that American investors
have lost their courage or their

cards

that

'Twenties, nevertheless, I felt there

capital is
desired—from the

sure

knew

undoubtedly would be in

than

willingness to venture.
It is,
ference could that the humanitarian
aspects of rather, that under the conditions
be paid for by our foreign aid
now existing in many parts of the
program have the
our acceptance
support of the vast majority of the world, the investor feels that the
the dif¬

recipient.
have

investment

private

greatly

select

changed a great deal, and was on an
entirely different plane in the 'Forties,

increased flow

instru¬

foreign economic devel-1

There

prompted

banking for my business career, and associate myself with
Granbery, Marache & Co., members of the New York Stock
Exchange.

moment

our

Various considerations

•

our

know that it .is easier to wish an
increase in these investments than

economic

misunderstand

was

urgent

when

for

means

for

point of view of both investor and

ac¬

large-scale gifts and loans by our
country to foreign governments as

normally

purchase

agreement that

detail

sale

Granbery, Marache & Co., New York City
'■ '
■'v.
' ■;
'
: .■ ■" 'v!•
a series of articles by members
of the younger
generation in the investment
banking industry]

[First of

opment under the Point 4 program.;

high

get

and

the

Let's look at it

ment

Get paid for them!
That is the
theme which I wish to
develop in
some

for

diate

how

can

volume

He has

gap.

our

irreparably drain

for them.

foreign trade
shown

goods.

—

the

available

resources.

is, how

importance

which

out

Through

dollars of such assets, the foreigner
increases his supply of dollars

program

States pouring

problem.

eco¬

Career in Finance

By JAMES B. RAMSEY, Jr.

Point 4 has spotlighted worldwide
attention on this aspect of the

face substantial decline

The

Thursday, April 6, 1950

Why I Chose

selling us assets located in his
country.... That is to say, foreign
investment.
President Truman's

Chairman, Electric Bond

must

CHRONICLE

and

By CURTIS E. C ALDER*

U. S.

FINANCIAL

lars with which to
buy our goods '
services.
He may do so by

Increase Imports, or Else—

exports, Mr. Calder declares.

Prescott
&
Co., National
City Bank Building, members of

!
■?'

way one was
-V".-

Harris, Up^nm

(Special to The Financial Chronicle)

BOSTON,

MASS.

—

Frank

Archer has become affiliated with

Harris,

Upham

Co.,

State

Street.

the New York and Midwest Stock

Exchanges.
Mr. Zebold
merly in the municipal
ment

which

McDonald
was

number of years.

was

Co.

associated

for¬

depart-'
with
for

Joseph Garside Opens
NORWOOD,
Garside is

curities

now

MASS.

—

Joseph

engaging in

business.

se¬

Volume 171

Of Reduced Eqnity Financing

V''/By

a. m. sakolski

Dr.- Sakolski points out,

among

causes

.•'

for elevating the
corporation's common

"leverage"
of

value

of their capital

ratio

unable

to;;

But

straints.

sufficient net
their shares a

earn

experience

proves

the case.
market
value above liquidating The danger of inflationary credit
This
concept
was
strongly
expansion arising both from Fed¬
stressed by the English economist, value.;
eral fiscal policy and the exces¬
Under these conditions of govWalter
Bagehot,
about v threesive
Federal
guarantees
of all
quarters of a century ago in his ernmentally induced and seem¬
sorts of credit transactions should
classic
on
the
London
Money ingly abnormal low interest rates,
not be passed over lightly in fore¬
Market, "Lombard Street." Com¬ it would certainly be a poor busi¬
casting the
future, despite its
menting on the continual activity ness move for a corporation,
current advantage in permitting
whose capital structure could af¬
and economic importance of the
business to borrow at low cost
London money market, Bagehot ford it, to forego borrowing need¬
and
dispense with large equity
wrote: "English trade is carried ed capital rather than dilute the
financing. As stated recently by
equity of existing shareholders by
on upon borrowed capital to an ex¬
William McDonnell, President of
Such policy
tent of which few foreigners have,, issuing more stocks.
the First National Bank of St.
would mean lower rather than
an idea, and none of our ancestors
stocks.

of reduced resort

that despite the tions, who furnish the borrowed
to de¬ funds, or through whose hands th6
posits (resulting from large gov¬ funds are channeled, will in their
ernment bond holdings) they are own. interest, exercise these re¬
short-term loans,

low

borrowing or outstanding indebt¬
edness at low fixed rates acts as
a

such

receive

equity capital. Or, using a term
first applied only a few years ago,

Low Interest Rates—One Canse

Commercial, banks, also, course, it might be expected that
low rates on their private banking and other institu¬

serves.

for

earnings

creating

means

(1415)

CHRONICLE

& FINANCIAL

COMMERCIAL

THE

Number 4896

^V'1 U

■

profits

afford

this has not always been

of business

corporations to equity financing, the prevailing

abnormally low interest rates, which make it

for business
stock.
cause

During the last five
has

been

years

almost

equity

the

financing,

last

there

continuous

discussion of the dearth

decline

during

and

Committees

;.-w

and

corporation

other

bonds.

the

because of the extra
risks and other after¬

hand,

business

effects'of the severe business de¬

could

been

holding hear¬
ings on the

relative

Much has been ;

nearly commensurate with the low
cost of obtaining capital in the
loan market. In other words, the

written

gap

problem.
and

yields ' on

income

between

dividend rates, but, with
of the gap
between costs and prices, it can

higher

every

the constant narrowing

which discount their bills largely,

anywhere

price

conceived.

have

district small traders have arisen

stocks, has advanced, leading to
the inability to obtain an equal
amount of funds from this source

private

organizations
have

profitable

pression throughout the 1930s, the
price of acquiring equity capital,
represented mainly by, common

year

Congressional
well

borrow funds than to issue capital
Warns impetus thus given to excessive borrowing may
over-expansion of credit and further inflationary trends.
managers to

Louis:

Government

Federal

"The

single- borrower and,,
with the need to continually re¬
the

largest

borrowed, eventually mean no dividends at new its
obligations, is anxious to
uu: •:;. ;;'.v ■/,<;
if they do' an... ,.".V
have available
to it cheap and
All this
does
not mean that
not eradicate, the old capitalist.
abundant credit.
If, however,
The new trader who borrows has more equity capital is not needed
credit is made cheap and abun¬
obviously an immense advantage at the present time or; that a
dant for the Federal Government,
continuous mounting of debt in
in the struggle of trade. If a mer¬
tends V to - become
chant has $50,000, all his own— capital structure of a business is /it necessarily

and with the

capital

harass and press upon,

not a dangerous trend both to the
cheap and abundant for other
and must charge business itself and to the public. borrowers.
If such credit sitiUH
for his goods accordingly; but if; There is no substitute for sound
most steadily widening.
the causes of
Accord¬
tion is continued too long, it can
another has only $10,000 and bor¬ financial judgment, and excessive
the
problem ,
ing to an estimate of the New
rows
$40,000 by discounts
(no borrowing is almost as bad in low lead to inflationary excesses of
York Stock Exchange, the income
and the reme¬
extreme instance in our modern interest periods as it is when in¬ the most dangerous character."
dies
that
yield, based on cash dividends of
A. M. Sakolski
terest rates, because of strained
common
should be apstocks, has risen from trade) he has the same $50,000
Despite the Keynesian doctrine
[
to use, and can sell much cheaper. credit conditions, are abnormally
6.1% in 1940 to 7.8% in 1949. The
plied.
There
that the interest rate could and
If the rate at which he borrows high.
seems to be a general agreement result has been a greater incentive
be 5%, he will have to pay $2,000
That some self-imposed re¬ should be pushed down to the
borrow by business corpora¬
that the taxation structure, com¬ to
a year and if, like the old trader,
zero
point, the level of interest
straints on injudicious borrowing,
bined with restrictions on securi¬ tions; when such organizations are
he
makes
$5,000
a
year,
he
rates plays an important role in
ties marketing, have been the chief in a position to choose between
induced by governmental low in¬
will still, after
paying interest,
impediments to equity financing. borrowing through the issue of
the national economy.
But this
terest policy as well as by subsi¬
instruments or obtaining obtain $3,000 a year or 30% on
There is a great deal of truth in; credit
role apparently is ignored in pres¬
needed capital through additional his own $10,000. In modern Eng¬ dized Federal lending, should be
these assertions.
However, these
lish business, there is a steady
ent day central bank practices and
reasons apply only to
clamped down on business, and
one phase stock issues. Moreover, interest is
of the; problem.
They furnish a computed as an expense, and, to bounty on the use of borrowed quite soon, is without question. Of in national economic planning.
basis for the investor's lack of in¬ that extent, reduces taxes, whereas capital, and a constant discourage¬
ment to confine yourself solely or
centive to acquire common stocks. taxes are deducted from profits

spoken
the

nature

bonds and current cash

stocks

common

has

dividends
been, al¬

they do not touch upon the available for dividends. This gives
which
lead
corporations an additional advantage to busi¬
under current conditions to seek ness borrowing.

But

use

the instrument of borrow¬

ing either

on a

short-term

long-

That the

year,

mainly to
It

causes

and

gain 10% on it, he must make

$5,000

was

this

capital."
same lines as
speak¬

your own

along the
Daniel

that

ing

1838:

basis,

yield afforded by the earnings of
all industrial common stocks when

of its short-term current borrow¬

ings from the banks.
The

level

of government

bond

yields affects the rates on
obligations, and thus cor¬

interest
other

explained:

the

system of modern commerce.

"Credit

has

done more,

more,

vital

the

air

thousand times

Company
•

($50

sell

borrower.

small

sumed

Interest

Rate

As in all other

Price

trading markets,

affected
by price changes relating to the
thing or service traded. A signifi¬
cant, but neglected, change that

the

capital

markets

has taken place in

kets

are

the capital

mar¬

the last decade has been

over

the marked and severe

decline in

i.e., prices charged
borrowed money. The decline

interest rates,
for

has

been

short-term

mercial
money

yields

equally pronounced in
money rates or com¬

loans

long-term

rates, as indicated by the
on

government, municipal

interest, rather than to dilute

the

corporate equity capital, as they
describe an issue of new stock at
the

existing market."

Borrowing at Low Interest Rates
Chief

Source of Dividends

may

that the

($5
The Company

capital, the more will
borrowed
and, other things

being equal, the greater
the borrower's profits.
The

will be

Cost
Borrowed Capital
Current

Low

set

been

the

— '

above

forth in the offering Prospectus.

Underwriters named in

The

certain conditions, to
mon

Stock

expires

may

not

issued pursuant to acceptances

Preferred Stock and Com¬

of the Exchange Offer,

April 12, 1950, including 85,372 shares of the above Common
the exchange which are being offered initially at a price ot $13.75

offered in
Prior

as are

severally agreed, subject to

the Prospectus have

purchase such shares of the above

and after the

expiration of the Exchange Offer, the

offer and sell Preferred Stock

which

Stock not

pershar**.

several Underwriters

and Common Stock as set lorth in

the Prospectus.

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 such Prospectus may legally be distributed.

policy

holders

their

The First Boston

G. H. Walker &

Corporation
Merrill

Blyth & Co., Inc.
Smith, Barney & Co.

W. C.

Co.

Lynch, Pierce, Fenner & Beam
A. C.

White, Weld & Co.

Allyn and Company
Incorporated

F. S.

Langley & Co.

Moseley & Co.

re¬

Pasadena

Corporation

W. L.

Putnam & Co.

Smith, Moore & Co.

Wheelock & Cummins, Inc.

Hanrahan&Co.

Barrett & Company

Miller & George

Tnomas L. Crabbe & Company

< >j

Rauscher, Pierce & Co. he.

J. M. Dain & Company

Boenning & Co.

Schneider, Bernet & Hickman

Mason-Hagan, Inc.

Lyons & Co.

& C^.

Incorporated

Edward D. Jones & Co.

Julien Collins & Company

of California

Reinholdt & Gardner

Robert W. Baird

Bacon, Whipple & Co.

,,.

Blunt Ellis & Simmons

Pacific Company

Quail & Co.

W. E. Hutton & Co.

Alex. Brown & Sons

here to fur¬
nish elaborate statistical data to
illustrate the decline in both longand short-term interest rates dur¬
It is not necessary

it should not ing the last decade. To all in¬
that borrowing capi¬ terested parties the facts are well
The yields today on all
tal at a cost lower than the profit known.
that can be obtained from its use classes of credit instruments are
constitutes the chief source of about at the lowest levels in the
dividends
to
stockholders. Few history of the nation—so low, in
corporations today or at any other fact, that the life insurance com«time could pay substantial divi¬ panies have found it increasingly
dends without the use of borrowed difficult to earn an aggregate re¬
capital, unless they greatly in¬ turn on their investments suffi¬
creased their profit margins. Bor¬ cient to cover the guaranteed rate

has

■

($100
Series C 6%, on the basis of $50.25
share of Common Stock, as further

value), Series A 7%, Series B 6K%> ar>d
share of Preferred Stock and $13.75 per

per

is offering the above Preferred Stock and 839,628 shares of the
exchange for its outstanding cumulative preferred stock

Common Stock in
par

••

(Incorporated)

be forgotten

therefore,

■

value)

Central Republic Company-

In this connection

rowing,

par

be further as¬

lower the cost of

borrowed

price at which it can be ab¬

sorbed by the

;

the mines of the world."

long-term capital.

value)

enrich nations than all

par

925,000 Shares, Common Stock

be had at
Of course, all this, now well
present at what might be termed
acknowledged as a postulate of
abnormally low rates. This is even
economics, assumes that business
in 1947, as compared with 12.1 in
admitted by the President's Eco¬
profitable to the
1920.
Obviously the inducement nomic Advisers' latest "Annual borrowing is

borrowing at 3%, earnings can be
further pyramided on the stock
already yielding 13%."

Preferred Stock

108,834 Shares, 4.80% Cumulative

porate borrowings can

stock at such high yields Economic Review," in which it is
as
compared with bor-. stated: "Corporate managers have
rowing funds at less than 3% from recently
preferred
to
borrow
life insurance companies and other funds at
prevailing low rates of

Light and Power

Iowa Electric

computed as a percent of average
stock prices was 13.8 in 1948, 10.8

sources

sell, or a solicitation
April 3,1950

n e e

companies are selling at prices
representing yields on current, as
opposed to past or prospective,
earnings of 6 to 13%. Indeed, the

and is not to be construed as, an offer to
offer to buy, any of these securities.

low interest rate policy ing in the Senate of the United
States
remarked
on
March
12,
Roosevelt regime

instituted by the

as a means of obtain¬ before the war, and since followed
"The declaration so often
d e d" capital.
In other without interruption, is largely
quoted, that 'all who trade on bor¬
words, no explanation is offered responsible for this situation can
rowed capital ought to break' is
why business corporations are hardly be denied. Of course, dur¬
the
most
aristocratic sentiment
willing and able to go into the- ing the extended business depres¬
ever uttered in this country.
It is
loan
markets to obtain
needed sion, idle money accumulated, re¬
a sentiment which, if carried out
funds to carry -on or to expand
sulting in declines in interest rates
by political arrangement, would
business operations.
on
high-grade credit risks. But, condemn the
great majority of
All this has been fully recog¬ with the return to boom condi¬
mankind to the perpetual condi¬
nized in the recent report of the tions, ;as existed during and, fol¬
tion of mere day laborers. It tends
Subcommittee on Investment of lowing the war, it would be ex¬
to take away from them all that
the Joint Committee of the Eco¬
pected from precedents of former solace and
hope which arise from
nomic Report, which states:
years in which similar conditions
possessing something
they can
"The inducement to
finance prevailed,
that
interest
rates call their own. There is no condi¬
The reason that
capital expansion by debt is partly would advance.
tion so low, if it is attended with
not been the case is
the result
of the high ratio of this has
industry and economy, that it is
due to the Treasury's not benefited by credit, as any¬
earnings yield to price for financ¬ plainly
ing most common stocks. In that policy, backed up by the Federal one will find out, if he will ex¬
regard the period since 1947 has Reserve Board, of keeping down amine and follow out its opera¬
borne marked similarity
to the interest rates for the purpose of tions."
protecting the market for govern¬
years 1919, 1920, and other boom
And on another occasion, in de¬
ment
obligations, and
also to fending bank credit, the Great
years in that stocks of long-estab¬
lished
and
successful American maintain at a low level the cost Daniel

term

This announcement is not,

Webster

Fraser, Phelps & Co.

E. M. Newton & Company

Figge-Vavra & Co.

Hamlin & Lunt

Sincere and Company
■k

Ernest Kosek & Company

(1416)

THE

COMMERCIAL

trade

Closing the Dollar Gap
By HON. JAMUES E. WEBB*

directly

and to

use

the

gap at a

has been

time

clearly shown,
a
long
exporting far more

been

has for

It has been

the

tion

ECA

system

economic

products

individual

fort

and

tradition.

such

the

cnannels

trade.

such

or
a

nomic

nation

they have been developed by
and

this

There

other

United

The

there

has

above

such

But

last

$12

bil¬

about

services, and that is

money

and

lot

financed

lot

duced in the United States in 1948

all

was

commodities

exported;

four

pounds

out

one

tobacco

every

was

ex¬

sion, which

call

worked

was

•

modernizted,

with

out

the

Treas¬

repairing the

of the

threat

war.

and
of

receded.

eco¬

cessful negotiations. We have
high
hopes that it will become the basis
for a pattern or system of interna¬

Today,
jobs and

communism

tional commercial relations which

Production is will benefit
not only ourselves but
The exports
every nation with which we con¬

prewar levels.

of these countries and their
trade
with one another have

terms

world,

ous

recent suc¬

has food

area

hope.

world

the cessation of the Marshall Plan
would have the least effect

friendly

States.

exported

aid

ruins

They are
ing, once

system.

lives.

In Western Europe, whose trad¬
ury,- the Commerce Department,
ing relations are so important to
the Agriculture Department, and
the whole civilized
world, we have other Federal agencies.
It has
been making an
unprecedented ef¬ stood the test of three

clude such

increased.
their way to becom¬

The

treaty.-

treaties,

healthy and vigor¬ friendly
the economy of eligible,

more,

partners

These

to which

nation

the world.

aid

employ¬
ment, no matter how you look at
it.
One out of every five
pieces
of the agricultural
equipment pro¬

situa¬

the

worth of

that in 1949

23%

the

each

prise

lion worth of goods and
$3 billion

public

today

their shattered

the environment would be
highly
favorable to our private enter¬

People sometimes tend to play
the importance of
exports

Treasury.
The

world
of

dictating
of

;

economy and
countries.

year

difference out
of

rest

this

.'Thursday, April'6, 1950

a minimum of
govern¬
ment intervention with a view to

down

the

rebuild

did help.

the

every

world

doubtless familiar to

are

many of you.

Let

European Recovery Pro¬ however, their main
thus has helped to put the provisions.

summarize,

purposes and

the American economy, and gram
problem of the foreign trade nations of Western
Europe into a
They accord most-favored-na¬
gap could be most easily solved." position to
expand their produc¬ tion treatment unconditionally and
Clearly, the closing of the dol¬ tion of goods and services with often national treatment.
They set
lar gap would be one of the
great which to trade with the rest of the up an international legal frame¬
steps toward the achievement of world and with us, and thus help work designed to
help business
these objectives.
to close the dollar
gap.
/
activity to increase and capital to
be more readily invested.
Mr. Calder has pointed out that
In the
underdeveloped regions
They
upon

States

than it has imported.
fin ancing
most

foreign policy.

the

geograpy
would be

reciprocal trade agreements for lowering tariffs and calls for
united effort of individuals and
government to integrate our

United

Under

would

skills

should be only temporary and
European nations as well as
U. S. should strive to balance trade with dollar
area.
Praises

other,

principles alone, making available

high level of interna¬
tional trade is most
important single step that can be taken
toward economic and political
stability of free nations, high
ranking State Department official reveals EC A in 1049 financed
23% of all commodities going into export Says this situation

the

each

the earnings from such
in
any
country in

world.

trade

domestic and

with

CHRONICLE

transactions

Under Secretary of State

Asserting closing of the dollar

FINANCIAL

the

there

is much

ments
in

can

this

and

process

production,
costs and creating
mate

that

the

millions

live

furnish

under

nation

of abject

poverty, dis¬
ignorance.
Yet
from

these

countries

protection

provide

the

for

contracts.

come

from

discrimi¬

molestation

and

they

enforcement

They

provide

certain

of our most vital raw ma¬ basic protections for individuals.
terials, and their citizens could be In short, they aim to create an in¬
some

But there is

United

many

favorable cli¬

world

and

ease

stimulating
lowering their

for investment.

much

the

conditions

their

also

that other govern¬
should do to help

among our

States

best customers.

ternational

These

environment

which

will release the
energies of mil¬
fact, much people need technical assistance,
every
three of what needs
lions of men and
port.
This
to be done can
women, business
only plans for their own economic de-r
bales of cotton was
exported; and be done
included 60%
by the United States. We velopment, and capital for the people, professional people, scien¬
.two out of every five bushels of
more than
of the cotton,
any other single nation development of their natural and tific people, and those from almost
wheat
were
exported.
Over or
22%
of
the
people have the power through human resources.
V./
every
walk of; life, from many
2,000,000 Americans in all levels
our
machin e r y
individual and collective ac¬
The development of these areas present uncertainties including il¬
of our economic life are
James E. Webb
depend¬ tions to
and
legal interference or hampering
help create a better world is one of the most
equip-,
ent for their jobs on
urgent tasks we
export, over economic climate. Therein
restrictions.
In such an environ¬
lies our face.
ment, 51% of
It is necessary to the eco¬
and above the
V"
large number of; hope for the
the coarse
future—and our re¬ nomic
ment, individuals can have the
grains, 52% of the to¬ agricultural workers who
progress of the world; it is
are also
best
bacco,
22%
of
ti e
opportunity to produce;; a
essential to the preservation and
petroleum dependent cn exports for their- sponsibility.
sum
total of wealth and knowl¬
products, 27% of the meat and present
expansion of the democratic way
Our Present Policies Can
prosperity.
t
17% of the iron and steel
and
things of the spirit
of life.
It will also help these edge
prodClose Gap
*
'
•'
Moreover, I think
usi

going into

ex¬

ported;

out

one

can

and

should do.

■

UCtS.

■.

■, ■

here

this

all of

would

room

areas

Most of

our

evening.

gap...

,■

■

"Our

efforts

„

today

;■;/ must

;

should

directed toward the
expansion

other

present

policies can,
situation which neither : agreement as
to our broadest ob¬ if vigorously
pursued, contribute
you
as
businessmen nor we as jectives and
as to
the kind of a greatly to the closing of the dollar
government, officials would want world
trading system we would
to see continue
gap.i
any longer than like to see
established,
I could,; ; In the first
was
place, we have rec-.
absolutely necessary. ^ J-; ^s
not do better in
stating this point ognized that, if our own and other
So I think we would all
than to repeat the
agree
conclusion of * countries' trade is to
increase, the
that we do'not want to
continue the report of the Fletcher
School, *' rest of the world must be econom¬
public financing indefinitely as a to
which
Mr.
Calder
referred f ically
healthy.
Other countries
major means of closing the dollar earlier this
This is

areas

off -i Five

their trade with

and with

and thus

Hig^ Level of Trade 'international
trade,

would also all
larly toward the
agree
jrnultilateral trade
want to close the
gap at
we

any
governmental
produce for them.

can

to closing
the dollar ^ But the nations of Europe can¬
The Point IV program is de¬ not fully
recover, and the under¬
signed to aid in this process of developed areas of the world can¬
economic development.
It is pri- not
develop
effectively,unless
marily a program of aiding these they are able to trade with each
regions to take the steps necessary other and with other countries.
to their own economic
That is why we attach so much
growth.
,

importance to the reestablishment

Bilateral

suppliers.

Commerce Treaties

}■:-fy.

Desirable

years

described

and

I think

than

contribute

ago
normal world
Another way in which we can
particu-f trade had all but
disappeared. The hope to contribute to the economic
economic system of half the civil¬ development of other countries is
that we
through the program, which has
a high level of
international trade./This would do more than any- ized world was in ruins. Millions already been referred to
this eve¬
To close it at a low level
would thing else to solve the problems of people were without food, shel¬ ning
of negotiating modernized
manifestly have an adverse ef¬ arising in connection with the I
ter, or the means of earning a liv-. treaties of friendship, commerce
fect on important segments of
relationship between our own •'
our
and economic
development.
ing.
Their factories had
been
and the

Close Gap at

greater

authority

gap.

be able to be
good customers

and good

expand

restoration of
in the world.

the

multilateral
in

the

trading world

Fletcher School

statement which I read you.

/ And

that is why we have been; the
leader among nations in the long

negotiations
Charter for

wjiich
an

led
to
the
International Trade

economy
economies of
other nations.
The restoration of bombed, their crops destroyed.
Secretary Webb
the Export
Managers Club, New / the
multilateral trading system
We Americans had the
energy
City, March 21, ISoo.
would
permit
private firms to. and the means to
help our allies

♦An address by

Under

I think this is worth
more than

before
York

brief mention.

ties

were

means

among

our

regularizing

tional activities.

This advertisement is neither

Commercial trea¬
earliest

interna¬

The present

Organization.

This Organization
provides, first of all, a code of
principles that member countries
will

agree

duct

other,

and

trade

secondly,

tional forum

ver¬

their

for the

Continued

the

with

con¬

each

an interna¬
orderly dison

page

offer

The

to sell nor a solicitation of an
offer to buy any oj these securities.
offering is made only by the Prospectus.
('
•*
~
V
.

NEW ISSUE

NSTA

$6,000,000

Lit Brothers
4%

Notes

INVESTMENT TRADERS ASSOCIATION OF
PHILADELPHIA
The Investment Traders Association
of Philadelphia will hold
its annual field day at Whitemarsh
Country Club Friday, June 16.
Golf and softball will headline the
intercity sports of the day.
Out-of-town guests are invited.

Sinking Fund Debentures (Subordinated)!
Due March 1, 1970

DALLAS BOND CLUB
The Dallas Bond Club will have

a cocktail
party honoring the
visiting dealers and their wives en route to the Texas
Group IBA
Spring Meeting on the afternoon of
Tuesday, May 2, 1950, be¬

Price 100%
Plus accrued interest from
March 1, 1950

tween the hours of 4:30 and 6:30
p.m. at the Downtown Club in
Dallas. The Committee in
charge of this party consists of Robert
K. Foster of
Blyth & Company, Chairman; R. McRae Davis of
the Texas Bank & Trust
Company; and Landon Freear of William
sN. Edwards &
Company.
'
( >
"
!
.

SAN FRANCISCO
The

Copies of the Prospectus

may

be obtained in

including the undersigned,

as may

their
any state from- such

of the several Underwriters, >

lawfully offer the securities

San

annual

TRADERS ASSOCIATION
Francisco Security Traders Association

spring

party

9, 10 and 11.

the

Diablo

SECURITY TRADERS ASSOCIATION
ciation

A. G. Becker & Co.
Incorporated

JpriN

will

Club

hold

June

in such slate.

The

Country

NEW YORK

Bowling Tournament between the Security Traders Asso¬

New

York

and

the

Investment Traders Association

Philadelphia will be held Thursday, April
20, at the Ten Pin
Alleys, 23 Park Row, New York City, at 7:30
p.m.
Following the
match the usual dinner
celebrating and honoring the visitors will
be held at Joe
King's (3rd Avenue and 17th Street).
All ST ANY members are
the: dinner; at $8.00

invited

watch the bowling and
per person.
Reservations should be
made before April 12 with Charles
Kaiser, Grady, Berwald & Co.-

attend

THE

Number 4896

Volume 171

imately

Gas Pfd.

Tom Canova

Assigned
To Treasury Post

;

COMMERCIAL

ga& per

Stock Issue Offered

710,000

MFC of natural

day on Dec. 31, 1949, .will*
to a daily capacity

increased

(1417)

CHRONICLE

& FINANCIAL

Pollock in Chicago

To Hear J. H. Ward

1,060,000 MFC, as authorized by
Federal Power Commission,

the

— Edward H.
CHICAGO,
ILL. — J.
Harris
winter of 1950-1951.
Julius is now associated with the
1950, it was esti¬ Ward, Secretary of the Common¬
Weld group offers 100,000 shares
known in Wall Street for many
sales department of William E.
mated that the remaining cost of wealth Edison Co., will address
years as a trader and specialist
of. 4.60% preferred stock at' completing the presently author¬ the luncheon meeting of the In¬ Pollock & Co.'s newly opened
in U. S. Government securities,
Chicago office, 231 South La Salle
$105 per share.
ized pipe line expansion program vestment • Analysts Club of Chi¬
has been ap¬
Street.
would amount to approximately ! cago to
be held today in the
An underwriting group, jointly
pointed to the '• mrnmm
$116,000,000.
; . .. y;
'
Wedge wood
Room of Marshall
TJ. S. Treasury
headed by Stone & Webster Se¬
The new stock carries a sinking
curities Corp. and White, Weld &
Field & Co. Mr. Ward will talk
Department as
fund
commencing in the year
a
Deputy Di¬
Co., on April 4 publicly offered a
on the Commonwealth Edison Co.
new
issue of
rector in the
100,000 shares of ended April 1, 1956, sufficient to
retire issue by April 1, 1980. The
4.6% cumulative preferred stock,
Savings Bonds
The
association
of E.
Allen
New Officers
new
stock is redeemable at the
Division for
par value $100, of Tennessee Gas

Stone & Webster Securities-White

•

Thomas

well

Canova,

during
As

CHICAGO, ILL.

the

of Feb. 28,

E. A. Henderson With

•

Shearson, HantmiH

New

stock* is option of the company at any time
at prices decreasing from $108 per
priced at $105 per share.
Proceeds of the sale will be share if redeemed prior to April

has

been

tive

ac¬

continue

will

assist

the

Treasury

De¬

PORTLAND, ORE.
of

Campbell

Bank

general funds of the

Building,

—

Officers

Robbins,

office, 14 Wall Street, New York

various

son was

gan

formerly with Glore, For-

& Co..

coordinate

Mr. Hender¬

City, is announced.

consultant

mill & Co.,

A. D. Canova

Thos.

partment

Shearson, Ham-

James

are

with

members of the New
York Stock Exchange, in its main

company

and

programs

Henderson

The

1, 1955 to $105 per share if re¬
President;
Harold L.
and will be used to help deemed on or after April 1, 1965, Robbins,
finance
the
current
expansion.
and for the
sinking fund at a Temple, Vice-President; and John
The company expects that its de¬
T.
Pasquill, Secretary-Treasurer.
livery capacity which was approx¬ price of $105 per share.

added to the

previ¬

Treasury

ous

Co.

Transmission

York.

Mr. Canova

promotional,

relations and bond sales
activities during the forthcoming

public

national

Drive"

"Independence

savings bond campaign.

Iowa Electric

Ugh!

Offering New Pfd.
On Exchange Basis

;

G. H.

Corp. and

Boston

First

Walker head underwriting group.
Iowa Electric

Light and Power

offering to the holders of
outstanding $100 par value
is

Co.

its

preferred stock the right to ex¬
change such shares for 108,834
shares of new 4.80% cumulative
preferred stock of $50 par value
and 839,628 shares of new com¬
mon stock.
The exchange offer,
which
will terminate
April 12,

1950, is being underwritten by The
Boston
Corp. and G. HWalker & Co. and associates.
In

First

purchasing the unex¬

addition to

changed shares, the

underwriters

purchasing for immediate
sale
85,372
shares of
common
stock.' The company at the ex¬
also

are

piration

exchange

the

offer

will call for

redemption, at 102^2

accrued

dividends, all of its

and

old

preferred stock that has not
exchanged. - The capitaliza¬
at the conclusion of this fi¬

been

tion

nancing will consist of
par

and

$22,000,000

108,834 shares of $50

funded debt,

value 4.80% preferred stock,
1,000,000 shares of $5 par

value common stosk.
Iowa Electric

Light and Power

engaged in the electric busi¬
serving an area ex¬
tending through the heart of the
central Iowa corn belt, considered
to be the nation's richest farming
Co. is

Breaking New Ground

in Iowa,

ness

area.

operating

Total

revenues

(From the 1949

$10,905,157,
of which approximately 83% was
derived from the sale of electricity
and the balance from the sale of
for

1949 amounted to

gas, steam

fast, clear, accurate
and dependable as at any time in history and the Bell
System is breaking new ground in service betterment.
It is fundamental in the policy of the business that the
only good service in the long run is one that is always
improving.: We expect to go forward in the years ahead
as we have in the years gone by.
y
v
I

Telephone service today is generally as

and hot water.
the board

It is the intention of

according to the pros¬
pectus, to declare a dividend of
22Vi cents per share on the newcommon stock, payable on July 1,
of directors,

1950.

Arthur Richards With

effective than it
today. Manufacturing, supply and service operations
were never better performed.
The men and women of
all departments are doing a magnificent job and the facili¬
ties they design, build and operate are far and away the
best in history and getting better every day.
We are confident too that telephone users desire good
and improving service and prefer to pay what it reasonably
Bell

PA. —New-

announce

now

Stock

Exchanges,

that Arthur C. Richards

associated with them as a

registered representative.

Burnham Admits
Burnh^

& Co.,

admit

Alex

members
Exchange,

%; I

Wolf to limited

partnership on April 13.

public understands the need for

sound financial structure
tinue to

provide

—

working conditions — for a
and for earnings that will con¬

steady and reasonable return on the
the Bell System by hundreds

billions of dollars invested in

of thousands of men and women.
We have confidence

future

System research was never more

means

in the past,

can.

"V.--1

;

are

cornerstones

r' v\;,

...

in the building of a com¬

The
steadily forward
providing better and better telephone service to the

munication system

Bell
in

the System will continue to have the
do the best job that

and the freedom it needs to

Those

that under wise regulation, in

that is

great national asset.

System can be relied on to move

American

people.

15 Broad

Street, Nev^ York City,
of the New York Stock
will

and Telegraph Company)

good telephone wages and

burger & Co., 1342 Walnut Street,
members of the New York and

Philadelphia

We believe the

costs.

Newburger &' Go,
PHILADELPHIA,

Annual Report of the American Telephone

BELL TELEPHONE

SYSTEM

(1418)

THE

COMMERCIAL

Farm Price

Upturn Seen As Temporary
Interruption in Deflationary Trend

Rise in unemployment beyond 5 million, and

building decline
forecast by Alexander Hamilton Institute.

month

last

FINANCIAL

while the

year,

for the first two months

CHRONICLE

total
89.7%

was

higher than a year ago. If the per¬
centage gain in February over last
year's level was maintained dur¬
ing the remainder of 1950, the an¬
nual

volume

residential

ing contracts this

Thursday, April 6, 1950

•

Canadian Securities
By WILLIAM J. McKAY

build¬

would ex¬
So far the Canadian economic in current
ceed
900,000,000 square feet as
After showing a downward trend April,
statistics, a few threat- 1947, the number of persons
has /been
remarkably ening clouds are now beginning to
compared with the previous high situation
Irom a record high peak of 306 in
employed
in the United
States
record of 568,383,000 square feet well sustained at a high level of gather on the Canadian economic
January, 1948, to 233 in December, showed a slight rise to 56,953,000
business activity and production. horizon.
1949, the index of the prices of in February, according to the Al¬ in 1929.
The unemployment figures earlier
farm products, as compiled by the exander Hamilton Institute.
There is a good possibility, how¬
This
During the week the external
in the year gave some cause for
Bureau of Agricultural Economics gain in employment,
section of the bond market once
however, was ever, that high building costs will
concern, but with the approaching
on
the
basis of January,
more
1910- not sufficient to absorb the in¬ prevent building activity from be¬
relapsed into its previous
end of the winter season there are
December, 1914 as 100, recovered crease in the available supply of ing maintained at the present rate
apathetic
state
following
the
already indications of a downward
to 235 in January and to 237 in workers from
short-lived
61,427,000 in Janu¬ during the remainder of this year.
period of animation
trend.
The recent budget speech
A preliminary figure shows that
February, according to a report of ary to 61,637,000 in February.
provoked by the new Quebec and
of Finance Minister Abbott like¬
the Alexander Hamilton Institute.
the index of building costs, on the
Alberta issues.
The internals on
The result was that the number
wise was highly
optimistic, and the other hand
It is probable, however, that this of
reflected a mod¬
persons unemployed rose from basis of 1926 as 100, rose to record the forecast
was
made that the
upturn represented only a tempo¬
erate investor demand and
4,480,000 in January to 4,684,000 in- high figure of 213.2 in February, general level of
prices
business will re¬
rary
interruption rather than a
February. This was not only a new or more than double the annual main good into 1951. It was men¬ were a shade firmer despite the
definite reversal of the deflation¬
decline in Canada in anticipation
high for the postwar period, but
tioned however that any further
ary movement.
Despite the fact it represented the
largest number average of 103.9 in the prewar extension of pensions and social of an imminent announcement of
that prices in February were down
the June refinancing terms.
of unemployed in any month since year of 1938.
Free
services would have to be met by
22.5% from the all-time high in
funds, following a slight decline
August, 1941. The unemployment
higher taxes. Mr. Abbott further
January, 1948, they were still as
caused by offerings in connection
figure last year was 3,221,000.
stated that the Federal expendi¬
5
highly inflated as they were at the
Wwith the June internal bond re¬
From now on until fall, employ¬
ture ceiling would be fixed for the
peak of the inflationary movement
ment should show a seasonal up¬
foreseeable future at a figure of demptions, rallied on further de¬
after World War I, as well as be¬
mands in connection with Alberta
ward trend. There are indications,
$2.4 billions.
ing 163.3% above the prewar level
oil financing. Although transac¬
however, that this increase will be
in August, 1939.
Thus it appears that the Federal
tions were on a restricted scale
exceeded by a gain in the avail¬
Government will make every ef¬
the corporate-arbitrage rate de¬
able supply of workers. It is thus
The Drop in Exports
fort
to
stabilize
the
Canadian clined to
151/2 %-143/4%. Stocks on
possible that unemployment will
economy at its current peak level.
the whole were inclined to lag but
According
to
the
Alexander rise above the 5,000,000 mark by
There are however impdhtant ele¬
Hamilton Institute, the value of
the Western oils were a notable:
early summer.
ments in the situation that are not
merchandise
exception. Pacific Petroleum reg¬
exported from the
susceptible to direct control by the
United States in January to $744,istered a sharp advance in active"
The Building Boom
Dominion authorities. In particu¬
000,000, a new low for the current
trading and Royalite and Calgary
lar the volume and direction of
According
to
the
Alexander
and Edmonton made
recession, and 47.4% under the
substantial
Hamilton Institute, total building
foreign trade are governed prin¬
postwar peak of $1,414,000,000 re¬
gains. Speculative golds attracted i
contracts
cipally by external factors outside
awarded
in
February
corded in May, 1947. On the other
some attention among which Authe scope of Canadian direction.
ran far above the level of a
year
hand, the value of imports in Jan¬
maque, Barnat Mines, Norseman,
In view of the Dominion's
ago, as was the case in January.
high and Louvicourt
uary extended its upward trend
"figured promi-]
Most of the gain was accounted
degree of dependence on foreign
for the sixth consecutive month,
nently.
On renewed rumors of *
for by residential building con¬
trade, the Canadian economy is all
rising to $623,000,000. As a result,
the more vulnerable in the event acquistion by the Manitoba Govexports exceeded imports in Jan¬ tracts, although there was also an
e r in m e n t,
Winnipeg
Electric
of adverse external developments.
increase in non-residential con¬
uary
by only $121,000,000, the
touched a new high.
Base metals
Dr. L. Starkweather
/ A pertinent example is the present
tracts.
According to the figures
smallest gap reported since the be¬
were
mixed
but
East
Sullivan,
state of U. S.-Canadian trade. The
ginning of the present trend to¬ compiled by the F. W. Dodge Cor¬
Gulf Lead, and Labrador regis¬
Dr.
Louis P. Starkweather, latest returns show that Canadian
ward a closer merchandise trade poration, combined residential and
tered small gains.
non-residential contracts awarded Chairman eff the Department of trade with this country has now
balance.
reached its highest level in his¬
in 37 Eastern States amounted to
Of the
Finance, Rutgers University,
$121,000,000 excess of
tory. The unprecedented propor¬
71,024,000
square
feet
of
floor
merchandise exports over imports
School of Business Administra¬ tion of
66% of Canada's total trade
space
in February as compared
in January,
$47,000,000 was fi¬ with
48,510,000 square feet in the tion, has become investment ad¬ is now transacted with the United
nanced by net gold and silver im¬
States. During February Canadian
corresponding month last- year, an visor to Frank L. Valenta & Co.,
ports, leaving only $74,000,000 to
exports to this country constituted
PHILADELPHIA, PA. —Robert
be financed by United States Gov¬ increase of 47.0%. The total for Inc., 1 Wall Street, New York
64% of total shipments abroad,
McCook, formerly on the Trading
ernment aid and other means. This the first two months was
135,399,- City, sponsors of Natural Re¬ which compares with a. ratio of
Desk at Hallowell, Sulzberger &
suggests that the downward trend 000
square
feet
this
year
as sources Fund,, Inc., an open-end 50% during 1949, and 38%
over
Co., is now a registered repre¬
of merchandise exports
may soon
the past 30 years.
against 89,887,000 square feet last mutual fund, it was announced.
sentative
with
the Philadelphia
be
halted,
provided
that
the
office
of
year, a gain of 50.6%.
On
Walston, Hoffman &
I ;
the
United States maintains its
other
Dr. Starkweather is also a cor¬
hand
Canada's
pres¬
Goodwin, 1420 Walnut Street.
trade elsewhere, and
ent demands for
Residential
particularly
foreign imports.
building contracts poration and investment conwith
her other
great customer,
awarded in both January and Feb¬ sulant and
lecturer in finance at
The Rise in Unemployment
Britain, has registered an alarm¬
ruary were at a record high rate. the Graduate School of
Business ing decline. The February figures
After declining in
January to The volume in
February was Administration of New York Uni¬ reveal that in comparison with the
same
56,947,000, the lowest figure since 73.4% larger than in the like
month last year
Canadian
versity.
...•
exports to Britain have declined
Vanderhoef & Robinson, 31 Nas- 1
by 31%, and by 42% in compari¬
year

Dr. Starkweather to

Advise Valenta Go.

Robert McCook With

Walston, Hoffman /

•

Yanderhoef Robinson

Admit Irvin Kerr

with

son

turns.

mind

the

February,

has also

1948

re¬

borne in

current

statistics

Street, New York City,

bers

the

Exchange,

New

mem-

York

Curb

still reflect the execution of orders

arranged a year or more ago. Fur¬
thermore the impact on Canadian

Kerr has

trade

SUBURBAN PROPANE

that Irvin W.
Kerr has been admitted as a gen-

many years.

that

sterling devaluation has
registered its full effect.

not yet

GAS CORPORATION

the

eral

partner

firm.

the

Mr.

been with the firm for

Consequently in the period im¬

mediately ahead economic devel¬
in

opments

Summary from 1949 Annual Report
Growth of suburban communities
beyond gas mains in
our nine-state
operating area continued to
our

strengthen

market.

Demand from

ing efficiencies

customers and operat¬
combined to establish new
high -levels
new

in sales and in consolidated net
income before extraor¬

dinary and non-recurring deductions.

Refunding and Service Agree¬
Purchase

ment

chased

from

Company

Total

$6C(0,000

purchased

Service

Common Stock
Fixed Assets

410,980,343

602,837

the

Dividends $

224,900

Increase
.

94%

(net)../

447,958

$5,618,824

$ 9,699,526

Working Capital
$ 402,049
Lbs. of Gas Sold.........
61,200,000
Number of Installations..

$ 2,268,591

98,128:

105,000,000
;

141,755

$100,000 an-;

-•

136%.
99%
73% ■:
464%>
72% "
44%
;

Dividends—During
nual

dividend

Stock
$.84
since

was

rate

share—the

request to

of our 1949 Annual Report can be obtained
Suburban Propane Gas Corporation,
copy

MARK ANTON
President

upon

Whippany, N. J.

R. GOULD MOREHEAD
Treasurer

the

Common

Sales Program—s ales

■:

sales

1948.

and

$1,788,881.

Revenue

from

equipment

have

ceived

revealed

Stock

balances

current

proceeds of
our

—

months
,

ings
ada

gas

burning equipment increased "29.1%
over

appliance

amounted

Municipal

remarked,

their

represent almost every state in this
•

Provincial

held

Corporation ' f-

other' governments.
Mr. Abbott
stated that these balances are now

ister

♦;

complete

which

country.

Government

an¬

$.72

increase

;

that

be applied against these balances.
"To this extent," the Finance Min¬

Common

third

1946.

holders

re¬

"abnormally high," but they are
likely to be reduced in :the next
few months by exports which will

the

the
from

Common Stockholders
3,994

of his

warne'd

and

reflected

1949

increased

also

in ^Canadian

will

The economies

will

course

speech, Finance Min¬

Abbott

reserves

Advisory
Phillips

this, purchase

refunding

ister

crease

For

which

years.

cent budget

CANADIAN BONDS

economic

Canadian exchange
high level jof $1,204
millions is accounted for by a rise

earnings.

$ 1,421,183

payment

Canadian

situation. In the

considerable part of the recent in¬

from

Company

the

and
critical bear¬

principal

* Debentures.

Agreement

Petroleum

ing

country
a

Petroleum

Phillips
$3,000,000

nually for 16

1949

Revenue.........,.. $5,673,615

Net Income

our

amount

effected

1946

November

1949
we
refunded $7,000,000 prin¬
cipal amount of publicly held 4& %'
Sinking Fund Debentures and pur¬

eliminate

A RECORD OF
PROGRESS

—

this

Britain will have

on
are

"our

level

some

future, earnings
been re¬
It

the

was

CANADIAN STOCKS

the

effect

advance."
that

reserves

include

A. E. Ames & Co.
INCORPORATED

also
few

Two Wall Street

heavy transfers of earn¬
U. S. investments in Can¬
expected.

During the

sec¬

New York 5, N. Y..
WORTH

4-2400

1-1045

ond quarter of last year-the Can¬
adian exchange reserves declined

by $90 millions
repatriation

as a

result of U. S.

current

earnings.
Thus despite the present highly
satisfactory state that is reflected

Fifty Congress Stre«
.

■

announce

Boston 9, Mass.

COMMERCIAL

THE

Number 4896

Volume 171,

RAILWAY COMPANY

CANADIAN PACIFIC

December 31, 1949 (Abridged)

Sixty-Ninth Annual Report of the Directors, Year Ended

Account

Income
Gross

$363,252,094

——J

Earnings

342,620,125

Working Expenses

Net

(1419)

CHRONICLE

FINANCIAL

Earnings

Other

$ 20,631,969
23,636,653

—

Income
"'

■

.rr..

$ 44,263,622.
Fixed

$ 29;724,805

•

•'

Dividends:
'

8,002,392

$ 355,249,702

363,252,094

Gross Earnings

Decrease

1948

1949

income

Net

YEAR'S RESULTS:

14,543,317

Charges

Increase or

*•

Stock:

Preference

■

.V> /' ' ■•;■!?r

% Net
:

336,830,536

342,620,125

'«Working: Expenses
}

\„:y.

->;

■■■

-! • ?■ ■

'■

■

Yy/'
Y;Y*:i'
••
Ratio, Net to Gross Earnings
'!

' '

*•

*'•

♦" i

;

■

7,'-."■■■:■; Yy! j

::'.ys
•

' "l : ■ '"•* ; -Y' '

■

;

_
"

,■

'r _ C,-

•>""

-.j

<■

5.7% ;
V

■>

v.-

•

0.5%

•

i •

Y'Y )Y YY Y'^YY^yY'-Y;

i -r

.--.V'

•

Y..Y

'Y ■

24,864,949

14,543,817

Rental Charges

and

1,346,447

subsequent

684,914 ;

4,557,682

1949.)

3,015,868

6,086,169

;

J. ;h:\

-f*" rv '

•

•*'

the

•

JL$

•

19,152,037

declared

the Ordinary Stock which was

and is payable March 31," 1050,
deducted in the accounts for the

year

not

10,572,768
* •.

1 ;•

•;

...

-'J

Profit and Loss Account
31, 1948
$196,737,313rv-y; Vr
:1 .'/•
-r"
•(
*7'"<
on the Ordinary Stock, declared from

'iV'- V-

•.

•

the year 1948, paid

'*'/v".' ''V

;V-:"

'■ V-'-''V

.V',-,-- •' *

r^.-

"• r\

v-;-'

Final dividend of 3%

the earnings of

and Loss- Balance December

V-'-: ';v

9,102,037

Corporate Purposes

•

and Loss Account—,

Profit

■

Profit

Balance for Modernization and Other

'•

;

16,750,000

6,700;000 4 '•*. *
,'v '•

•;

:■

•—Ordinary Stock—5%

3,872,768

•'*

the end of
$10,050,000,

amounting
year

3,872,768

Dividends—Preference Stock—4%

1949

•

(The final dividend of 3%

Interest

;•«

$ 1,228,296

15,890,264

23,636,653

——

•

.V*"1 t'*

Balance transferred to

Other Income

•

paid October

~
.

■'

•

Ordinary Stock:

;'•/
$

"
;'

•.

1,741,565

1950—

■ -

•:

2,131,203

1949-L-

Dividends:

- • •

5.2%

: -

-J

' " i . «.;■' * .-y,

'-r

payable February 1,
^

Z 2,212,803

18,419,166

20,631,969

Earnings

paid August 1,

2 7o

5,789,589

■

v':,A

/';

March'"31, 1949—10,050,000
$186,687,313

YEAR-END POSITION:
of Income

Balance

$56,733,453

$1,324,512,797

$1,381,246,250

Property Investment

•

40,986,281*

234,431,233

193,444,952

—

102,037,000

503,527,526

486,524,243

steamship

Capital

;

„

' J

' •

J-

;

■-

,
*

.•!

■
,; \

< 1
,

8,432,656
'•"

* '. '

' ,'

.•
.

cost of

for increased

-lL

•

...

■ ;

315,163

Credit—.,

1949, as per Balance
—

—

;

■

-20,043,464.-

and Loss Balance December 31,

Sheet

i. .t*

r.s

576,264

replacement

yyrZyyy
Profit

Working
1

$ 19,152,037

-A •• •' *
...
insurance recoveries rep-

resenting compensation

17,003,283

97,715,688

Miscellaneous—Net

'Reserves

ended

31, 1949
Y'.1'v...' /

l\:-

tonnage

;

22,664fi00

89,283,032

...

79,373,000

—

Funded Debt

for the year

December

V;#'•'*

Portion

Other Investments

Account

•

$206,730,777

t ' '

Railway Operations
TRAFFIC STATISTICS:
Gross earnings
Tons of Revenue Freight

3,591,149

11,969,457

—

60,036,833

13,629,044

1,659,587

1.20c

Carried

Revenue Passengers

Revenue per Ton

56,445,684

Carried

1.13c

0.07c

Mile of Freight

Mile

this,

about

V'-■

Y'.?■'

|
j
ft

■

Working expenses increased $5.8 million. Of this in-»
$4.2 million resulted from the general wage
of 17c per hour, which was in effect for the

0.24c

2.48c

2.72c

those

million is attributable to
freight traffic. There was a net increase of approxi¬
mately $18 million from adjustments in freight rates,
but this was largely offset by a drop of nearly $12 million in the volume of traffic, which was ♦ 6% jlower^
measured in tons, and 4% lower measured in ton miles,
1948.

Revenue per Passenger

increased $8 million, or 2.3%, over

crease

increase

]

full
*1

;

-1

*•r

„{,

year

1949, as compared with ten

months in 1948:

yi
Maintenance

expenses

million in maintenance

million in maintenance of

million — $2.5
and structures and $3.1

increased
way

$5.6

equipment.

|
j
j
|

J
sion
The

year

1949 was one of sustained

industrial and

commercial progress throughout Canada.

net

investment of your Company in

1.96% for the year 1949, far below an

rail property was

As your

questions of law arising
The Court held that
the Board had erred in postponing the final determina¬
tion of the, application of th$ Railways,'and certified its
opinion that the Board had failekl to perform the duty
<;imposed upon it by the Railway Act.
out of the

earnings from rail operations have been; insufficient to
provide any return to holders of ordinary stock.
But
for the unusually large income from other sources it

not have

would
meet

recent

•

:Vv'-

concluded

of 20%

interim

announced

its

<■

your

8%
Canada) and a
specific increase of 8c per ton on coal and coke. The
judgment postponed the final determination of the
application until several investigations and studies had

increase

28, finds that in place of the 8%
allowed,: the Railways

previously

now

be allowed a 16%

Company

increase.

of 15c per ton instead

only $22 million, while

(except on grain rates within Western

the revenue

the Board itself amounted
to approximately* $30 million.- The steps necessary to
redress this situation are now under consideration. ::
deficiency as established by

September 1949, authorizing an interim increase of
.

coke an increase

;

decision

set

for final hearing, which was
February 7 last.
The judgment of the

On coal and
of 8c is author¬
ized.
It is estimated that these increases, had they been
in effect for the full year 1949, would have yielded to

should

in freight rates, the Board of

Commissioners

request of your Company, then

application' down

application of the Railways made in July 1948

increase

Transport

The Board, at the

i. Board, dated February

for your Company to

years.

On the
for

been possible

the modest dividend that has been paid

even

the

The
*

YY-V".Z-•!

Equipment repair expense was higher owing to inwage and material costs and to the increased f
number of freight and passenger cars repaired.
• Y
\
creased

Maintenance expenses were

Income

and

Company show the

-December 31,

1949:

Profit and Loss

accounts of your

following results for the year

ended

credited with an amount Y

$7.5 million withdrawn from the Maintenance Fund.
Of this amount, $6.25 million was applicable to track
materials. Withdrawals from the Fund, as in 1948, were
of

based

with

prices at

prices of these materials as

made.

Depreciation charged to maintenance expense was $2.5
1948. Of this, $2.2 million resulted
the adoption of revised user rates developed in
studies made during the year.
The service lives on
which the user rates now are based closely correspond
with those on which the Board of Transport Commis¬
sioners based its straight-line depreciation rates for rate
making purposes in its judgment of September 20^ 1949;
;

million less than in
from

Transportation expenses were little changed

from last

but the ratio of these expenses to gross earnings
to 42.4% from 43.4% in 1948. This reduction
resulted largely from a substantial decrease in fuel

year,

declined

expense,

regard |
compared •}
the time the accruals to the Fund were y

formula which was apjplied without

to the increase in

time, net

rail.

judgment of the Board.

adequate level.

Directors have stated from time to

Company to the Su¬

Court of Canada on two

preme

laying expense was greater, principally because
of the installation of additional quantities of track mateT
; Track

rial, including 223 more track miles of

appeal was taken by your

early summer of 1949.

Gross earn¬

again surpassed those of any
previous year, but net earnings, though ; showing a
slight improvement over 1948, were substantially below
the requirements found reasonable by the Board of
Transport Commissioners. ' The rate of return on the
ings from rail operations

the Royal Commis¬
Transportation which has been sitting since the

completed, including those of

been

To the Shareholders:

the increased use of diesel power

being a factor.

Operating performance showed an improvement; tho
average freight train load was greater and freight train

There

speed increased.

however,

was,

credits

working

expenses

earnings

gross

recorded.

the

Between

94.3%,

was

ratio varied from

low of 77.3% to

principally

Other Income

- -

Land

27,868

sales

amounted

from

:•.

Ocean freight traffic

lower and the effect of this

higher

carryings due

passenger

vessels

placed

operation

the

Coast routes favourably affected the

British

were

and

V.j

Net earnings from

£780,000.
there

year.

improvement in

the

resulting from

holds

11,193,882

decreased

$2.8

fees

the year were $8.5

million,

■

come

The

miscellaneous

;

Property

stock,

in the Fund

received

Also included
interest

for

was

the

1945

1948

the reorganization of that

company.

The
other

setting in part this additional income, was
earned

increase

Alberta

the

Railways,

which
:

;

borne

■-

your

Debenture

was

Stock

payable

devaluation.

in sterling were lower as

The

effect

this

obligations,
Collateral
rency,

Consolidated

Trust

Bonds

because of t.

and

United States

$9.5

million

cost

million.

>• Net Income and Dividends

■

$29.7 million,

declared

from

income

net

aggregated

Chateau

for

was

motive

power,;

•;

This amount included dividends of 4%

Stock and
of which

($1.25

the final

the year.

per

share)

was

■/,

Earnings
$1.93

per

share.

and $2.04 in 1947. '■

Tris

The

con¬

Air

Lines

additional

y, '

reduced

was

7V7

June

' "

16.

Montreal

The

the

Noranda

division

efficient

jet-propelled

service

official opening of com¬
Pacific

routes.

commenced

and

July

for

which

the

over

Pacific

and

In order to

operation,

service

expected

are

These aircraft

operation
the

economical

Service

delivery of two De Havillahd

aircraft

by 1952.

was

ceased

new

via Honolulu

survey

are

long

particularly

distances

en¬

due, in part, to their

' i

of $3

''.

600,000 shares of stock of

your

Air Lines

issued to your Company in exchange for advances

million previously made.

connection
million

with

the

made

was

Pacific

To meet obligations in

service

during the

advance

These transactions

year.

of Scotlandand

rhffl^n^used

$10.7

close of 1949.

;

the

end

Finance

Net

income

$12 million,

$622,000

July 2,

1949, $10.7

Bonds matured.

million.

million

Collateral

Trust

'Because of the present extraordinarily

high cost of shipbuilding and the uncertain conditions

the Preference

prevailing in the Orient,

the Ordinary Stock,

sidered

for

use

wise

the

your

undertake

Pacific

Directors have not

the

Ocean,

Minneapolis,

St.

Paul

Sault

con¬

creased

compared

$1.6

million,

with

1948.

principally

Gross
as

$1.00

decrease

earnings de-

result

decrease of $1 million in expenses.

per

'.paid in 1948,

the capital

was

declared

amounted to

stock, the

lower

$360,000.-:■ '17 -'>
Under

$719,000, of which

the

plan

rate as

same

This

Company received

your

v-v,;.

A dividend of

February 21, 1949.:

replacement of ships
for the expansion

Ste.

freight tonnage handled in 1949; offsetting this, in part,
was a

Dividends

Railroad Company, after provision for fixed and

contingent charges, amounted to $1.1 million,

•
■

year was

the

>>:;

reorganization

;

approved

I7ri //

the

compares

with $1.70

if Miscellaneous—Net Credit, amounting

Atlantic

Fleet.

order, therefore, to

make the

best use in the meantime of the funds set
aside for that
purpose,

1948

was

decided

^appropriate

Steamship Replacement Fund
sum was

; Interstate Commerce Commission and the Court, the re't organization managers formed a new company, under
the

$10.7 million from

deposited with the Trustee for the issue.
a

y y

'
•'

•

!■:>

vestment in controlled lines in

Expenditures for pensions during the

$10.4 million.

sion allowances

year

amounted

These included the proportion of
pen¬

paid by

your

State

Company, its contribution

The

Minnesota, to: take

Duluth,

South

over

from November 1,; 1949*

Shore-and

The

new

the

Atlantic

Com-

company is

Duluth, South Shore and Atlantic Railroad Com¬

In accordance with the plan, the initial capitalization

First

to $315,000, in-

pany.

of the

named

reduction

the

Railway Company and Mineral Range Railroad

of $13.6 million in the amount of
Consolidated Debenture

Stock pledged as collateral,

properties

net decrease of $22.7

million in funded debt during the year and

was de¬

set up to provide for poten¬
,

laws

;
,

to redeem these bonds.

pany

credit of $438,000 representing the unused bal¬

considerably higher cruising speed.

million, representing construction costs of

Pensions-'-

capital

The amount of serial equipment
obligations discharged

Ordinary Stock, which

tial losses in respect of i

%■/-;;; :|7

The pas operations were aug¬

1949 marked the

countered

maturity

the Ordinary Stock amounted

reserves

■
•'

''7r;7;7

■,.

from

May

Australia

suitable

for

clared after the close of 1948 and paid on March 31, 1949.

of investment

service

operations

"Comet"

year was $8.4 million lower than at the end of 1948.

cember 31, 1948, was reduced by $10 million, the amount

ance

I
loss

net

United States Subsidiaries

The Profit and L^ss balance of $196.7 million at De¬

net. loss of $194,000 m

' 7

increased.

An additional

-v'-v.'• 7-7

opening of the Winnipeg-Churchill service

provide

by $7.5 million.

V '

Lines, Limited

Air Lines resulted

your

order has been placed for

repaid through

purposes were

Air

Japan and China via Alaska September 19.

assets

for

mercial

77777.77 77

•

Pacific

Company

These transactions resulted in

I eluded

Pacific

■'

revenues

The year

certain

and

the Association

Working capital of $89.3 million

the

,'77'|

•

'•

;of the 3% dividend

operations March 1^

Pro "it and Loss Account

the

brought your total investment in Air Lines to $11 million

This

settlement,

■'

commendecd

1949.

Company in

your

about

Operations in Canada continue to show improvement

applied

were,

wholly-owned subsidiaries.

;

"Empress

your

When

at the

cur¬

declared after the close of
;•

annually.

began their investigations into the disputes

•

and

hand from equip¬

during 1948

years.

Maintenance Fund

bring

$9.5 million for

and

cars

Montebello, Que.,

acquired

were

issuance

during the

$20.6

some

redeem Collateral Trust bonds.

increase of $2.3 million.

failed^ to

*";7*

1948.

Withdrawals from the Steamship Replacement Fund

Net income, after payment of fixed charges, amounted
to

million

of $113,000 as compared with

The

equipment delivered in

new

January 1, 1949, of Soo Line Second Mortgage Bonds.

a wage

cents

Marie
lower owing to the

was

(ten

other
forty-

the

devaluation of the Canadian dollar.

Guaranteed interest

railways,

British Columbia Coast vessels and reconversion costs of

equipment

Stock

Debenture

payable

Log

included

devaluation

offset somewhat by increased charges on

Canadian

employees, of

hour

per

approximately $35

Canadian

physical assets of the Seignio.y Club Community

The

;

Consolidated

Compliance with these requests would cost

which

were

interest

and

weekly earnings, and

same

cents

cars.

stocks of these

and

employees

seven

negotiations

•-

working capital and other

roads

Company

$44.6 million for rolling

was

Company and to Canadian

port

decrease of $1.3 million.

result

cases).

" De-~

Fixed charges amounted to $14.5 million for the year,

for leased

increased >$56.7

acquired have been leased

the

Rents

increase

Part of the advances made to Canadian Pacific Trans¬

Fixed Charges

the

period of 25

operating loss of the Northern

half

hotel

hour week with the

•/77

Mortgage Income Bonds of the Association.

Off¬

reduction

ancillary operations, have made demands for

7'.

sideration, mainly, of the surrender of $2 million First

by the Steamship Replacement Fund

Company.

train

Association

in interest

the pension

'77V7?

amounting to $16.7 million

towards

Duluth, South Shore and Atlantic Railroad income bonds

including

"■early in 1950.

;;

investment

which

Funds

amount of $359,000

period

10,388

were

was

death.

reduction of $585,000 from

ment trust certificates issued

considered for the present to be

was

during 1949

terminated

were

mented

the inclusion

was

to $3 million in the annual

Employee Relations

oper¬

increased

sources

providing

increase of 752.

Total assets at the end of the year amounted to $1,714

policy adopted in 1941 of retaining such in¬

unnecessary.

and

$25.3 million for freight train

Contributing to this increase

acquired

payroll,

"Non-operating"

$1.5 million.

were

authorized

1948 and

over

.77*

assist

oil

Rents, royalties

and

Directors

your

there

year

Operations of

$9.50 in 1949.

and

pensions,

ythe end of the

rights,

lease

substantially increased.

under reservation

were

■V'.77'7-

of $698,000 representing the net income of the Insurance
Fund.

petroleum

under

were

.Balance Sheet

passenger

properties

employees

The number of employees pensioned

respect

1,326; and 574 pensions

*':'>77;

principally

interest, exchange, separately

number of

increased

tion

the stock of that company was reduced

Net income from

larger

Minister of Labour established two Boards of Concilia¬

largest item of expenditure

from $11.00 in 1948 to

position

contribution to the Pension Trust Fund.

the 1948 balance.

of*

respect

The periodic review of the pension

increase from $1.75 million

acre.

per

land account totalled $5.5 million.

because of the lower dividend paid by the Consolidated

dividend rate

wage

will

produced $1.7 million in 1949, an"

Mining and Smelting Company of Canada, Limited. The

ated

title to

acres

therefore higher.

were

Cash received

million,

levies

and

■'/■■■''*

income

Act.

the

for

ferred payments on lands and townsites at the close of

increase in tolls of 15% made

Fund

years

included

'77.

Oil production increased

reservation

million,
Dividend

$666,000.

77-"

35,880

year

Disbursements, including taxes,

from domestic

revenues

Trust

higher

farm and pasture lands

increase of $515,000 over 1948.

communication services increased

effective July 4.

which

price of $3.12

were

reservations,

exploration.

and

Revenues

Rentals irom leased wires were higher and

was

messages

ment

million,

■:

Company

royalty payments

meals, made in July 1948, being effective for

full twelve months.

your

varying

for

new

higher, mainly owing to the increases in rates for

rooms

companies and

Columbia

results for the

the

which

the

Two

Net earnings of hotels increased $640,000.

the return

of France" to the Atlantic route.

"Empress

7 v

under

much

was

only partially offset by

was

■

Pension

employees covered by the United States Railroad Retire¬

and the balance timber lands and townsites.

and coastal steamship opera¬

ocean

tions decreased $454,000.

land holdings consisted of 1,627,145

of which 1,000,863

Net earnings

average

At the end of the year

Other income amounted to $23.6 million, a decrease

the

and

of timber lands and 59,880 acres of farming

acres

acres,

$1.2 million compared with 1948.

charges

of * adjustments

respect

rates, the resulting pensions to emerge in future

land, the latter at
-

miscellaneous

Land Accounts

high of 85.4%.

Other

States.

were

recently completed by the Actuary indicated that owing

1939 this

1920 and

years

Thursday, April "6, 1950
1

property investment account.

fractional reduction only from 94.8% in 1948, the highest
ever

CHRONICLE

The ratio

increase of $2.2 million.

United

the

substantial in¬

Net earnings from railway operations in 1949 amounted
to $20.6 million,

FINANCIAL

in empty freight car miles.

crease

COMMERCIAL

THE

(1420)

new

South Shore Company consists of $5 million

Mortgage

Common

Income

Bonds

and

$10.5

million

Stock, represented by 210,000 shares having

slated value of $50 per share.

$4.1- million

;

and $1.2 million in cash.

the' new;

bonds,
-

Your Company received

The

all of the
new

bonds

new

and

stock,
stock

,,t-

Number 4896

171

Volume

THE-COMMERCIAL

been

accounts of your Company

in the

recorded

advances to, the old companies after

investments in, and

were

Nanaimo

the

1949 resulted in an

during

operations

Shore

South

compared with net earn¬
ings, on a comparable basis, of-$748,000 in 1948.
A
marked decrease in freight earnings was the principal

operating deficit of $539,000,

this result.

factor in

to communication

betterments

The

Evidence was pre-

Commission.

Commerce

Interstate

sented in support and

317

"A"

units,

a
pleasure for your Directors to record again
appreciation of the effective work of officers andemployees in all branches of the service. Their cooperation in the constant effort to achieve efficiency in
operations is gratefully acknowledged.
»

consisting of 30

units, 4 road switchers and 4 yard

switchers, will be placed in service between Cartier

rebuttal of the proposal of a group •

Fort

William

their
•

and

For the Directors,

the Schreiber Division in Ontario.

Further briefs on
filed by the interested parties.

proportion of new securities.

the subject are to

W. A. MATHER,

the Commission, designed to increase

zation approved by

Directorate

retire from office at

The undermentioned Directors will

President.

Montreal, March 13, 1950.

Rates and Services

Commissioners
the.

April 23, the Board of Transport

judgment upholding the application of

delivered

Province

This

freight rates.

Differential"

effective July 1.

adjustment in rates became

8% in Canadian class and com¬

specific increase of 8c per ton on
authorized by the Board of Transport

coal and coke were

Commissioners

'■

•

CAPITAL STOCK.:

INVESTMENT:

PROPERTY

Grain rates in Western

$ 964.265,009

affected.

international,

traffic were subject to two increases

and export

United States railways in

5.4%,

Ocean

by authority of the

and Coastal

increases

in passenger fares in

295,438.229

LIABILITIES:
8,117,505

Companies

motor truck com¬
increased by 8%, effective

Other

Collectible and Advances

Payments

Deferred

LLABILITIE8:

the British Columbia

11,546,859

Properties

Unsold Lands and Other

Coast steamships were

of Canada

Government

Jvyv'

varying amounts during the year.

increase

15%

y-y:yy.\

';.y;'..yy;

Relief

2,933,739

Miscellaneous

4,386,012

15,485,365

Fund-——

Steamship Replacement

193,444,952

UNADJUSTED CREDITS:

RESERVES AND

ASSETS: *•:

CURRENT

•//''v

Maintenance

Negotiations

are

by the Railway

by the Government
motive

New

sisted

steam

units, of which
The

switchers.

Railway

change-over

Diesel power was

1949.

and 48

locomotives

Island

Contingent

Reserves

Unadjusted

134,376,594

Credits

—

4,113.819
6,714.070
510,241,596

DEBITS:

UNADJUSTED

PREMIUM

motive

Insurance

80,433

——$

Prepaid

CAPITAL AND

34,453.562

DEBENTURE STOCK

Nanaimo
completed during

was

>13,183,540

—

33,635,855

Cash

diesel-electric

yard

3,493,643

Reserves
Reserve

22,839,000

Canada Securities.

Government of

the year con¬

diesel-electric

13,875,642

Insurance

20 were road units and 28 were

Vancouver

delivered during

464.371,524

17,670,714

Investment

Accounts

Miscellaneous

services on the Esquimalt &

all

for

power

of Canada.

power

Balances
Receivable

Conductors'

and

Agents'

of 55% in mail rates payable

17,850.000

Reserves

46,305,333

and Supplies

Material

Reserves

Depreciation

application
Association of Canada in Novem¬

still under way on the

1948 for an increase

ber

1,447,223

13,183,540

Fund

Insurance

Unemploy¬

17,850,000

—

ment

Com¬

by the Board of Transport

authorized

Fund

Maintenance

domestic message telegraph

missioners, effective July 4.

made

10.697,532
45,093,562

increased by

was

8,492.454

Townsltes

DEFERRED

tolls

;•

Liabilities—:—.

Current

Other

Lands and

651,677

1,741,565

Declared

Dividend

Unmatured

981,051

;

Charges

Fixed

Accrued

5,141,369

Accounts Payable—

Miscellaneous

6,819,809

Settlers

.....

-—.;—

■.

3,974.440

Balances

Net Traffic

47,157,050

Controlled and

14,769.474

Audited Vouchers

October 11.

79,373,000

71,923,324

Investments

Miscellaneous

Janu¬

Special express rates issued to meet

16,507 500

1,331,246,250

Bonds—Controlled Com¬

Mortgages

Rates

equipment obligations

bonds and

Advances

petition within Canada were

$ 311.945.723

——

collateral

INVESTMENTS:

panies

class fares were raised 15%
and May 11, respectively.

April 10

STOCK

Pledged

Pay Rolls

Coach and first

15.

2,787,245

Bonds-.

Unamortized Discount on

SURPLUS

I.AND

Other

also placed in use on the Mont¬

Unadjusted Debits——_—

1,629.937
PROFIT AND

4,497,620

The efficiency
have been satis¬

65,586.757

—

206,730,777

LOSS BALANCE

real-Newport-Wells River line in June.
and

economy

of this type,of

power

$1,713,565,416

$1,713,565,4-16

factorily demonstrated.
;
A total of
cars

were

3,596 new freight cars and 45 new passenger

placed in service. The passenger cars

14 coaches and

5 roomette units.

•»..

SHAREHOLDERS,

TO THE

classification yard in the Montreal area was

at the end of the year.

traffic control system.
to

the

classification

Movement of cars from the hump

tracks will

be handled

by push¬

control through retarders and power operated
switches. When complete, the yard will be one of the

the
them

up-to-date on this continent, and

requirements of modern traffic

will meet the

conditions.

with

.In

».

The

rities in

safe

erly

records
which

securities

our

opinion the

for

the

the books of

the

securities owned by the Company
the custody

custody for the Company.

drawn, up so

operations

were

the Canadian Pacific Railwav

Loss Accounts for

year

appropri¬

vertfi-d bv an examination of those
depositaries as were holding secu¬

certificates received from such

Accounts and the other related schedules are prop¬
present, fairly the. financial position of the Company at December 31, L543, and the results of Its
then ended, according to the best of our information and the explanations given to us and as shown
General Balance Sheet, Income

the Company.

10,

schedules, and have compared

and Profit and Loss

T'
.

•'
-

March

Company as at December 31, 1949.

that date and other related

at December 31. 1949, ware

Its Treasurer; and by

aggregating $9 million, in addition to those ap-

and

Capital Appropriations

anticipation of your confirmation, capital

ations

books

General Balance Sheet of

the year ending on
and records of the Company.,'

Profit

Montreal.
'

the

/'' '!"

COMPANY:

the above

examined

and

Income

button

most

;

Vice-President and Comptroller

W-.

-1

PACIFIC RAILWAY

have

The yard
occupies an area of 680 acres.- Traffic entering or leav¬
ing the yard will be controlled by a modern centralized
completed

ERIC A. LESLIE,
,

included

CANADIAN

The new

'V-.

■

nearly

472,256,921

FUNDED DEBT

Canada were

increased approximately 25%

were

102.851,324

—_

Sleeping and parlour

the year.

put. into effect during

—137.256.921 *

Steamships-—62,476,772

Properties

laneous

—

CONSOLIDATED

PERPETUAL 4%

CURRENT

Various

fares

j -

134,883,654

Communication and Miscel¬

Hotel,

Stocks and

- :

ternber

ary

;•

Less;

OTHER

car

lative

DEBENTURE

11, < and a further approximately 3.7% became effective Sep-,

•

Companies-

effective January

made

was

increase

granted

Commissioners. The first, averaging

Board of Transport

Bonds—Leased Railway

Stocks and

1949, and made applicable in

classes of traffic

these

Canada

overhead and certain import

$ 335,000,000
Non-cumu¬

Stock—4%

Preference

116,763,991

Improvements on Leased Property-

Rates

Stock

Ordinary

Inland

Rolling Stocx and

Railway,

SteamstLps '

Canada were not

LIABILITIES r

■

<■'

■

September; 20, and

judgment of

its

made effective October 11.

were

ASSETS

rates and-a

modity

1949

General Balance Sheet, December 31,

An interim increase of

COMPANY

CANADIAN PACIFIC RAILWAY

Columbia for removal of the so- r

British

"Mountain

called

Officers and Employees

freight cars, 50 express cars

The diesel units,

cars. ■

"B"

;

Walker, K.C.

Mr. G. A.

modification of the plan of reorgani- ~

of bondholders for

their

work

and

Examiner of the

Wisconsin Central continued before an

Hamber, C.M.G.

Mr. Ross H. McMaster

appropriations for new rolling stock make provi¬

sion for 58 diesel units, 720

of the

proceedings

reorganization

Hon. Eric W.

propriations of $33.4 million for the year 1950.

the

Hearings

approval will be requested also for capital ap¬

Your

G.C.B.

Mr. L. J. Belnap

for additions

facilities,

They are eligible for

•

The Rt. Hon. Sir John Anderson,

--• ^

of Scotland" and $535,000

"Empress

and

—i11-—

11,0

modernization of

for the

million

$3.6

route,

referred to.

giving credit for the cash payment

re-election:

The principal items
$4 million for the new vessel for. the VancouverDirectors during the year.

your

approaching Annual Meeting,

the

proved at the last Annual Meeting, were authorized by

remaining book value of

$13.6 million, which is the

have

(1421)

FINANCIAL CHRONICLE

1950.

«•

-> *

PRICE,

;

WATERHOUSET «fe CO.,

Chartered Accountants

(1422)

THE

Shawinigan Places
Bonds Privately in

expan¬

group

Reporter

Weld & Co., and
Kidder, Peabody
6 Co. have
arranged the

due

March

bonds

new

bonds,

new

have

been

102.22

Co.

territory

are

Water
the

largest

.consider

province.

Gross

sales

five

other

for

customers

system

Due

use

the

served

commercial
sumers,

about

for

con¬

now

en¬

year

of the

Treasury

financing

"F"

"G"

and

flexible

obligations.

These

policy the authorities

money

are

ities

appears

have

monetary policy

fit

now

into

the

operating
very

This probably means longer-term

boards,

when

the

less

rigid

worked out between the Reserve Board and

was

the Treasury.
There

definite

element

economic

money market control

involved in the kind of security which
Treasury in the deficit financing.
Accordingly, it is believed the trend of business and
employ¬
will

period,

offered

This

determining whether issues will

the

Roth's

Mr.

com¬

functions

and

au¬

transmission

estimated

other

and

could

ad¬

affect banking functions
development since the

any

years ago.

The

Currency,

aggregate

approxi¬

mately $95,900,000, of which

$57,700,000 had been

made

which

organization
submitted

undertaken

this

over

to the

1949.

doubt

offered

which

will

meet

holders of the maturing
obligations.

Plan

No.

1950,

Congress

This

Plan

and

the

Reorganiza¬

tion Act of 1949

are

fused

so-called "Hoover

with

Report"

the

tions should
will be

important, it will not

Treasury in 1950.
be paramount

needs

the

various

coupon
care

are

the

not to be

con¬

Commission

the

Executive

Government, which

recommendations

of securities that

for

the

CERTIFICATES
NOTES

HIGHER

oppor¬

While it
made

BANK

ISSUES IN

indicated the

and

to what the

economic

nomic

AUBREY G. LANSTON
& Co.
INCORPORATED

15 Broad St., New York
5, N. Y.

Telephone WHitehall 3-1200

Teletype N. Y. 1-3690

conditions.
the

will depend upon the future

With the debt

past, it is believed

management

policy

will

worked

realistic
out

and

the

thorities.
The

folding
higher

new

and

debt

which

coupon bank

management
many

course

service factor not

policy that

believe

will

well

(4)

greater

eco¬

au¬

un¬

use

issues, might take some of the attractive¬
1952 eligible tap bonds.
This feeling may
be responsible for some
of the switching out of
the nearerterm eligible restricted issues.
ness

away from the

;

Abolishing

(5)

unnecessary

ac¬

Redefining

the

now

Office

functions

jury and police functions
control

our

private
i!

Abolishing Unnecessary Activ¬
ities and Services

present

Comptroller
SARY

Abolition
such

operations

are

the
of

the

vitally NECES¬
banking system.
entire

origin,

entity

its

transfer to a
Cabinet Officer's
domain, seems a
drastic
method
of
or

streamlining

operating techniques. Such
lining as is needed could
ter

done

where

takes place.

necessary
performed

the

stream¬
be

work

We know of

functions

the

Office.

bet¬
now
un¬

now

being
Comptroller's

Redefining and Limiting Execu¬

tive

Functions

with

View

Efficiency of Service'
There is

need to redefine

limit the

present efficient opera¬
tion of the Comptroller's Office.
To transfer this
independent office
the

Executive

Branch

Government, would only
MORE

the

encour¬

functionaries

and

So much for the improbabilities
that the drastic remedy
proposed
will

and

limiting

with

view

achieve

the positive
objectives.
We

mended

disturbed

ties that such

efficiency of service.

abuse, far

the

move

recom¬
are

far

probabili¬

will lead to

harmful than the
long and careful study,
alleged inefficiencies or economies
by extensive inquiry
which are offered as
justification
quarters, I, and my asso¬

ciates, cannot conclude that a sin¬
gle one of these desirable objec¬
tives would be achieved by the
virtual

abolition

the

demon¬

strably essential and effective Of¬
fice

the

Currency.
genesis

move.

Comptroller of the
On the contrary we see
of

new

hazards

Herewith is

economic

from

such

Economy of Operation and
Administrative

The

Costs

Comptroller's

Office

does

constitute, in

den

upon

this

Office

for

any way, a bur¬
Federal budget.

the

Comptroller's

the most

they

alarming, and I think
be simply stated thusly:

can

For the 86 Years of Its Useful Ex¬
istence
the
Office
of > the

Comptroller has enjoyed, and
still does, a
semi-independent
status:

Other,

visions

branches, bureaus

the

Treasury

ment do not possess this
The
Plan
therefore

would

affect

the

di¬

Depart¬

standing.
primarily

Comptroller.

The Comptroller is
appointed by
President with consent and

the

advice of

the

countable

annual

Senate.

Congress

reports. He makes

ac¬

through
recom¬

banks

our

time

are

our

No. 1 of 1950:
1.

of this

proposal. It is the negative
potentialities of Plan No. 1 which

and

reasoning
for opposing Reorganization Plan

important

monetary

lives.

age

•

tivities and services.

not

flexible debt

seems

mean

functions

activities LESS functioning.

and services.

as
the
monetary standpoint, business activity will determine
whether the initial
policy will be continued.' Whether funds will
be directed into certain
channels (that is, away fcom or into
the

deposit institutions)

duplication

overlapping functions.

political

impending offering which will be

finance the deficit will give some clues
authorities intended to accomplish from both the

"consoli¬

system akin to the "consolidation"

(3) Consolidation

PROSPECT

Elimination

in many
-

past.

COUPON

sys¬

buttressed

•

BONDS

listed below:

After

There was no chance for greater
maturity
distribution when only certificates
were offered for
maturing
or called
bonds.
Also, with more intermediate-term eligible
obligations available, some of the pressure
to acquire the
longest bank issue would be lifted,
especially from the smaller
money center institutions.

BILLS

(2)

tunity for greater maturity diversification than
'has been the
case

this

Economy of operating and

executive

in the past.

sought

administrative costs.

While debt cost is still

banks

objectives

are

(1)

eligible obliga¬

Accordingly, it is believed there are quite likely to be
1% % and 2% issues available to
deposit bank holders of called
obligations. This will give the commercial

TREASURY
*

issues, higher
figure prominently in taking

retired by the

higher

Plan

Securities will

Since commercial banks

the largest owners of these

u. s.

means

obligations will be coming in the picture.

coupon
no

likely

most

year,

key¬

banking

contrast,

The

Office

by
the
President, pursuant to the Reor¬
ganization Act of 1949.

The

financing, along with the large refunding operations

must

rela¬

the

of judge,
in
their

•

Comptroller's

about to be abolished through Re¬

MARKET EXPECTATIONS
Deficit

banking

whole

our

with

present

independent Comptroller's

transferring or interfering in any
with the functions or organi¬
Comp¬
troller of the Currency.

are

dual

our

the

date"

zation of the Bureau of the

distri¬

facilities

which 'forms

tem.

follows in part:

the

stone

and

elimination

autonomous

States

way

non-bank investors.

United

proposal

versely

made

the

ment will be important in

to bank

Branch of the

and

valuable

Consolidation of Activities and
Services

tionship

"Organization
to

seems

itself,

this

Secretary of the Treas¬
thority of the Comptroller of the
ury would, as
we
see
it, bring
Currency would be transferred to
about a situation in the
banking
the Secretary of the Treasury.

of certificates to meet matur¬

the

under the

to favor

beyond doubt going to be

use

gone

hazardous

seem

could

are

the

Comptroller of the

always

securities

dis¬

banks

establishment of the Office of the

business but guesses have to be made
and these still

is,

units

Such
consolidation, if carried to
conclusions made "logical"
by this
first step, could easily end

Square,

Reorganization Plan No.

1950

than

IMPENDING FINANCING STILL IN SPOTLIGHT

the

Roth

national

text

Under

Franklin

munication

issues.

Masterminding

3.
Arthur

communication

government

"check and balance" factor.

Na¬

throughout
April 4.

discussion in money circles is

function

other

quasi-government

The

tributed

shorts, being disposed of, in order to acquire the higher in¬
tap

overlapping

from

ence

Bank,

The

main topics of

of functions. The sheer independ¬

come

Y..

func¬

Comptroller's Office.
Its reports
are accepted
by both FDIC and

Franklin

Al¬

essential

the Federal Reserve Board.
There
is no duplication or

tional

the

and

examining national banks
exclusively performed by the

Presi¬

dent

prime

n's

Arthur

yearly lows have not interfered

of stabilization has not yet been reached.

area

Overlapping Functions

was

Roth,

Reor¬

Re¬

criticized

obligations.

proposed

Elimination of Duplication and
The

organization

great deal of these purchases and there is no doubt this
procedure will be continued. Switching has
supplied another
prop for the restricted issues with bank
obligations, mainly

expenditures for additions to gen¬

end of

new

Treasury

the

tion of

pro¬

pending

President

Plan,

ago.

from

ganization Plan No. 1 of 1950.

under

the

This program began in 1946 and is

eration,

1 of

long-term tap issues by the Central Banks,

obligations, since the exclusive

domestic

this six

way in which the tap issues are being taken
by investors,
despite the general belief that lower prices and higher yields
are probably in the
cards. Scale buying has been responsible

scheduled for completion later in

bution

One

in its 52-year history.

Over

also

years

result

Treas¬

posed

obligations.

offerings

prominent in the program also.

gaged in the largest program of

1951.

right for impending

the company is

expension

market

so-called Plan

PRESSURE

industrial,

postwar growth

and

UNDER

under, but marketable issues

electricity

the

eighty-six

Office

Secretary
the

ury,

decline.

the

the Reserve Banks.

accounted

32% of gross
from power sales, and, at
end of 1949, the retail dis¬

168,000 customers.

been

non-bank

cushion

defensive, it has been
orderly in absorbing the securities that are being let out by

very

approximately

tribution

consumers

revenue

the

other

have

the
of

buying has also
institutions, in not too

helped

the

its

functions

Some scale

though the market continues to be

large blocks of
distributors

STILL

indicating

mainly

electricity.
In 1949 sales to resi¬
dential,
commercial,
farm
and
municipal consumers and to small
industrial

of the

Declining prices and many

from

revenues

derived

to 32 industrial

power

and

are

the sales of

from

has

companies

with the disposal of

north and
St. Lawrence River,

Montreal, an area
of approximately
16,000 square
miles containing more than twothirds of the population of the
power

from

Comptroller of the Currency,

fer

Federal, and. investors and

extending

west

insurance

but

abolition

and, the trans-

government market is still under pressure of selling by
traders alike are more than a little
concerned about the amount of liquidation that
may have to be
done before' prices and yields reach levels which the
authorities

payable

from the vicinity of Quebec
City
to Lake of
Two
Mountains, 40

miles

the

The

producers and distributors of hy¬
dro-electric energy in the world.
The system of the company serves
south of the

ment

The

few investors have taken to the sidelines

recently

amounts,

MARKET

and

one

prices decline.

sellers of certain

and

Shawinigan

Power

future, to finance

many

appearing

Life

In U. S. dollars.
The

bonds

sizable

The

the bonds

near

abolishing

not realized

by Con¬
public, its adoption could have more injurious effect
banking functions than any development since its establish¬

under pressure of liquidation

are

Currency is

gress or

purchased

Principal

interest.

interest

1975.

of the

the tap

"Q",

been

institutions

accrued

series

Grass-roots banker declares while
import of plan for
office of Comptroller of the

imponderables in the situation, pension
funds and savings institutions have
bought large amounts of

$15,000,000 of the Shaw¬
inigan Water & Power Co., first
mortgage and collateral trust
fund

Treasury will offer in the

The restricted issues

Although quite

sinking

the

because

sale,

Governments

decline.

Dominion Securities Corp., HarriRipley & Co., Inc., White,

without public offering, of

Thursday, April 6, 1950

Proposal to Transfer Currency
Comptroller to Treasury Strongly Attacked

by the Central Banks, with the Victory bonds again leading the
The bank obligations have given a better
performance
but they too have been on the
defensive, due in some measure, to
swaps from these securities into the higher yielding
ineligibles.

was made
April
consisting of the

man

issue

what

over

the deficit.

Announcement
a

CHRONICLE

Government securities continue to give ground
gradually due
to selling by Federal of
long-term obligations and the uncertainty

sion program.

that

FINANCIAL

By JOHN T. CHIPPENDALE, JR.

New $15,000,000 issue
completes

Truman's
Our

The United States
financing for $96,000,000

COMMERCIAL

entirely self-sustaining, mendations to Congress concern¬
dependent in no way upon appro¬
ing legislation affecting national
priations made by Congress or banks.
He enjoys a position of
funds supplied by the
Treasury prestige on the same plane as the
Department. The expenses of the other
supervisory authorities, such
Office are defrayed
exclusively as the FEilC and the Board of
by the assessments on national Governors of the
it.

Federal Reserve

examinations

made

Therefore
no
reduction
of
Government expenditures would

System.
The

plan

would

result

the

Secretary of the Treasury absorb-

Volume 171

COMMERCIAL

THE

Number 4896

(1423)

CHRONICLE

FINANCIAL

it—even

about

th&

national banks there¬ from a superior. While the banks
be subject/to this pro¬ of the country have the highest
The
direct relationship with Congress. vision.
Secretary
of
the respect ^nd confidence in our
Treasury would have control of present Secretary of the Treasury,
Among others, the Comptroller is
these funds and any unused por¬ the Hon. John W. Snyder,: there

operations of national banks and
the public confidence in them.
Indeed, one of the best argu¬
ments for preserving the situation,
as it now stands, is that the bank¬

apprehension that some future
holder of this office might use his

ing functions at stake are matters
of law and not of personality or

Virginia (Democrat) and Homer
Capehart, of Indiana (Republi¬

We believe it should re¬

can), have both introduced resolu¬
tions to the Senate Committee of

ing all functions of the Office and

;

troller

severing the Comptroller's present

fore would

specific
tions

the

with

charged

following

important
under

which

reor-

the

ganization

plan

transferred
of
,

the

ment.

Secretary

Chartering of national banks.
Approval of consolidations be¬

national

state and

System.

of
recapitalizations;
autonomy
reorganizations.

supervision'

and

Power to examine

disturb

but the vital function of

dispersed

suit

political,

well

satisfactory

But there is

(State

the Secretary is a
he
would
dominate

140

Fifth

Ave.

Power to initiate

■

national
law

directors

violation

would

for

banks

unsound

practices.
proceed¬

banking

ings to forfeit charter of national,
bank for violation of law.

the

■;?

'.Tf J

for

banks

costs

covering

;

i//'/ ;7«v

and-

the

purpose of;
examinations

determine

funds
of
the
Office
obtained
against na¬
tional banks for expenses of ex¬
amination; this would be trans¬
ferred to the Secretary to be used
Control

over

deems

appropriate.

Power to determine
/

assessments

national

banks

and

solvency of

appoint a

Power to

appoint

conservator

national bank.

Duty of Comptroller to serve as
director of the Federal Deposit

Insurance

of
the

the

;

■

Obligations
Loans and Bills Purchased
;

U. S. Government

Public Securities

■

•

■».

....

«;.

/-Vi: 7

Capital
'
.
Surplus Fund
.

$2,616,280,608.89

■■

•'

*■

Total

such

100,000,000.00
200,000,000.00
72,695,292.70

office

set at five years so as

was

Secretary

The

rates

of the Treasury.

and

fixes

rates

bonds and

indirectly in control of state

his directorship on
the board of FDIC, he could be
could
reassign duties which accused of establishing an interest
might seriously interfere with rate pattern favoring the banking
of

Secretary

the

efficient

the

Treasury

operation

of the

Comptroller's functions.
The

Secretary of the Treasury,
plan, would have com¬

under the

plete
the

direction

duties

now

control over

and

performed by the

Comptroller's Office. The Secre¬
tary could authorize any other of¬
ficer, agency or employee of the
Department to handle any of the
functions now performed by the

been accused

national

banking

laws, re¬

quires quick decisions by experi¬
enced
supervisory
authorities,
whose decisions are final.
The national banks, at this
have confidence in and

fied

are

time,
satis¬

with the splendid

formance

past per¬
of the Comptroller's Of¬
certainly do not desire

fice

and

any

in connection with the

ance

way

sums

people who have tried to
past will have
a
much stronger argument if the
Secretary
of
the
Treasury' is

the

Comp¬

■
.

37,792,213.08

...

53,771,683.76
$2,616,280,608.89

$131,612,107.40 in the above Statement are pledged to qualify for
public moneys as required by law, and for other purposes.

Securities carried at

fiduciary powers, to secure

J. LUTHER

alert

effect
fice

the

position

con¬

your State Banks as to
the elimination of the

the

Comptroller

Currency could have on

L. KLEITZ

President

■

;

DIRECTORS
GEORGE G. ALLEN
- Director, BritishAmerican Tobacco Company, Limited, and
Chairman of the

F. W.

Chairman, Executive
Committee, Union Pacific Railroad Company

CHARSKE

J. LUTHER
W. PALEN

CLEVELAND
CONWAY

joys the confidence of the Na¬
tional Banks of the country.

national

are

77/7

STUART

JOHN

President, The
City of New York

JR.

Crane & Co., Inc.,

President,
Dalton, Mass.

M. CROCKER
President,
The Columbia Gas System, Inc.

W. DAVIS

banks

this

country,

56% of all the
banking resources of

CHARLES E. DUNLAP

of Davis Polk Wardwell
Sunderland & Kiendl

President, Berwind-

White Coal Mining Company

over

GANO

President, The J. G.

DUNN

White Engineering

WALTER

S. FRANKLIN
The

GAWTRY
A. HARTFORD

Chairman of the Board,

The Great Atlantic 8s Pacific Tea Company

Chairman of the Board,

CORNELIUS F. KELLEY

Anaconda Copper

MORRIS W. KELLOGG

Mining Company

Chairman of the Board,

The M. W. Kellogg

Company

President

WILLIAM L. KLEITZ

Chairman of the Board,
Air Reduction Company, Inc.

CHARLES S. MUNSON

approximately 5,000

and act on their behalf
without censor or influence

speak

;

P. COOPER
Presbyterian Hospital in the

WINTHROP M. CRANE,

The Office of the Comptroller en¬

Chairman of the Board

CHARLES

their in¬

,,■*

There

President, American

LEWIS
JOHN

Cyanamid Company

the
the

Board, Duke Power Company

WILLIAM B. BELL

Of¬

stitutions.

and

WILLIAM

CLEVELAND

Chairman of the Board

could

trouble in the

placed

paid

Total Liabilities

Those

cause

the

Treasury

sonnel.
The

Payable, Reserve for

Expenses, Taxes, etc.

issu¬

Secretary of commercial
effect the United States.
These banks
transfers of the Funds of the look to the Comptroller of the
Comptroller's Office, as well Currency
as
their
sponsor
in
as records, property and per¬
Washington, a federal official free
plan

the

Accounts

April 15, 1950

with Foreign Branches

government bonds and the
paid on these bonds.

representing
Under

Items in Transit

interest rates

change

which might in any
jeopardize the same.

4,980,802.37

Dividend Payable

of being fav¬

ored

trolling banks.
>"'■ "7v.
Comptroller's Office.
This could
While
we
are
directing this
lead to serious difficulties in the
enforcement of the National Bank communication to certain National
Act, as the proper administration Banks only, we suggest that you
of

11,288,941.35
3,000,000.00
1,690,529.33

In the past banks have

system.
often

16,269,743.72

Investment

banks through

The

2,189,813,632.43
$

ernment bonds.

;

If he

372,695,292.70

Gov-

is also in control of national banks

overlap

Treasury

the

interest

Fixes

political administra¬
tions and
to
protect; the office
from the political pressures that
invariably bear on the Secretary
to

Capital Funds

Deposits
Acceptances,;.
Less: Own Acceptances Held for

National Banks.

the

938,423,395.71
964,941,423.97

153,395,349.94
5,078,483.25
40,607.50

Undivided Profits.

554,401,348.52

LIABILITIES

tary of the Treasury would ob¬
viously give him great influence
over the STATE BANKS as well

responsible functions to po¬
For this very
reason the Comptroller's term of

„

W'/7f 7V''1''

dominating position of the Secre¬

litical manipulation.

7,502,746.33
7,567,094.89

....

76,879,990.36
9,000,000.00
41,415,493.06
11,030,025.30

and Mortgages.

Bank ...
Other Securities and Obligations . ,
Credits Granted on Acceptances
.
.
Accrued Interest and Accounts
,

Stock of Federal Reserve

hardly think it needs exhaust¬
ive analysis or argument to sil¬
houette the hazards of exposing

■>

and Due from

...

Total Resources

this

FDIC

...

Other Real Estate

virtue of the fact that State Banks

March 31,1950

•

Hand, in Federal Reserve Bank,

Bank Premises

Secretary of the Treasury would
sit on the Board of the FDIC. By
members

the

then

abolished

s''

Banks and Bankers

the Senate.
If the
Comptroller of the

Currency

Real Estate Bonds

Comptroller

approval

Receivable

{

Cash

pointed by the President with the

are

Corporation.

Comptroller
is abolished

of the Cur-;
rency is now one of the three di¬
rectors
of the FDIC, the other
members
being
the
Chairman
of
the
FDIC
and
a; third
ap-;
The

Office

receiver therefor.

of the

would be the effect up-

the State Banks?

Comptroller's
through

the

what

•

Currency

Office

the

amount

the

inject outside in¬
Power
to
levy
assessments,
terference
in the determination
against shareholders of national
and administration of policies and ■ /
banks to restore 'impairment of
regulations now carried out by- '
capital.
V /
the Comptroller and his assistants.
7
Power to assess fees against na¬
tional

60th St.

.RESOURCES

would

This

Ave.

BRUSSELS

PARIS

Condensed Statement of Condition,

depart-

the

0\'\

;'.,V:;

ment.

•

program

MADISON AVE. OFFICE

■

Madison

LONDON

perform such duties as

prescribed by the Secretary,
particularly
in
supervising
and directing the policies and

Power to initiate court

ROCKEFELLER CENTER OFFICE
Rockefeller Plaza at 50th St.

Board,:

the

appointed

would

continuance of unsafe and

Tuesday, April 11, 1950.

Secretary

Administrative

proceedings to.,

and

officers

Broadway

44th St.

and
placing the Comptroller in an in¬
administration of laws relating to.
ferior position.
lending and investment powers of:

remove

for

something you and

MAIN OFFICE
FIFTH AVE. OFFICE

Since
Cabinet Officer

regulations.)
'
Interpretation, application

national banks.

Expenditures

hearing tentatively scheduled

Company of New York

ust

Secretary of the Treasury;

also subject to

.■these

presented before

Committee

it.

not done about

will

President,

Member Federal

Retired

WILLIAM C. POTTER
GEORGE E. ROOSEVELT

of Roosevelt 8s Son

President,

CARROL M. SHANKS
The Prudential Insurance Company

of America

Chairman, Executive
Committee, Illinois Central Railroad Company

EUGENE

W. STETSON

THOMAS J. WATSON
Chairman of the Board,
International Business Machines Corporation
CHARLES E. WILSON

Corporation

Pennsylvania Railroad Company

this

These reso¬

the

1950, if something is

11,

May

lutions

become law

And the Plan will
on

fiscal

convenience.
For example—the
Promulgation of rules and reg¬
Comptroller would be replaced on
ulations relating to investment se-.
the Board of the FDIC by the
are

proposal be defeated.

the office

affiliates of national banks.

member banks

Departments requesting that

law.

comes

the -Executive

Expenditures

ganization Plan No. 1 of 1950 be¬

uFany way

present

if Reor¬

Robertson, of

of the Comptroller be

could be reassigned and

non-banking

curities of national banks.

the

What Has Been Done

destroyed by the proposed move,

national banks.

general public welfare.

remain

not

.",

would the prestige and

Not only

Examinations

for the

be done which would

•

Approval
and

of the Federal Reserve

ernors

national banks.

It will

date.

Senators H. Willis

main that way.

banking

sound

banks.

into

politics.

authority * in a way

and

conducive

It would place the Comptroller in Over the long years of its exist¬
~an inferior position with rela¬
ence the Office of the Comptroller
tion to the heads of other suhas built up a splendid record. It
t pervisory bodies, such as the
FDIC and the Board of Gov¬ is our belief that nothbag should

Approval of conversions of state
/banks

not
or

the Treasury:

tween national banks

powers

Approval of branch offices.

by him to carry out
functions of the Depart¬

other

would

used

and

appropriated

tion thereof could be

func¬

and

can

late

President, General
Electric Company

Chairman, Executive
Committee, The Coca-Cola Company

ROBERT W. WOODRUFF

Deposit Insurance Corporation

(1424)

„THE

COMMERCIAL

Terms Business Outlook Veiy

Bank and Insurance Stocks

Best

City Bank of New York maintains coal strike settle¬
ment has removed, chief obstacle to Spring business, although
some curtailment in soft
goods and in primary textile prodnction is reported. Construction at record-breaking level. 1949
corporate earnings off, though still satisfactory.

Company, Inc., 75 Fulton Street, New York,

capacity

Satisfactory

„

This Week—Insurance Stocks
M.

Thursday, April 6, 1950

National

By H. E. JOHNSON

Alfred

CHRONICLE

FINANCIAL

of the most authoritative sources of information
insurance operations. They recently summarized in

Most industries being well-fortified with orders and inventories

and

weekly bulletins the operating results of a group of
the first stock fire and casualty companies to file
complete reports.

being moderate, the settlement of
the coal strike renders the short-

Y., is

one

available

of their

one

It is presented

below:

rep¬

resent

reasonably good cross-section of the over-all experience.
These statements full.y confirm the optimistic forecasts that the
year 1949 broke all records lor profitable operation. While many
factors were responsible, it was really the unusual coincidence of
all of the major classifications
being profitable in a single year
a

which

boosted

profits to record heights. Although premium vol¬
showed signs of definitely leveling off in the last half of the

ume

the 81 carriers in this study reported a gain of nearly 10%
for the year. This is probably somewhat higher than for the in¬
dustry as a whole but the total increase in stock fire-marine
premium volume apparently approached $200 million in 1949. For
year,

the last 18 months the average over-all loss ratio of the stock
fire-marine companies has ranged in the neighborhood of
44% or
45% with the expense ratio at 38% or 39%. Experience in 1949

materially better than for the full year 1948 because the un¬
usually good results were present only in the second half of 1948.
companies there was a drop of six points in loss ratio

was

For the 81

to 44.5% and better than

90.2%

in 1948.

For the

point in

ing the combined loss and

ratio to 38.4% bring¬

expense

expense ratio down to 82.9%

industry

against
would hazard a
as

whole, we
that the over-all loss ratio might be a shade lower but the
expense ratio a bit higher.
The combination of excellent invest¬
ment gains and record
underwriting profits was reflected in a
as

guess

boost

were

rise.

about

15%.
'

25%

policyholders' surplus, while total assets

Federal income taxes incurred also showed

casualty-surety companies included in this
over

half of the business in

representative of the group

whole.

as a

pre¬

their field

While the under¬

writing results did not approach the phenomenal records of the
fire-marine field in 1948, they were
eminently satisfactory with an
indicated profit margin of about 8%.
Over-all premium volume
advanced about 8% in the first half of 1949
but leveled off in the

half

second

than
The

over-all

about
one

that

million

$100

two

for the

incurred

points to

ratio

expense

about 5%

rose

volume

loss, ratio

the

92.2%, just

was

not

invest

large

may not

percentage of

stocks, they did not show
fire

companies.

Nevertheless, it

gether with the
sible

gain of

than

casualty field.

earned

declined

the

have

quite

combined loss and

the record volume

As casualty companies

their assets. in

common

portfolio appreciation

was

corre¬

been

rather substantial

20%

reserves

and, to¬

policyholders' surplus.

were up

the

satisfactory underwriting profit, made

very

advanced 13%, loss
were

much

that the.combined loss

the largest ever
reported.

was

add

point below

one

Although 1949

higher by nearly

were

ratio, the dollar underwriting profit

of business

Assets

were

nearly double

•

Casualty Com-

Fire Companies

panies—Case Basis
(000 omitted >

1948

•

1949

1948

Assets

$2,266,764 $2,611,091
Policyholders' Surplus
920,543. 1,146,252
Unearned Premiums
997,743
1,092,481
Net Prems. Written...
1,089,1Q2
1,193,720

the

Net

(P.

Invest.

L.)-

Income.

Declared

Other Invest. (G. or L.)
Fed. Taxes Included..

Dividends

hppn
oeen

penod.

true of

though not all nonPaper, copper, zinc, and

some

durables.

materials

widely used
tries, which
in

are

plus reflects market value of securities.
Last 000 omitted.
and adjusted expenses
incurred to earned
curred to written

premiums;

piemiums.

♦Losses

expenses in¬

indus-,

therefore

are

general

useful

conditions,

duction,

especially

How-

rayon.

^v/w-

inference that overall
consumer
buying is lagging or
purchasing power diminishing
any

would be incorrect.

The total

incomes, augmented

personal
the

veterans'

has

reached

19 NEW YORK CITY
BANK STOCKS

NATIONAL BANK
ol INDIA. LIMITED
Bankers

Office:

31, 1950
on

Colony,

request

India, Burma, Ceylon, Kenya
Kericho. Kenya, and Aden
and Zanzibar

January

clines

above

soft

offset

February

and
year

goods

ago;

were

de-

increased sales of

laird, Bissell & Meeds
ibers

New

York

120 BROADWAY,

Stock

Exchange

NEW YORK

N. Y.

Telephone:
Bell

BArclay 7-3600
Teletype—NY 1-1248-49

(U A. Glbbs, Manager
Trading Dept.)

£4,000,000

Paid-up

£2,000,000

Reserve
The Bank

.broken

ler's

all

was

sales of

but
as

records, despite Chys-

£2,500,000

conducts every

description of

banking and exchange business

Trusteeships

and

—

...

c]ose(j jn
Letter's
3 300 corporations.

'of

end

;

decline in corporate earnings,
jn profit margins, was ais-

an(j

analysis of

"Annual rePorts for 1949,

bJenfoUpwed

lons

mill

steel

97%

arming

"?ns

opera-

canacitv

now

finajjdal

statements anH

almost

half

thf»

statements and almost nan ot tne
total assets of all American cor-

$118 billion

records "

Federal"

"The

index

which

was

39=100)

Reserve

Board's

12%,

1948,

still

but

decrease of

showing

good

production, compared with earlier years," the
180 in February (1935- bank reports.

industrial

recovered

March

"Three out of five, on the

183 ,or higher. Further gains in age, of all

aver-

reporting companies

April and May, to the best levels showed smaller earnings in 1949
since January or February, 1949, than in 1948, and with some outare

indicated.

Warmer

will

bring the

usual

weather standing exceptions the trend
up

generally

of farm and road work and other

measured

outdoor

profit margin

activity.

improve

opening

Employment

and

continue

large."

:
t

downward
by

dollar
on

was

whether
net

sales,

income,
rate of

net assets."

^ "Comparison of sales or operatLng r®ve"ue.s published for 1949

by about nine-tenths of all the
reporting nonfinancial companies
u
indicate an average profit margin
trade will be,
6 6 cents per
dollar, compared

■

Commenting

return

consumer

Inventory Policies Cautious

the

inventory

f
What the state of
whether the markets will be with 7.3 cents in 1948," the Letter
cleared of all the production m states. "While the total dollar
Pr0SPect> are Questions to which volume of business receded only
answers necessarily are less cer- slightly from the record level of
^ain*
3 usual thing upswings. 194^ the
an(j relatively ina"

the

used

made earlier of reports
new cars at discounts,

markets
has

season

advanced

kinds

of
of

business

ma-,

ever
oi
of

"The
ine

volume
volume

activity

and

oi
of

anvthine

nas^ exceeaea

anytning

before known at this

were

with

each

50,000

housing units

monthT

com-

same

the

months of

1949, and March seems
certain to show a still higher figure.
Daily average building conawards

the

first

three
a new

Dodge

inventories

peak,

according to the
reports, with residential
117%

above

last

year

their

demands

'shipment the day before

oversJockin2

■

An
yes-

from

•

.group

•

man,

-^Tinn?

Dur-

^ntu/ef

^
any

of industrial prices indicate

considerable speculation, for

aespite rising
wage
rates
ana
fringe costs such as pensions, the
*
.
.
,
^ f nonJarm
Q11Tnmer

tarm

since

B,ros >
store-

with

fsubordinated)

Philadelphia

Proceeds are to be used,
amount

preferred stock.

an
6^

hemn«?

A sinking fund

ooeration

1951

wnicn Degins operation in iyoi is
the

entire

hpntnrec

"Probably if a large group of
purchasing
agents
were
questioned they would say that the
situation/in industrial materials
and supplies is generally such that
speculative coverage. is not re-

treasury funds, to retire

to retire

;

o?.

department

approximate iiKe amount oi t> /o

mntnritv

issue
hv

^^esna^p^tatUrity by
annual payment,

de-

wmai

The Lit Bros, store has been in.
operation since 1891.
In the 11
months ended Dec. 31, 1949, the
company reported nearly $60,000,-

000 in sales, $5,147,000 available
relations of supply and demand for interest (compared to annual
have changed a good deal since requirements of $240,000 on the
the boom days of 1948. Productive bonds to be outstanding), and

quired. In

many

commodities the

$3,027,000

While the

Net Income

Per

After Taxes

Cos.

Cent

1948

Manufacturing

Change

1948

187

Trade

239

Transportation

1949

Public Utilities

111

Amusements, services
Finance

$6,998

—14

7.5

6.8

230

—26

14.5

12.3
3.3

708

577

—18

3.8

743

492

—34

6.9

4.8

934

1,025

+ 10

11.4

11.9

4.7

4.8

7.3

6.6

842

1,021

+21

$11,805

$10,433

—12

•—

vide

for

the

Sales i

312

284

1949

ft- Margin

$8,172

Mining, quarrying

net -income

all

new

debentures pro¬

issuance,

subject to

specified conditions, of additional

obligations which may be of high¬
er rank, no senior debt is present¬
ly outstanding.
Redemption
prices are fixed on a sliding scale
starting at 103, with privilege of
redeeming the issue as a whole at
101 Yz prior to March 1, 1953, in
the .event of

also undertaken

after

charges.

(In Millions of Dollars)

Total

■

No. of

3,322

•

underwriting
,

offered on April 4, at 100 plus acehasfngagents donotsuggestthat
cnasmg agents ao not suggest mav crued interest, a $6,000,000 issue
20-vear 4% sinking fund deReDorts

■

Executorships

Group

Lit Bros. Bebentures

are

Net Income of Leading Corporations for the Years 1948 and 1949

1,710

sales, accompany-

A. G. Becker

necessary

last bummer.

started

contracts

the

wholesale price lnaex oi
nop
products has hardly varied
h

season

continued growth in operatjng revenues and plant capacity."

buyers especially
carrying less than their share

80,000

some

return
a

consumer.

In January ana Feb-'
in Januarv and r eD

the vear
ine year,

ruary

con-

contract

exceeded

ing

mercantile

course

demand," the letter

has

are

pr0ved both its dollar net income
an(j

terday.' This does not look like

have>ad

meet

"On the other hand, complaints
are
heard
from
manufacturers

for

terials, household appliances, carpets
and
furniture,
heavy sales and are under pres¬
to

goes

found, that stocks are building up
between the primary producer

unreasonable

and

to housing, including building

time

support trade, and that they

tightened

prices have stiffened.

car

"All
All

have

Probably

way-

that

inability to supply its dealers.

682

Capital
Fund

weekly and
j

and the

automobiles and home furnishings.
Retail sales of automobiles have

109
Subscribed Capital

1949

other industries will find as the
rayon
weavers
have recently

both

high

new

26, Bishopsgate,

London, E. C.
Branches

Available

the

Government in
Kenya Colony and Uganda

Head

March

Corporate Earnings in

support

The

stability in buying."

were

alltime

and other statistics

cushion

a^e accompanied by accumulation flexible operating costs bad the
80C)(is, which eventually leads effect of shaving profit margins
a slackening of business buy- per sales dollar more closely. The
ana turns the "end the other public utility group, however, im-

tract

earnings ';'

greater

refunds,
(using
the
seasonally adjusted annual
rate reported by the Department
of Commerce).
Total retail sales

insurance

weeks of the month reached
A comparison of

outPul

should

curtailment] has
in primary textile pro-,

u„vwUJ1,

pared
sur¬

sTocks
charo rebound

"Some

serves.

appeared

awards
awaros

37,119

and

finds

coai ftrfke

the

disappointing
Easter
goods," the bank ob-,

struction

35,965

aggregate

tism and

biles, and with coal and steel proQueers under the necessity of

trade in soft

continues.
continues.

operating figures beiore Federal
taxes; policyholders'

the

are

rule

are

exceptional

"Department and apparel stores.; buying power
report

92.2%

68,130
43,114

products

the

strong demand.

38.0%

27.561

and

through

measures

93.2%

52,307
62,147
41,191
36,221

the

ing another sharp price rise. The
change makes for more conserva¬

indus¬

particularly, including ma¬
chine tools, are in a better posi¬
tion: than they were at the beginning of the year. This is also

37.2%

45,806
—6,390
21,679

promising

tries

82.9%

65,802
118,369

with

manufacturers nave added

38.4%

—11,863

nrnmisinP

anri
and

Many of the heavy

sure

88,089

„

V»™pklogs of^unfilled ^or-.

ders.

54.2%

53,328

year

"Thus the arrival of spring

orders,

than

around
'P..0* capacity. DOration<; makp
a somewhat
less
tion indpyps were neia down hv
lion
indexes wprp hpld down
oy These industries will hold their Potions, mase
favorable showing than the prethe coal stoppage, the
Chrysler
rates ior some time.
ine
•
summarv
given
in
our
strike
of automobile demand J.™nary summary given inour
striKC, steel mill curtailment and strength
steeJ mill curtailment
^ 6^
ibmty
the effects oi coai
xne eiiecis of coal and steel shortancl the Possibility of labor ^+uer ^si month. The combined
of labor Letter last monin
steei snort
ine comoinea
nublp
wili rombine to keen au- net income of all reporting coin¬
ages on other industries, both concon- tro u Dies will com Dine 10 Keep au
•
•
,q4q
f,
tavp*
and
sumer
and
business
bavin*
has
tomobile output high, and when panle£\ *n f.
' a,.te? taxes am*
^ at 2r„u .? "^?S r"yi.ue„
the Chrvsler strike ends the fie- after deducting deficits, amounted
held
high levels.
In the ag- the Chrysler strike ends the figcomnared
with
ereeatp
ures are almost certain to break J® J1"-* D111.10IJ> compared
gregate manufarturprs havp addPd
wltJJ

56.0%

150,362

this

most industries well-fortified with

While industrial produc-

44.5%

59,567
58,888

artivp
active

an
an

90.2%

♦Combined Ratio

Underwrit.

far

rather

course

market

26%.; Orders

GaJns ,n Prospect

from

has
^pby some 3,300 corporations
in bituminous ^®P^-a®nting a large majority of
satisfactory. °y a sharp reboundIm bituminous a]J whjch
blish ^

39.6'%

♦Expense Ratio

coal

50.6%

.....

the

is
now
very
In many respects the first quarter

1949

$2,324,146 $2,623,525
712,431868,422
668,183
733,678
1,415,746
1,496,008

situation varies

rarity

generally prove temporary when
they appear. In short, there is in

of spring busi-

months
has
nas

lumber

increased

modernization.

i to market, but bottlenecks

£r-?m co"stl™^lon an^ automo-,

the chief ob-

removed

the way

Much

81 Stock

♦Loss Ratio

for

ex-

SSftoMS*:foTth^e"te/ew

69 Stock

business

settlement

strike has
stacle

than

the taxes incurred in 1948."

Admitted

"The

pos¬

9% and unearned premiums

nearly 10% higher. Federal income taxes

for

of New York.

ever,

record year as to an all-time low
loss ratio

expense

stock

premiums

54.2% but expenses

sponding ratio in 1948.
a

year

annual

point at 38.0% of premiums written

and

outlook

tremely satisfactory, in the opin¬
ion of the April Monthly Bank
Letter of the National City Bank

other

"The 69 stock

are

sharp

liminary study write well
and

term

"The first 81 stock fire insurance companies to file their com¬
plete annual statements write approximately half of the total firemarine business in* their field and their operating results

all others

been

and

More labor is available. Of
the

ahead of last year by 21%.

has

expansion

consolidation, merger
liquidation.
*
■
;

COMMERCIAL & FINANCIAL CHRONICLE

THE

Number 4896

Volume 171

the

An
"We

lead

Unhappy Past?
the

are on

who believe

back to

the

ditions

some

single

economic

con¬

might only have slowed
perhaps have prevented)

wholesome

the

taking place

glorious future. That test will occur
Congressional elections of

ward to

"To have taken
governmental
or

down (or

for¬

unhappy past rather than

indicator

fixed

those
would try to

do and those who

action,

otherwise/ based

of another test between

eve

report says.

direct

the

price

shifts

that

were

under the guidance
system," the Bank

explains.
Reserve Policy

is allied

know who

As inflationary pressures abated

each side for the record is writ¬
ten for all to

the

The
struggle will not be a minor
one.
Those who oppose us have
large funds and sympathetic as¬
sistance

"Our
as

reliance.

TT*

increased

allowed

demands

and" currency

.serve

changing the policy
governing open market operations

firming effect

Chas. Weinstein Co.
Formed in New York

during

System

the

latter

Chas.

Weinstein, Paul J. Engel,
of

member
^

the
,

York

New
_

mittee that it would "be the policy

ideals, and in

»e formation of Chas. Weinstein
The new firm will mam-

& Co.

^a-n 0ffjces at 135 Broadway. Mr.
was formerly with J. L>.
Schiffman & Co.

BANKING^

our

Truman

trust

That

people—all of the people.

the

It shines

and faith cannot be counterfeited.
beacon of truth

through the fog of propaganda

misstatements.

and

-"Your

meeting will show that the forces of lib¬
marshaled in full strength in the,

eralism will be

well be one of the most
in this century.
Your
enthusiasm in the liberal cause augurs well for the
future, a future which you and I face with confi¬
dence as the kind of challenge which always brings
out the highest capabilities of the American people."
1950

campaign, which

crucial

THE CHASE

may

liberalism

tests

NATIONAL BANK

OF THE

Democratic
convention assembled.

—President Truman to "Americans for

Action" in their recent
"Lead

back to

STATEMENT OF CONDITION, MARCH 31, 1950

Can that

unhappy past?"

OF NEW YORK

CITY

the history* and the accomplishments

the way

of the American

people

are

viewed by the President

and the other "liberals"?

RESOURCES

It is hard to believe.

Cash and Due from Banks

Don't

Expect loo Much From Point Four: Sprout
substantial rewards

Banker notes risks abroad contrasted with

Holds nation

home.

making modest

Four program

for technical assist¬

investment

and

ance

under¬

The Bank's report

developed areas is an indication of
».

American for¬
ward

plan-

ning, it would
be

dangerous

expect

much

too
this

it is
stated by Al¬
lan Sproul,
score,

detail

some

also discusses
foreign

the

ex¬

that took
place
last September and the
progress which countries receiv¬
ing financial help from the United
States have made in reestablishing
sound internal economies and in
devaluations

change

improving their international fi¬
nancial positions. The report finds
few definite effects as yet from

the

e ra

New

the

Bank's

Annual

Presi¬

"The

Speaking of the domestic situ¬
the report notes that 1949
a year of modest prog¬
ress
toward most of the nation's
ation,

objectives.

Four

cuts and reductions
of inventories which characterized

assistance

program

and

in¬

underdeveloped

announced at the beginning

areas,

of the year, was

The

the "mild" recession

essentially healthy corrections, the

the

ning to this end," says Mr. Sproul.
"But it would be dangerous to

struction, although not entirely
eliminated, are no longer acute.
Moreover, the buoyant strength of

this

score.

Emphasis is rightly placed, so far
as direct investment is concerned,
the flow of private capital.

upon

will

difficult, however, to
enlarge American capital exports
above
the $1
billion (net) an¬
nual

rate

1949

while

the

re¬

capital are still substan¬
home, the political and

wards to

tial

economic

risks

abroad

great, and the rewards

for

are

investment

such

risky investment, when
successful, are so largely reduced
by taxes. Yet ways must be found,
to raise our imports and to

both

increase

the

outflow

private

capital, if many of the successes
thus far achieved in rehabilitating
the

production and trade of the

world

are

Accrued Interest Receivable
Customers'

10,523,711.75

16,593,906.63

Acceptance Liability

Banking Houses'
Other Assets

•

29,237,975.25

not to shrink away after

1952."

;

11,192,097.82

$4,633,437,698.25

says.

The

the

Deposits
Dividend

•

1,224,989,652.25

2,960,000.00

Payable May 1, 1950

14,513,444.14

Expenses.

introduced

distortions
and

war

the

American

Other Liabilities

■

21,470,965.60

«...

4,184,261.42

Acceptances Outstanding
Less: In

Portfolio

•

economy

overcame

Capital Funds:
Capital Stock.

.
(7,400,000 Shares-! 15 Par)

$111,000,000.00

output

of goods and
post¬

Surplus.

189,000,000.00

Undivided Profits

47,711,641.41

services to within 5% of the
war

347,711,641.41

peak by the end of the year,

the report points out.

1,633,437,698.25

The Bank attributes five-sixths

in gross national prod¬

of the drop

uct

during

the

spending

recession

business

notes

that

curtailment
ries.

remained

during 1949.
now

to the

invento¬

"remarkably

se.cur

ies carried

$324,271,292.00

to secure

seems

*»•

were

pledged

public and trust deposits and for other purposes as required or permitted by law.

quarter

"reasonably clear

that the

mobility of labor and en¬
terprise during 1949 was a neces¬
sary part of the continuous change
that

United States Government and other

consumer

constant" from quarter to
It

25,976,256.27

postwar recon¬

tendency toward cumulative
depression, and by late summer
of 1949 recovery was under way,
the

any

raising

of 1949 were

cation of forward American plan¬

much

1,379,484,664.53

Reserves—Taxes and

bank

too

......

price

received eagerly
throughout the world as an indi¬

expect

125,300,747.93
V 32,734,062.73

LIABILITIES

dent's Point

the

171,728,672.20

The Domestic Scene

constituted

Report.

points

York

35th

technical

Loans

Bank

vestment

in Europe.

Fed

for

1,655,931,638.17

out that continued antiinflationary measures are needed

Reserve

Mortgages

and it

devaluations

currency

President of

Allan Sproul

Municipal Securities

Other Securities

objectives.
While President Truman's Point

Gpvernment Obligations

State and

toward

progress

U. S.

1,200,710,221.24

produces economic progress,"

Member Federal

Deposit Insurance Corporation

Curb

Exchange and Leo Gold announce

Oie Federal. Open Market Com- Gold

/WORfmWIDE

President

exer¬

the money
market.
The report
states that
the operations of the Federal Rea

pur-

exchanges

regard to the general business and
credit situation."
.
'
.

accumulated, the System
its "easy money" policy

cre(jit

direct

and

ideas

faith

and

sales,

evidence of business

modified

Committee

chases,

our

banks and by

greatest strength must

and

trust

Later,
recovery

of the

government securities by the Federal Reserve banks with primary

and agriculture.

ness

for

busi-

the

it did in 1948 in

and

much

.n.n

supply

meet the needs of commerce,

these they place

their main

lie

Congress.

from

and

press,

•

the

in the market to

available

early in 1949 the Federal Reserve <hal£ o£ 1949 illustrated and clariSystem acted to increase the avail- {ied the meaning o£ the statement
ability of credit by reducing re- \
o«
onnG,,nnnmonf
Ktr
serve
requirements of member 1
tne ,uune ao announcement o.y

in the annals

see

81st

increase

cise

-1950.;
"We

funds

(1425)

(1426)

THE

COMMERCIAL

FINANCIAL

CHRONICLE

Thursday, April 6, 1950

Bond Club Field

Mutual Funds

NAT 10.,.,

Details

prospectus

NATIONAL
RESEARCH
120

request

upon

Pension Plans Discussed by
Investment Trusts

and

program

SECURITIES

CORPORATION

alternative

confronting

BROADWAY, NEW YORK 5, N. Y.

The

pension

industries

and

operating 10 years. It has grown
$25,000,000, taking securi¬

panies and the advantages of

road

em¬

still

most

important

are

topics in the

Bulletin,
comment

noting

types

corporation to
inc.

fits

orJ

from
to

from

ance

reouest

company to
benefits.

purchased

Distributors Group, Incorporated

can

take

care

They

may

be
by

stand

putting

sufficient

The money put aside is
generally invested by the trustee
of a pension trust in accordance
with the provisions of

"Many corporations favor using
group annuities to solve the pen¬
sion * problem on the
assumption
that they are thereby
shifting the
risk of both
mortality and invest¬
ment loss to the insurance com¬

However,

pany.
on

Investors, Inc.
A

Registered

■"

Such

Available

from

•

authorized

any

investment dealer

rates

wards,

V;;-.V

'■

■

premium

such contracts

are

rates

usually only

guaranteed for the first five years.

^ f Investment Company J
y

trust

agreement.

Fundamental

may

depending

revised

on-

the

up¬

expe¬

rience of the method of
financing,
insured or funded, the corporation
will pay

the real cost.
"Independent actuaries

from

Company

and

INCORPORATED ;

Wall

CHICACO

and are being used by
corporations for estimating

many

needs

reserve

Street, New York 5
LOS ANCELES

for

funded

gram."

pro¬

"V:j-;

Tax Advantages of Pension Trust

Pointing out the tax advantages
of

a
pension trust, the Bulletin
slates, "Income from investments

owned and

profits realized

the

sale of securities

are exempt from
income taxes.
Consider¬

Federal

able, obvious advantage is, derived
following investment policies

from

ey stone
i

which increase the rate of growth
of the fund while not taxable.
"Benefits paid to employees are

Custodian

usually at

his

tax

cases,

INVESTMENT FUNDS

the

one

taxable

lump

"From

benefits

are

one

sum

benefits

the

tax

purposes

may
as

employer's point of

view, contributions
fund

BONDS

are

expense

(Series B1-B2-B3-B4)

tributed

PREFERRED STOCKS
;

certain

such

for

(Series K1 -K 2)

total

year,

treated

level, and

nominal.

paid in
be

low

long-term capital gain.

investing tbeir capital

deductible

to the pension
as

business

provided the amount
is

reasonable

to the employee's

con¬

relation

COMMON STOCKS
(Series S1-S2-S3-S4)

chase
of

TLe

be obtained from

en¬

the

provisions of the
in keeping with the re¬
quirements of the Internal Rev¬

Keystone Company
of Boston

plan

are

Code."

Congress Street

Boston

Massachusetts

American

Shares,

discussing pensions, makes refer¬
to

the United Fruit Retire¬
ment Trust Fund and
comments!
ence

"The

United

com¬

Loeb

trustees,

J. Emerson Thors

the

able to invest in

rate of

average

of 5%

2%%,

(which

The

ding

theme

will

nearly

80%

admitted

New

will

floor
men

New

broker

the end

years."

the

Curb.

York

office,

the

previously

carried

out

Commonwealth
shares

nigh-on

has

made

per

f '

elaborate program of competitive

sports

and

features
year

golf

entertainment.

are

being

shareholders of

record March

planned

James W. Maitland

this

President

in addition to the traditional
and
on

tennis

Exchange and

115

tournaments,

the Bond

31, 1950.

New

Club

Broadway, New York City

Stock

publication of the

"Bawl Street Journal."

MUTUAL

PJ/ie

FUND

Seorye
v

of
BOSTON

PUTNAM
FUND

A BALANCED FUND
Prospectus

§|

of'JjO.itdll

from

your

request

investment dealer

:■

50 State

Sueet. Boston

Affiliated
Fund, Inc.
Prospectus

THE

upon request

LORD-ABBETT

IHVESTMENT COMPANIES

Lord, Abbett & Co.

Companies File
and

Exchange

March 31,

Commission

New York

Chicago

—

Atlanta

Los Angeles

—

1950: Aeronautical Se¬

curities, Inc., 39,000 shares of capi¬
tal
stock;
Fidelity
Fund,
Inc.
(Boston), 400,000 shares of capital
stock; Nation-Wide Securities Co.,
Inc. (New York), 300,000 shares
of capital stock; Wisconsin Invest¬
ment

Co.

(Milwaukee), 2,100,000

shares of capital stock.

A. C.

Allyn S Co.
Branch in Spokane

SPOKANE,
Allyn

Fruit

Company

Retirement Trust Fund has been

Co.,

opened

Medical

WASH. — A. ' C.
Inc., as of Aoril 1,
a

Center

office will

branch

Building.

be under

sion of Wm. M.

the

Marshall,

elected Vice-President of
poration.

formerly

Mr.
an

office

This

supervi¬
a

Diversified Investment Company

Prospectus

may

be obtained from

investment dealer
200

your

local

The Parker Corporation,

Berkeley St., Boston 16, Mass.

our cor¬

753L
was

officer of the Seattle

First National Bank.

newly

Marshall

Louis ii. Whitehead Co.
Putnam Fund Distributors. Inc

Four Investment

The following investment com¬
panies filed with the Securities

share, payable April 15,

1950

their

irresistible.

the

INITIAL DIVIDEND
Directors have declared

makes good, hard sense, and the
visual presentation combined with

complete

^fund

bid¬

The sales copy

layout gives you their
story in two minutes.

partners

reported

Sales Booklet

simple

its

Both

"Chronicle" of March 16.

Ripley &

Commonwealth Investment Co.,
in
their booklet, "A Share For
You," has told their story in an

Broadway.

new

Commonwealth Issues New

admirable fashion.

Exchange

firm

•

member

the

will make their offices in the

Admission
was

York Curb

serve

the

of competitive

is well

capital loss

resident

Chair¬
of

gf t

man¬

initial dividend of 15 cents

going rate on common
stocks today), you can absorb out
a

and

;

under the

income

been

of the

Chase National Bank), and David

Co., Inc.

been

named

L. Skinner of Harriman

V4% above the required rate, this /
Vt% compounded will en¬
able you to absorb a capital loss
of 6%.
But if you can invest at
average

has

(The First Boston Corp.), George
J.
Gillies
(A. C. Allyn & Co.,
Inc.), Robert L. Hatcher, Jr. (The

extra

Co.

becomes

now

general Field Day Committee. He
will
be
assisted by four ViceChairmen:
William B.
Chappell

are

you

bonds at today's
around

and

pen¬

30-year period

man

prominent official

ager

been

: v-, "t

Mr. Howard has been the

pur¬

Kuhn,

have

partners

partner in the New York office of
the firm.
Mr. Gumes has been

Emerson

Thors of

trading

concern¬

stocks

common

over

1950,

United Fruit Retirement Trust

Selected
50

Coun¬

Gumes

general

,■:,

Y.
J.

life insurance company stated:

"If

pension plan and trust agreement
are
filed with the Federal Gov¬

enue

may

needed

Apropos of discussions
ing the risk involved in

ernment and the

Prospectus

management

Discounting Common Stock Risk

sion

Sleepy

salary.

"These tax
advantages are
joyed provided the details of

•'

con¬

taxable when received, at
which time the recipient's income

Certificates of Participation in

two

they get the

running the investment
panies."'

only

Funds

(1)

of the extra
are

available

Hugh W. Lonc

out:

The

but

numerous,

men

the plan.

descriptive material about

are

tions is shifted to the professional

money to fund the accrued cost of

for the latest

know

investments, and (2) the re¬
sponsibility for the stock selec¬

programs neces¬

aside

has

why United

stock

"Fully funded

prospectus and other

know

portion of their funds.

reasons

employee.

today

not

Club,
Scarborough,

un¬

living standards rise.
trustees of profit-sharing
pension funds prefer to use

stock

the

try

common

grow as

tinuous

sitate

send

investment company shares rather
than the individual stocks for the

insur¬

year

Friday, June 2,

United Fruit.

and

outing
place

this

com¬

companies entirely

separate annuity contract for each

Street, New York 5, N. Y.

list

;

The

Harold

the firm.

will take

that Kenneth J. Howard

announce

and

admitted

the Bond Club.

stock

Many

group basis

the

why many such
funds
do
so:
(1)
stocks yield
more; (2) they offer better pro¬
tection against inflation; (3) they

plans a
purchases de¬

pension

from your investment dealer or

but

earnings or
by charges

company
usually
ferred annuities from

of insured

case

"We

earnings.
"In the

United Fruit

the

Co.,

President

invest¬

Fruit chose to put so much of its
retirement fund money in stocks,

built up

reserves

lot

was

J. A. Hogle & Co., members of
New York Stock Exchange,

New

sons

diversified

related to

pension bene¬

pay

current

course,

stocks

current business expense

either

prospectus on

(3)

"Pay-as-you-go plans require

Group Securities,

63 Woll

and

It has

mon:
199,500 shares, worth $11,097,187.50.
But $7,267,863.75 was

Funded.

Insured

Of total

by Charles

Hollow

"Of

Howard & Gumes

Hemphill, Noyes,
Graham, Par¬

$18,000,000.

investment

(2)

as-you-go,

SHARES
A CLASS

problem.
After
there can be no

plans, and states:
"From the point of view of fi¬
nancing there are three general
types of pension plans: (1) Pay-

BOND

■

over

Calvin
basic

Jr.,

of a little over $24,000,000
(at market), common stocks were

"master blue print" pension
plan,
Bullock
points
out
the

GENERAL

Morse,

its

stocks.

Club

Bond

announced

ments

the

that

the

were

bonds, in industrial bonds.
largest investments are in

But

common

industry.
Bullock, in its monthly
has presented an able

Calvin

York

sizable investments in government
bonds, in public utility and rail¬

com¬

ploying investment trusts
the

Day

ties at market last Dec. 31.

mutual funds

To Be Held June 2

to about

plans

J. A. Hogle Admits

Plans for the 26th annual Field

By ROBERT R. RICH

INVESTMENT PROGJRAM
An Open
Inves^mBff Account

Cay

H IV ER S A R Y

f f AR;

COMMERCIAL

THE

Number 4896

171

Volume

were somewhat unevenly balanced
preciated that the Boston Trustees
in favor of the latter.3
the characteris¬ had done a steady and reliable job
A
Committee
on
Fiduciary
tics and virtues of the Massachu¬ in a difficult field the nation was
setts Trustees'
Investment Rule, not thoroughly acquainted with Legislation of the American Bank¬
Association
Trust Division,
which was originally pronounced the beneficient and helpful rule ers
headed by Roy C. Osgood of Chi¬
in March 1830, by the Massachu¬ under which he operated.

the American Bankers

ference of

Continued

from page 4

Association

Securities in
The American fiduciary

Investment Trust
somewhat

now

enterprise.
England,
and
especially the United States,

free
more

from our earnings year

save

call

wistfully

year.

setts

the

legal

has

basis
in

legitimately believe
that there will be a decreasing
burden of death duties and estate
taxes,
Every so-called radical in
the world is agreed upon one cen¬
cannot

that

Chairman, and composed
of the outstanding
officers in American
In the
nation-wide discussion
of trust investment powers which banks4 was requested to consider
took place in fiduciary circles af¬ and report upon the wisdom and
ter the Midwinter Trust
Confer¬ feasibility of preparing legislative
ence
of 1942, the Massachusetts proposals which would incorpo¬
the
Prudent Man Theory.
Rule came- to be known as the rate
Prudent Man
Rule.
Its ancient This proposed legislation, if ap¬
would
thereafter
be
rival, the English Rule, long fol¬ proved,
lowed by a number of our pivoted sponsored by the Trust Division
states (including, as diverse geo¬ in an attempt to bring about the

"Prudent

been

Man"

"Illegal List"

vs.

number

triut

senior

fiduciary

the

Massachusetts

which

takes so much

since

ever

cago, as

Court,1

Judicial

Supreme

tradition

after

upon

which

and

a"p,:..

(1427)

CHRONICLE

FINANCIAL

pride. In the course
I suggested that

address,

the time had come when the con¬

permitted a degree of acquisition
siderable block of American states
of private property, by individual
whose laws had been patterned
citizens, independent of caste or
after
the
ancient
English
ap¬
social status, to a degree which
had never before been seen in the tral idea, at least—that it is sound proach, and whose trustees and
history of the world.
In those social policy to restrict the amount beneficiaries
had
consequently
A Model
graphical examples, New York, much-needed reform.
golden days there was no income which may be left by inheritance
been denied the virtues of flex¬
Illinois, Texas and California) had Trustees'
to succeeding generations.
.
Investment
Statute
tax, save briefly during the Civil
ible and modern investment tech¬ always been called the Legal List
If
War; it was forbidden, or so it
the
amount which can be
was prepared in
due course, was
Rule.
The American States,
seemed, by the Constitution. There saved out of income is reduced niques, should
study and take
debated at length in various conr
was no
capital levy of any kind; and the burden of death duties is
steps to adopt the Massachusetts speaking broadly, patterned their
ferences
held
throughout
the
no
impost .upon
testamentary increased, and more especially if
Rule.2
Such a study was neces¬ law either upon the Prudent Man
transmission of the sort to which the purchasing power of the dollar
Continued on page 28
have now become accustomed. is
depressed; it must inevitably
strongly was the institution of follow that aggregate wealth will
property respected, in contrast to be more and more widely spread;
the concept of individual human that the problem of management
rights,
that
our
Republic was of the average modest family cap¬
riven in twain over the question of ital will be more and more press¬
preservation or abolition of human ing; that diversification of the
slavery.
risk will be more and more and

sary,

for while it was

Rule

generally ap¬

Rule, and

the Legal List

YORK

THE NATIONAL CITY BANK OF NEW
Head

So, we are now told, there grew more important; that in conse¬
both in this Republic and in quence all sorts of sound media
collective
investment
will
England, a vast and increasing for
differentiation between the great arise and become more and more
masses of people and the relatively
valuable;
that the accumulated
few
possessors
of property and fiduciary accounts of the nation
wealth.
Government interfered in must be managed with increasing
the expansion and enjoyment of imagination and flexibility; that

Office: 55 Wall Street, New York

up,

private fortunes only when, as in ancient restrictions upon trustees'
the case of obvious public utilities, powers
must
certainly be re¬
Indeed we shall be for¬
like the railroads, and eventually, moved.
tunate if the duty of the trustee
to some degree, when in the case
of the exploration of mineral re¬ of the future is not preponder¬

the antly a matter of operating going
states
and
among
the
Indian businesses rather than the man¬
Tribes," it had become obvious agement of rich mixed portfolios
traffic "between

and

sources

monopoly
and
unfettered of the Victorian type.
license would bring certain dis¬
Slow Reflection in Law

that

to the

aster

Condensed Statement oj

Cash, Gold

LIABILITIES

U. S. Government Obligations

Agencies

State

Other Federal

Loans

jj,z(j5,68y

394,355,607

90,084,205

Municipal Securities

and

the

pression,

church
shiny Victoria, while the

observed

lawn, and drove in state to
the

voters of the town lived down

river

ithe

ments! In those

endlessly

becoming

dreds,

hun¬

buccaneers

brave

were

fiduciary

American

economic

number

tax, to set up a
progeny in lasting lux¬

without

numerous

ury.

indeed, you

days,

those

not sensibly

and I could

Discounts

and

■

1 375 617 474

have met

Now

comes

very

never

man

possessing
.

few. The
thought of
portfolio of his own.
the

only

another

era.

precipitated

which

process

are

Banking Corporaiion

and prolonged

place
the

values of all

served

re-emphasize

vestments which

8,507,073 r v:

26,344,128 ".

......

Other Assets i

WOO,000<§. KO Par)

,oi

77 m7

Bank Premises

u;.

3,105,508

Total

Figures of Overseas Branches are as
,

•

Chairman of

1 „■

•

$4,909,93^502
V:

of other assets are deposited
required or permitted by law.

Committee

are

President

•

W. Randolph Burgess

Jr.

Chairman of the Executive

the Board

Wm. Gage Brady,

•

CORPORATION)

(MEMBER FEDERAL DEPOSIT INSURANCE
f'Y

•

of March 25, 1950.

J323 405,362 of United States Government Obligations and $7,936,300
to secure $237,155,567 of Public and 1 rust Deposits and for other purposes

•

302,427,995

52,427,995

Undivided Profits

$4,909,931,502

126,000,000

......

Su|mtls

»«.«.«««.

Howard C. Sheperd

•

•/

in¬

"safe" for a

CITY BANK FARMERS TRUST COMPANY
Head

Office: 22 William Street, New York
Bank of New York for separate

Affiliate of The National City

administration of trust functions

remitting application of prudence,

strength. Forces are at work which discretion and intelligence to the
must inevitably increase its power variegated problems of a topsy¬
and its speed.

Condensed Statement

oj Condition

of March U, 1950

turvy world.

In February

Fortune-Accumulation Now

continue

shall

see,

and

mine, a

heavy burden of income

taxation.

not

lives

your

likely

that

able to

vidual Americans will be
a

save

great

substantial

fortune,

There has been much

rights

the

clearly
there

and

discussion of

this

trend;
it

social

arguments,

strong

of this

to me, on both sides

seems

securities.

wrongs

established
are

even

in intangible

fortune,

property

personal

indi¬

many

question but I fear that we deal
with

when

fact

say

that this

trend will continue. It is an
lished

political

likely to
but

less,

have

fact.

estab¬

are

varying ceiling,

effective ceiling, neverthe¬

upon

what we are

able to

College

Harvard

Pick.

the

Amory

(1830),

Trust

Bulletin,

May,

1942,

Massachusetts Trustees' In¬
vestment Rule:
Its Virtues and Defects.
See also Trusts and Estates, Vol. 74, No.
Vol. 21, The

1942.
3 The guiding rule, even in legal list
jurisdictions, was often stated in terms
similar to the language used in Harvard
College v. Amory.
See, for example, King
v.
Talbot, 40 N. Y. 76 (1869).
But in
practice the trustee was limited, under
legal list procedures, to an assortment of
approved bonds, and a very few stocks of
2,

and

Due

Banks

from

U. S. Government

catagories.

4 The

with

other members of the Committee,

their

then

titles,

were:

Carlysle

Bethel, Trust Officer, Wachovia Bank

and

Winston-Salem, North
Carolina; Maclin F. Smith, Vice-President
St
Trust Officer,
Birmingham Trust St
Savings Co., Birmingham, Alabama; L. H.
Roseberry,
Vice-President
&
Manager,
Trust Dept., Security-First Nat'l Bank of
Los
Angeles,
Los Angeles, California;
Louis
S. Headley, Vice-President,
First
Trust Company of Saint Paul State Bank,
St.
Paul,
Minnesota,
and
Arthur
F.
Young, Vice-President and Trust Officer,
National City Bank of Cleveland, Cleve¬
land, Ohio.
Trust

Obligations.

Obligations of Other

Federal

$ 19,497,732

94,547,262

Real I;state
Stock

cans and

Pank Premises

$102,662,828

....

•

3,197,523

•

{Includes Reserve for Dividend $155,295)
Capital

;

102,468,
600,000

Surplus

10,000,000

•

Undivided Profits

30,261,741

10.261,741

2,385.575
$136,122,092

17,791,554 of United States
44,840.356 ol Public Deposits

Total

$136,122,092

Government Obligations are deposited to secure
and for other purposes required or pet netted oy n. *t

(MI,MEEK FEOERAL DEPOSIT

INSURANCE CORPORATION)

President

the Board

YV. Randolph Burgess

;

$10,000,000

Company,

Chairman of

4,321,670

2,897,122
.

10,221,261

Ctker Assets

Total

Securities

Federal Reserve Bank

«'

)

1 549 002

Securities

State and Municipal

....

Agencies.

Loans and Advances

Deposits
Reserves

Cash

February,

limited

LIABILITIES

ASSETS

Trust Con¬

446.

2 See

through

of 1942 I addressed

the Annual Midwinter

Impossible

2,635,000 :
$124,001,000

the folly

designation

legislative

Other

indebtedness

certificates

de¬

kinds

etc.

Capita!

7,000,000

•.

Expenses,

International

rural

possible that we are leaving be¬
trustee. It was fully demonstrated,
altogether
what
may
be
called the Victorian era of heavy indeed, that if "safety" is ever to
concentration of capital for the be attained in the management of
benefit of individuals.
The great
property it can be only by the un¬
seeing is unlikely to diminish in

disasters in the

Repeated

Dividend

open

conflicts both in urban and
areas.

22,435,999; '•

Interest, Taxes, Other Accrued

7,500,000

Federal Reserve Bank

Ownership

were

hind

levelling

Stock

19,676,260

for:

Unearned Income

mortgage

and

bond

foreclosures

market

ordinary

Acceptances

7,529,400

(/« Foreign Currencies)
l'rRMS IN Transit with Branches

for

20,703,537

9,523,482

Foreign Central Banks

Unearned Discount and

Customers' Liability

with prime

disastrous experiences

Reserves

511,471

Real Estate Loans and Securities

Total

investment
able

and

There

returns.

vestment

together; for the art of
clines
was known and avail¬

talked

the

during

had,

forces

wealthy, with enough property re¬
ceived and
retained, and trans¬ securities;
mitted,

A
social

powers.

thirties,
days, indeed, there produced shocking declines in in¬
tene¬

space-heated

example, we; have
marked broadening of

for
a

$30,227,019

portfolio

ances in

j)UF

with iron deer and mastiffs on

Less: 0wn Accept-

it in a

$4,519,348,370

...

ances

Obligations

economy.

Now, as I have said, the law
How remote all this sounds to
today!
How distant the age slowly reflects these changing so¬
and
economic
conditions.
when the small town banker pos¬ cial
sessed the many turreted mansion, Since the experiences of the de¬

Liability on bll.i.s.
Acceptand

1,769,175,004

Deposits.

Due from Banks .$1,182,660,092

and

oj March il,-1950

ASSETS

■

Other Securities

Condition

Lindsay Bradford

(1428)

THE

COMMERCIAL

Continued from page 27

national

Fiduciary Field

corporated in a booklet which
was
widely distributed by the
Trust Division 5
Reform

Movement
The

reform

tently ridiculous.

movement

immediate
mentum.8

gained
increasing
mo¬

and
To

the

amount of

creased

which

states

but

had departed to some degree from
the Legal List theory before 1942

trust

real

aggregate
be

knows

sure,

his

has

become, in a
the working tool

sense,

not* only of the "rich man"

but of

moderate

ing important jurisdictions which

very

of estate

Model

Statute,

something closely approaching

it;

Delaware

'r'iO

/•

California

—-1943

Minnesota

1945

Nevada

■

Oregon—.
Washington

;

Within

-—-1949

few

days the New
York Assembly has enacted what
a

is informally reported as
Prudent.Man Rule.
Debate is continuing in

35%

a num¬

ber of other states and in the Dis¬
trict

sign

Columbia.

There

of(.abatement

tined

emerge

the

The Prudent Man Rule

trend.

seems

des¬

the sole

and

.■

Trust

Increasingly '
Useful '

those

that

period the
trust function has proved increas¬

mind

same

charitable

and

the

billions

The first such

benevolent; considerable

of the incal¬
fiduciary busi¬

amount

The

money

problem is

emphasis

led,

meant

risks

adjustment

•

tan

-continuing
holdings of

his

fiduciary

banks.14

Common Trust Funds have
pro¬
duced an opportunity for diversi¬
fication

smaller

the

trust

investment

funds

which

of
was

hitherto unavailable and have also
served to reduce the cost of fi-

duciary

administration

marked

degree.
Trust men are
agreed that Common Trust Funds
here to stay. Their growth has
been only moderate, to be
sure,
because
they
are
intricate
in
structure and somewhat difficult
are

establish.

time

nothing

fixed income

American

before

rently

be a
will be

may

they

available

the

long
cur¬

smaller

the foundations which
endowments of hos¬

therefore,
consideration,

of reputable and seasoned
investment companies and invest¬
trusts.17

counts in insurance companies and
financial institutions of all sorts.
Yet most of these tremendous

""men of prudence, discretion and

,intelligence" conduct their own
affairs, "not in regard to specula¬

cap¬

ital

tion but in regard to the
perma¬
nent disposition of their

funds,

well

fulness

the probable safety of

Victorian

ownership of
was

trust
and

days, beneficial
fiduciary portfolio

hallmark
was

seldom
of

women

So great

was

wealth.5
used

moderate

The
men

means.

the per capita dis¬

and

extraordinary
adaptability of

trust

device, and
saving habits of

their capital."
In

"fiduciary"

are

na¬

one sense or another. And

because of the

considering the probable income
as

sums

ture, in

8 Gilbert

use¬

the
instinctive

the
our

people

the

Stephenson, Esq., Director of

Prudent Man

Rule

for Trust

In¬

vestment, Trust Division, American Bank¬
Association, 22 East 46th St., New
York, New York.

ers

Examination of the annual indices of
Trusts & Estates, The Trust Bulletin
and
the Annual Proceedings of the
Section of.
fteal Property, Trusts and Probate
Law
of the American Bar Association
show
the extent

and

variety of

the

discussion

,ia

all parts of the Country.
The last
named organization created a
special com¬
mittee to deal with the
matter, still in
existence and still
working to extend the
7 Opinion among
professional

ies

appears

unanimous

fiduciar¬

that

the

Prudent Man Rule works well in
practice;
certainly the investment return to the
income tenant has been
substantially in¬
creased,
*
,

payer. His

only chance, when all is said and
done, of getting into the game, let
alone of

with

staying there, is to join

others

problem.

who

of this

ment

alternative

game

Not
In

risks

some

supposedly

the

1947.

Committee

And

Association—Trust
of

reports

also

Report

Trust

Information
.American Bankers

of the Trust Division.

The

see

Bulletin

the

May, 1947.
Comptroller of the

Currency,
only,

which cover National
(about
1,500
institutions)

growth

cluding

"individual

corporate and

ial

accounts

$9,284,000,000

000,000
^

from

trusts,"

show

not

pension trust

$4,238,000,000
in

Banks

1939

of the last

10 The characteristic
that

and

day of 1947.
of insurance trusts

they remain inactive for
years,
supported by contracts or
policies of in¬
surance.
When they
"ripen," however,

they

present

vestment.

Bank

immediate
statistics

narily include the face
as

held

in trust.

need
do

amount

for

not

in¬

ordi¬

of policies

in the

able

with

role

his

talent"

safe

place.

matter

therefore,

11 The

able

fiduciaries

only

that

manner

portrayed in 1943, by Julian
S, Myrikch,
Second
Vice-President
of
The
Life

Life

Association

and

News, June,

an
article
entitled
"Catching
the 'American Radical'."

the

not

American

available

fiduciary

can

13 See Article

gested

that

the time

14 The

provided

lating to delegation of fiduciary
duty and responsibility and min¬
gling of trust assets are entirely
inapplicable to discreet purchases
by a prudent trustee of properly
qualified investment trust and in¬
vestment
company
shares.18
A
trustee is not, in fact, abandoning*

delegating his fiduciary respon¬
sibility when he buys such shares
or

but is, rather, exercising that re¬
sponsibility in a manner identical
to that adopted by men of pru¬
dence, discretion and intelligence

the

conduct

by Robert Cutler, Pres.,
Company of Boston en¬

Report of the Committee on Trust
Information of the Trust
Division, American
Bankers Association,
published in
the Trust Bulletin for
May, 1947.

states

which

Common

Trust

legal, as of this writing are:
Alabama; Arizona; Arkansas; California;
Colorado; Connecticut; Delaware; Flor¬
ida; Georgia; Idaho; Illinois;
Indiana;
Kentucky; Louisiana; Maryland; Massa¬
chusetts;
Michigan;
Minnesota;
Mis¬
souri
(by decision); New Jersey; New
York; North Carolina;' Ohio; Pennsyl¬
vania; South Dakota; Texas; Vermont;
Virginia;
Washington; West Virginia;

Wisconsin.
>

15 The

'■

law

least

one

jurisdiction,

Massachusetts, makes the Common Trust
Fund
of

available

individual

fiduciaries

the

unlikely that use will be made
privilege because of practical dif¬

ficulties.
16 The

Bankers

With

their

Nor is there

own

af¬

prohibited

Funds
with

^■

Trust

Division

Association
manual

which

the

American

has

upon

sets

comments.

out

published an
Common
Trust

Common

sample
Trust

Handbook

form,
Funds,

on
their Purposes,
Estab¬
lishment, and Operation—Second Edition,
a

The

Trust

Association,
York

16,

Division
12

mingling in

when

sense

East

New York.

American
36th

Bankers*

Street,

trus¬

acquires for his trust portfolio
negotiable certificate which is

;

that

trustees

prudence,
intelligence who

and

purchase shares of certain types of
business and public utility corpo¬

rations, or
companies,
much

the

—they

insurance

in effect, making
sort of purchase *

in fact buying an un¬
in
investment

are

divided

banks,
are,

same

fraction

portfolios of great size.
Such ac¬
have been freely per- 4

quisitions

mitted to trustees under the Pru¬
dent

Man

without

Rule

for

generations,

criticism either

the

upon

ground of improper delegation
of

mingling.

There

valid

conditions, between securities

ern

this

t.ype

the

and

are

excellent

1946,

arrived

ground of distinction, under mod¬

Old Colony Trust

printed

had

when courts should recognize that
the ancient legal prohibitions re¬

discretion

titled

Mutual

Insurance Co.

trusts

investment companies in the
modern
fiduciary scene, I sug¬

clear

whom the Common Trust Fund is

but

difficulty of accumulating a siz¬
estate was
graphically

testamentary

considering the

investment

and

fiduciary

Funds

all

"hiding

other'

mind—for

of modern

not permitted
avoid

rea-'

Responsibility

while

very great advances

field

not

may

field

attain¬

generally recognized as a "secur¬
ity" in financial circles. It seems

administration.18

in¬

prime necessity for the trustees of
America to be able
somehow, to
join in an investment program

spec¬

1929

becomes,

in¬

$20,420,-

edly marked

•

him.

goal within

Avoiding

1940,

future

the

ever

"Program for Profits," Trusts and
Estates, April, 1949, p. 204.

altogether, is

"poor man's tool." f See an Estate Plan¬
ner's
Handbook, by the present com¬
(Little, Brown & Company,
Boston, 1948).
■„
9 See Report of the
Comptroller of the

Currency for

legal

tee

will

activity; i.e., of staying oiil of the
to

mentator

have

new

sonable time.

to be doubted whether individual

fiduciaries

The

Research of the Trust
Division, has £on'e
so
far as to refer to the trust as
the

•

5 The

the fund is too
small,
he has no safe
way to engage in
the great game of
capital manage¬
ment ':as:an individual

number

developments in this
seem
to point, indeed,

fairs.

in¬

conduct their affairs

been

throughout
the
United
States, of ways
and means of permitting fiduci¬
aries to acquire and
retain the

banks of the nation, and
particu¬
larly to the rural banks, and it is

which is held by

characterize

has,

creasing

have

Trust Funds operated
by a some¬
what lesser number of
metropoli¬

con¬

than .dispersal of risks. The
prudent trustee minimizes his in¬

the

problems

metropolitan
institutions have suc¬

acquiring by use of the
Common Trust Fund device.

ment

sented by about seventy Common

vestment

special

investment

larger

ceeded in

There

New

1 17 Inquiries

and

questionnaires

the

corporate trust field reveal both interest ?
and desire upon the
part of many trust i
officers for an advance in the law
upon

this

See

matter.

editorial

Trust

and'

Estates for

July, 1949, entitled Fiduciary
Investment Company Shares, *
declares that, "Trustees will find

Interest
which

and

folios

coming into their

ment

estates

private

port- '

with investAs court decisions and ex¬

shares.

care

tensions of the

'prudent man rule' further
open the way to their purchase for trust
funds, these shares will also be of wider
interest

for

consideration

and

analysis.

;

Many smaller trust departments, without
adequate facilities for invesment beyond ;
the legal list or bonds, may find that in'
vestment company shares will offer their
managerial
facilities
needed
for
better V
.

diversification
shares

may

insurance
to

the

advice

where
18

trust

many

their

not

Loring,

(Shattuck

answer,

proved

persons

and

estate

personal

accounts.

frequently

trustmen

veloping,
account

also

has

needs

are'

ought to be

collective

the

fiduciary

Fund

abling statute, and in one state by
force of court decision, and
repre¬

the theory and
practice of diversification. By di¬
is

Trust

field, to the invention of the Com¬
mon
Trust Fund, a device now
legal in 30 states by virtue of en¬

upon

versification

Common

These

Trust Fund

which

vestment.13

bearing securities as
charitable cor¬ contrasted with his participations take advantage of their virtues.15
There are obstacles,
porations throughout the coun¬ in ownership
moreover, of
equities; by a care¬
pitals, churches and schools and in
marked difficulty in the
try. The endowments of a dozen ful limitation of the
enjoy¬
aggregate of
thousands
upon
thousands
of
leading universities of the nation his. purchases in any one field of ment of Common Trust Fund
everyday
family
arrangements. aggregate more than
techniques
by benevolent
and
$500,000,000; investments,
by
spreading
his
During recent years, moreover, it
charitable funds and foundations
may be imagined that the total
investment complexities and tax
geographical risks, his maturities
endowments
of
in the n a tur e
of hospitals,
churches,
hos¬ and all ottier incidents of owner¬
burdens have become more for¬
pitals, fraternal, groups and other ship in whatever manner seems to churches and schools.
Yet the
midable and estate
planning ar- similar organizations would reach him
safest according to his honest principle of collective investment
jrangements, employing the trust a
staggering sum. It is,estimated and best judgment of-the circum¬ has demonstrated itself in this
device, are "very much to the fore. that there
are more than five bil¬
stances then before him.
It can be safely predicted that
field to be worthwhile in all re¬
the; lions of dollars in pension trust
The prudent trustee can
hard-pressed fiduciaries of this funds not financed
per¬ spects
and
the Common Trust
by insurance; form his
difficult task of diversi¬
Republic will demand and re¬ there
are
enormous
sums
in
Fund, taken together with the
fication, as history demonstrates,
ceive, at the hands of courts, Union
Treasuries as well.
On top
widespread
enactment
of
with a fair degree of success
the
legislatures
and
draftsmen
of of all this one can
if,
only speculate but
trust instruments, an
only if, his fund is of suffi¬ Prudent Man Rule, have undoubt¬
increasing upon the number of "special" ac¬
cient size. If
freedom to
iunds,

tues

method of joint in¬

some

there

numbers, and the thous¬

Common

to devise

whom

given, in fairness, an unquestion¬
able legal right to obtain the vir¬

possibility of breaking
even, let alone of making a profit.
The only
solution, once again, is

by a
fi¬

fi-

benevolent
societies and smaller banks which
do not have the facilities of the

responsibility
conducting, as separate port¬
folios, a large number of sinall
and
variegated
trust
accounts
there is

clear that individual

seems

countless

limit

to
and

conduct

ands of charitable and

safety of capital. The
historic characteristic of the Pru¬
dent Man. Rule, aside
from, its in¬
junction of loyalty and its pro¬
hibition against
speculation, is its

which is done by individuals

ness

that

the

own

duciaries,

considerations

proved

opportunities of the past. Indeed,
it

fiduciary

loyalty

has

itself

investment affairs, he
certainly gain a great ad- "
vantage over the narrowly limited -

be imposed upon this
type
professional generosity.
If a
corporate or individual fiduciary
is charged with the

second

revealed

added

expense

commends

will

must

cerned with

•

divers

trends

often led into
costly

which

their

ac¬

"Refuting the commonly ac¬
cepted idea that trust institutions

It, is

;

taxes

recent survey among
corporate

throughout the United States, asemployed in contrasted with
banks; notably by.
myriad forms, e.g., in wills, in liv¬ members of
the investment and
ing trusts,**in various types, of
legal- fraternities.
Those billions
agency and custodian accounts, in do not
include, either, the very

ingly useful.

these

often

management

intelligence"

and opportunity for
service.
This is especially true of
small family trusts and
guardian¬
ship accounts. And the economic

Area

indication

exorbitant

"men of prudence, discretion

history of American corporate fi¬

borne in

any
culable volume of

this

fiduciary

involving

accumulation of

Income

"An

and

by
disproportionate
Good-hearted
persons

responsibilities

materially decreased. 11

agree¬

which

involve

burden

duciaries.

first,

and

are

Trust Trend Toward Low

banks.18 Nor is there included in

Function

During

that they do not include any of
the very great number of insur¬
ance trusts in existence in those

vestment Rule of the second half
-

expected,

but there is to be

unchallenged American Trust In¬
of this century.7

general

companied

duciaries

are the servants
exclusively of the
constantly
greater proportion of the national wealthy, the survey reveals that
wealth.
Indeed, the aggregate of 54% of trusts in the care of trust
fiduciary funds is already a mat¬ institutions have an annual in¬
come
of less than $1,200
ter of first magnitude.
each,
with an average income of
$370.
As of Jan. 1, 1947, there were
The survey further shows that
nearly 3,000 corporate trust insti¬
73.5% of all trusts have an an¬
tutions in this Country, about half
nual income of less than
of them National Banks, admin¬
$3,000
each, with an average income of
istering more than $36,000,000,000
$788."12
of property iii personal trust acWhen trust portfolios are
counts, the equivalent of $1 for
coming
into existence, to endure for sub¬
every $4 of the roughly $157,000,stantial periods of time, in aver¬
000.000 of bank deposits as of Jan..
1, 19479;
That number of bil¬ age sizes of the above order spe¬
lions of dollars .is sizable enough* cial problems are certain to arise.

1949

Oklahoma

also,

accounts,

1949

Kansas

•

1947
1947

Idaho

——.——1947

the

matter

expense.

for hope that tax burdens will

planning structures.8 '
is,

shall

;vM;':Mairie'vrr^^--^---1945
)

will

trust

not

The Economy Problem

small

family fortunes in these
days; there are few who see rea¬
son

method of collective investment of
his fiduciary funds
which
does

economy.
Every professional man
of experience knows that it is the

and
is, therefore,
to use them. A less
factor is the undeniable

death

simple

great

in the forseeable future.

1945

astro¬

seems

likely

do not permit the

foundation stone of millions

There

—1943

Illinois
;Texas

sized

y-1 ment among students of trust ad¬
ministration
upon
the probable
continuance of two distinct trends

—-—1943

fact that income and

man of moderate
means, both
family and in business affairs.

have

the

almost

diversification

The second problem
arising out
the
of
fiduciary
portfolio
of
smaller
size
is
one
of

the average man
about trusts than did

hopeful

There is every sign, indeed, in our
American social economy, that the

enacted

these

aggregates,

safe

•

■

ancestors

the
in

added the follow¬

of which is that

fiduciary funds has in¬

enormously,

the

very

The

have

been

view

nomical

(as, for example, Connecticut, by
Statute, 1939, Missouri, by Court
decision, 1940; New Hampshire by
Statute, a 50% rule, 1941) there
now

can

Thursday, April 6, 1950

achieved.

strange, though true, that the av-;
erage size of individual fiduciary
parity in possession of the national accounts
is
decreasing
and
is
wealth that it
was
freely said, likely to be even lower as time
even
in
comparatively
recent
goes on.
This is the second trend ;
times, that Sixty Families con¬ of modern
significance.
It re¬
trolled the Republic. Such a state¬
sults from a combination of fac¬
ment, if ever true, is today pa¬
tors, the first and most hopeful

United States, and was finally in¬

certain

seems

fiduciary field.
In

Joined

total

sum

CHRONICLE

by giant strides.
This, then, is the rough size and
proportion of the market in the

Investment Trust Securities in

States

FINANCIAL

increase

The American

trust

plans,
or

who

bankers

appropriate."
A
Trustee's

These
as

life

be,
seek
de¬

especially

management

Handbook

Revision), Little,
Brown
8t
Co., Boston, 1940, Sec. 61.
See also for
further development
of these
ideas 2£? "
Boston Univ. L. Rev. 1. (1949).

•

COMMERCIAL

THE

Number 4896

171

Volume

FINANCIAL

CHRONICLE'

(1429)

investment
com¬ on
Saturday, Jan. 10, 1948, at stocks, bonds, and other written constantly being allowed in Pruevidence of debt.
panies and investment trusts.19 which meeting, I served as sec¬
!
dent Man Rule states which conIf any provision of the Revised tain investments in shares of in■
Indeed, It seems certain that the retary.
with
demonstrated virtues of this mod¬ ;
I put the question of the pro-, Laws is inconsistent
„thi§^vestment companies and trusts"
ern
type of investment are des¬ prietary of a trustee purchasing Section, the latter shall govern.
xhere is in short accumuiating
tined to compel legal sanction of shares of investment companies
(2) Takes Effect. This act shall evidence that the tied has turned
investment
trusts
on
the take effect upon is passage.
proper
purchases f. by American and
and is running strongly in favor
fiduciaries. Such a prospect ex¬ agenda for the meeting and the
of making available to American
(Signed) RICHARD F. UPTON
ists, of course,
only in states matter was discussed at length.
fiduciaries, in common with other
Speaker of the House of
Of the twenty regular Probate
where the prevailing law is based
men
of prudence, discretion and
Representatives ;V;'i
in
this Commonwealth,
upon
the Prudent Man Theory, Judges
intelligence, this type of modern
or,
alternatively, where special sixteen were present.
investment "security."
(Signed) PERKINS BASS
I am now in a position to in¬
authorizations are granted to the
President of the Senate
Now, because of these developtrustee by the terms of his gov¬ form you that none of the Judges
f
ments and the needs and virtues
(Signed) SHERMAN ADAMS
erning instrument or by the local present have any objection to a
Governor
to which I have referred, and be¬
statutes.
But, since the number of trustee investing in the type of
Approved April 12, 1949
States
It
adhering to the Prudent securities mentioned above.
cause it is apparent that there is
Man Rule is constantly increas¬ was the unanimous
feeling that
There
has
been
no
reported a growing sense
of confidence
the Probate Judges of this state^ American
ing, and the proportion of instru¬
case, from a court of
among prudent men in this type
ments
containing broad invest¬ to
keep
abreast of the times,
last resort, in which a trustee has
of investment, a responsible and
ment powers is growing markedly should
recognize the fact that
been criticized or surcharged for
greater, one may properly expect such
purchases
are
not
such

substantial

develop rapidly in this

particular.
Judicial

1940

Since

Development

1940 there

Down to

judicated
and

toms

cases of any importance
esablished judicial cus¬

provide

securities

these

chase

would

be in making other

1940, however, there have
interesting developments in

the

this field.

the issue

1948

was

it entirely

Court

Probate

The

situated.

made

Knowing

cision, that such a purchase was
hot an improper delegation by the
in any
other
way
improper,
and thus
could

part

The

was

case

ap¬

pealed to the intermediate Court
of Appeals of Ohio, where the

Yours very

highest Court of Ohio, but
appeal was recently with¬

to the

while, therefore, the
Supreme Court of Ohio has not
had
occasion to pass upon the
merits of this precise case it may
be taken

the rule of the County

which

from

the

campaign.

being

prepared

document

for

instru¬

provision in the
improper.21

express

any

ment is not

A similar situation has

arisen in Oklahoma with a similar
result in the lower court.

historic

Massachusetts,

viewpoint

home

Man f* Rule,

the ; Prudent

stated

this matter

upon

in the following letter:

distribution which contains much
of what

lieve

said today.

have

that

this

teeship.

You,

of course,

place those securities. The oppor¬
tunity seems to me to be a great
I beseech you to be circum¬

one.

spect

and

endeavor,

re¬

discriminating
for

excesses

prospect.

spoil

don't

the market is

Our

Nine

Lord

Oner

Hundred

and

there and

well in your conquest of

ness.

enacted

by the Senate
and House of Representatives In*
General Court convened:
; *
Investment of

(1)

Amend
of

paragraph

Trustee!

section

chapter 363 of the Revisecb
by inserting after the wortf
in the first line thfc

"securities"

the

tered

under

ment

Federal

Company

from

time

which

Act

time

Invest¬

1940

amended

sold

may

as
and-

th'£

under

regulations,

of the State of New Hamp¬

that said- paragraph

amended shall read as

IV.

In such

bonds

securities,
of

follows:;

stocks

including

open-end

;

...

36,428,426.69

45,198,653.38

.
.

3,150,000.00

Loans, Bills Purchased and Bankers' Acceptances

Mortgages

Banking Houses

21,605,693.16
V

551,655,811.97

15,851,077.82

;;
♦

10,575,942.11

Customers'Liability for Acceptances i-.

.....

6,008,038.40

Accrued Interest and Other Resources

Other Real Estate

Equities

458,588.42

6,114,851.47

$2,298,721,634.63
I.I A HI I.ITI KS

the

closed-

Capital

$45,000,000.00

............

Surplus
Undivided Profits

60,000,000.00

.......
_

Reserves for Taxes,
Dividend

Unearned Discount, Interest, etc.

Payable April 15, 1950

Outstanding Acceptances
Liability

Cash held

Deposits

Endorser

Collateral

investment

which

registered

•

1,350,000.00
6,706,147.12

in Escrow

2,570,790.67

11,916,624.16

.........

2,128,288.703.94

•

•»••••••••••••

...

9,457,329.37

Acceptances and Foreign Bills

$2,298,721,634.63

trust
United Stales Government and other securities carried'Ut

under

thev

monwealth of Massachusetts held

fiinds

public

$l00,295t8!>9.72 (ire. pledged to secure

and trust deposits and for other purposes as

1940 as from time to time amend¬

required

permitted by law.

Federal Investment Company Act

their annual meeting in my lobby

138,432,039.37

33,432,039.37

type investment

company

the Com¬

Other Securities

type investment company ot
trust which is regis¬

end management

Shattuck:

The Probate Judges of

Mortgages
.

576,856,447.59

1,024,818,103.62

investment

shares
v

Municipal Bonds

words, including the shares of any.
open-end or closed-end mariagd--

other

V ;

State and

•

relating to investments

of trustees.

16, 1948.

Boston, Mass.

U. S. Government Insured F.H.A.

Stock of Federal Reserve Bank
AN ACT

shire,

Mayo Adams Shattuck, Esq.
15 State Street,

Mr.

Year

Forty-nine.

ment

BOSTON, MASSACHUSETTS
Jan.

the

the shares of investment
companies
and
investment
trusts
are
"securities" within the accepted meaning
of that term.
Surrogate Delehanty, writ¬
.

Certainly

the decision in Estate of Ella J.
Hoagland, Surrogate's Court, New York
County, New York, L. J. May 27, 1947,*
pi 2090, said, "In the investment field
ing

shaies

investment

trusts

are

cur¬

rently bought and sold and are regarded
marketplace as securities.
A com¬

in the
mon

fund is

trust

investment trust in

decision declared, upon
that investment in a par¬
ticipation in a common trust fund was
justified
under
testamentary
language
effect.

which

allowed

other

"to

invest

securities

and

besides

by law as proper for
my
said trustee may deem
desirable, it being my wish that

recognized

those

trustees

wise and

said

the trustee

such

shall

trustee

called

'trustees'

20 See

son's

not

limited

so-

of Alec Brock Steven¬
book, Shares in Mutual
Funds,
Vanderbilt
Univ.

Chap. X

court

citation

Probate

Court

citation;

(2nd)

.Appeals,

563,

Eighth Judicial Dis¬
trict, No. 20864, decided Jan. 26, 1949.

Chairman, TheSperrySc

State

the

for

prudent
his

New

Hampshire,

would purchase

man

investment

own

having

the

and

principal

regularity

and

the

amount

income

Steamship

Chairman,

LOU

American

derived

therefrom;

provided,

however, that not less than 50%

Home

KENNETH

JOHN

President,

Dana Corporation

C. FLANICAN

inventory

the cost value

of the

assets of the

trust shall be

Board oj Directors

JOHN

President, Gerli & Co., Inc.

classes

Trust Committee

of Directors

President, National Dairy
Products

P. MAC01RE

GUY W.

Co., Inc.

V-

PALMER

Director, Cluett Peabody &

Corporation

VAUCHAN

Director, Western Electric Co., Inc.
HENRY

Co., Inc.

VON

ELM

Chairman, Board of Directors
ALBERT N.

GEORGE J. PATTERSON

WILLIAMS

President, Scrdntoh & Lehigh

President, WestinghoUse

jj'

Coul Co.

D. GIBSON

President

invested

Emigrant Industrial

President, John P. Maguire &

C. R.

Chairman,
Board

L. A. VAN BOMEL

FRANKLIN

President, United States Lines Company

HARVEY

ERNEST STAUFFEN

Savings Bank

PAOLINO GERLI

of the

MicLELLAN

JOHN T. MADDEN

CHARLES A. DANA

Home Insurance Co,

President,

of America

Fuller Company

V. SMITH

HAROLD

President, United Buscuit Company

CRANDALL

Chairman,

York City

New

Director, Lambert Company

Simpson Thacher & Bartlett

President, George A.

HOR ACE

HAROLD C. RICHARD

OSWALD L. JOHNSTON

Corporation

l ice Chnirman,

Lines

ALVIN G. BRUSH
Products

primarily in view the preservation

BLOOM

Indies

West

RABE

Vice President

Bank

JOHN L. JOHNSTON

Chairman, Atlantic, Gulf and

WILLIAM

CRET8CH

Chairman, Lincoln Savings

HutchinsonCo.

Air Brake

Company

property

which qualify under paragraphs I,

Head Office: 55 Broad Street, New

II and III of this section.

shall

accountable

KA\kl\l>

OFFICES

York City

OH EAT Fit

NEW

YORK

Court

Cuyahoga County, Ohio; In re Estate
of William D. Rees, Probate Court
No.
56362, decided June 26, 1948; intermedi¬
Court

exemp¬

DIRECTORS
FREDERICK

BKINECKE

EDWIN J.

EDGAR

Trustees

for

ate

regulations, and

tions of the insurance department

1946.

21 Lower

be sold under

may

investments."

interesting

Investment

Press,

the rules,

The

that reasoning,

reinvest

ed and which

for, and
-

22 It

this

may
to

be licensed to sell,
remembered, in

reading
the

statute, that New Hampshire is
state which operates under the
called 50% Prudent Man Rule.

enly

so-

European Representative Office; 1, Cornhill, London,
Member Federal Reserve System • MemberNew

by
a

that the

product is needed and I wish you

years.,

•

that

But I feel certain that

close of business March 31, 1950

U. S. Government Securities

want

pleasing

RKSOIJItlES

Hamp¬

Cash and Due from Banks

Thousand

as at

the

are

who will recommend and

persons

following stat—

and ex¬
emptions of the insurance depart-,

COUNTY

SUFFOLK

FOR

oj Condition

I be¬

step in the
right direction for American trus¬
a

TRUST COMPANY
Condensed Statement

STATE OF NEW HAMPSHIRE

rules,

COURT

PROBATE

DILLON

ute:22

ment

1948, the Probate Judges in

the

enacted

Laws

recently

nationwide

truly,

In 1919 the State of New

shire

prudently

not in violation

made and

that

arose

case

this sort of investment

Dear

that

hand in

MANUFACTURERS

Judge of^the Probate Court
for Suffolk County

and

drawn

FREDERICK

(s)

case was

their

for
and

giving

■I

First

judgment was affirmed. The
appealed again, this time

lower

securities

interest

keen

your

cretion.

be made the subject of

not

surcharge.

protracted period of

invest¬

fiduciary purchase

company

retention.

invest¬

matter, and that you had "a
in this quesition being put

plain, in its de¬

trustee there involved, nor

the

vestment
American

squarely raised in a significant up to the Judges, I feel that you
Ohio probate case, in the impor¬ are at liberty to quote
any por¬
tant county in which Cleveland tion of this letter in
your dis¬

for

the

wage a
the country for the enactment of
a statute which will
legitimize in¬

ported, for example, of the disposition of
probate and surrogate courts., to allow
guardians to invest moderate sized port¬
folios entirely in such shares.
There is,
of course,
a
particularly pressing need
for
this
sort
of participation where
a
guardian is charged with the retention
and investment of a relatively small leg¬
acy

in this

recently

been

industry has decided
campaign throughout

trust

ments.

for

tion

been

could

accurate predic¬
probable future.29

ground
Since

of the United

State

any

which

States

ad¬

was

have

23 Instances

authority
on the making or retention of in¬
as would war¬ vestments of this nature. T Quite to
on that score
the
contrary,
extensive
corre¬
alone.
The Judges reserve the
right, however, to apply the "pru¬ spondence with men active in the
dent man" rule in every case, and trust field leads me to believe that
the 'trustee will be held to the
probate and trust accounts are
same
rigid standard in the pur¬

of
part of a trustee
rant an objection
delegation

group

ment

well-seasoned

the law to

E. C. 3

York ClearingHouse Association • Member Federal Deposit

Insurance Corporation

the busi¬

THE

(1430)-'

Continued

from first

COMMERCIAL

work does not

.standard.

could not stand the shock of

that

work.

The
little

Deal,

but

it has

since

four

five million during the coming

increase

but

natural consequence

decade. This
of a growing

some of the soothsayers
end. Is such a growth, then, something
rare
and strange, never before experienced in this
or other country?
The answer is, of course, that it is

absurd to suppose that
many

such growth is without many,
precedents. Precisely comparable figures about

these

things covering

long period of time

are,

un¬

fortunately, not in existence, but estimates quite
:X curate enough for the purpose here in hand are

against

ac-

readily

rise of roughly 7 xk% expected

self

ten

well

em¬

to those who are

greater activity

or
discourage the man who initiates busi¬
enterprise and keeps its wheels turning.

The way to do that is the way that it has been
done

throughout our history—provide a fair field and
favor, and let the "drive" of the individual take
oyer from that points
no

politicians in 1900 might have worked them¬
into a sweat about what was going to happen
during the ensuing decade in which it was easy to see
that the labor force was going to expand.
Without any
doubt, they would have done so had they been indoctri¬
nated with "modern" notions as have those of today. Look¬
ing back after the event they would, however, have won¬
dered why they should have suffered so at the prospect—
although, being politicians, they would probably have
thought of claiming that only their efforts had prevented
the development of the dire things apparently in prospect
ten years earlier. But, in any event, the fact is that in
1910, unemployment was hardly more than a third what
it was at the turn of the century. And neither the New
the Fair Deal had

nor

been

ever

heard of at that

....

ary

unemployment did not remain

from 1900 to 1929

since

suggest,

the

station¬

the figures cited above would

number

of jobless

naturally

j i throughout these

years as in other years fluctuated
with the state of business, but no long-term upward
trend developed during the three decades in
question.

} Unemployment in 1940 was about double what it
j J was in 1930, and was considerably more than double
what

was

from first

1929, thanks to

the long

and

the

tificates
In

any

order of magnitude

explanation

obvious

end

1929.

enough.

! "benefit" of "planning" or of other New Deal

previous centuries) grown

paper

Leaving aside the mystery

as¬

pects of the dollar-is-a-dollar puz¬
zle, the obvious question arises:

Why do people accept a piece of
paper in lieu of "value received"?
totalitarian regime they have
other choice (except by escap¬

ing into barter deals).
Indeed, a
full-fledged
dictatorship
must
have

a money that is
"national,"
i.e., useless for all but domestic

Nor

the

Fair Deal

than proportionately to

was to
be expected that it would do so, and it is to be expected
that it will do so in the coming years and decades if given
the simple
opportunity that we have provided in the past.

The result of this continued growth is not only that more
j and more individuals have been taking part in the produc| tion of the good things of life, but that more and more

{

realm. Evident¬

it is true that this habit of viewing the
future welfare of the country
merely in terms of "job
opportunities" (that is job opportunities in the ordim

course,

sense), is

problem,. It
work is
man

a very, very
seems

superficial approach to the

rest

end in itself, that

the

some

to work and that work serves

assumption

The fact is, of course, that work is
merely

that

inner urge drives
his ultimate need.
a means

is, Americans have lost

their freedom of choice in matters

Yet, with all laws and regula¬
being as they are, no one
could force the American people
tions

"swallow" inconvertible paper
dollars if they did not want them.

That

the

the voluntary
public. It might
pick at random

point:

of the

consensus

instructive to

and

to question a thousand "men
the street" whether they think
there is any difference between
on

dollar

the

constituted,
before, and the

was

ly, to control his subjects the dic¬

tator has to have unlimited sway
over their pocketbooks.
And the

realize that at

reverse

true, too;

once

has full control

ernment

currency—once

can

gov¬

over

the

determine

convertible
France

paper

in
revolu¬

money

Earlier in this

have been tolerated by

British
would

either the

the American public. It

not

only have unleashed a
of unprecedented

crisis

financial

magnitude—a

the

run on

respec¬

tive central banks—but its conse¬

could not have been
rected for a long time.

quences

cor¬

By 1931-33, even business took
devaluation

without showing
sign of losing confidence in
the depreciated paper.
This was
not due merely to a depressiontime weakness of the public. What
the

any

seemingly

depression

permanent

Did People Reject Gold?

It would be
than

thousand who would

convertible

into

one

much

time it

one

gold and

was

now

not convertible either at home

abroad; and not
has

one

is
or

thousand

idea at all that this dif¬

any

all

highly significant

practical

and

purposes

shade of doubt, the pa¬

rational

stable value

this

dollar is as good as gold.
A
minority of the quasi-intelligentper

the ultimate stand¬

ard onto which to hold, and

naive

One

now?

tionalize

ignore
to

way

ra¬

that it is
the legal tender character of the

saying

that

dollars

paper

"value."

You

few

they

are

them

them
quite a

gives

may

use

also,

taxes;

pay

good to pay any private

debt incurred in dollars. But that
was the
case in
1910, too; why,
then; did grandpa insist on a gold

clause

bond

the

buy¬

was

ing? The legal tender character,
and
whatever economic
value
flows therefrom, was just as good
then as today.
Nay, better: there

incomparably

was

less

paper

floating around,

money

amount

government

the

and

bonds to

"back" the currency was

virtually
Nothing has happened
of money or in
the quality and
wisdom of the
government that would explain
and j u s t i f y the psychological
negligible.

functions

the

change about which we

ing.

are

talk¬

;

Evidently, we rely presently on

con¬

To, the general public,

sequences.

the

word

would

doing

government

dreamed

have

not

recently

And

ago.

the

that

generation

as a

goes

all,

for

most, Western people* (excepting

sia might even argue that paper the Latins). It is a voluntary re¬
the" great
Russia, Japan and Ger¬ :;is-better ^thm-gbld^)^ 'XXXX-XX liance on the authorities, mind
after World War I, in China
Try, on the other hand, to poll you; in this country, even such

during

World

War

and

other

instances.
A

Totalitarian

impose

State

has

the

"its

subjects
a
unit of currency which should
be
called
Nothing.
But
what

power

about

"free

the

"dead":

(or,

country" like ours?

for

the

Americans

same

that

matter, Europeans)
generation ago. Suppose we

would

have

whether

able

them

asked

1910

they preferred irredeem¬
to

currency

vertible

notes.

thousand

gold

and

con¬

Probably 999 out

Why should an American citizen
accept an apparently worthless

their

hands

nominal unit in payment for very

idea!

worth-while

ceived"? Witness the general prac¬
tice of hoarding gold, and the im¬

For

one

ters

free

goods

and

services?

thing, in monetary mat¬

paper

than

currency

Frenchman.

The

latter is

pleases, and on a perfectly free
market, except.that it is illegal to
export or import gold, while you
and I may Have to go to jail if we
commit

would

have

horror.

raised

The

very

countryXstays entirely portant role of the gold clause in
the
convertibility of its' long-term contracts and bonds.

permitted at least to buy and sell
gold bars and coins as much as he

any

contracts

rency

such crime.
gold

Nor

foreign

The

Monetary

freedom

are

enforceable in this country,

the

prohibition of
gold ownership and the elimina¬
tion

tracts

the

are

eously

perience
would be

As
a

gold

less

con¬

spontan¬

or
at
least
Otherwise, the sad ex¬

with

prohibition

liquor

duplicated.

nation,

have not "lost"

fundamental freedom

rendered
own

clause
or

accepted

tolerated.

and

volition.

use

we sur¬
it by our

—:

discarded
to

blame

Irving Fisher, Lord Keynes or

any

other money crank, on in¬
or
organized
pressure

very recently the civilized
world has been thinking in terms

dividual

racket

gold

(or silver).

nations of that

today

terms

The leading

same

world think

unit

which

does not

represent any "tangible"
commodity
value.
Ffom
the
golden calf we have progressed to
the paper calf.
,

This is
cur¬

Revolution

Until

personal

restricting

measures

Who would want to be "de¬

enjoys less freedom in this respect

all.

The

surprising to find

the

I for

con¬

culate within

) of the good things of life have been produced and provided
us

fact

old

invalidated.

say, in 1929 or
dollar as it is today.

can

into hard money
is suspended. As a matter of fact,
since 1933, the American citizen

clause

been

it permit any
other money than its own to cir¬
purposes.

after

Without

j the growth in population and the labor force. It
j

vertible into anything.

many

| interferences, business over the sweep of time has during
j the first half of this century (and, without doubt over
:

gold
cause

change from gold-to-paper-mindedness? Why did we use to think
terms of a universally marketable
commodity
of
a
comparatively

"redeems"another. Which amounts of monetary standard.
to saying that a dollar is
exactly
Capitulation of the Cold Dollar
one
dollar—that it is not con¬

tion,

piece

one

cold

gold

has

tracts

without

Explanation Is Simple
The

case,

the

and

quisition of total power. The road
to dictatorship was paved with in-

of that conflict unemployment has been running in

the

two $5

for

intervened, and for much of the time since

another $10 note, or
notes, or ten $1 cer¬
(which certify nothing).

same

into

the groundwork is laid for the ac¬

same

the

century, to say nothing of the pre¬
vious, no such manipulation would

began

Our Paper-ized Economy

deep

depression of the 1930's. Meanwhile, World War II
the

serious resistance.

What

ference has

■

their hats,

Reducing

much excitement and met with

page

arbitrarily the kind
of money
people must use or go without—

)

price out of

speak.

content of the dollar did not

Why

Continued

Similarly, with the succeeding decades. Unem¬
ployment in 1920 and again in 1929 was about what it
was in 1910,
although by 1930 it had risen considerably due to the depression which had by that time set
in. Of course,

gold
to

to play around with
the dollar, drawing

feature of the financial system.

value

the

Messrs.

Morgenthau were
free hand to confiscate all

Now

Now the

Deal

the

States,

and

phenomenon became

selves up

time!

United

the gold and

does not hinder
ness

the

given

in all

in business for him¬

man

de¬

once.

these

working for others. Be¬
the part of those who work for
themselves will bring more production and offer
greater
opportunities to those who prefer to work as employees,
the important task is that of
creating an atmosphere which
cause

years,

Then and

being said refer to the

generally as¬
pound sterling

was

the

It would lose its credit

Roosevelt
as

gold

in the Sum¬

Yet, the British public
scrapping of the tradi¬
tional gold standard as calmly as
if it had been a perfectly normal
procedure.
Two years later, in

much is

the "labor force" rose
more than 30% from
1900 to 1910; some 10% from
f 1910 to 1920; around 17% from 1920 to 1930; and
;
roughly 11% from 1930 to 1940. The increase from
1940 to 1950 was fully 10%.
the

took

following
is more production of the things people really
want and are
willing to work for. If this is true, then
obviously the proper policy for the future is the sort of
policy which will result, first, in the production of the
right goods, and, second, in an increase in the output per
capita. In this connection, let it not be forgotten that
these employment and
unemployment figures about which

population, but it frightens

during

valuation.

repeatedly repudiated.

What is needed in the next decade

of the day no

available. As

appeared to

decades

in what is known as the "labor
work or ready to work) of

growth

that

the

from

As late

1931, it

sumed

campaigning of the New

been

mer

What Is Wanted

(that is people at

idea

employment derives in part from some such
assumptions, whether the fact is understood or not.

thoughtful citizen, however, will wish to look
closely at the facts. Current estimates

suggest a

such

What is not realized is the fact that this eternal

phasis

-force"

Some

departure

can

underlie much of the earlier

the story goes.

is illustrated by the Anglo-Ameri¬

flows from

See
We

only an expanding economy can absorb the workers
coming into the market; or at least only it can do so with¬
out a spread-the-work movement which in the end results
inevitably in a similar spreading of the limited fruits of
labor and thus in a reduction in the plane of living. And,
so

Thursday, April 6, 1950

bring more of the good
point in more work. The
task would then be merely a better distribution of the
work which must be done and of the product which

lation

CHRONICLE

things of life, then there is

end.

page

FINANCIAL

ers.

gets away with a huge
subsidy, that is a matter of politi¬
cal
horse-trading.
The
driving:
force

behind

paper

money

is not

thejpaper manufacturers. Its rule
is a^matter of mass psychology;
the
politicians take advantage of
that,

^while

the

intelligentsia—

the

ideology of brain trust¬

itself ""Under
the sway of mob
mentality—provides the rationali-

Its

revolutionary

zattMSi.and

mentality,
or

change in the public's
not just in textbooks

groups and crackpots. If the silver

character

pours

its

own

ideo-

Volume

logical fuel

THE

Number 4896

171

the fire

of mone¬

tural

pattern

the

COMMERCIAL

Occident.

tary demoralization,

Separation of physical force

State)

Incidentally,

the
idea
that
is what the omnipotent and

money

omniscient

first

money

the

State

for

enunciated

was

advocates

signats.

declares

(of

was

French

the

as-

course)

German

professor, G. F. Knapp,
Theory of Money"
cf 1906 gave it the "scientific" for¬
whose

"State

mulation,

product of the
istrative
its

Knapp, money

system

legal

legal and admin¬
(rechtsordnung),

character:

tender

Liberal, Capitalistic
abandoning
gold,
subtle
and
tion

handed to

American

leaves

wield
That

door

ultimately

checks

you

may

techniques,

outlays by the Securities
Exchange Commission and the

because

they
The gold standard

can

with

the

Commission

and

expendi¬ ing to the Department of Com¬
follows: man¬ merce. The data, collected during
ufacturing down to $6.7 billion the first quarter of this year, in¬
from $7.2 billion; mining $650 mil¬
cluded actual plant and equipment
lion from $740 million; railroads
expenditures for the fourth quar¬
$930 - million from $1.4
billion;
other transportation $350 million ter of 1949 and anticipated expen¬
from $520 million; electric and gas ditures for the first two quarters
utilities $2.9 billion from $3.1 bil¬
of
1950 and the year 1950.
All
with

compared

groups,

Department of Commerce.
outlays

are

Capital

expected to total $16.1

compared with

billion

herent, vested pressures much too

lion in the peak year

1950,

$18.1 billion in 1949 and $19.2 bil¬

1948.

Expenditures in the first half of
than holding and delaying action 1950 are
expected to fall about 8%
pass it on.
was
lion; and commercial, communica¬
given -the
alliance
between below the first half of 1949.
A
a
sheer
accident;
the
British
tion and other industries $4.5 bil¬
political forces and the "ivory larger decline is expected for the
adopted it in the 18th Century
lion from $5.1 billion.
tower
torchbearers
of
a
new
second half of this year, with an¬
without knowing what they did.
Actual expenditures of $18.1 bil¬
Utopia,"
quoting
Joseph
Stagg ticipated outlays about 14% below
The rest of the world followed
lion for 1949 were very near the
Lawrence.
the corresponding period of 1949.
in the 19th "not because gold was
The actual decline in the second $18.3 billion of anticipated expen¬
gold, but because England was
Evils of Paper*Standard
ditures for the year estimated in
half of this year, on the basis of
England."
this survey early in 1949.
Actual
Gold
is
international
money; past experience, may be smaller
paper
is
"national"—more
pre¬ than indicated since there is some outlays in theVfourth quarter of
Nationalizing Money
1949 and those now estimated for
cisely, anti-international. The one tendency for companies to under¬
No doubt,
the change in the
the
first
quarter of
1950 were
compels
adjusting
prices
and estimate their plant and equip¬
psychological climate toward
thereby production to the require¬ ment expenditures over the longer higher than had been initially an¬
money—from gold to paper—was
ticipated. While the upward revi¬
ments of world-wide competition. term.
J''^'77^7^.'
a
gradual process. World. War I
sion in the fourth quarter is due
The other, by its very nature, fos¬
Each
of
the
and its aftermath gave the deci¬
major
industry
largely to accounting adjustments,
ters the chiseling practices which
sive impetus; the Great Depres¬
groups plans lower capital outlays
the revision for the first quarter of
vitiate the price, wage and pro¬ this
sion was the visible turning point.
year.
The largest percentage
duction structure, bringing about decline in
expenditures for 1950 this year may indicate an in¬
Ever since, the process is widen¬
those artificially supported mar¬ is
anticipated
by
railroad and creased confidence in the business
ing and deepening in a self-in¬
kets familiar to the current scene, other transportation companies,
duced fashion. The shift in masssituation.
.77;and generating the capital malal- which expect to spend 32% less
psychology opened up the gates
Plant construction in 1949 made
locations
which eventually
will than last year. On the other hand,
for Monetary
Management that
bury the whole House of Paper electric and gas and manufactur¬ up about 30% of total expendi¬
in turn carries it further, estab¬
under the weight of its miscon¬
lishes
and
hardens
the
new
people take

tered

tures in 1949, are as

reality, the democratic process is
much
too
clumsy, and1 its in¬
strong, to permit as a rule

ing companies plan capital outlays

capital

democratic

think.

will

1950

and

for

open

The basic data for the above es¬
timates were derived from reports
submitted by corporations regis¬

survey.

only 6% and 7%, respectively, be¬ large sample of unregistered man¬
1949.
Expenditures antici¬ ufacturing companies, unincorpo¬
equipment than in 1949, ac¬ low
cording to the latest survey of pated in 1950 for these industry rated as well as corporate, report¬

been

the

business

the proportion is

1950.

and

has

who already

change in

spend about 11% less on new plant

Government.

men

power

plans lower capital outlays, accord¬

ing to SEC-Commerce Department

produc¬

over

little

expected in

tures for plant and equipment and

Expenditures to Decline 11%

Each major industry group

Society. By
a
uniquely

distribution

and

the

rule

(1431)

was

machinery of uncontrolled

arbitrary

still

nothing but a name, de¬
"historically." What matters

its

;

and

unit

fined

economic power
unwritten
organic
law

the

Plant

(the

CHRONICLE

FINANCIAL

—

figures are estimates for all non-

agricultural industry based on the
sample data.

Morelaitsf & Go. Adds
Neberf to Staff
MICH. —Louis

DETROIT,

Moreland & Co., Penobscot Build¬

ing, members of the Detroit Stock
Exchange, in the trading depart¬
He

ment.

was

previously

Smith, Hague & Co.
Robert

Snell,

•

outlook. The longer

the

this lasts, the

One

specific

product

in which the fundamental instru¬

System—is

ment of all economic valuation is

the

new

way

fiat of authority in power.

mere

which

—

abortive

the

Woods institutions

combine

single

virtual

the

international

the

vate

into

capital

ferred to the retail department.

cessation
of

than

New York Trust

pri¬

capital

followed by the nationalization of

flight). That this, too, is the out¬
come of a new cultural pattern is

the capital market: Cheap

pointed out in

The

nationalization

"eternity;
Small

the

entire

thinking

but

printed

principle of its

name,

quantitative

sociologist's
fiber

lack

the

prime

at will, with
thing that is

meate the

why

balanced

the

should

attachment to a
and costly,

scarce

the

credit

de-throning of

"nature"

monetary
tion of

system)

gold

basis

(i.e.,

is the

the

separa¬

major part of the credit

the

and

standards)

vyorld economy—under

leadership.

delve

pessimism.

fact, this country still is

infinitely

off

better

its

basic

spects

longer by a costly and therefore
value-creating process of mining,
so
credit need not be hampered

by limitations imposed by selfrestraining
economic
processes.
With
the
sacrifice of
the
gold
principle of the currency, the oldfashioned liquidity rule of credit
goes overboard.
More precisely:
true liquidity in terms of under¬
lying commercial self-reproduc¬
ing processes is replaced by a
paper concept of "shiftability" in
terms of

legal tender and govern¬

than

world.

vicious

and

reverse

the

is accidental
But

individual do about

the

All that

it?

"historical."

than

can

of the
infinitely

rest
an

which

trend

rather

the

it is in

position

stronger

what

And

be said this time,

can

briefly, is that:
is mandatory

endeavor

that

to understand

should

fully this

trend with its

and
institutional
economic, social, po¬

litical,

ethical

psychological
and

implications

to educate others to a proper

and

fare State.

the restoration of the free owner¬

money

Institutionally,

ship of gold;

The Cultural Pattern

Forcibly, the foregoing outline
an
analysis had to be very

citizens,

centrate

the

toward

ought to con-

political

our

overriding

one

efforts

issue,

sketchy. The esential point is that
paper-izing of the monetary

namely, the restoration of think¬
ing in gold with the ultimate ob¬

is due primarily to psy¬
chological forces—to the subor¬
dination of the individual quest
for
a
standard
(and
store)
of

jective

value to the

interests, we have to learn to re¬
alize that paper liquidity is at the

the

system

thority.

judgment of the au¬

The

same

age

that

has

produced the broadest expansion
of

democratic

freedoms

also

has

unprecedented
surrender of the private "treasure"
brought

^to

about,

the powers that
The

"invisible"

of money is the

eruptive symptom

profound change in the cul¬

the

restoration of the

automatic gold coin standard;
individuals

take care of

our

who

own

have

and trusted

of political ebbs and flows
and therefore, in itself, is a very
dubious anchor for economic se¬
mercy

(

l"Restoring
Bases

1S50.

Sachs,

Science,

The

Columbia

Academy

University,

$153,162,771.41

Cash and Due from Banks

Root, Ballantine, Harlan,

Bushby & Palmer

JOHN E. B1ERWIRTH
President. National Distillers
Products Corporation
STEPHEN C. CLARK
The Clark Estates, Inc.
WILLIAM

United States Government

253,899,261.28

Obligations....

1,650,000.00

Stock of Federal Reserve Bank

9,740,937.59

Other Bonds and Securities

F. CUTLER

Vice President

American Brake Shoe Company
RALPH S. DAMON
President

244,608,581.19

Loans and Discounts.

2,978,995.81 '

Customers'Liability for Acceptances

Transcontinental & Western
Air, Inc.

Interest Receivable and Other Assets

WILLIAM

2,575,205.10

FRANCIS B. DAVIS, Jr.
New York

$668,615,752.38

HALE HARKNESS

New York

HORACE HAVEMEYER, Jr.
President

LIABILITIES

Co.

The National Sugar Refining
B. BREWSTER

77*%

JENNINGS

Capital

$15,000,000.00

Surplus

40,000,000.00

ADRIAN

Undivided Profits.......

12,138,352.33

CHARLES S. McVEIGH

General Reserve

J. SPENCER LOVE
Chairman of the Board
Burlington Mills Corporations
M. MASSIE
Executive Vice President

$ 67,138,352.33
1,631,231.82

Morris & McVeigh

Dividend

CHARLES J. NOURSE
Winthrop, Stimson, Putnam
&

Roberts

600,000.00

Payable April 3, 1950....
^

Acceptances

RICHARD K. PAYNTER, Jr.
Financial Vice President
New York Life

2,997,625.13

•

3,504,717.74

Accrued Taxes and Other Liabilities

Insurance Company

SETON PORTER
Chairman of the Board, National
Distillers Products Corporation
.

Deposits

......

592,743,825.36
$668,615,752.38

ROBERT C. REAM
Chairman of the Board
American Re-Insurance Co.

MORRIS SAYKE
President

United States Government
ment are

;

Corn Products Refining

Co.

CHARLES J. STEWART

pledged

obligations carried at $26,832,875.42 in the above state¬
United States Government deposits of $19,184,218.82
deposits and for other purposes required by law.

to secure

and other public and trust
Loans and Discounts are

President

Stillman, Maynard & Co.

the Economic-C u I t u r a 1
Investment,"

American Foreign

Alexander

P-litical

ASSETS 7

A. BALLANTINE

stated after deduction of $3,959,104.23 in Reserve for
formerly carried with General Reserve under the cap¬

Bad Debts. This reserve was

WALTER N. STILLMAN

curity.

be.
nationalization

ARTHUR

Socony.-Vacuum Oil Co., Inc.

manipulation—is the final
outcome, releasing the somethingfor-nothing philosophy, the Wel¬

promises. Utopia — free,
unfetted,
unhibited,
arbitrary

H. ANTHONY

President

understanding;

the most im¬
portant educational devices are:
a
balanced—nay, overbalanced—
national budget (by way of re¬
duced Federal expenditures) and

ment

CONDITION ■'? ^

March 31, 1950

New York

Colt's Manufacturing Company

is not limited any

CONDENSED STATEMENT OF

Chairman of the Board

monetary position as in other re¬

money

DIRECTORS
MALCOLM P. ALDRICH

GRAHAM

Conclusion

matter of

AVENUE

(or

the

The purpose of the foregoing is
not

1002 MADISON

•

are

structure from real market values.

legal

TEN ROCKEFELLER PLAZA

change, the effects of which per¬
our

BROADWAY

MADISON AVENUE AND 40TH STREET

new

denominators

dif¬

any

reference;

society,

such

100

learned

monetary ethics

ferent in nature? The consequence
of

the

—

frame

has

moral

standards

"Cultural

the

deteriorated

what

budget —
becomes an irrelevant, antiquated
concept. If currency can be created

control

Sachs.1

provides

pattern"

Company

penetrating essay

Alexander

revolution. If money

nothing

Money

the

that

economic

and

undergoes

money

wonder

financial

7y77

Paper

flow

(other

The

Bretton

supp®sed

were

;

VANDERBILT WEBB
Patterson. Belknap & Webb

tion "Reserves".

•

trading desk, has been trans¬

global system of Paper Standards

takes

—

with

formerly

the

of
economic
thinking for granted.
Unwittingly, and step by step, it
adjusts itself to a way of life

ness

„

the

: 7

ceptions.

public—including busi¬

Hebert has become associated with

»•/

Member Pee/erat Deposit Insurance Corporation

"* THE COMMERCIAL & FINANCIAL CHRONICLE

(1432)

CnvfiniiPcl 1mm

weaker than it was a year ago or tions at the end of the war were

nnap

Biidseye View oi
41

extend the scope of their ac- marked for
tivities, and may finance up to a will
almost
billion dollars of new foreign in- Most of the
We

may also expect
investments abroad
will again increase.
It would not
be surprising to me if at least
$500,000,000 would be spent for

private

ventures abroad, or for addi-

new

tional

foreign financing by private
corporations or individuals.
But
these private investments will be
in

concentrated

few

areas

TfAffA

WW Villi

may

vestments.

Wnrlri

VUIlvllft

:•

much worse.

years ago.

employment and
business recession,

preventing
a
are much more
pressing now than they were be-y
•,/ ;•
/fore.
Not only do they occupy
off-shore purchases more of our time, but they influcompletely vanish, ence Congress and they influence
decline, in fact, will our thinking about foreign
category, in order to problems. ECA, for example, is
1

WIf

■

117 YAH f

■

that

effects on exports from the United
And, despite all of* States; but it is a basic world
Let me explain this last remark, our
dollar
aid,
they are still trend that deserves consideration.
First of all, the domestic prob- worse in most countries than they
lems that we have, of maintaining are in the United States.
Conclusions
two

llfftilv

come in this
minimize the

increase in United States imports,
properly, they sometimes lead to
even the most liberal allowgreat successes. Any student of
ance is small.
We probably have
history is bound to be impressed
not fully felt the effects of the with the
way in which economics
devaluation of sterling and other and
politics helped each other out,
foreign currencies; but I still do as
practiced by the British during
not believe that there will be a
their great period of expansion.
big increase in imports. Too many of course, looking a little farther
domestic industries
are
already along in British history, the stubut

abput

program, emphasis shifted to Eu-

ropean integration.
This was an
dent will also be impressed with admission that Europe's economic
talking the extent to which the British base had been
badly damaged
subsidy to help out indus- political position was weakened
during the war and that the orig-

? experience a dislocation, when her commercial expansion inal
a
to obtain
drastic re-

Efforts
auction

was

American

tariffs

will

lll^tReJ c?w~
tneir

imhort hnrrier®
We

enneernAH

are

w* ioc

fh<Tinm*term^
trnver*v fhnrl with
outcome

The Hav

^
the

nmhoMo

tioniem
hind

thiSr

that

reaii™fhnf

nessmen

onlv human nature fhnf

well

law

heJn

management

object when

iviH11ai

and this

imnort^cut

into their

business

own
*

The main obstacle

drastic

reduction of importbarrier*isnf

warse.

th^S^Sca^t

be taken by one country, or by a
fewcountries
PAimfri^

countries
measures

alone

while

insist

for their

while other

own

protective
industries.

visualize additional

even

Therefore

dif-

Administration

our

followed by a cycle of eco-

program
allowance

of
for

made

recovery

this.

Western

nomic retreat and retrenchment.

Europe had lost its Eastern Euro-

1 am very much afraid that the
United States has been somewhat
naiye in some of its policies. A
Part
this comes from our geographical isolation from events in
Europe and Asia. We know what
going on if we stop to think, or
read the information that is avail-

pean market.

Many countries in
Western Europe had lost valuable
prewar sources of overseas income, much of which had been
paid to them in dollars. Something had to replace these losses,
and integration was supposed to

be the solution.
But integration turned out to be
difficult, if not impossible. Loss
of Eastern markets and overseas
income sharpened the economic
rivalries between Western Euroto beheve that this pean countries. Governments in
last Worl<i War would settle basic many countries were unstable, inProblems, that an era of peace flationary trends had not been
c0"ld b,e guaranteed by an inter- stemmed, and it was not possible

ev" able* But

T^it

port Withmit imhortinff

industri^

Lvcl"*

mncf

don't actually see it
S°mg on, or feel it going on, to the
same extent as most foreigners do.
This country usually has remarkably good intentions. We so
we

the

same

time, Congress is

pressure to economize,
is disturbed by the
rising trend of

unemployment, and

is concerned
about the effects that such
imports
are having in
such industries as
textiles, watches, oil, etc.
Dollar availability in 1950 will

be less than last
year.
show an even bigger

SLiifirir,* wf.--BO■ .mucll -wailte<l:',XO
much wanted to
^

that

be|ieVe

r»mcnerifv

peace^ould

and

?UDOiv n/u
supply of U.

connections

that

Our exports

Area Dislocations

Quite
lieve

frankly,

that

however,

exports

some

dollars would

ere-

realistic

and

tvi
J*off

No}v we hear a great dealmore
less

about integration and much

France and in Great Britain,

sia.

look back

cold

war

has

will

been

see

success

must

ourselves

Europe.
now
begin

In
to

we were
on
its

fact, we
question

conflict.
_

western

0Uw-*u
With
going

Hemisphere

countries

If inner politics in the United
States affect their .foreign policies, then certainly the same thing
too much can be expected abroad.
And this

foresight to conclude that the real is indeed the case.
^nited States.
test of our position in Europe still
In fact, the situation there is
the number of ECA dollars lies
ahead, and that the position more extreme than it is here,
down, the
amount
ear- from which
we must meet
it, is simply because economic condi-

It is

plain that

these problems

are
complex, difficult and not
subject
to -immediate solution.
They can only be solved by long

strenuous

and

efforts,

and

great patience and understanding
on the part of the people involved,

But populations affected by
living costs are not likely
patient and understanding.
it is almost impossible for

vidual

governments

rising
to

Thus
inditake an

have been worse.
Both parties
recognize that new elections will
have to take place shortly, probably within a year. The present
government will not be able to
follow any strong and consistent
line of action. Every one knows
that it is acting as a caretaker,

and that continuity of policy cannot be expected. The situation in
France is much the same.
In practical terms, the Labor
Party in England will probably
receive Conservative support in
relation to the internal budget
and in relation to trade controls,
In fact, the real differences between the two parties did not relate to foreign trade, or to developments that will affect American exporters. They related more
to domestic problems, specifically
nationalization. And even on this
subject, the Conservatives did not
propose to turn back the clock,

fftnnw

jmnnrtant

these

trend*

trv

fnrPcPp them

...

thin^

and

Another development that de?Jrvel y°ur attention, even
though ;,you may be able to do
nothing about it as individuals, is
,e Problem of many foreigners
jyj1? want to bu5[ *ron* the United
States, but who have to sell cornmodities before they can get the
dollars to spend,
There should be some sort of a
clearing-house which would bringtogether foreign and United States
businessmen in a practical way.
Too frequently the American who

wants to sell abroad is not able
to import.
If he could temporarily associate himself with some
other American who was importing, he could consummate his foreign sale.
is there any

early prospect that

this confused and disturbing for-

eign

situation—and I speak in
political and economic
sense—will clear up?
I can see
nothing abroad to make me feel
optimistic. And I can see nothing
in Washington to make me feel
optimistic.
The State Department is in hot water, which makes
both

the

formation

conduct

and

foreign policy even more difficult
than it usually is. At the moment,
i fail to see well-developed programs.
Rather, there is a tendenc^ to wait and see what will be
proposed by Great Britain, or by
Argentina, or by this or that other
country; or to improvise when
conditions make

some

action

un-

me close on an
The situation
T

Let
„

„

note

-t*

O eofthe sources of supplynges
lessdj^atic c
for

has affected

trend has by

ended. In

np means

scribed here

fact, speaking from a political

comfor^ng
.

can

have

dfv

encouraging.

nhvionslv

intelligent

optimistic

hardly be called

and

calls

fore-

for

well-informed,

and who does have

foresight,

wili

development is the na\
tionalist thinking in most coun- ine SP°X» ana wno nave sumcienv
tries. All of them want more in- daring,
dustry. Many of them cannot fi\
"
"
'
m
nance a very rapid industrializaW||||'|H| nfmSAIt JOIIIS
tion and at the moment, at least, «lllHI"! IIWBwll Willv,
dramatic

will

not

have

much

II4uam TauimcamaI

getting
United States backing.
The fact remains, however, that
machinery is being shipped over-

IIC ilalBIl I UvVllSCIlfl

success

•

PHILADELPHIA, PA.—William

the time, and that this to H. Hobson, Jr., formerly a Viceextent is providing new President of Blair Rollins & Co..

seas all
_

Inner Politics Abroad

purchases.
European whether or not it has been as suecountries had dollar help in fi- cessful in
Europe as we believed,
nancmg
their
purchases
from I think it does not take
-

they do in the United States. But
manipulation of currency

any

congratulating

?
a substantial Paft °f the
dollars was earmarked for
shore

may be so immersed in
these details that he may temporarily miss some of the basic
trends and developments. Let me

f{Jow a much sharper drop just about the time when

himself

than

extent

sian initiative, not from our own. she had before.
In addition to
We will see that the "Truman trade opportunities, which most of
Doctrine," which had the frank these countries need, she can
I be- aim of containing Russia, had to offer such important intangibles
areas
be abandoned in the Far East at as neutrality in case of another

than the total.

greater

Sources of Supply
.

avoided if another war broke out,
and they very naturally do not
progress for a long time. We will like this prospect.
see that the cool periods and the
This, of course, gives Russia a
grow- hot periods have come from Rus- greater
bargaining power than

much

would s be necessary if be ng.
wa
to be accom-

tvt

mg competition in export markets,
t\j

foreign trade.
On the contrary,
I think perhaps that the exporter

viewpoint, any uncertainties about be
j^erally rewarded even if it
some of our other allies will pron- ?e
™aroro, evoa
in^. They have to be recognized more independently.
ably lend encouragement to a fur- ^at tne expense or ot
for what they are and dealt with
j do not mean that these coun- ther strengthening of the econ- ar!, less wei1
™
accordingly.
•
tries would rather do business omy in Germany and Japan; and
The very need of many counThe foreign political trend is not with Russia than with the United this, of course, will require a big- tries
to
prepare
lor
new
favorable to the United States po- States, or that they trust Russia ger outlet for German and Jap- emergencies stimulates moves and
sition and it is .not favorable to and distrust the United States. anese exports on world markets movements which often mean
the United States exporter.
But it is hard to convince them and in the United States.
highly
profitable
business
for
Take the controversy with Rus- that Russian occupation could be
Another fundamental but less those who are alert who are on

decline, since that the

integration
follow plished

sufficient

S. collars w°uld ere

few countries
may try to build
up their gold and dollar reserves,
These are plain signs of the
a

They also have problems

of external trade./; Currency
values enter in the trade question

„cSSt"Sf and0 restric.-. but merely to stop it for the time avoidable.

.will find '"itself.. in"' a - very'
difficult{wfd-headedi Furthemore, I don't there was previously in Scanposition as the ITO Charter is believe that I have ever seen any dinavia, to hew less closely to the
discussed.
problems solved by wishful think- United States line, and to act
feeling the

flation.

jectives, just as they are in other economically sound line of action
fields.
First concern of the without causing their own downMarshall Program was European fall.
recovery.
This was necessary, we
The position in Great Britain is
believed, in order to insure peace the latest illustration of this diffiand to strengthen potential allies, culty. The outcome of the elecDuring the second stage of the tions, in many respects, could not

jeelmg the damaging effects.. Even
Administration

These countries in many cases
I have not tried to give you a
still have problems of internal in- lot of details about exports and

decline in direct being trimmed down, not because values also affects the internal. sum up
briefly:
spending by ECA countries in the the foreign need for dollars has situation.
There is no earlv brosneet that
United States.
been overcome, but because we
The internal inflation, in turn,,
forejgn trade will beffin aea in to
Those of you who do business in are beginning to think differently affects the trade position as well
m0Ve in a more normal manner
Latin America will be badly af- about the dollars spent at home as the stability of the government.
ImDOrt
exDOrt and
currenev
refected by this trend. The outlook and the dollars spent abroad.
To improve the trade balance it strictions
as vou
know
are
both
for exports to that area is exceedSecondly, we are not in as se- is necessary to increase exports, severe
' d gpnprai
Th Z "
ingiy difficult, and many Latin cure a position with our potential which calls for lower prices. But b
chan£?es
nf course
hut
these
American countries will experi- Western
European allies.
The internal
inflation
creates
labor
m
trelieve the nresent situ
ence
new
economic and political cold war has made an impression unrest
and
irresistible demands
ti
thpv wm rnerelv mike it
crises. We will probably see fur- abroad, perhaps more so than at for higher wages.
little'different from time to time

countries, mainly in Canada, Central America, and Southeast Asia.
Only small amounts of private ther changes in governments in home.
The average American,
capital will go to Western Europe. Latin America.
Any hope that not too badly off and busy with
A few large new investments will
trade or currency restrictions will his own affairs, can sometimes
be made in the Middle East.
generally be eased, seems to be shut his eyes to the risks and
Thus those countries which are
utterly unrealistic.
dangers of another war. But the
in most urgent need of dollars will
European sees war clouds closer
have to depend on exports and
Political Trends
hand geographically if not in
"services" as their chief source of
Politics and economics go hand time, and is beginning to think
supply. This applies especially to jn hand, perhaps more in the ex- more about a
position of indeXJreat Britain, France, Holland,
port trades than they do in do- pendence or neutrality.
Italy and also to Argentina.
mestic business.
These changes are traced out in
Most forecasters allow for some
when
the two are combined the shifting emphasis on ECA ob-

th0 '

Thursday, April 6, 1950

some

sources

items.

supply

for

Whole

finished

plants, too old or
too backward to be competitive in
the
United
States,
have
been
packed up and shipped to areas
where
cheap labor will again
make them productive.
~
I do not say that this development will have early or important
.

;
P.
»
as Decom® associated with De Haven & Town-

send, Crouter & Bodine, Packard
Building
v

c+'
;

members
.

17v

the
:

New

Excnange, as man-

a&er of the firm s municipal bond
department.

Volume

171

Number 4896

COMMERCIAL

THE

FINANCIAL CHRONICLE

(1433) ; 33

;

iated with holding companies and
to date we have received approx¬

imately 4,500 replies with ques¬
tionnaires'still coming in," Mr.
Harding said. "This represents a
response of about 37^%, an un¬
usually high figure, and every
State of the Union, as well as the
District of Columbia and Alaska,
is represented.
Better than 99%
of all the replies are affirmative
as to all four questions.

Regulation of Bank Holding Cos.,

Independent Bankers Ass'n Reports

By OWEN ELY

Pacific Gas & Electric
Pacific

Gas

Electric

has

Early replies to questionnaire distributed by Far West bankers,
endorsement of enactment of legislative curbs
in public interest.

indicate strong

been

selling recently around 32,
while other important utility $2 dividend-payers such as Consum¬
ers
Power, Ohio Edison, Southern California Edison, Carolina
Power & Light, and Dayton Power & Light were quoted between
33 and 35 V2.
Why this differential? The answer seems to be that
Pacific Gas is now a "marginal" dividend
payer—i.e., earnings do
not

provide much marginal safety for the dividend. The same is
true, of course, of Boston Edison, but that company has a much
larger common stock equity base—about 60% compared with 26%
for Pacific Gas (excluding intangibles).

throughout the

Bankers

according
the

mail

has paid dividends on the common stock in each year since
1911 with the exception of 1914 and 1918, and the present $2 rate
has been paid since 1937.
Many valuable subscription rights were
given in the period 1926-31 and again in 1947-50. All other sub¬
scription offerings were priced at par (with one exception in 1929)
until this year, when a price of $30 (vs. $25 par) was fixed for
1,656,156 common shares. The shares were offered to stockholders
of record March 14 on a l-for-5 basis, with rights expiring April 5.
The issue was underwritten by a syndicate headed by Blyth &
Co. on a negotiated basis.
The new stock brings the total out¬
standing to 9,936,936 shares.
v",...
v
Y.,,„

stepped up

were

engaged in the heaviest construction program
electric-gas utility company.
Expenditures
from $44 million in 1946 to $100 million in 1947,

$158 million in 1948 and $192 million in 1949; 1950-51 expenditures
will average

about $150 million annually,

it is estimated.
Thus
the company will have spent nearly $800 million by the end of
1951, as compared with a net plant investment of only about $647
million at the end of 1945.
Net plant account is now close to the
billion-dollar level.

■;

:Y;

-vYJ'v''

The 1949 earnings were after inclusion of
credits—$4,411,889 interest charged to construction, and
shares).

"average"

special

$1,719,857 credit arising from adjustment of prior years' special
charges for Federal tax provision; omission of these credits would
have reduced share earnings by perhaps 74c a share.
Interest

poll

ciation

Twelfth

threat

the

Fed¬

any

This

District.

nity

commu¬

owned
Harry J. Harding
and
operated
banks of Arizona, California,
-

Idaho, Nevada, Oregon, Utah and

Washington, has been actively ad¬
vocating
Federal
regulation
of
bank holding company operations
for a number of years.
Its Presi¬
dent, Harry J. Harding, President,
First National Bank of Pleasanton,

of the bankers who
of the pending
Holding
Company
Bill

was one

testified
Bank

(S-2318),
Banking
mittee

favor

the

at
and

recent

Senate

Subcom¬

Currency

hearing in Washington.
The

that the

company

will be
how the
bankers from their area, as well
as
over
the nation as a whole,
that members of Congress

bank

Questionnaire

knowing

this

the

super¬

Tripp & Co. Open
Branch in

Do you believe that bank

Bradenton

BRADENTON, FLA.—Tripp &
Co. Inc., announce the opening of

holding companies should be pro¬
hibited from controlling and oper¬

Florida office in Bradenton un¬

ating enterprises engaged in nonbanking business activities?
"(4) Do you agree with the Sec¬

management of Douglas
business with
institutional
and
individual in¬
the

der

M. Bell to transact a

retary of the Treasury, the Board
of Governors of the Federal Re¬
serve

subject, which is vital
preservation of a sound
banking economy."

feel

vision, is permitted to dominate
a
major portion of the area's
banking resources and facilities?
"(3)

to file these question¬

propose

interested

area

regulation

adequate

organization,
representing
the

substantial

the poll is completed,

by States with the Senate
Banking and Currency Committee
for its consideration.
We believe

holding company, by continuing
to
expand and operate without

Reserve

eral

new

bankers will
Harding continued

Mr.

soon

naires

Do you believe there is a
to the sound economy of

"(2)

vestors

tax-free

state, munic¬

ipal and public revenue bonds and

System, the Comptroller of

mutual fund

shares.

Deposit

the Currency, the Federal

Corporation, the Na¬
tional Association of Supervisors
Insurance

banking

State

and

Association

Bankers

Henry Gurney Dead

American

the

Banks,

of, State

many

that

associations

••

25.

Philadelphia, ..died March
44.; Prior to his asso¬

was

with; Bioren

Mr.

Co.,

the Trading Desk
of Herbert H. Blizzard & Co. for
Gurney

affil¬

sent out to banks not

ciation

questionnaires

12,000

o m e

were

Bioren

Street,

bank
holding company
legislation is desirable in the pub¬

Gurney, Jr., cashier
Co., 1508 Walnut

Henry

proper

lic interest?"

Seeking to determine the atti¬

assumes

plant account under construction;

new

of other banks?

offices

Bankers Asso¬

tude of bankers both on the need

"As

many

reply,"

by taking over and operating the

can

construction usually

earn

that

branches or

establishment of

Independent
the

Pacific Gas
does explain whether it is following this practice, but the inclusion
of this credit may be warraflTeffllyen if it discounts the future
to some extent. However, the :otoir credit would seem to belong
in profit and loss account, since it reflects an adjustment of prior
years' transactions.
On this basis earnings would have been re¬
duced by about 21c to $1.85.
^ f

charged

."Naturally, we are highly de¬
lighted with the high return re¬
ceived to date and are hopeful

holding company should be sub¬
ject to the same regulations as a
bank regarding the expansion of
its banking offices, either by the

being taken

Calif.,

Y-'/vV Share earnings have not kept pace with this rapid growth,
however.
In 194-3 share earnings were $2.72, in 1947 $2.45, in 1948
$2.46 and last year only $2.06 (based on outstanding rather than

legislation and the specific
provisions it should include, the
questionnaire asks--the following
questions:

for this

"(1) Do you believe that a bank

try, with annual revenues of $217 million ($151 million electric,$65 million natural gas and $1 million miscellaneous). The com¬

The company is
undertaken by any

co-mpa n 1 e s,

results

pany

regulation

legislation for the
bank
holding

the

Pacific Gas & Electric is the third largest utility in the coun¬

coun¬

try are indicating an almost unan¬
imous opinion
favoring Federal

was on

many years.

DIRECTORS

Thus interest charges are due

for an increase of about $1 million

(less tax savings) because a large block of bonds were sold last

Total annual preferred qividend requirements are now
$13,355,592, an increase of about j$2,300,000 over the amount paid
in 1949.
Thus adjusted pro forma net income for common in

July.

1949 would

$14,300,00$

approximate

On the basis of present out¬

J. P. MORGAN & CO.

•

reduced to a "pro forma" basis, with
annual interest and dividend requirements based on the currently
outstanding securities, share earnings would be further reduced.
If the 1949 earnings were

C. LEFFING

INCORPORATED

WELL

Chairman

NEW

YORK

ARTHUR M. ANDERSON
Chairman Executive
'

Committee
Condensed Statement of Condition March

GEORGE WHITNEY

31,1950

President

HENRY C.

ALEXANDER

Executive Vice-President

assets

standing shares, this would indicate pro forma earnings of only
about $1.44.

I. C. R. AT KIN

However, there are also

adjustments

to be made on the favor¬

California Public Utilities Commission
order effective April 15, increasing the company's

able side of the ledger. The

has

issued

basis, this being the first
last November's
the first in 18 years. After adjusting income
forma earnings including these two rate increases
increase) would gaiii alaout 78c a share making the

electric rates by $8,666,000 on an afinual
electric

rate

in 30

increase

followed

years.

increase in gas rates,

taxes,

pro

(minus tax

figure $2.22,-vy
Moreover,

AjYV'v-'Y
earnings for

(see prospectus)
the

months

the balance

■;

the • 12, months ended

Jan. 31, 1950

remarkabJe1 improvement over those for
December—^' gain of nearly $2 million in

ended

parfeof

ths reflecting the gas rate
increased only about $658,000). These

for common, only

gains appear to have been derived principally from lower costs
of oil and gas for January this year compared with last year.

10ck>.with its hydro operations for
it also had harcf tuck with the extremely cold
weather in the early months of 1949J Because of the shoratge of
hydro power it was necessary to>r|n inefficient steam electric
plants during a period when fuel oil prices were very high. Dur¬
ing the three months^ended February 1950, rainfall in California
was only 83%
of normal.
HoweverJthe company in its annual
report dated Feb. 21 stated that' "T&t| outlook for hydro electric
generation in 1950 is' better than.fdi- several years.
This fact,
combined with the completion ;bf 'ri6w hydro-electric plants and
Pacific Gas has had hard

several years, and

high efficiency of

steam-electric generating units, will enable us
status a number of smaller and less efficient

to place on reserve

direction are
already being realized, and further savings may be anticipated."
Pacific Gas noiv has an estimated rate base of about $1,074

fuel-burning plants.-/Substantial economies in this

million, including working capital
allowed

earn

approximate $64 million
interest and

Vicc-Prcsiddnt

a|id new funds. If the company
[rate base the amount would

this

which,! after allowance for pro forma

preferred dividend requirements, would mean earn¬

number of shares.
probabfy not be realized under present

While such

conditions,
the

earnings

company

seems

can

1950 should

certainlyl make

gets'*"tfre "breaks"

\>ij

improved showing if

weather.

reasonably senirr based uir this premise.

The $2 dividend

Government

States

CHARLES S. CHEST ON

of Morgan

Grenfell

COLLYER
Goodrich

Company

34,204,251.51
1,500,000.00

(including Shares

Morgan $ Cie.
Loans and

Co. Limited and

*$'

12,900354.22

Incorporated).............

191,583,733.18

Bills Purchased

Accrued Interest, Accounts
JOHN L.

President The B. F.

221,440,721.85

Reserve Bank......

Other Bonds and Securities

BERNARD S. CARTER
President Morgan & Cie.
Incorporated

$160,048,823.15

Banks

Securities.

Municipal Bonds and Notes

Stock of the Federal

Corporation

2,413,946.84

Receivable, etc...

3,000,000.00

Banking House
Liability of Customers on Letters

10,959,477.06

of Credit and Acceptances

H. P. DAVISON

Vice-President

$638,051,307.81

CHARLES D. DICKEY
Vice-President
N.

D. JAY

Chairman Morgan
I

LIABILITIES

& Cie.

ncorporatcd

D EYE REV.X C.

Deposits: U. S. Government

JOSEPHS

Life
Company

All

I nsurance

Official Checks Outstanding

THOMAS S. LAMONT
Vice-President
L. F. McCOLLVM

Company

ETZMA.Y

President New York Central

13,445,738.24

Payable, Reserve for Taxes, etc...

Acceptances Outstanding

President Continental Oil

G US TA V M

Accounts

$ 34,801,993.66

511,476,942.68

Other

President New York

$559,784,674.58
6,057,115.91

and Letters of

:11,120,81336

Credit Issued

20,000,000.00

Capital
Surplus

30,000,000.00

;

11,088.674.16

Undivided Profits

Railroud Company

$638,051,307.81

JUNIUS S. MORGAN
Vice-President

ALFRED P.

SLOAN. JR.

Chairman General Motors

Corporation

United States Government securities

carried at $52,693,735.81

the above

pledged to qualify for fiduciary powers, to secure
public monies us required by law, and for ether purposes.

statement arc

JAMES L. THOMSON
Chairman Finance

Committee Hartford Fire
Insurance

ings of about $3.32 per share on the increased

Hand and Due from

State and

President State Street
Investment

United

PAUL C. CABOT

showed

increase (since gas revenues

were

Cash

Company

JOHN S. ZINSSER
Chairman Sharp & Dohtne Inc.

Member Federal Reserve

System

Member Federal Deposit Insurance Corporation

There

of the hour.
matical

of this in¬

changing thing that you expect us
to talk about, and to have ideas
about.

By JOHN DUTTON

security offerings is a specialized
field all to itself. If you are going to serve this market thqfe are
certain pitfalls which you will avoid by all means. The demand
for speculations by security buyers is sometimes greater than
others. This has been well recognized as a phenomenon that usu¬
The handling of speculative

which

outright gambles on the part of many conservative

the

manner

interpret what I
Magazine, in the
Letter" and in other pub¬

"Hatton

Forbes

You

lications.

expect

opinions and you expect
compatriots associated with

express
my

investors.

this business

probably have some accounts that are soundly conceived and
where the major portion of the assets are in substantial securities

ing about securities and trends to
express opinions.
But you must

bonds; yet these same people every once in a while want
to have a little fling at some penny or dollar stock which they

remember that these

buy with their eyes wide open. The main point is to know what
your customer is looking for, pand that he understands what he is
doing when he tosses his money into something where the odds

There

point you

must

almost complete

recommend

stock that

customer bought it
have mental reservations
your

analyst is
do, the things that he can
which

able to

the

I think that he

do.

identify

can

I think that he

trends.

iden¬

can

tify values. And I think that he
can
distinguish
sometimes
be¬
tween values and vogues, which is
important.

the subject was a

Then I would like

to have

think

for

of the

things that the analyst

not do.

moment

about

you

some

can¬

first

that he cannot

sure

tell you whether the market is go¬

ing

going down. And that is
the thing that you expect him to
up or

A great many

do.

times it is em¬
barrassing to those of us who
write popular financial literature
to see people read into what we
write things that we never in¬
tended to

say.

Expecting the Impossible
You want

because

being
well

to be

perhaps
as

bullish, and

want

please

entertainers

analysts,

succumb to your

you,
as

sometimes
desires.
we

has

take

been

said

that

10 economists and

you

put them

end to end, you will find that they
will be going in every direction.
I

have

sometimes

paraphrased
that idea into the thought that if
you take one analyst and place

take

toward

impossible, also, for us to
tell you what will hapen in the
field
of
international
politics,
which you young men, above all
others, know is a very important
field of human knowledge today.
We don't know, you don't know,
Mr.
Truman doesn't
know, Mr.
Acheson doesn't know, what is
going to happen in that particular

contend with in

can

direction.
"double

possibly help it,

sometimes

may

I don't

talk"

elements

which

this,

our

have

day and

even

being too definite.
We can't tell you what the mar¬
ket is going to do; and we cannot

insol¬

generation.

though
wrong
in

Reading Market Comment

Then, it is

difficult for us
measure statistically the invest¬
ment and speculative psychology

always

econ¬

very

matter of

ings

have been

may

good old days.. It
recently. As a

been

true

fact, the trend in earn¬

in 1946 when
down, in 1947
good,
And in 1949, when

was upward
market went

the

when the market wasn't too
in

1948.

market

began to go up, the
earnings was down. And
trend
in
earnings today is

trend in

the

is going

down, and the market
up.

The

trend

necessarily

earnings doesn't
in a trend in
prices.
Rather, I

result

market

stock

think it is

the

dividend

trend

payments that counts,

because it

vastly important to know how

are being employed, and
being done with them.
time, back in
1948, in
commenting on the huge earnings
of the oil industry—you will re¬

earnings
what is
One

that

member

oil

when

that

the

was

earnings

year

their

were

peak—I remarked that it seemed
to me that those earnings were
their

worth

not

face

value

be¬

being reinvested
in petroleum industry properties
at disadvantageous prices, and at
the
wrong
time to put money
into the oil industry.
they

cause

were

What has

happened since, and

Disaster Thinking

in the future,

those oil company earnings in 1948

thinking, in terms of eeonomic disaster. We have never

way

been

time when

and

1949

face

value.

used

stocks.

common

for

what

values

the

back

market

Lets

talking about

bonds, because I know

little

about

bonds.

who

men

competent

are

stocks;

and

know

know about

that

talk

stocks

two

are

com-

diverse

very

field

than

omy

and

intelligent in the other. You must
different

have

and

habits

have

must

you

mind,
different

judging

and dividends

come

important
what
a

common

than

stock is

are

far

amount

tain

Now, please
all

these

making, I
in

the

worth

money.

entire

that in

that

generalizing.
field

remember

comments

And

influence

anywhere nearly

economic
as

The

second

believe

makes

thing
the

that
stock

people
market

down, which really
doesn't, is the trend in the Federal Reserve Board index of progo

and

the trend in business,
a chart here tonight and
I could show you what stocks
have done and what the Federal

ject to important exceptions.
So,
if you seem to find exceptions to

Reserve Board index of production has done since about 1941, I

economics,

those of you who have gone to

college

and

studied

generalizations
this

given,

you

one

that

economics

here
I

tonight,

have

just

must remember that I

Another

}

thing that people think

lines

little

tiful

that

draw

you

You think that
have got a line, you
have got a trend or a system, or
something like that, that the mar¬
ket has to go up or down.
graph

paper.

because you

chart

stock is like Bap¬

tism in the Christian

nothing but
inward

religion; it is

outward sign of

All a chart tells
you
is what has happened and
what
is
happening.
At
times
grace.

charts

area

useful.

are

you

They

may

help

identify where a supply
the up-side may be ex¬

They help you
demand area
down-side may be expected

pected to develop.
to

identify where

the

develop.
For

some

reason

have

never

able to establish in my own

been

mind, people often seem
willing to sell stocks in
siderable

volume

con¬

where

about

they were not willing to buy any
more
last time.
And they seem
to

quite willing to buy stocks
the
point where they

about

not

willing to sell

any more

You

duction,
If I had

would show

business- has
mony

with

that the trend of
been out of har-

you

the

trend

in stocks,

that

saw

and

over

again at the 160 level in the Dowindustrial

Jones

the last two

during

average

three years.

went down there five

Stocks

six times

and didn't go
a

through. There was
clearly defined demand

very

for

area

160

stocks

down

Then

the

around

day, you may
remember—last June, I believe it
area.

was—all of

area,

that

the

one

sudden stocks went

you

bit

little

and

down

cer-

Concerning Charts

of them last time.

that, for the most part, we
ought to pay less attention to
these political factors in finance
than we have paid in recent years,

paying, and what
which

stock

that

the reinvestment.

were

much, in an econ]arge as our economy is
complicated as our econ-

think

stock is expected to pay,

makes

that

much
as
the older generation of our
time has thought that they do.
I

decided

are

and

is today, whether politicians

trends

stocks, in-

earnings.

issues

box,

statesmen

type of personality.
In

as
ag

omy

pay dividends, but they
being reinvested in such a
as to provide a poor return

j doubt very

wise in

have

ballot

harmony with them.

have to have

you

were

particu-

worry

the
people who remain in power in
government are those who rightly
interpret the trends of their fimes,
ancj those who implement those
trends so that public policy is in

men

are

different attitude to be

one

doesn't

the

about

few

sure

anc* y°u must

been

realistic—and I know

economic

few

that

bonds

petent to talk about bonds.
These

one

has

this I am going against
your prejudices here, but

many

very

think

about

which

not talking viarly—we will recognize that very

about

few

are

that in

stocks

common

tonight and I

cyclical,

I know

are.

factors

^
it, I

clear about

very

The stock

been

greatly
over-stressed
in recent
years has been the result of elections.

forces of supply

the forces of demand.

and

have

may

these factors

se-

of the

less cycli-

much

been

but the economy has been relatively uncyclical, especially since
1937 and 1938.
What the public thinks makes
the market go up and go down is
another thing, as the public is
usually wrong in what it thinks

place this in aeademic language, I would say that
the price of a stock is the time
incidence

their

They were not being

people

many

it was in earlier years.

the

were

cal, in recent times at least, than

stocks

makes

are

it has

fact

to recog-

worth

not

were

People have been thinking that makes the stock market go up and
our economy was a terribly cyclidown, which I could talk about
ca* economy, when as a matter of for a long time here, is the beau¬

should

one

justify the view'that

think you will agree with
me that much of the time since
1933 the stock market has been
thinking, or a great many people
dealing in the stock market have

know, all generalizations are sub-

one

uble

every

write

moment

one

market

stock

curities.

going in
to

the

is, but what the outlook for
the economy is believed to be.

and

who

I don't need to tell
ordinarily you get the
best values |in
the anti-vogues,
and you pay most for the things
that are in vogue. But it is dif¬
ficult, it is impossible, for us to
tell you how far a vogue is going
or how far an
anti-vogue is going.
Unfortunately, many of you ex¬
pect us to do exactly that.

him end to end, you will find him
want

right

omy

in the first place, the fun-

think

which

the

too

not

was

what the outlook for the

down.
And it is
awfully, awfully simple. It is just
the operation of the old law of
supply and demand. Price is not
necessarily
established
by
the
values back of a security.
It is
determined
rather what
people

course,

be¬

It is important

are the se¬
wants,
that
enthusiastic
about.

The

right. It makes mistakes, because
its judgments often are based, not

that

That

market

1946.

summer.

So don't think for

What Makes Prices

in an anti-vogue, that sell expopularity; I think the rails usu¬
ally are in that classification.

field.

wrong
market was

stock

at the top of

stock

in ;the

you,

attitudes that

proper

are

terribly

was

The

the

hasn't

have been depression-conscious as
they have been since 1933.

here

the

The stock market

trends; and finally, I shall lay
down
what
I
think
are
some

you

sorrow,

1929.

wrong

rent

everyone

securities

wrong at

was very

had

curities

market

stock

The

Then I will comment on some cur-

sell more or less

other

place,

cum-popularity; they

have

tre¬

was

obviously was very wrong at the
top in 1937. The stock market, as
some of we older people know to

what; I think makes
and down; and secondly, I will remind you what the
public thinks makes stocks go up
and
down, and how much the
public believes in old wives' tales,

far vogues and antivogues
will carry in the stock
market. Today you have a vogue
in television; and, in my humble
opinion, you have a similar vogue
in natural gas securities.
Secu¬

tell

try

stocks go

Misconceptions

everyone

know,

you

1948.

Pricing Common Stocks
will

tell you how

vogue

The stock

affected

are

earnings." That

true

•

"Well,
by the trend
say,

may

you

the things I anticipate may happen

should

You

intelligently
the sheep and goats.

tween

•

rities

that

stuff.

have

stocks

and

in the same direc¬

Again

The stock

It is wrong.

right.

mendously wrong after the elec¬

you

judge,

idea

market often is wrong.

and what it may not
mean, and as to the sincerity and
capabilities of the people who

Prevalent Stock
things

it may mean

this

old

the

on,

last

business

moving

the

generation was brought
that the stock market is
omniscient and knows everything,
up

read popu¬
lar financial literature as to what

nize,

the

that

think

Don't

and to bring this thing down
earth so that you will have a

write

than

trend
months

the

many

been

and

Omniscient

Not

Market

want, rather, to be frank with

able

that the appraisal of that
stock is not right.

wager

our

making

are

common

bottom in 1933.

damentals

Market

usually

obviously

better idea when

al¬

not

In fact, those of you
commitments in com¬

stocks

you

be right—but even if he is right his intelligent customer
immediately reacted unfavorably to such talk. In selling specula¬
tions you certainly don't want to stick your neck, or your chin
out—and it is the easiest thing in the world you can do.

make

He may

■

right.

ways

who
mon

market

stock

fession.

week. A friend of mine told me
that a customer's broker for a New York Stock Exchange firm
called him on the telephone the other day. He said that this
fellow told him in an excited tone of voice that one of the New
York partners had just visited his office and had said that it was
his opinion that the Dow Industrial averages would go to 300.
For this reason he suggested buying certain stocks immediately—
in fact he intimated that the outlook for profits was so good that
the purchase of almost anything would be profitable. My friend
asked me what I thought of the conversation. I told him he didn't
need my opinion but what did he think.
He said, "It sounds like
a lot of bunk to me."
This customer's man stuck his chin way out.

The

is.

tion

reminder that happened just last

page

stocks

economy,
but what people
think the prospect for the economy

mysteries. I am not go¬
tell you what the stock
market is going to do, because if
I did, I would be a faker, and I
don't want to prostitute my pro¬

elephant is a piker compared with the average stock buyer who
bought a stock that went sour.
If you have been selling securities for even a short while you
are no doubt aware of the foregoing.
However, the only reason I

first

the

business,

has been

with

harmony

tion.

ing

ing his other holdings, Stock buyers have short memories when
it comes to the profits you helped them make—but the proverbial

Continued from

prospect for the economy — not
necessarily the actual prospect for

market's

risk involved
(even if you
does show a
loss. Human nature is such that if you
goes to pot (regardless of the fact that
with his eyes wide open) he will still
about your ability to advise him regard¬

thought it pertinent at this time to bring up

tempt to solve some of the stock

when you sell a speculation will not be remembered
sell properly and explain the hazards) if the security
total

going to at¬

the trend in stocks
of

Then, of course, another factor
in what makes stocks go up and
down is the commonly accepted

market,

In this address I am

stress about

be sure to

certain things that we

are

cannot do.

ways.

better.

The

infallible.

not

are

do, and certain things that we

can

In other words make certain your buyer
knows what he is buying and why he can expect to lose his money.
Of course, if he doesn't lose it he probably will understand that
he might be compensated by a larger than ordinary profit—the
less you say about the size of the profit expected however, the
long both

are

that

and

opinions,

are

and
out

all

outline

exceptions.

of comment¬

You

and good

the

time

have

not

people
in

write

ami often

because

troubled

much

details,

into these

going

gentlemen,

ally takes place during the latter phases of bull markets when
optimism and emotional enthusiasm for bigger and better days is
in the air. There is also a steady demand for radical speculations
and

mathe¬

are no

measurements

tangible that we are so much con¬
cerned
with, and of this ever-

Securities Salesman's Corner

Thursday, April 6, 1950

& FINANCIAL CHRONICLE

THE COMMERCIAL

(1434)

there

had

was

through that
chart signal

down

trend

market.

was like most of these
signals; it was like going to
the well too many times. It just
simply didn't work.

Well, it

chart

All
never

the

markets
have

market,

dividual
situation

Every

different.

You

meeting of

twice

or even

stock.
is

different.

same

factors

same

stock

are

the

any

in¬

market

And

Volume 171

Number 4896

foolish, in

lieve

history

that

History
self in
I

just

THE

estimation, to be¬
itself.
repeat it¬

repeats

does

not

$13.60
were

guilty, the

same

FINANCIAL

that

time

the

Dow-Jones

;

much worse

much better

in the last few years. I think

it is

paying out; just a very good stock.
But I think
percentage
in peopl^JiaiiB. looked at that stock,
they are paying and Have thought it is more specu¬
out
today, around 55.1%, today lative than it is, because it has
around 54.2%.
At that time, the moved so much in price.
Dow-Jones averages were selling
Equities Are Better
at a yieldMof
about 3%%; the
of a situation here now; there¬ yield
The quality of our equities has
today is about 5.9%., At the
fore, the result will be the same highs
of
1946
the
Dow-Jones improved a great deal in recent
now
as
it was then."
Usually averages were selling at 15.7 times years.
I remember back in 1921
that kind of argument is abso¬
and
earnings.. '"V : ''1/!, '
•
1922," when I was writing
about securities here in Bos¬
If you
lutely worthless.
interpolate yields and
price-earnings ratios against the ton, almost every big corporation
every

other market analyst is
guilty at
times, of putting together a com¬
parison
of
what
happened
in
1901, and 1907, and 1909, and;
1914, and 1926, and 1939, and say¬
ing, "Well, we have got this kind

Some Current Trends

going

about current
to

interpret

talk

trends, and attempt
of these trends;

some

were

the

about

same

dividends

that

Dow-Jones averages today on the

moment

averages

1946

basis,

sold

as high today as they
1946, they would have to

had huge bank loans, almost every

would find that in corporation

you

order to sell

less

am not going to try to tell
what the market is going to
do.
I am going to refrain from
being a financial alchemist here

sell

you

350.

tonight, because I don't think that
is a respectable occupation.
What I am going to try to do

body to go out and say that I said

ties

that.

liabilities

tell

somef of

you

that I believe I

present.

In the first place,

trends

gong on here

see

in the market at

the

people

bothered about
the fact that their money is not
are

earning enough.
There are probably
and

million

half people who either have

saved

inherited

have

where between $75,000
000 and are

some¬

and $150,-

trying to make

liv¬

from the earnings of that
money. Many of you people serv¬
ice clients in that category. There
are
many
of them.
There are
ing

staff

work

out

re¬

on my

tabulation

for

listing the companies which
to predict have reported since Jan. 1, which
me,

Far

from

here tonight that the Dow is
340

I have mental

reservations

to whether that will

not.

don't

But

going

I don't want any¬

350.

read

happen

your

paper

tomorrow morning, or some morn¬

I think there

terrific pressure for yield.

think

and

340

between

ing

sometime, before

the

Dow-Jones

sheets had

cash and government securi¬

than

their
and

total

funded

current,

debt.

until the 20th of March he identi¬

fied

242

such

companies.

They

all

are

industrials, because I told
when him not to pay any attention to

long

sell

averages

in their latest balance
more

the utilities and rails.

business

That is

one

about

money

there

ever

find

nave

you

develop

mutual

fund

ties.

way

for

demand

securi¬

do that, you are compelled to
do one thing; you must go more
into equities. The spread between
the

yield

the

and

stocks,

equities,

common

yield

bonds
it

still is very wide, and recently
been

has

wider

even

now.

than

are

think that is why you

reasons.

find the pressure of money today

high quality equities.

Stocks Not So High

This has been

unique market.

own

around the highest point in

But you know, and I
that stocks as a class are
high as the issues in the

years.

know,
not

Dow-Jones
that

lected.
are

stocks

know
neg¬

are

You know that rail stocks

behind.

way

if you

You

averages.

speculative

dip only

Dow-Jones

ownership
is

the

which

men

you
World War II
today, I remember Mex¬

are

Petroleum

ican

equities

own

When I was a young man

same

Baldwin

and

used

tion used to be turned over—once
a

week.
a

once

not

kidding

you—

week.

also

remember

I
1929

turned

that

over

back

the

entire

capitalization of American indus¬

the New York Stock Exchange.

You

know

cent years

from

year, I

22%.

turnover

our

re¬

has ranged all the way
to, I believe in the top

amazes

know

master-mind

try

you

could get in
at

out

the top

spoil each
cyclical
investment procedure is fallacious.
because

would

you

other's game. The idea of

I think there are

great many

people why try to speculate who
have
no
flair
for
speculation.
You should study yourself and see
whether
you
have a flair for

do much
speculation,
doesn't
always
come
with the
people that have the most money.
Oftentimes the people that have
speculation

before
flair

That

it.

kind

tomers

Investors

find

cus¬

group

the least money
for speculation,
game,

have a good flair
I find.
In this

Investors

And

a great many

only

once

in 25

years.

our

good

common

stocks

are

concerned, values, the real genu¬
ine

Dow-Jones

averages

today

share and

paying dividends at the

rate of around

$12.05

share, and

investment

For
one

example, do you think for

minute

that

ment value of

Santa

values, fluctuate
price.

the

invest¬

real

Atchison, Topeka &

has

fluctuated

around 68 to around

from

124 in recent

selling around 208.
At years?
I don't think so.
I think
investment
value
of
that
the
highs at 1946, those
same the
Dow-Jones
averages,
or
practi¬ stock, the real, true essence of
they

cally

are

the

same,

were

earning

get

fact

values

and

ket

second

thing

you

the

investment

value

that

trends and the environment which

exist in your time.
There

lost,

and

has

been

still

ket

the

long run.

out

of line;

out

and they are always
at

and

the

less

less together in

Oh, they will get

line

values

years

much

AND TRUST

some

stock

their

had

that the economy

the

But

market go

together

over

and in the long run.

COMPANY

Main Office, 37 Broad Street

STATEMENT

CONDENSED

CONDITION

March 31, 1950

RESOURCES
Cash and Due from Banks

U. S. Government Securities
State and

•

♦

•

$112,469,741.40

•

Municipal Securities

Other Securities

Loans and Discounts

•

189,245,531.07
20,703,770.02
5,740,629.11

•

175,543,395.41

Customers' Liability for Acceptances.

587,230.36

Stock of the Federal Reserve Bank

720,000.00

Banking Houses

•

.....

•

2,278,258.99

•

Accrued Interest Receivable

892,728.87

Other Assets

296,051.01

•

$508,477,336.24
LIABILITIES

$10,587,500.00

Capital
Surplus.

13,412,500.00

24,000,000.00
Undivided Proflts

7,562,402.18

$31,562,402.18

Dividend Payable April 3,1950
...

...

302,500.00

1,174,336.26

Acceptances.

....

Less: Own in Portfolio

5,029,097.21

$4,119,690.13

Other Liabilities

838,507.72

3,281,182.41

Deposits

•

458,883.36

•

....

469,111,609.51

$508,477,336.24
United States Government Securities carried at

pledged to

$17,154,307.46

public and trust deposits, and for other
as required or permitted by law.

secure

purposes

not

had
changed,
but
that they hadn't
changed.
Every
one
of you
people engaged in the securities
changed,

point.

of NEW YORK

money

more; money

against
the
trends,
of
times.
They just simply

couldn't realize

something

are

The Public National Bank

are

made, in recent years by people
who
have
kicked
against
the
pricks,

opinion is

Values and the stock mar¬

apart.

Reserved for Interest,Taxes, Contingencies

Live Your Generation
the

the

recognize

you

Don't think that the stock mar¬

don't think future
cycles are likely to be as severe as
1929 or 1932, although of course
there will be cycles, but you are
not going to beat them.
You are
going to find that you will be
owning
stocks when
they are
cheap.
You are not going to be
able
to sell all your securities
I

Unearned Discount

think

MEMBER: N. Y. CLEARING HOUSE
FEDERAL

FEDERAL

ASSOCIATION

RESERVE SYSTEM

DEPOSIT INSURANCE CORPORATION

world

25 Offices Located

;

follow
mighty

in these vogues.

wrong

from the idea that they can beat

cycles.

high

them while

the majority

that

away

generalization holds;
if you are

money-maker.

much less than the

earning at the rate of $23

stocks is more stable than it used

speculative market we had in 1946
and 1945, has hardly moved at all.
The

ought

not

ride

that

careful

other profession.

but for goodness' sake,

going to speculate, be sure that
you have a talent for speculation
of and that you are naturally a

of. stocks which, in relation to that

are

any

are

they are going on, but be awfully

profession has made
in these last 20

than

thing

good

try

far.

too

vogues

progress

years

should

markets.

ought more and more
analysts, because

the analysts'

markets

manipulated

the

consult

The

you

of stocks that my

buy"—you

laymen, who
than we do,

think and act.

market- may

•

you

own/ership of common ought to do is recognize that you
have got to live your generation.
curities which have not done any¬ to be, partly because of the fact You are not living your father's
where, nearly as well as the Dow- that these shares are being held generation, and you are not liv¬
Jones averages.
You know that by people who do not trade in and ing the next generation; you are
if you dip into really speculative out of the market.
I think prob¬ living your generation here and
stocks—as one of my friends says, ably that is a good thing.
So far now, and you must recognize the
"the

the confidence

much less

bond

manipuated high market, but the
stock market is an unmanipulated
free market.
Normally, free
markets
are
low
markets, and

for

think 1946, something like

a year.

over

not

to master-mind the
Even if you could
the
stock market,

not very many
at the bottom

prime stocks are being turned

little under the

begin to get into a group of se¬

see

some

which

and

bond market,

the

the stock market is a free market.

The

with

stocks

Unlike

down.

enough about what we are doing.
It

*< $ '
- 1
either, that the
puppet where
is pulling the strings.
longer exist.
"They"
s

make:

don't

but because I know that this
very complicated' business.
Even those of us who are special¬
ists
in
our
fields
know
little
is

I imagine our turnover to¬

day is running at the
rate
somewhere
between
15%.. and
18%

You

smart enough
stock market.

often

turned over—the entire capitaliza¬

our

grade,

equities

trend

longer.

You know that

average

tuations.

another trend here in the

see

think is vastly important, and that

The Dow-Jones industrial average

20.

"They" no

one,

than you ever did

you

something about these price fluc¬

Holding Stocks Longer
I

try once; in other words, we have
100% turnover of listed securities

somebody

perts in security values, not be¬
cause I happen to be classified as

you

Locomotive

going into equities
because of the pressure of infla¬
tion, because their bonds have
been called, and for many other
People

year

assume,

market

stock

think, too, that investors ought
to consult more and more the ex^

of the corporation

unencumbered

you

Don't

There is

And when

income.

adversity..

213, and say that stocks are example of how the quality of our
as high as they were in 1946, be¬
equities has improved.
when they are high.
You ought
cause
it just simply will not be
Another thing, we have had a
to try to hold more
and more
true.
•'
•" :v.r
tendency to avoid debt in recent
things that you can be comfort¬
I think there is an institutional years.
That is vastly important.
demand for securities which we These equities have become thick¬
haven't had in past years. That is er.
The debt above
them has
The equity that
important.- Not only the straight become smaller.
institutional demand, but also the you own has been made greater;

$3,500 a year.

cost

has;

and

things that can't stand

avoid the

and cost your clients
after year.

you money

one mutual fund some before.
That is important in look¬
seldom think of, namely, ing at common stock values.
Investors
were before.
I want to give you a few ideas
Syndicate
in
Minne¬
If you take $100,000 today, for apolis, that I understand has a that are practical to you people
the sake of argument, and try to cash inflow of almost one million that deal in common stocks, and
put it in non-risk securities, the dollars a week that has to be in¬ they come out of the book of
person who owns that capital just vested., The large amounts of new experience, and from sitting in the
simply is not able to derive a money coming into the stock mar¬ seat of the scornful, as it were,
living from the income on it. It is ket today from mutual funds has for 30 years, watching common
impossible to live on an income to be invested, because when you stocks go up and go down.
of $2,500, or even $3,500, a year buy
a mutual fund you
expect
In the first place, I would say
especially for a person who has your money to be invested. You that a great many people try to
been brought up in an atmosphere don't expect the mutual fund you
speculate who have no business to
where he
or
she
has inherited own to go from cash to securities,
speculate. I am not talking about
You
$75,000 or $100,000, or in an at¬ and from securities to cash.
investing; I am
talking
about
mosphere where he or she has expect them to invest your funds. speculating.
You can invest in
saved that amount of money. You That is why you buy the fund; common
stocks, and when you in¬
can't live respectably on $2,500 that is why you hold it.
vest in common stocks you forget

than

them

with, it

contend

have had

rough times, and to

able with'in

exactly' what

knows

because you

mean,

more or

working capital.
cently had one young man

but I

somewhere

strapped

was

for

(1435)

CHRONICLE

a
share against $23; and? stock, has-been pretty stable.
I
paying $7.50 a share against don't thinly that stock has grown

$12.05.

the stock market.

COMMERCIAL

Throughout Greater New York

the

THE

"(1436)

COMMERCIAL &

FINANCIAL

MORGAN

CO.,

NEW

INCORPORATED,

Total

NEW BRANCHES

Bankers

and

ETC.

REVISED

589,603,037

and

160,048,823

221,440,722

173,091,294

profits,!

11,038,674
it

Arthur

and

Lapharn,

Director

Hawaiian
board

directors

reports, and thus enable the stock¬

Company,

member

tion 'and distribution of the annual

American-

Steamship

elected

was

President

holders to study them in advance
of
the
meeting.
The '«■ directors

the

Bankers

10,900,181

rector

tional

Bank

the

Crocker
of

First

Na¬

San

stockholders'

Francisco;
Federal Insurance Co.; Transpor¬
tation & Terminal Corp.; Vigilant
Insurance Co., and Williams, Di- known, Bankers Trust Co. is the
first
New
York
bank
to
take
mond & Co., of San Francisco.
•
' *
*
advantage of this change in the
law.

Formation of Be'g'.an American
Banking Corp.* under the New
York

Banking

nounced
York

Law,

was

guaranty

an¬

zation

was

approved

Banking

Wall

Street

Cash

certificate

from

dent of Banks.

Banque Beige
(Overseas)
Ltd.

ing

Undiv.

Cash

and

from
U.

1,078,980,2.91

33,432,039

•

bank

1,593,278,135

354.347.951

and

523,922,142

438.234,512

436,846.232

profits—

14,409,153

13,623,977

>!:

irving

trust

Cash

YORK

Cash

and

from
S.

Dec. 31. '49
$

Govt,

—

1.375.617.474

52.427,995

bank

trust

and

Loans

19,497,732

and

43,740,244

MANHATTAN

Govt,
and

4,321,670

Mar. 31, '50

Dec. 31, '49

323,594,137

13,896,315

EXCHANGE

10, 033,243

Deposits
Cash

New

stead

January each
on

the

Wednesday in January,

advocated

this

TRUST

CO..

the

banks

change,

Vfr

been

associated

Mr.

the

ciety,

Counselor

States

the

466,541,652

Undiv.

■a

national

Cash

and

Chamber

592,743,825

bank.

S. Govt, se¬
curity h'ldings

253.899,261

267,035,141

disc'ts

and

profits

12,133,352

237,053,833
•

IT3"

t
'

11,721,125
f-

6,254.737

13 ,115,370

12,039,125

5 ,509,012

5,258.682

915.801

900,995

se¬

—

profits.

offices.

york

Total

from

4,536,238

BANKING

YORK

Lincoln

$95,732,370
74,324.818
11,622,029

42,726,034

1902.

old

and

51.878,803

form

Co.

National

the

7,784,900

lyn.

Mr.

Bruch¬

trustee

the

trust

resources-

Cash

from

CO.,

NEW

and

36,392,454

8.224,272

Undiv.

10,626,478
23,373,752

5,619,962

6,307,617

;

2,757,038
-1 ;•

"
*■'

2,752,062
'■»

each

April 24.

CORN

EXCHANGE

NATIONAL

Mar.

Total

resources.

Deposits
Cash

and

from
U.

Dec. 31, '49

$301,403,567

277,472,407

due

banks—
Govt,

65.435,458

76,706.151

se¬

curity h'ldings
Loans

31, '50

260.158.065

112,259,749

123.407,153

bills

and

discounted

—

76,197,928

72,187,766

protits—

Undiv.

3,104,462

3.002,709

philadelphia

national

philadelphia,
Mar.

Total

resources.

Deposits
Cash

from
U.

$739,773,473

Govt,

228, 365,734

284,254,188

293, ,585,414

149,994,908

146 .405,863

11,542,534

11 ,071,499

se¬

curity h'ldings
bills

ana

discounted

Undiv.

687, 232,486

222,264,523

due

banks,,

Loans

$756 ,053,383

670,810,207

——

and

bank,

pa.
Dec. 31. *49

31, '50

profits

Wierman.

associated

town-Penn

with

Trust

since

Pa.,

67,006,343

125,071,032

130,552,855

30.133,005

28,863,355

1,965.632

time

death

was

1.786,753

his
68

Norris-

died

March 24.

Mr.

years

Treasurer

Assistant

had

Norris-

1906,

heart attack

who

the

Co.

At the

Wierman,
age,
the

was
com¬

se¬

bills

and

pany

Manager of

one

its

branches.

—

sub-branch

the

of-the

National

The

the

AND

PA.

$284,659,451

—

India Ltd. of London

over

BANK

CO., PHIALDELPHIA,

who

profits—

building

Surplus <fe undi¬

;

share of $25 par stock, payable on

The main Yonkers, N. Y., office
of The County Trust Co. of White

bills

dend of 1/ 15th of

Plains, N. Y., moved into its

19,808,978

discounted

224,602,843

62,292.375

se¬

curity h'ldings

shares,

bank at their regular
meeting on
April 17 will declare a stock divi¬

office

banks._

10,000

to a change of

branch office from

expected that the directors of the

town,
Dec. 31, '49

due

Govt,

due

profits.

york

$242,364,115

banks—

discounted:

$41,865,394

29,062.911

brooklyn,

219,503,660

and

curity h'ldings

YORK

Dec. 31, '49

$34,611,387

Deposits" 1

and

downtown

Brook¬

$237,205,893

resources.

Deposits

TRUST

well

George
co..

South

week-end,

new

Broadway,
it

was

an¬

517 Chestnut Street to the
ground'

Mar. 31,'50
Total

3,503,022

■

;

floor of the Lafayette Building at
5th and Chestnut Streets.
It is

brooklyn

11,020,458

Mar. 31. '50

Govt,

its

Manu¬

Bankers Club
a

new

3,503.573

amount

$25,

1912

merged

was

Savings Bank of

se--

profits-

April 3, approval wss given
increase in its capital stock

the

been

„

are:

The

member of the Eco¬

bills

and

merged with
Co.

turn

Trust

was

Brooklyn
Dec. 31, '49

8.993.917

was

nomic Club and

CORP;,

$79,831,852

born

the

Manufacturers
1915

hauser

57,092,043

and

vided

the

facturers

was

due

Govt,

from

Trust

bank

which

Bank

banks—

Cash

Citizens

with

Surplus & undi¬

Total

Bank

Broadway Bank

45,199,277

4,632,379

charge

Title Bank and Trust Co.

TRUST

with

career

Broadway

26,871,520

SCHRODER

and

un¬

resources-

Cash

Brooklyn in 1884 and began his

the

profits

the

Mr. Bruchhauser

banking

29,646,078

25,630.703

Boston

near

of Philadelphia announces that at
^special meeting of its stockhold¬

the

45,072,633

the

says

April 27 to shareholders of record

bills

W. Bruchhauser, one of the
bank's senior Vice-Presidents in

bills

HENRY

Loans
244,608.531

6 846,874

96,057,893

26,414,665

an¬

city's Chinese district.

Manufacturers Trust Co. of New

Arbi¬

new

Mar. 31, '50

183r533,421

23,031.852

charge of all Brooklyn and Queens

92.473,750

curity h'ldings

627,300,444

due

york

Dec. 31, '49

$24,939,037

se¬

SCHRODER

Dec. 31, '49

new

$27, 297,569

due

and

vided

Dec. 31, '49

discounted

$706,360,953

co„

Mar. 31, '50

banks—

discounted

6,529,433

$663,615,752

935,000

25, 304,894

Govt,

Loans

$110,515,634

banks—

vided

CO., NEW YORK

43.969,396

958,703

-u

were

The bank's

Surplus & undi¬

due

Govt,

Street

situated

officers

66,058.357

36,095,743

trust

■

offices by

Alexander Shelton, Manager, and
Edward H. Maloney, Jr., Assistant

par

curity h'ldings

United

the

36.658.049

70,877.530

and

from

So¬

$107,398,673

——————

divided

heart of the

resources-

Deposits

145,504,842

31,604,953

profits—

;j..

March 27.

service,
"Herald," are

ers on

'*■

di¬

American

Dec. 31, '49

$153,662,996

bills

clinton

Total

resources-

Kneeland

Land

$141,090,401
132,943,212

Mar. 31, '50

trust

se¬

discounted

head

Commercial

Cash

york

erick

discounted
468, 003,667

bank

due

and

new

Manager.

new

curity h'ldings

the

curity h'ldings

153,162.771

Undiv.

14,496,162

York announces the death of Fred¬

83,703,839

14^573,997

ter-American

Total

opening of

nounced

The

Argentine Re¬
public, Vice-President of the In¬

banks—

Loans

43,790,252

banks—
Govt,

Business
at

Drumm

Pan

Loans

foreign trade advisor and

Loans

6, 927,930

resources-

from

41,360,935

national

and

from

■<

served

Division

rector

234,791,032

76 078,440

and

95,944,234

un¬

resources-

Cash

March

has

Industrial and

consultant.

766,806.909

profits—

Cash

92,880,490

—

National

new

Deposits

Mr. Drumm is completing

203, 759,675

31, '49

—

Deposits

that
as

Total

office in New York where he will

$315,484,764

Mar. 31. '50

Total

53,379,166

bills

.co.

Loans

the

43,835,100

9,223.080

plans for the establishment of

bills

third

and

Dec.

31, '50

change. The Bankers Trust
one

1918

YORK

$790, 307,793

THE NEW YORK TRUST

advantage

was

and

Undiv.

directors of the trust
company on,
March 21 acted to take
of this

office.

se¬

curity hidings
discounted

176,465,525

se¬

sterling

Vice-Presi¬

retired

years,

Overseas

Meadow

■■

the First National Bank of Boston

due

Surplus and

the

v.-,'.

The

*'—

Bank.

$205,868,681

banks—

and

initial

the "West Hempstead

Office"

BANK

YORK

169,945,131

Govt,

with

The office of the West

7,562,402

NEW

.and

$1,010,000,

operated

v"/i

NEW

Dee. 31. *<*9

divided profits

Development

due

banks__

Govt,

Loans

year, in¬

before

156,561,875

NATIONAL

$200,676,123

—

232,144,322

505,319,220

curity h'ldings

branches in Panama, Argentina,.
Uruguay and Brazil and more re¬
cently in charge of the bank's

*740. 469,785

and

from

York
State
Banking Law
permits banks and trust companies
to hold their annual stockholders'
meetings any time during the
of

% 189,245,531

has

si:

BANK

NEW

Total reaources-

change in

:»•"

Mar. 31..'50

discounted

Deposits
a

its annual meeting date, the Bank¬
ers Trust Co. of New York
states
that a recent amendment to the

month

Since

3&3.184.373

14.451,812

2,843,980

CO.

resources-

Loans

462,758,440

making known

31.

Surplus and

Mar,

for

338,662.479

430.003,791

„

121,914,963

2,972,034

COMMERCIAL

from

125,363,055

Drumm,

who

Loans

278.045.768

10,261,741

dent,

from

1,232.332,464
1,042,607,156 1,127,809,682

bills

profits—

111,432,195

profits
*

112,469,741

initial

Hempstead National Bank will be
132,033,461

bills

and

$205,000.

124,673.600

131,081,769

Mar, 31, '50

James

1,144,373,464

profits

CORN

99,797,468.

se¬

TRUST

$544,034,712

1, 107,449

Loans

Cash

bills

discounted

84.171.023

banks—

Govt,

Undiv.

$503,477,336
469,111,610

profits—

Deposits

se¬

curity h'ldings

Undiv.

94,547,262

CO.,

due

banks—

Loans

se¬

discounted

Undiv.

$145,223,923

and

from

due

curity h'ldings

resources-

Deposits

111.945.613

banks—
Govt,

york

13,005,689

THE

Cash

102,662,828

new

Dec. 31, '49

discounted

The

undivided profits of not less than

bills

381,221.232

13.553, 578

NEW YORK

co.

se¬

and

each.

364,104,524

Deposits

and

175,543,3n5

Govt,

grace

Dec. 31, '49

$136,122,092

Deposits

452,413,721

371.413, 652

farmers

bank

tration Commission, etc.

Mar. 31. '50
resources-

from

415,149,650

profits

bank

Total

Cash

311,035,037

bills

and

50,463,116

profits—

CITY

271.217,913

—

se¬

1,381.156,840

Total

banks

Undiv.

1,182,660,092 1.264,319.880

bills

discounted

$20

59,500

stock of the par

common

of.

will

into

'331,491,903

curity h'ldings

due

Commerce

se¬

and

Undiv.

1,052,443.028

discounted —

curity h'ldings 1,769,175,004 1,902,534.208
Loans

1,187,464,523

976.918 624

due

Govt,

Loans

4.669.251.863

du#

banks—

york

1,114,242, 364

curity h'ldings

4.909.931,502 5,051,983.339
4.519.343.370

—

new

co..

Dec. 31, *49

I—!—7

and

from

Deposits

co.,

curity h'ldints

act

$
resources.

Deposits

resources.

s|t

Mar. 31, '50

Total

* \

■—

Vice-President.

Mar. 31. '50

national

banks—

538.546,433
!

bills

Smarting
March 31, the collection will con¬
tinue through to April 30.

be President, and
Smits, Chief Manager
of
the
New
York
Agency of
Banque Beige, will be Executive

NEW

and

Undiv.

ings Bank of New York.

will

Cash

value

bank

divided

1,983,442

Mar. 31, '50

432,295.401

se¬

Maurice J.

BANK

2.025.239

Deposits

due

and

Total

Loans

Prints, watercolors, English en¬
gravings, and pictures relating to
textiles
are
being exhibited,
courtesy of The Old Print Shop,
Inc., of 150 Lexington Avenue,
New York City, at the 291 Broad¬
way office of the East River Sav¬

Van

THE

resources-

consolidated

will

51,924,606

public

According to

surplus of the consolidated bank

57,447,460

55,638,645

bills

with the foreign service of The
National City Bank of New York

director
of
Banque Beige et Internationale en

Total

Dec. 31, '49

be Chairman of the Board of the

CITY

57,859,034

—

the

17.

the

Bank,

Dec. 31. '49

se¬

and

Undiv.

1.449,655,709

curity hidings

Undiv.

37,754,115

pro: its-

Loans

Total

york

1,439,117,043

banks—

discounted

of the Board of Banque de la So¬
ciete Generale de Belgique, will

NATIONAL

Govt,

National

$390,574,345

discounted

co.,

due

Govt;

Loans

23,397,312

trust

1.340.031.776

—

and

Dec. 31, '49 >

$163,135,673
129,691,370

due

trust

resources.

from

capital of $3,000,000 (fully paid)
a paid-in surplus of $1,000,000.
Pierre Bonvoisin, Vice-Chairman

Egypte,

under

Mar. 31, '50

Cash

120,092.699

banks—'

from

and

Louis

31,964,648

Mar. 31.'50

Banque de la Societe
Generale de Belgique.
It is con¬
templated that the new corpora¬

organization.
Damme,
managing:

and

from

the

shares of
CO.

title

$357,639,162

Deposits

557,375.053

new

co.

7.>.'

york

$153,311,250

_—

discounted

with

new

700,693,983

551,655,812

Deposits

with

resources_

March

$1,010,000,

YORK

effected

and

Banking De¬
partment, the initial capital stock

v' ■.'!

TRUST

MIDLAND

$750,000. The

was

Brook

Y.,

Hempstead, N, Y.
a capital of $100,000
capital of the Meadow

charter

133,192,794

Freeport,

resources-

from

1,024.318,104

v.'1'

Cosh

133.718.063

NEW

new

Deposits

ef¬

the New York State

443,611,932

MARINE

been

states trust

curity h'ldings
576,856,443

chemical

Bel-

corpora¬

business

united

Total

Dec. 31. '49

profits—

Undiv.

THE

636,351,311

444,507,199

*■/',

■

Meadow

424,355,833

530.960,853

&
profits

undiv.
v

the

surp.

■'

international

■

Mar. 31. '50

y-'V'

york

—

stockholders of the

begin

the

Capital

has

West

consolidation

bills

discounted

the

effective

378.710.866

bills

and

discounted

tion, other than its directors, will
be; Belgian and Belgian Congo
organizations affiliated or associ¬

will

Located

Bank

Brook National

se¬

and

Total

se¬

curity h'ldings
Loans

Total

tion

banks—
Govt,

Loans

principal office in Rocke¬
Center, he continues his

credit field.

consolidation

while the

due

curity h'ldings

Interna^-

bank's

due

banks—

Govt,

insti¬
tution in Western Europe and the
oldest
in
Belgium.
The
other

ated

title

new

Division.

70,568,483

2,293,721,635 2,451,996.774
2,128,288.704 2,281,747,791

——

gique, the largest financial

new

from

954,967,571

72.695,293

resources-

Deposits
and

>'•

;

The latter had

1,451,849,592 1,592,385,470
1,304,929,541 1,443,101,33o

resources-

Cash

and the West Hempstead National

Dec. 31, '49

the

The

tional

Mar. 31, '50

and

tional
feller

964.941,424

Stein's

Manager

activities

profits—

Deposits

liquid

Credit

Cash
Total

Over 65% of the stock
Belgian
American
Banking
Corp. will be owned by Banque
Generate

1,038,072,400

Mar. 31, '50

ing Corp.

Societe

938.423,396

se¬

;-;-r new

Harold
.

■■

1,819,414,477

CENTRAL HANOVER BANK & TRUST CO.,
NEW YORK

dated by Belgian American Bank¬

Avenue

Street.

manufacturers' trust co..

l'Etranger
will
shortly
be

536,973,445

bills

Superinten¬

will

Madison

v-,:

pour

commitments

and

■

Bank

the bank's midtown

profits—

Total

fected of the Meadow Brook Na¬

Manager
Division, and

cus¬

check, make

1,379,484,665 1,350,507 123
47,711,641
45,338,274

Midtown

to operate and all outstand¬

cease

Govt,

discounted

The New Agency

554,401,349

curity h'ldings
-

due

banks.—

Loans

soon

the

office

Dec. 31, '49

2,189,313,632 2,299.855,939

—

and

from

as it re¬
ceives the required authorization
as

work

1,655,931,638

the

where

cash

loan payment, pick up
payroll, or transact almost any

bills

and

Undiv.

york

new

2,616,230,609 2,730,574,934

resources-

Deposits

Belgian American Bank¬
Corp. will begin activity at

ing

CO.

Mar. 31, '50

To'al

Board.

Co.

at¬

bank

kind of banking business.

1,280,491,136

facilities,-per¬

customer

windows
can

deposit

se-

office

March 29

trust

by the New York State Superin¬
tendent of Banks and the

•

organi¬

new

will

28th

Agency of Banque Beige
l'Etranger (Overseas) Ltd.

pour

serve

Govt,

the

tomer

....

1,200,710,221

"drive-in"

tellers'

Dec. 31.'49

due

discounted

Ninety Wall Street, when it is
in May.
John Dowling

will

YORK

$
$
4,633,437,693 4,779.689,820

curity h'ldings

opened

of the International

"
*

March 30 by the New

Incorporation of this

new

BANK

NEW

leaving his automobile.
driveway circling the bank
building there are two special

37,169,138

banks—

Loans

•

will

tached to the Colonial's
at

bank's

4,224,989,652 4,384,572,391

and

from

Manager of the Inter¬

national Division and

resources.

Cash

Aguirre has been advanced to

Downtown

April 3.

or on

without

NATIONAL

CITY

Deposits

provide for holding
meeting
on the fourth Wednesday in Jan¬
uary
each year instead of the
Tuesday before the third Wednes¬
day.
It is stated that as far as
so

annual

the

April 1

mitting

576,710.609

37,844,955

York, have announced three pro¬

new

532,298,777

567,711,929

feature of the arrangements is the-

Mar. 31, '50

Total

laws

York

CHASE

THE

was

435,386,024

512,254,311

profits—

THE
.

S. J. Balassi, Vicecharge. The public
invited to inspect the bank's
quarters and "drive-in" facil¬

Dec. 31, '49

bills

and

sion of Colonial Trust Co. of New

the April 4; meeting of the board.
Mr. Lapham also serves as a Di¬

New

se-

voted to amend the company's by¬

nounced

President
31, '50

404,193,205

Company

Govt,

discounted

motions of Assistant Managers in
that division of the bank.
Juan

Trust

Undiv.

Kleeman, President
and Mario Diez, Vice-President in
charge of the International Divi¬

time for the prepara¬

YORK

Thursday,-" April 6, 1950

ities

banks—

Loans

bills
*

Undiv.

NEW

due

curity h'ldings

283,545,914

191,533,733

—

and

from

164.459,613
U.

—

1,574,824,472 1,624,145,647
1,348,036,281 1,431,527,783

resources-

Deposits
Cash

discounted

have

Total

$666,778,009

CAPITALIZATIONS

31, *49

$633,051,303

Govt, security h idings

CO.

Mar.

due

banks

Loans

Lewis

Dec.

559,784,675

and

from

CONSOLIDATIONS

NEW OFFICERS,

resources-

Deposits
Cash

TRUST

BANKERS

YORK

Mar. 31, '50

News About Banks

CHRONICLE

Naivasha, Kenya,
sub-branch

business

only.

Nakuru
Bank

was

opened

March IT.

will bd open for

Tuesdays and Fridays
v

Volume ,171

Number 4896

: THE,' COMMERCIAL

FINANCIAL

CHRONICLE

(1437)

■,

*<'

■

Continued from page 5

the

financial

section

popular stage still

According

The Financial

•sports

its

survey,

the

read

Articles

tabulators, which

addition to the factual

news

items, there is considerable
terial of

The

ma¬

the

first page. The general articles are

United

Press

usually concentrated in the Sun¬

and Standard and Poor's
to

interpretative- comment
ters

also

en¬

Using

the

daily story on the
stock market's /performance, and
in the so-called ."gossip columns"
containing spicy briefs often con-r
tributed by various staff members.
Si .'.'■'•''t
('
J-k-';
-

]

,More Business Coverage

ri Notable ; is

the

growth
of the business

portance

;

im¬

20-30

with r perfect timing and
teamwork, and expert teletypists,
taking the prices off a battery of

sheet;
into
in

the

master

leading

market's

the
with

would

ual

;

the

least

section

whole.

devoted to events

space

in the category that is not

strictly

Street"?

depression

ment-deflation

Norman

York

and

excite¬

since ,;1929).

Stabler

The7

"Herald-Tribune"

depends

predecessors

very great
questiomis

always

the

about

spirit of having

the

value

to think that

at-'its

sure

one—

get complete

efficient coverage.

This

ap-

market

keep;

factors

of -much

(5) Be completely cynical about

look

editorial comment

soon

v* '/j'.1

(2) Don't read the stock market

advertisements without scrutiniz¬
ing the motivations of the adver¬

tisers; and don't follow
(Rather

them

use

un¬

them

extent

Exchange Seat valued at "Journal of Commerce" 51 cod$625,000) everybody was a mar¬ modities.
A
.//:)%,?' ,:
ket
expert
and,
so
.of
course
(3) Emphasize with careful and
read, and usually as well tried
complete
scrutiny,
the
factual
to write, about the market—the
data, rather than the interpreta¬
entire setting being one of sheer
tive.
This is the way to maintain
fantasy rather than fact.
,:,
a value-appraisal approach to se¬
During the post 1929 holocaustic curities rather than to engage in
collapse in values and the ensuing the indoor sport of forecasting of

other read¬

ing matter harboring forecasting
of the stock market-as-a-whole. *

trouble,

been proved

Cassandra-ism

Surely, at
to

little

during popular bull markets, and
be somewhat of a
Pollyanna in
bear periods.
;

se¬

under-

reason

reactions to having

;

market, "confusing
forest," etc.).

following the suc¬
manic-depressive super-

—look for

rea¬

particular

either "right"; or "wrong"
tempor¬

arily*.

the

optimistic and pessimistic atti¬
tudes toward the market.' Instead

con¬

previ¬

performance

one; out

(4) Avoid

because of one's intense emotional

the special¬ deservedly.,

salary route
speculating or invest¬

in its securities (because of
realizing the anticipatory ele¬

cessive

Handel, Lundborg & Co.
:

PORTLAND, ORE.
The firm
of Handel,
Lundborg & Pat¬
—

name

ten, Inc., * American Building, on
April 1 was changed to Handel,

Lundborg &
Leonard

Co.

Principals

are

Handel and Hugo P.

Lundborg.

Our

Stock

the trees for the

only be price-

ized publications, with their de¬
asked. railed indexes—the "Wall Street
In the roaring speculation of the Journal"
including specifications
late 1920's (with the franchise of
jof individual companies, and the

Editor," instead
''Financial" Editor" as

his

and

did.

when

and Financial

merely

answer

there

iplies particularly

now

functions under the title of "Busi¬
ness

index—when

the> question, ;and
"Who reads the financial news?"

New

not

ments

after ;one has made a transaction
in it.
In fact, such avoidance will

Who Reads?

Mr.

the

should

least, there is

the

should

make their money from their

market-as-a-

curity might tye overpriced on value bases.

■'morn¬

financial'.-(seemingly resulting in
part
from
the* secular
"Wall

the

ously; and only when there is
son

investment,7 rather than a
short-term, view r< of the general
picture as well as of individual

the

one

company via the

ing

month

The quotations of individ¬

issues

sidered

and* the

checked in

;state-of-the-

take

complete alpha¬ securities. Avoid the super-timely
betical list of every stock traded .play t by - play
baseball account
that day, the volume of sales in avidity.' ;;;
is}S j. 1\ 1;; 'I I', c • 'Ji' > each issue, and its high, low, and
(2) Read the financial pages (as
final price, and net
change. ;> r -well as the non-financial) from

close;

doing. Bear in mind business¬

—not from

enough to look * at the

movement

once

term

get

after

ing" rather than an '-'evening" at¬
titude; that is, in line with a long-

members

seconds

toward

Treat

even

condition

own

previous
(7): — don't

our

Possibly

market.

work¬

services

hands of their

matter

attitude

section.

respective

the

old-time market "tips" based
what the "big shots" or "they"

are

look at the market-quotations
any
more than is
absolutely necessary.

underlying

for its financial sections.
Read
the general news sections first, irr

tabu¬

lators

tickers coded

Should Read

(1) In

line with
affirmative
caveat

Although
the financial
pages of the dailies may well be
read, the paper should not be read

crew

Financial Pages

tivity.

cluding
the
"Sun-Times,"
the
"Daily News," and the. "Journal
of Commerce."

officers, directors and controlling
ihe

importance and unchanged
emphasis during varying periods
of speculative excitement and ac¬

repre¬

market-as-a-whole.)

persons—as

Don't's—How Not to Read the

equal

sentative clientele in Chicago, in¬

credit,
policies,
and comment from special corres¬
pondents abroad. Editorial and
government

Maintain

financial

coast-to-

particularly full

(1)

for

particu¬

men

phlegmatic

•

It has

such phases as money,

(3) Be skeptical about the SECs
periodic reports of transactions of

V(7) Above all:—DE-EMOTION-

conclusions

issues

the

even

half

your

investigation

lar

AL1ZE YOURSELF!

How The Investor

Averages

subscribers from

coast.

men.

further

movement.

as many

daily

700

Women'spage

leads

same

thinking of owning, without
being
influenced
by
its
price

editorial

and

the *

are

many women;

men,

reports

Make up your mind

on the
value of the security you own, or

distributes

day and Monday issues (the latter
being ''thin" because of the Sun¬
day stock market closings), and
cover

the

number of

many

quotations,
in
some
cases complete and in some par¬
tial, and also both the Dow-Jones

contained

taxation,

equal

the "Sun's"

were

(6)

the society-and-bridge page by an

property before the merger.

editorial nature, most
on
the section's

its quotations

and Sun"
from its own

The

women.

and 3 times

men

"World-Telegram

gets
General

The

is perused by twice

table

dividend.

almost

many men,-and even

50%

nancial

go.

page

plied far-and-wide throughout the
country by the Associated Press.

most

has far to

the

page

twice

value, is grossly misleading; and
its raiton d'etre is incomprehensi¬
ble to me.)
I
;
•

Capital

While the stock market and its

fluctuations

still, as has been true
since newspapers first segregated

their financial

into

news

one

sec¬

tion, receive the greatest amount
of the public's attention, the

em¬

phasis has been steadily shifting
•—and rightly so—from the quota¬
tions per se to phenomena behind
the quotations.

This

shift

;

the

Depression,
demoralized

phases of the

news

mercial

they
slaughtering

likewise applies to

the

world

specialized

publications,

read

York and

Commerce"

comparative

financial

the

new¬

our

dailies is the frequent use of

photograph,

deemed

are

supply

ket

'and

carries

practically

every

its

the

men,

ranging

the

gen¬

Readership Survey
of

readership two

years

which

ago,

is very

interesting although prob¬
ably * understating the ? financial

many as

from the

section's

circulation

as ?of
today.
readers, 35%

Of the paper's total
of the

said

ing, and in general economics, to
those; clerically
tabulating the
daily stock market quotations. In
addition to the product of their

and 19% of the

men

comprised

writers, most editors get the
of one or more of the

were

read

and"-

editorial

The

stock

market

by 30% of the

17%

of the

page

women

they usually read something

the first financial page, which

items.

outputs

principal wire services. ;y;

1949-1950

the
nation's
leading
morning newspapers made a sur¬
vey of its comparative sectional

editor to staff writers specializing
in individual industries, in bank¬

own

mar¬

speculation, as well
the publication's circulation.

One

Paper

bull

current

bellwether

state

financial-and-business

section is the work of

the

financial

eral

Going into the completed prod¬
uct

the

and

useful

the

with

significant symptom of this is
advertising, both as
quality and; quantity.? In fact,
the market advertising, and
partic¬
ularly its tipping—concealed and
unconcealed—usually constitutes

Making

But

"morgue" as .thought to: be
quite a unique publisher's asset.
The Chinese proverb "A picture
is worth 5,000 words," may be
apocryphal, but it assuredly is
being followed..
.

was

the

with

and

negligible.

been somewhat restored.

Financial

item,

became

upswing with its 2 million share
days, the public's interest has

needed

photo

extinction, the public

ume,

pepping-up to normally dry ma¬
(in line with the picturebook craze in annual reports). The
"Commercial

with

1942-1946, marked by a
doubling of prices and heavy vol¬

terial

Chronicle"

but

ran,

early 1940's the interest

stricted.

being
ever
more
generously;,used. Not
merely applicable to events but
to individuals figuring in news
items or making a speech, pictures
which

the

lamb

largely confined to professionals,
and the public's readership conse¬
quently was very severely re¬

section of

the

activity in the dol¬
during most of the 1930's

drums

The Photographic Age

Notable

still

were

process,

was

women.

the

continued.

Exchange's

V'"i

and

comer

it was,

they

readership

final

readership,

With the Street's business and the

New

j .'

Chicago. '

while

their

the "Wall Street Journal" and the

"Journals of

While

•

general
the com¬

financial

news

tables

men

and

The business

perused by 22%

of the

genera] market.

(4)

"N.B."—Pay

tention

the

particular

clues

the

at¬

psy¬

chological factors of the market¬

place,

they

denced.

continually 'evi¬
example:—with the

are

For

perspective

proper

gence,

one

can

and

note

intelli¬

the

many

The
'

distribution

Journal"

take-

the'

service

of the

market

prices, a split-second operation,
comprises one of the speediest
and most efficient operations in
the
entire
newspaper, field.
In
New
York ~ City
the
"Times,"
"Tribune,'?
and-r "Wall ' Street
sup¬

surprisingly enough, by
almost equal proportion (19%)

was

women; On Sundays there
little change from weekdays

the

the
was-

male
of

case

readership,

the

interest

Even

reader

with

the -acceleration

interest

bull

markets,

reasonable

from

Four

boys"

should

tax

other

return,

and

assurance

and

relief

move

non

and

taxation

on royalties
by American com¬
panies should not only be waived
by our Government, but also by

government of the
Patents are the result

recipient.
of

costly-

research and commercial

develop¬
royalties are absorbed
by taxation the desired movement
in this important field will
simply

ment and if

from the

capital to

income

earned abroad

the

...

confis¬

catory attacks,
capital, .will
the

capital
areas; was the
-

not be

Four"

contention ad-

accomplished.
The "Point
boys should give this sug¬

gestion

some

real consideration?'

van cedr by
lames (H .

Drumm, VicePresident

A successful
National
speculative community; as change
offering of. an issue
of debentures ofthe Federal In¬
of mood from optimism to pes¬ City Bank of
termediate Credit Banks was made
simism and back again, and inter¬ New York, in
March 15 by M. G. Newcomb, New
pretation of the news, and of an address beJames
H. Drumm
York fiscal agent for the banks.
forecasting—that follow and accord fore the Ex.with quotations.
There is whole¬ port Managers Club convention in The financing consisted of $70,180,0C0 1.30% consolidated deben¬
sale rationalization of market be¬ New York City March 22, 1950.
havior—on both the up-and-down
April 3, 1950, due
"The question is often asked by tures dated
The issue was placed
sides—after the event.
The news some very naive persons why cap¬ Jan. 2, 1951.
at par.
Of the proceeds, $57,775,is interpreted, usually by varying ital is not moving more readily
used
to
retire a
like
the emphasis, ex post facto in ac¬ from the capital countries to the OCO was
amount
of debentures maturing
cordance with the previous mar¬ non
capital
countries
or
why
April 3, 1950, and $21,405,000 is
ket action.
technology and know-how are not
"new money."
As of the close of
So—from your investing point- moving out more rapidly," said
business April 3, 1950, the total
of view, keep your perusal of the Mr. Drumm. "The answer is obvi¬
amount of debentures
ous.
outstanding
Capital will only move if it
news as an
ancillary function of
amounted to $482,885,000.
can secure a satisfactory return on
generally keeping posted as "back¬
its investment and be assured of
ground" (to use the conventional
fair
and
Two With J. H. Goddard
just treatment.
The
press-relations
term);
selecting
therefrom those items specifically quickest way for the non-capital
(Special to The Financial Chronicle)
countries to attract new capital
related to valuation of particular
BOSTON,
MASS. — John M.
is to give the capital already ; in¬
companies-as-properties or indus¬
vested in the country
a
square Gleason, and Horace C. Thornton
tries
and, as stated, for taking
Those countries with a good have become affiliated with J. H.
note of the psychological foibles deal.
performance
record
have Goddard & Co.
exhibited.
For example, over- or past
Inc., 85 Devon¬
been
successful in attracting a
under-valuation of an issue which

the

—

you

already detected,
invaluable
confirmation
if

may

have

certain

amount

American

In¬

shire Street, members of the Bos¬

Capital during these re¬ ton Stock Exchange.
get
cent troublesome years and some
you can note the reason therefor
in a general fallacy indulged in foreign licensing agreements have
With Elmer Bright
been negotiated and successfully
by those makers of the price who
(Special to The Financial Chronicle)
concluded.
The pace
has been
are
responsible for the disparity.
slackened due to the inability in
BOSTON, MASS.— Thomas J.
(5) For the determination of
has
become
connected
the yield of common stocks today, many countries to convert foreign Ezekiel
currency profits to U. S. dollars.
it is necessary to read the tables
with Elmer H. Bright & Co., 84
Unfortunately profits, dividends
in several publications, and get a
and royalties have been generally State Street, members of the New
result through a process of osmo¬
classified by Control Boards in a York and Boston Stock Exchanges.
sis. This is due both to the helterdustrial

skelter variance between the divi¬

dend

policies,

particularly

with

regard to extras, of our corpora¬
tions

(the to-be-expected

ring annual
same

Sundays.
•

indulged in by the investment and

distaff side there

halving- of

a -

but

"Point

given reasonable

are

loibles recurrently and cyclically

men, and

Split-Second Action

The

remember that if private investors

thing

from

company); .and
different

recur¬

dividend is not the

ways

also

company-to-

due

the

in which each fi¬

category after luxury imports in¬
stead of
up

enjoying a category right
essential
imports.

with

Double taxation has been an even

greater deterrent in the movement
of

capital and in the assignment
licenses abroad," Mr. Drumm
continued.
"In the case of the
of

latter,

royalties

should not

even

from

patents

be treated as net

H. C

Wainwright Adds

(Special to The Financial Chronicle)

BOSTON,

MASS.

—

Andrew

Fiske has joined the staff of H.'C.

Wainwright & Co., 60 State Street,
members

the

New

X°rk ai)d

Boston Stock Exchanges.

(1438)

THE

COMMERCIAL

Continued from page 3

income

FINANCIAL

the annual rate of

and

over

$218.4 billion which after Federal,

five

years

state

was

and

local

Wartime Savings Provide Strong
Cushion for Continued Prosperity

prices

with

of 1940 dollars

extra

effort

ap¬

plied to. sales and production

ana

with

favorable

attitude

3,395,000 compared with 8,120,000
in 1940.

disposable

taxes

personal

indicated

income

the

part

and

labor,
prosperity *in 1950

In 1950

(1) Non-agricultural
employ¬
in January and February,
has

exceeded

all

1953

the 1940 level of $75.7 billion. This
the increased ability of

could

dividuals

The

increased

married

With

the

total

the

who

labor

em¬

These
held
all

billion

mature

sayings

bonds

billion
and

in
of

1940.

income

mately

classes

half

with

not

were

above

force

This

what
a

would

un-

ma-

savings such

1940.

standard

1950

this

living
total

1940

and

about

en¬

(6)

per¬

-::j'

Consumer

debt

Even

over

reaching

amounts

new

over

current

power—consider

effect

compared

with

entered

17%

of non-veteran males
employed in
February, 1950.
''

about

the

labor

1,220,000

force—adding

power,
to

•

Feb. 1948 '

1950

the

total

personal

of World War

12,106,000
11,244,000

total

Feb. 1950

12,352,000
11,507,000

12,508,000
11,721,000

(8)

1940

BEYOND NORMAL EXPECTANCY
1940

1949

$175

billion

Bonds

Maturities of U. S. Savings
will

7,541.000

play

power.

sumer

the

expenditures

same

consumer

purchasing

One billion mature in 1950

period

exceeding
1949.

retail sales in January, 1950

increasingly 2% ahead

important part in sustaining and

stabilizing

4 MILLION ADDED TO
LABOR FORCE SINCE

TOTAL INCREASE IN LABOR FORCE

—

compared with $52 billion in 1940.
Feb. 1949

Employed Male^Veterans
Non-Agricultural

1940

Total
were

January, 1949 while

February, 1950

was

ahead

February, 1949 in spite of the

ily

the

standard
A.;.;.--;
for

■

im¬

living/are
in fam¬

A../;

rapid increase of

ulation—2,553,000
1949

total

Jan.

ing

requirements.
in

1949

than

1950

the

hous¬

new

number

dwelling units
27%

was

last

the

six

homes

new

the

two

same

months of 1949 by 60%/ It is

that

greater

months

January-February,

160,000

exceeded

pected

brought

the last six months

574,300

while
-

reach

The

non-farm

pop¬

Jan.

1950, to
150,604,000—has

new

started

our

from

continued pressure
of

47%
births

2,538,000

1940.
The

our

ex¬

population

total

about 152 million
by
1950—an increase of
15^2%

will

July,
since

1940.

Significant

taken

place in

changes

the

have

distribu¬
population since 1940.
Estimates for 1950 indicate:

Disposable Personal

age

our

<•

45%

♦200.0 Billion

children under 10

(9.5 million more)
—8% fewer 10 to 19

1949

(1.8

3,395,000

ABNORMAL INCREASE
♦

(As result of higher percentage
labor

living

groups—changes that

than

greater
in

UNEMPLOYMENT

of certain
groups entering

tinued high. Births in 1949 ex¬
ceeded 1948 by 1.3% and the total
of 3,729,000 born in 1949 was

1948

Income After Taxes

in¬

increased markets and
increased employment.
■
> >
(12) The birth rate has con¬

(13)

AVERAGE

rapidly

mean

tion of

POPULATION

costs

opportunities

income

can

re-

1950 GOAL

items that made

standards

started

NORMAL INCREASE BASED ON

about

substantial

indicated by these shifts

tarding effects ,of a national coal

1950 REM. CONSUMER PURCHASING
POWER CAN BE 60'/. ABOVE 1940

increased
basic

proved

workers

the

A Real

January

to the next

family's former
living. ' H

„

averaged

spending

increase

the

•

unemployment

in¬

discretionary spending
even 3 after
applying the

present

While

savings
than

disposable

crease

this

might have had if over $5 billion
ing the 1940 ratio to disposable had matured in such
depression
beyond
income.
years as
1933 when total retail
what the present population in
this age group would have added
(7) The backlog of accumulated sales were about $24 billion,
Non-agricultural
employment
savings
of
individuals
totalled
In 1949 averaged 50,684,000 com¬ at 1940 participation rates.
(9) Personal consumption exabout $220 billion at the end of
penditures for all goods and servpared with 37,980,000 in 1940, and
(3) Total disposable personal
1949 or over three times the 1940 ices in 1949
were at the all time
the average weekly
earnings of income after taxes in 1949 was level
of $68.4 billion and has a
those employed in
high annual rate of $179.4 bilnon-agricul¬ $191.2 billion, highest in the his¬ real
purchasing power at today's lion compared with
tural industries were more than tory of the nation and 2V2 times
$178.8 billion
prices about double the purchas- m. 194®*
double the prewar rate.
the 1940 level of $75.7
T^e average consumer
billion, or
price index in 1949 was 169.1 com¬
Total employment in
the savings that ex1949) in¬ over 4 times the depression low ing P°wer
pared wjth 171.2 in 1948 indicating
isted in 1940.
cluding
those
in
the
Liquid assets of an even
Armed level of $45.1 billion in 1933. Dis¬
greater physical volume
Forces, averaged 60,176,000 com¬ posable income in 1950 could reach cash and government securities in 1949.
owned by individuals is 3^ times
pared with
1950 has started out with con47,910,000 in 1940, $200 billion or 5% over 1949. In

ployment

consumer

this there

purchasing

what

(or

come group

sav-

is a revolving fund of over
billion annually in the hands
of consumers adding to the turn-

4.9%, in

higher

4,000,000 since the spring of 1948
in the group over
$2,000. < When
families move up from lone in¬

re-

disposable

net

14,000,000 to 35,280,000 in Febru¬
1949.
The 1949 figure even

feet

unusu-

the 1940 ratio to savings—it could
be increased 40% without exceed-

with

the

5.5%

represents

savings accounts

reached
of

the $3.7 bil¬
This would be

ary,

ings bonds are sold; each year
equalizing the maturities, the ef-

•'i.V-v';.

ally low in relation to savings or
to disposable income.
Debt could
be increased 75% before

above

in that they do mature and do
quire a decision.

dis-

cretionary spending power could
$107 billion or -over four

1950-

and

over

be over

compared

Prewar,

families

what might have been purchased

over

something

in¬

goods
$12 bil¬

units)
have moved
up
to the
level above $2,000 since 1941
with
an
increase in this group from

out
of
current
income.
These
funds differ from other forms of

for

rate

after

for

(11)
There have
been
some
really startling shifts upwards in

and will require a decision
on the part of each holder as to
whether to reinvest or to spend

the distribution of families
by in¬
come
groups.
Over 21
million

ture

1940 stan-

and

come.

basis of

hence they represent
encumbered cash when they

the

ratio

and

of'loans,

auto¬

1949

even

four times

never

bonds,

some

1950

can

1940.

consumer

transferable

expenditures

income

widely

approxi-

all

spending units having

available

money

are

the

$188 billion.

lion saved in 1940.
at

annually,

ing the

living

have

level

prewar

billion

"small denominations by

They

dard of living for the broad basic
items of food, clothing and shelter.
This is available at the discretion of the consumer for rais-

women

husbands)

tered

Only 6% of the male veterans

the

amount

over

centage far greater than prewar.
Also, in the age group ;of 14-19
years old a much larger percent¬
age of both boys and girls have

year.

into agricultural

$26.5

is
accounted
for
by reach
between the ages of 35-54
"times

(mostly

great

about^matches the required to maintain

unemployment.
force

and

between

over

services

lion,
1955

The rate of savings by in¬

creased

and

ige-c

reach

flO)

6.8

1954

After

strike

field.

$10 billion greater than
D

4.0

over

unemployment figures mis¬
leading in any analysis of pur¬
chasing power since this abnormal

women

its high¬
est postwar level for this time of

gone

This

increase

February, 1950 reached

have

1940.

7,540,000 from 56,030,000 in 1940 to 63,571,000 in 1949, but 4,000,000 of
this, increase has been abnormal
beyond the growth of population.
About 2,100,000 of this abnormal

highest February
on
record
(February, 1949) by
556,000.' January, 1950 also was
the highest January,
exceeding
the same month of 1949 by
98,000.
veterans

since

force

labor

ed the previous

•

*952

$113.2 billion in terms
about 50%

$10

—

four times *were not to be used

makes

total

high records for this time of year.
February, 1950 non-agricultural
employment of 50,730,000 exceed¬

Employment

labor

increase alone

ment

1950

and

1950
markets
for
goods
and
services with $200 billion of dis¬
posable income could be about

millions)

-r—

have

Summary of Facts About Potential
Consumer Purchasing Power
•

Year

195Q

strike
motive

Amount

rate

(4) Real purchasing power in
1949 after correction for taxes and
was

govern¬

canj

$28 billion in the
after 1950.

of $200 billion.

The employment level, particu¬
consumers to buy goods and servlarly in the non-agricultural in¬ ices as measured in
units or imdustries
is important to
watch proved
quality. With $200 billion
and 1951 in¬ from the
standpoint of consumer of
disposable income in 1950 real
stead of depression.
purchasing power being gener¬
purchasing power could exceed
Before becoming too discour¬ ated—and it is
holding at a very 1940 by 60% and 1949
by over 6%.
aged about the future let's sum¬ high level.
(5) The surplus income availmarize some of the facts about
(2) 4,000,000 people, mostly able for
discretionary spending or
potential
purchasing
power
in women, in excess of normal ex¬
saving in 1949 was at the rate of
1950.
pectancy have been added to the
$97.5 billion or almost

business

ment

Thursday, April 6, 1950

reflects

toward

CHRONICLE

(3.8 million more)
16% more 40 to 59

78.8

lnflotion

million fewer)

(4.9 million more)

30%

force)

and

over

(4.1 million more)
151/2% more total population

(20.5 million
♦121.2

TOTAL LABOR FORCE 1949
1940

1940

63,571.000

(1940 AVERA6E UNEMPLOYMENT

56,030.000

♦45.5
Increased tool

Disposable fcrsonol

8,120,000)

(60* Increase

over

19*0

6* Increase

Purchasing few

Inoome After Taxes

* PARTICIPATION*
1940

WOMEN

14-19 years

old

35-44

1949

o*r

1949)

23.3%

32.5%

28.8

381

1,050.000
1,050.000

24.3

35.9,

55-64

18.7

25.3

450,000

7.4

9.6

MEN

14-14

44.2

53.6

65 and over

45.0

46.9

non

730,000

institutional population in each
age group as 100%, the per cent
ticipotion shows the proportion of the
group in the lobor force.

Within

move.

Income After Taxes

the

of Dollor)

our

United

popula¬
States

are

Nearly 28 million

lived in

Corrected for \falue

the

persons

different place on April
1949 than on the same date a

year

earlier:

Different home in

1940

100,000

4,000,000

Migration of

large—Americans

♦757BILLION

(Disposable Personal

630,000

TOTAL AODED

ih the

ing and household equipment as
as ori
savings plans for edu¬
cation, etc!
tion

in 1940 Dollars

3.270.000

TOTAL MEN ADDE0

facilities, foods, hous¬

well

(14)

Purchosing fbwer

130,000

TOTAL WOMEN ADDED

school

Real

590.000

45-54

65 and over

for

ESTIMATED ABOVE NORMAL
ADDITION TO LABOR. FORCE

total)

needs

Total Real

Purchosing Fbwei

SOURCE OF ABNORMAL INCREASE
IN LABOR FORCE 1940-1949

This change in age
groups will
have significant effects on

same
county
Migrant—

1950 60AL

Within
100

Consumer Price Index

Population
Real
Per

131,970,000

Purchasing Fbwer
Capita (fcipowble Income

After foxes in Terms of W90

Dollors)

♦ 574

165

151JBOO.OOO

(July 1.1950)

♦BOO (39* increase

oxer

18,792,000

state

3,992,000
1,782,000
2,562,000
Apr. 1, 1948
476,000

Bet. contiguous states_
Bet. non-contig. states

Abroad

1940)

Total

(15)
could

Moving

Our
still

27,604,000

standard

improve

living
a

third

Volume

the

over

reaching

Number 4896

171

before

level

present

the $50

that would
be typified by the level of living
of fthe $50 a week families in 1940.
In ,1940 bur economy and standard
of living was typified by the family with a $25 per week total in-

power from current income plus

have

(at

1940

or debt expansion in living made possible by our pro¬
changing their standard of living, ductivity and by the increased
We have the additional new in- real purchasing power resulting

now

exceeds
.

inflation has limited the
in real

purchasing

increase

that

V Since the

war our

operated on

a very

Will to Buy—A Factor in
Changing Standards of Living ;

Economy has

high level.

There

three

are

CONSUMER HOLDINGS OF

LIQUID ASSETS 3ft TIMES 1940,

1940

BILLION
:\

4 Times 1940

*20.0
i

r//

'/ /

million

has

from

moved

rural

areas

have

decreased

about

1940 while the

population> wil 1

non-

have

in¬

resulted in about

creasing

million

will have

soon

influence

school

in¬

fa¬

*60.9

cilities, housing requirements, food
requirements, and the general
level of living;
that some
million marriages since 1940 have
brought new families into exist¬
ence representing over 40% of all
our
families; and that the educa6'4Times 1940"* tional level of our adults is now

fir '

Savings and Loan Shores
Currency
*9.1

1940

2 Times

!''
i

Deposits

"'considerably higher than in 1940.
Time

*24.9

Deposits

"*■

All

these

factors

are

that

point to increased market poten¬
tials.

*9.4

U.S. Gov't Securities

1948

1940

been

Liquid Assets (in 1940

♦ 52.4

% Of

Short

$9 1

debt

Billion

could

factor

—

has

and

detail
very

high level.

important
buy — as the

the will to

'field

97,

mar-

—

power

This leaves the third

(Approximately Double)

$16.3 Billion

Billion

177,

Liquid Assets
term

covered

shown to be at

171

$102 2 Billion

Dollars)

Short Term Consumer Debt

purchasing

—

IOO

Purchasing Power of

are

sure

then.

This

are

production.
Last year, 77,868,353 tons of ingots and steel
castings were produced. The all-time record was set in 1944,
when a wartime peak of 89,641,575 tons were turned out. Biggest
peacetime output was in 1948, when the industry made 88,640,470
for

tons of steel.
No

expects steel output this year to break these records,
its outlook today, total steel production this year
could amount to between 80,000,000 and 85,000,000 tons when
the last ingots are counted, this trade paper observes.
-i
The Detroit labor situation remains the biggest roadblock
but

liquid os«ts!

inwhich

lhave

their

But

marketing

greatest

American

keep

Stpck Exch.
Weekly Firm Changes

*7.6

BILLION

The New York Stock Exchange
has announced the following firm

] changes:

*6.8

f" Transfer of the exchange

memrbership of H. Lyman Stebbins to

BILLION

;

BILLION

United

■■■

:,v

Auto

;

*4.0

Jr., will be
April 13. It is unToerge will act

Iron

and

Steel

Institute

announced

this

for the entire industry will be

96.8% of capacity for the week beginning April 3, 1950. This
is an advance of 0.1 point from last week's rate of 96.7%.
Output for the current week will be the greatest since the
week of Mar. 21, 1949, when production reached 1,863,800 tons.
This week's operating rate is equivalent to 1,845,300 tons
of steel ingots and castings for the entire industry compared
to 1,843,400 tons one week ago.
A month ago the rate was
73.5% and production amounted to 1,401,100 tons; a year ago
it stood at 98.8% and 1,821,400 tons, and for the average week
in 1940, highest prewar year, at 1,281,210 tons.
ELECTRIC OUTPUT RECEDES FURTHER FROM PREVIOUS
WEEK

distributed by the electric
industry for the week ended April 1, was esti¬
mated at 5,911,936,000 kwh., according to the Edison Electric
The amount of electrical energy

light and

power

Institute.
It Was 81,126,000 kwh. lower than the figure reported for the
previous week, 534,274,000 kwh., pr 9.9%, above the total output
for the week ended April 2, 1949, and 875,148,000 kwh, in excess
of
the
output reported for the corresponding period two
years ago.

derstood that Mr.

individual floor broker.

..as an

BILLION

Toerge,

Norman K.
considered

*56

American

of the steel-making capacity

standard of living and
income at high levels.

our

T New York

BILLION

*5.4

the

week that the operating: rate of steel companies having 93%

opportunity.

*8.8

BILLION

with

The

men

ate the demands that will raise the
5

*5.7

conversations

drop in auto production,! always a fearsome thought to
steel people, is not feared as much now as it has been—because
demand in other industries seems high enough to absorb a good
share of Detroit tonnage if it should become available. There is
continuing evidence, for instance, that some appliance makers are
holding back expansion plans or new models for lack of the extra
steel required.
Conversion deals are still going strong, indicating that buyers
are Just as anxious as ever to obtain steel.
Orders for sheet and
strip are booked through June with some even being taken for
July delivery, although the mills aren't anxious for commitments,
more than three months in advance, 'The Iron Age" concludes.

have,. in 1950, a market
152,000,000 people with
proven high purchasing power but
':with a standard of living which
has lagged behind that purchasing
•j power.
This then is the challenge

SUSTAINING AND STABILIZING CONSUMER PURCHASING POWER

BILLION

Motors launched serious
Workers.
/'>"

about

US. SAVINGS BONDS MATURITIES OF GROWING IMPORTANCE

*5.6

one

judged

barring smooth progress toward this goal. Negotiations at Chrys¬
ler are still stalled on dead center.
Meanwhile, the second round
in the auto-labor tussle got underway last week \yhen General

We will

double before reaching 1940 rotio to

the steel business

Tketing
»

The second major factor in

(DECEMBER)

(DECEMBER.) "
Consumer Price Index

steel

living

*52.6

'it

men

means a very good year for steel.
Operations this week
scheduled at 97% of rated capacity, up half a point from last
week.
On an annual basis this is equal to 96,000,000 ingot tons of

births which

i. -

/
f

Demand

know

population

has

ffl

'<}

of the smartest

can't last long at this level—that the second half will see a drop
in demand.

come

will

by 23 million; that the
abnormally high birth rate since
1940 continued through 1949 and

BILLION

cracking crystal balls all over the
Every major mill in the country is booked to capacity
on every major product, according to "The Iron
Age," national rpetalwOrking weekly, in its current summary of
the steel trade.
Steel is moving to customers on the allocation
system developed during the hectic postwar period.
Mills are
being swamped with requests for steel faster than it can be turned
country.

for months ahead

Some

looks first

creased

1
Hi

Holdings of Individuols

96.8% OF CAPACITY IN

A careful check* ,by "Iron Age" editors in nfajor market areas
throughout the country revealed no cracks in front line demand
for steel.
On the contrary, most of those who had been predicting
a slump at the end of the first half are
extending their predictions
to the end of the third quarter—and
they aren't so sure it will

farm

Times 1940

*30.8

man

on people because
starting point of all

the

million from

*52.4

will

u
a

Totol Liquid Asset

is quite different;
that by 1950 the farm population

■!"

■

There is no real evidence this week that there will be any
serious drop in steel demand before the end of the third quarter.

ard

-•

1940

out.

cities where the pattern and stand-

2% Times 1940

*10.5

•>

■

have

1948

■

that the

over

3ft Times

marketing

markets.
U.

It 1

grown by
131,669,275
in 1940
to about 152,000,000 by
July, 1950, or an increase of over
15%; that about 9 million people

WITH DOUBLE THE PURCHASING POWER

'■

power.

his statistics

that

174.8

by President Truman in January. The drop in receipts may
a
dampening effect on Congress' plans for cutting excise

STEEL OUTPUT EDGES HIGHER TO

(3) The will to buy.
The

factors
are:

(1) People.

(2) Purchasing

basic

that make markets—these

must be kept high because "break-

standards another third to reach

Industry

CURRENT WEEK

The

yea®s

living

power so

would need to expand

the next five

Steel demand this week is

inf bonds maturing each month,
and in increasing amounts over

$50,

■.

from increased productivity.

While average/ fluence of a large volume of sav-

prices).

page

taxes by $1,000,000,000 or more.

savings

typi-

from

tinues the Treasury's receipts for the current fiscal year would
be at least $1,000,000,000 below the estimate of $37,763,000,000
made

or one

(1439)

The State of Trade and

low ratio of consumer debt if con- public is educated to accept and

week income

per

Continued

sumers shou>d choose to .utilize insist on the higher standards of

$50

family" income

in most busihigher than prewar that any major recession^
consumer: demand would quickly
make production unprofitable and
lead to heavy unemployment,
There is no need, however, for
this serious drop in demand if the
are,

were

living about double

fied

CHRONICLE

much

nesses, so

indicates that we
high level of purchasing

FINANCIAL

standard

in.production indicated'we

capable of supporting

cK-

have

points"

even

potentially powerful increments to
purchasing power through the
Our wartime performance huge backlog of savings and the

come.

week level in terms of

1940 dollars.
All of this

economy

COMMERCIAL

THE

Hugh A. Johnson retired from

partnership in George D. B. Bonbright & Go. on April 1.

CARLOAD1NGS TURN DOWNWARD IN LATEST WEEK

Loadings of revenue freight for the week ended March 25,
1950, totaled 717,233 cars, according to the Association of American
Railroads.
This was a decrease of 8,337 cars, or 1.1% below the

preceding week.
.

CORRECTION

the

March

issue

the

was

re¬

amounted to 175,874 cars, an Increase of
138,705 cars Above the corresponding week a year ago, but a
decrease of 15,360 ears below the preceding week this year.

BILLION

Coal loading

The week's total represented an increase of 120,904 pars, or
20.3% above the corresponding week in 1949 and 53,570 cars, or
*

"Financial Chronicle"

ported that Sherman Shiels Hoelscher had become associated with

BILLION

8.1%, above the comparable period in 1948, in both of which years
loadings were cut by work stoppages at coal mines.

Kaiser & Co., San Francisco, and

*1.6

AUTO OUTPUT DIPS IN LATEST WEEK

been

BILU0N

Hoelscher had formerly

Mr.

that

'1.0

scher

partner in Sherman Hoel¬

This

Co.

was

Sherman Hoelscher is
his

1950

1951

1952

MATURITIES AN0

1953

1954

1955

1956

AMOUNTS OUTSTANDING AS

1957

1958

1959

OF DECEMBER 31/1949

own

firm

scher & Co.,

Francisco
son,

incorrect.

continuing

of Sherman

Hoel¬

members of the San

Stock

Exchanges.

His

S. Shiels Hoelscher, has be¬

come

associated with Kaiser & Co,

According to "Ward's Automotive Reports" for the past week,
in the United States and Canada ex¬
panded to an estimated 139,260 units compared with the previous
week's total of 140,196 (revised) units.
/,
The total output for the current week was made up of 108,437
cars and 24,440 trucks built in the United States and a total of
4,688 cars and 1,695 trucks built in Canada.

motor vehicle production

The auto industry yesterday finished Its second highest
production quarter since 1929, with no let-up in sight, Ward's

Continued

page

4.0

COMMERCIAL

THE

(1440)

Continued from page 39

trade.

•']

'' \

■

; -

do, who will give him orders, who

the report added.

119,088 units produced in the

like 1949 week.
So far this year,

in this

assembled

1,350,529 cars and 297.885 trucks have been

country and 65,277

cars and

23,640 trucks in

Canada.
BUSINESS FAILURES VEER UPWARD

vacations.
:

its

Commercial and industrial failures rose to 198 in the week
ended March 30 from 186 in the preceding week, Dun & Brad■

Despite this increase, casualties were not as
numerous as a year ago when
216 occurred, but they remained
considerably above the 91 in the comparable 1948 week. Failures
were 40%
below the prewar level of 310 which occurred in the

i
;

similar 1939 week.

and

There

that of

only line in ^hich more failures
The week's increase was concentrated
in the Pacific and in the South Atlantic states. • Failures in the
Middle Atlantic and Pacific states continued to be moderately

trade

the

was

New

year ago.

a year ago, but a
vailed in most areas.
'

•

Coast +

PRECEDING WEEKS

•

wholesale

The

food price index,

compiled by Dun & Brad-

street, Inc., remained unchanged last week as advances and de¬
clines in individual commodities balanced each other.
The March
28 figure
it shows

at $5.79 is slightly above the $5.77 of a year ago, but
drop of 14.2% from the $5.75 recorded on the corre¬

sponding date two years ago.
-

}

The index represents the sum total of the price per pound
It is not

of 31 foods in general use.

cost-of-living index.

'■

Continuing its mild upward movement, the daily wholesale
commodity price index, compiled by Dun & Bradstreet, Inc.,
advanced to a new high for the year at 250.59 on March 27.
The
index closed at 250.47 on March 28, comparing with 249.48 a week
earlier, and with 255.53 on the corresponding date a year ago.
'

Grain markets continued to strengthen the past week with

all deliveries of wheat and corn touching new high levels for-

the

season.

7'■ 7'

-77 '7.7

777-'

>4i.

|
' / The advance in wheat reflected a lack of pressure in the cash
) market together with reports of damage to the winter wheat
:

•

in parts of Kansas, Texas and Oklahoma as the result of dry
infestation. Export demand for wheat was

crop

during the week, being somewhat less than in
period.
/ 77;:777'7
Department store sales on a country-wide basis, as taken from

<
the Federal Reserve Board's index for the week ended March 25, \

1950, showed no change from the like period of last year.'' In
preceding week an advance of 1% was registered from the
like week of 1949.
For the four weeks ended March 25, 1950,

77,

•>'.7 7'7\:'\' 7.777;/7

week ago.Coffee

futures advanced quite sharply, aided

7~77'/:7

Lard prices were stronger in the week.

still the rule.

Trading in lard futures on the Chicago Board of Trade
broadened considerably with all deliveries selling at new sea-

)

sonal highs.

Lending support to the market was the strength shown,an
1 vegetable oils which more than offset continued easiness in live

hogs which sold below government support levels throughout the

'77:77',.■■■ -7.= ■•'7,7'' 7' "777

Cotton prices in the

..V:":^'^'7 777.',

domestic market finished slightly lower

Jast week after fluctuating irregularly over a narrow range during
the

period.

Inquiries were fairly numerous, but domestic mill
lacking owing largely

demand continued slow with buying support

to legislative uncertainties at

Washington.

] 700 bales last week, from 95,100 bales the previous week and

com-

} pared with 121,200 bales in the like week a year ago.

j
i

1 The export outlook remained favorable.

Foreign shipments of lint cotton, according to the New York

] Cotton Exchange, for the season through March 27 approximated
j

3,365,000 bales, as compared with 2,838,000 in the like period of

! last season. Cotton ginnings from the 1949 crop, as reported by
j the Bureau of the Census, totaled 15,900,502 bales, compared with
j 14,580,279 bales the previous season, and 11,557,138 two years ago.

j
Entries of cotton into the government loan stock in the week
] ended March 16 were placed at 12,100 bales, as against repayments
net stock of about 2,558,500 bales un-r
1 redeemed on March 16.
The cotton gray goods market continued
1 quiet with some constructions showing further easiness unde^,

J
1

bales, leaving

pressure of resale
quoted by mills.

offerings of goods at lower prices than those

j RETAIL TRADE DROPS UNDER SEASONAL EXPECTATIONS
\
—WHOLESALE TRADE ORDER VOLUME FRACTIONALLY BELOW 1949 WEEK

subjected

the decisions of business man-

what he shall be
offered, where and when he can
get it, and how much he will have
to pay for it. The business management can make its rules and
back them up with administrative
organization, physical planL and
equipment, money in the bank,
and propaganda.
the

But

great

strength
sumer
or

inequality

not

it appears—in fact, the

be with David Conbuy,

may

if he does not have to

his

postpone

can

buying, or
will

find something else that

do, or some other place to get it.
Then

crease

4_yoltime

was

on Wednesday of last week; the in?
below seasonal expectations, however. Total dollar

slightly below that for the comparable week

a year

the customers, and
employees of
all
rank

the

from

"No!

the opportunity to
will do my business

with another business." When the

make

governed
powers

rules

ability

the

them,

enforce

But
collectively the customers
determine what, rules shall in the

end survive.

When there is

choice to the

Corporation become
clumsy handicaps before David's
power

of choice. The company and

rule-making

can say

great

"No" they have
those of the

tricity

transporta-

sometimes

which

exists

rule-making

activities

both necessary and de¬
sirable. Because of them, business
is

are

private

name

structure

government

only. Let
of

business

put

look at the
and

see

the

together

inside.

Uon, the customer is helpless if , Krom whatever angle we apthe product or service is mdis- pr0ach a business
as
we
rise
pensable for health and comfort, higher and higher through the
In these cases of natural or arti- levels of authority
we
finally
ficial monopoly, the more im- come to a chief executive who is
portant

rules

the

affecting*the customer

company
regu-

are

usuanv the President nf th*
pany.

■V'\'7,i k

lated by public government.

find

managers

lu.u

The Employees

nnm

0 tne COm

President the Boss

The

fourth

group

7 Inmost things in

;

people

governed by private business are
the

employees,
of

President

all of them. The
company,
the

the

Assistants,
the
Superintendents
and Managers, Foreman, bosses,

slowly but surely force the busi-

and

rule-makers to modify their
rules to meet the views of the

part-time and full-time, employed
or unemployed—all are governed

with

faced

ness

governed.
Does

this

^
that

mean

the 1

cus-

tomers make the rules? Not at all.

only

means

rules

,.,u™

that

....

that when the
made

are

cus¬

worklrs-imale

will

still

offered

makers,

promulgating
of

when

and

where and for how much. Neither

individually - nor

codes

thority

what

collectively

self

are

declare

nnpn

rik-irwV*
nd>

by the rule-making; of private

man¬

business the

securlties to the
business. Some of these governed pany> sell
uCj or djssoive
business.
are themselves subordinate rule- otl;er thi
he
t d
••
instructions with the

will

i^°SSf' forking:
^ ^js 1subordinates, he gets
fn
gS that £ave, to,be
*?>^ A$'""V <*f<* he also dee P°'lcles that will be
77 777 l
Can"

JJ7f 5v
'
® J?
female! £™Ci,?n«ehI cZ.ni

issuing

decide

and

choice,

the power of

acceptable to" them. Business

will

-^77'"

%• -

? -

gets done the things

business

how

supply,

true of telephone service or

Vice-Presidents, the Deputies and

the

that

means

as is
elec-

js the only source of

tating condition called "idle plant
expense." Idle plant expense will

A business

than

debili-

themselves

customer, when a single company

imposing property and
organization and resources of the

its

have

customers

the

which they are

business-state

and
au-

dent

toeappoint

himself

pub^
One

« tVhig

0wn
«

■

<ff.'°me™es a company has

employed.

,
■
,
..
officer who is called Chairman of
people, the rules that the board. The
powers and duties
most intimately affect their lives
of a chairman do not follow a
are made by their employers.,.
consistent pattern. - In general the
These rules determine for the powers over'" policy that are' reindividual where he shall work,
^served from the president, and
■c

For most

In the wake of vigorous promotions consumer spending rose

governed under the
rule-making of business,
stockholders,
of
the

the

agement

j slightly in the period ended

that tolerable free¬

the

Strongest business.agement as

under the

we see

the

say,

Ani Director-Trustee

tomers have

Thus

comes

do it

courage

conditions £ under

It is obvious that

dom

Corporate Management
being

execu¬

vendors,- of

of 92,300

the

only

the period.

the,

\ 1930's, r the reality of freedom,
guaranteed politically under the
Constitution, was
actually
lost
under the economic exigencies of

Goliath

for

large-scale unemployment of the

from page 6

disadvantage

cus¬

to do his

elsewhere

Even

and

private

can

Reported sales in the 1,0 spot markets decreased slightly to 87,-

choice.

men.

from the like period last year.
In the preceding
week an advance of 1% (revised) was registered from the similar
week of 1949.
For the four weeks ended March 25, 1950, a de¬
crease of 1%
was reported from the like week of last year.
For
the year to date volume decreased by 6%.
*

week.

'7 '77:V7

the

subjection to business rule¬
making is supportable by free

•''7

by improved demand for actuals at steady to rising prices.
The
domestic flour marekt remained quiet with hand-to-mouth buying

CV;.

'•

was,

company

ability of

which

According to the Federal Reserve Board's index, department
City for the weekly period to March 25,

I shipped during the next few months.
Cocoa was in somewhat
better demand as the week closed; prices were steady compared
with

'<7V-T-

the
negotiation

too the strength of the

the

are

1950, fell 4%

The outlook for grain exports in the new crop year, however,
\ is regarded as very poor because of the marked improvement in
7 crop prospects abroad. Corn prices continued to rise, aided by
{'light country offerings and substantial sales for export to be

true

employee lies in his ability, when
he has it, to get another job from
another employer or to get along
without doing any work. The laws
and the unions may help provide
a
basic setting for private busi¬
ness
rule-making, but they can
never
do enough to give to the
employee a real feeling that in
conforming to the rules affecting
him he has exercised responsible

where

store sales in New York

Continued

the

mal¬

tive, the ability to get a job else-

for the year to date show a drop of 3%.

ago.V'lV'
-

free

change from the corresponding period a year

providing an incentive toward increased
sales, retail trade in New York the past week failed to come up
to previous expectations.
As a consequence, department store
volume dropped an estimated 3% below the like period of a year

;

■

the

weather and green bug

fairly good.

Order volume for the country was

With Easter shopping

SWING ESTABLISHED NEW HIGH FOR YEAR

•

customer

business

oc¬

the

cases

Just

con¬

indi¬

the

unequal

business,

the comparable 1949

ago, but

WHOLESALE COMMODITY PRICE INDEX IN MILD UPWARD

extreme

the

tomer

fractionally below the moderately high level for the similar week
in 1949.
There was a dip in the number of buyers attending

found

re-ordering of wholesale goods was accelerated in

reflected

nor

than

the

with

wholesale centers

sales

protection

apparently

+2 to —2; East and South 0 to —4; Mid¬
—1 to —5; and Southwest and Pacific

week's level.

strength of

1 to —3.

doing

laws

labor

can

administration.

the week and helped to raise total dollar volume slightly above
the

WHOLESALE FOOD PRICE INDEX ARRESTS DECLINES OF,

period ended on Wednesday

Northwest

The spot

England

and

west

mild decline from the 1949 level pre¬

above

casional

estimated to be from unchanged to 4% below
year ago.
Regional estimates varied from the levels of a
by these percentages:

year ago

company

without

give the broad framework of
ditions of employment
and

week #ms
a

neither

But

vidual

Total retail dollar volume for the

last

other

some

getting by
work at all.

trade-unions

the week earlier.

and the third
getting a job

chance

generally a steady demand for television sets, radios
furniture. Slightly less lamps were sold than during

was

gov¬

private organiza¬

employees,

working for

goods

electrical appliances were in slightly

many

other

the

and wooden

than in the similar week of the preceding year.

durable

of public

labor laws

union
tion

ately high interest in kitchenware and china in some localities.

Wholesale

lines of

some

must

ernment, the second is the trade-

demand; spring promotions were reflected in a moder¬

increased

occurred than

the

for

look to
balances. The first

weakness,

three offsetting

high level in others.

and

rules

the

makes

enforces them. To compensate

any

j 166 from 141 in the preceding,, week and exceeded by a narrow
margin the 162 of last year.
Small failures, those with liabilities
; under $5,000, declined to 32 from 45 in the previous week. _For the
first time since January, 1949, casualties of this size were less
numerous

increased

and

Housewares

liabilities of $5,000 or more increased to

Casualties involving

volume

sustained at

was

all of them, are

compared with the com¬

that

pany

this

previously high level.
Retail

street, Inc., reports.

The employees,

weak as

his

him,

and
discipline, • the
amount he gets paid, and the time
and duration of his holidays and

millinery was especially popular, women sought in¬
creasing quantities of coats, suits and washable dresses.
Interest
in accessories dipped slightly, while the buying of fur-goods ■"
remained limited;
Slightly more men's suits were sold in the
week with the sale of shirts and haberdashery steady with the
volume of the previous week.
Shoppers bought slightly more food than a week ago.
The
purchasing of fresh fruits increased somewhat, while the demand
for vegetables generally declined.
Moderately more meat was
sold than formerly; a price drop kept dollar volume at a slight
increase.
The interest in dairy products declined slightly from

The week's total compares with

from

orders

take

promotion

While

10% higher than in March,

schedules for the next quarter are

will

A slightly larger volume of apparel was, purchased last
than during the week earlier; noticeable increases in
pre-Easter buying in specialty and department stores were
reported in scattered areas.

Although Chrysler Corp. plants are still shut by a strike
of the CIO United Auto Workers, auto manufacturers' monthly

said.

shall

when he shall work, what he

•

—

week

The Slate oi Trade and hdnstry
i

Thursday, April 6,r 1950

Bradstreet, Inc., reports in its current summary of

Dun &

ago,

; •

CHRONICLE

FINANCIAL

Volume

not

are

171

Number 4896

to the board

reserved

directors,

exercised

are

'"chairman.

THE

The chairman has par¬

from

time to

supervisory responsibilities changes even in the same meeting
including observation of the work on different issues. If the chair¬
of the president. It is doubtful if man or president is an extremely
strong

should operate the company even
the power to do so. If

if he had
he did

may

board

give such instructions, he

board,

would himself be the chief admin¬

means

istrative

officer

and

name,

under

the

another

president

Short-Term Policies

holding
top company authority are by no
means
uniform in business, and
unimportant for this

are

there

two

are

own'company.

most

dominating gover¬
likely to pause if three or
directors differ audibly with

decision.

The

time

be three other directors who
differ, and the time after that an¬
other three. Minorities are help¬
less

discus¬

that

of advice, as a
influence in

source

access

may

What is important is to re¬

alize

his

The titles of the officers

sion.

as a

the

But
nor

and

directors

quarters outside his

would

then be his assistant.

Long-

the members of his
as a sounding

use

alone, but several minorities
mean
a
revolt.
Whenever

may

related,

(1441)'

choosing.

own

The other is that tors to give particular attention t®
"public" di¬ their trustee assignments. Since
Directing Board, an in any case these four special di¬
of the Securities and rectors would be interested, even

there

shoulp

rector

be a

the

appointee
Exchange Commission

or of some from the
standpoint of their spec¬
Neither sug¬ ial interest, in the growth and
institution, not only in the gov¬ gestion meets the
requirements of prosperity of the corporation, and
ernment of a single business, but
the
situation
in more
than
a
would be individually and collec¬
in
the
government of business formal
way, and both should be
tively only
a
minority of the
generally, it is in its present form
rejected as unrealistic and un¬ Board as a whole, it seems im¬
an
inadequate instrument of desirable.
probable that the divisive interest
power. It is a vestigial remain of
If we reject these two methods
thus deliberately built into the
a
time when investors paid at¬
for broadening the composition of
Board at a low level of power but
tention
to
their
businesses and
a
corporate Board of Directors, at a high level of articulate re¬
when offensive and defensive alli¬
what suggestion can be proposed?
sponsibility would be harmful in
ances in business were the order
A New Suggestion
any way to a clear-cut and effec¬
of the day.
The most that can
tive corporate program.
be said for the Board of Directors
My suggestion is this: As a first
The question will arise, need
as
it exists today is that it pro¬
step, one director be elected or re¬
vides
an
arena
in
whicn
the elected and he be asked to act anything be done at all? Granted,
that the customers, the vendors,
ablest, most powerful, and most as "trustee" for one of the three
and the employees do have an
persistent members of the BoaYd parties at interest, other than the
interest in the kind of business
can
Such
a
directorgenerally have their way. stockholders.

firm hand.

and

Considering the central position

individual,

self-willed

he holds the reins in

CHRONICLE

Directors Inadequate Institution

ticular

the chairman would give instruc¬
tions to the president as to how he

FINANCIAL

organization
direction
discipline.'*',v /;•

Sometimes it

time.

the

power differs in different com¬
panies and in the same company

the

COMMERCIAL

ownership and management are
by different people, it can

the

Such

Board

Directors

have

other public agency.

asked to

to which they are

rules

the

traits that trustee might be assigned the in¬
conform, they have no present
successful, and terests of either the customers, or
their survival in the shifting locus the vendors, or the employees, de¬ rights in the matter. The stock¬
broad consideration of the com¬ directors does not matter.
holders have the rights; if they
of power in a
company
means pending
on
the nature of the
pany's relations to trends within
The locus of power may, for a
that they survive not only for company's business. He would be do not choose to exercise them,
the industry, in other industries, moment or on a
that is their right as well. Mean¬
particular issue, their own
good, but for the good the nominee of the management
in the government, and in inter¬ be held
by a single director. Gen¬ of the company too. The Board of and of the
while, the business goes on meet¬
existing Board of Di¬
national affairs, and (2) that of
erally this occurs when a strong Directors tends to screen the fit rectors and would be elected in ing on every side the test of com¬
day-to-day central coordination of will holds a negative opinion.
It from the unfit, and to that extent the usual
petition, and preserving its au¬
way by the owners of
operating decisions covering every is rare that a single individual to
provide the rule of the fit for the company,
the stockholders. thority as long as the governed
phase of doing efficiently the on a Board of Directors can get
consent to the rules that are im¬
the conduct of the business.
During the experimeptal period
things that it is the business of the positive action taken contrary to
Need anything be done?
If the of whatever length, no public an¬ posed.
company to do.
the wishes of the officers. s
In
considering whether busi¬
Board of Directors is a vestigial nouncement
would
need
to
be
The powers that are withheld
^;
v
and obsolete institution, sooner or made that such a policy had been ness should do anything to give a
from the president and chairman,
The Executive Committee
voice to interests other than those
later it will disappear in its pres¬

separable, top functions:
of

held

(1) that

long-time policy planning with

said

never

that

men

businesses

make

board

the

'■■■

chief

executive

whatever

board

officer

held

are

directors.

adopted.

under

company are

Consequently, it is

and

board of directors
■

how

At this

office.

the

they

The

form

tors

the

location

election

cedure for the

delegation of

pro¬

affirmation of the

one

business

over

rule-making resides

in the owners of the property, and
that the larger the relative owner¬

ship the' larger the right to ex¬
press preference for the individ¬
uals

whom

should

delegated
assigned.

powers

intention
cedure

that

the

election

pro¬

implies.

Electing

point,

the

elect the directors but

they do not

choose them. They are chosen by
the board of directors itself, which

makes the nominations.

The

respondence

stance rests

siderations:

form

(1)

cannot

•••:-;

for this lack of

reason

choose

and

cor¬

sub¬

two

practical con¬
The stockholders

directors

because

they

not organized as a politi¬
in a way to make their
franchise effective. (2) Real choice
are
cal body

of Directors,

Committee,

sonalities at

another.

this

within

shifts

the

When

In this the

them.

The occasional crisis situation can
be

ignored, since the political or¬
ganization of stockholders to oust
a
management
is generally so
crude as a technique of obtaining
stockholder
little

caricature

consensus

than

that

the "democratic" procedure it pur¬

divisive ten¬

the ^ Board

Within
and

the

circle

directors

Now

the

single

what

the

company

the
cus¬

are

his

It is his duty to

interest.

4know

act as

sits

interests of

the
of

these

interests

are

the

For

in for his ability to make another's
an

business.

the

of the Board

of Directors,

this

and

the

source

his

case

growing

includ¬

President.

come

instructions, and

the rules,

the delega¬

own.

director-trustee

The

should

Vendors

bor costs.

can

get better
expense

vendors,

and

em¬

ployees are to be met, and the
employees can
improve their
earnings only at the expense of
the

three

other

est.

fore,

parties at inter¬
there¬

Board of Directors,

has

double task,

first,

provide the company with an ef¬
ficient, aggressive management,
and

than

effort

the

does

conven¬

directorship. Such a director
should be properly compensated

tional

for

service he

the

performs.

Other Director-Trustees

first

the

director-trustee

works out usefully,

would

be;

each

specific responsibility, the

provision

the

of means and

character

takes form.

the

the out¬

company

Into this circle

come

experience, inspiration, and criti¬
from

the

organization

whole, and from this circle1 flow

give

back

"rights." If these interests-

There

tions

have

been

two

sugges¬

to how the several parties

at interest

the

other

present form of control of
ness

not,

are

someday, ' perhaps
most inconvenient time, make
will

someone
a

crusade

his

Since they

power.

the
busi¬

under

safeguarded

properly

in¬

all

interests

the

happens,

these

turn

rights. If, before this

terests into

parties are protected by business
itself, it is unlikely that formal
would

intervention

.on

occur

political

abstract

grounds
theory.

particular
cialized

case

the operations of a

One

The reasons for taking

steps to

modernize the Boards of Directors

companies

of effi¬

are reasons

justice.

and

ciency,
prudence,
Fortunately, there

is no critical
situation that presses for action,
but unfortunately there is, under
such
circumstances,
an
under¬
standable hesitancy about alteringand known power rela¬
However,
the
mere

passing of time brings with it the
necessity for specific changes in

warrant

consideration.

spe¬
this

three of the four parties at

way,

Modernizing Boards

Reasons for

interests—all

depending on the nature of the
company and whether the groups
are
important
enough
in
the

tionships.

the

personnel

purpose,

transformation

may

usecfc

to the?
centrat

lead
the

of*

Board

Directors. These occasions, if

of corporate power so that
represents more nearly the in¬
of those whom business

agency

interest will have someone desig¬

speak

for them. Pre¬
stockholders,
the
party, will be the concern
of the remaining directors. But to
make sure that equally thoughtful
attention will be given to all the
stockholders, one director should
be explicitly charged with respon¬
sibility for all ownership interests
and be paid for taking the time
required in doing so.

terests

the

governs.

nated

sumably

Because

fourth

The

Board

Directors

then consist of four

trustees,

the

would

paid director-

Chairman

and

the

President, and such other officers
and Directors as the needs and

frame of reference where the

interests
heard.

all

will

have

been

The four director-trustees would
might be effectively
suggestion
is that sit, not as "representatives" of the
each of these groups should be interest for which they speak, but
represented by directors of their as designees of their fellow direc¬
heard.

in the

government of business, they can
be acquired through orderly pub¬
lic legislative processes.
Today the obvious interests of
the
several
parties
subject to
business
government
are
not

existing

any

company
as

the next step
for

director-trustee

second, to make sure that at traditions.of the
company dictated.
given level of activity and
Under
such
a
Directing Board,
efficiency, the groups at interest,
the interests of the governed will
lines of ways.
Here, is found the whose interests are necessarily in
be at least represented and the
co-ordination of the parts and of conflict get a square deal.
actions of the company's adminis¬
partial efforts. Within this circle,
The Current Suggestions
trative
officers will take place

tion

selves,

stockholders

have time to work on his job and
of to think about it. His duties would
larger dividends and
a
higher not require his full time, but they
market price for their stock. For would
involve more application

stockholders,

lies within the circle

company

rights to express them¬

who have

the possi bility

principal Officers, the locus of * judgments "which

well-managed,

means

itself consideration only at the

The locus of supreme power

c-ism

ports to be.

identical

period

harmful

the

choosing him

tomers

Chairman

with

part

stockholders,
customers,
or
continues a division
of time, again a employees. Customers must pay
pathological condition exists that higher prices if the desires of
a

From

been

Board,

a company

ambitions and

dencies.

has

they are con¬
matters * affecting

sonal

accepted

trusteeship which
created voluntarily by

trusteeship—a

and to see to it that

seems

profits and income, not to assert
rights in the delegation of power.
They do not want to be organized
politically as stockholders; they
alone.

time, another at the vendors it means a better out¬
in a company, let and prompt payment for the

one

ing the two principal officers, the

agrees

are

business.

per¬

their savings in a business to make

let

who

doing the of products from which to choose.
is supposed For the employee it means stead¬
shifting character of ier employment, higher pay, and
the locus of power is desirable. better conditions of work.
It keeps an administration from
The Conflict
becoming too brittle. < It creates
a
narrow circle where there is a
But at any given level of ac¬
normal and; healthy competition tivity and efficiency of a business
for internal
status and recogni¬ the interests pf the four groups of
tion.
Carried too far, such com¬ the governed are in conflict. At
petition can
be destructive to a given level of activity, higher
united efforts, but ordinarily the dividends
can
come
only from
influence of the Board as a whole lower prices to vendors,
higher
moderates the intensity of per¬ prices to customers, or lower la¬

profits, and to the interests of the

all

of them benefits by

this

may

company

by the company
private government.

to go to things they supply. For the cus¬
him who wants it and is able to tomer
it
means
better
service,
exercise it. For the effectiveness better quality, and a wider range

efficient management, to business

want

interests

efficient,

sharp,

blurred.

area,

over

management

the

affected

that each

officers.
is

divides, and

The stockholders have invested

the

has

nevertheless

trustee.

interest

the

the Executive

focus

Power

stockholders would
extremely costly and dis¬
ruptive procedure, damaging to

themselves.

those

contribute

tive

combination

stockholders

First, we
body supe¬

efficiency
of the business.
Second, we w&nt
a rule-making body that is sensi¬

senior

and
the

of directors by
an

rule-making

want

will

are

boundaries

Sometimes

The fact is that the stockholders

that

Directors?

rior to the executive officers that

•

Committee.

Choosing Directors things that
to do, this

versus

want

When we examine these inter¬ sidered
element in a com¬
when
nearly an area than ests, a curious fact appears. The them are decided upon.
Such a
interests of the four parties
at director-trustee should be chosen
pattern within the Ex¬

within

include

directors does not conform to the

ecutive

Board

dif¬

important

power

pany
a

but

someday want new rights

The

changed,

do have

What

Shifting Power

sometimes

Without raising questions as to
these assumptions, it is fair to note
that in substance the selection of

•

little

sense

come

Board

of the executive

r:.;-'.,

;

to candidates
for election and re-election. The
power

procedure accepts on principle the
assumption that the final power

ex¬

Many decisions are made

officers of the company. /

formal

Transformation gives trustee has been asked to act for
opportunity to consider the the customers of the company.
question of what is wanted and Although he owes his nomination
to choose a preferred method of to his fellow directors,
and his
getting from here to there,
election to the s t o c k h o Id e r s,

the executive committee that
only be referred to the board
for information and ratification.
Included in the membership of the
executive committee, there will

need

direc¬

quasi-democratic

are

disappearance
by transformation or it

tomorrow.

far apart.

are

operations

policy and

amined.

chosen

point the form and

business

an execu¬

committee, with power to act

meetings is set up; and in this
committee, the details of questions

matter

continued

are

substance

power

are

may

for the board of directors between

Interest how the members

some

Accordingly,

This

must remember that
by collapse. Collapse ference would occur in the de¬ each business derives its power
is a clumsy and uncertain way liberations of the Board.
Let us and its form from public govern¬
of moving
from, yesterday into suppose that this first director-- ment in which all these "interests"

may come

final

instantly

authority

available.

persons of considerable importance
in rule-making powers of a busi¬
ness.

source

tive

The directors of

require that

a company

form.

ent

The decisions that must be made

the

Election of Directors

title,

become

has

pervasive facts of

operations pf business
acquired a political as well
economic significance in the
of
ordinary citizens. The

the

life,
have
as

business

of the most

one

lives

this

political and eco¬
is in corporate man¬
agement. We have depended on
enterprise and competition as our
methods
of
placing
business
locus

nomic power

powers

where they are presently
proved

found. These methods have
on

the whole successful as far as

economic

development

con¬

they alone are in¬
adequate to meet the newer re¬
sponsibilities of business. Cor¬
porate
management, being the
locujs of
business rule-making,
has the opportunity to initiate the
but

cerned,

transformations
serve

the

business

the

same

that

successes

will
of

con¬

private

government and that at
time will safeguard the

community
pxercise of

from

abuses

private power.

the
■

Continued

from

resumption of note fiand a slight improveyields, point toward
greater flexibility
in Treasury
operations and a spacing-out of
new maturities; a new %Vi% bond
issue may be in the offing.
The
scarcity of eligible bond supplies
nancing

would

even

serious for

commercial banks were it not for

the

supply

of part of the
banks* investment needs.
care

1V8%, and so

down to

come

There is no need to explain
here in any detail why the Fed,

together with the Treasury, now
vast

longer-term

over

measure

control

rates

well

short-term rates; the magof the Federal debt now

as over

nitude

level.

declining eventually

bonds

ment

credit

business

should

activities.

ness

1948/49

Wide

DiS'^sLr,L'n FUtUre
Earnings Decline
.

trying to project the future
earnings
trend
of
commercial
banks

that

has

one

the

banks

bear

mind

continue

naturally /lags

recession,commercial, in-

fore.

general

trend

in-

any

ou"di„agndwea„fdCoUr ?n lllui
proportion
Fed.

decline in inter-

hand, the very im¬
that U. S. obligations

^acquired asasa amedium for
and

investment

pacemaker

rates

urer

moreover

the

peak

postwar

pronounced

efforts

stabilize

the

dilemma

and

economy

Faced'with

this

With the Treasury's resolute

op-

position to higher interest rates,
the Federal
1949

Reserve

ootioned

to mid-

for stabilitv

in the

Government bond market in oref-

erence

niolatidn
for

countercyclical

of interest rates

anti

primarily

ma-

reiving

For

purchasing

Real estate

only during the 1949 busidownswing that the Federal

was

ness

Reserve

decided to shift the

in its

phasis

stabilization

security
counter

operations
of

the

markets
-

cyclical

Source:

seems

from

adjustment

Economic Advisers has

out

come

of the House-Senate
Committee

mended

has

restoration

Eco¬

recom¬

26.9

15.5

65.3

19.2

43.0

31.1

25.9

Guaranty Trust
Irving Trust

—

1,384
3,993

2,191

+o8.0

4,106

3,852

32.2
43.3

17.8

33.3

38.3

28.4

City BankX_

Obviously, a

operating income of those
are now deriving
a
of that income

demand for private construction
jLas been reduced appreciably,
Thus> th<?
cyclical decline in
commercial bank lending will

bank that has a big part of its
total loaned-out funds committed
m real estate loans will feel the
effect of declining loan demand
ProbabJy spread to all lending ac- and rates much more slowly than

tivities. Barring some unforeseen a bank whose loans are mostly
mai°r events, we would expect short-term. Taking this distribuordy a s^Sht net decline in lend- tion of - loaned-out fun ds as a
volume this year, but, possibly rough indication for average loan
are a

show the

total

loans

York

City banks,
call again that a
Western

loans

than

very

derived,

short-term

from

affect

the

total

few illus-

National

City

probably
nf

tho

me-

66.7%

—8.6%
—7.4

38.5

30.7

—9.7

allowing

major upset in the Government security
market to take place.
any

This policy will permit the
on

the capital

na-

mar-

themselves, though
narrow

limits.
.1^

current year, , a
balance m available
ap,p€\ars

2?^
$2.5

*1^

to $3.5 billion for

from

2.1

2.34

99.6

0.4

2.68

loans

99.4

0.6

2.06

While

$4.00%
*

mand

American Trust Co.

35.5%

12.0%

Anglo-California

43.3

26.0

bank

into
an

security

investments

de¬

entail the

the

$71% Of real estate loans

many

cases,

tained

investments.
volume of

would

tend

any

interest

rates,

loans

1949 Yield

commercial

Keyj

banks

'he av®f®ge„yi,e,!d S"
in t0t,al..l0a wd"?Ut f2nd£ 0f ie-?~
*ate loans (the bulk of which is-resentahve Western banks, while
gu.aIant®e?> 13 between 4% and toey ara insignificant for most of

West,

yields

commercial

recent

opposite direction later when

ESTIMATED ,1949

Corn Exchange

9.0

33.0

Percentage of Total Income From Loans

Bank of America

Consumers'
Loans

Loans

24%

32%

44.0%

...

National City Bank^.

99.4%—

Real Estate

0.6.

-v

58.0

Guaranty Trust

1.91
1.19

47.7

51.4

0.9

Manufacturers Trust

1.58

73.7

26.3

1.46
Bank of America— §1.54

94.0

6.0

National City, N. Y.

♦Not

available.

tOn

all

RECENT YIELDS

Year

Months

1.13%

1.22%

there

48.6

holdings.

^Maturity.

—

■t

39.3

bond

One

Three

On the other hand,

Loans

81.7

18.3
50.0

§On all

4-3
3-9
2-11

12.1

Yrs.-Mos.

6-2
2--

2-8 1
3-4
*

investments,

GOVERNMENT SECURITIES

;

7 to 9

13 Years

"Years

Years

and Over

1.46%

1.73%

2.22%

3 to 5

seems

be leeway,

two, we assume that (1)

15% of

short funds, and 2% of real estate funds loaned out at the end
of 1949 will be shifted into in-

will do in each individual case is

vestments;

(2) in addition, lower
requirements and Govprevious ernment deficit spending will be
hypotheses, in the next year or .responsible for
raising invest-

matter of

conjecture.

In accordance with our

reserve

in numerous cases,
for a shift toward longer average
maturities. What the management

INCOME FROM LOANS

Callable

Av.Matur.

16.0

1.27

come from loans, as illustrated bj/
the following rough estimates:

Commercial

$15.1%

1.73

lesser degree the same holds
true for consumers' loans,
This relationship is, of course,

5 Years

$54.3%

84.0

§1.55

Trust

Years

1 Year

$30.6%

tl.45%

Table

31, '49, Due
Over

1 to 5

Bank of Manhattan.

and 3%, depending on the im- mirrored in the composition of inthe

rela-

in
from
•

Chase Nat'l Bank—

4 4%; yleld °" consumers' credit the big New York City banks; to
averages roughly between 6% and
over 8%, while yield on commercjai loans averages between 2%

seen

■+;

Within

U.S. Govt. Sec.

American Trust Co._
Bankers

Published information regard- loans are generally somewhat
in8 average yields on the various higher in New York City,
loan types is very incomplete, but
A glance at table/No. 2 shows
it seems a reasonable assumption that real estate loans bulk heavily

as can

even

decline

Average

of total real

only.

renewable,

further

this table:

Table 6

without

U.S. Govt. Securities, Dec.

are fully insured under the provisions of

flOn commercial

average yields ob¬
investments
in
1949

not

4.33H

113.09

or carry a guarantee under the Servicemen's Readjustment
$About 44% of rea| estate |oans guaranteed under G. I. BUI, another 31% is fully

Housing Act.

yields will tend to have
opposite effect. Moreover, in

from

resources

increasing

the National Housing Act
under National

from '49 Level)

average

decline

30.7

S'On F.H.A. insured mortgages, which were over 92%

ma? ? por^ance of term loans, etc.; in
funds

new

slight stiffening in
interest rates makes for greater
flexibility in the Treasury's debt
management/ and will give the
Fed more leeway to move into
the

Other Sources

them, the assumed 10% decline in

enhance the income derived from

4.24%

$52.5%

for credit would

shifting

such

California-

tively small.
The

•

Investments

97.9

insured

(Decline

come

38.6

Prospective Income from

National

Act

'-A

of Oper. In-

28.9

30.5

Chase Nat'l Bank-

estate mortgages.

Factors

Annual Rate

33.1%

America-—

Presumably

37.0

nuuuie

best.

From Invest. &

§51.5

fhp

other than real

0.2%

32.5

2.67%

♦Not available.

loans

would fare

Other

from

estate

From Loans-

8.9%

4.5

mitting very moderate cyclical
fluctuations in interest rates,

fairly

come

now

Real Estate

91.1%

21.2

policy Started last June, per-

simplified premises,
deriving the smallpercentage of operating in-

est

Estate

27.3

rnntinnp

within rather

these

Composition of 1949 Operating Income
(Partly Estimated)

Consumers

58.5

Reserve

all but

be 10% be-

YIELDS, END OF 1949

Crocker First Nat'l

roaa

kets to assert

the bank

operating

wide diver-

Real Estate

(3) interest rates

age;

real estate loans will

loans

Bank of

Bank of America—

will

tural forces

riod of the general credit shrink-

low current levels:

American Trust

Federal

without

rent

decline in the income

Real

—

(2)

Depressive Ef¬

Average Loan Yields

City Bank
Guaranty Trust

levels

current

country;

Business &

New York CityBank of Manhattan

assump-

fect of Assumed

Percentage of Total Loans
Business

individual banks,

some

Table 5

would affect; the actual income at the end of 1949.
LOANS—COMPOSITION AND

throughout
volume of real
loans dip ,2% below curlevels during the initial pe-

the

Table

below

New

not

are

a downtrend in lend.
..
.
:n that rp)?nprt
ingyolume and i nter est rates geimies that existed m that respect
.

14.4

other than real estate will be 15%

has to relarge part

one

While

following illustration is to
rough idea of the extent

to which

might

11.8

(1) Lending volume for all loans

short-term category.

;

o^their operating income estate

centage

give

16.9

The following simplified
tions have been made:

short-term loans

vulnerable.

most

The

16.3

income of

Table 4 shows that the big Western
banks derive a bigger per-

2)3.2

69.3

percentage

from

"21.7

62.0

Bank__

banks which

seems

credit now has reached a real estate loans may run from

61.4

America.

from interest

upon

Trust

20.1

Francisco Banks—

The

2.8
high
+ 10.0 +

from loans greatly depends

trations to

47.7

to1Q^?' decline spread over maturities, here

17.6

16.3

38.9

Bank

—13.3%

34.6%

National

—13.2

relatively high level and backlog about 5-7 years

orthodox central bank policies.

The

169

Other

27.2%
36.4

American

$13,349

55.5

Anglo California National

,une'1949

3,504

con-

-"v/v

Investment

38.2%

Change

SOURCES

From

Loans

Percent

policy, in line with

flexible credit

INCOME

-"S+'V.

■

0ct> 1948

Compiled from Federal Reserve Bulletins.

flatly in favor of rigidly pegged
low rates, even during periods of
inflation, the Douglas Subcom-

■

47.3

San

moderate

OPERATING
1949

Manufacturer's Trust

characterized' the last recession every individual bank. Business
wil1 again be present in the next loans average 3-6 months, , conbusiness downswing because con- sumers loans 6-8 months, while

Government

Corn Exchange
+

While the President's Council of

nomic

pro-

unlikely that the

years.;

Chase National Bank_„

carrying securities—

em¬

credit conditions.

mit tee

industrial

—-

have

Bank of Manhattan

T„„_

reached in the 1948/49 recession:

Consumer installment credit

inflationary
measures
upon
the Treasury's

management of debt retirements.
It

Reserve Board

ipbeen

among

banks which

widening jn the past few

Bankers Trust

ana tnose in June
the low point was

duction index (seasonally adjusted)
195
Commercial, industrial and agricultural $15,388

instability in this highly important market may,in itself tend to sumers
defeat

dividual

New York Banks—

boom

implications n,!cting lending trends which the length of loan maturities of

any

IMPORTANCE

—Monthly Average—

Federal

contracting
incipient boom,
and the-reverse during a business
downswing, drastic action of this
type would result in wide swings
in the market for "government's,"
for both investors and the Treas-

"significant differences

with "their'adversT

single case; in that respect,
the 1949 income accounts point up

every

the

From

(Millions of Dollars)

and

during

few

force.

(Percentage of Total 1949 Operating Income)

LOANS OUTSTANDING—WEEKLY REPORTING MEMBER BANKS

key interest rates has brought
about conflicting objectives in our
monetary policies. While mini¬
mizing the business cycle calls for
the orthodox policies .of raising
interest

full

Table 4

same
^ the
RELATIVE
eral Reserve Board's industrial
production index while the rise'
in other important lending activ-

Table 1

for

credit

deteriora-

(he

ucl0Der»
be- 1949, when

eluded months, or evert years,

Thus,

with

ing Western banks would be ex-

On the other

portance

empt from such rapid

other hand, some 40% to 50% of
the current loan income of lead-

ities continued; this is borne out

terest

within

banks

York

New

months

by the following comparison between loans outstanding at the

management.

the

the brief

rates, as current yields on
loans and investments are largely
the result of transactions con-

behind

During

somewhat

income

operating

outstanding, as compared to all
other high-grade bonds outstanding, lends tremendous weight to
the Fed's open market operations
and the Treasury's ways of debt

have

maturities

average

lending volume and interest rates well be reversed once more. In
that of
the
big Eastern the meantime* the cushioning efpai bank.
The wide differences banks; this should hold particu- feet
of the high-yield, longer|n these policies, as illustrated in larly true for American Trust Co. term real estate loans would perthe following part, promise to re- of San Francisco, with its high mit those banks to carry out the
sujt jn a wjde dispersion in the percentage of real estate loans, necessary adjustments in operaprospective earnings downtrend, and its relatively moderate com- ting cost.
mitments in consumers' loans. The
What a ^decline in income from
as between individual banks,
combined effect of a decline in loans will mean for total operating
Prospective Income from Loans the demand for credit, and in in- income depends upon the relative
For several months demand for terest rates
would hit the big importance of loan income in

The Future of Interest Rates

vestment policies of each individ- than

the line, with the well sustained, thereafter it is
2.20% rate on long-term Govern- likely to decline in line with busito

exert

view

that

volume

along

bonds, forth

housing

which will take

loan

depend upon the lending and in-

\
a slowdown in economic activities
sets in. At that time interest rates
will undoubtedly trend down,
once more, and may be permitted
to decline by an average of 10%
to 15% in the years ahead. In
other words, from a longer-range
viewpoint, the current \lk% rate
on a 15-months note seems likely
...

ment

and

develop later this year will and yields of the various loan tions, and ibwould take 4 years1
be reflected only gradually in the types, it must be concluded that or more until the aggregate loan
income accounts of banks.
How for the next few years, the income income of the big Western banks
fast, and to what extent, changing from loans of the big Western would have gdne through a corneconomic conditions are mirrored banks will be much less vulner- plete downward adjustment; by
in income accounts will, of course, able to the prospective decline in that time the general trend may
may

The Earnings Outlook .;
For Commercial Banks
such

rates

est

page

Thursday, April 6, 1050

CHRONICLE

& FINANCIAL

COMMERCIAL

THE

(1442)

i.V

Volume 171

ments

by,

Number 4896

THE

5% above the 1949

say

big part of their
mitted

average; and (3) most banks, with
the aid of changes in
be

able to

decline

hold

yields

the

On these

of high

strong leverage effect

current

operating ratios.

case

decrease in the

of operating income

ranging

operating

formance of individual banks
be

whose 1949 operating ratios stood
around 80%, 75%, 70%, or 60%

the

On the other

importance

part

income

operating

change in

any

income.

(See

also

This

discussion

expected

have

Loans

Commercial

Estate

Income fro-m

of Total

U.S. Govt.

29.3%

28.7%

Resources

tween

0.6%

38.0%

+6.2%

+2.5%

0.1

38.0

+ 4.6

+ 1.8

18.0

19.7

35.8

+2.2

Bank

the

is designed

idea

lar amount of total 1949

decline

percentage
rate

annual

expenses

of net

1949

in each

operating
levels might

that

amount

the

operating

is not lowered, and

dollar

by 5%.

case

(2)

reduced

44.6

23.0

28.6

+7.8

+ 1.3

America__

21.6

underlying assumptions

text

see

1949

Operating Ratio,

Dollar

1949

and

are

not to be

forecasts; their
explore the approxi¬
magnitude of
income

mate

two

under

though

set

could

from

two.

decline

1949

the next

Total

probable

estimates

sumptions

year

made

would

in¬

out

banks,

also Tables

for

showing

differences

their

7.5

Change in

Operating Ratio Approx. 60%—
unchanged —18.8

9.0

10.0

12.0

—30.0
—22.5

—22.5

—25.0

—11.2

—15.0

—17.5

Operating Ratio Approx. 70%—
•
1. Dollar expense remains unchanged —25.0

—30.0

—33.3

—18.3

—21.6

1949

Dollar expense cut by

—13.3

Operating Ratio Approx. 75%—
remains unchanged —30.0

1. Dollar expense
2.

Dollar expense cut by

—36.0

—40.0

—25.0

—30.0

—60.0
—40.0

income' from

1949,

annual rate of net operating earn¬

ings might decline by about 15%

16%, provided operating ex¬
will be reduced some 5%

penses

many cases, may

expenses can

not exceed about

1949 operating
be cut by about 5%

to-10%.

AND

RATES

UPON

ally,

these general observations
model-projections should
make it easier to gauge the po¬
tential earnings trend of individ¬
and

ual

banks

RATE

Result of

Loan Income

YVY+S:Y/'Y+

Invest. Inc.

—9.7

National

—8.6

Considering the underlying
sumption

short-term

15%

loan

volume,

and

2%
loan

10%

real estate

initial decline in

decrease

interest rates, and

average

as¬

decline

Oper. Inc.

—7.8%

—0.7

—9.1

—8.2

American

Trust

Co.

San

Francisco, and 16.8% of
Bank of America; the latter

the

had

the

some

1% %

months

former

rate
in

while

1949,

that

made

effect

rate

for

the

effective

decline in income other than from

Jan.

loans

recently
deposit rate by
50% will have to materially im¬
prove their income and efficiency

net

investment, the estimated

effect upon operating income

reassuringly

moderate,

which

is due to the cushioning effect of

longer-term

loans

and

rising

investment

1950.

California

raised

order

Obviously

banks

the

those

which

time

offset

the

Late last week the railroad stock market again turned strong,

—1.4

the

New York Central

Assumed

Changes

—0.9%

+1.8
come

All
rn

Other Inc.

+0.5%
+>+ +1.3

effect

some of the highly speculative issues in the forefront in point
activity and in percentage gains. New York Central was one of
the leaders, pushing ahead on Saturday to the best levels seen
since 1948.
Most railroad analysts were hard pressed to find any

justification for the particular strength in this issue, except pos¬
sibly the mere' fact that it has long traditionally been a boardroom
favorite.
Certainly there is nothing in the operating performance
of the road, Or in its reported earnings, that would justify bull¬
ishness.

New York Central reported earnings of $1.51 a share
with $2.28 in 1948 and $0.36 in 1947. Natu¬
rally with coal an important item the road has been off to a par¬
ticularly poor start in the current year.
In January a small oper¬
Last year

its stock, compared

ating deficit was sustained compared with a net operating profit
of $1,694,000 a year earlier.
Only by virtue of substantial nonoperating income from subsidiaries was the company able to show
net income of $702,000 in January, down from January, 1949.
Feb¬

If the forecast of gen¬
erally lower interest rates in the

ruary

was

and

net loss of over

think of what happens to the oper¬

coming

had been

of most industrial

revenues

volume shrinks

10%

and

15%,

by
decline

prices

10%.
On

the

absorb

cost

side, salaries

between 30%

now

and 36%

correct, the
recent increase in the time deposit
rate may eventually be reversed,
and thus may cease to be an ad¬
verse
factor in
the longer-term
proves

year

earnings

outlook

fornian banks.

Cali-

some

(The high ratio of

even

with a net operating deficit of $3,341,000
$5.3 million, A year ago in February there

worse,

net profit of

$1,355,000.

had

net loss

deterioration of $6,775,550, or more than $1.00 a
share, from the net income of $2,150,262 realized in the opening 1949
periods.
It may be taken fpr granted, with the coal strike ended
and such industries as steel and automobiles operating at a high
that

March results will reveal

considerable improvement.

operating income. No significant
change in salary rates seems
likely for the next year or two,

time deposits enables these banks

The

but

loans.)

the balance of the year
sufficient to bring the full year 1950 earnings results much, if any,
above the $1.51 a share reached in 1949.
New York Central has long been a high cost operation.
Its

loan

volume

shrinks,

it
should be possible to reduce the
as

size of the staff to
bill

Senate

raise

provision

extent.

passed

the

FDIC

which,

the

insur¬

according

large

of their
real estate

part

high-yield

Generally speaking, the differ¬
in lending and investment

ences

ceiling to $10,000 also carries

ance

policies

managerial

and

effi¬

ciency are reflected in greatly di¬
vergent
performance
ratios, as
illustrated

by these figures:

net

would

Committee,

reduction
amount

member

banks

have to pay for deposit
With

annual

the

Table 9

result

of about 55%

the
will

1949 PERFORMANCE RATIOS'
Oper.

insurance.

assessment

Y'1''

rate"

Percent

Expenses

-V

Earned

Oper.

Income
standing at l/12th of 1% of de¬
posits, the banks would economize' Bank of America.—
69%
c*

considerable

amounts

money

the

unfavorable side, there

is the recent stiffening in
rates

paid

number

time

California

Manhattan

Chase Nat'l Bank-,

under the new bill.

banks

National

future

savings de¬
posits (which constitute the ma¬

nounced

jor part of time deposits), as
against 1% paid formerly. While
in -the case of the average bank
in New York City, time deposits
represent 3% to 8% of total de¬
posits, that ratio runs to an aver¬
age
of 40% for banks in San
Francisco.

In 1949, interest paid on depos¬
its absorbed

15% of operating in¬

0.89%

In
up

some

has

of
to

0.47
0.41

trying

course

earnings

paying \Vz%

City Bank

Anybody

are

now

Deposits

Bank

interest

deposits;

same

to
net

take

0.43

chart

the

operating

these

pro¬

differences into account.
cases

it would

seem

to be

to management to improve in¬

adopting a
somewhat less conservative pol¬
icy, in others there seems to be
room
for squeezing some water
out of operating expenses. Where
such potentialities exist they may,
if used,
serve
as
an
important
cushioh
against the prospective
downtrend in earnings and could
come

prospects

should be true for

it is difficult to

visualize

some

months to

earnings

come.

Nevertheless,

over

margin of profit has consistently been among the lowest in the
industry. Last year the road was able to carry only 4.9% of gross
through to net operating income before Federal income taxes.
Admittedly 1949 was a particularly hard year on major eastern
carriers, that have an important stake in the coal and steel indus¬

however, explain away the pretax profit
margins of 5.0% in 1948 and only 2.6% in 1947.
In the first post¬
war year,
1946, the road sustained a net operating deficit before
tax credits.
Naturally with such a narrow profit margin the com¬
tries.

estimate by the Senate Bank¬

ing
a

recently

some

invest

funds

general feeling that
decline in bank
earnings promises to be compara¬
tively moderate.
In these

This

does

not,

is particularly vulnerable to rising costs.
One of the important factors in the New York Central picture
is the large passenger business.
Last year about 18% of its gross
came from this source.
Passenger business is normally unprofit¬
pany

This is particu¬
able, at least based on ICC accounting practices.
larly true of short haul and commuter business which makes up
a substantial proportion of the whole for New York Central.
Short
haul freight traffic is also expensive to handle and New York Cen¬
tral handles quite a large tonnage in this category.
With all its
mileage, and with through routes from the western gateways all
the way to the Atlantic coast, its average freight haul in 1948 was
This was shorter than that of the much smaller
Nickel Plate which comes east only as far as Buffalo.
The road's operating problems are reflected in a particularly
high transportation ratio. - Such expenses last year absorbed 45.8
cents out of every*revenue dollar.
This was six cents more than
for the industry as a whole.
This represents the actual cost of
handling and moving the traffic and is not, like maintenance, sub¬
ject to year-by-year management whim.
Unless, and until, the
management is able, through capital expenditures or operational
changes, to bring these all-important costs under greater control,
it is difficult to forecast any really substantial earning power for
only 227 miles.

the stock.

prognostications, based
general economic
an
attempt has been

certain

upon

premises,
made

estimate

annual

earnings
banks

the

course

income and
rates of commercial

operating

the next year or two.

over

Beyond

that

"visibility"

of time, the
political and

span

the

horizon

far

to permit worthwhile

too

poor

income pro¬

jections.

Trad Television Stock

Offered by
Offering

Tellier
shares ' of

600,000

stock of Trad Television

common

Corp. is being made by Tellier &

„

For the first two months of 1950 the company

of $4,625,288,

rate,

the

prospective

economic

that step.

enterprises if

price-earn¬

currently selling, with the
prevailing
among
good-

with

volume; in order to
appreciate this, one only has to

ating

;

reflects

Net Effect of

Decline

—7.4%

City, N.

indicated

the

grade industrial stocks, it becomes
obvious that the market already
the

Assumed

Change in

American Trust, S. F
Bank of America

within

ratios

ANNUAL

Result of

earnings

ings ratios at which bank stocks

TOT^L OPERATING INCOME
Assumed

operating

If one compares the

3, 4 and 6.)

Change in

the

data have to be studied individu¬

policies. (See

APPROXIMATE EFFECT OF ASSUMED CHANGES IN EARNINGS
ASSETS

1949; under similar circum¬

While, for each bank, pertinent

/+,+

the

drop about 18%—19%.

—50.0

operating

applying

—48.0

—45.0

7.5%

projections
in Table 10 and Table 8 (last col¬
umn) to the National City Bank,
whose 1949 operating ratio was
73%
(see Table 9), that bank's
Thus,

stances,
—33.0

earlier

earnings could dip be¬
and 60%, depending
expense ratios and fu¬
cost control,
as
shown in
23%

rate of the Bank of America could

,—25.0

reached

from

—21.0

likely that the decline in

50%.

Table 10.

—15.0

Conclusions

and

operating income

1949

upon

1949

make it

the

—39.9
—28.2

Operating Ratio Approx. 80%—
,1. Dollar expense remains unchanged —37.5
2. Dollar expense cut by 5%———17.5

19%

where

case

ture

1949, IN PERCENT

by 5%

to 10%); in cases
operating expenses
remain about unchanged, the
earnings decline could vary be¬

are

Table 8

'V 1

between

vary

range.

loan and investment

Tables

work

prominent

substantial

Operating

increase

Combining

and 7, here is how our set of as¬

—

three

vr;;Income
The

the

Prospective

case will
the individual policies

of commercial banks.

other

To what

thp will be the

depend

reasonable,
assumptions.

Prospective income from
10%

extent

which

sources

to be in the cards.

seems

year or

other

and

simplified,

sources

loans

may

partly

offset the decline in income from

purpose is to

changes from 1949, which
brought about in the next

from investment will

come

net

1949, net

Operating Expense

2. Dollar expense cut

These illustrations
taken
as
actual

the

(7.5%

tween

1. Dollar expense remains

above.

declines by as much as 12% from

+0.5

Tor

may

some

Table

approximate

9);

Decline in Operating Income from 1949

27.8

rate

annual

30%, depending"
operating ratio and
the expected decline in operating

operating earnings (1) if the dol¬

give

EARNINGS FROM

27.9

de-.

and

terest rates.

Total

37.7

feasible

percentage

1949

Income

American Trust

11%

the recent

where

Oper.

Securities

about

income

Table

PROSPECTIVE LONGER-TERM DECLINE IN NET OPERATING

Assumed Changes on

As % of

Real

institutions

earnings

centage decline in the rate of net

earnings from

Estimated Effect of

12-31-49

Business &

for

Table 10

Sec. Held

Percentage of
Resources, Dec. 31, *49

separately

the

two

(see

U.S. Govt.

Total

year

table shows the approximate per¬

the

Loans As

can

widely

vary

(see also Table
These calculations have been

made

general assumptions made regard¬
ing future lending trends and in¬

what

-POTENTIAL SHIFTS IN INVESTMENT INCOME

should

the next year or two, despite the

Table 4.)

Table 7

City Bank

should

cases—the

many

8).

investment

relatively

National

—which

brought out the principal reasons
why net operating earnings per¬

proportion

those banks will tend to show
up
best which now have a

Chase Nat'l Bank__

rate

erating income will tend to be in

premises, it is obvious

Tot.

be in the

(1443)

investment income upon total op¬

the figures set forth below
the
investment income
of

that

reduce the

CHRONICLE

cline

hand, the effect of

10%,

which is the general rate decline
assumed earlier in this discussion.
from

com¬

FINANCIAL

from 7.5% to 12%

part in investments.

average

down

resources

loans, especially shortloans, and a relatively small

term

maturities,

will

COMMERCIAL

Co.

at 35 cents per share.

The

proceeds from the

these shares will

sale of

be used to pur¬

chase component parts and for
/working capital to meet the re¬
quirements of increased business.
The Trad firm is engaged in the
business
of
manufacturing and

selling theatre size television
ceivers

vision,"
in

use

the

under

name

primarily

designed

re¬

"Tradio-

for

hotels, restaurants, hospi¬

tals, schools, military installations
and
other
places
where
large
gather.

groups

these sets have

three feet in

The majority of
picture four-by-

size.

Hughes Secretary
Of Blair Holdings
The

election

Hughes

Blair

urer

Secretary

Joseph
and

Holdings

Treas¬

Corp.

succeed John J. de Boisaubin was
announced

continue
cial

by V. D. Dardi, Presi*

Mr. de Boisaubin, who will

dent.

and

with

tax

' the

consultant
matters,

Mr.

•

with

the

Blair

interests

thirty-seven years, will
as
Assistant Secretary

some

continue
and

been
and
its
than thirty

Hughes, who has been af¬

filiated
for

finan¬

corporation

predecessors for more
years.

has

Assistant Treasurer of

Rollins

Co.,

Street,

New

officer

Inc.,

Blair,

Wall

York City, and an
subsidiary com¬

other

panies of Blair Holdings Corp.

COMMERCIAL

THE

(1444)

quired—the interrelated functions

and the country has come to adopt
the idea that the solution of this

Continued from page 6

.Thursday, April 6, 1950

FINANCIAL CHRONICLE

labor,

of- capital,

and

manage-

American

civilization.

.We

busy; but they
be tPo busy to do this.

know they

are

fundamentally the re- ment—has not been taught. How must not
sp'onsibillty of the government. / many high - school graduates or They rnust find time to talk with
An adequate social security pro- how
many
college graduates their employees, with government
they
must " establish
gram is not only of benefit to the know the rudimentary facts officials;
the industry, ignore his ; employees, particular
individuals involved about money or credit? How do closer relations With teachers and
and say, "the public be damned." but
gives
them
a
purchasing businessmen or business corpora- professors; and discuss with one
There are a few large fortunes, power which is needed to keep tions raise money?
What has to another matters of general con¬
problem is
■

which

end-product

marvel of the world.

Thank God for American Business

! We

Should

all

thank

face

Either

did

millions

Would

tories would
ernment.

should

people

our

it?

fac¬

our

by the gov¬
odious
prospect

make

easier

think

Clearly on this subject.
If the
government
ran
business
what
would become of the millions of
small

that colorful

and

ing; today the giant corporations
of this country are owned, not by
one or two individuals but by mil¬

have

run

That

from

over

riotous era—but they are vanish¬

not

starving,

left

for

W hat would

American business.
We

God

who

shareholders

live

their income from business?

And

what would take the place of the

shareholders

American

lions

unit

whose

holdings

are

very

small.

only the ownership, but the
of business has been dis¬

Noc
power

Both politically and eco¬
nomically, but chiefly politically,
its power has dwindled. Agricul¬
sipated.

labor exercise the great

ture and

They have made
they now spend to buy the tremendous gains— to view our
products which keep our factories American scene and not admit
going? Who would pay the taxes these great changes is a dishonest
now
paid
by
business?
What approach to a consideration of our
would become of the bargaining situation and our problems.
sIn
power of labor
If labor cou.dn't. my judgment, business should re¬
strike
against the government, gain some of that lost influence
what power would it have? If it —so that business, as well as ag¬
could strike, what power would riculture and
labor, becomes a
the government have?
major concern of government and
-Nine years ago, at Hot Springs, the public at large.
from which many of you have
Other changes have, occurred.
come tonight, and before the
very Most
businessmen
now
realize
two groups which ace assembled:
that they cannot conduct their
here now, a great advertising man businesses in
disregard of the in¬
made an historic speech. James terest or wishes of their workers.
Webb Young was talking about That
disregard still survives in
the place and problems of adver¬
some segments of American busi¬
tising, and I am talking about ness, but it is not representative,
business in general; but the ap¬ and those American businessmen
proach which we suggested is as who voice it render a disservice
sound tonight as it was in No¬
to business itself.
'
vember,
1941.
He
listed
the
I am not devoting this speech to
groups of critics— among them
the related subject of the respon¬
those
who
think
"trade"
is
sibilities of labor, but it might be
secondary, if not vulgar, and a
well to point out that it is neces¬
group sincerely convinced that our
sary
for
labor
to
recognize
whole
free
enterprise
system
changes which have taken place.
needs to be
overhauled; to be As I stated
previously; the actual
greatly modified, or to be com¬
and relative power of labor unions
pletely replaced; and convinced
has
grown mightily.
Intelligent
also that they knew, how to do it!
and public spirited union leader¬
As he saw it, the problem was "to
ship will recognize the great re¬
bring about in this country a new
faith in the possibilities^ of the sponsibility which goes with this
power. It is also to be hopedjjhat
dynamic economy,", and "to give
political

power.

money

the whole of business

new faith

our destiny"—"to create an at¬
mosphere in which business can
hope and plan and dream again."

result of that speecn, the
Advertising Council came into
a

being. Its purpose was "to serve
the public interest by mars.tail¬
ing the forces of advertising to
help solve national problems and
to make democracy work."
Our
purpose should be to marshal the
,

forces
for

this

all

American

This

task.

fascinating

business

opens

prospect.

American

business, and especially the lead¬
of American business, should

ers

abandon
and

any air
indifference

other

segments

of detachment
or

hostility to

our

life—in¬

cluding the government—and ask
what they can do to help solve
national problems and make

United States business deals with

things
that

which
booming

happened during
generation which

followed the Civil War—a period
of unbridled,
ruthless business
warfare when so-called "robber
barons"

fought each other
business stakes, and

great
ated

least

the

for
cre¬

beginnings

great fortunes which have lasted
until recent

years.
Mark Twain
referred to this, or at least its lat¬
ter phase, as the "Gilded
Age."

that

its

prosperous

American

ened

The

business.

do?"

First

tinue

business

of all, it should con¬
its fundamental job

—that
and

is, to produce the goods
services* which the people

want

afford

ing

which they can
The distinguish¬
outstanding character¬

prices

pay.

and

istics of American business

good

volume,

prices, and
the

wages,

are

big
low

and

substantial profit for

shareholder.

These

should

continue to be the chief objectives
of business. No activity by*business

vent

larger field should pre¬
its
operating
effectively
a

within its

own

well-

people has met the
instant and vigorous opposition of
business. Business cannot hope to
be well regarded by the public if
the public thinks that every sug¬
gestion for its welfare will meet
our

•

Radicals "and

reac¬

ity"

protection

today.

Many of -the
generation have been
taught the theory of corrimunism,
°Pe a!: 0

prevent

capitalism socialism, and abstract
theories of economics, but have

enterprise feels to be just and de-

not been taught much about the
Business should approach this application of economics or the
complicated and difficult problem relationship of capitalism to their
with an attitude of
helpfulness own daily lives.
sirable. "

opposition. Many businessmen, of course, have done just
that,
Others should join them,
and the public should know thqt
business is trying to help rather
than oppose sensible social security.
This brings us to the
second
needful undertaking of American
business—to acquaint the Ameriand

not

value

this point

than
do the

tising,

ity, can
work. I believe
effective

more,

not less,

G e

n e r a

convincing

facts about business whic

could be, very convincing.
should not only dis-

Advertisers

play the products and services of
American business to the people.
ThPv

chmild

estlv

how

tell

these

have

profound effect upon their

unions

and

2)metimes

the

slow

progress

end

America

magnify
each

not

are

today.

realistic—if

differences,

our

group

know

guards

7
we

and

jealously

its

prerogatives |ind withholds from
others its good will and its assist¬
ance—

America may go down in

traveler in the year 2000

who searches for the

Washington

ful people.

We should thank God

for the

bounty we have received
and pray for the wisdom to cher¬
ish it and for guidance in its

use.

discouraging.

hag j)-een made

case

La Pointe Director

Progress
after cas6j

management has taken labor into
"s confidence and has established
better

relations

dulctivitv

and

When

pffmSfvpiv

greater pro-

JL
it

h
£on_
chnf.iH hp

^nfrihuLn

and Steel Institute in May, 1949,

one

1950

auto-

of them have

real

explanation as to
how these price reductions were
achieved.
Was
it through improved techniques in the plant,
improved
labor relations and
higher productivity, better
sources
of supply, better management, or was it taken out of
the pockets of the stockholders?
Advertising can take advantage
of the average man's absorbing
curiosity to explain the fascinating processes * of our advanced
business civilization.
In selling, itself to the American
public, business of course cannot
rely upon one avenue alone. Ad-

vertising must be helped by education.
Our public schools and.
colleges have

the

stronger and richer
of the century than

productsarede-

several
no

our

energies,

our

nation will be

£lven credit for that cont but
In a sPeech 1 made to the Iron

public is the announcement
product at a lower

our

—

hon-

rlearlv and

better

seen

necessary

dynamic balance of
and

interests

signed, produced, and distributed. I pointed out that inadequate apThey should explain the contribu- Pla"se had gone to labor leaders
tions of science, the skills of inthis country who had risked
dustrial craftsmen, contributions their
positions and sometimes
of managerial ability, and the need their lives in their fight against
for money to keep business going, communism within the ranks of
Of
course,
the most exciting organized labor,
news which
business can release
The most important task conto the

look into the fu¬

Above all, of course, a sale must Monument
that symbol of our
be $iade to the millions of em- unity and strength — may find
ployees of American business. The only a pile of charred and broken
way they are treated, the extent marble.
of their participation in the disWe are, or should be, a happy
cussion of business problems, the
conditions under which they people. We should also be a grate¬

adver- views anchthose of their families,

lauding the American

of life are not too

restraint

the

achieve

ruins;

Sold

Employees Must Re bold

cise

other activare
pioneering
the
most effective frontjer of labor-management re¬

3nd

are,

mystery enshrouds the far
distant prospect of the year 2000.
If we work together, if we exer¬

any

advertising.

statements

many

Must

ahead?

ture,

business contribution to

lives.

their

EmDlovees

work, and a constructive apwith the extent and proach to labor negotiations will

people

can

in the lives

™n/ know anything[of the real
facte ab<3ut^eri^n business

pro-

dependency, and private pension plans should be encouraged to give whatever benefits in addition thereto a private
to

era

on.

should'

mobiles.

being of

own

government benefits
vide only a,, minimum

field, business should do thingsriot
talk
about things,
but do
things — for the benefit of the
public at large.
There has been
a belief, in some cases justifiable,
that
every
suggestion for im¬
provement

of these big corporations
practically none of their
stofcks? In other words, how
agers

f th

strictly

the

a*jd J£

persons,

business field -and into the larger

our

marches

tour

12*000,
.^J^idua What are their average holdings?
plans covering How many know that the man-

pension

ductions

out

not,

price. In recent weeks, advertisements have announced price re-

Action Not Words

with instant and automatic objec¬
has gone forever. Many tion froiri business.
citizens, and unfortunately,
I ean illustrate the point with
many of the young people in our
social security.
We are faced to¬
colleges, hear of the way some
day with increased longevity and
grieat American fortunes
were
a
constantly growing group of
built and assume that nothing has
our population who have reached
changed between 1900 and 1950.
the age when they no longer work
It is of the greatest importance but cannot1 be left
to starve. Even
to bring home the fact that time
many years before "social secur¬

That

company
between

field.

should

Government

way

question remains, "What is
for. American

there

Stepping

One of the fascinating chapters
the history and folklore of

recognize

benefits will come from
and not from weak¬

greatest

de¬

mocracy work.

will

labor/

turning,
be done to raise money? How is cern outside the scope of the im¬
how- business managed?
What taxes mediate business operation. Above
ever, pay out benefits regardless does a
businessman pay?
What all, what they do must be calcu¬
of the taxpayer. It should imme- forms
must he fill out? • What lated to convince the American
diately or as soon as possible elim- must he do to carry on proper and people that business i3 a friend.
inate grants in aid to the States effective labor relations?
What
Today, we stand at the halfway
which
have
tended
to
become parf 0f the cost of an article is
point of the Twentieth Century.
more and more of a burden on the involved
in
distribution, trans- Behind us are five decades of
Federal
Government,
with less portation, packaging? What are
amazing progress. We enjoy the
and less incentive upon the State. tbe relationships between domeshighest standard of living man¬
to make the conditions of payment
production and distribution kind has ever known. We are rich
reasonable.
The income tax laws and foreign trade?
How many, in knowledge and resources, we
should be changed to permit de- know anything at all about the
are blessed
with democratic tra¬
ductions of contributions by em- government's efforts
to control ditions and institutions, and we
ployees to pension funds. Social monopoly and unfair trade prac- are
strong enough to provide aid
security should be extended to all tices?
How does a buyer for a and
leadership - to
a
troubled
non-covered groups of gainfully
department store operate?
What world.
The question is—will we^
employed
people. Private pension
tbe number 0f individual share- remain prosperous and grow in
plans should be encouraged. There aiders of our large corporations?
strength and wisdom in the years
are
now
over
the wheels of commerce

vation depends

the annual

Termihal

Pointe

meeting of Bush

Buildings Company, Al¬
La Pointe, Vice-Pres¬

exander E.

working fo¬ ident
of* Title
Guarantee
and
greatly disturbed Trust Company, was elected to
labor dispute in- the board of directors.
dications that the employer thinks
Mr. La Pointe joined the in¬
his interests will be served by the
vestment, department of the bank
destruction or crippling of organ- in 1933 and was
successively asized labor, or that the workingsitant trust officer, trust officer
man thinks his interests will be
and Vice-President in charge of
served by the crippling or destruc- the trust
department.
tion of business.
We must con¬
vince each side that this attitude
is wrong and can lead to disaster, With Hamilton Managem't
A dying or an unprofitable busi(Special to The Financial Chronicle)
ness does not give increasing emDENVER, COLO. — Hamilfon,
ployment at good wages to its
employees.
When a plant is de- Management Corp., Boston Build¬
stroyed or damaged by employ- ing, has added to its staff, Chester
ees or their sympathizers on the
C. Cook, Charles J. Lamothe, Vin¬
theory that the owner is, their en- cent L. Snyder, Robert F.
Tutton,
emy, they are pursuing a suicidal
and Walter A. Wolfe.
course. On the other hand, when
the employer acts as if he had no
responsibility for or interest in
With Bache & Co.
gether.

see

upon

when I

bis workmen, he encourages just
such an attitude. If business can
take the initiative to bring about
discussed,, it has a mutual understanding of this

never

given enough

attention to teaching the facts of
American business.
If American

business has been

fronting America is to persuade
its various groups that their sal-

Alex. E. La

■■

■

' (Special to The Financial Ch»6nicm)

CLEVELAND,; OHIO—Howard
,

Linsz

has

become

associated

largely from an analytical or fundamental fact, it will have with Bache & Co.; National City
progressive business concerns un¬ economic viewpoint, mostly theo- made an inestimable contribution
East Sixth- Building. Tie was for¬
dertook to meet this problem for retical; but the full fascinating <» our economic,progress.
_;
ing, dictatorial giant; of business their
own
employees.
There story of American business in acBusiriessmeri: must take time to merly with Lawrence Cook & Co.
or, finance^ could monopolize an weremot many of them, however,
tion—how it, operates—what is re- study and reflect iipon their place and ijaR,. Barge' & kraus.

tionaries alike should realize this.
The day is gone when a rampag¬

wafc

taken

seriously,, some

been

...

Volume

171

Number 4896

THE

Continued jrom page 2

COMMERCIAL

FINANCIAL

CHRONICLE

The company should
increasingly
benefit as each new television set

■

tentialities

The

although not

such

managements

advanced

Mining, J. C. Penney
Directors

and'

substantial
which

always

consideration.

The

are

stock

has

stock

stocks

ratio

Ralph

earnings and dividends, purchase
of
Masonite
at
present
levels

New York

York

;

..."

j,..'

■.

based

future

.We

particularly like
'York, ^'New Haven .&
General

Mortgage;

Convertible Income

t e 1

A%s

; chased

the

"price"

50, will pay
May 1, $45
bond,
'thus, giving a
current
yield

ii d

end

per

year

able

pay¬

ad¬

y-'r-'v'T'

vance.

well-

This

managed railJ,w

has

started
-

Oppenheimer

di-

itself

vesting

;

pro-

gram
W.

L. Scheinman

Robt.
-

•'

use

and

sets

••

some 5

are

4j/2

expected

consider the sale of its New York

real

Central

estate

The

gether
which

Grand

the
it

New

holds

to¬

Cen¬

York

tyew Haven has all to¬

365

stations,?

have

—such

which

area

gether with the
tral.

adjacent

sales

real

the

have

many

estate

following

advantages for the company:
railroad

can

retire

some

mortgage bonds;

its

substantial

sums

nually.
the

i;,';

stations and other real estate

sold

lion

sets

rapid

execution

should
look
•

•

this

may

growth

the

Let

railroad's bondhold¬

that within

assume

certain time, the New Haven RR.will sell properties for $10 mil¬
lion:

this

This would

mean

that under

$10 million sale, annual savings

one-third

the

requiremnts

yearly

interest

outstanding

painting;, or

last

three

about

per

the

quarters of

May 31st, 1950
slightly ahead
previous year.
The 660,-

expected to

are

the

common

stock

are

$9 per share. Based

the

television

packages pre¬
pared for sale by the management
in the 1950-51 fiscal year, it is
expected that television revenues
will

increase
from

this

use

source

grow

Rev¬

should

rapidly

for

the number of sets

many years as

sharply.

very

increases and the quality of

reception improves.

'/The
alert

company

the

tialities of this
has

had

management

tremendous

under

poten¬

medium

and

consideration

the

new

ticle, stressed the great possibili¬

The management also is pres¬
g;e:
ently engaged in discussing with

well when

git it,

operated

electricity

and

the

remainder almost completely die-

from

consider

MAQ, because of its

dominant position in sports suit¬
makes:the operation of
practically, independent able for telecasting, a very at¬
the coal situation. -'-Recent - tractive" speculative opportunity.

selized,
this

road"

which

for

curity

Com¬

Third edition

of '17 i page

Stock

booklet

Exchange,

New York 5, N: Y.—Paper. :.

; .r,

Reorganization

Coal

the1 German

Industry

tional

the

and /Its Interna¬
Aspects—An Essay in the

Application of the Antitrust Idea
holdings to
Europe—Frederick Haussmahn

writer's

opin¬
of

reserves

—C.

H. Beck'sche Verlagsbuchhandlung, Munich and
Berlin,
Germany—Paper.English trans¬
lation

from

the

author,

Prof.

Frederick

Haussmann, Hotel Sonnenberg, Zurich, Switzerland. ;

are

Predict

the

considerably in

ex¬

How

Your

Own

Future—

Use

factors to make easy and reason¬
able predictions about your life
—Donald

Cooley

Wilfred

—.

field

that

mendous
Cafbon

might prove of tre¬
importance to
United

the

company's

announcement of

Joins Eastman, Dillon''.

recent

series of

(Special to The Financial Chronicle)

suc¬

CHICAGO, ILL. — William G.
drillings in Virginia.
Should
commercially
important Budinger has become associated
with Eastman, Dillon & Co., 135
gas be found in this area, prox¬

of these
whose se¬

examining

are

the

About

potential natural gas Funk, Inc., 227 East 44th Street,
York
17, N. Y.—Cloth—
development possibly foreshadow¬ New
\
'
ing the discovery of a new gas $2.95.

some

are

that

Facts

cessful

company

believes

it is

'.'the .shares.

vestment selection.

what

;

ground valuation would be equal

the stargazers, and
prognosticators." So.
the following is by no means a
"provesy" but simply the fitting
of a security to some of the more
important criteria of sound in¬
First,

1884

Stocks and Cash Dividends-

—New, York

MCF,

per

to almost twice the entire present
market price for the Company's

And,
the prophet Isaiah held

astrologers,

criteria?

daily

Cycles, trends, pro¬
one
trillion
cubic
feet, jections, physical rhythms, hered¬
known scientific
at
conservative ..in-the- ity, and other

cess

for if you
noboddy will for-

fate

11c

considerable

proven

Company

^man,

worse

writer

reserves,
ion that

never

the monthly

gas

imity to markets and the absence

should

South

Salle

Street,

was

long-term contracts formerly with Harris, Hall & Co.
at unfavorable prices will com¬ and prior to serving in the U. S.
ing power and have demonstrated,
Army was with the Chicago office
that this earning power can be. bine to give the gas from this
of Lazard Freres & Co.
maintained during the temporary area a much higher sales value
downward swings in the business than for most other sections of
the
country;'
During
the
past
With Baldwin, White *
cycle. It should have a strong fi¬
three years
the able and farnancial position. Its record of dis¬
(Special to The Financial Chronicle) "
management of ; United
tributions to security holders sighted
Carbon has acquired oil and gas
PORTLAND, MAINE—Rex W.
should also be a favorable one.
These are important tests of past rights on more than 170,000 acres Dodge and F. W. Bernard Hardhave

favorable

record

earn¬

this

area.

performance. Perhaps even more
On
past performance,
important are some of the sign¬
United
posts to future performance.. Is Carbon also meets the tests with
the company
going ahead?—for flying colors, "During the ' Com¬
in the writer's experience com¬ pany's twenty-five year history if
panies cannot stand still—they has suffered a loss in only -one.
must either progress/or fall be¬ year.. Earnings per share for 1949

wick have become associated with

Baldwin, White & Co., Chapman
Building.
Both
were
formerly
with A. C. Allyn & Co. and Bond
& Goodwin, Inc.
' V,
,

hind.

the

management

cap¬

$3.60, which figure

were

was

With Amott, Baker

also,

the

J Special to The Financial Chronicle)

able?—possibly the most impor¬
average earnings
per
share,
: BOSTON,
MASS. — Ralph F.
tant single question we might ask over the past five years.
During
in reviewing a company, - ,:
the past ten years, earnings per: Mallozzi and John B. Wade, Jr.,
.

The

security
which
handsomely passes these
the

common

Carbon

stock

Company,

tests

of the

United

which

this

celebrating its twenty-fifth
year of operations. United Carbon"
is one of two principal maufacyear

have
become
affiliated
with
averaged
almost ~ $3
per,
share and for the Company's en¬ Amott, Baker & Co., Inc., 10 Post
••••
•
« • tire twenty-five year operations Office Square.
share

per

share earnings have averaged
These earnings more¬

almost $2.

after extensive chargedepletion, depreciation,!
drilling expenses
turers in the country of carbon exploring- and
black, an important ingredient of which in recent years have aver¬
automobile tires and other rubber aged approximately $4 per share.;
For the past three years the Com- j
products, printing inks and paints, j
The demand for carbon black has pany has paid dividends of $2 per?
increase

$10

"Don't

The

Investment

mon

•

than

important role in the vast expan¬
sion anticipated for this
product:
Although United Carbon does not
publish figures for natural gas

said.

and experience in the natural
gas
will .enable it to
play .an

the

/the

sold last

field

if you provesy right

even

shown

and

nel

forward

Company's

enough to
security for this

look

For

of gas

favorable price.

•*''

noboddy will remember it."

the

rash

prospects

million

Triborough Bridge and Tun¬
Authority the proposed con¬
of a new "Garden" by
the benefit of this nev^policy to
the
Authority,
which
"MAQ"
the railroad's bondholders is ob-.
would lease, if and when it is
vious.
constructed.
Earnings from this
The raiiroaa
nas
covered its
source could be very substantial.
fixed interest charges 2 33 times
The company's
Board of Di¬
in
1948 and 2.0 times in 1949.
Fixed
and
contingent
charges rectors is composed of prominent
individuals who own directly, or
were covered
1.59 times in 1948
and 1.30 times in 1949. " The fact represent, about 16% of the com¬
that a large, part of the road is pany's shares. V/.
;
a

lion

having this
choice plague him at any time
during the uncertain future. An
early American humorist put it

run

preceded by nominal debt ($400,000) and the book value works
various

one

must

dismal

out

fiscal year ending
of

honor

Aid to Timing, An—Method of
measuring the time and duration
of price trends,
including a
index of prices from 1861 to

year To /others,: including, many
of the country's major
pipe lines,
'United Carbon received $6.6 mil¬

sort or another and

who

nominate

Gas

Field,

♦

book is generally
pleasure it will

one

man

cf course,

Garden

year) and is selling within
a, few
points of a 5-year low
(1946-50 range 8V2-21). Earnings
the

the

conservative estimate,

bonds.

Geo. F. Shaskan, Jr..

: j-..

yung

vious

profit of

cubic -feet

for; the

selected

struction

income

figure is

wrong

ties for movie theatres in obtain¬

the

Terences.

Hugoton

manufacture.'

billion

di f

portant

black

im¬

are

provesy

figure of $1*
million " to
$1.25
million. ' This ing exclusive telecasting privi¬
"
alone
could
provide for about leges for sports events.)
ffcjts
a

there

provesy

;

v er

This

use.

present prevailing prices the rail¬
possibilities of televising various
road could retire approximately
events of national interest, such
$15 million nominai value of iis
as championship boxing matches,
1st Mortgage Bonds, thus saving
national basketball championship
annually $600,000 in interest. Fur¬
games, exhibitions, etc., on a "spe¬
thermore, savings on?taxes and
cialized" basis.
'
:
3
v
upkeep on such properties sold
(Mr. Samuel Goldwyn of movie
could be estimated to amount to
fame, in a recent newspaper ar¬
at least another $500,000. Thus, on
could easily reach

in *

Howe
:

the

Gas

natural gas wells and last
Economic
year
Survey Tor
1950—
produced and purchased some 138 British Information
Services, 30
billion
cubic feet of gas,
more Rockefeller Plaza* New York
20,
than half of which was used:
by N. Y.—Paper—1 s. ; '
«. .,
; ■
the "Company in its own carbon

field.

far-reaching

has

share (compared to $1.12 the pre¬

continue
program

materially change the out¬

for

be sold

implications for those companies
which have something to sell :to

enues

eliminated.

are

The

ers.

' •:

an¬

Expenses for the upkeep of

(3)

Current estimates by some
industry authorities indicate that
by the middle 1950's some 25 mil¬

out to

(2) The local tax savings should
amount

were

year.

400

With the cash received the

(1)

mil lion

sets

real estate holdings,

City

last

about

■

contenders
t he \

these

million additional

of all possible -this new market.
including its Madison
Square
stations, and is reported to even present is
earning

exer¬

stocks h a Ve: afford, and this being a matter ;of
taste,/one is not likely to be taken
more ;th an
doubled in to task for this choice. A security,
on the other;
hand, is chosen for
price. At' the

current

o n

many of

pur-:

ision

equities

of 2022i

s'income

^ bond,' if

produc t i

good

ation of other i.

ing the curi ent
speculation in

Monroe

—George Lindsay, 19 East Grand
portant acreage in the Bonnie Avenue, Chicago 11, 111.—Paper—
View Oil Field in Texas, the Lov: / American
Economic
ington Oil Field in New Mexico,
System,
the Elk City Field in
Oklahoma, "The—-Frank D. Newbury — Mc¬
and the Johnsonville Oil Field in Graw-Hill
Book
Co., 330 -West
Illinois. At the end of 1949 it had 42nd Street, New York 18, N. Y.—
a total of 1450
* ■ producing oil and Cloth—$5.

particu-

larly

Field, the West
Virginia Gas Fields, and the East¬
ern
Kentucky Gas Fields. Its oil
producing properties include im¬

does not warp
one's appreci-.

;

•

present
the stock mar*

...

the

fields

Field, ,the Panhandle Gas

island.

cise,

ket is reflect¬

the New
Hartford

A t

' ' *

tered

ma¬

mental

.Series ! "A'!

desert

con¬

industry.

c-j

Garden)

development -of
the television

>' c.

have

royalty in¬

producing natural gas from
important and widely scat¬

such

1 d

w o u

and is

"the

has

than 1,000,000 acres
of potential oil and
gas properties

Square Garden to
carefully
calculated
risk

New

■tij\.CQfZ:2022)

o n e

?best

Co.,

Madison

(New York, New Haven & HarU
ford Series A Convertible 4^s>,

terest in

security- I like
best" is a bit like that
delightful
game
of
choosing the world's
greatest picture or the one book

City

Square

City;-

•

Selecting

leases

owns,

United darbon Company

speculative vehicle I

sider

Partner, Oppenheimer, Vanden

Exchange,

rooned

(Madison

WINFRIED H. OPPENHEIMER

Stock

important—it ac¬
the important know-how
locating, drilling for and pro¬
ducing natural
gas.
Today,
it

quired

are

SCHEINMAN

Samuel

should work out very well.

York

should

ROBERT

reported

Broeck & Co., Members of New

Bonds

tion.

Command

again

ever

reasonable

were

age- and—more

the future holds.

Partner, Shaskan & Co.,
New York City

seeking a high yield and good
possibilities for capital apprecia-

reasonably satisfactory market on
the New York Stock ^Exchange,
a

Income

attractive to those who

very

important

The

the

product

It acquired consider¬

able amounts of natural gas acre¬

GEORGE F. SHASKAN, JR.

than last year.

Sun Oil.

connections

owners

operating figures compare Very
favorably with those of 1949 and
earnings are substantially higher

Minnesota

which I believe

this

agement in this direction is mod¬
ern

The stock's present level
reflects none of the real promise

Security I Like Best

recognized.

is sold.

(1445)

almost

each

uninterrupted
during
the

year

past quarter century and its place
as

omy

major product in
seems

assured.

...

the econ¬

However, it is chiefly as

na¬

tural gas producer rather than
a

carbon

off s

black manufacturer that,

Rejoins R. H. Johnson

are

and

dividends

have

PORTLAND, MAINE
C.

Weeks

Carbon

Carbon
..

took

early interest in
closely -associated

became-,

with natural gas—at a

before

the

has

—

George

rejoined the staff

Johnson

Co.

was

been

paid in twenty of the Company's
twenty-five years of operation.

With Merrill Lynch
.

(Special to The Financial Chronicle) *-

The

Company's financial posi¬
NEW ORLEANS, LA.—John F.
particularly sound. Cap-- Clark
III, Luke S. Elliott, and Ed¬
italization consists solely of 795,win
C. Minor are with Merrill
is

770 shares of

common

Company, has

not

stock.

had

The

raise!

Lynch,

Pierce, Fenner

818 Gravier Street.

& Beane,
'

':!

appears

the basis for carbon black United

and

recently with Board, Freeman &
Co., Inc.
1

particu- any new money since 1929 despite
the fact that plant outlays have
larly attractive for the future to
the writer.
Since natural gas is been heavy. Current assets "are
United

(Special to The Financial Chronicle)

for

tion

•

over

period long"

tremendous

fuel

than

liabilities,
ernment

po-" twice

three

times

while 'cash

bonds

current

alone

and

G6v-.

Arthur

New

Porter

Secretary

almost! Bramhall,

are

liabilities."

J. A. Porter Resigns
J.

current,

York

and

Barbour

has

Director

resigned

Qo.,

Inp.,

City, it is announced.

Mead

The old stop of
seems
archaic.

18 last week.

Whyte

14V2

now

Says—

control

banks.

over

one

we're

looks 'like

better.

week

Last

that

bank

periods where nothing happens and what does happen
takes days, or even weeks, to
get started. It won't make for

thought the market would should be regulated in much the
still get up to about 215 in the same manner as banks themselves
are regulated.
Dow Averages. Better make it
A bank holding company is most
211 to 215. When that will
likely to be a State-chartered cor¬
a market that will win friends
happen is
something else. poration organized to own a ma¬
and influence people.
But Present day markets are a law jority of the stock of a group of
markets are annoying enough unto themselves.
They act banks and to manage or supervise
not to

about good public with

c^re

relations.

All this

brings

the question and answer pe-

^ther

riod, the most important be-

ing what to buy,

when. I don't know

off

these

sell, and

ago

may

worth the

why I get less

the

and

can

name

start

a number ot weexs
A nilTnhpr nf weeks

company

un-

with

Cooper Chronicle. They

recommended

Bessemer and Mead

c0incide

Corp., at

those

of the

presented as

are

may

well

those <* the author onM

In
or

prices which then seemed at¬
tractive.

Together with other

stocks and the rest of the

ket,

they

they.

went

During the

downs of the past

these stocks
,

world
and

ups

steady, which

■

•

less
n

kind ot

is some

virtue, I suppose, that should
be commended.
*

...

single stock

of stocks.

group

any

I buy

them, and recommend they be

bought because I think they
Ur,

can

sold

tor

„

than

they cost. When that hope bewatered down for any

comes

,Af

reason, its time to get out.
*

r.V

owns

another

Bessemer

ing level

was

would

now

have

24,

mean

old stop at

buy¬

get-out

loss.

22.

it to 24 and let it ride.

You

owns

Whenever

LOS

the

ANGELES,

staff

Blyth

Co.,

Inc.,

any,

stock
company
which, in
control of a group of

In this

banks

•

with

—

First

Walter E.
Securities

York

Stock

Per 100 Shares Plus Tax

•

U. S.

Smelting. @ 36% June 19 $137.50
@ 38% July 3 275.00
July 3 350.00
Wheeling Steel @ 50% May 29 325.00
Douglas Air... @ 78
May 25 525.00
Cities Service
@ 71
Aug. 7 675.00
Intl. Harvester @ 26% June 16 200.00
Shell Oil

Exchange

Chicago Board, of Trade
14 Wall Street

COrtlandt 7-4J50

New York 5, N. Y.

Teletype NY 1-928

Private Wires to Principal Offices

large, nationally known organi¬
States. Such

Cons.RRsCuba @ 18
June
Intl. Tel. & Tel. @ 14% July
Stand.OUN.J. @70% July

5
3
Schenley Inds. @ 30% May 25
Subject to prior sale

187.50

87.50
287.50
200.00

price change

THOMAS, HAAB & BOTTS

San Francisco—Santa Barbara

Fresno—Santa Rosa

site

Members Put
Dealers

"hjbldhig

of the

major

which

banks,

Another

several

& Calls Brokers

Assn., Inc.

Broadway, New York 4, Tel BO 9-8470

nqw

defect

which

placing

bill

and restrictions upon
the
right of such companies to vote
the stock which they owned in

serve

System.
This section pro¬
a holding company, be¬

vides that

directors

bank

the

voted

•

part

purpose

the

underlying

The

permit.

Board

discretion

stock

from the Board.

authorized

its

grant or deny such
As a condition to the

are

bank

in¬

holding

com¬

the

term

without

giving the Board, any discretionary
authority.
We have approached
this problem sympathetically but
have

been

definition

unable

based

solely

find

upon

an,

arithmetical formula which would
do the job
also asked

adequately.
those

who

We havehad

some

statute

with
in

this

basic

to suggest a

for

satisfactory substitute

the present definition but
has

one

gestion

brought forward
which seemed to

the

meet

tionary

situation.

The

agreement.

previously

pointed

However,
out

and

as
as

Congress and the courts have long

no!

sug->
to

discre¬

authority for the deter¬
a bank
holding com¬

mination of

pany

patterned

authority
the

which

Public

■

after

similar

contained

int
Utility Holding Com-»

Act and which has been in
operation over a period of some
15 years. The rights of all
parties

reach

premise

[

question about this in their minds?

this

permit to do

its

Board,
opportunity for

pany

The

and

vote

may

definition

will be

those companies which control the
management and policies of banks,

and

that we have studied this,
point very carefully and have«
tried to develop a formula which
would
constitute
a
satisfactory

•

member bank, must first obtain a

fore

definition
the

.say

one
"

of the

authorizes

though it does not own£
15% of the stock of a bank. I may;

election,

upon

pany even

the

any

preceding

part

notice

stitution

law

for

sim¬

affected alike.

hearing, to determine that

than 50% of the

election

tions

member banks of the Federal Re¬

or more

institutions
are

holding company" in the

which

after

or
controls, directly or in¬
directly, either a majority of the
shares of capital stock of a mem¬

number

All

that

of "bank

defines^# bank holding
any^company "which

ber bank

requires that it be
subject to regulation.
•v Some question has been raised

owns

limita¬

This definition

practical, just, and es¬
view of the .prevailing

which

banks

of the

existing

holding

the kind of influence

exert

important

|hat|; portion

in tthe

bank

has a ready procedure for
escaping regulation by demon¬
strating that it does not in fact

company as

paragraphs applying

and

definition

exclusively to bank holding com¬
panies (called "holding company

affiliates")

declare

Each

jbanks.

and

ilarly situated

nonmember
though the latter in¬

clude insured

of the present,
inadequate
concerning bank holding com¬
panies.
As part of the Banking Act of
1933, Section 5144 of the Revised
Statutes was amended by adding

situations.

contrdl; oply
even

sential

bank§ This excludes from
regulation, tl|pse companies
which operate in all respects as
bank
holding
companies,
but

pro¬

policies

even

ber of banks.

any

visions of the proposed legislation
will be assisted by some explana¬

the Board

believe

to be found in al-. filiate." The "definition in the ex¬
most every section of the country.
isting law embraces only those
The proposed legislation, there¬
holding companies which control
fore, deals with a problem nation¬ member

A discussion

influence
or

finds, after hearing, that it does
in fact control the specified num¬

af¬

company

controlling

automatic coy€rage under
the definition, provided the Board

to feach others be¬
inadequacies in the defi¬

nition of

they

though it does not
the 15% of bank stock requi¬

own

fails

are

subsidiary banks.

company

not

also

for

made

management

institution

apply for a voting permit, but

the

permit

to reach

cause

case

bank.

Subse¬
quent provisions of the definition

Not only

companies* which elect

those

zations controlling a large number

....

Menterey—Oakland—Sacramento
•>

inadequate.

the

automatically,
a

of their

able to avoid regu¬

pres&t law fail

does the

tion

Deere & Co... @ 44%

New

was

demonstrate that they do not

over

voting the shares
owned in these banks,

and thus

which

provision

exercise

without

which

operating
of one

banks

company

definition
can

advised

bank

the

which would be covered under the

corrections, the
applying company simply aban¬
doned its application for a voting
permit. It was able to control its

Inadequacy of Present Law

SPECIAL CALL OFFERINGS

New York Curb Exchange (Associate)
San Francisco Stock
Exchange

when

au¬

the exemption of such institutions

If such corrections ap¬

however,

first

two

branches,

other

However,

if
to meet .basic

the need for such

holding companies range
size from small organizations

With First Securities

Securities

necessary

The

one

ex¬

organiza¬

reports of

necessary,

pear

law

Members

are

standards.

wide in scope.

Co. of Chicago.

Schwabacher & Co.

reviews

banks,
four

15%

own

voting

determine what corrections,

the controlling

numerous

relationships.

which

receives

aminations of the affiliated banks

in other situations.

CALIF.— of banks in
companies

215 West Sixth Street.

Murray

Board

tomatic coverage to all companies

nonbanking

tions and

The

Lewis J. Caulk has been added to

MADISON, WIS.

Pacific Coast Exchanges

the

application for

affiliated

„

(Special to The Financial Chronicle)

On the

they vote

voting permit,
it makes a thorough examination
of the holding company and its
an

same

2(a)

porate

not

lation.

With Blyth & Co.

bank hold¬

Section

part of the definition extends

class of banks.

'/■.vf.

deficient

regulation.

bill conforms more nearly to
practical realities of intercor¬

the

statute||p

;

company

the

their shares in such banks.

advantage of

The definition of

ing

practical

regulation is most
very well be the

may

definition to escape

be¬

case,

(Special to The Financial Chronicle)

Orders Executed

When, in
time exer¬

of banks whether

banks;

Raise

Pacific Coast

same

in which the attempt is made

take

Ordinarily, of course, control isClearly the law should apply to
based upon stock ownership, but
all bank holding companies alike.
this does not necessarily mean
ments, extensions and additions to majority ownership; holding com¬ This cannot be accomplished by a
its utility plant or to reimburse
law which permits a holding com¬
panies can and do exercise a con¬
its treasury in part for expendipany to elecfcswrtrto subject itself
trolling influence over banks
tures made for such purposes. The through the ownership of lesser to regulationMThe law must be
company contemplates making exmandatory tofbe effective.
The
amounts of stock.
penditures of approximately $93,present bill provides that all bank
The banks controlled by a bank
holding companies meeting the
500,000 during 1950, 1951 and 1952
holding company may include na¬
for the construction or acquisition
prescribed definition shall register
tional banks, State member banks
0f pr0perty.
and shall be subject automatically
and
State
nonmember
banks, to all of the
^jegulatory provisions
Regular redemption of the bonds
whether or not insured; and the
of the
™ay bfnKva«5e +at iPnn^fs rangiPg major holding company .'groups
Present
from 105%% to 100%. Special
dSpiition of holding
usually include more than one
redemptions run from 102%% to
company is

now

The

so a

necessary

Not

so.

control

which

case

however. This
many
instances

holding companies,

connection, it should be mentioned
and accrued interest. The bonds that, without owning any of the
were awarded to the group at stock of the banks, a company
competitive sale April 4 on its bid
may indirectly, or even directly,
control a group of banks, as in the
of 101.63999%.
The company proposes to use case of trust
arrangements, as well

about 24, after making better
than 25 last week.

because

cising most effective control. The

establish indirect control.

are

absence

fact, it is at the

matter, can control the operations

the

Bank

Cooper

done so,

voted

puts it within the power of
holding company to establish

the

they are made a
condition tp the granting of the
voting permit.
In one important

turn,

offering
today
$15,000,000
Georgia
Co. first mortgage bonds,

100%.

test

but tfyere also are other
methods which have been used to

gnd

l980,&aTl02i

all have

provide a portion of the
funds required for construction or
have
acquisition of permanent improve-

times

married to any

Power

lieved that all would

number of shares

a
holding company re¬
lationship exists. Such a restricted

manda¬

was

«*>

whether

even

obtain such

company

shares.

preceding election, is an unsatis¬
factory basis for determining

A hold¬

Undoubtedly it

permit.

bonds to

record that I'm not

gone on

(April.

the proceeds from the sale of these

various

associates

few weeks, 2%%%eries"due

were more or

pany

holding

out¬

control

for-the election of directors at the

under

pro¬

where

with the

case

instances, there are two
holding companies con¬

indirectly.

But there is

smaller

total

Similarly, the number of shares
owned or controlled, as compared

tory requirement in the law that

banks, directly
simplest ex¬
ample of this is where one com¬

per¬

holding

some

law

is issued.

State institutions.

trolling the

Halsey, Stuart Offers
Georgia Power Bonds

though

exactly

weren

beaters.

mar-

of any

company

the

engaged

pany

re¬

The

others,

the

maintained without the ownership

becomes subject to
only if a voting permit

ing

in other
ownership
and control of other businesses,
unrelated
to
banking.
Holding
companies
may
themselves
be
banks, including> national banks

the

are

left

but

the voting permit.

upon

is not necessarily a cor¬

businesses,

leaders

companies

holding

standing,

though meeting the same defini¬
tions, free from regulation.
This
is because the law is based solely

poration; it may be a business
trust, partnership, or some other
organized group.
In addition to
controlling banks, a holding com¬

1The views expressed in this
article do not necessarily at any
^me

groups
banks.
A

control

sons

intriguing sub- forefront.

jects when I don't know the
an_
answers.

went

bank

optional.

ownership

portion

for bringing some

means

regulation,

However, there is a

organized

other,

scared
so
much they
stocks
down.
Conversely, it
mean
that no move

down to stocks

the

Section 5144 pro¬

amendments

vided

law

Present

great variety of factual situations
in which, by one method or an¬

Television

the

when

these banks.

ex-

last

witnessed

was

week

precedent.

ample

upon

where control is exercised through

fund, and to dispose of all inter¬
ests in securities companies.

Basically, our view is
holding
companies

businesses.

that

wrote

banks,

the ownership or
majority of the voting
shares.
Thus, the present law in
this respect does not cover cases

quired to agree to submit to ex¬
aminations, to establish a reserve

segments tit our banking structure
with
miscellaneous
nonbanking

going

of those dull

one

controlled

its

and

control

by another does not

company

control of

granting of the permit, the hold¬
ing company, on behalf of itself

importance is the combining un¬
or der the same management of large

18V£

point

prof it-taking

effective

recognized,

Ch^ige it to 16 and make the

=By WALTER WHYTE=

into another

better than

was

page

Bank Holding Companies'
Control Should Be Tightened

in at 16, is now

came

about 16 and

jrom

depend

Markets

Walter

Continued

up-side make 27 or better
your profit taking figure.

Tomorrow's

Thursday, April 6, 1950 j

FINANCIAL CHRONICLE

COMMERCIAL

THE

(1446)

der
"/

adequately' protected

the

provisions

the

since

the

that

company is a bank

Board

can

un¬

bill,

determine

folding
only after notice and
hearing and any action taken by
company

Bank

Holding Companies

minority

stockholders

with

which

defend themselves

acting

upon

the

and

matter

;

this

Under Section 5 of the bill,

situation

remedied

would

with the specific with, us in trying to bring forth a

sound and effective bill which
would meet the views of as many

of the statute or of a holding com- varying interests as possible. They
pany's agreement with the Board have all been most helpful in the
are
directed principally at the discussions of the matter and in

they become a part of the record
in the case. The views of the State
authorities will thus be fully conpreventing bank acquisitions with- sidered in each instance and a aebank holding companies.
To that .'out first obtaining the approval cision will be reached only in the
end, a holding company would be Gf some agency of*7the Federal light o^ their recommendations.
required to divest itself of any Government.
Under this section,
S. pl8, like S. 829 in the last
securities except those in com- any acquisition
pf the stock or as- Congress, provides that the Fed-

quirements of the bill is contained
in Section 4 and is designed to
limit the non-banking activities of

coupled

power to require corrections. Secondly, the penalties for violation

little into account by the Federal agency

and

the most salutary re- except their own protests.

One of

(1447)

CHRONICLE

These must be taken not

which leave the local, management promptly.

■

Nonbanknig Activities of
V

FINANCIAL

would, of course, be ex- the first place, the Board's right points in connection with this proby measures pected to submit his views very to examine a holding company is posed legislation and have united

banks

independent

judicial review.

the bill Such power can be used to acquire visor

the Board is subject under
to

COMMERCIAL

THE

Number 4896

171

Volume

controlled banks, rather than at
the bank holding company.
rjibe provisions of the present
bill, as previously indicated,

submitting constructive suggestions. We are also most appreciative of the helpful consideration
which we have had from the Atwould require registration of all torney General's office, the Bu-

panies which are incidental to its. sets of banks by a bank holding eral Reserve Board shall be the
banking operations, those which company would have to be ap- administering agency, because the
are eligible for investment by na-;
proved by the Board.
If one of Board is named as the administertional banks, or those which rep- the banks in a holding company ing agency in the existing law enresent investments of a relatively group wished to acquire^the assets acted in 1933 relating to holding
unsubstantial nature. Such divest- of a bank, the acquiring bank, if company affiliates.
However, we
ment must be accomplished with- a national bank, would have to are more concerned in this bill
ln a period of two years
or within secure the approval of the Comp- with the principles which would

bank

companies

holding

of the Budget, and other
Government agencies. We have
felt free to call upon any and all
each of these groups and .agencies at

(Sec.

reau

A bank holding company
WOuld be required to file periodic
3(a)).

reports.
(Sec. 3(b)). It, as
0f its subsidiaries, would be sub-

ject to examination.
(Sec. 3(c)).
The more important requirements
the

present

statute regarding

time for their points of view,

any

Their assistance has been most
generously given and our discussions have been carried on in a

^hmildye^ troller^'if^a State member bank, be established by it than we are reserve funds of bank holding most cordial atmosphere.

ff ^addUio^al^Vime
deemed

hardship

fn^n^ MS" *** f°l th,a

ouTreme^ifare"simple'"^Vcc^pted

Sl =to7k~offt^bank hoWini
would be forbidden

°"iy

pany

ssr2®shsrt, ttt,,
Bsyswvfa&st ez
.s ssssKissi
turin2

chnnM

potential

not

borrower

HnminatpH

;VnQncinn"

The lender and

concerns

borrowe°

owning

would be regulated
s ssssx s * "™,w ?r16

con

Jnd.v/teH

hnwier.
hnwpvpr

earlier
parlipr

irHipatpr?

used to gather under one manage-

wholly unrelated

ment enterprises

to the conduct of

banking busi-

ness*

In'keeping with sound banking
it

nrinpinipc

i«

bank holding

nPPPccarv

that

should be

company

required by law to divest itself of

substantial interests in

any

hankin?

Thp pxcpntion

venture*?

in the bill which permits a hold-'
in" company to own not over

of°the

witirig

securiti^

of another

directly or through the

company

companr'fs'not fncompahblf

we-

If,
however, this exception should be
used to evade the purposes of the
law, the bill provides that the
holding company may be required
to dispose of any such securities,
Where, pursuant to the requirebelieve, with these principles.

and

CommUtee

nee^ ^if

flte

the
this

pointed out in favor-

abiy reporting upon this legislation in 1947, these are in general
the considerations now specified

^ny

holding
limits

group

company

that

area

potential

one

and sound banking and the

interest.

this

public

connection,

should point out that this reprea

difference

that

contained

evils

bank - holding

operations exist.
.
Under existing law, a chartered
bank may be prevented by the

company

regulatory agency to which it is
subject from expanding its banking offices either by the establishment ofmew branches or by tak,

and operating the offices

ing over

banks as

.other

order

establish

branches.
branches,

language

the

bill

The lan-

—:v- —^

the considerations
which the supervisory agency may
take into account in passing upon
questions of holding company expansion. Chief among these considerations
as
this .Committee
pointed out in 1947, is the antimonopoly principle enunciated in
the Sherman and Clayton Acts. .
way narrowing

the

In have had
na-

Congressional
Section

purpose

9.)

3(c) of the biu author-

bank

With respect to its

effective ad-

terested

—

agencies, instead of making the
The bill extends a statutory Bank Building,
examinations ourselves. Acc°rd- right 0f judicial review to anyone
,
aggrieved by any action of the
ln£ly>
b"e Committee snouia flfrprrjpVpd hv anv action of the
With Merrill Lvnch
Rrtnrd
tnlrcn
under
of
the
Willi lYiCTrlll l^yilCIl
consider it advisable, the Board Board taken under any of the
(Special to The Financial Chronicle)
would have no objection to put- various regulatory provisions of
INDIANAPOLIS, IND.
James
ting a provision in the bill which
(gec xo(d)). This proanv

—

theTonlent'of !hfFede°ral rnlrmnLlbieTe^lauL'^'otrer E' Smith is with MerriU Lynch'

Pierce, Fenner & Beane, Circle

Deposit Insurance Corporation be-

nnH

onmnnnv

fhp rnn<;pnt

of the

tne
aPP™Prlate State swervisory au
tttorty for ^examination ot a
a"bs,dia(y
h,Ts thP
tamk. As; to national banks, tne

which we
this bill with the ingroups
the
discussions

(Special to The Financial Chronicle)

^ desirable changes. These
amendments which are of a tech.
nical nature and consistent with

West is now affiliated with J.

purposes

of the bill,

lab°"sh'P
tr°ller ,°*

f0oarde^b^deg^de!aveexisbt^
n"!jJnns„fthe

suggestion ore,e!t

]aw

tWshas

®f„^Slv®"d^f

OTov!!ionf

the

bill

would not change the effect of ex
lsting law-

stands in much the
position as a bank's own
trust department.
The second
proposed amend-

the subsidiary
same

withtbi tnei umiea &taxes.

be controlled, sion which requires that in any
relatively few such case the bank supervisor in
of' a State must be notified and given
the holding company, giving them* 30 days in which to submit his
a decided advantage in acquiring
views and recommendations. (Sec.
additional properties and iri car- 5(e).)
As a practical matter, in.
rying out a program of expansion, emergency cases the State super-

Co., Inc., 89

(Special to The Financial Chronicle)

defmiUon ot bank tnose

can

Arthur Warner &

George R.

W,tK A M ^

the

—

"ba"k holding company" merely
DETROIT, MICH. — Milton J.
because it may have a subsidiary
unt
trust company located in the same Foley is now with A. M* Kidder
t
city
rj.ricWolri Street
city or town. xii sum <x diLuauuu, o p
or town, In such a situation,

^^ib^aUQd"bank" tho^OTgan-

BOSTON, MASS.

^
^ further ^ Devonshire street
'e and^he sultation with interested parties.
Currency and tne
Under the first Dronosed amendW«.L A. M. Kidder Co.
With A im V"

Board, and non-member- ler, the Federal Deposit Insurance
; I ntw Asn*H* nf Promoted
from the Federal Corporation, or the Board, in con-:* v
•
•
Legislation
Insurance ? Corpdration.:Vsidering
any r proposal
for the * ? '
But a bank holding company is-Acquisition of banks or the estabXTndertbe present law, the only
not limited by- any such requirelishment of .branches ; under this provision which implies a degree
ments. Throughlhe acquisition by. bill, to consult with the appropri- of administrative supervision
the holding company of the stock; ate State
bank, supervisory au- bank holding companies relates to
and in wbose shares naof an existing bank which there-* thority and get his consent before sucl1 examinations
as shall be tiobalbanksinvestwith the Board's
after may
be operated, for all approving the transaction. We dis- necessary to disclose fully the repractical purposes, as a branch of cussed this at great, length with
merely a clarification of the prothe holding company system, the various groups and among ourthe further provision that, for vio- vision already m the bill excluddenial of a branch application of selves and with others and we did
controlled uaiiK. may uecumt: al- not ieei that it wouia be prac- lation
a coniruiiea bank mcty become al-.
feel xnai 11 would oe
not
of the statute or of its
whhfn^thffunited States
most
meaningless.
The holding- ticable to go so far as to give to agreement with the Board pre- , *ess
_
company device lends itself read- the State supervisor what in effect requisite to its obtaining a voting
,
t
wb;rb r now submit
ily to the amassing of vast re- would be a veto in the matter. We permit, suth permit of a holding
the record
sources obtained largely from the
have included in the bill a provi- company may be revoked. In that De inciuaea m ine recuiu.

which

Arthur Warner

committee IWU pxuposeu aineiiuthfi fem which we bfi_

ments tQ

J^mination Pract'ce and the re

banks

used

sort of

(Special to The Financial Chronicle)

Deposit

and

they

tice, of course, so far as banks are subsidiary bank (Sec. 11(a)). In
INDIAPOLIS, IND.
Hugh O.
concerned, we would expect to addition, the bill provides for the
r^ almost wholly upon reports criminal prosecution of willful Foster & Bradley T. Rpss are with
of examinations made by these violators (Sec. 11(b)).
Waddell & Reed, Inc., Merchants

from the

who comprise the management

which

f|d®q"?

Comptroller of. State bank supervisors, that it
the Currency, State member banks would be well for the Comptrol-

public,

bj?

in
■*»-*»» Committee the
the appro- the violation, to receive dividends desirability of prompt and favorthaftS In" ?r m^ager?e.1lt. or service fees able action
? its subsidiary banks, or to
Waddell & Reed Adds
Stnr
participate in any way in the
*
* Sr It h!ni^
munag.emer}t or control of any

horl Lto

^±ba^^±°^2ei:
mission from the
insured

holding companies

yardstick

-ncy
an.cet Corporation, or

adequate

with

consistent

cities in intemretatinn.

of the greatest

^8 one W. caa tte,refhbew" make such rules, regulations, and this subject Is highly desirable
e,ct.'ve administration of the leg- orders as might be necessary to from the standpoint of the public
enable " t0 admi"ister a"d Carry interest " is als0 desirable the
in
out the purposes of the Act. (Sec. my judgment in order to give

the
beyond

K,dasthto nresem^fols'^ffU

uccu

economy as

would extend the operation of

assets, such a transaction is given previously acted upon by
this
appropriate tax exemption under Committee. The earlier bill cona
provision of the bill prepared tained language which was obwith the assistance o" the m
of "
Treas- jected to by a number of groups,
*•
ury tax experts.
(Sec 12(f).)
including
non-banking groups
with whom I have met, on the
Bank Holding Company

this

management or service contracts completely objective and fresh

obvious reasons of efficiency and between a holding company and approach to the problem without

theTede^l Depos.Ansur: it! rffidals" who'^a^cipated

from

for

—1

the subject, I have made an
extensive and what I consider a

bank holding company group

gents

.( 'W,,

c.Dr,m

non-banking

Expansion

(Sec.

The terms of any

izes the Board to make such ex_ ministration> the bill provides cer- yarasticK oy wnicn tney can
aminations of a holding company tain sanctions believed to be nec- operate, so that they will know
the admission of State banks to ?nd, °f' ^ subsidiaries, including essary to assure compliance with what they are lawfully permitted
re! "s Provi?ons'
ifitjs « to do and what they may not do.
Cvcfam ot-iri
tt,/, rrrontinfr r»f
necessary to disclose fully the re
after notice and hearing, that a mu
.
. ,
.
woHJvfrtbetween the holding com- bank holding company has will- The necesslty for appropriate leglations lOr
cve? under the bm the agenCT pany and its subsidiaries> but U fully violated the Act or any rules, tslation in the fieldbehalf of the
is generally
on
poncernedwouM ateo have hfcon- als° Provides that the Board may regulations, or orders issued there- recognized and
sider whether the proposed ex- F®e tuepP°r^L,°ftrnUp^nf ^hp
Snd*er'J5S ho?dmg c°roPany may Board, therefore, I respectfully
•

holding com-

Th„

6(a) and 6(c)).

Committee

well as time saving on its bank would be open to sui;- personal prejudice in the subject
Finally, the and have reached
conclusion
^ uulwuu fl8cuucbi Only by nam- Board would be auiuonzea to on my own that legislation on
different agencies.
uoara wouia ue authorized iu
own

pnmmlmitiec involved^As

its

distributes

before this Committee nearly

s ssvr ssar -*

the part of the executives o£ the veillance (Sec. 7).

agSnt

ments of Section 4, a
pany

lul

to consider the financial his-

1°? ^

tbp

holding company device has been

ous

wrmiH

iriro+

fh£

troUed bv the sam~agement

board made up of varisupervisory agencies for the

Act by a

was

of the in-

iaries

and gUide the banking agencies in deoperating industrial and manufac- ciding whether to approve any
such

business,

and

event^certain penalties affecting
the banks in the holding company
system may be r applied.
When
considered in the light of the voluntary aspects of the existing law,
such provision falls far short of
providing effective regulation. In

Before concluding this statement, I would personaly like to
express my deep appreciation to
the various, banking groups and
individuals who have given so
much of their time and attention
to the consideration of the various

E°'ey

& Co" b0° ^nswold btreet-

COMMERCIAL.& FINANCIAL CHRONICLE

THE

(1448)

The

following statistical tabulations

latest week

week

Business
Latest

STEEL INSTITUTE:

AND

IRON

AMERICAN

Week

Ago

that date*

capacity)
Equivalent to— < .■'>
'
••/'V."
Steel Ingots and? castings (net tons)——
Indicated'steel operations (percent of

1,845.300

PRODUCTS
(DEPT..
OF COMMERCE)—Month of 'January: .,
Total shipments (thousands of pounds) -i—

1,821.400

ASSOCIATION—

AMERICAN TRUCKING

—

Crude runs

(bbls 4 ) rnmrn*** VfLm* *»'*»•KdrM

Mflft 25

——

stills

daily average

—

Gasoline output

output (bbls.)-,,—
——Mar. 25
Gas, oil, and distillate fuel oil output (bbls.)—-——-——..-Mar 25
Residual fuel oil output (bbls..—-——Mar. 25
Stocks at refineries, at bulk terminals, in transit and in pipe lines—
Kerosene

(bbls.)

17,703,000^

17,417,000
■■■V 2,014,000

2,484,000

6,890,000

8,014,000

T,855,000

133,888,000
16,227,000

135,052,000

12,950,000
40,577,000
42,546,000

43,102,000

56,050,000^

BANKERS

48,663,000

——Mar. 25

-p.-—

128,087,000

1717,233

{725,570

§546,791

CONSTRUCTION

8508,502

547,733

All

construction—————

construction

Private

—

State
Federal

$133,448,000

$132,174,000

111,584,000

87,578,000
45,870,000

85,038,000
47,086,000

39,331,000
7,755,000

65,746,000

71,419,000

49,363,000

31,961,000

16,383,000

38,455,000
7,415,000

\
and lignite (tons)-———Mar. 25

12,370 000

13,400,000

(tons)—————i—-;—--Mar. 25
~
>—Mar. 25

1,136,000
78,300

1,215,000

2,900

—

———.

——

residential
nonresidential

/Bituminous

coal

Pennsylvania

anthracite

Beehive coke

(tons)———:—-—•

of
New

•

277

221

264

PERMIT

INSTITUTE:

ELECTRIC

Electric

„

—April

00q kwh.)————

(in

output

5,993,062

5,911,936

5,878,788

AND

(COMMERCIAL

STREET

INC.

INDUSTRIAL)

——

—

DUN

BRAD-

New

Pig ir<6n

(E.

J. QUOTATIONS):

,:,*.

Electrolytic copper— >.
•
Domestic reiinery at———

•

'v, '

-5 ■>: >/;

—Mar.
Lead (New York) 'at——:
——-4---'——Mar.
Lead.(St. Louis) at——v——1
—.'——Mar.
Zinc (East St. Louis) at-—Mf.r.
tin

Straits

York)

(New

at————r——

——

New

corporate

Average
Aaa

-4.—-,

3.837c

3.752c

$46.74

Construction

,*$28.42

$27.08

$31.17

Commercial

Wholesale

18.425c

Public

Utilities'Group———.——'

Industrials Group

——,i——

18.200c

io.3ooc

18.425c

103.000c

/12.000c

10.500c

Aaa

v1;

■

10.300c

;

i—

—

io3.oi

11.800c

'
'

10.000c

9.750c

Apr.

115.82

..Apr.

121.46
120.02

■

116.02

108.83

111.62

119.00

;

115.82
"

■

—

——

COMMODITY

———

—

INDEX—s.

Orders

received

—

STEEL

$10,928,000
>

864.'
•

4,440,000
7,355,000

Crude

104.83

Refined

111.62

108.16

/ ;

114.08

117.40

120.22

685

$15,009,0001.^
3,468,000 V

.*
'

5,728,000

2,476,000

r: 896,000

)

1,875,000

$22,156,000

$26,436,000

$27,567,000

92,994

•78,266

*124,383

327,035

—

FORGING

(DEPT.

307,656

*569,727

January:
—<

—

Copper production in U.

112.37

(tor.s

(.short tons)

In U.

A.—

„•

lbs.)

2,000

81,216

2,000 lbs.)

85,612

76,594

95,229

80,275

112,773

111,668

98,611

101,070

831841

94,03b

——_.

customers—

February: *

77,472

(tons

Deliveries

117.40

2.26 /

2.25

2.84

2.83

(tons

lbs.)

2,000

Refined copper stocks

3.00

2 59 /"■

2.59

2.58

—

at end of period

(tons

lb3.)

2.70

2.66

266

2.65

2.79

2.86

2.85

3.23

3.24

3 03

3.08

2.28

2.84

•

2.86

2.38

3.23

Apr.

4
4

2,78

2.64

3.08

;

COTTON

3.27

2.73

2.78

2.S5

2.G4

2.64

GINNING

Running

bales

———Apr.

——

357.2

363.1

Active

186,128

Mar. 25

—

Mar. 25

—_—

————

172,503

194,402
205,932

210,897

135,542
164,620

200,998

355,062

Percentage of activity———
—
—.Mar. 25
Unfilled orders (tons) at———————————————Mar. 25

382,006

314,640

267,085

of linters

(DEPT. OF

spindle hrs.

final)

15,900,502

—

per spindle

STORE

SALES

14,580,279

—

COMMERCE):
23,264,000
20.417,000

23,286,000
20,217,000

9,181,000

9,091,000

496

in place Feb.

23,741,000
20,758,000
-

7,966,000
355

(FEDERAL RE-

VSERVE SYSTEM)—(1935-39 Average=l00
of

Adjusted
•

(excl.

COMMERCE):

Spinning spindles in place on Hgb. 25_
Spinning spir.dles active on Feb/^25
Active spindle hours (000's omitted I Feb.-_

2.78

3C7.6

356.0

(DEPT.

COTTON SPINNING

3.04

3.46
'

ASSOCIATION:

(tons)—

Production (tons)

v63

1,884,000
1,829,000

COPPER INSTITUTE—For month of

Month

NATIONAL PAPERBOARD

4,166,000
1,824,000

liabilities^

(short tons)

DEPARTMENT

MOODY'S

$7,905,000

6,386,000 '

seivice

120.22

Apr.

——

Utilities Group—

Industrials Group

Public

318

V-

;

Unfilled orders at end of month

117.20

108.70

117.40

Apr.
Apr.

—

/ .'

811

110

403

*",'69'.V! ...V/

i——

liabilities —

Total

101.71

;; 120.22

—

——

liabilities

113.12

121 25.

111.62 V>

V.:.

103.39

116.41

119.82

108.88

'——-—;—:

— ——

Railroad Group

■

170

225

———1

—;

,Baa

—.1."

—

73.

number!

100 41 '

—399

service

Commercial

16.850c

103.17

■

170

16.000c

116.22

113.82

■■

•

—~

——

COMMERCE)—Month of

121.25 V

4
4
4

—

...

•

——

Construction liabilities

4;' v

J 116.22 V'

4
4
4 >

Apr.
——;—Apr
:—;
-Apr.

corporate —:

-——a——;
.

51.217,797

192,977,754

number.

COMMERCIAL

U. S. Government Bonds——.———

$244,195,551

41,873,234

293,125,927

BRADSTREET

number

liabilities

of 2,000

Average

$334,999,161

275,667,082

Retail liabilities ;

io.25oc

MOODY'S BOND .YIELD DAILY AVERAGES:

—* $343,121,578

City

17.000c

•

V 23.425c

77.375c

23.200c

74.125c

18.425c

10.500c '

4 i
4

———Apr.

———Apr.
———Apr.
——;
_L—Apr.

,—~———

18.200C

76.000c

———-1—i———:_Apr.

—— -——•

————————

Railroad Group

4.576,587

48,152,886

18.200c V

20
29
29 >
29 v

Apr.

6,783,809
55,399,293

number

Shipments

——Apr.
————h'y,—*—*
— Apr.

—Iv

—;

Baa-

Total

10,925,903

9,393,887

67,454,496
York

Manufacturing

..—Apr,

39,980,726

11,762,911

54,111,051

number

$40.38

—'

——

——————

A''

35,260,200

60,940,028

•

FAILURES—DUN

3.837c

*;-'-T.

MOODY'S BOND.PRICES DAILY AVERAGES:
U. S. Government Bonds-—

23,598,851

64,612,554

INC.—Month of February:

■

V':v" >'->>""■ ■' '

■

-Mar. 20
Export refinery at——————————Mar- 29

73,570,480

40,226,495

City

METAL PRICES

80,823,437

53,699,662
76,003,349

■

$25.58

—
ri—Mtr. 28
ton)——-r———Mar. 28

$8,129,913

—

$46.38

$14,450,634

$43.38

ton)

(per gross

Scrap "steel (per gross

Retail number

$3.837c

-■

—

—:

York

216

IRON AGE COMPOSITE PRICES:

Mar. 28

$8,163,678
92,900,340

Manufacturing

—————

60,676

DUN

—

CITIES—Month

INC.—215

Central

Wholesale

Finished steel (per lb.)—*

*55,487

Total United States————

5,377,662

179

136

196,325

65,387

Central

BUSINESS

198

177,497

*212,214

33*068,782

VALUATION

—...

Atlantic

Mountain

Mar. 30

—

$434,493

*291,839

—

etc.——

—

Outside of

FAILURES

*$559,540

324,254

—166,014

Central

Pacific

EDISON

13,550,000
$228,229,000

—

Middle Atlantic
South

West
6

273

Without

February:

for

seasonal

FABRICATED

variation—

STRUCTURAL

282

216

110,528

*117,834

108,764

122,614

STEEL

282

226

adjustment—

*133,430 '

145,879

283

227

(AMER¬

ICAN

INSTITUTE

AVERAGE=100

PRICE INDEX—1926-36
—„——Mar. 31

/i" >'

GRAY

DEALERS

AND

SPECIALISTS

EXCHANGE—SECURITIES

EXCHANGE

THE

;

FOr sale

COMMISSION:

'Number of orders————
Number of shares-Dollar value

purchases)—
——

—

Number

orders—Customers'

total

Number of shares—Customers'

i
!

total

28,864

213

243

499,529
$19,661,564

16,316

•

196

Mar. 18

31,310

27,463

28,619

776,288
8,235

815,590

434,590

Mar. 18

6,677

9,363

.—Mar. 18

864,149

768,053

806,227

7,821
426,769

Mar. 18

$32,497,863

$23,150,205

$28,179,563

$14,820,472

—

Mar. 18

—

tons)

258,730

288,140

140,670

2~58~730

•

262,550

•

_Mar. 18

;

/fi-„

;

262,550

280^140

140*670

Mar. 18

—

248,130

278,640

267,600

Farm products
.Grains

•

>
_

1—
——

HOUSEHOLD

*—Mar, 28

167.3

-—Mar. 28

199.2

-—-Mar. 28

—

155.9

_______

214.5

—.-Mar. 28

foods—"

CLEANER

materials

STANDARD

SIZE

(AMERICAN

MANUFACTURERS'

^uye*

.3—

fIncludes 485,08O-:bftrrels of foreign

yeari l941twdatB. The welghts u»ed are
SM6 ln i94g lnclusive.
IReflecto effect of

based

241,574

275,576
20,300

201,300
28,250

772,000

581,000

—

HOME
ASSOCIA¬

Factory sales of washers (units)
Factory sales of ironers (units)
MAGNESIUM

WROUGHT

OF COMMERCE)

(in

—

PRODUCTS

(DEPT.

Month of January:

pounds)

PLYWOOD

(DEPT.

COM¬

(M sq. ft. %-in. equivalent)
and consumption
(M sq. feet,
equivalent)
(M sq. ft. %-in. equivalent) at end

152,3

158.1

159.4

171.1

%-in.

164.6
>
.

the

tl68,257

*179,876

118,284

tl61,996

•186,030

107,837

Shipments

162.9

196.6

200.6

155.2

157.8

212.5

219.7

161.7
211.2
.

162.3
224.7

Stocks

t52,835

1^5.6

145.4

136.9

142.3

130.1

130.4

134.3

1G9.6

169;6

169.7

173.8

Shipments

192.9

192.5

198.9

For sale

Mar 28-.

116.7

115.5-

116.9

For producers' own use

*77,661

58,011

t *218,613

314,369

75,894

150.6

136.2

•44,941

t74,583
176,885

Consumption of logs (M ft. log scale)
Stocks (M ft. log s;ale) at end of month

Mar. 28

—

249,150

MAN-

;

IRONERS

AND

136.1

-Mar. 28

CSiemicals and allied products.—

(VACUUM

Mar 28

and

Building

2,064,061

month

STAND¬

—

(number of units)-

.130.5

—Mar. 28
Mar. 28

»'

892,458

263,515

TION)—Month of February:

157,4

158.5

Mar. 28

—

All commodities other than farm and
Fuel

914,185

342,967
27,600

end

WASHERS

LAUNDRY

151.7

152.1

573,511
466,832

1,040,343

MERCE)—Month of January:
Mar. 28

—,

Livestock ——————;

Fcwds

421,763

952,000

ions)

—

SIZE

440,409

463,744

sale

for

862,172

449,577
(short

Production

...

All commodities

913,321

use

196,380

1926=100:

COM¬

FACTURERS ASSN.)—Month of February:

Factory sales

Shipments

WHOLESALE PRICES NEW SERIES —U. S. DEPT. OF LABOR—
•,

own

HOUSEHOLD VACUUM CLEANERS

SOFTWOOD

(DEPT.

January:

...Mar. 18

...

Other sales

(short

tons)

16,120

870,826

——1——

short

Round-lot purchases by dealers—
Number of shares
;

18,174

-v-Mar. 13

other Sales—:——

-Short sales

27,676

181

$29,843,368

31,491

—

(short tons)

orders

ARD

> Round-lot sales by.dealers—
;
Number of shares—Total sales

830,839
$29,257,620

Mar. 18

saies^

Customers'

$35,514,604

Mar. 18

—

—-

Customers'

sales

830,869

26,406
813,684

28,120

sales)—

sales—;

Dollar value

23,413

Mar. 18

Customers' short sales
Customers' other sales———.

Mar. 18

—Mar. 18

Odd-lot purchases by dealers (customers'

;

CASTINGS

(short

producers'

Unfilled

-———

•

IRON

For

(tonnage)

MERCE)—Month

Shipments

STOCK

Odd-lot sales by dealers (customers'

CON¬

February:
estimated

135.0

STOCK TRANSACTIONS FOR THE ODD-LOT ACCOUNT OF ODDLOT

Shipments (tonnage)—estimated
121.7

121.9

121.7

———

-T—

closed

STEEL

STRUCTION)—Month
Contracts

GIL, PAINT AND DRUG REPORTER

;

192.9
>

116.5

crude r uns.
JThe weighted finished* steel composite wax-revised for the
average product shipments for the 7 years 1937 to I940 «iiiclu£iv6 and
i,i
*

five-day week dTective Sept. 1, 1949.

February:

South

INDEX—FEDERAL RESERVE SYS- ■■>'
TEM—15)35-39 AV£RAGE;=IO0—--——
Mar. 25

———

alterations,

England

East

STORE SALES

DEPARTMENT

9,477,000
$280,269,000

:
'

—

BRADSTREET,

.475,000

13,780.829

building construction

BUILDING

$134,178,000
51,495,000
10,305,060
13,096,000
5,605,000

9,630,000
21,956,000

$555,655

Month

—

VALUA¬

THE

LABOR

omitted*:

<000s

Additions,

(u. s. bureau of mines):

coal output

;3i2

•

2,802,980- t

$255,762,000

AREAS

URBAN

DEPT.

New

620,000

*55,500

———;

—

•'

312'

■

*3.088.151

i ^

—

New

2,620,000

—

municipal————

and

$177,330,000

155,521,000
103,380,000

construction

Pjublic

$258,901,000

—Mar. 30
—Mar. 30
Mar. 30
—Mar. 30
Mar. 30'

———;

—

—.

*'-■

OUT-'

CONSTRUCTION PERMIT
IN

January

RECORD;
Total

ACCEPTANCES

—————

BUILDING

ENGINEERING NEWS-

—

'312

3,147,259

596,329

'8671,004

—U.

ENGINEERING

-a-'9,125,000
Domestic warehouse .credits———
15,687,000
Dollar exchange
:
—25,000
Based on goods. stored and shipped between
10,903,000
foreign countries —;
—

TION

CIVIL

139,588

$175,129,000 $189,899,000
48,832,000
44,893,000

Exports !.L
shipments

17.700,000

8672,898

-Mar. 25
of cars)-—Mar. 25

freight loaded (number of cars)—
received from connections (number

*
%
;■*
- r #
reporting-.—.—

FEDERAL RESERVE BANK* r
; ,l. ;
'■i

—

Domestic

Total

Revenue freight

Ago-.

93.061

100,727

Imports

AMERICAN RAILROADS:

ASSOCIATION OF

Month

OF NEW YORK—As of Feb. 28::

58,202,000

13,592,000

■

transported (tons)

DOLLAR

*; STANDING

48,721,000

41,966,000

s.-v;

at—i--—-Mar.25

carriers

Volume of freight

6,167,000
8,305,000

135,406,000

at——

•Gas, oil, and distillate fuel oil (bbls.)
Residual fuel oil (bbls.) at——,

Revenue

17,639,000
2,338,000
6;87O,0OO
8.171,000

Year

prevtous

5,353,000

—Mar. 25

Kerosene

5,277,000

5,381,000
17,936,000
2,129,000
■1 6,663,000.

5,187,800

(bbls.) at——-—Mac. 25

unfinished gasoline

'Finished and

;

5,000,000

4.844,000

4,843,100
,55,469,000

—Mar, 25

-gallons each)

of motor

Number

and condensate output

Crude oil
,

Month of January:

INSTITUTE:
—daily average .(bbls. of 42

AMERICAN PETROLEUM

of that date :

are as

Latest

1,401,100

1,843,400

either for the

WROUGHT

ALUMINUM

v.-,,v

are

Month

98.8

•

of quotations,

cases

Ago

;

73.5

96.7

00.8

or,

Year

Month

production and otherfigures for the

cover

Dates shown in first column

month available.

month ended

Week

;

Thursday, April 6, 1950

STEEL CASTINGS
Month

tons)

♦Revised:.

88,821

fbr

Sale

end

month

—

^Proportion estimated, 11 to 19%.

140,577

53,079

30,825

(short tons)

84,508

'57,996

(short tons)-—ii.1

Unfilled* orders

(short

(DEPT. OF COMMERCE)—

January:

(short tei.s)

31,429

103,503
37,074

122,887

> 338,889

I-:-' '
142,484-

Continued from page

otherwise

Part

the

existence

Increase Imports, or

Our government4

policy.

also

lend

its good

offices, in
cooperation with the foreign gov¬
ernment, in the settlement of any
dispute or misunderstanding that

can

arises

between

the

vestor and

the

American

in¬

recipient country.

Inducements by

Foreign

Governments

But, in the final analysis, it is the
foreign government that should

supply the inducements to attract
private investments. It
should give the investor a
fair

American

chance to

earn

profit

resources

tend

currency

divert Eu¬

wnere

selling effort

not

most efficient and

nation

earth.

forget,

great.
I believe that the major reason
has\been the failure of other na¬
are

responsibilities.

new

you

international creditor with

tne

exports into easy markets
the competition and the

ropean

cornerstone of the United Europe

recently, the United States,, in its
new
rote in the world economy,

us.

the

and

neighbors

But

tions

It is still
productive
will not

some

men.

commensu¬

•

Imports now are widely recog¬
nized
are

what

for

they are.
They
for drawing upon the

means

of the United

That

16th

The

is history which may have

interest

for

June,

Government

the
French

you.

1940,

over

the

which

was

international presiding being at Bordeaux, Win¬
remember, that ston Churchill telephoned to me

our

must

first and greatest

have
become during the long history of France,
indistinct, we must, there never was a government
remain true to the traditions that which left the country as I wanted
tion, and one
rialize unless investment condi¬ have led our land to greatness. At to do it, to continue fighting in
tions become more attractive in the
same
time, we should co¬ North Africa. That is the reason

investments

foreign

best, would

which,

landmarks

nomic

blurred

temporary solu¬
that will not mate¬

and

productivity of other lands and
other peoples. They are a neces¬
the
recipient
countries.
And, operate with
other nations to
Just about a year ago now, the
sity for assuring our national De¬
finally, although it must be recog¬ develop and to maintain sounder
National Association of Manufac¬ fense. And they are a ready means
nized that this solution may ad¬ world trade.
It is one of the
turers laid before the Economic for increasing the quality and va¬
versely affect some elements of roads of progress that free men
and Social Council of the United riety of goous avaiiao^e lor our
must keep open.
'
! ^
industry and .agriculture at home,
Nations a study of our capital ex¬ use and enjoyment.
the solution most compatible with
As we succeed, we shall have
port potential.
That study esti¬
Last year the Fletcher School of our world role as a
great creditor more,
and
sounder, dollars at
mated that under conditions about
Law and Diplomacy prepared for nation is a large-scale expansion
home.
as I have just outlined, something
And, what is even more
the National Association of Manu¬ in our purchases of foreign goods
in the neighborhood of $2 billion
important, we shall have more
facturers a report which I com¬ and services.
per year of American capital could mand to vour careful study.
In
As I have said
several times and sounder friends abroad.
be expected to be available for in-/
this report it was suggested that
abroad.

at work to create?"

are

answer

produce, at competitive
prices, the quantity, the quality,
and the variety of goods in de¬

States.

vestment

profit has been basic in devel¬

oping the

blocked

that

also,

(1449)

responsibil¬ and made me that offer. I an¬
ity is to safeguard and preserve swered him that I accepted it and
tnis
great land of opportunity. that I would sustain it before the
Here, free men have reached new Council of the Ministers. So I did.
mand
in the American market. heights of achievement, under the But I was alone. Other ministers
Other nations have .neglected to system of free, private, competi¬ were certainly in favor of it but
ered here.
►
improve productive efficiency and tive enterprise which is part of they did not support me. Most of
During my business life, and
outmoded
merchandising
tech¬ the fabric of our American way of them were opposed to Churchill's
particularly during the past ten
life.
proposal because they were in
years,
there has been a great niques. They have failed to study
the American
market
The false prophets of the social¬ favor of an armistice. To accept
carefully,
change in the attitudes of the
offer would
have
and to merchandise their products ist millenium have no message for Churchill's
American
public and American
us.
We have given, and will give meant the continuation of the war
businessmen in reference to im¬ aggressively in this country.
These, then, are the three major freely of our substance, to help in North Africa. They had been
ports. Imports were once regarded,
alternatives for bridging the for¬ anyone in trouble.
But we will told by Marshall Petain and Gen¬
at best, as a necessary evil.
At
eign trade gap: First, a substantial never abandon freedom and op¬ eral Weygand that England would
worst, they were regarded as an
reduction in exports which might portunity in exchange for regi¬ be defeated in three weeks and
unwanted stepchild that took the
create
serious problems for the mentation and the promise of being politicians, they were afraid
bread from the mouths of Ameri¬
of having to return to France after
United States as well as for our regimented security.
can workmen and the profits from
In this time of social ferment, a few weeks, to be called desert¬
customers.
Second,
a
the pockets of American business- foreign
You must
remember that,
material increase in our private when the old political and eco¬ ers.

rate with his risk. This fair chance
to

exported

reason,

balances

Else

ing agreements and treaties with point of delivery is changed. It
friendly nations for the safeguard¬ would seem as logical to me to
restrict the freedom of our citi¬
ing of American investments
abroad. I am happy to say that zens to spend their vacation dol¬
the negotiation of such treaties is lars abroad as to restrict them in
the expenditure of dollars for for¬
being actively pursued by our
State Department as a matter of eign goods of their choice .deliv¬
national

FINANCIAL CHRONICLE

COMMERCIAL. &

THE

Number 4896

171

Volume

estimate

has

been widely accepted as an
approximation of what may be
expected from the United States.
I am encouraged to think that as
the result of the wide and fruitful

discussion

throughout the world
principles of foreign invest¬
ment and economic development

of the

should be abie to uiipori about

$14

billion

worth

services annually.
was

based

upon

of goods and
This suggestion

gross

national

product of $270 billion per year,
which certainly is not out of reach.
It

was

tation

based
of

gooas

annual impor¬

and services,

in¬

investment income,
of
over
5% of; our gross
national product.
This ratio has
make this $2 billion estimate good.
previously been attained in pros¬
However,
we
must recognize perous years. $14 billion of im¬
that foreign
investment can be ports is well above our present
only a partial solution to the prob¬ annual rate of about $10 billion
stimulated by the Point 4 concept,
conditions will be created which

why Churchill's proposal was not
accepted. I have always thought
that
the
union
then
proposed

cluding
slightly

Continued

from

page

It was not to be.

engaged.

know the rest of

You

the story.

Germany and Britain Necessary
a United Europe

the

She must become part of
union for there is

European

Europe

without

Britain

The World's Insomnia

Germany must be ad¬
Strasbourg Assem¬

Western

mitted

bly.

must

Germany.

But

equally' become

without
her, Germany with its economic
announced by Sir Stafford Cripps,
delighted to be ahead. One month strength would dominate the un¬
hoping that it will be acceptable ago, the French Socialist Party ion. I do not close my eyes to the
came out in favor of my proposal,
to all.
'
•
difficulty posed by the fact that
Which proves that you must never Britain is now under a Socialist
Formation of the Council of
despair, even with Socialists.
regime with a State directed econ¬
Europe
But to give it its due, the cre¬ omy.
For example, £480 million
part of the union, because

have been drawn from the tax¬
important step payers' pockets in order artifi¬
A Euro¬ cially to lower the cost of living.
one
lem of the foreign trade gap. In¬ per year (again including invest¬
pean
spirit reigned among the Perhaps, you can remember the
ago,
the meeting of the
vestment will have to be serviced. ment income),: But, if it can be years
cartoon of the London "Punch."
delegates of Strasbourg.
European congress of the Hague.
Additional dollars will be required attained, we shall be within reach
People have said to me since I A father asks his little son: "What
From this, developed a surge of
for this purpose.
When the flow of a realistic balance in our inter¬
came
to America, "What can be do you want to be, later on: doc¬
public opinion which compelled
of new American investments is national payments.
done to speed this union?" 'They tor, a lawyer, an architect?" The
the governments of Great Britain,
broken
off, at any time in the
I have no desire, I assure you, to France
and
the
three Benelux have further said to me, "What are boy answers: "No, I want to be a
future, the dollar exchange prob¬ minimize what we ourselves may
consumer." Can you imagine prices
1 V;
countries to convoke, in Paris, in you going to do?"
lem of the recipients will be ag¬
For my own part, I have op¬ artificially lowered in one of your
be
able
to do to
increase our
December, '48, a conference of
gravated—unless the investments
purchase of foreign goods and these five nations.
I was one of posed with all my strength the American states and not in the
already made have substantially services. I believe we should care¬
:
the Committee of others?
the French delegates.
After one attempts of
increased
their
production
and
fully examine our stockpiling pro¬ month of work, France and the Ministers to silence the Assembly
As you see, the difficulties are
their capacity to export for dol¬
gram.
We should see whether it three Benelux
countries had by ignoring its recommendations. great but we are many and we are
lars, and unless the American peo¬ is
'adequate to assure a ready sup¬ agreed upon the main lines for I offered to my colleagues in the determined to solve them at any
ple are then willing and able to
•'
ply of strategic materials—for our the creation of a Council of Eu¬ Permanent Committe of the As¬ cost.
supply the dollars to service those national defense and to bolster
rope,
including a Committee of sembly my,own resignation rather
investments
The French Struggle in
by increasing their depleted reserves of minerals re¬
than submit to the attitude of the
Ministers and a Consultative As¬
Indo China
purchases of foreign goods and
Ministers—and I am glad to say
quired
to keep
our
industrial sembly.
The British delegation
services.
that my colleagues were with me.
economy functioning in high gear. received instructions from its gov¬
It is too late, now to speak at
As our nation adds to its credi¬
I believe there
Immediately after this meeting
arp numerous un¬ ernment, obliging it to sponsor an
length of Asia. In. China, the tri¬
tor position, it is crystal clear that
explored possibilities for increas¬ entirely different plan. Under this I demanded in the French Parlia¬
umph of communism is complete.
we commit ourselves increasingly
ment a full debate on the attitude
ing
our
purchases of foreign plan, each national delegation
We must remember that it is in
to the eventual acceptance of an
handicraft articles, and certain would have had a cabinet minister of our own government toward South-East Asia that can be found
import balance if we expect to get manufactured goods in the pro¬
the action of the Ministers, and
at its head, voting for all its mem¬
all the raw materials China needs:
paid for our exports and get a duction of which other countries bers.
Finally, the British Gov¬ this debate ended in a resolution rice, oil, rubber, coal, tin, zinc.
dollar return on our investments.
the government toward You see the danger. If the French
may possess a real competitive ad¬ ernment accepted the proposal of urging
This brings us to our final al¬ vantage. However, I cannot em¬ France and of the Benelux coun¬ speedier action toward union. The
were to give up the fight against
ternative in the matter of permit¬ phasize too strongly that, as in the tries.
The Council of Europe was French Government has accepted communism
in Indo China, the
\
ting the foreigner to earn dollars case of foreign investments, the created on the 5th of May, 1949. this, resolution.
communist
wave
would soread
to pay us for goods we ship him,
In
their
own
Parliaments over Siam, British Malaya, Burma
major job in promoting an in¬
In August, the consultative as¬
through Europe many of my col¬ and
i.e., for bridging our foreign trade crease in cur imports must be
perhaps other lands. Ours is
sembly met in Strasbourg. This
leagues have been carrying on a the only country which for the
gap.
It is by purchases of his done by the nations who wish to
assembly has no power.
It can
similar fight.
goods and services either as im¬ earn our dollars.
last five years iks been shedding
only talk, and, in addition, it can¬
ports delivered on our shores or
We must go on telling our own her blood for the common cause,
During recent years, we have not talk about everything.
For

delivered to

abroad

underline .tourist

cause

any

that

one

seems

tourists.

services
to

be¬

followed
tariff

consistent

reduction,

until

policy
now

our

object to

average (note I say average) rate
level of tourist expenditures of
duty on dutiable imports is the
can
be
accommodated
by
lowest in our history.
Further¬

present or

projected travel facili¬

im¬
materials, now
come in
duty free.
Nevertheless,
Tourist Expenditures
our general imports in
1949 aver¬
To the extent that tourists spend
aged 2.6% of our gross national
dollars abroad we seem to have a
product
against
3.4%
in 1937,
painless partial solution of the 4.2% in 1929 and 6.1% in 1920.
problem. Yet essentially there is/

ties.

more,

60%

by value of our

ports, mostly raw

■'

difference between an expendi¬

ture for goods and

services abroad

Loss

of Productive Capacity

A number of members of vari¬

ous

parliaments — Churchill was
of them—brought about, two

cannot

e/xample,- it
defense

Western

recommendations

discuss

the

Its
brief,

Europe.

were,

ation and the meeting of the As¬

sembly

was

toward European unity.

people
We

the urgency

continue

must

elections

the

of union.
press

Assembly

for

against
are

communism.

Our

losses

But France is well ac¬
to suffer. She will carry

heavy.

customed

Committee of European basis by education, by on her fight in Asia and continue,
Ministers.
In my
opinion, this speeches, and by our deeds. "We in the forefront, her efforts for a
Assembly will only achieve real must continue pressing our gov¬ United Europe.
ernments
forward
so
that the
I have come to csk you: Are we
power
when
its members are
elected
by
the
votes
of the Committee of Ministers may be¬ right? Shall we go on? Will you
come an active force rather than
French, the English, etc., voting,
help us further in this-struggle
an obstacle squatting in the path
not as Frenchmen or Englishmen,
for
western
civilization?
I am
aside

put

but

the

of union,

Europeans.

had

proposed

this,

the

only

Congress, but I received
six votes.
One of my op¬

Churchill's

Hague

Part of the reason for this, of ponents, a French Socialist leader,
touring citizen and an equiva¬
answered me: "You are ahead of
expenditure for imports by course, is the loss of productive
your time."
I replied that those
that same citizen or a less fortu¬ capacity and the large domestic
who had been behind their time
nate one who can't afford to travel. needs of foreign countries. These
before the war, had cost France
In either case foreign offerings factors have created a local de¬
and the world so. much that I was
are bought for dollars.
Only the mand for goods which might

lent

might have been the beginning of
the effort in which we are now

confident

Proposal\of

With

British Union

During my speaking tour in
your country, people have asked
me, "Why did your government
in June, 1940, refuse the Churchill

proposal of a
ion?

your

answer.

Franco-

Franco-British un¬

Would it not have been

the

Hayden, Miller

(Special to The Financial

TOLEDO, OHIO

—

William

Retherford has become
with

the

Cleveland

firm of Hayden,

Chronicle)

associated

investment

Miller & Co.

•

THE

(1450)

Securities
•

Aeronautical

NEW ISSUE CALENDAR
■,

April 6,

Wing Co. (4/8)
March 29
(letter of notification) 295,000 shares of
capital stock at par ($1 per share). No underwriter.

Aelus

Capital

April 10,
Boston Edison

Crescent

Co.

1950

;

Cladmetals

Co., Carnegie, Pa.
of common stock (par
share. Underwriter—Graham &

480,0Q0

$1).

Price—$1.50

Co.,

Pittsburgh

per

and

additional facilities and
•

American

March

between

Gas

filed

1952

determined

Proceeds—To

York.

for

Electric

Co.

inclusive.

1965

(EST)

noon

Bonds

American

Investment

Co.

Loan

Finance

serially
be

units

certificates

Power

Reading Co.

(EST)

____Equip.

•

Norwich

Pharmacal

value

1950
Bonds
.Bonds

1950
Bonds

Electric

Notes

Idaho Power Co

Preferred

value

stock, to be sold at $40
and $14 per share,
respectively, by Frederick Machlin,
Executive Vice-President of the company.
Underwriter
—F. Eberstadt & Co., Inc., New York City.
•

•

••'

•
,

Oil

•-

•

Refining Co., Ashland, Ky.

Bids
Will be received at office of James V. Toner,
President, 12th floor, 182 Tremont St., Boston, Mass., up
to 12 noon (EST) on April 10, 1950*
•

Canadian

prior to July

stock

offered

now

employees and

officers of company and subsidiaries. Underwriter—None.

Price—$20

per

share.

Proceeds—For

Statement effective March 20.

Associated

Natural

March 14 (letter of
stock

build

$100

working

capital.

Gas

Co., Tulsa, Okla.
notification) 2,500 shares of common

share.

per

natural

gas

underwriter.

transmission

line.

Proceeds

Office—105

Boulder, Tulsa, Okla.

Beverly Gas & Electric Co.
Dec.

to be

filed

offered

33,000 shares

capital stock

(par $25)

stockholders at the rate of IV2 shares
for each two shares now held, at $30
per share. No under¬
writer. The proceeds will be used to
pay off $575,000 of
notes held by the New England Electric

System

and

bank loans.
Boston Edison Co.

(4/10)
$18,000,000 of first mortgage 30-year
bonds, series B, due 1980. Underwriters—To be deter¬
mined by competitive bidding.
Probable bidders: Hal¬
sey, Stuart & Co. Inc.; Lehman
Brothers; First Boston
March

filed

Corp.; Harriman, Ripley & Co., Inc.; White Weld & Co,
Proceeds will be used to
pay
for redemption of $6,000,000

$12,000,000 bank loans and
25-year 3% notes due 1970.

Admiral

Corp.,

Ltd.,

Malton,

Ont.,

Canada
30

filed

28,458

offered

shares of $1 par value

common

shareholders at the rate of

half share for each share held.

—$5

one-

Underwriter—None. Price

share. Proceeds—To purchase plant site, erect
and equip plant, and for working capital. Business—
Manufacture and distribution of radios, television sets
and electric home appliances.
per

Canam Mining Corp., Ltd., Vancouver, B. C.
Aug. 29 filed 1,000,000 shares of no par value common
stock.
Price—800,000 shares to be offered publicly at
80 cents per share; the remainder are
registered as "bonus
shares."
Underwriter—Reported negotiating with new
underwriter.

Proceeds—To

Statement effective

Dec.

develop

mineral

$100, $500 and $1,000. Underwriter—None. Proceeds—
To redeeA outstanding
bonds and improve facilities.
Office—Eighth and Jackson Streets, Topeka, Kan.
•

Central

Airlines, Inc.
(letter; of notification) 1,500 shares of 5%
cumulative non-convertible preferred stock
(par $100)

March

and 3,000 shares of class B

Price—At

par.

non-voting common stock (par
Underwriter—None. Proceeds—To

indebtedness

and for operations.
Camp Bowie Blvd., Fort Worth, Tex.

Central Arizona

Office

Light & Power Co.

6109

—

(4/12)

March 21 filed 125,000 shares of common stock
(par $5)
and 40,000 shares of cumulative preferred stock
(par

$50).

Underwriters—First Boston Corp. and Blyth &
Co., Inc.
Proceeds—To pay current construction loans
and for

further

by amendment.
•

construction

costs.

Priee—To

filed

Expected April 12.

Central Vermont Public
"

Service Corp.,

Rutland,

Vermont.

Philadelphia

Pittsburgh

San Francisco

Private Wires

all

Crise
March

offices

Chicago

Cleveland

Manufacturing Co., Columbus, Ohio,

29/(letter

Co.

notification)

debentures

Proceeds—To

and notes and

due

March 30 filed $2,000,000 of series F first
mortgage
bonds, due 1980, and 8,000 shares of $100 par value pre¬
stock.
Underwriter—To be determined by com¬
petitive bidding for the bonds; to be filed by amendment
ferred

for the preferred stock.

payment of bank loans.

Proceeds—For construction and

$250,000

1962.

retire

4!/2%

Uunderwriter—The

outstanding debentures

balance of price for assets of MU Switch

Corp.

;

Dairy Dream Farms, Inc.
March 29 (letter of notification)
$249,500 of 5-to-12
year 5% debentures (face value $100 each) and 24,950
shares of

stock

common

debentures

and

supplied

ten

(par

in units of $100 of

10c.)

Underwriter—To

stock.

by amendment. Price—$101/ per unit.
off

pay

current

debts

Pro¬

for expansion.
Office—110 East 42nd Street, New York, N. Y.
Delaware Power &
8

now

filed

232,520

offered

1950, at the rate of
to

be offered
shares

Langley
for

and

Light Co.

common

stockholders

stock

(par
April 5,

record

share for each six held, and then

one

employees with a maximum purchase of
employee. Rights will expire April 24.

per

(For

—

Co.

share.

per

the

unsubscribed
Union

and

shares)

Securities

Proceeds—To

Corp.

(jointly).

finance

construc¬

and two subsidiaries.

company

Dome

Exploration
Toronto, Canada

(Western)

Ltd.,

Jan. 30 filed $10,000,000 of notes, due
1960, with interest
at 1% in the first
year, 2% in the second year, and
3% thereafter, and 249,993 shares of capital stock (par

$1). To be sold to 17 subscribers (including certain part¬
ners of Carl M.
Loeb, Rhoades & Co., State Street Invest¬
ment Corp. and State Street Research &
Management
Co.) Underwriter—None. Proceeds—For general funds.
Business—To

develop oil and natural gas properties in

Western Canada.
•

//,,

Dorchester

Fabrics, Inc., Summerville, S. C.
April 3 (letter of notification) 1,000 shares of pre¬
ferred stock.
Price—At par ($100 per share).
Under¬
writer—None.
Proceeds. To buy additional machinery
and
•-

expand plant facilities.

(Allen

B.)

Mont

Laboratories, Inc., East

Paterson, N. J.
March

Capper Publications, Inc.
$2,000,000 of series 6 five-year first mort¬
gage 4% bonds and $2,000,000 of series 7 10-year first
mortgage 5% bonds. Price—At par, in denominations of

retire

Boston

•

resources.

Indefinite.

March 20 filed

$1).

New York

bank loans and to increase operating
Office—163 S. Main St., Cortland, N. Y.
Ex¬
pected about April
10.

—

March

1958)

short-term

tion

Feb. 27 filed 50,000 shares of $1.20 cumulative
(no par)
convertible preferred stock
(convertible into common

15,

000

Price—$21

common

■'

Ashland

Inc. (4/10)
March 24 (letter of notification)
3,000 shares of pre¬
ferred stock to be offered to employees at par
($100)
through officers of company.
Proceeds to retire $200,-

Underwriter
Preferred

cumulative convertible preferred stock and 3,000 shares
par

stock (par $1).

Crescent Corset Co.,

150

May. 22, 1950
Iowa Public Service Co

employees.

Harris, Inc.

$13.50)

Armstrong Rubber Co., West Haven, Conn.
8 (letter of notification)
1,000 shares of 4%%
no

.—Capital

May 1, 1950
Gas

and

164,560 shares of first series convertible

common

ceeds—To

(S. S.) Dental Mfg. Co.

American

officers

Acceptance Corp., Chicago, III.

27 filed

March

of class A

sold

Underwriter—Sills, FairPrice—$5 per share. Proceeds—For
working capital and to reduce bank loans.

•

Preferred

Public Service Electric & Gas CoWhite

Common
1950
——

April 19,

No underwriter. Office

stock to be sold at $14 per share by
President. Underwriter—F. Eberstadt

Co., Inc., New York.

March

Ohio

South Carolina Electric & Gas Co..

common

James A. Walsh,

1950

Pacific Power. & Light Co.

Armstrong Rubber Co., West Haven, Conn.
March 10 (letter of notification) 1,200 shares of class A
par

April 18,

Petroleum Corp.
(4/15)
(letter of notification) up to 250,000 shares
of common stock to be offered at par ($1 per
share),
the net proceeds to be used to acquire oil and gas

Division of Chase-Shawmut

March 27

leases, and for working capital.
—Grant Bldg., Pittsburgh, Pa.

Trust*Ctfs.

American Petroleum Corp.

April 17,

surplus. Office

American

will

sinking fund

underwriting
underwriter.

stock (par $8.50),

Security Insurance Co. of New Haven_____Capital

April 15,

Co.

common

capital.

1950

Delaware, Lackawanna & Western RR.

Dallas, Tex.

Proceeds to increase guaranty fund and
—1524 Irwin-Keasler Bldg., Dallas, Tex.

--Bonds

-Equip. Trust Ctfs.

April 13,

exposition in Chicago.1

Electric

Stock

St. Louis San Francisco Ry._____Equip. Trust Ctfs.

noon

Colonial

•

(EST)

W. E. Hutton & Co. headed groups
in previous years.k Proceeds—For construction. '.State¬
ment effective March 15.

man

..Common

-Notes &

noon

Gas

Feb. 24 filed 556,666 shares of

class A

Light & Power Co
Development Co. of

Plains

Great

Illinois

notification)/ 450
$650 each.
No

Debentures

1950

Canada, Ltd.

Illinois

Pfd. & Com.

Central Arizona

$15 per share. Proceeds—For general corporate purposes.
American Lloyds,
March
31
(letter of

Business—To hold

Underwriter—None.

Corp

April 12,

March 27 filed 31,892 shares of common stock (par $1) to
be offered to employees.
Underwriter—None.
Price—

•

Proceeds—To

of which 498,666 will be offered to stockholders of record
March 15, 1950, at $28 per
share, at rate of one new
share for each five held (rights to
expire April 7) and

58,000
1950

Mississippi River Fuel Corp.__
Common
Pennsylvania RR. noon (EST)__Equip. Trust Ctfs.

(5/1)

competitive bidding. Probable bidders:
Halsey, Stuart & Co. Inc.; Union Securities Corp.; Salo¬
mon Bros. & Hutzler; First Boston Corp.; Harriman Rip¬
ley & Co., Inc. Proceeds — To redeem $15,162,300 out¬
standing 43A% cumulative preferred stock at $110 a
share, to pay $10,300,000 of 2% serial bank loan notes and
the balance, if any, added to treasury funds. Expected
in May.

Common

Hytron Radio & Electronics Corp

State

Preferred

(EST)

a.m.

April 11,

install

Underwriter—To

Colo.

Chicago Fair, Chicago, III.

Cincinnati

working capital.

$27,000,000 of serial notes, due

and

New

For

Corset

Utah Fuel Co.

filed

Co., Denver,
processing plant.

Underwriter—None.

expenses.

Casualty Co., Chicago, III.

ment effective March 24.

Bowers

debentures, due
Price—At par.
Proceeds—
construction, alteratiohs and general administrative

1960.

Co., Inc.
Inter-Mountain Telephone Co

American

(The)

Common

Wing Co._

will sell the stock. Proceeds — For stated
capital and paid-in surplus to carry on business.
State¬
•

Crops, Inc., Morrill, Neb.

(letter of notification) 170,000 shares of com¬
stock (par $1). Price—$1.50
per share. Underwriter

build oil seed

1950

of company,

March

Chemical

mon

1950

.April 8,

1,000,000 shares of common stock (par $1).
share. Underwriter—M. A. Kern, President

per

ADDITIONS

March 24 filed $1,000,000 of subordinated

working capital.
Office—505 Perry Street,
Trenton, N. J.
Expected about April 8.

Price—$2

INDICATES

SINCE PREVIOUS ISSUE

—Robert

States Telephone Co

Southwestern

Proceeds to

American

•

"March 20

Aelus

All

Thursday, April 6, 1950

company.

Feb. 27 filed

CHRONICLE

York City

March 31 filed 39,000 shares of capital stock. Underwriter
—Calvin Bullock, New York City. Business—Investment

•

FINANCIAL

Now in Registration

Inc., New

Securities,

COMMERCIAL

value
and

filed

common

Van

250,000
stock.

class

A,10-cent

par

Underwriters—Kuhn, Loeb & Co.

Alstyne Noel Corp., New York. Price—To be
Proceeds—For additional facilities

filed by amendment.

and corporate purposes.

Paso

Natural

Gas

Co.,

Paso, Tex.

March 27 filed 65,000 shares of convertible second
pre¬
ferred stock, series of 1950, no par
value, to be offered
to common stockholders at the rate of one

preferred

share for
on

unspecified number of

common

shares held

April 10. Underwriter—White, Weld & Co., New York.
supplied by amendment, along with divi-

Price—To be

Volume

dend

Number 4896

171

rate.

San Juan

Proceeds—To

pay for construction
Expected in April.

pipe line.

of new

ceeds

Equitable Securities Co., Indianapolis, Ind.
24 (letter of notification)
$100,000 of 5% sinking
fund debentures.
Underwriter—City Securities Corp.,
Indianapolis. Proceeds—For working capital.

Evans-Vance, Inc.

(letter of notification) 5,000 shares of pre¬
ferred stock (par $10) and 8,400 shares of common stock
(par $1).
Price—At par.
Underwriter—None.
Pro¬
ceeds—For

working .capital.

Office—37 East 67th Street,

•

Fidelity Fund, Inc., Boston, Mass.
March 30 filed 400,000 shares of capital stock. Distribu¬
tors
Paul H. Davis & Co., Chicago, and The Crosby
Corp., Boston. Business—Investment company.
—

•

Forest

Products, Inc., Attica, Ind.

March 28 (letter of notification) 3,000 shares of common
stock (no par) at $10 per share and

$30,000 of 4V2% first
mortgage bonds, due 1960, at face value. No underwriter.
Proceeds to cancel debts and for working capital. Office
-West Main Street, Attica, Ind.
Fox Metal

Products Corp.

March 16 (letter of notification) stock purchase warrants
exercisable prior to July 31,1950 entitling holders there¬
of to purchase a total of 30,000 shares of common stock

(par $1) at $3
working capital.

share. Proceeds—To be added to
Office—4002 So. Clay Street, Littleton,

per

Colo.

•

;

; •

Fox Metal Products

Corp., Littleton, Colo.
March 30
(letter of notification)
30,000 shares of
common stock (par $1) to be sold at the market
place,
but not less than $2.50 per share, by Mary E.
Fox,
Denver, Colo., Secretary of the company. Underwriter—
Ward &

Co., New York.

Garfinkel
Feb.

(Julius) & Co., Inc.
(letter of notification) 5,000 shares of

stock (par 50c) to be sold by Mrs. Dee M.

common

Schmid, Wash¬

ington, D. C., at the market price of between $19% and
$16% per share. Underwriter—Auchincloss, Parker &
Redpath, Washington.
•

Glatfelter

(P. H.)

Co., Spring Grove, Pa.

standing 5% cumulative first preferred stock (par $100)
in exchange for their
holdings, at the rate of one new
share of preferred and 3% shares of common for each
share surrendered. Underwriters—Union Securities
Corp.,
New York, and Stroud &

Co., Inc., Philadelphia. Price—
share respectively. Proceeds—To redeem

per

the 5% preferred not surrendered in the
exchange.
•

Grant

Co., New York City
118,935 shares of common stock

These shares will be sold to employees
time under terms of an Employees Stock

tim.e to

Purchase Plan to be voted

April 18.

added to general funds for corporate
Not less than $22 a share.

Granville

Mines

Corp.,

Ltd.,

Proceeds—To be
purposes.

British

Price—

Columbia,

Canada
Feb.

stock

filed

100,000 shares of common non-assessable
50c). Price—35c per share. Underwriter—

(par

None.

Proceeds—To

buy

mining

machinery

and

for

working capital.

March

from

Development Co. of Canada, Ltd.,
(Alta,) and Montreal, Can. (4/12)
$10,000,000 of notes due 1965, bearing

date,

filed

and

interest between

1952

and

retirement

500,000 shares of $1 par value capital stock
(Canadian currency). Underwriters—Dominick & Domi-

nick and

Kidder, Peabody & Co., both of New York, and
James Richardson & Sons, Winnipeg, Canada. Price—To
be filed by amendments. These securities are to be offer¬
ed in units of $1,000 of notes (with a detachable warrant
for 50 shares of capital stock) and 50 shares of

capital
Business—Develop¬
in Alberta, Saskatche¬

stock.

Proceeds—For general funds.

ing oil and natural gas resources
wan and possibly British Columbia.
Gulf

Atlantic Transportation

May 27 filed 620,000 shares of class A participating ($1
par)-stock and 270,000 shares (25c par) common stock.
Offering—135,000 shares of common will be offered for
subscription by holders on the basis of one-for-two at

S}5 cents

per share. Underwriters—Names by amendment:
include Blair, Rollins & Co., Inc.; John J. Ber¬
& Co. and A. M. Kidder & Co. on a "best efforts

and may

basis."
—To

inal

Price—Par for

complete

$5 for class A. Proceeds
ferry, to finance dock and term¬
current obligations, and to provide
common

an ocean

facilities, to

pay

working capital.

Gyrodyne Co. of America, Inc.
(letter of notification) 150,000 shares of

March 3

com¬

stock, class A (par $1) and 18,000 shares of 5%
cumulative participating preferred stock (par $4). Price
—Preferred at par and class A at $1.50 per share. Under¬
mon

writer—Jackson & Co., Boston, on a "best efforts" basis.
Proceeds—For
development of model, etc.
Office—

80 Wall Street, New York City.

Office—119 N. 5th Street,

Hammond

Instrument Co., Chicago, III.
(letter of notification) 2,000 shares of com¬
stock (par $1). Price—$20 per share. Underwriter

mon

—Paul H. Davis & Co. of

Helio

Chicago.

Aircraft Corp., Norwood, Mass.

sold

units

one

preferred

common share for
$25 per unit.

artel

No underwriter.

stockholders.

(letter of notification) an undetermined amount
stock (par $1) and warrants to purchase4his
stock at $10 per share to be sold at the market price of

March 23
of

Illinois Power Co.

J. S. McDonnell, President of the
Underwriters—Merrill Lynch, Pierce, Fenner
& Beane; Smith, Moore & Co.; G. H. Walker & Co., St,
Louis; and Smith, Barney & Co., New York.
•
Macco Corp., Paramount, Calif.
March 28 (letter of notification) 1,000 shares of com¬
mon stock (par $1) .to be sold at between $8 and $9.50
per share (market price) by Edward A. pellegrin, VicePresident of company.
No underwriter; Office—14400

company.,

(4/12)

filed

$10,000,000 first mortgage bonds due
1980 and 300,000 shares of cumulative preferred stock
(par $50). Underwriters—Merrill Lynch, Pierce, Fenner
& Beane for preferred not needed to exchange out¬
standing 200,000 shares of 4.70% preferred stock (on a
share-for-share
basis t>lus
cash, about April 5 to,
April
19).
Underwriter for
bonds
to
be
deter¬
mined by competitive bidding; probable bidders include:
Halsey, Stuart & Co; Inc.; White, Weld & Co. and Mer¬
rill Lynch, Pierce, Fenner & Beane (jointly); Harriman
Ripley & Co., Inc., and Glore, Rorgan & Co. (jointly);
Union Securities Corp.; Kuhn, Loeb & Co., and Lazard
Freres & Co. (jointly); The First Boston Corp.
Price—
for preferred $51 per share and accrued dividends. Pro¬
ceeds—To pay short-term bank loans made for construc¬
tion. Bonds expected about April 12.
•

units, series

Inter-Mountain

for investment.

Telephone

Co.

•

„

Electric

Will

one

Pro¬

Underwriter—Union Securities
Proceeds—To be used to retire
$7,250,000 bank loans and balance applied toward con¬
be filed

(4/10)

Co., Providence, R. I.

redeem

struction costs.

Molybdenum Corp. of America
March 30 (letter of notification) 1,400 shares of com¬
mon stock
(par $1) to be issued in exchange for an
option to acquire an undivided one-third interest in
certain mining claims located in California.
In evenij
that option is ultimately exercised, the company is to
deliver to the present owner an additional 8,600 shares
of its common stock. No underwriter. Office—500 Fiftfy
Avenue, New York, N. Y.

Public Service Co.

offered

(5/22)

Kansas City

Power & Light Co.
1,904,003 shares of common stock (no par)
to be offered by United Light & Rys. Co., Chicago, at
$12 per share to United Light stockholders of record
March 22 on the basis of three shares of Kansas City
stock for each five shares of United stock held.
Rights
March 3 filed

Underwriters—None. If unsub¬

scribed stock exceeds 1 % of the total, United Light may
consider

competitive

bids

this

balance.

Statement

efective March 22.

Telephone Co., Taft, Calif.
(letter of notification) 15,000 shares of com-/
stock to be offered pro rata to present stock¬
holders.
Price—At par ($10 per share.) Underwriter
Kern Mutual

•

March 31

—Bailey & Davidson, San Francisco Calif.
Proceeds—
To retire $33,000 of outstanding debentures and pay
construction.

$2.37% for each seven shares held. Rights expire on
■

•

March 27 at the rate

each five shares; rights are to expire

for

•

Price—At

par

($100

per

Nalco, Inc. (N. Y.)
31 (letter of notification)

650 shares of 6%'
at par ($100 per share) and
4,875 shares of common stock (par $1), the latter issued
by selling stockholders. Price—$1,000 per unit, each
unit consisting of 10 shares of preferred and 75 shares
of common stock.
Proceeds—For machinery and work¬
March

ing capital.
N. Y.
•

Office—203 East 18th Street, New

■

;

—

•

■■

■;

YorkJ
v

Nation-Wide Securities Co., Inc., New York City

March

Under*
Business—An in*

filed 300,000 shares of capital stock.

writer—Calvin

Bullock,

New York.

vestment company.
•

National

Lafayette, Ind.

Homes Corp.,

(letter of notification) 500 shares of commofl
stock to be sold at $18.75 per share by Frank A. Tedford,
I Secretary of the company. Underwriter—Kiser, Cohn 8&
( Shumaker, Inc., Indianapolis, Ind.
March 27

Sugar Mfg. Co., Denver, Colo.
(letter of notification) $300,000 of first mort¬
gage serial bonds, series of 1950.
Price—At $1,000 prin¬
cipal amount each.
Underwriter—Peters, Writer &
Christensen, Inc., and Boettcher & Co., both of Denver*
Proceeds—To retire balance of an outstanding note and
•

National

March 23

outstanding second mortgage income bonds. [This was
erroneously published under National Sugar Refining
Co. in last

Thursday's "Chronicle."—Ed.]

Norlina Oil Development
March 28 filed 600 shares of

Kropp Forge Co.
March 20 (letter of notification) 100,000 shares of com¬
mon stock
(par 33% cents) to be offered first to stock¬
holders of record March 22, 1950, at the rate of one share
at

one

28. Underwriter—None.

50,000 shares of cumulative preferred stock

expire April 19.

183,918 shares of

filed

to stockholders of record

cumulative preferred stock

(par $100). Underwriter—To be determined by competi¬
bidding.
Probable bidders: A. C. Allyn & Co.;
Harriman Ripley & Co. and Merrill Lynch, Pierce, Fen¬
ner & Beane (jointly); Kidder, Peabody & Co. and Blyth
& Co.
(jointly); Equitable Securities Corp.; Lehman
Brothers; White, Weld & Co.
Proceeds—For payment
of bank loans and for construction.
Expected May 22.

April
share)/
Proceeds—To pay indebtedness to its parent, American
Telephone & Telegraph Co., and for corporate purposes,
including construction. Statement effective March 27.
I
of

old

tive

are

Telegraph Co.
capital stock, to be

Mountain States Telephone &
March

preferred stock at $102.50 per share.
Feb. 21 filed

•

Proceeds-

unexchanged

by amendment.

Corp. will head group.

Light & Power Corp.

Walker &

used

1950, in the ratio of one share for each fouy
rights to expire April 24, 1950. Price—To

April 4,

shares held;

;

filed

Mississippi River Fuel Corp. (4/11)
•.
March 21 filed 245,708 shares of common stock (par $10)
to be offered first to common stockholders of record

(par

and G.

company's common stock.

108,834 shares of cumulative preferred
$50) and 925,000 shares of common stock
(par $5).
These new stocks, along with cash, were on
March 31 offered in exchange for the outstanding 49,290
shares of series A 7% preferred stock, 15,605 shares of
series B 6%% preferred stock and 43,939 shares of series
C 6% preferred stock.
All unissued shares are offered
publicly with a 10-day standby to expire April 12. Price,
—The preferred at $50.25 and the common at $13.75 per
share. Underwriters—The First Boston Corp., New York,
stock

Inc.

(letter of notification) 1,000 shares of 6%
cumulative preferred stock at par ($100 per share). Un¬
derwriter—George D. B. Bonbright & Co., Binghamton,
N. Y. Proceeds—To assist in acquisition of 1216 shares

one share
for each two shares held at $10 per share;
rights to expire April 26 (42,776 shares to be acquired
by Southern Bell Telephone & Telegraph Co. and Chesa¬
peake & Potomac Telephone Co.). Underwriters—Grpup
of six headed by Courts & Co. Proceeds—To be used to
reduce short-term
bank borrowings outstanding. Ex¬
pected about April 10.

Co.,

(Walter R.)

Miller
March

March 20 filed 95,000 shares of $10 par common stock to
be offered to holders of record March 31 in the ratio of

March

Newarkf N. J.
5,200 shares of common
stockholders of record March 17

(letter of notification)

$50 per share on a one-for-five basis. UnderwriterClark, Dodge & Co. Proceeds—To pay notes and for
additional working capital.
Expected this month.

l|, of $1,000 each, and 5,286 accumulative plan
are

of notification)

units, series E, of $1,200 each, issued in con¬
with participating
agreements covering these

The proceeds

plans.

(letter

Corp.,

stock offered to common

Inc., Oakland, Calif.
single payment plan investment

3,657

Oil

Middlesex Water Co.,

Securities

filed

Feb. 9

March

Paramount, Calif,

Union Springs, Ala.
50,000 shares of 5%
participating preferred stock (par $1) and 20,000 shares
common stock (par $1) at the rate of five shares of pre¬
ferred and two of common to be sold for $7 a unit. No
underwriter. Proceeds to drill additional wells. Office—
Moseley Bldg., Union Springs, Ala.
Mid-South

March

Co., Los Angeles, Calif.
(letter of notification) 12,500 shares of com¬
mon stock
(par $1) to be offered at $4 per share; and
12,500 shares to be issued to William Innes in exchange
for 600 shares of common capital stock (no par) of Innes,
Inc.
No underwriter.
Proceeds to pay indebtedness
and for working capital.
Office—436 W. 7th
Street,
Los Angeles, Calif.
>
Insurance

Paramount Blvd.,

•

I fines Shoe

•

common

about $25 per share by

—

March

•

Louis, Mo.

McDonnell Aircraft Corp., St.

April 3 filed 20,000 shares o-M% preferred stock. Under¬
Wegener & Daly Corp., Boise. Price—At par
($100 per share). Proceeds—To expand production, trans¬
mission and distribution facilities. Expected to be issued
on or after May 1, 1950.

writer

for

March 22 (letter of notification) 9,000 shares of preferred
stock (par $20) and 9,000 shares of common stock (par$l)
to

Lytton (Henry C.) & Co., Chicago, III.
(letter of notification) 7,000 shares of common
stock (par $1).
Price—$8 per share. UnderwriterStraus & Blosser, Chicago, 111. Proceeds—To two selling

March 1

(5/1)

mon

March

shares of capital stock (par $25).
Offering—To be offered at $35 per share to common
stockholders at the rate of one new share for each three
shares held.
Underwriter—None.
Proceeds—To repay
bank loans, for construction and to make further im¬
provements.

Hytron Radio & Electronics Corp. (4/11)
cumulative convert¬
ible preferred stock ($8 par value) and 440,000 shares of
common stock (par $1), of which 40,000 snares of com¬
mon stock will be sold by four officers of the company.
Underwriters—Barrett Herrick & Co., Inc., New York,
and Sills, Fairman & Harris, Inc., Chicago,
Price—$8
for the preferred; the common stock price to be filed
by amendment. Proceeds—To finance expansion of Hy¬
tron and its subsidiaries. Expected April 11.
Idaho Power Co.

loan owing

Lowell, Mass.

Lowell Electric Light Corp.,

March 10 filed 200,000 shares of 6%

•

Dec. 30 filed 55,819

Grand Junction, Colo,

Iowa

Co., Jacksonville,

Florida

gen

capital.

capital and to pay
Chicago^

to the LaSalle National Bank,

(letter of notification) $100,000 of 4% deben¬
Price—At par.
Underwriter—None. Pro¬

Iowa

Great Plains

Calgary

—For additional working

Co., Grand Junction,

notes.

ture

nection

(par $5).

No underwriter.
from

March 20

investment

(W. T.)

April 3 filed

Investment

Colorado

March 31

March 31 filed 20,000 shares of 4%% cumulative
pre¬
ferred stock (par $50) and 70,000 shares of common stock
(par $10) to be offered to holders of 20,000 shares of out¬

$50 and $15

Loan &

Home

April 11. Underwriter—Blair F, Claybaugh & Co., New
York, at $2.50 per share for unsubscribed stock. Proceeds

helioplane prototype.
Norwood, Mass.

four-engine

ceeds—For working

March 31

New York, N. Y.

build

(1451)

CHRONICLE

FINANCIAL

Office—Boston Metropolitan Airport,

Feb.

•

COMMERCIAL

THE

offer only

Co., Washington, D. Ci

capital stock (no par.) To

sufficient shares to raise $1,000,000 at $5,000.

share. No underwriter. Proceeds to
plore and develop oil and mineral leases.

per

be used to ex¬

Continued

on page

THE'

(1452)

COMMERCIAL

FINANCIAL

CHRONICLE

Thursday, April 6, 1950

Continued

from

page

Northwest Cities

- -

Co.

Gas

Ca., Waila Walla, Wash.
March 15 (letter of notification) 21,370 shares of con¬
vertible preferred stock (par $5). Price—$10 per share.
Underwriter—None.
Proceeds—To
convert
plant in
Eugene, Ore., to propane gas and to improve mains and
facilities, as well as for working capital.

received
•

Norwich (N. Y.)
Pharmacal Co. (4/17)
March 24 filed 50,000 shares of series A convertible
pre¬
ferred stock (par $30) to be offered to common stock¬
holders at the rate of one preferred share for each 16
common

held

—The

and

about

plans to
entitled.

•

bonds due

tional Bank & Trust Co. and
payable May 1. 1950.
•
Pacific Refiners, Ltd.,

and

common

stock

par.

one

78.17%

stock.

the

Hills, Calif.

rec¬

share.

New

Sion)

820,000

Southern

Gas

(including 9,500
market

Co.,

Tar

stock ^o

Oil

offered

of
par

con¬

rate.
Proceeds—To pay
off indebtedness incurred for
expansion of the comoany
and a wholly-owned

subsidiary, Phillips Chemical Co.

either

Teco, Inc., Chicago

under

held

stock

purchase

plan.

These

Carolina

filed

due

Electric

$22,200,000

first

Gas

Co.

1949, at rate of

Pioneer Telephone
Co., Waconia. Minn.
(letter of notification) 1,000 shares of 5%
cumulative
preferred stock, series B. Price—At
par
($100 per share).
Underwriter—H. M. Bishoo & Co.,
Minneapolis, Minn. Proceeds—To expand service.

Underwriters, Inc., Seattle,

1979.

Proceeds—To

redeem

amount

outstanding

Expected about

Service

bonds to be

organize, the Preferred Fire Asso¬
Virginia St., Seattle 1, Wash.
Electric

Gas

Co.

(4/19)

$26,000?000 first and refunding mortgage

dated May 1,
1950, and to mature May 1,
Underwriters—Names to be determined
by com¬
petitive bidding.- Probable bidders: Halsey, Stuart &

1980i

share for each five held.

Price—At

costly television programs by calling the telephone com¬
and asking to be plugged in.

pany

Jan.

Co., Dallas, Texas

filed

$2,937,254 of 4%% senior cumulative in¬
due
1965; $1,147,150 of 5% junior
income debentures due 1970; 30,500 shares of $5 class A
cumulative preferred stock (no par), with no rights to
dividends until 1956; 51,000 shares of $5 class B cum¬
ulative preferred stock
(no par), with no rights to
dividends until 1956; and 2,000 shares of common stock
debentures

terest

(no par), represented by voting trust certificates; to be
under a plan of debt adjustment.
Any interest

issued

payable on debentures must first be approved by RFC,
recently loaned the company $15,100,000
Under¬

which

Business—Oil production.

writer—None.

Statement ef¬

fective March 23.
•

Tonopah North Star Tunnel & Development Co.

March 27/ (letter of notification) 900,000 shares of com¬
mon stock (par $1), with 300,000 shares to be issued at

share to cancel indebtedness and 600,000 shares

the

public at

10 cents.

underwriters.

Pro¬

ceeds for mine,

mill and incidental financing. Offices—
1150 Union St., San Francisco, Calif., and 139 N. Virginia
St., Reno, Nevada.
.1
Z
•

Treasure

Mountain

Gold

Mining Co., Denver,

Colorado

value common stock (par 25 cents)

par

No underwriter.

at 50 cents per

Proceeds for additional machin¬

payment of debts and exploration. Office—Midland
Savings Bidg., Denver, Colo.
Turner

Airlines, Inc., Indianapolis, Ind.

March 10 (letter of notification) 60,000 shares of common
stock (no par). Price—$4 per share. Underwriter—None.
Proceeds—To buy planes, pay overhaul and for working

capital and general corporate purposes. Office
Airport, Indianapolis, Ind.

—

Weir

-Cook Municipal

Southeastern RR. Co., Inc., Statesboro, Ga.
March 29 (letter of notification) subscriptions to 6,000
shares of common stock at $50 per share, the subscrip¬
tions to

exchanged for shares after company begins
to function as a corporation. No underwriter.
Proceeds

•

build

railroad from Monticello to

United

Mines

Honduras,

Inc.,

Wilmington,

Delaware

March

(letter of notification)

150,000 shares of com¬
Price—$2 per share. Under¬
writer—Willis E. Burnside & Co., Inc., New York City".

mon

stock

(par 50 cents).

Proceeds—To

Atlanta, Ga.

Southern New England Telephone Co.
March 9 filed 400,000 shares of common capital stock (par
$25) to be offered common stockholders of record March

purposes.

mington, Del.
U.

S. Oil

indebtedness and for general corpo¬
Office—North American Building, Wil¬
Expected in April.
pay

& Development Corp.,

Denver, Colo.

28, 1950, at the rate of one new share for each seven held.
Rights will expire April 21, 1950.
Underwriter—None.

March

Price

Underwriter—R. L. Hughes & Co., Denver. Proceeds—To

—

At par.

American

Proceeds

Telephone

To repay advances from
Telegraph Co. and for further
—

construction.
4

Southwestern

Associated

(letter of notification)

preferred stock (par 10 cents).
drill

and

rehabilitate

wells.

160,000 shares of 6%

Price—25 cents

Office—429

per

share.

Johnson
;

Vashon

Telephone Co.,,

Dallas, Tex.

preferred

(no par)..

Underwriters—Rauscher, Pierce & Co.,
Inc., Dallas; Paine, Webber, Jackson & Curtis and Stone
&

Bidg., Denver, Colo.

March 30 filed 16,500 shares of $5.50 cumulative
stock

Webster

Securities Corp., New York.
Price—To be
by amendment. Proceeds—To pay indebtedness and
finance purchase of Two States Telephone Co.

Telephone Corp., /Vashon, Wash.
March 9 (letter of notification) $49,000 first mortgage
5% serial and sinking fund bonds at $1,000 per bond,
plus accrued interest from Nov. 1, 1949. Underwriters—
Wm. P. Harper & Son & Co. Proceeds—To be used for
telephone equipment and other corporate needs.

filed

Southwestern
1 500 shares of partici¬

pating preferred stock and 10,500 shares of common
stock, at $100 and $1 per share respectively. No under¬

Public

one

Underwriter—None. Proceeds—For working capi¬
tal and the promotion of Zenith's "Phonevision" device,
whereby television users could pay a special fee for
par.

ery,

(4/18)

refunding mortgage
Underwriter—Names by amendment
ana

(probably Halsey, Stuart & Co. Inc.; Kidder, Peabody &
Co.; The First Boston Corp.: Union Securities Corn.)

•<-'

March 30

March 29 filed

stock in Zenith Radio Corp. of record July 15;

common

10 cents

the treasury or will be re¬
The maximum number of shares which can be

are

South

•

Co., Inc., Charlotte, N. C.

share.

Nov.

amendment, along, with interest

Office—1020

Finance

Nov. 21 filed 100,000 shares ($10 par) common stock.
Offering—These shares are to be offered to holders -of

sold

purposes.

Corp.

first mortgage 3%% and 3%% bonds.
April 18.
-■
''

—

Proceeds

Heel

Westfield,

No general public
offering

March 15 (letter of notification)

Toronto, Canada
common

March 28 (letter of notification) 100,000 shares of,25 cents

bonds,

vertible into common stock until
May 1, 1960, to be of¬
fered to present stockholders at
the rate of $100 of de¬
bentures for each eight shares held.
Underwriter—The
First Boston Corp., New York. Price
To be filed by

Fire

held.

funds.

Office—

•
Phillips Petroleum Co.,
Bartlesville, Okla.
jWEarch 31 filed $75,637,900 of
debentures, due 1975,

Washington

one

properties. Office

(letter of notification) 1,500 shares 6% cumu¬
lative preferred stock (par $50) and 25,000 shares of com¬
mon stock
(par $1) at their respective par values.. No
underwriter.
Proceeds for additional
working funds.
Office—404V2 S. Tryon St., Charlotte, N. C.

rate

Preferred

each old

sold under this plan in a five-year period is 598,700, or
5% of the outstanding shares.
Proceeds—For general

15,761 shades of com¬
shares under offer of recis-

(estimated

375,000 shares of

common

Las Vegas, Nev.
notification) 100,000 shares

preferred

corporate

acquired.

$4 per share) for
Morehead, Treasurer. Underwriter

planned.

ciation.

(letter

subsidiaries

(letter of notification)
the

•

Bioren & Co., Philadelphia.

writer.

700

and

effective

Gas Co.

Jersey

account of R. Gould

notification)

Jan. 27 filed 598,700 shares of common stock
(no par) to
be offered to officers and employees of the
company

Underwriter—Bioren & Co.
&

7 filed

for

Okla.

Gold Mines Ltd.,

Texmass Petroleum

Nevada Oil Co.,

Sinclair

(letter of notification) 8,500 shares of
com¬
stock for account of Mark
Anton, President. Price

Pennsylvania

March 27

Mass.

per

genera]

March 28

Boston,

share).
No underwriter.
-Proceeds to drill
for • working capital. Office—130 S. 4th St.,
Vegas, Nev.

Underwriter—Daniel Reeves & Co., Beverly

Pennsylvania & Southern

new

Proceeds to expand

stock. Price—$1
share (U. S. funds). Underwriter — None. Proceeds
—Funds will be applied to the purchase of equipment,
road construction, exploration and development.

common

Airways, Inc., San Antonio, Texas
Feb. 10 (letter of notification) $194,000 of 4% convert¬
ible income debentures, due 1957 (non-interest bearing
until March 1, 1952), and 19,400 shares of common stock
(par $10), iqto which the debentures will be convertible.
Underwriter—Fridley & Hess, Houston. Proceeds—For

-y

Proceeds—For working capital.
12333 W. Olympic Blvd.

one

per

(4/13)

cumulative

Las

(par $100)

Statement
:

per share.

stock

Haven

($1

Packard-Bell Co., Los Angeles, Calif.
March 20 (letter of
notification) 9.500 shares ^f common
stock
(par $1) to be issued under warrants held
by
Howard D. Thomas,
Jr., Palm Springs, Calif., at $7 50

mon

Association,

(letter

Sierra

well

expire April 21.
Underwriter—None.
Proceeds—For Construction and to re¬

preferred

June

50,000 shares of capital stock

share for each six

14.

March

of New

Bidg., Tulsa,

Sudore

Invest¬

oil.

standing, and 640.957 shares,

per

March

bank loans made for construction
Ameri¬
purposes.
Telephone & Telegraph Co., parent, owns
3,732,493
shares, or 91.75% of the 4.068.165 common shares out¬

-—$4

—

Jackson & Curtis, Boston.

can

mon

Business

rate

underwriter.

—Howard

Underwriter—

stock.

stock (no par) to be sold at $16 per share by the National
Shawmut Bank of Boston. Underwriter—Paine, Webber,

pay

•

filed

Shawmut

refines

preferred stockholders of

March

Radio Corp., Evanston, III.
(letter of notification) 40,000 shares of

Feb.

Telephone & Telegraph Co.

ord March 21, 1950 at the rate
of
shares held; rights

50,000

stock.
Price—Par ($1 each).
Underwriter—Dempsey
Tegeler & Co., Los Angeles.
Proceeds—For working
capital.
Office—607 S. Hill Street, Los Angeles.

Hawaii

Company

Feb. 23 filed 814,694
shares of
to be offered common
and

Price—At

filed

Slick

Pacific

share
No

Service Finance Co., Los Angeles, Calif.
Dec. 19 (letter of notification) 65.000 shares of common

March 29 filed $750,000 of 6%
15-year sinking fund de¬
bentures, due 1965 and 500,000 shares of common stock
(par $1) to be offered in units of $3
principal amount
of debentures and two shares
of common stock at $5
per
unit to common stockholders of
record April 14 at the
rate of one uint for each
share. No underwriter.' Pro¬
ceeds for construction
expenditures.

....

expenditures and for additional

(par $1). Price—$6.50 per share. Underwriters—
Sulzbacher, Granger & Co., New York. Proceeds—For
working capital.

(Inc.)
(jointly); Carl M. Loeb,
Rhoades & Co.; Lehman Brothers.
Proceeds—To be used
to pay off 2%%
promissory notes held by Mellon Na¬

and markets crude

unex¬

the ^ com¬

Sentinel
Feb.

Co,

Honolulu,

Sterling Oil of California, Inc., Tulsa, Okla.
•,
March 30 (letter of notification) 1,000,000 shares of
capital stock to be offered to stockholders at 22per

five held about April 13. Underwriters—Chas. W. Scranton & Co. and Day, Stoddard & Williams. Inc.
Proceeds
—To increase company's capital and surplus.

by competitive

(jointly); Blyth & Co., Inc., White, Weld & Co.
hall

•

stock

mortgage

Harris,

reimburse

stock,

York

(par $10)
and warrants enabling stockholders to purchase these
shares at $30 per share on the basis of one share for each

bidding. Probable bidders: Halsey, Stuart & Co. Inc.;
Kidder, Peabody & Co.; W. C. Langiey & Co. and The
First Boston Corp.
(jointly); Union Securities Corp.,
Equitable Securities Corp. and Salomon Bros. & Hutzler

redeem

Proceeds—To

preferred

Security Insurance Co.

Price—At par ($100 per
share). ^Underwriter—
Proceeds—To modernize plant.
•'.» '

Underwriters—To be determined

March 22

Orchards Telephone Co., Orchards, Wash.
(letter of notification) 500 shares of common

1980.

firms.

4%%

other New

eight

and

ment company.

Pacific Power & Light Co. (4/18)
March 17 filed $9,000,000 of first

Corp.

Scudder, Stevens & Clark, Boston.

March 16
stock.

Boston

Scudder, Stevens & Clark Common Stock Fund,
Inc., Boston

March

to the 55,004 shares to which it is
Underwriter—No underwriter, but any NASD
member helping a stockholder wit.i a
subscription will
be paid 25 cent3
per
share.
Price—To be filed by
amendment.
Proceeds—For construction.

None.

First

Finance

Corp. (4/11)
March 15 filed $4,000,000 of 5% 10-year sinking fund
debentures. Underwriter—Johnston, Lemon & Co., Wash¬
ington. Price—To be filed by amendment. Proceeds—To
pay off serial notes and for working capital. Business—
Holding company for personal loan subsidiaries. Ex¬
pected about April 11.
"

for outstanding 4%% preferred
share for share basis. Underwriter

Loan &

State

exchange

Rochester

April

5, 1950, at the rate of one for each 10 now held.
Rights
will expire in about 15 days after
ma'.lng of wax rants.
Standard Gas & Electric Co., owner of
550,041 shares,

company.

19.

Gas & Electric Corp.
80,000 shares of 4% cumulative pre¬
series H (par $100), of which:, 50,000
offered, along with an unspecified amount

pany for construction
construction.

(par $20)

changed

cates;

(N. Y.)

stock, series G, on

Norwich, N. Y., and to expand business.
stock

stock,

cash,

Mortgage Co., New Ulm, Minn.
filed $500,000 of series 1305 investment certifi¬
$1,000,000 of series 1207-A accumulative savings
certificates, and $10,000,000 of Series 1217-A accumula¬
tive savings certificates.
No underwriter. An investment
Feb. 27

filed

shares will be
of

April 17. rights to expire
Underwriter—Hornblower & Weeks, New

about April

Rochester

ferred

about

Oklahoma Gas & Electric Co.
March 6 filed 97,900 shares common
to be offered stockholders of record

April

about May 3.
York.
Price—To be filed by amendment.
Proceeds—To
build a $500,000 chemical
plan and warehouse facilities
north of

State Bond &

Inc.; Morgan Stanley & Co. and Drexel & Co.
(jointly); Kuhn, Loeb & Co. and Lehman Brothers
(jointly); First Boston Corp.; Union Securities Corp.
and White, Weld & Co. (jointly). Proceeds—To redeem
a
like amount of first and refunding mortgage bonds,
3Y4% series, due 1966, atM03%. Bids—Expected to be

States

Telephone Co.

March 15 filed 114,828 shares of

Underwriter—Central

Republic

common

Co.,

(4/6)

stock (par

Chicago.

$1).

Price—

To be supplied by amendment. Proceeds—From 65,000
shares go to construction program of company; remain¬

ing shares

are being s^ld for account, of Allied Syndi¬
cate, Inc. of Wilmington, Del.
Expected April 6.1
.

Sta-Kleen
March 20

Bakery, Inc., Lynchburg, Va.
(letter of notification) 3,375 shares of common

stock to be sold at $11 per share by

five persons. Under¬
writer—Scott, Horner & Mason, Inc., Lynchburg.

Videograph Corp., N. Y. City
(letter of notification) 300,000 shares of

Feb. 2
stock

common

10c).
Price—$1 per share.
Underwriter—
George J. Martin Co., New York.
Proceeds—For addi¬
tional
working capital.
Business—Assembles a coin
operated combination television and phonograph. Office
—701—7th Avenue, New York, N. Y.
(par

•

Washington-Idaho Mining Co., Spokane, Wash.
notification) 750,000 shares of 10 cents
par value common stock at 40 cents per share. No under¬
writer.
Proceeds to*'.pay indebtedness, for machinery,
equipment and mine development near Kellogg. Idaho.
Office—711 Huttcn Bidg., Spokane 8, Wash.
March 27 (letter of

Volume

THE

Number 4896

171

(letter of notification) 6,000 shares of capital
stock at $47.50 per share. No underwriters; Proceeds to
be used in setting up additional branch stores in Wash¬
ington and Oregon to sell retail jewelry. Office—Ranke
Building, Seattle, Wash. ' > '
14

Cobalt Mines,

Uranium

Western

tiled

800,000

Central
March

Wood

Western

Proceeds

build

operate

wood

filed

500.000

eral

sugar

will

(par

sell

from

time

Corp. notified SEC
during a three months'

time,

(4/19)

Corp.

one

new

Interstate Power Co.

May 2 stockholders will vote on authorizing an issue of
250,000 shares of preferred stock (par $25), Company

Williams and associates,

also

planning to issue in May or June $8,000,000 of bonds.
headed by Merrill Lynch, Pierce, Fenner &
Beane and Kidder, Peabody & Go. has been formed to

buy

five

unit of

one new common

common

would be offered the right
share and $1.75 of

new

package price of $2.25 for each

held.

The

issue

new

stock

debentures would be underwritten by Darien Corp. and

Iowa
March

announced

Co., New York, N. Y.
company is considering

program

financing for working capital. Probable
underwriters:
Morgan Stanley & Co.; Clark, Dodge &
Co.; F. S. Moseley & Co.
of

April 25 stockholders will vote

long-term

Amun-lsraeli
March

March

City
was

will

Housing Corp.

Electric Co.
'
reported company may sell later this

Coast Line

28 announced

written by Blyth & Co., Inc. and F. S. Moseley & Co.
Probable bidders for bonds include: Blyth & Co., Inc.

Moseley & Co. (jointly); Merrill Lynch, Pierce,
Brothers; Kuhn, Loeb & Co.
and Lazard Freres & Co. (joint#); Harriman, Ripley
& Co., Inc. and First Boston Corp. (jointly). Proceeds—
To retire bank loans of $14,625,000, and to pay part of

and F. S.
Fenner

cost

Stockholders' will
-

from
vote

manufactured

May

plans.
•

California

Electric

■,

natural

gas.

approving financing

:■

''"v

' J.-rv•',;•/■

Power Co.

March 30 company announced

that it plans to raise $2,-

through issuance of new securities about mid¬
year to finance construction requirements in
1950. If
market conditions are favorable the management will
consider raising at the same time the new money which
will be required, in 1951. Probable underwriters of ©re¬
ferred stock: William R. Staats Co.; Pacific Co. of Cali¬
000,000

fornia; Walston, Hoffman & Goodwin. Probable under¬
writers of bonds: Halsey, Stuart & Co. Inc.; Shields &

Co.; Kidder, Peabody & Co.
Carolina, Clinchfield & Ohio RR.

planning sale of $3,885,000
mortgage bonds. Probable bidders: Halsey, Stuart & Co.
Inc.; First Boston Corp. and Kidder, Peabody & Co.
(jointly); Dick & Merle-Smith; R. W. Pressprich & Co.:
Harriman Ripley & Co. and Drexel & Co.
(joints
Proceeds to pay notes due to Louisville & Nashville RR

Feb.

reported

company

Celanese

Corp.

of America

12 stockholders will be asked to authorize the
creation of 1.000,000 'shares of a new preferred stock

(par $100), 505,000 shares of which can be issued at any
time,
Plans are being formulated for the issuance this

if market conditions are considered satisfactory, of
initial series of this new preferred stock which may
convertible into common stock.
Net proceeds would

year,
,an

be used in

part for expansion of the business, including

required

Power

company

Corp., New York, N. Y.

Hayden,
principal underwriters of a proposed of¬
fering of 100,000 shares of new unissued $5 par common
stork
(in addition
to 30 000 shares by selling stock¬
holders). Proceeds will be used to reimburse treasury
for capital expenditures already made and to increase
working capital.
Expected this month.

1953.
Indications
$12,000,000, plus

through
loans

bank

•

Light Co.
planning

for

probably

bonds,

new

& Western RR.
or

•

series J, to be dated April 1, 1950 and to
instalments of $133,000 each from

annual
to

April

Stuart

1965,

inclusive.

Probable

mature in 15
1951
bidders: Halsey,
April 1,

&Tto. Inc.; Salomon Bros. & Hutzler; Kidder, Pea¬

body & Co.; Harris, Hall & Co. (Inc.).
Public

General

Utilities

Corp.

received SEC authorization to
solicit stockholder approval of a proposed charter amend¬
ment which would permit the public offering of any of
its stock fdr cash without according the then existing
stockholders prior subscription rights to such stock. The
proposal is to be voted upon at the annual meeting to
be held May 1, and must obtain the favorable vote of
"the holders of two-thirds of the company's outstanding
March

Munti;

13 corporation has

shares entitled to vote.

1951

(Y. V.),

York

New

State Electric

& Gas Corp.

two-for-one split-up of the common stock, the sale of
additional 800,000 shares of new common stock and

200,000 shares of
-

serial preferred stock.

new

Company

expects to presently offer 272,380 shares of the increased
common
stock to present common stockholders in ratio
of one

mated

new

for

each

seven

shares held.

esti¬

Proceeds

between

finance

usjed to

$6,000,000 and $8,000,000, will be
this y.ear's portion of the construction

which, it is estimated, will cost over $55,800,000
three years. Traditional underwriter: The
First Boston Corp. Other probable bidders for preferred
issue: Kuhn, Loeb & Co.; W. C. Langley & Co.; Lehman
Brothers and Glore, Forgan & Co. (jointly); Harriman
Ripley & Co., Inc.; Salomon Bros. & Hutlzer; Kidder,
Peabody & Co. and Merrill Lynch, Pierce, Fenner &
Beane (jointly). : Registration of common stock offering
expected about April 7.
program,

and

Stockholders March 23 approved a proposal to authorize

April 13 at the office of J. G. Enderlin, Treasurer, Room
2008, 140 Cedar Street, New York 6, N. Y., for the purchase from it of $1,995,000 equipment trust certificates,

1950

Inc.
early registration with the SEC
is expected of about 400 000 shares of common stock.
Underwriter—Kebbon, McCormick & Co.

(4/13)

noon.(EST)

before

sell in

new

March 31 it was said that

Stanley & Co.; W. E. Hutton & Co.; Lehman Brothers.

Co.

company* may

securities, which may
include bonds and debentures and possibly some addi¬
tional common stock. Financing of $10,000,000 or more
in bonds may be undertaken in May.
The proceeds are
to be used for expansion and extension of its gas and
electric lines.
Probable bidders for bonds: Halsey, Stuart
A' Co. Inc.; Blyth & Co., Inc.; Union Securities Corp.;
Merrill Lynch, Pierce, Fenner & Beane: Smith, Barney
& Co.;. First Boston Corp.; Lehman Brothers.

planned to offer between 200,000 and 250,000 shares of
stock (first to stockholders) and $7,500,000 pre¬
ferred stock, probably in May. Probable bidders:
Mor¬

received

reported

approximately $22,000,000 in

money.

common

Dec.

releasing from preemptive rights 50.000 shares of such
slock to be sold to officers and employees.
It is also

will

Power

Montana

Delaware, Lackawanna

announced that the

$47,500,000 in instalment notes (including $2,500,000 cur¬
maturities) outstanding at the close of last year.

Dayton Power & Light Co.

Bids

Co.

Star Gas

rent

April 13 stockholders will vote on increasing the author¬
ized common stock from 2,000,000 to 4,000,000 shares and

gan

company plans long-term
borrowings in order to retire two short-term bank notes
amounting to $5,000,000 and other loans which were the
result of new construction expenditures during 1949; viz:

sale,

reported

$8,500,000

Lone

March 23

Probable
bidders: Halsey, Stuart & Co. Inc.; Equitable Securities
Corp.; Lehman Brothers; Salomon Bros. & Hutzler; First
Boston Corp.; Union Securities Corp.; Kidder, Peabody
& Co.; Blyth & Co., Inc.; Merrill Lynch, Pierce, Fenner
& Beane (jointly); Harriman, Ripley & Co.
May,

the

Niagara

Mohawk

Power

Corp.

„

Jan. 19 announced that construction program will neces¬
sitate in 1950 not more than $25,000,000 of additional debt

equity financing, including short-term bank loans.
bidders for bonds: Halsey, Stuart & Co. Inc.;
Morgan Stanley & Co.; The First Boston Corp.; Kuhn,

Green

Mountain

March 7 amended

provides
new

for

common

sale

Power

Corp.

Probable

plan of reorganization filed with SEC

approximately

100,000

stock for cash to the public through under¬

subject to prior subscription

rights by present
preferred stockholders.
Exemption from competitive
bidding has been requested. Proceeds—To retire 4Y4%
notes and for working capital.
writers,

April

Knott Hotels

short-term

Dallas
Dec.

& Beane; Lehman

conversion

increasing authorized

will be sufficient to carry construction
program through until next fall before permanent financ¬
ing will be necessary. Refunding of $5 preferred stock
(1,915,319 shares outstanding) is also, reported to, be
understudy.
' •, ■'
■'•

Brooklyn Union Gas Co.
8 company announced it plans to issue $8,000,000
first mtge. bonds and sell 186,341 shares of convertible
preferred stock which will have a par value of $40 per
share. Latter will be offered for subscription to common
stockholders on a one-for-four basis and may be under-

treasury funds,

RR.

March

with

financing

that

were

creating a new mortgage to be dated March 1, 1950,
providing for a maximum of $200,000,000 bonded indebt¬
edness. The net proceeds would be used to refund $50,724,000 first consolidated mortgage 4% bonds due July
1, 1952, to refund $33,325,000 of general unified mortgage
bonds due June 1, 1964, and the balance for construction
costs.
Probable bidders include Halsey, Stuart & Co.

Boston Corp. and G. H. Walker &.Co.

•

Stone & Co.

company

money

stockholders will vote April 18 on

Incorporated.

underwriters: First

Consolidated Edison Co. of New York, Inc.
Jan. 13 company officials estimated at $96,000,000 new

1,172,000 shares to 1,400,000 shares. Probable underwrit¬
ers: Union Securities Corp.; Smith, Barney & Co.
Atlantic

underwriter: Dillon, Read & Co. Inc.

vote

March

stocks through a

common

adequate number of unissued
shares and to enable it to sell or exchange such shares,
if desirable, under future market conditions.
Probable

$2,000,000 of convertible debentures. Stockholders
April 11 on increasing common stock from

year

registration with SEC Is
offering of about $18,000,000 preferred
negotiated deal. Probable

and

March 2 the directors authorized discussion with

provide

April $10,000,000 of 15-year 3% first mortgage bonds.
Atlantic

reported that early

expected of

preferred stock from 500,000 shares to 750,000" shares to

reported company will sell to public early in

Electric Co.

Keyes Fibre Co.
April 12 stockholders will vote on authorizing 200,000
" shares of first preferred stock, issuable in series
(par $25)
of which it is planned to initially issue 100,000 shares
•designated as 5.6% series. Under an exchange offer
(which will be underwritten) each present preferred
share would be exchanged for five new preferred shares
Bros. & Hutzler (jointly); Harriman, Ripley & Co., Inc.:
and cash equal to the call price (including accrued divi¬
First Boston Corp.; Lehman Brothers; Paine, Webber.
dends to May 1, 1950) of the old preferred over the initial
Jackson & Curtis; Kidder, Peabody & Co.
\
' offering price of the new preferred stock. Coffin & Burr,
Inc., will probably manage the group of underwriters.
Cleveland Electric Illuminating Co.

Prospective Offerings
3

the latter issue. Other probable bidders may in¬
Halsey, Stuart & Co. Inc.; Smith, Barney & Co.;
First Boston Corp.
1
'
on

clude:

March

group

bid

.»

and

company

American Can

Possible refunding of privately held $22,500.first mortgage bond& is also said to be under

consideration.

share for each 10 held and employees of the

Co., Inc.

000 3y4.%

banking group headed by Hemphill Noyes, Graham,
Parsons & Co., Shields & Co., Blair, Rollins & Co., Drexel
and its subsidiaries will be given the right to
& Co. and Sterling Grace Co.
.1
* *
buy the additional 20,000 shares plus any remaining from
Chicago & Western Indiana RR.
the stockholders' offering.) Price—To be filed by amend¬
ment.
Proceeds—For additional working capital.
Ext.; ( Jan. 31 reported company will probably issue in the near
; future some bonds to refund the 4% non-callable conpected April 19.
"- V
.■ '
: ' /
/ ;
solidated first mortgage bonds due July 1, 1952.
Re•
Wisconsin Investment Co., Milwaifkee. W**.
funding of the first and refunding mortgage 4V4% bonds.
March 31 filed 2,100,000 shares of capital stock. Under¬
series A, due Sept. 1, 1962, is also said to be a possibility.
writer—Loewi & Co., Milwaukee. Business—Investment
Probable bidders:, Halsey, Stuart & Co. Inc.: Morgan
company. 1
V'
' iv-..".' / Stanley & Co.; Lee Higginson Corp.;
Harris, Hall & Co
(Inc.); Drexel & Co.; Kuhn, Loeb & Co. and Salomon

Electric Co. "

Boston Corp.; Union Securities Corp.; Harriman Ripley

Electric

income debentures for

shares of capital stock (par $20).
Underwriter—Drexel & Co., Philadelphia. (Of the total
shares. 29,891 will be offered to stockholders at the rate

•

Michigan

Probable bidders: Halsey, Scuart & Co. Inc.; First

gram.

•

States

Feb. 27 company was reported to be contemplating the
issuance and sale of $20,000,000 first mortgage bonds in.
June or July, the proceeds to finance construction pro¬

except for approximately 4,600,000 shares held by Harri¬

49,89,1

filed

April

Indiana

1 it was announced that under an amended plan
reorganization it is proposed to issue to holders of all
classes of 6% preferred stock for each old share the right
to buy a unit consisting of eight shares of new common
Stock and $14 principal amount of new 4%% income de¬
bentures for a package price of $18. The common stock,
son

Dental Mfg. Co.

(S. S.)

W.iite

when deemed necessary.

Light Co.

to
•

announced

March

molasses

stock

common

Illinois

that stockholders on April 20 will
proposal to authorize the directors to incur up
$3,500,000 of indebtedness on a long-term basis, so as
place the company in a position io do such financing

Kidder, Peabody & Co. and Estabrook & Co.

Central

;

Financing may consist of
preferred stock. Prooaoie unutiwintrs

Illinois stock.

corporate purposes.

tive March 21.

aporoximately
first mortgage

period commencing March 20 on or off the New York
Stock Exchange, its holdings of 7,314 shades of Central

Underwriter—None.
Proceeds—For gen¬
Registration statement effec¬

plan.

cost

and

$12.50), offered to employees under company's employee
stock

Hairooflton Watch Co.

March 10 Commonwealtn & Southern

work.

Westinghcuse Electric Corp.
2

vote

estimated

program,

Central

Office—409 Atlas Bldg., Salt Lake City, Utah.

March

Feb.

bonds:

common

Sugar & Chemical Co.

and

Electric Co.

bonds

stock (par $50) and 22,220 shares of common stock (no
par) to be offered in units of one share of preferred and
four of common stock for $50 a unit.
No underwriter.

plant.

$24,100,000.

notification) 5,555 shares of preferred

March 27 (letter of

Gas

Loeb, Rhoades & Co. (jointly); The First Boston Corp.;
Equitable Securities Corp. and Union Securities Corp.
(jointly); Glore, Forgan & Co.; Kidder, Peabody & Co.

construction

Ltd.,

(par $1). Price—35 cents per
Proceeds—Exploration and development
•

Hudson

(1453)

reported that the company may issue $19,100,000 of new securities to provide funds for its 1950-1952

capital stock
share. Underwriter—None.
of

CHRONICLE

Probable underwriters:
Dillon, Read & Co. Inc.; Morgan Stanley & Co.

Vancouver, B. C., Canada
Feb.

FINANCIAL

additional production facilities.

/ We-isfield's, Inc., Seattle, Wash.
March

COMMERCIAL

Gulf

States

Utilities

Co.

Feb. 16 reported company may

offer $7,500,000 preferred

"new money" bonds in April
or May, this year. " Probable bidders for bonds:
Halsey.
Stuart & Co. Inc.; Blair, Rollins & Co., Inc. and Carl M.
stock

and

$13,000,000

Loeb & Co.
•

Northern

Natural!

Gas

Co.

■

April 4 requested SEC approval to issue 304 500 addi¬
shares of common stbck to common stockholders

tional

of record May 3, 1950, on the

basis of

one new

share for

eight shares held; rights to expire May 22.
Un¬
subscribed shares will be offered to company employees.
each

Price—To be supplied

Proceeds—To; be

by amendment.

usfd. for 'construction. ;

Continued
•
.

•'•

•

•*'

on
•

page
v 5

'■

54
.

(1454)

THE

Continued from page 53
Northern

Natural

Gas

and

sell

other

competitive

debentures.

funds,

will

used

finance

the

company's

Probable bidders: Halsey, Stuart
Co., Inc; The First Boston Corp.;
Kidder, Peabody & Co.
Offering expected in June.
Ohio

St.

company

to issue and

proposes

sell

at competitive bidding $52,000,000 of first
mortgage bonds
due 1980 and to issue additional bonds or borrow
$4,200,000 from banks on instalment notes.
Probable bidders
include: Halsey. Stuart & Co. Inc.; Morgan

common

April.

stock

Oklahoma Gas
28

Electric

reported

was

$17,500,000 in
to retire

bonds.

new

costs.

Co.
may issue in May
proceeds would be used

company

The

$7,500,000 of 3^4%

construction

Stuart

bonds and

Probable

the

bidders:

Merrill

Lynch,

ing first mortgage

Co.

could

Oswego Falls Corp.

for

(4/11)

to noon (EST) on
Ap^iJ1 11 at the
of George H.
Pabst, Jr;, Vice-President, at Room

office

1811,
This
will constitute the first instalment of
an
aggregate of
not exceeding
$20,115,000 of such certificates, series Z.
Probable bidders:
Halsey, Stuart & Co. Inc.; Salomon
Bros. & Hutzler; Harriman
Ripley & Co., Inc. and Leh¬
Broad Street Station

man

Brothers

•

Utah

Inc.

•

filed

Power

Co.

reported company plans long-term
financing
later this year, the
proceeds to be used to repay $5,000,000

borrowed in January from
banks, the funds being used
to pay for new construction.

Public

Service

Electric &

Gas

Co.

April 17 stockholders will vote on issuance. of
$90,000,000 new bonds for the purpose of
refunding $50,000,000 3%% bonds due
1965; $10,000,000 3%% bonds due
1968; $15,000,000 3% bonds due 1970 and
$15,000,000
bonds due 1972.
Probable bidders:
Halsey, Stuart & Co.
Inc.; Morgan, Stanley & Co. and Drexel & Co.
(jointly);
Kuhn, Loeb & Co. and Lehman Brothers
(jointly); First
Boston Corp.
,

Reading Co.
Bids for the
ment trust

before

(EST)

April 12 at the office of R. W.
Brown, President/Room 423, Reading Terminal, Phila¬
on

Barnsdall

Oil

Co.,

Dillon

which

Co.

Hutton

crease

Southern Pacific Co.'s
big
debenture offering,

727,800 in all, which raised
a

con¬

$37,con¬

month

back, has been wrapped up and
tucked away as a
decidedly suc¬
so

cessful operation.
Four groups had been set
up to
bid for the
'

"standby" contract,
when the financing was first
an¬
nounced,

but

solved

and

looked

over

withdrew

set

two

were

these

par

when

pired

they

by the railroad.
adjusted somewhat

groups were opened

proved

even

these

bit

the successful group took up the
debentures as 3s with an under¬

writing compensation of $785,688 while the runner-up bid for
a

fee of

$464,049.,

underwriting

month-end,

tank¬

found they had
only $3,317,000 or thereabouts to
take down.
Sales against this block
are re¬
ported to have run
around

$1,-

300,000, leaving a net balance of
only about $l,900,0fft)
actually
unsubscribed or unsold.
these were placed

fraternity

Power
first

bonds, due

moved

true

Co.'s

mortgage

out

readily

the group.

ends

another

those

in¬

teresting episodes which crop up
from time to time in
the invest¬
ment banking business.

$15,000,30-year

Natural gas securities
appear to
a responsive
chord with in¬
vestors these days

of new 4.6:%

snapped up

Priced

preferred stock
this week.

was

pears,
which

tire

large

Wisconsin
March
of

remainder to

amount

Electric

for

been

long time

hanging

The

ler

loose to take

care

themselves.

Two Issues Near
Offering
Two
set

definitely

utility
on

issues

were

the road to pub¬

plans to issue $25,000,000

Halsey, Stuart

& Co. Inc.;
Securities Corp.
and Salomon Bros. &
Hutz¬

Equitable

•

Expected

Wisconsin Power &

Light Co.

March 24 reported
company plans to raise about
$16,000,000 in new
money to finance construction
costs, etc. This
ma-y include $10,000,000
of bonds.
Probable bidders:
Halsey, Stuart & Co. Inc.; First Boston
Corp.; Salomon
Bros. &

Hutzler;

Equitable

Securities Corp.; Lehman
Brothers; Glore, Forgan & Co.; Harriman
Ripley & Co.
Harris, Hall & Co. (Inc.)
(jointly); White, Weld &
Co. and
Kidder, Peabody & Co.

being to

re¬

outstanding

is¬

purpose

Gas

filed

for

1952

the

interest

$27,-

rates

also

here

1965.

DIVIDEND NOTICE

BRITISH-AMERICAN
TOBACCO
NOTICE

will

competitive

DIVIDEND TO HOLDERS
OF STOCK WARRANTS
TO BEARER FOR
ORDINARY STOCK.
NOTICE IS HEREBY
GIVEN
Directors in their Annual
recommended

Final
Stock
1949

will

place

the

and

dividends,

bank notes.
'

"f.

'•

••

same

CHICAGO, ILL.
rick &

now

—

with

Trust Company
Lombard Street,
anty

the

ANDERSON,
is

with

IND.—Edgar
Thomson

W.
Mc¬

Kinnon, Citizens Bank Building.

June
must

Guar¬

York,

seven

made.

THE

1950.

BOARD.

McCORMICK,

Secretary.
House, Egham, Surrey.
.

credit
.

the

12th

Saturday)

who

Article

may

XHI(l)

Taxation
Treaty
between
States and the United

Joins Thomson McKinnon
;

New

day of March,

ORDER

Stockholders

Adkins

29th

Rusham

virtue

• •.

can

Co., Inc.

(Special to The Financial Chronicle)

Annual
the

London, E. C. 2.,
days (excluding

payment

DATED

Her¬

the
on

the

before

Oakley

Barret

(subject

being sanctioned at
Meeting to be held

May next) on and after the
30th
holders of
Ordinary Stock Warrants
deposit Coupon No. ^207 with

With Barret Herrick

the

30th

General

(Special to The Financial Chronicle)

Patton

that

Report have
Stockholders
the

the

;

June
1950 of
a
Dividend on the issued
Ordinary
fcr the year ended
30th September
of
tenpence per
£1
of
Ordinary
(free of Income
Tax).

clear business

■'

the

To obtain this dividend

com¬

and

COMPANY, LIMITED

payment

liquidate $10,300,000 of 2% serial

though several have been turned

Co.

construction.

early in June.

in funds to redeem 151,623
shares of 4%% preferred at
$110 a

still

Appalachian Power, Detroit Edi¬
Co., New Jersey Bell Tele¬

& Beane;
Boston Corp.; Union
Securities Corp. and Harri¬
Ripley & Co., Inc.
Proceeds—About one-half for
refunding and remainder for new

Stock

As a matter of fact insurance
companies, as an example, have

son

expected

and

Proceeds

bonds around from such
deals

are

man

pany

are

commoi

(jointly); Merrill Lynch, Pierce, Fenner

bidding.

now.

there

and

First

in¬

determined

fire

been rather slow in
general and,
according to observers,
have
been doing little in
the market
since the turn of the
year.

bonds

Power

reported company
Probable bidders:

bonds.

currently

from

Around

investors
have
particular rush, it ap¬
clean up a few deals

have

preferred

the

Forgan & Co. and
(jointly); Lehman Brothers

American

Ltd.

& Co. and the Firs
underwrite the financinj

divided 759.

the

sues.

Institutional
been in

$105 a share and
backed by a
sinking fund designed
to retire the entire
issue by April

and

000,000 of serial notes to mature
Pieces

nex

Eastman, Dillon

Glore,

ding, the

yield 2.77%,
preliminary inquiry
assured quick resale.

judging by the phone, Pennsylvania Power and
celerity with which Tennessee Gas Mississipi River Power Co.
even
Transmission Co.'s 100,000 shares

reported that company may issue

The first mentioned
plans to
issue $26,000,000 of new 30-year
bonds through competitive bid¬

101.63999 for a
2%% coupon. At
the reoffering price of
102% to

and

"...

American Gas & Electric Co.

highest

Bits

Peabody & Co
Brothers; Carl M. Loel

Co., and

the

Accordingly,

strike

was

lic offering with the
filing of the
necessary registrations by Public
Service Electric & Gas

the market today.
This issue drew
eight compet¬
ing bids on Tuesday, the

And

Demand Seems Brisk

remaining

confusing to the
investment banking minds, since

and

the

ex¬

held

same

Georgia
000

stock

ers

later.
the

stockholders

The

the

Inc

Unio

$175,000,000^

$5, in order to

par

bonds

stock.

shares,

1,000,000 shares,

Co.

and

be taken by life insurance
companies. Arrangements wil
be made to place in
Canada part of the securities.
It ii
expected an American corporation will
be formed tc
construct and operate the
American end of the line ir.
Washington, Oregon and California. The
completed line
it was announced, will cost
about

stages.

stockholders

value, to

dis¬

the provisions of the

When bids of

bankers for Sunray.

approved a proposal to
the authorized common
stock from
500,000

When the offering to South¬

vertible

formative

\ Ltd., of Montreal, Canada, and Wood,
Gundy & Co.
Toronto, Canada. The financing would be

Thompson Products, Inc.,
Cleveland, Ohiho

Pacific's

Halsey, Stuart
Co.; Harriman Ripley & Co., Inc.
Corp.
(jointly); Kidder,

ready to
1,400 mile pipe line proposed
by the West Coas
Transmission Corp., along with
Nesbitt, Thomson & Co.

Schoellkopf,
(jointly); Bankers Trust Co.,

Pomeroy, Inc.

March 28 the

weight of the conversion feature
attaching to the debentures. 1
ern

still

shares in the

latter year and
165,OC
1952, the proceeds to meet construction
cost

of the

(expected to

strong stock market
naturally added to the

which

are

compan

$10,000,000 of bonds, plus a
1951, together with 150,OC

West Coast Transmission
Co.,

total around
$2,400,000). Prob¬
Halsey, Stuart & Co. Inc.; Lee
Higginson
Corp.; Kidder, Peabody & Co.; Salomon
Bros. &
Hutzler;
Harriman Ripley &
Co., Inc.; Harris, Hall & Co.
(Inc.);
Blair & Co.,
Inc., L. F. Rothschild & Co. and

pointing side during the
standby
interval, the sponsoring group was
by

may

common

President, reports

sell

amount

Feb. 10 reported4 that
Boston Corp. were

able bidders:

And while the bond
market itself was a bit
on the
disap¬

aided

statement

Light Co.

Gadsby,

$20,000,000 of "new money bonds." Probable
bidden
Halsey, Stuart & Co. Inc.; Union Securities
Corp.; Kuhr
Loeb & Co^
White, Weld & Co.; Stone & Webster Se
curities Corp.; Salomon Bros. &
Hutzler.

Texas & Pacific Ry.
March 21 directors
approved purchase of 13
additional
Diesel-electric locomotives (to cost
approximately $3,500,000), to be financed largely
by equipment trust
certificates

naturally watched the operation
1,
1980
with
more
than
customary in¬ quickly.
terest.

siderable commotion

registration

(4/10)

year to

fall

involving about $80,000,000 financing
with proposed
merger of Sunray with

connection

Eastman

the

month

G. ,M.

March 27 it

California

reported

this

Virginia Electric & Power Co.

Sunray Oil Corp.

Co.

White, Weld & Co.; Lehman
Rhoades & Co. •
...v.;

was

New York.

(4/12)

purchase from company of $3,810,000 equip¬
certificates, series R, will be received at or

noon

Halsey,
Brothers;
(jointly);

company reported planning issue in
April of
200,000 shares of common stock with
Glore, Forgan &
Co. and
Kidder, Peabody & Co. as underwriters.
•

Securities

March

Potomac Electric

Drexel

terms

competitive bidding on
1,000,000 shares of cumulative preferred stock.
Probable
underwriters:
First Boston Corp. and
Harris, Hall &
Co. (Inc.). Proceeds to be
used for construction
costs.

March 20 directors authorized officers to
develop plans
for public financing of
$25,000,000 to $30,000,000, part
of which might be in the form
of additional common
stock. Traditional underwriter: Lehman
Brothers.

the company will

mortgage

Probable bidders for bonds:

Spencer Chemical Co.

Philip Morris & Co. Ltd.,

March

additional

shares in

mission

March

that

first

will

plans late this

Southern California

announced

Power &

additional

Edison Co.
March 30 company
applied to the California P. U. Com¬
for
exemption from

Building, Philadelphia 4, Pa.

(jointly).

provided satisfactory
Probable bidders include

Fuel

referee

March

Edison Co.
/
reported that company expects
^0 issue
this summer
$55,000,000 of bonds. Probable bidders:
The First Boston
Corp. and Harris, Hall & Co.
(Inc.)
(jointly); Halsey, Stuart & Co. Inc.; Blyth &
Co., Inc.;
Shields & Co. Proceeds would be
used to refund
$30,000,000 3 J4% bonds and for construction costs.
>

the

bonds,

arranged.

Southern

purchase of the company of $10,110,000
equipment trust certificates, series Z, to mature $674,000
annually from April 1, 1951-1965, inclusive, will be re¬
ceived

March 3 it

'y:';.

Pennsylvania RR.
Bids

The

the

Stuart & Co. Inc.;
Kuhn, Loeb & Co.; Lehman
First Boston Corp. and Harriman
Ripley & Co.
Union Securities Corp.

March 20 stockholders approved
$500,000 additional first
mortgage bonds, which are expected to be issued about
May 15.
■
'

is pre¬

bidding 440,000 shares
outstanding) early in

issue

with

was

additional

offer at public auction
at 11 a.m. c
April 10 all of the 100,000
outstanding shares of stock <
this corporation at the
Guaranty Trust Co. of New Yorl
J 40
Broadway, New York. Business—Mining of coal i
Utah and Colorado and
manufacturing of coke in Uta
and sale of said products.

Seaboard Air Line RR.
Feb. 7 directors appointed a committee
to proceed with
the refunding of the
approximately $31,800,000 outstand¬

balance for

Inc.; Lehman Brothers and Blyth & Co.,
Inc.
(jointly); Equitable Securities Corp.; Harriman
Ripley & Co.

Utah
.The

SEC
expected shortly.
Becker & Co.
(Inc.), Union
Corp. and
Ladenburg, Thalmann & Co.
(jointly); Merrill Lynch, Pierce, Fenner &
Beane; Kid¬
der, Peabody & Co.; F. Eberstadt &
Co.; Allen & Coi

Pierce, Fenner & Beane; The First Boston Corp.; Halsey,

These

(total

Registration

Probable

pipe line bon
(which may be placed
privately) and will borrow $11
000,000 from banks.
Proceeds will be used to expai
operations.

Securities

March

Property Custodian

paring to offer at competitive

$32,000,000

Schering Corp.

Co.

deal

Transcontinental Gas Pipe Line
Corp.

March

Louis-San Francisco

Jan, 26 announced the Alien

Stanley &
Co.; White, Weld & Co. and Glore. Forgan & Co. and
Union Securities Corp. (jointly); First Boston
Corp. Pro¬
ceeds would be used to
redeeming all outstanding first
mortgage bonds ana serial notes of Ohio Public Service

•

a 1.20-to-l
split-up and for future financir
acquisition of property aftd other
puroses. No immedia
financing planned. Probable underwriter:
Smith, Ba
ney & Co.

Ry. (4/12)
March 28 company reported
planning issuance of $2,250,000 equipment trust
certificates, series F, about April
12. Probable bidders:
Halsey, Stuart & Co. Inc.; Harris,
Hall & Co. (Inc.); Harriman
Ripley & Co., Inc. and Leh¬
man Brothers
(jointly); Salomon Bros. & Hutzler.

Edison Co.

announced

Thursday, April 6, 191

provide for

April 15, 1965, in¬

Lee

construction program.
& Co. Inc.; Blyth &

Feb. 21

CHRONICLE

Probable bidders:
Halsey, Stuart & Co. Inc.;
Higginson Corp.; Salomon Bros. &
Hutzler; Kidder,
Peabody & Co.; Harriman Ripley & Co., Inc. and Leh¬
man Brothers (jointly); Harris, Hall & Co. (Ipc.).

$40,000,000 of 2%%
proceeds, together with

net

FINANCIAL

clusive.

bidding

The

delphia 1, Pa. The certificates are to be dated
April 15,
1950, and to mature serially in semi-annual instalments
of $127,000 each from Oct.
1, 1950 to

Co., Omaha, Neb.

Jan. 20 announced that the
company proposes to Issue

20-year

COMMERCIAL

under

131

Internal Revenue
application to Guaranty
New

York

United

Kingdom,

Section

States
of

entitled by
the Double
the

obtain

the

Code

Trust

tax

United
can

Company

certificates

giving
United Kingdom

particulars of rates of
Income Tax
appropriate to the
payable the 30th June 1950.

dividend

COMMERCIAL

THE

Number 4896

171

Volume

(1455)

CHRONICLE

FINANCIAL

Continued

from

page

;

Chicago Association of/Cbmmerce either by exporting dollars Or by

Closing the Dollar Gap

Industry

and

Illinois

the

«-•
of Chicago.
subordination of certain/ parWhile Marshall aid offers the
problems.
ticular benefits which certain par- necessary time, Mr. McClintock
One of our great needs is agreeticular groups of" citizens would said, "American business can aCment amone nations on orinciples
like to enjoy. The-closing of the Cept the challenge it offers to the
to guide international trade and dollar gap at a high level is the exporter" and
"with hard work,
nr?ani7ation of nations to helo
most important single step that intelligence, ingenuity and integ.

cussion

trade

solution

and

will

consuUeT'before ' other

^ °f A""**""^iKntock

fre^L ~ fhe. wodd, and the

i countries do things that may af-

hrinf*

Tirhioh

mnv

nlaints

snecial oroblems

That

anv

| under the trade agreements program.:- You know the record and
•

the results accomplished,

tude of

much

along

in France last year in nego-

heard

discussed

Uahons to extend the scope.ot nie

General

Agreement on Tariffs and
signed in Geneva
negotiations
at

Trade which was

The

1947.

resulted in
liberalizing tariff barriers on about
and

Geneva

two-thirds

import

total

the

trade

•<

Annecy

participating

This amounts to about

countries.

billion, or about one-half of
the 'total
import trade
of the
$30

To do

world.

this, the participat-

the

lines you
tonight.

said

"pegging-

He 0n the threshold of another phase,
British manufacturing abroad.
"time to
"gy introducing American

the

each of you, can power^ipound'#;had furnished
fuuy affect the solution i<6f this ponderlfeffective remedies for the
problem. Let me suggest tliht each world's^ economic
ills. In the
of you and men like you through^.world fh which we live today,"
out thp C0Untry, have a -vital in- he said$«we cannot afford to let
You,

seeing the Marshall Plan

terest in

DIVIDEND NOTICES

The Board of Directors has de¬
clared

dividend of fifty ^cents

(50c)

the

Stock of the Company,

Capital
payable

April 24, 1950 to stockholders

countries reached agreement <
The United States is today the
50,000 different tariff economic center of the world,
AMERICANS
rates.
This was a process that with 7% of the world's popular
mvolved
a
great deal of give- tion we account for 20% of its
CAN COMPANY
and-take.
No country was able
agricultural production and 50%
to have its own way about every of its industrial production.
We
common stock
item. But the over-all results of are'the world's largest single mar0° March 28, if950 a quarterly dividend of
tills agreement are Of such great ket
wp are the greatest single seventy-five cents perjshare was declared on. the

■!

ore

and

world

changed

challenge

that

copper

ago

years

importing
today?

"The

of our

many

Who could have!

offers

the exporter.

convinced that by

a
am

hard work, in-?

telligence, ingenuity and integrity
business

American

overcome

can

obstacle and build

every

substantial

and

trade than

ever

profitable export
before."

March

cided

stockhold¬

the annual meeting fixed to

be held
June

27,

recommend

ers

of the Directors
4950 it was de¬

meeting

held

May 12, 1950 payment on
1950 of Final Dividend

30,

of Ten Pence for each One Pound

Ordinary Stock free of British
Tax upon the issued Or¬

Income

dinary Stock.
Profits of the

Net

Consolidated

for the year after deducting
charges and providing for for¬
eign taxation and where appropri¬
ate
United Kingdom taxation are
£15,328,761 (£10,631,332). The

group

all

of these profits at¬
the Company is £ 12,(£8,974,225)
plus
£855,643 arising through devalu¬
ation
of sterling and other cur¬

tributable

TECHNICOLOR, Inc.

ing

almost

thought
iron

dream. Two world

depleted

resources.

should

imports

proportion

British' Commonwealth down."

-the

successful
in stif&sing the importance of
conclusion; the President's Point continued aid to Great Britain—
IV Plan put in operation; the ITOratified; imports increased; and
# 'ti¬
S0Und program of increased fors ; DIVIDEND NOTICES
eign investments launched.
through

carried

have

natural

for

"This is not

"there will be only one way to

fnat

us.

wars

heighi|flped by World War II.

have

countries

exporting

ma¬

furnish dollars to the

terials will

DIVIDEND NOTICE

the ,0B, run.

pprticipcited actively at Annecy

ourselves need here. Such

export,

maintain and develop trade there,
tremors throughout the
^
d(g
business
world
onh the, b"sn1; through subsidiaries domiciled in
ness seismographs, such a decline tbat °rea
could cause such a world depres„For ^
. jq years," Mr.

of ' many

expressed the

continue these measures
But I am coni.?10" as we have never seenMcClintock concluded, "we have
vjnCed we must also make the
' Mr. McClintock ^maintained that gone out and done a magnificent
difficuit decisions and take the the
"increasing interdependence selling job for American goods,
actions needed for the short run, of^a.tifins and peoples had been And now it looks as if we were
: Let

for

traUon will show you the raagni-

soviet

provide this hope.

One illus-

repeat it.

not

are

run

decline

severe

economic^he^
economic

designed in the long
build this strength and

working so hard with negotiations

I shall

against

oear

aggression. Our present

also why we have been

brougnt

mm-

problems.

plaints or specia

income

and

increase

can

thus providing materials

sources,

from

who are

men

populous countries.
We can de¬
velop untouched natural re¬

Had changed from the world's
greatest creditor to the world's
greatest debtor nation,
"Our loan and the later ECA

could be taken toward the eco- rity overcome every obstacle and trade," Mr. McClintock said. "The
pxnprienrpd in international trade
nomic and political stability and build a more substantial and people have worked hard. They
know that economic warfare leads strengthofthefre^nationsofthe profitable world trade than ever have produced more and exported
tn
lpcc tradp and le^s orosoeritv
world. It is therefore a problem before."
more than ever before. But some
We in the State Department know which should
f
Pointing Out that the total sum of the debts incurred in the
that
it
leads
to more
political kl"d of coordinated effort that the of loans and giftg through the sterling area during the war had
frictions.
We
know "that
it is natlon pASQ^r^uo+in^nd pLp
Export Bank", the World Bank and to{be paid^
easier for each country* to follow at war. A reconciliation and^c
^ the ECOnomic Cooperation AdminGreat Britain may need some
agreed principles of international *ul
istration is ^staggering," Mr. Mc- assistance after 1952 The United
trade if it can be reasonably sure
Clintock maintained that the States cannot afford to see Great
of three things.
These are, that ?iak
Surely, building t c peace benefits achieved, often made pos- Britain fail. The effects on our
most other countries are living up £ ]ust as important as winmng^ible onlyMhrough Marshall aid, own
economy would be calamto the agreed principles so they
th^^arpf,nnnm^ Wnf?th of thp feve proved-to be the salvation Hous. The sterling area must reYou

them

national

the

aid revived British industry and

manufacture

merchandising,

lost millions of men, a great part
of its foreign investments, and

app°y

methods

importing goods—Mr. McClintock
Manufacturers
Association,
the reviewed briefly the past 25 years
Export Managers Club and the of British history>■ In that pe*Business and Professional Women riod, he pointed out, Britain had
.and

record

ness

the close

of busi¬

341,858

transferred

rencies

consolidation

net

current

sidiaries

March 30, 1950

result

purposes

assets

the

certain sub¬

abroad

operating
attributable

amount

devalued sterling

conversion to

for

April 10, 1950.
L. G. CLARK, Treasurer

unrealized

Exchange profit arises
of

Exchange

further

Reserve.

the

and
Com¬

\yili

th^ long

run.

;;

-Further negotiations are schedfor

uled

September at

Torquay,

England.
And we are confident
that several new countries will

who

the 33

with

join

are

now

producer and
ynrsnocu
products. We have the ftcghest per of business April 20, 1950. Transfer books will
capita income Of any country. Our remain open. Checks, will be mailed.
EDMUNf) HOFFMAN, Secretary.
exports and
imports make up
*r'V;
more than 0ne-fifth of the world's
/V" :*/V

>'■ ''■■■*"'

international trade,
We
cise

be wise in the exerleadership, and it is of

must

■

»>'

"nqt»y

O TI s
ELEVATOR

—■' -'".i-.-'UM'r

—r*

■

Engineering-

combustion

COMPANY

superheater, inc.

General great importance that men like
Dividend No. 183
; you are spending your time on
As Mr. Calder has pointed out, problems like the dollar gap.
In
our average rate of tariff on dutithe free enterprise .system, people
able imports has now reached the and
business ■ and government, aquarterlydividend of fifty cents (s°c). per
in

| participating

the

Agreement.
:

lowest

point in our history. But
averages are not what matter in

joined in a common purpose, can
resolve this—and all our other

panye
abeen
stockholders

I
I

who takes

And anyone

terested.

a look at our present tariff schedules can see that we still have a

| lot of pretty high rates.
'
| The ad valorem duty on surgical
/needles

40%.

needles it is 54.9%.

imitation

import

I would have to pay a

pearls you
60% duty on

most kinds of kitchen

them.

victrola

If you wanted

utensils you would pay 40%, and

kinds of artificial flowers
you would
pay 71%.
On wool
1 blankets the rate is 60.6%.
On

■i on some
*

cigarettes it is 104.4%.
So, by the reduction of tariffs
around the world, we and other

;

have

nations
easier

already

made, it

for

;

{To take the steps which will be
necessary
will

not

to close this dollar gap

easv

It will reouire

taportant decisions bv the people
V of the United States.
It will require constant attention and effort
by

individuals

ment.

require

and

will, without

governa

doubt,

the national interest

close of

cic

STRAUSS,

Avoid

29,

March

ment

Cents
stock
ness

the

has been

29, 1950, to stockholders
ord

the close of business on

Bruce H. Wallace, Treasurer

notice

Directors"of

per

10,

April

record of

14,

New

York, March 29, 1950.

this Company

authorized the pay¬
Twenty-five (25<J)

all shares of common
of the close of busi¬

such dividend to be
1950, to,the holders of

1950,

business

LOUIS

of said

April

10,

stock

at the

1950.

JOHN J.

O'BRIEN,

ILL.—Extension

CHICAGO,
tinuance

either in loans or con-

'of

the

1952

was

Marshall

after

subsidiaries

from

and

all charges and
providing for taxation are £5,389,638 (£5,326,478) exclusive of
devaluation profits
on
exchange
less tax of £808,200 transferred
to

deducting

Exchange

Dividends

Reserve. Preference
£321,750 net

absorb

(£321,750 net) and Interim Div¬
Two Shillings, free
of tax, for each One Pound of Or¬
dinary Stock have been paid to¬
talling £2,375,776 (£2,375,776).
After
paying
Final Dividend
amounting to £ 989,907 (£ 989,907)
and
allocating
£ 95,884
(£1,838,193) to Fixed Asset and
Stock Replacement Reserve
£ 1,500,000 to General Reserve the
carry forward will be £3,806,580
(£3,700,259). Corresponding fig¬
ures
for the year ended Septem¬
ber 30, 1948 are given in brack¬

idends totalling

Secretary

Transfers received
will

1950

June 1,

be in time for payment

dividend

regards

transferees.

Bearer Warrants
paid against de¬

dividends will be

198th

posit of Coupon No. 207.

CONSECUTIVE-CASH

Stockholders

DIVIDEND

Plan

pictured here A dividend of twenty cents

On March

($.20)

avoiding share has been declared upon the
depre^sion»
gtock of BURROUGHS ADDING
vice-Pres- MACHINE
COMPANY, payable

March 27 as the "key to

dividends

ets.

By Order of the Board of Directors.

urges

rinpar^id

rec'

April 7, 1950.

Treasurer.

continuance of Mar¬
shall aid beyond 1952, particu¬
larly to Great Britain.
'y

Inc.,

value Common Stock
declared, payable April

par

COMPANY

1950,

dividend

outstanding

April

payable
of

McClintock, Executive
Vice-President of Sterling Drug

busi¬

Common Dividend No. 170
A dividend of $.50 per

Checks will be mailed.
dividend

The Board of

closing of the dollar gap.

April 27,7950

THE MINNEAPOLIS & ST.

Major World Depres'n

far to make it easier for

rmS?^ributewito

Both

RAILWAY

Seen As Key to

beyond

OTTO

Earl

payable
record at the

declared

t0 stockholders 1950.record at the
of
April 13,

Extension of

co^tries to trade with
other.ofBy further selecting
our oWn tariffs, we

reductions
can

ness

questions. I can assure you that in
ticular product in which the im- the State Department we welcome
j porter and the exporter are in- your efforts and wilL^do-our part.
it is the rate on the par-

J^ariffs:

£11,225,718 has been
to
Capital
Reserve.
Group charges for United Kingdom
taxation amounted to £7,274,003
(£7,016,217). Net profits of the
Company for the year including
of

pany

transferred

j-V®,

6hrh<,ideVf

dared that aid might be discon- "cord '" ,he close of 'g""ess May
tinued by 1952 in some countries
»
•
that have reached
sound
..-Detroit,Michigan Sheldon F. Hal,
nomic and political footing.
The March 31, 1950
Secretary
story in Great Britain, however, is
different^ he declared,
Mr. McClintock spoke in the
Chicago Bar Association Building
before a joint dinner meeting of
the foreign departments of the

21> 1950, the

Board^of Directors de¬
clared regular quarterly

of the

dividends

United

of $1.25

the 5%

per

Series

and the 5% Sinking Fund

Series

($100

Preferred
par

value),

Stocks

each

payable May 1, 1950 to
stockholders of record

April 15,1950.

who

may

en¬

of Article XIII (1)
Double Taxation Treaty be¬
the United State« and the

titled by virtue
tween

der

Kingdom to

Section

States

131

tax credit un¬
the United

Internal Revenue Code

can

application to Guaranty Trust
Company of New York obtain cer¬
tificates giving particulars of rates
of
United Kingdom Income Tax
by

appropriate to all the above men¬
tioned dividends.

BRITISH-AMERICAN
TOBACCO COMPANY,
March 27, 1950

LIMITED

THE

(1456)

COMMERCIAL

FINANCIAL

CHRONICLE

Thursday, April 6, 1950

banking system throughout the
U. S., to be controlled
closely by
the political arm of the

BUSINESS BUZZ

govern¬

Washington...
A

BeWmLfcbe-Scene Interpretation*

JljLUxA/

Iron the Nation's Capital

ment.
It

the

Comptroller

Currency's

office

which

the
the

Budget Bureau, using the office
of.the President, would reor-

Jl %J Iw

gjpjjafeT into

nonentity

under

control.

l*.

•

)lumn is intended to

WASHINGTON, D. C. —All is
going very poorly for what was
once thought would be the smooth
Httte plan to'.hawk, the
"civil
rights" political wares for about

Pepper

three" weeks

month

the

re*

ployment Practices bill
Originally it was

the

does not

openly "schedule

buster."

ules

consideration

bill

Theoretically,

sched¬

the

FEPC

Senate.
Everybody
advance, however, that

the

knows

of the

North

cisco Stock

tive

not

even

with

bill

''harmless"

gestures will, either;
(2) that scheduling consider¬

and

ation will

inevitably precipitate

filibuster

which

weeks to

from

:•

will

last

three

SAN

conserva¬

supremacy"

Demo¬

'V,' •'

minority

groups if

the FEPC bill.

It cannot very

est

what

the

President

would

do with the Kerr bill when it

presented to him.
It

Exchanges.

Co.,

members

San
-

Fran¬
>

MASS.—William

Square.

Joins C. G. McDonald
(Special to The Financial Chronicle)

was

DETROIT,"
Morris

♦

cannot

and

Witter

York

(Special to The Financial Chronicle)

Office

great deal of inter¬

Dean

Carson is with Hemphill, Noyes,
Graham, Parsons & Co., 10 Post

7
was

New

BOSTON,

skip that one and make any
forceful appeal to those large vot¬
ing groups.
♦

well

There

Montgomery Street,

with the

spot

Hayes has been added to

staff

Joins Hemphill, Noyes Co.

it does not take

the

CALIF.—*

hand, the Admin¬

FRANCISCO,

<;;■ '

■

istration

month.

Carolina

"white

crat.

(1) no FEPC bill with any en¬
forceable provisions will pass, and

probably

(Special to The. Financial Chsonicxe).\

ling of the White House, is fac¬
ing a tough' primary fight in

fili¬

;

Dan F.

On the other

Administration

With Dean Witter Co.

the

most reluctant.
course

to drop his primary
back in Florida and>

other Fair Dealer who is the dar¬

over¬

even

and may or may not coincide with
the "Chronicle's" own
views.) ;
>

Mr.>

Incidentally, Senator Frank P.
Graham of North Carolina, ap-

to have
started in March. Maybe anyday,

were

urging

about

to Washington to show which

due.

by now, the Administration
leadership in the Senate has de¬
cided to take the cold plunge, but
at the beginning of the week they

fleet the "behind the scene" interpretation from the nation's
Capital

not

side of the issue he; favored.

the Fair Em¬

would

Florida

backward

The filibuster

seem

it that long), the old line-Demo¬
crats

Senate, getting, it ready, for the
political "sale" next November.

difficult to delay

campaign

it would

confirmed,

course, but the report is prevalent
that the President promised

MICH.

has joined

McDonald

Building.

Mack

—

the staff of C.

Ca^PenpJjior*

;

key

theory, however,

buster

Truman Administration.
£

permit

the

It will

Administration

get credit with minority

groups

will not create the

pass and so

intra-party

havoc

ment would
or

minority

advertising

ship that

they
votes

have

not

other

have to give up.

Even though the Truman Ad¬

ministration had given up long
serious drive to get any

►. '

ago any

appreciable

proportion

its

Fair Deal program enacted this
year,

long-term

would

embarrassing

Administration.
barrass

filibuster

the

would

the
em¬

Administration be¬

security, still to
in the Senate, tax leg¬

have

*■

.•

the

less

ne-

would

price of

fire

alleging that
"by

its

natural gas to

While

the

terrific
at

the
A

summer.
mean

own

beginning

the

legislative jam would
the
Administration's

that

conservative

able to

snarl-up of legis¬

grab

opponents would be
a lot more of their

way.

There

still another

tion for the

explana¬

Administration's,

de¬

lay thus far in taking the
plunge.
Two
Fair
Deal
Democrats are

hostages

to civil rights.
One is
Senator Claude
Pepper of Florida,
who, although he made
eyes at
the Wallace
crowd, is still
more

desirable
as

than

the

Administration

^forward looking"
his

Senator

conservative opponenc

the Florida

primary, Rep. George

A. Smathers.
^

filibuster starts before

the May 2 Florida

primary (md

guar¬

have been criticized by examiners

ade¬

get
at

istration, it is easier

would

—if

ture

recent
speech before a
of bankers, Mr. Robertson

than

merits.

That

complaint

the

argue

js the

same sort of
"liberals"
have

raised when the

ployed

to "go

that

technique is

another

against
happening on
•.

In the process of
as

the
to

bill,

real

bogging
as

down.

now

are

ment

v» *

but who can't

get

them to have

depositors'

it—but

funds;

not

and

out
per¬

sonally doubt that it would be in
the public interest for them to oe
financed from any other source,"
Mr. Robertson declared.
declared

that

the
not

business

there

assertion
make
for

was

that

loans

fear

to
ex¬

Cooper

"At the risk of
appearing
me

•

any

banker

does

not

make

loans

for

fear of

cism,
you

you can
are

petent,

state
small

business
criti¬

be pretty sure that
one

weak,

may

informed Jay

that

examiner

listening to

misinformed,

self-

that if you

say

have

who

individuals

who

or any

there

not

about

tinued.

been

such

the

occasionally

policy,

even

struc¬
build

Robertson

refer

extend

con-

allegations

would

some

Mr.

overly

pot for

were

which

posals

enable

FT.

WAYNE,

Thomas

neighbor. I cannot bring myself
believe

that

good

any

mis¬
who

with

Michafel

—

Thomson

Cement Stocks:
Riverside Cement

borrow from banks in order to

IND.

Spokane Portland CtarapT'
Oregon Portland Cement

eco¬

nomic purpose would be served

Coplay Cement Mfg.

thereby. It would not transform

Giant Portland Cement

unsound

businesses

into

sound

ones,

but it might lead to reck¬

less

and

chaotic

competition

which could drag down all con¬
in

cerns

strong

the

field,

weak

LERNER & CO.
Investment

and

10 Post Office

alike."

Securities

Square, Boston 9, Mass.

Telephone HUbbard 2-1990

While

the

Deputy Comptroller
of the Currency was so speaking,
the White House was putting the
finishing touches upon its small
business
for

financing

aid

program,

government-sponsored

guar¬

Walt
"The

Teletype BS 39

Disney Productions
Cinderella

Analysis

Stock

1950"

Request

system of government-wet-nursed

Missouri Pacific

"capital banks."
Mr.

Robertson

"bureaucrat"
tor Paul H.

who

the

same

amazed

Sena¬

Douglas of Illinois by

advocating legislation to allow
tional

sion,

if they

convert

chose

so,

freely to state banks. The

Senator,

however,

likes

one

General 4s 1975

Convertible

5%s 1949

Common A and Pfd.—When Issued

na¬

_banks under his supervi¬

BATKIN & CO.
30 Broad Street, New York 4
Tel. WH 3-3388

Tele. NY 1-1963

big

put

otner

HAnover 2-0050

Teletype—NY 1-971

Firm Trading Markets

Southern New England

Telephone

on°

against

when it

FOREIGN SECURITIES

is against a current political trend

Stock and

All Issues

RigSrts

piece of legislation that might

extend his powers and perquisites.
One of these

is J. L. Robert¬

ftARL MARKS & HO. XN£

son

Deputy Comptroller of the
Currency, second in command

of the agency

national

which supervises

hanks.

The

curr°nt

both in Congress and the.

FOREIGN SECURITIES
SPECIALISTS

50 Broad Stroot

Hill, Thompson & Co., Inc.
Trading Department

Now York 4, N. Y.

McKinnon, 120 East Berru Street.

uncredit-worthy business to

compete with its credit-worthy

;

pro¬

government-

procedure

;

con¬

the

who will speak out for
government

^incom¬

subordinates

This / ideal picture
seldom is found in real life. How¬

rage

Building.

Thomson McKinnon, Adds

^ antees, more liberal government
lending to small business, and a

of the big govern¬
boys, civil servants are con¬

consideration.

or a

credit

eyes

country above party

ever,

who

they are not credit¬
worthy. Perhaps it would be nice

* annointed, let

the

though the chances

✓

In the

with,

there

aminer criticism.

approved by Congress. "■ 71
■

have

"hear
-

slim that this proposition will

•

would-be

are

and

credit because

for

small

put

hole,

work

that it has passed.
*

hanks

building

the

would

against
"liberals" hav¬

there
here

nothing

incidentally,

looks

phase

steal

kill

President

em¬

sector

them, as is now
foreign affairs.
'
the Kerr bill

banking is falling down
of its job.
Un¬

this

doubtedly

possibly

along"
demagogic proposition of

sort

the

Co.,

Robert

(Special to The Financial Chronicle)

cerned

com¬

banks.

borrowers
not

gas bills by a fraction of
the b.oost in the cost of coal, raised
with the blessing of the Admin¬

with

Walter J.

—

with

now

for unsound practices.

"small

pin down facts which show that

raise

scientious

cannot

accommodation

American

consumers.

could

nority groups may well work out
a

set

thereon,"
In

to be

loans

business

quate

cost

purpose

billions"

The proposal to investigate
"sick coal industry,"

lation

and

business," because theoretically

against the bill

to show that the Ad¬
ministration is OK with the mi¬

campaign

attempted

advertising

antees

regulate the "arms

terrific !

government

now

flowering

aid, and other

the

guarantee

ing failed

legislation,

built

indeed

consumers,

cessitous
bloeked.

hand,

observed that "I have been unable

islation, appropriations, foreign
,

other

group

this

;

the

mercial

boost

Seals

he dictates!"

Bowers

small

social

cause

come up

has

built

clo¬

legislation while it
Administration will

the

"Old B. J. really puts on quite a show when

natural gas. The "liberals" have

So once the Administra¬
tion takds the plunge it must reallize that the filibuster will crowd
all

un¬

length" production and sale of

buster.

out

(Special to The Financial Chronicle)

; DENVER, COLO.

heard

ever

private word to poli¬

to do so, to

ture, and hence to end the fili¬

lasts,

With Robert D. Bowers

;

anteeing that the Federal Power
Commission cannot assert juris¬

the

enforce

•'

•

up against this bill, which
is only for the purpose of guar¬

made clear to the Truman leader¬

necessary

fire

November.

his

"liberals"

always work
thing, it has been

one

;

■

charged that Mr. Truman,
his
late
predecessor,

diction,
For

•

Administration

Theory does not

•

out.

become

ticians.

minority

note

reporters have

broken

Truman

that

bill

"...

the

that

groups

allow

Few

would

their side, for

was

voters

law.

So the three

cause.

blatant

would

enact¬

four weeks' filibuster

its

^Democrats

southwest

for pressing for this legislation.
At the same time it will not

fili-

the

thing for the

good

120

BROADWAY, N. Y. S
Tel.

REctor 2-2020

Full text of Commercial and Financial Chronicle : April 6, 1950, Vol. 171, No. 4896

FRASER