Full text of Commercial and Financial Chronicle : August 11, 1949, Vol. 170, No. 4828

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AUG

12 1949

ESTABLISHED IS3 9

BUS. ADM

tMRARY

Reg. U. S. Pat. Office

Number 4828

Volume 170

New York, N.

industrialist

American progress

recounts

exchange. Advocates free market

profit motive is essential

con-

only express it. For a measure
something definite, exact, in¬

Sees a force of destruction in gross enlarge¬
of Federal Government, and calls Socialism and
Communism, "foreign yeasts working in our society."

Business has played an extremely important role in our national
for many decades. It is an outstanding index of our material

economy

well-being. Within its ranks, year by year as population has increased
and the needs of the people multiplied, industries have developed in
counties s<$>

variable. Regardless of its compo¬
sition a yard¬

dint

A

c

meter,

solid

of
100

less.

be

can

la t

yard

a

trans-

d.

metric

'terms,

prof iand

t

Great
em¬

of

raised

the

within

our

borders

a

pro¬

21-24 for PICTURES fusion of the
necessities, conven¬
taken at recent annual outings of
iences, and luxuries of life more
the Security Traders Association
widely
available
than
in
any
of Los Angeles and the Securities
(Continued on page 32)
Traders Association of Detroit and
pages

Michigan.
♦An address by Mr. Fairless at

the
Far

Banks, Brokers and Dealers

One need not be

There

feet

finds
See

Lessons From the White
'>

Paper

the

without

^appreci¬

any

Exercises

Commencement

of

text- books

-

and

important lessons,
from this document.
If they are not

learned

be

to

lessons,

some

are

some

cyclical

•

BRITISH

could

well be taken to heart by many who still have not come

place

virtually

the matriculate,

to

new

they probably

realistic understanding of much of what is

going on
in the world today. First of all, it is evident—whether
warranted or not is not here in question—that President
to

a

all the glowing phrases of idealism,
hesitate when the occasion arose to "play world

Roosevelt, amid
did not

politics" in precisely the way that the larger European
powers had been doing for centuries.
It is now obvious
enough that no small part of the present situation in
China, if it did not have its origin at Teheran and Yalta,

Bryant College, Providence, R. I.,

(Continued

on

page

level

of

In

the

Funds,

Members New York Stock

UTILITIES FUND

Exchange

INCOME

(BALANCED) FUND

Prospectus on request

Philadelphia Providence

FRANKLIN DISTRIBUTORS, Inc.
64 Wall Street,

Amsterdam

i! OF NEW YORK
Bond Dept.

26,

Bond Department

New York
Seattle

pacific

Agency: 20 Exchange PL

Portland,Ore.

San Francisco Los

OF

bonds & stocks

securities

Public Service Co.
".

Analysis

Corporate Securities

Dean Witter
Members
San

Subscribed

Reserve
The

Bank

£4,000,000

Capital

£2,500,000

Fund
conducts

banking

and

Trusteeships
also

every

description

Established

(Incorporated)

of

CLEVELAND

exchange business

and

Executorships

undertaken




1899

New York

Chicago

Col ambus

Cincinnati

I

Denver
Toledo Buffalo

New

Los
14

Stock

STREET,

7-4300

&

Exchange

Gepoeatioti

Exchange
YORK

Teletype NY
Los

Francisco

1-579
Angeles

Honolulu

Seattle
Direct

Domwiok Securities

Exchange
NEW

Wires

■

'
upon

■■

request

Co..

Exchange

Stock

Stock

Angeles Stock

WALL

BArclay
San

York.

Francisco

Honolulu

OTIS & CO.

£2,000,000

Capital

NEW YORK

New Orleans

Municipal

Branches

Paid-Up

CITY OP

CANADIAN

and

Zanzibar

THE

Angeles

COAST

Distributors of

in India, Burma, Ceylon, Kenya
Colony, Kericho, Kenya, and Aden

CHASE

THE

NATIONAL BANK

Head Office: Toronto

Teletype: NY 1-708

Underwriters and

Uganda

Bishopsgate,
London, E. C.

and

I

OF COMMERCE

Government in

Kenya Colony and

Bonds

CANADIAN BANK

THE NATIONAL CITY BANK

of INDIA; LIMITED
the

be¬

Municipal

TIIE

New York 5

NATIONAL BANK
to

months, if not

a

Monthly Commercial Letter
upon request

BOND FUND

Street, New York 5

Office:

nine

financial crisis had oc¬
curred:
bank
failures, business
bankruptcies, stock market crash,
(Continued on page 27)
fore,

COMMON STOCK FUND

White,1WelmCo.

Head

it is, took
record low
bond yields

previous depressions, within

Canada

across

PREFERRED STOCK FUND

Bankers

a

State and

inc.

A Mutual Fund

Bought—Sold—Quoted

London

at

government

first

28)

Franklin Custodian

SECURITIES

40 Wall

The transi¬

whatever

and money market rates.

550 Branches

-

(Internal Issues)

Boston Chicago

Paiyi

top prosperity to some¬

else,

wholly

Melchior

experience.

tion from

thing

DUTCH

SOUTH AFRICAN

•

Dr.

all

to

CANADIAN

•

BELGIAN

or

sed it¬

r e v e r

Aug. 5, 1949.

AUSTRALIAN

time,-

boom

"broke"

self,

a

and disaster.

meter

a

term

WlllAs We See It §|f

dens and pro-

Senjamin F. Fairleut

Disclosures of science,
in America.
along with-the teachings of engi¬
and inches, and the figures will neering and the fine arts, have
been adopted in factory, mill, and
be exact, always. Such is not the
case with
the unit of currency— field, to the great benefit not only
of industry
itself, but of those
T:- f.
(Continued on page 20)
who use its products. So today one
Rene Leon

simi¬

a

name.

This

gressively
standard of living in

into

e

lar

been

before

partisan opponent of Roosevelt, Tru¬ able
bodied in ma¬
tighten¬
man
or of any one
else, or yet a supporter of Dewey or ing of the in¬
chines, facili¬
ties, and con¬ any of the Republican "opposition" to find depressing read¬ terest rates to
sumers' goods,
ing in the extended White Paper now made public giving p r e c e d e it.
all
of
which
T h i s is cera detailed picture of our Chinese policy in recent years.
It t a i n 1
have lightened
y con¬
human
bur¬ is a sad, sad story of misconception, misadventure, bungling trary
to
the

more,

never

Thus

under

inventions

centimeters,
never

n

have been

gold,

measures

e

strong.

whether made
or

i

has

known

EDITORIAL

hard

c o m e

less.

of wood

<£that

—

work have be-

feet,
more,

never

of

It has been said that if this is a depression, or recession, it is the
prosperous one the country has ever seen. Indeed, the pattern
of this nine months old down-turn is totally different from anything

most

ac¬

tivity, and by

measures

never

Says

logical accompaniment of ambition and

of

Notes present

slump is not characterized by financial distress, bank
of this sort is in offing. Holds
nothing has occurred but a lull in an inflationary boom and there
has been no orthodox collapse of consumer demand, which has
characterized previous depressions. Sees backlog of demand supported by liquid holdings as great as ever, and urges accumulation
of substantial corporate reserves "while the going is good." Scores
President's economic predictions, pointing out their fallacies.

to attainment.

fields

orderly retreat from inflationary top.

an

failures and the like, and nothing

in

<

spur

can

three

and most efficient industrial structure.
as

sees

business

of business

ment of powers

vertibility of dollar.
vi The passion for fixed rates of
exchange is based on the myth
that money is a measure of value.
| Money cannot measure value, it

significant role

which has created in less than two centuries

the world's greatest

but foresees disaster to economic

one,

President, United States Steel Corporation

Prominent

denounces efforts to fix rates of

stick

ever was

a

By BENJAMIN F. FAIRLESS*

Asserting money cannot measure
value, because it has no fixed
and unvariable unit, Mr. Leon

is

Copy

By MELCHIOR PALYI

By RENE LEON

gold

a

Role of Free Enterprise
The Phony Depression
In American Progress
Dr. Palyi, asserting this depression is
"phony" if there

Money, Gold
And Exchange

structure in immediate

Price 30 Cents

Y., Thursday, August 11, 1949

40

Exchange Place, New York 5, N. Y.

IRA HAUPT & CO.
and

other

111

WHitehall 4-816!

Boston

Principal

Broadwayy N. Y. •

WOrth 4-6000

Teletype NY 1-702-3

Exchange
Exchanges

Members New York Stock

Teletype NY 1-2708

Telephone: Enterprise 182U

2

COMMERCIAL

THE

(546)

Fund Managers

Central Public

SOLD

—

QUOTED

New York Hanseatic
York 5

Teletype NY 1-583

BArciay 7-5660

this

of

There

open-

enders,

man¬

companies.

re¬

by
their

con¬

tinued

out¬

as

standing

fa¬

Securities

of

Henry A. Long

Members

New

120

York

Curb

Exchange
Exchange

BROADWAY, NEW YORK 5
Tel. REctor 2-7815

.

defensive

09

STREET

WAL L

NEW YORK 5,

N. Y.

against a
the recession and also

profit possibili¬

their

of

ties from exchanges in

the

liquidation

with the

well-liked

cement industry.

those mer¬

were

the variety

chains, and the tobacco
stocks. In the latter group, Liggett

Exports—Imports—Futures

shown outstanding
attention following the announce¬
ment of the issuance of rights. As
and Myers was

in

the

previous quarter, steels
their unpopularity and

continued

joined by manufacturers of

were

DIgby 4-2727

for

character

heavy industrial equipment;., Very
little concentrated selling was in¬
dicated in any other groups.
Non-Ferrous

cial

establishment

the

with

connected

transactions

of

cause

Air Filter Co.

Common

Firming

Metal

in

Common

with

same

its

Preferred

mBANKERS

BOND ^

Revival

1st

Floor, Kentucky Home Life Bldg.
LOUISVILLE

2,

Long Distance 238-9

in

some

KENTUCKY

Comment was

of the March
quarter concerning the decreased
popularity among
these
issues.
Purchases continued widely scat¬
tered among the stocks of com¬
our

survey

mercial

Bell Tele. LS 186

American Furniture Co.

program.

the

other

hand, buying

Bendix,

Sperry

United

and

Aircraft.

In

spite

timism

Only
the

increased

the

went

buying
a

Lynchburg, Va.
LD 33

Tele. LY 83

lllllllllimillllllllllllllllllllllilllllllli

op¬

managements, few

overboard

activities.

a

company,

in

resented

Wisconsin

June

a

10V2%

in

*

their

Purchases

did

of

caution,

despite

the

increase in their purchases, is in¬
dicated by the
still substantial
cash

and relatively con¬
positions in the equity

reserves

servative

sections

Stix & Co.

excellent

of

their

portfolios.

An

picture of the continu¬

ing defensive positions, despite the
INVESTMENT
509 OLIVE

SECURITIES
STREET

Company's
portfolio.
An addition to the approved list
the

of

•

New

England

quarter's
by

a

purchases,

comparison

of

is
the

indicated
average

the

Bond

tors, has received a good amount
of

attention

not

investment

from

managers, to
been

General

building
ties

too

date there

much

interest

V
Public

Service, in
its holdings of utili¬
natural gas
stocks to

up

and

comprise two-thirds of portfolio
investments, has completely elim¬
interest in

its

inated

oils. In the

last-quarter it sold 1,500 shares
of Continental, 2,000 Gulf and 1,000 Phillips. Some of the other
managements have also been sell¬

point is being reached in the de¬
for

this

group.
Delaware
eliminated its hold¬
ings of Commonwealth and
Fund recently

NY 1-1557

branch

our

Established

offices

i

and

Open-end Stock Funds

83.6%

86.5%

Companies...™ 80.9%

-79.7%

a

good com¬

summation

sense

York

Stock

Exchange

Curb

Exchange

Cotton

York

New

Exchange

Commodity

Chicago

Exchange,

Board

Inc.

Trade

of

New Orleans Cotton

„

Exchange

And other Exchanges

N.

Y. Cotton Exchange Bldg.
NEW

YORK

4, N. Y.

the

of

problem in their letter to bene¬
ficiaries accompanying the June

CHICAGO

DETROIT

PITTSBURGH

GENEVA, SWITZERLAND

report:
It

to

seems

us

that sterling

a

free and open market.

When this is done it will be

equity sections of portfolios,
statement
accompanying

the

is

.

up¬

setting to our British friends, and
undoubtedly there will be reper¬
cussions in this country.
How¬

is it not inevitable; and if
it is inevitable, why not do it
soon
and
get it over with.
It
seems to us that some change in

ever,

the value of the pound

Doubts

to be made.

as

is

disturbing,
and is contributing to the general
feeling of uncertainty."
will

when

and

be

Royal Bank of Scotland
Incorporated by Royal Charter 1727
HEAD

OFFICE—Edinburgh

Branches throughout Scotland

LONDON OFFICES:
3

Bishopsgate, E. C. 2

will have
to what it

8 West

49

Smithfield, E. C. I

Charing Cross, S. W. 1

Burlington Gardens, W. 1
64 New Bond Street, W. 1

Utility Purchases Continued

additions

Excluding

TOTAL ASSETS

dis¬

from

solution programs and stock divi¬

dends, purchases of utility issues
paralleled those of the preceding
quarter
and
represented about
19% of total portfolio commit¬

£155,175,898
Associated

'

Banks:

Glyn Mills & Co.
Williams

Deacon's

One-third of the invest¬

ments.

.

Bank,

Ltd.

companies included in this
survey received stock of Middle

ment

South Utilities and United Gas in

exchange for holdings of Electric
Power and Light $6 and $7 pre¬
tion
A

issues

under

dissolu¬

the

plan of the latter company.

dozen

ceived

also

funds

more

or

Gas

re¬

of

Cincin¬

Electric,

Public

stock

common

lumbia Gas System—grouped

and

Service Electric and Gas and Co¬
the

oil

and

with

stocks—in

gas

ex¬

change for United Corporation $3
preferred. Several of these trusts
purchased additional shares of the
new

securities.

Electric
tial

Madison Gas and

received

was

liquidating

United
seven

Light
more

Natural

full year's

subscription to the Monday
and

Thursday issues of the

"Chronicle"
ideas

will

galore and

give
pay

yon

liberal

dividends.

par¬

from

by

of Commercial & Financial Chronicle

shares
Gas

American

(Continued

a

Sixteen funds

96,664

American
as

a

Railways

and

trusts.

purchased
known

as

dividend

INVESTED in

on

(formerly

Light

page

and

36)

New York 8, N. X

25 Park Place

REctor

2-9570

5I5ISI51BI5ISJBJ5JSJ5I5M5ISISI51515J5I5I5I5I9

past, spreading our purchases over
a
period of many months. Only
a

small

aside
used

to

part of the

for

fifth
for

have

date,

leaving

over

Firm Trading

been

Markets

N. Q. B.

one-

of your

total fund available

plan."

As
the

set

purpose

additional

this

reserves

this

purchases
-

noted

in

.

under

COLOMBIA

survey

BOLIVIA

.*

the

March

guaging of the extent of the
All

decline worried managements, but

mitigating factor

Barringer
termed

of
the

was

what Mor-

the

frevolving*
edgement

Issues

OVER-THE-COUNTER
INDUSTRIAL STOCK INDEX
10-Year Performance of
35 Industrial Stocks

Delaware

concept of the

June

65.8%

mon

make

and

Fund
March

York

New

pound.

nati

eau

Open-end Balanced Funds__ 66.9%

Members
New

is the British picture
in particular the future of the

Fund

1856

H. Hentz & Co.

course,

still maintaining a relatively con¬
servative
balance between
cash

equity section for the month-

Closed-end

j 0f

ferred

Southern.

ends of March and June:
•




is

Stores, one of its chief competi¬

a

Members St. Louis Stock Exchange

Fund

While

Stores.

Howard

percentage of total net assets in

St. Louis l,Mo,

the

of

35%

measure

Direct wires to

One of the chief imponderables,

level in

ing

.

Scott, Horner &
Mason, Inc.

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

should be allowed to seek its own

gold min¬
group which rep¬
This

by 85% as contrasted the
June
30th
report
of
the
margin for buying trustees of the New England Fund:
transactions in the March quarter.
".
your
Trustees
could not
But
over-all v: activity
was
just hope to forecast with any ac¬
about equal to that in the previ¬
curacy the extent of this recession.
ous three months, the additional
However, during this period, we
buying of equities being made are following our usual policy of
possible through a 14% decrease adding sound stocks to our hold¬
in liquidation of portfolio secu¬
ings at what we believe will prove
rities.
to be bargain prices. Because of
The% fact
that
managements the difficulty in timing such a
have not yet discarded a certain
program we are now, as in the
with

rolling

readjustment,

chell Mine, Inc.

exceed sales

Dan River Mills

to

heard-of security

seldom

Illustrating the general manage¬
ment policy
indicated above of
making selected purchases while

Moderate

of

of

j

Putnam

mand

funds

Moore-Handley Hdwe. Co.

tax

riod.

of aviation supply manufacturers
was concentrated in a few issues

Activity

Trading Markets

problems

former

ing utilities since the end of the
quarter feeling that a saturation

like

'iiimiiiiiiiiiiiiimiiiiiiimiiiiiiimii

spe-

banking institutions and
companies, as occurred
in the previous three-months' pe¬
On

the

of

the

of

Wisconsin Investment Co. is Get-

non-fer¬
reflection

reviving interest in- such
companies as Kennecott and In¬
made in

continuation

a

recently added to the portfolio of

has

insurance

Incorporated

a

interesting

A

note.

company

a

ternational Nickel.

Kentucky Stone Co.
5%

prices

of

metals found

rous

Black Star Coal Corp.

of

to eliminate

reserve

connected

in Howard.

American

HAnover 2-C703

New

percentage

With reference to general port¬
ing stocks were shown a marked folio
operations a few individual
preference, particularly those con¬ transactions are
nected

N. Y.

V

,

petroleum issues, and the booming
natural
gas
industry
attracted
many managements with its longof the
term growth potentialities. Build¬

Also

SUGAR

International
than doubled

Effect of devaluation of
The decrease in the cash j tj-le foreign monetary unit on our
of its affiliate, U. S. and Foreign; economy is of course difficult to
Securities, also resulted from an forecast for conservative manageinter-company transaction as part ments. The trustees of the George

chandising issues representative of

Raw—Refined—Liquid

and

was

Buyers edged ahead
status.
bears once more in the

proceedings.
of

LAMBORN & CO., Inc.

se-

the

and

tension of
because

25 Broad St., New York 4,

of its port- j and preventing a severely spiralfolio represented by equities was
:
j ling decline in the economy as a
correspondingly
decreased
be- ; whole."
protracted ex¬

their merits as

curities

in the cor- j downward adjustments in various

more

S.

U.

of

cash

be¬

both

cause

of

severely depleted because its ■ as building, steel and automobiles
annua] fiscal periqd
ended in are postponed for a while longer,
June, at which time a substan-j corrections in other important intial capital gains distribution was dustries may have been substanmade to stockholders, In contrast,! tially completed, thus
allowing

to

Utilities

staggering

was

public.

vorites

York Stock

Steiner, Rouse &Co
Members New York Stock Exchange

the

responding cash reserves appear- j industries has modified the sever0f the overall decline.
If deing in the accompanying table.
are
still
Lehman Corporation's equity sec¬ clines which
likely to
tion
rose
and its cash position develop in such still active fields

their

stock

the

,

wide fluctuations

the

in¬

to

of

own

New

by Carl Berg

upon

ing the figures for

sales

ft[c"PONNELL&Po.

it is expanded

interpret-' in his June quarterly report to

the closed-end stockholders:
These also explain;
"Thus far,

mostly

serves

r

that

factors

two

are

should be mentioned in

total,

liquid

Since 1917

Bought—Sold—Quoted

<e>-

balance, al¬
a third

aged

Rights & Scrip

Louisiana Securities

gas

Increasing confidence was displayed by investment companies in the second quarter
majority of both open and closed-end funds stepped up their purchases of
Only nine out of the sixty trusts covered in this survey sold equities on

crease

Specialists in

Alabama &

of the year as a
common stocks.
though

Corporation
120 Broadway, New

Show Increased Confidence

and closed-end fnnds expand common stock purchases in June quarter. Utilities, oils, natural
and building industries favored; steels and industrial equipment issues are sold.

open

Preferred

—

Thursday, August 11, 1941

relatively conservative positions in equity section of their portfolios, majority of both

While maintaining

Queens Borough
Gas & Electric
6%

CHRONICLE

By HENRY ANSBACIIER LONG

Utility 5V2I52

BOUGHT

FINANCIAL

&

recession.

Acknowl¬

has been quite gener¬

ally accorded to this analysis and

New

study

on

request

ZIPPIN & COMPANY
208

South La

Salle St.

Tele. RAndolph 6-4696

Chicago 4
Tel. CG 451

BOOKLET

ON REQUEST

National Quotation Bureau
Incorporated

46 Front Street

New York 4, N. Y.

Volume

Number 4828

170

:

THE

■

COMMERCIAL

INDEX
Articles and News
The Phony Depression—Melchior

FINANCIAL

Fantasies

Cover

Role of Free Enterprise in American
Progress

—Benjamin F. Fairless__

Cover

.

—Henry Ansbacher Long

2

3

;

The Possibilities of Improved Equity Markets
—Thomas B. McCabe

Corporation for

4

out since

Stock Market Will Continue to Rise
Through 1949

profits

4

Products—Charles F. Brannan

6

,

American Oil Industry—Walter J. Levy

9

Expanding World Markets for American Cotton

_

Mr.

Murray

Secretary Snyder Favors Guarantee

14

wages.

U.

S.

Foreign

Aid

a r 1 y,
Nathan

Report

Says

U.

Occupies

^___

____

Power

Commission

Reports

Peak

Frear

Introduces

Bill

Bank

SEC

:

....

U. S. Chamber of Commerce Opposes

Amendments

of

Member

Banks

Again

Lowered

week

risen

Reporter

WILLIAM

D.

than

Drapers'

Messrs.

and

Gardens,

.

.

of

9576

as

Possessions,

in

President

United

Territories
Union

Dominion

the

Other

news

S.

La

(Telephone:




Salle

State

St.

0613).

and
per

Monthly
per

Note—On
he

$35.00

have

rate

March

its

made

side

in

welcome
our

the

of

the

public

1948,
sales,
weekly and

reinvestment.
that

reason

the

poration data

The

opportunity to

case."

U.

S.

New

\

*

Do you

like to be
=■>'

Steel

Cor¬

entertained?

Members

Was

of

for

many

years

not-prepared for the

these

r

<»

then

<►

::

i

Don't miss

«►

Z

A to

hearings.
in this

and

charges

It is

Exhibit

them,

will follow

shown in

the

*

at Broadmoor Hotel at

\>

i
Colorado Springs

$

this
se¬

income ac¬
count,
namely,
selling
prices,
production, wages, raw material,
profits, dividends and reinvested
quence

any

9tli

Oct. 5th to

<►

«►

%

si

i:

'♦UVUUUHHUUVWHWVWf

balances.

Steel Prices—Are They Too High?
Nathan

Mr.

charges they are. j
Murray.
Therefore,
forecasts that high
prices and high profits will bring
on
a
recession.
However, steel
prices have lagged in their rise
So

does

Mr.

Nathan

Mr.

behind other metals, like copper,
lead

and

index

of

zinc,

behind

and

wholesale

raw

the

material

prices.
Mr. Nathan stated that
the
industry showed - a lack of

charge all the traffic would bear
as union labor is now trying to do.
Mr.-Nathan talks about prices

(Continued

on

per

year:

per

page

42)

ONE DOLLAR

does the work
Your financial

of

-

advertising dollar

does the work of four when it's

of

the

—
Monthly,
postage extra.)

fluctuations

York

funds.

because The Times reaches

...

banking executives, corporation
officials,

professional

tutional

security buyers — and

and insti¬

individual investors—in

in

Record

(Foreign

offerings of

year.

year.

Spencer Trask & Co.
Members

25

New

Broad

York Stock

Exchange

Street, New York 4

Members New

50

Albany

-

Chicago

-

Glens Falls

over

more

the U. S.

communities all

fork Simes

2-8200
"All

1-5
-

11,000

York Curb Exchange

Hubbard

Teletype—NY

than

Congress Street, Boston 8

HAnover 2-4300

In

Schenectady

I

It is avail¬

case.

refuting

and

memorandum

NSTA CONVENTION

purpose

PREFERRED STOCKS

ol

per

«>

$

Yes?

used is because

are

%

report is purely factual, has been
furnished

But the state-

of

in

<>
<►
<►
-

only

High Grade Public Utility and Industrial

Publications

account

dispute
interest.

this

S.

Record—Monthly,
(Foreign postage extra.)

Earnings
year.

BONDS

hourly and
annually, (selling prices,' raw ma¬
terials, taxes, income, dividends
and

SAVINGS

output,

New

Quotation

year.

S.

invested in The New York Times

exchange, remittances for forlgn subscriptions and advertisements must

.e

and

We are interested in

U.

$38.00

Countries, $42.00
Other

and

U.

1902 to

years

physical

wages,

Eng-

at

States,

and

Canada,

of

and vi¬
public-

"The union is not afraid

second-class matter Febru¬

Subscriptions

etc.).

135

C.t

BUY

cards.

self-restraint; but the. black mar¬

to

.

York 8, N. Y.

525.00

111.

house

a

ket arid the gray market disprove
this charge.
The industry did not

present

E.

25,

vertising Issue) and every Monday (com¬
plete statistical issue — market quotation
records, corporation news, bank clearings

3,

The

Smith.

1942, at the post office
York,
N.
Y., under the Act of
3, 1879.
'
Subscription Rates
ary

Bank

Chicago

London,

&

arrogance

Murray

facts.

,

RIGGS, Business Manager

Offices:

for

'

Teletype-BS 128

grossly

conclusions

Nathan

on

Copyright 1949 by William B. Dana
V'
Company

B2b.ou

Other

proven

the

demand that negotiations be based

34

Edwards

c/o

in

before' such

management.

44

i

Office.:.

SEIBERT,

city news,

ex¬

spirited, constructive and creative

5

Says)

ad¬

and

the

tuperation

40

Thursday, August 11, 1949

•tate

industrial

at

even

a

rather

We

COMPANY, Publishers

Every; Thursday (general

rather:

18

Pan-American
DANA

not

14

(Walter Whyte

HERBERT D. SEIBERT, Editor & Publisher
WILLIAM

it

great

statesmanship,"

*

Weekly

to

to

American

the

and
Is

41

...

...

CHRONICLE

2-9570

more

panse of the .• stockholders' divi¬
dends?
Labor leaders ought to
standi in respect, i even humility,

38

Reentered

REctor

elimi¬

are
even

testimony

5

;

.

Offerings

COMMERCIAL

DANA

in¬

worker

16

ind,

25 Park Place, New-

has

consumer?"

....

You._.^_____

Patent

is

record

two

ican

"Not available this week.

S.

alone

the

periods

war

times.

1.38

If

performance consti¬
"exploitation of the Amer¬

examined

FINANCIAL

risen

dividend

times.

tute

Securites Salesman's Corner

WILLIAM B.

that

But

16

Securities Now in Registration
-The State of Trade and Industry

Twice

employees

12

Securities

and

0.56.

to

25

Security

Tomorrow's Market

of

39

Governments

on

Working hours

7

L__._

Public Utility Securities.

U.

charts.

and

be

can

like

1923

STREET, BOSTON 10

HUbbard 2-3790

exposure

tstics

47

Doesthis

11

—-

_______

Observations—A. Wilfred May.
Our Reporter's Report

Reg.

for

Total production

has

2.6

nated, the
striking.

8

-News About Banks and Bankers

The

statistical

wartime

common

flationary

8

—

___

two

dividend
The

15

Indications of Business Activity.'
Mutual Funds

Published

on

30 FEDERAL

steel

prices, able to anyone sending a postcard
inflations, to the company at 71 Broadway.
have risen only 1.84 times.
In* analyzing the fallacies and
The
combined preferred and common the facts in the Murray-Nathan

10

-

Washington

the

dropped

1.76 times.

44

Shelf..

Securities

Notes

have

Number

despite

Cover

....

Stocks.

Book

Coming Events in Investment Field...

Railroad

the

requires no pro¬
analysts.
Any layman
pencil and paper looking at
the
1948
annual
report of the
U. S. Steel Corporation can do the
job.
Here are 24 columns of sta-

show?

record

Connolly & Co.

INCORPORATED

with

fur¬

for

recofd

has risen 2.68 times.

35

.

Walter J.

imposing and

tables

so

covering
does! the

times.

Minimum Wages Through Admin¬

(Editorial)

Insurance

Man's

^Prospective

who

machinery

JYeekly) earnings have risen 4.65

29

"Dealer-Broker—Investment Recommendations..
Einzig—"Will U. S. Private Capital Flow to Britain?"
From Washington Ahead of the News—Carlisle
Bargeron

"NSTA

topple

in

consumers

24-column

per

Regular Features
As We See It

Canadian

in

report a statistical record begin¬
ning with 1902.
The figures on

rose

Government Hiking
istrative Subterfuge

and

for

risen 8.40 times.

27

Sees

BOSTON & MAINE R. R.

and

show ever-shortening hours, it is the only company that pub¬
higher wages, lower profits and lishes them.
The facts and con¬
would
be
hardly any increase of dividends. clusions
similar
for
Since 1902, hourly earnings have other companies.
This company's

Federal

by

TEXTILES

years

to Housing

Panama Bonds Drawn for Redemption

Business

with

The United States Steel Corpora¬
tion furnishes in its 1948 annual

25

Reserve Board

cold

think¬

26

_—

Legislation

Bank

Murray

built

incorrect

stockholders

the

What

this

__________

N. Y. Savings and Loan League Reports Savings Drop

Reserves

elaborate

workers.

Over

Powers

the

nished

25

in

you

which

27

Unlisted Corporations

keep
time.

constitute

wishful

case

quicksand with

lower prices."
Notice that neither said anything

Output

...

un¬

fessional

25

Widen

to

* share

is

with

25

...

India Applies for Loan From World
Senator

Electrical

June

:

union

ne ss

benefits

whole

and

about

Mid-West Exchange Merger Date to Be Determined Scon

at

The

assumptions

Elisha M. Friedman

19

...

you

conclusion.

Such

Purchasing Agents Report Pace of Business Decline Slackening 20

Federal

can

de¬

wages

in

hot

pay

We'll

to

that

WALL STREET, NEW YORK

be selected to support a false

Mr.

higher

19

_...

it

long

a

it's
you

NEW ENGLAND
on

ing, propaganda, statistical meta¬
physics and numbers magic.
It
"figures don't lie" but

workers

18

Position

Key

collar.

for

for

think

getting

Telephone! WHitehall 4-6551

is true that

tion

Stefan Osusky Wants Point IV Program Applied to Danubian

Nations

constitute

18

Economy

profits"

Messrs.

of

17

(Boxed)

S.

w

menfs
Nathan

of mechaniza17

States

exorbitant

that

should

17

Destroying International

V. Lewis Bassie Foresees Substantial Business Revival

World

o

Simi-

"busi

Credit Foundation Reports Slowing Up of Collections

United

and

1

-

mands

___

Continued

Down With This Class Approach!

/•■"■Sv'v

o

1

15

_

Investments

,

o

the

Sees

99

a

-high

t

Program to Aid Small Telephone Companies in N. Y. State
Revealed by Spencer B.
Eddy, Member of Public Service

Our

through

too

prices

_

Commission

1 o i t

tion"

(13

of Foreign Investments..

_

"These

"e x p

Winthrop W. Aldrich Doubts Effectiveness of Foreign Guar¬
antees

beers

IT

and

charges,

iii

Beardsley Ruml Favors Repeal of Wartime Excise Taxes

the

enough

to

that's

demolish their conclusions.

17

-

inclined

under

Errors and Distortions

on

The conclusions of Messrs. Murray and Nathan are based
sound assumptions and faulty methods. Facts are

13

Return!—Philip M. McKenna
Hi

Holds current

IS

HUMIDITY?

demand if industry cuts prices.
CIO Demands Are Based

11

___

The New Look of the Constitution—Donald R.
Richberg
The Gold Standard Will
$

than profits.

more

presented

9

_

No Need to Expand RFC Powers—Earl R. Muir

much

were

little. Points

rose

We're

obsolete

shows that workers' hours

moderate and have been declining for decades in relation

are

8

—

Outlook for Business and Investments—Donald B. Smith
White

1937 wages rose

7 |

Important Aspects of Gas Industry—John W. West, Jr.

D.

years

Notes liquidation of steel shares by profes¬
sional investors, and warns steel wage increase would set
pattern
for all industry and would harm country. Advocates union withdraw

6

Dangers of Spendthrift Government—Herbert Hoover

—E.

OR
THE

to sales and to wages.

A Defense of Production
Payments on Nonstorable Farm

on

40

over

halved, earnings increased eightfold and dividends

*

—Ralph Rotnem

IS IT THE HEAT

Mr. Friedman contends Murray-Nathan conclusions
regarding corpo¬
rate profits are based on statistical errors.
Says record of U. S. Steel

Facts

vs.

AND COMPANY

Consulting Economist
Chairman, Econometric Institute, Inc.

__

New Steel Wage Demands—Fantasies
■'—Elisha M, Friedman_______

llCHTflMIl

"

Facts

vs.

3

By ELISHA M. FRIEDMAN

Fund Managers Show Increased Confidence

Impact of ECA

(547)

Cover

Money, Gold and Exchange—Rene Leon
.

CHRONICLE

New Sleel Wage Demands-

Page

Palyi^

&

Worcester

the News That's

Fit to Print"

4

L

COMMERCIAL

THE

(548)

The Possibilities of Improved

&

FINANCIAL

CHRONICLE

Thursday, August 11, 1949

Stock Market Will Continue

Equity Markets

By THOMAS B. McCABE*

To Rise

if

Chairman, Board of Governors of the Federal Reserve System

Central Bank head ciLng decLne in

flow of risk capital and deleterious effects on entire economy, advo¬
cates Congressional sludy into tax structure from viewpoint of availability of equity capital.
Proposes
revision of statu.es to treat present double taxation of corporate income, taxation of capital gains, de;

preciation of

V/';

tJ

country

actual

tif there

shortage

of

had
an

tradition.
in

resulted

;the

rapid de¬
velopment
of
'our resources,
expanding
and

of equity rather ; than borrowed
capital by industry renders the

duction,

pro

steadily

a

less vulnerable to debt
liquidation. Moreover, enterprises
which maintain high equity ratios
are better able to get credit if it
is
needed
under any economic
economy

rising stand¬

ard of living.
Thomas

At times the

desire

McCabe

B.

for

speculative gains became so great
that serious social problems arose,
for instance, in the

conditions.

of the

case

ties, and it

to adopt

was necessary

to

measures

protect the economy

from such over-exuberance.

During

the

last

two

we

years

the

Thus

have been faced with the opposite j
coroorations has been
situation. In spite of a large flow

j iow since

of

Savings, the market for
stocks

com-

its

has

response

to

were

prices

have
of

terms

terms of

continued

dividends

earnings.

panying

low

well

as

As the

shows,

table

in

as

in

to. cash

dividends

earnings, have undergone
cal change since prewar.
"

dr

to

apparent it

came

natural "burnt

Later

seemed

depression.

Board
eral

of

Governors

Reserve

of

of
the

Fed¬

System, prepared at

Currency of the TTnited
Senate.—Aug. 5,1949.

States

well

in

as

Ralph

A.

cn

by the Boston Investment
as

now

TABLE

Declined to

the basic

stability.

184.49

The

1947

safety in investments has been
vealed in the
er

war

of

System

the

by

Center

Federal

the

of

1949

161.60

Research

University

of

These surveys suggest

overwhelming majority
population as a whole save
primarily for
security reasons,
such

business

activity, earnings and

declined, the stock market has
by its retreat since 1946.

have

we

well

ment

within

the

prepared

prices

for

have

such

news

speculative issues have been substantial.

for three years

seen

9%

commodity

Higher grade stocks had little to correct

but the declines in the more

What

been

1%

market

which

is

healthy qualitative adjust¬

a

has

wartime

corrected

excesses

(Table II).

as for a
rainy day, old age,
emergencies.
In the survey

TABLE
1946

1948, covering
community, 62%

Groups—

II

Low Since

Highs

Months of

1946

104.0

Percentage

Decline

Decline

41

48

Utilities

132.8

92.1

21

30

365

163.0

115.6

37

29

should

like

as

Why

(2)

Why

orises

not

more

of their in¬

to

discuss

three

follows:

individuals not
shares in business

are

are
business enterobtaining more funds

no

not

for

Security

—

There

is

single reason why investors do
buy equity shares in business.

We know that the volume

dividual

those

ties

savings

interviewed

today

of in¬

is

tre¬
mendous, and it is not therefore a
shortage of available funds that

not

were

not

were

were

op¬

safe,

familiar

while

with

30%

stock

as

investment opportunity. In in¬
terpreting these results it should
an

be

remembered, of course, that
ownership of common stock has
never

permeated all groups in the
community.

emphasis

safety is re¬
flected in the large volume of in¬
dividual savings currently being
held

(3) What, in my judgment, can
be done about the situation.
Desire

of

The

through stock sales?

in

the

on

form

of

in

such

industrials

re¬

non-commercial

bank and financial institutions

as

the

June

months'

be

at

were

lows.

suggests that the buyers

Evidently they

has
for

normal

been

be

the

remembered

pretty much

channeled into these types of in¬
In 1948, for example,

The

stocks

substantial

market

in

the

interested

are

in June.

was

last

to

of

to

pause

six-

and

it

is

gains, it must

last few years

have been

streets.
turn

out

to be

their worst

they do not

own

their

short

positions.

July the

short

interest

cover

of

in

While the

weeks,

seven

after such

react

or

that the recoveries in the

one-way

shorts often

15th

in¬

were

fe^l that the market will

higher level next December than it

advance

the

of

This

Generally such purchasers

long-term gains.

and trust funds.
tion

'

attracted by the values that were available around

have sold something that

large propor¬
individual
savings
is

671/2

It

was

enemies

since

they

and eventually must buy

is

interest

of

the

largest

that

as

of

since January

1933, while the ratio of the short position to the average daily

trading
of 1938.

the past 15 years into these
channels exceeded $48 billion. For

during

the

preceding

month

the

was

largest

since

May

Irregularity
The market

January.

as

quite regained its losses since

But it must be realized that

highs for the

new

whole has not

a

instalment

finance,

some

groups

have moved to

These sections of the market include the

year.

investment

trusts,

office

liquor,

equipment,

University is not,

the most part, investment in com¬
mon stock by these institutions is

brewers, containers, foods, air transports, drugs, dry goods chains,

prohibited

salesmanship sponsored

Club and Boston

and

advance.

companies, savings
and loan associations, and
savings
banks; as well as of reserves in
private and government pension

loan associations, and mutual
savings banks alone, totaled al¬
most $6 billion. The flow of funds

Delay

the

.on

vestors who

life insurance

A

23%
30

-

actually

increased

government

bonds; of deposits, shares, and
serves

_

5

So far the recovery has been persistent and
orderly. There has
been little public participation and the short interest has

and

grocery

state

ing companies.

or

ample,

or closely restricted by
Federal statute. For ex¬

the

home of

State

many

of

New

York,

large life insurance

However, the difficulties companies, while
premitting life
on
the publication is insurance companies to purchase

work
are

that the hook will be

forthcoming excellent

Inquiries in

con¬

preferred

source

of material

that

from

them

P. 0. Box 1604

The

purchasing
fact

that

common

the

dollar

volume of funds

flowing through
recognized savings institutions is
now greater than ever before has
been

INVESTMENT CLUB

and

guaranteed stocks
meet certain tests, prohibits

stocks.

addressed to—

cent

a

major influence in the

large supply of debt relative

to stock money available to busi¬
ness

Boston, Mass.

rates

of

nance

the government's

taxation

(Continued

imposed

to

fi¬

heavy

ex-

on page

30)

in

These

our

groups,

it

seems

.

me,

are

under present

...

We must also note that the overall

ably improved since last November.
week

to

being justifiably favored for purchase

economy,

by both investors and traders.

political climate is

measur¬

This has been highlighted this

by the philosophy and recommendations offered by Thomas B.

McCabe, Chairman of the Board of Governors of the Federal Reserve
System,
business

to

the

Congress.

sentiment

in

Evidently

Washington

there

as

an

is

least

at

offset to

the

some

pro-

ascendant

political-socialistic corrosion.
In

view of all the

economic—I

that

enterprise.

chains, soap, vegetable oils, cotton goods and utility hold¬

conditions

re¬

Increased Taxes—The increased




17

(to date)

an

of the

15

4

177.00

While

post¬

Reserve

Survey

the

Michigan.
that

in

for the Board of Gov¬

years

ernors

conducted

14

2

193.16

re¬

Surveys of Consum¬

Finances

165.39

32%

4

186.85

1948

for

10

(1947)

163.21

__

% Gain

Rally

212.50 (1946)

163.12

individuals

for

jests

Month's

160.91

economic

principles of security salesmanship should be

BOSTON

Advanced to

1946
of

req

I

Market

1945

desire

his

of

87.0

off the press within the next three
weeks.

on

Truman

Re¬

by the abandon¬

168.8

currently underwav.,; Indications
nection with this

credit,

com-"

Federal

Rails

investment

been vcvercrme

President

the

40

yet, available for distribution.

have

easing

of

37

of

refer-'*". <*f course, to the fact that the
book,

series of lectures

improvement in

action

110.7

the market.

SUCCESSFUL, INVESTMENT SALESMANSHIP, contain¬
a

in

Eoard

by

the

Market

intervention to mitigate economic
and
social
disparities and
in¬

over

ing

temporary

by

158.6

Pardon the
are

Rotnem

government

the flow of individual savings into
life insurance companies,
savings

We

least

increases, by the postponement of the sterling
crisis in England, and by the fact that the steel
strike did not
take place.
Also favoring the
markets
was
the
large short position and a
strong technical position.

of

vestment.

';

at

weeks,

ment

collapse and depression
in the early thirties have caused
people to seek security in invest¬
as

average.
After each
rally has developed and each

tax

financial

ment

in

160-

102.4

the

the request of a Subrommittee of
the Committee ,on
B^kinp" and

memories

the

315.7

on

interests

buying more
enterprises?

j
Chairman

the dark

in

four

serve

geographic expansion, the

and

ended

war

High grade stocks

(1)

of

McCabe,

primarily

show

ing

unsettled
state
of
international
affairs since the turn of the cen¬

tury,

the

support

industrial

substantial

a

the

since
met

Low priced stocks
416 stocks (S. & P.)„

the

tal situation

everyone

*A personal statement
by Thomas

obtained

major aspects of the equity capi¬

recognizes,
the
equity or ownership
capital is of vital importance to

B.

have

of

time

has

previous rallies has lasted longer
and
been
larger than the one we have had
during the past seven weeks (Table I). v
Sentiment has been improved by the grow¬
ing belief that business activity may begin to

of the frontier and the

appearance

end

fifth

market
for the

135.5

I

of

—

test

of

conducted early in
all groups in the

reason

viewed with concern.
As

businesses

expenditures with equity
and less with borrowed capital,

j-However, by now it aooears that
this apathy may go much deeper.
^Clearly its persistence is to be

supply

New
aver-

vestment

col¬

fears

stock. I am firmly convinced that

the

the

area

terprises finance

ascribed to

investors'

postwar

165

posed to holding common stock
lability it is always better if in business enterprises.
Twentyboth large and small business en¬ six
per cent felt that such securi¬

fingers" reaction
plausible

a

be

to

serious

buying

an

and

In

1929-32 stock market

lapse.
a

was

1946

from sales of stock

When the apathy to risk-taking
'reflected in these figures first be¬
a

from

loans, and new bond issues and
retained' earnings,
rather than

'

to the

people

from bank and insurance company

radi¬

a

fall of 1946.
issues have

funds for capital outlays

common

share values, measured in relation

rjeither

particularly

aged only about 10% of total new
corporate security issues. In
earlier periods of expanding economic activity the ratio averaged
approximately 15%. Since the fall
of

accom¬

the

stock

common

been sluggish in
|
what historically j
stimulating circumstances of j
inflation and high earnings. Stock

mon

sources,

availability, and flow of equity
capital are of primary importance
as they relate to the national ob¬
jective of economic stability at
high levels of production and em¬
ployment.
Stock
financing
by
business

stock boom of the twen¬

common

prevents

important reason for people
not buying common stocks is the
increased emphasis which they
place upon security and safety of
capital is essential to a business their savings rather than upon
because
it
permits growth and prospects of gain. Security rather
risk-taking without fear that a; than opportunity has recently betemporary period of poor earn- come more and more a part of
ings will mean hardship. The use our national philosophy. The dis¬

Amer¬

been

capital I

funds supplied to a

long

ican

economy. ;

mean those
business which
do not involve any fixed lien or
debt obligation and on which no
fixed return is guaranteed. Equity

By equity

?
*

Such risk-tak¬

ing

For

1945,

expanding

dynamic,

a

Asserts in

any event 1949
lows will not be reached again in foreseeable future.

At times we have experienced
significant lack of interest in risking those that

a

buyers by tax law provisions.

<

a

was

prospect

but rarely

ct savings,

sizable return.

as,

profit-taking offered

to June

Uxe reasonable risks with their savings.

available

were

It

of state and municipal securities. Suggests relaxation
institutional and other fiduciary investors.

on

Until recently there has never been a general unwillingness on the part of investors

in this
an

Harris, Upham & Co.

Market analyst predicts both external and internal market factors
will support rise to at least 185-193 level.
Expects major test will
occur in December because of
temptation for

ai.ets, and tax-exemption

regala:.ons

Through 1949

By RALPH A. ROTNEM

that

at
a

cause
some

believe

least

the

ascertainable

the

185-193

trend

level

of

factors—technical, business, and

the

will

be

market

is

reached.

still
I

upward, and

further

believe

major test will be faced in December or-January, when be¬
of the six-month

dividing line in capital gains tax treatment,

buyers at the June low levels will be tempted to accept profits.

But under

no

conditions will the lows of 1949 be again reached.

Volume

Number 4828

170

Evans to

THE

DALLAS,

TEX.

Otis &

—

Building,
Roger

Dallas,

Evans

Evans

business

CHRONICLE

(549)

5

Co.

has

^

'

-

:

Jit

Trade

Food Price

and

By A. WILFRED MAY

Index

Auto Production

Industry

Business Failures

Chairman McCabe Needs More B-y-r-d-s

his

The detailed statement

:

to the investment

career

I

r

Commodity Price Index

Texas

devoted

V/

«<*

Electric Output

Retail

State of Trade

Resident

as

'a :

Carloadings

Manager.
Mr.

FINANCIAL

Steel Production

SiThe;:i;;; '

has opened a branch office in the
with

&

Manage New

Otis' Dallas Branch
Kirby

COMMERCIAL

the equity capital situation submitted

on

to the Congress this week by Chairman Thomas B. McCabe of the
.

For
week

the

nation

reflected

as a
whole, total industrial production the past
slight increase but continued to hold moderately

a

under the level of the

Insofar

.

in

Board

number of reasons.

a

generated onslaughts

as

employment for the* country is at the highest level of 1949. According
to Federal and State agencies, the layoff rate of
factory workert
has diminished and the jobless problem has eased during July.
In the field

'

of wholesale trade the

heightened interest of

is

System

extremely

politicallyr

with

the free enterprise sys¬
tem, it establishes the fact that there exists in
.Washington at least some traces -oft sound and
realistic thinking about our ecJnb^^q. machinery.
Moreover, the McCabe statement, which is
published in full in this issue of the "Chronicle"

the number of people presently employed is concerned
overall economic picture, a recent report states that total

the

Reserve

.Coming at this time, when the

country ...is. being, inundated

g

corresponding period of 1948.']

Federal

the

of

Governors

of

important for

on

retailers in Fall and Winter apparel was reflected in the
step-up in
the number of orders for the coming season.
The volume of order,

(page 4), very abiy, succinctly 'anqh-without'the
customary special pleading, discusses the pressing
tax elements as they affect tne security markets

for Fall goods

and the investor.

showed

many

noticeable increase and immediate delivery

a

was

sougnt by numerous merchants as they planned early promo¬
tions of women's coats.
Buyers of men's wear, however, continued
to exercise

Roger Evans

field

starting

Bond

Municipal

the

in

1922,
operating
under
the
name
of
Roger Evans Company. During
the
war
period
he
was
with
Rauscher, Pierce & Co. In 1945
he reopened Roger Evans Com¬
pany, specializing in the origina¬
tion of municipal and corporate
issues.

able
As

for

investment

in

change

securities

government

Friday, last,
security values.,

stock

moved

on

prices

This action represents the fifth

i

higher

sharply

loans to

or

business.

the New York Stock Ex¬

on

did

as

government

anti-deflationary step taken by

Federal monetary authorities to assist the nation's economy in recent
Reserve requirements on demand deposits will be lowered

Otis &

Co., established in 1899,
has its headquarters in Cleveland

months.

and also maintains offices in other

two points for all classes of banks.
be cut one point.

principal cities. It does

general

a

*

On time deposits, reserves will
*

*

is

a

tributor

of

state, municipal
corporate securities.

Anent

"For many

ambitious plans have had

too

GREAT

S.

Reade

margin.

A.

and

Farms.

Great

.

Barrington.

Rev. Cornelius Bakker

a

The

of

family and
intimate

STEEL

limited number

a

friends.

Richard

received

May

Arts

If

degree

her Master

from

Publications.
received

ness

Columbia

of

the

Economics.
served

was

During

School

the

war

of

as

he

a

Exchange

nancial Chronicle" and

of

the

a

CURRENT WEEK

very

From the

the books and

on

standpoint of

buying by

more

in the bank, busi¬
of their customers, the

money

some

He is

Economists'
on

a

National

Policy

Monetary

a

trustee of the Over¬

adds this trade paper,

it will take

is

a

an

side in New York.

uptrend

In

'

/

a

or

just

while to

a

see

if the current change

shakeout of prices that fell too low.

smaller measure, observes

"The Iron Age," the steel order

pattern

during the past few weeks was a repeti ion of last
Many plants had then shut down, cut inventories and extended

Elected Amerex Directors

Board

of

members

Directors

of

Holding
Equitable

Securities

together

with

Securities

Corporation of New York, recent¬
ly

purchased

holdings of
Amerex
which

the

principal

Albert

H.

Holding
owns

over

stock
in

Wiggin

Corporation,
99%

of

the

shares of American Express Co.




in

began

1913

Federal

the

when

In the original laws both corporahons and indi¬

under
collected from the
corporation on its earnings the dividends were free of the normal
income tax.
By 1932 the tax on corporations had climbed to 13%%,

viduals, which would mean any stockholder, were taxed 1%
that

Since the Federal Tax was

arrangement.

that

rate

individuals

on

had

climbed

to

8%.

the new

1934,

In

statute and while the normal tax
the tax rate wnich applied to dividend

got to manipulating the

experts

reduced

to 4%,
sharply increased.
In 1936, with the New Deal in full cry and hunting for more
money to support its spawning aphabetical bureaus, the normal indi¬
vidual tax was extended to dividends.
Corporate earnings, therefore,
became subject to double taxation.
The rates, however, were rela¬
was

income

was

tively low and the results of taxing the same earnings twice, while
inequitable, were not really serious in terms of money divested.
During the war the corporations paid as high as 70% in taxes
on their earnings and
individuals paid as high as 90% on the same
earnings. The present corporate rate is 38%, and the individual rate,
in some cases, is larger than 80%.
So it is apparent that the govern¬
ment takes an unbearable portion of corporate earnings.
; u
The evil and inequity of double
of

tax

a

are

unfair to all classes

forces

higher tax than he is required to

income.
pay

taxation

The combination of the corporate tax and the indi¬
the small shareholder of modest means to pay a

taxpayers.

An

pay

other type of

any

on

elderly couple living on dividend income is required to

tax rate that otherwise applies only to persons wuh

times their income.

v

Theoretical Remedy—British

The

If

it

were

several

desired

to

this

correct

Style

situation,

it

*

could

be done

simply by collecting the corporate tax on all earnings, but giving
the shareholder credit for the tax paid by the corporation.
This is
the British System.
In Britain, lor instance, if a stockholder receives
a
£10 dividend, he gets with it a form of withholding slip showing
on what portion thereof the company has already paid the tax.; The
stockholder pays his tax on the difference and includes the with¬
holding slip with his tax return.
Tnat, h.cic.entally, is single taxa¬
tion.
The Practical Unlikelihood

of Reform

year.
vaca¬

but

the
appreciating these evils.
only does he point out that double taxation of corporate profits,
that other phases of our tax structure as well, are extinguishing
health

Now Chairman McCabe,

Investors
Not

League,

of

our

along with self-interested voices like

reveals himself as fully

financial markets.

But

must be realized that the government's

ments

and

purposes

derivable from any

stand

firmly

the

biiter practical truth

huge-scale spending commit¬

against

sacrificing

any

revenue

existing tax irrespective of how harmful it may

With the lawmakers alieauy lacing a

budgetary def¬

icit, the temptation to continue the iniquitous d ub e-taxation, though
opposed by Mr. McCabe or anyone else (excepting possibly the CIO),
is insuperable.
It is too easy to dismiss such p oposals for reform, as
"technical," "esoteric," or "a trick of the greedy."
In the coming

no

prices

got

to

depleted

steel
are

back

their

and

looks like

desks

customers
a

miniature of last.

shortage, inventories
lower than they

in for a slump.
they found orders piled high,
yelling for delivery.

are

steel picture

in the days of the premium price,

were

j

but

it

is true
may

Just how long the

that

be

steel-strike

that

the

are

fears

strike

no

big strikes.

have tightened

steel consumers'

was

not

action by the Congress.

steel supply

opened steel users' eyes to
before—that steel was not due for a

inventories

buying

up

were

on

legislative experience, for the same p actical rc asons the need for a
general lowering of the tax rates—which progressive income taxation
as
Mr.
McCabe points out is so vita!ly hindering the incentive
to invest in risk assets yielding high returns—will not elicit favorable

Existing High Imposts BJock Ofher Reforms

threat

something they had not seen
repetition of the debacles of 1921 and 1937-38.
total steel

brighter

will last cannot be told now, but it may stick through

October and into November if there
It

Only this time there
control and steel

under strict

the gray market and the conversion deal.

Corporation,

Union

dividends

of

they

This year

9.

Aug.

taxing

Double

Income Tax began.

A lot of sales managers thought business was

is

Amerex

Corporation

This is "double taxation"!

admittedly be.

inventories

the

of

before he gets them and again when he receives what

once

When

O. Currey, President
Equitable Securities Corpora¬
tion
of
Nashville,
Tenn.,
and
Joseph H. King, President of Union
Securities Corporation, New York,

elected

twice,

tions.

Brownlee

of

were

The part distributed (presumably the
time as each stock¬
holding recipient has to include the sum received in his individual
income tax.
Thus the earnings from his invested dollars are levied

the

ton this week to $20.00 based on firmness at Pittsburgh.
Steel
prices have long been regarded as a business barometer, and,

scrap

seas
Press Club.
After a trip to
Europe, Mr. and Mrs. May will re¬

_____

They coined phrases that made headlines
in a position where they must inject red
their-presentations.

put steel companies

gross

Income

entire amount eventually) is then taxed a second

The firmness that appeared last week in steelmaking scrap was
further extended to more markets and more grades of scrap this
week.
"The Iron Age" scrap composite advanced just 8 cents per

mem¬

Corporate

of

system of levying taxes on corporate earnings is, of

partly held in the business.

much

trade.

and

the

injurious to the fluidity of our markets.
38% of the stockholders' profits at the
(through the corporate income tax).
Then the rest is partly
distributed to the. stockholders, large and small, as dividends, and

vidual

color into

and the American Statistical Asso¬

ciation, and

PROSPECTS—SCHEDULED

FOR

ing Board in New York.

member

a

faculty of the New School

for Social Research.
ber

BRIGHTER

1.2% HIGHER

their side of the wage-pension-insurance dispute before the Fact Find¬

editor of the "Commercial and Fi¬

Committee

of

are

Violence in an organizing drive at Chicago and two wildcat
strikes there last week show the temper of the Steelworkers' Union.
Union officials came up with some heavy artillery in presenting

official of the Secu¬

an

Commission
and the United States Treasury
Department, he is now executive

of the

size

However, this week the steel companies open their case before
the Presidential Fact Finding Board in an atmosphere completely
lacking the goodwill that used to exist between them and their
union, this trade authority asserts.
The threat of an automotive
strike, the costly 3-day week in the coal mines and the continued
sluggishness in some consumer lines cloud the horizon.

special cor¬
respondent for American journals.
and

SHOWS

RATE

of

sector

every

source

steel

research

a

London

abroad

Formerly

insufficient for the

desirable, but unless they

Mr.

Columbia,

fellow

is

on.

course, both inequitable and
The government first takes

industry's executives have reason to be cheerful, "The Iron Age,"
national metalworking weekly, states in its current summary of the

May, who also
Master of Arts degree

a

are

real threat of labor trouble weren't ahead, steel people
would be more optimistic about the future this week than they have

University in 1940 and is now
Ilomemaking editor of Fawcett

rities

OUTPUT

been for months.

Mrs.

from

Steelworkers

Pensions

INGOT

H.

Wels of New York City gave the
bride in marriage.

of

ton proved inadequate and

sound

be

performed

the ceremony before the immedi¬
ate

a

pensions de¬
established on
basis, they will backfire. Less haste and more study would
beneficial in the present issue of pensions for steelworkers."

manded.

II, Annheart

Taxation

Double

The

Our present

while

underestimated by a wide

was

The original levy of 10 cents

the United

and

of Mr.

because

the current royalty of 20 cents is running short of actual require¬
ments.
Competent actuaries say the 11% cents per hour figured by

both of New York
City, were married Aug. 7 at the
Blue Hill Road estate

abandoned

or

now

"Wilfred May,

Mrs. Martin L. Straus

to be modified

estimates.

Cost of the miners' welfare fund

BARRINGTON, MASS.

Vivian

—Mrs.

numerous

the actual cost far exceeded

policies

fiscal

quent

May

nation's activity.

over a
pension plan for steelworkers,
in its current issue of Aug. 8, states editorially:

years

1

-

,

is left.

companies have been accumulating
experience with pension plans tor employees. Almost invariably this
experience has proved that it is far easier to underestimate the cost
of a pension plan than to overestimate it.
In numerous instances,

May

Wilfred

A.

controversy

"Steel" magazine,

and

Mrs. Reade Wed to
A. Wilfred

the

-

.

sition, establishing the overriding influence of
our government's socialist philosophy and conse¬

on

*

investment

banking business and
leading underwriter and dis¬

•'

;

implicit in Mr, McCabe's expo¬

stated but really

result of this action

a

even

great caution.

Taking steps to make available to both government and business
easier credit conditions, the Federal Reserve Board on
Friday of las.
week announced cuts to go into effect over the next few weeks in
reserve
requirements of country, reserve city and central reserve
city member banks.
By this action, it is reported, it will increase
by about $1,800,000,000 the amount of bank funds that will be avail¬

business in Dallas in

,

finally, and in this writer's opinion of
greater importance, is the conclusion not

And

far

In

the latter period

higher than they are now and

the present broad plane.

Incoming steel order volume has slackened a bit following a
flurry of new business during the past few weeks, the magazine
(Continued

on

page

29)

The

concurrent

tax

rates, as necessitated

by the government's

profligacy, will likewise in practice block +he reform of our tax on
capital gains. This is so not only because <"f revenue-intake require¬
ments, but because of elements of, ineouity.
That is, relaxing the
lien on capital gains below the 25 % level which now obtains on
over
six-months holdings, would seem to be imp.ac.icable if not
(Continued

on

na^re

331

6

COMMERCIAL

THE

(550)

FINANCIAL

&

CHRONICLE

Thursday, August 11, 1949

Dangers of; Spendthrift

A Defense of Production Payments

Government

On Nonstoiable Farm Products
f

By

of Agriculture

Secretary

Only living ex-President,

agricultural legisla- W

agricultural support program. Criticizes Congressional delay on
tion and denies his own plan will lead to farm regimentation.

in nation's

It is good to have this opportunity to talk with you-about the future of dairy land
agriculture.
This is not just a matter of income to you dairy farmers.
It is not, as
cynics would put it, a question merely of "wno gets whatj in the rough-and-tumble ol
business.

The

future

ag-

r

i

1 ture

c u

the

And in the Nation as a

enterprise last year
brought in 14%% of all farm in¬
come.
Farm dairy production is
consistently at or near the very
top of the list of commodities on
which American farmers depend
for cash income.
Thus, it is as

of

thou¬

many

sands of fam¬

ilies; it is the
future of mil¬
lions

of

hu¬

plain

beings

man

whole, the

anything can be that we
have an adequate price

as

each endowed

will

by their Cre¬

support system until milk is given
the status of a basic agricultural

in-

with

ator

.rights and
with poten¬
tialities t for

Charles F.

Brannan

enhancing the
fundamental values of human life.
The

future

of

dairyland

the health and welfare of the mil¬

lions

and

near

far

who

de¬

are

pendent for life sustenance
upon

—

upon

you,

ability,

your

determination, your oppor¬
tunity, and your particular por¬

your

tion of the good earth.

You,
mine

in

to

the

and

ideals

I

in

real

and

seek. Even though we
succeed in stating them

we

not

may

our

satisfaction, they are
a part of us—a
driving force prod¬
ding us forward in our effort to
find

and

ways

of

means

achieving

our basic purposes.
The ways and means are never

easy to find.

They

challenge to
posed

ingenuity. ^Pro¬

our

and

ways

constant

are a

means

are

con¬

stantly subject to sharp examina¬
and
controversy,
as
they
should be.
But the strength of
tion

our
we

purpose is the guarantee that
shall find the ways and means

through which to unite
and

make

our

the

in

progress

effort
com¬

mon cause.

agreed

people

many

certain

upon

principles

foundation

which

upon

are

we

can

As a starting point for our dis¬
cussion of ways and means, I want
to state two related beliefs which
I hold very strongly and which I

believe provide

basis for

a

which has received most, attention

is

there

cause

versy

payment.

production

the

much

so

Be¬

contro¬

about this, I am glad to have

this opportunity to set

the record

I ask you to

make a mental note
points I am about to make

of the

first

is

believe

self-help,

I

because

I

the

which

refer to

to

them

again in a particular way. I am
going to try a little experiment on

V'

you.

number

Point

one

about

background

isva

bit

of

nonstorable

commodities.

believe

in

principle

the

of

cooperative

embodies.

—

I believe the organized coopera¬
tion of farmers is essential to the
_

of

tition, for the

business

compe¬

farmer meets

con¬

centrated economic power
coming

/and going

when he buys and

—

when he sells.

the

even

the

full

more

dairy

extent

of

specific, I be¬
co-op,
my

and to

power

I

shall work to keep the rules fair
and
the opportunities open for

dairy cooperatives.
The related belief is this: I be¬
lieve that dairy farmers should

have price support which is
just
as
positive and just as high in
relation to any given standard as

that enjoyed
ers

by

any

in the country.

other farm¬

I believe this

is

necessary not only in the in¬
terests of the dairy farmer and
his family but also in the interest
of all

our

Here
cream

sold

people.

is
and

high

a

of

these

largely

geared

commodities

to

domestic

is

de¬

mand^/Und this demand fluctuates
with

employment,

is

level
for

bound

be

to

reasonable

because

consumers

of

the

larger supplies brought out."
much

So

that

for

background/'

Wisconsin, the milk,
other dairy products

by farmers account for

more

or

wasteful

a

♦An address by Sec. Brannan at




re¬

sources." (In other words there is
intention of pushing prices be¬

no

low

the

supply

and

demand

level.)
Point 3.

proposed

program

with regard to milk and its prod¬

ucts,

would continue full use
agreements

we

present marketing

in

ucts

a

most of these prod¬

need, rather than restrict¬
ing output short of that need.
sumer

"Under
would

be

this system the

paid

in

between

standard

for

cash

farmer

the

the

dif¬

support

commodities

which

is the alarming fact that at
this moment executives and legis¬
latures
are
seriously proposing

freely
by hundr e d s
individuals

projects which if enacted would
add

three¬

score

This institu¬
is

It is

a

years

of

not

a

Herbert

storage.
living thing which
will correct a vast
in

error

the

history

troubled times.

Hoover

avoid

war

dime

nations

never

received

a

from government
sources,
its scholars therefore can be

price
this

would

be most

otherwise

The

consistent

and

with the

public interest. We would

not, however, make purchases for
which we could not find accept¬
outlets.

We

would

method

purchase

the

use

mainly

the

to

re¬

surpluses and seasonal

about the same
purchases and

government

amount

would

as

would make

milk and milk

more

available

to

in

consumers

the

world

I

would

grain and forage production."
5—".

gress

the

.

.

payment

be

could

used, if Con¬
decided, not merely to

so

support prices but directly to

greater production
consumption of milk.
courage

is

me

added

somewhat

tion—not

posal

recommenda¬

subsidy

a consumer

I

merely

have
those

mended

recom¬
of sup¬

methods

farm

most to

encouraging

the

if

to¬

my

previous

currents of gov¬

ernment in this

Republic. Beyond
the immediate problems of effi¬
cient organization of the Federal

Departments,
there
arise
from
these investigations some grave
questions as to our whole future
as

a

nation.

///!"//■;/■,''

consumption.

considerable difference

There is

a

between

(a) subsidizing consump¬
hope that the bene¬

tion with the

he produced and the average sell¬

fit will trickle down to the farm¬

ing

er

and

in

If America is to be

by

run

people, it is the people who
And

do hot need

we

for

those

commodities

Because the

payment would go directly to the
farmer, it would be an efficient
support operation.
"Another big advantage is that

(b) supporting farm prices
which will give consum¬

the

most

of

ers

their

course,

am,

latter.
on

use

for

money.

will enable

us

ference
each

between the support

individual's

selling

and

price

.

gov¬

government employee to about 40
of the population.
Today, there

government

one

employee

to

one

employee
to
working popula¬

government

about

of

8

the

tion.
The Growth of Dependency

Twenty
rectly
or

ago, persons di¬
indirectly
receiving
regular monies from the govern¬
years

ment—that

is, officials, soldiers,
pensioners,
subsidized

sailors,

and employees of contrac¬
working exclusively for the

persons

tors

government
one

—

represented about

in,

person

40

every

the

of

population.

!

,

Today about

.»

out of

person

one

monies.

If

of

those

age

are

married, they comprise about

all

one-

half the voters of the last Presi¬

dential election.
Think

Working for the Government

against

square

some

of

lessons

principles of govern¬
ment and morals, if we would
preserve the rights and dignity of
some

to which this nation is dedi¬

men

cated.

The real test of
not

so

it is

I

our

thinking is

much the next election

the

next

not

am

solutions to
I shall list

as

generation.

going

in

subhead

to

long run it is the Aver¬
Working Citizen who pays by-

hidden

made
the

other

and
up

little

a

number

of

dynamic

on

this
av¬

the taxes.

Days' work
Obligations from former wars, 11
Cold

and

War

___24

State and local expenditures. 14
Total

a

thus

far..

-___61

be

of

wish

Spending
maintain

to

progressive

can

which

days

But

Japanese-English

Growth

must

have

I

showing

thought.

are."
The

taxes.

table

kind of citizen must work

Defense

"Bring feet
from clouds into swamp where we

nation

In the
age

Other Federal expenditures- _12

items for

would

We

over.

offer you

national ills.

our

some

Perhaps

now

it

erage to pay

people.

remain static and

a

No
sur¬

to go on

But

beyond this the seriously
proposed further spending now
in process will take another 20
days work from Mr. and Mrs.
Average W. Citizen.
Taking out holidays, Sundays,
and average vacations, there are
about 235 working days in the

Therefore this total of 81
a year
for taxes is

year.

work

days
about

one

week

of

out

every

month.

You

a

might

want to

work for

family instead of paying for

your

gigantic bureaucracy.
Think it

over.

.

is

recommended
than

any

so

restrictive

less

far enacted

tue of the fact that it

the support and the average sell¬

encou1'0

ing price. Nobody would have to

At that
one

tary, to each 120 of the population.
Twenty years ago, there was one

sundial which records only
sunshine.
Our
thinking
must

—

.

less than

was

employee, Federal, state
including the paid mili¬

and local

a

producing vive. But dynamic progress is not
and
consuming somewhere past made with dynamite.
And that
production and marketing, be¬
the level where straight dollar de¬
cause any farmer who could ex¬
dynamite today is the geometrical
mand would temporarily stop us. increase of
ceed the average market price
spending by our gov¬
by
That enables genuine demand and ernments
quality of product or good bar¬
Federal, state
and
our real productive power to ex¬
local.
gaining would benefit to the ex¬
ert greater influence in our econ¬
tent
that
his selling price
ex¬
Perhaps I can visualize what
ceeded the average market price." omy."
this growth has been.
Twenty
Point 6—"I state categorically
(Remember that the production
years ago, all varieties of governthat the legislation I have
payment would not cover the dif¬
the system would induce efficient

got well under way.

ernment

like

I

recommending the
The payment method for
perishable
commodities

simpler about

was

to put on sackcloth and ashes to
think. Nor should our minds work

ways

price

in the market place.

No doubt life

Bureaucracy

' /■/■] every 7 in the population is a
need regular recipient of government

Now, as never before, we
thinking on some of these ques¬
the

of

.

.

pro¬

prices
which
do
lick the surplus problem

porting

by

support

of

derelict

to

knowledge of the

and history,

also point out that this

price

a

en¬

situation

the

about every 22 of the population.
Worse than this, there is today-

Some
of you will know that
during the past two years I have

must think.

Point

ob¬

day I discussed the lighter side of
life instead of the serious issues
which weigh on my heart.

call for

greater consumption of

its

Some National

be

to

these

147 years ago, when
oeur govern¬
ment

is
for

somber

tion.

a

winds in

the expression of

Need

prices than would other¬
wise be the case.
It would also
our

Sierra

Thinking
In

eco¬

nomical

able

and

use

the

as

wherever

method

support

method

free

Growth

time there

in¬

government

to

/'/,//.

The

of these

and revolution.

being a
stitution, it has

annually

Add

age.

amount

It will also teach

Not

and

the

over

more

debt service and the average fam¬
ily inay be paying $2,900 yearlytaxes.
They may get a little back
if they live to over 65 years of

ments.

dead

one-third

spending.

our

govern¬

tion

beyond

this

of

and

serv¬

average

$200 annually.

That is bad enough. But

and

s

nished

Point 4—"continue to use pur¬
of dairy products
as- a

"Let

exactly what it says — a
payment to the farmer to go on
producing to meet genuine con¬

ment

materials fur¬

chases

tion payments.
"The term 'production payment'

mil¬

lions of docu-

jective truth.

method

supports to any of these nonstor¬
able commodities, I recommend
that we rely mainly upon produc¬

have

the

the

cost

family less
Today, also
omitting debt service, it costs an
average family about $1,300 an¬
nually.
//.//'•.

priceless

handlers desire." and

healthy economic cli¬

mate.

ice,

than

of

as

at lower

or

And

orders,
extend
those pro¬
grams as and when producers and

products

tion of all

port.

ment, omitting Federal debt

SUp-

and

and

wages

which

its

may

the

"Under

of

to¬

the stern lessons of how

but rather the difference between

Juneau, Wis., July 31, 1949.

soil

of

use

<v

over

ward

been

change mass
purchasing power. ' We can hope
to increase per capita consump¬

factors

tributed

value

problems which could be met
which are either highly perish¬ most
efficiently
in
this
way.
able or which can be stored only Whenever
any large-scale opera¬
at heavy expense—ipclude fruits, tion becomes
necessary, we should
vegetables, meat animals, milk, use
the
production
payment
butterfat, poultry and eggs. Pro-! method. As a rule, this could cost

ference'
To be

lieve in

at

farm

products

means

maintenance

sys¬

allow

would

remain

to

lieve spot

nonstorables

"The

"When it is necessary to apply

this:

in

want

My first duty is to acknowledge your generous reception and
most generous gifts to the Library.
It is now 34 years since this Library on War, Revolution and
Peace was founded. Over these years friends of the
Library have con¬
these

production
while
retail
prices
sought their supply and demand
level in the market place.
This

straight.

com¬

understanding.

the farmer cooperative.
I

The method I have recommended

ernment, and that increasing taxes and expansion of government
activities is leading us to collectivism. Denounces
pressure groups.

enough level to sustain abundant

personally believe that a com¬
of methods is required.

I

other

build.

The

income

bination

duction

Fortunately,

mon

getting

in

is

difficulty

The

agreement on the methods for do¬
ing the job—the methods of treat¬
ing milk as a basic farm com¬
modity.

own

the

it

,

is

mind,

your

know

values

advantage of this

that

■

the land and the people of dairyland

is

tem

in the price support Now Point 2.
"It is obvious, of course, that
system. We have temporized and
dilly-dallied long enough, giving the use of production payments
must
be
qualified
in such a
lip service to the need for action!
but not meeting the issues in¬ manner as to avoid extremely de¬
pressed prices in the market place
volved.
'
- •
}

agricul¬

small way related to

no

selling

average

$3,450,000

"A third

commodity

.alien able

ture is in

not

individual's

the

check

price.)

dairy

farm

is

future

half of all the farm income.

than

of

dairyland

on 75th birthday, warns of grov/th of gov¬
spending accompanied by paternalistic government Says
citizen must give 61 work days a year to pay cost of gov¬

ernment

proposal t) substitute production payments for parity guaran¬

Sec. Brannan outlines and defends his
tees

By HERBERT HOOVER*

HON. CHARLES F. BRANN AN*

cement

(Continued

to

by vir¬

offers

the

more

abundant

on page

26)

*An

Hoover
on

address
at

by

Ex-President
University

Stanford

the occasion of his 75th birth¬

day
i 1949.

at

Palo

Alto,

Cal.,

Aug.

10,

Confiscation
To

ing,

examine

of

what

must get
sunshine figures
we

(Continued

Savings
we

away
as

are

do¬

from such

the gross

on page

28)

na-

•f'

Volume

170

Number 4828

THE

COMMERCIAL

Washington
Ahead
of the News

The result

From

the

described it

the

outset,

U. S. oil exports without European Recovery Program, would have been greatly
reduced, but defends aid given European nations (o develop own oil resources. Says possibility of
increased foreign competition to American oil
industry is not deplorable, provided it is fair and open.
Stresses oil industry depends

dealing

newspapers

with

the

campaign

A lot of

questions

being raised, as well as many eyebrows, concerning the effect
European Recovery Program and especially of ECA operations on the American oil
industry, domestic and foreign. Great fears are expressed in industry circles that as a
of the

Of

result

cripple the influence of the Senator was ECA's activi¬
reason the CIO and AFL po¬
ties, the United
litical action committees got into the campaign.
States may be
Although the Senator was running for nothing, flooded with
the issue was so clearly drawn that he got into
foreign oil; the
the campaign to the extent of making a speech
domestic

talked to you

unquestionably the

for

the

candidate

who

looked

was

upon

his

as

and not bankrupt world.

on prosperous

are

To

ment.

Cooperation Administration

ECA official points out,

held in Vir¬

was

American

the European

dollar problem has
likely to continue

affect

to

the

Undoubtedly, had "his man" been defeated,
the Senator's influence in National affairs would
been

impaired, which

of economy in

his advocacy

means

the Federal Government.

Well, his

handsomely, I thought.
But the very interesting thing is that the very
newspapers you would have thought would be
rejoicing in his victory—the issue having been
maae
what it was
have, instead, been trying

Carlisle Bargeron

won

man

American

United

industry

would
ford

States

oil

a

domestic

not

need

Walter James Levy

—

to

get

comfort

of

out

the

strength which

the

opposition^ showed.

tell
we

that

you

in ECA are

Others have gone to considerable pains to point out that as compared

aware

the

close

relationship

between

what

ECA

is

oil

the

small plurality.

very

poll tax

responsible for Byrd's victory.
a

unquestionably

was

Nowhere have I

seen

headline in

a

conservative paper saying "Economy in Government wins."

getting

no

seems

annoyed.

are

would

There

conservative

papers

papers are.

"Herald-Tribune," long looked

which

but

organ

the Leftist

course,

The New York

lican

from the fact that the

away

Of

a

Some of them have contended that Virginia's

unquestionably responsible for this,

was

by

won

undoubtedly

Repub¬

upon as a

that

resent

appelation

though it is still considered to be conservative, head-lined their

now,

"Machine," of
to

is

course,

Byrd, wished him well,

would

you

worst, "Byrd Organization Wins."

machine, and

But

let's

your

crowd,

these

say

"Byrd Wins,"

say,

friendly

you were

at the

or

Organization sounds better than

well known politician has

one

as

organization if it's

If

propaganda word.

a

aptly said, it's

so

an

fearless

conservative

papers

attempting to report the facts when they called it

machine. Maybe

a

it is that they are conservative, but newspapers wedded to the facts

regardless of where they strike.
I wish

one

of them

the State machine

tion

Senator

can

be mistaken

may

but

a

an

organiza¬

He may go in as somebody's man, but when he

gets in, "the set-up is his.
organization that

how

me

I

patronage, the wherewithal, to build

machine.

a

or

organization.

or

organization is usually built around the Gov¬

or

He has the

ernor.

Quite commendable, indeed.

however, would tell

State machine

control the

A Senator has

way

no

of building up

an

His patronage is

compete with the Governor's.

can

And

to the

as

in

recent

a

invulnerability of the "Byrd Machine" about which

lot, the facts
who

years

were

The

cently been turned

fund.

ative

In

conservative

newspapers

Senator Styles Bridges.

at Byrd in this

echoed, has

re¬

Along about April

accepting this trusteeship he made the welfare fund

which

it

had

operators would not
or

on

less pressured

not

been

agree

a

Bridges
as

for

months

several

because

oper¬

the

coal

to a third trustee, they having been more

into the welfare fund

was,

widow's estate.

All

future

status

of the

tional oil industry and

present
interna¬

also to

es¬

tablish

objectively the role that
ECA plays in this connection.
At
the same time, we must attempt
to stay within the realities of the
situation, take
a
balanced
ap¬
proach and consider not only the
interest of the United States in
European

but also any
strategic and policy

recovery,

over-riding

interests of the United States and
the

commercial inter¬

legitimate

Effect

The

Shortage

of

Oil

or

by

of ECA

The amount

sought to hold

and

course

are

was

entitled to his

compensated,

$35,000

up

its

compensa¬

a

for

year

even
a

those

of

a

trustee in this

But Bridges went along for
About the first of this

year,

he decided to take it.

He, along with his co-trustees, is responsible

for the administration

of

some

I

$100,000,000.

am

advised by

oil

in

to work

the

The American

world

of the Marshall Plan.

is

ECA

tent

three years, must either iincrease
its exports to dollar areas or re¬

remain

duce its

States

imports from dollar

it must do both.

therefore develop

(c) Applied to oil, we face a
situation where Europe owns very
large
East

oil
and

in

reserves

in

the

the Middle

Western

Hemi¬

able

to

amount

of oil avail¬

could

which

Europe and available for

with

a

relatively

small amount of investment

export to non-European countries

considerably. At the same
time, Europe is, and has tradi¬
tionally
been, an
importer
of'

very

but

panies, controlling tremendous but
not fully developed oil resources

sphere, which, if developed, could
increase the

sound, this industry needs
not only in the United
also in Europe and
other foreign countries which are
faced with a serious f shortage of
dollars.
Europe, with the help of
gifts from the United States, is
bridging its current dollar short¬
age and, with the assistance and
encouragement
of
the
United
States, is expected to progress
economically in such a manner
that by 1953 it will no longer be
dependent on any gifts from the
United States. Obviously, in such
circumstances, European oil com¬
markets

areas

Europe must
its national re¬
sources
and production facilities
and increase exports to the utmost
extent
possible.
If, after these
efforts, Europe is still unable to
earn enough to pay for dollar im¬
ports at current levels, then its
dollar imports must be reduced.

or

We

a

be

yield
greatly increased output, will
called upon to assist Europe
(Continued on page 31)

but

a

endeavor

an

re-establish

a

,

Kirby Bldg.— Telephone Central 5756

solvency of the participating
countries.
This concept as laid
down by

com¬

a

with

Congress is fundamental

proper

understanding

of

Mr.

Respon¬

sibility for the administration of this amount is plenty of work.
been any secrecy
upon

about his receiving this

a

money.

statement that he was

recent

months ago, Europe is confronted
with a serious lack of balance in
its

trade

resulting

in

a

as

.

current

Resident Manager

To put it dif¬

ferently, Europe is presently re¬
ceiving annually from the dollar
area goods and services valued at
about

than

tremendous disclosure.

Roger Evans

As I stated to the Council some

four billion dollars.

seized

opening of

Dallas Office

as

to

pleased to announce

are

the

To that ex¬

is often
relief operation,

not,

four

the

billion

dollars

more

OTIS & CO.

goods and services

Eu¬
supplies to that area. Omit¬
ting all other factors essential to
European recovery, it is obvious
that Europe cannot be self-sus¬
taining without closing the dollar
gap, one way or the other.
I have

rope

In

one

widely syndicated article 1 read that "this man who has

been advocating economy in government and
of ECA turns up to be

making this money."

who has been

complaint.

sure

it would be quite proper for him to receive this money.

an

critic

This shows the writer's

real

If Senator Bridges were a New Dealer, I am quite

advocate of economy in government

outrage.

a

and

as a

But

as

critic of ECA, it is

an

In fact, he should be starving to death.

propaganda!




Such is

our

Established 1899

CLEVELAND
New York

Chicago

Columbus
*An address by Mr.

current the

National

Levy before

Petroleum

Council,

Washington. D. C.. Julv 29. 1949.

mar*

industry has

(b) As far as the future is con¬ developed large oil reserves on
cerned, Europe, in order to close a world-wide basis and' has es¬
dollar gap in its balance of tablished a very strong and sound
payment accounts during the next industry.
However, in order to

annual dollar deficit of more than

It is silly to say he doesn't have to do any work.

as a

American

seem

difficulties for

create

or

the

participating countries of Europe
during the three remaining years

petent lawyers that Jhis compensation for his responsibility is quite

receiving it

against
kets.

people is to help re-estab¬
lish, if it can be done at all, the
economic
independence
of
the

reasonable.

never

international trade

Europe.

ECA's functions.

Lewis creating the fund.

Leftists have

We are therefore facing a situ¬
ation in which all the realities of

the

trustees

nine months without accepting his fee.

the

into the United States.

Congress and from the Amer¬

with John

There has

mean

American oil

sponsible for petroleum operations
face a dilemma.
Our assignment
from

to

But

fewer sales by the
industry to Europe
and might increase competition
outside Europe between American
and European oil.
It might also
result in increased imports of oil

might

Trade

instance, had been fixed by the government when it made the deal
L.

This in turn may
hit American oil in two ways.
It

export markets.

the

Dollar

Europe's

do¬

expand

the International

on

wrongly stated,

from the outset, of

trustee.

a

Pro¬

of

and also to

ican

application through chicanery.

tion

Recovery

European

the United States oil in¬
dustry in true perspective, that it
is useful to go back to the fun¬
damentals of
the problem with
which we are concerned. We must

and

af¬

needs

part

Perhaps I may start out by stat¬
ing that we in ECA who are re¬

he accepted the trusteeship of the United Mine Workers'

ago,

year

very

the

gram on

New Dealers and for whom the Senator

sort of propaganda that was levelled

same

anywhere in international
oil, they will sooner or later be
felt everywhere.
I think, however, in view of the
fears that have
been expressed
and in order to assess the impact
place

Virginia has had two Governors

that

are

had nothing but contempt.

campaign and which

Oil is a world-wide
industry and we know that, if
substantial
developments
take

from

in order to

resources

increasing

an

mestic

Europe
to

offshore

therefore

is

ests of the American oil industry.

confined to the relatively few Federal jobs.

I have read

some

oil industry.

the factors that affect the

simply

were

of

activities

try to see clearly and impartially

machine if it's the opposition's.

a

in

doing

major branches of the American

of

story: "Byrd Machine Wins."

of

and

aid

foreign sources con¬
American companies.
aid, Europe was
in fact able during the past year
to import very large quantities of
American oil. Up to the present,
ECA
operations have
not
de¬
stroyed but, rather, have main¬
tained exports of American oil to
trolled

Because

with the total voting population of the

State, "Byrd's man"

ECA

oil

own

cover

not have been able

during

its

follows:

tities of American oil—from either

stand still.
I

as

perhaps describe

last year, and
could not afford during the next
three years, to import large quan¬

may

to

come

may

Without

(a)

i 1

o

I

these effects

the

of

tivities

industry.

It

Europe's point of view not com¬
pletely illogical or unreasonable
to try at this moment to develop

affected and is

re¬

controlled

sources.

Today I should like to make
specific observations on how

finer may lose
his shirt; and
the foreign ac¬

large scale from

on a

the United States as well as from

some

pro¬

ducer and

American oil

about this problem

before.

man.

have

7

Chief, Petroleum Branch

against Senator Harry F. Byrd, long one of the
leading Senate conservatives and an outstand¬
ing advocate of economy in the Federal Govern¬

one

as

primary

(551)

American Oil Industry

on

Economic

equivalent to election.

was

CHRONICLE

By WALTER J. LEVY*

By CARLISLE BARGERON
A couple of weeks ago a gubernatorial

FINANCIAL

Impact of ECA

From

ginia.

&

Denver
Toledo

Cincinnati
Buffalo

*

Thursday, August 11, 1949

FINANCIAL CHRONICLE

&

COMMERCIAL

THE

(552)

Important Aspects of Gas Industry

Dealer-Broker Investment

By JOHN W. WEST, JR.*

Recommendations and Literature

Director, American Gas Association

Assistant Managing

of gas industry in recent years. Cites growth in reserves of
natural gas and enlargement of pipeline distribution, and bases confidence in growth and importance
of industry on: (1) need of gas in home, business and industry; (2) its power of adaptability to chang¬
ing markets; (3) advanced technology, and (4) growth of natural gas production. Describes work of
Mr. West reviews increasing importance

It is understood that the

Canada

American Gas Association.

letter

industry of which I speak is an old industry, whose manufactured gas operations
when the Ed .son electric bulb began to take the gas lighting

The

Seemed foredoomed to extinction

Toad in the '80's—an industry

prosperity until the shallow^—
gas fields in the East beA pipe, similar advances were ,
gtn
to
play
out—an
industry made in the sciences of geology j
which has been subject to a vari- and
geophysics, which are the ;
ety of predictions foreboding de- bases for the discovery of oil and j
mise, from Moody's prognosis of gas structures.
The result was!
1925 that the manufactured gas that geologists have been able to
business
would be bankrupt, to point out more and more successH&ayor La Guardia's 1935 state- fully where the oil and gas traps
Went that, "the next generation may be far below the earth, even
will have to go to a museum to chough they cannot yet tell in
#ee a gas range."
j advance whether a given trap will
tial

natural

Today
Serves

h.e
22l/z

million

ohe-third

of

t&ken

the

It

on

Guardia

La

has

his

billion

$6

facilities

at

Tidewater

another

did

we

and

our

part

operations

as

Judging Outlook of Individual
Companies

a +

Your analytical

the Reserves

Gas

futu.re outlo?k of individual com-

the
in the

j Panies, particularly from the in¬
vestor s viewpoint. I realize m

trillion

some detail what this means from

during the previous year,

.vasted

thp end

1948

of

Association

manufactured gas, mixed gas and

United

liquefied

L'eet—an increase of seven trillion

encompasses

better
latter

of

one

o

feet.

df

company

pushing
through
the far

and

eeonomics

thus

transform

of

point

pains to

great

out that it would be inaccurate to

'ake the total
oil

the

or

gas

divide

it

known

reserves

of

in any one year and
by the amount with-

drawn during that year and conelude that the result would be the

ties far removed from

number

source,

Long recognized as providing a
premium quality fuel, the natural
<ga$ industry has been a rapidly
expanding one in recent years and
continue

to

be

fdTeseeable future.

in

such

back
a

in Fredonia,

of

terms

supply

of

years

present

However,

it

is

years'

N. Y.,

use

of natural gas, 12
oil and, in round figures,

supply

years of

few other localities where

1.000 years

mar-

Correspond;ng calculations by the Bureau of
Mines for some of the principal

Wts to permit the transmission of

Tinerals *ive 20 years for zinc'

Shallow

gas

reserves

sufficiently close

found

were

to nearby

9

through the primeval piping

however, it

was

for copper and
These comparisons

'ead.

facilities then available,

of coal.

10
of

years

for
the

availability of important minerals

not

until

"nd

the

of

sources

energy

be

upon

basis.

basic

limited

should be

serves

to

purposes

and industry.

w«re in

about the availability

over

vast distances

gas in the foreseeable future,

source

to

position to

volume.

that

At

markets

soon

use

it in large

time,

proceeded

recall

fire from the

steal

16th

Jersey Municipal Bonds—
statistical

of

edition

book

hand¬

containing

analysis of re¬
vised debt statements of approxi¬

property held by the

foreclosed
individual

municipalities

Ill

Also available
the

comments

are

Railroad

Outlook,

has

cess

Part of its

unquestionably

the

fact

which

that

has

it

advancement

long been

the

of

arisen
a

es¬

general
b 1 i c" it

p u

looked

at

nomic

prophets

a

the old couplings.

'

by

personal

a

number of
of

the

years

story,

com-

Reserves

construction and

of

the

laying

a

New

Analysts,

New York, N. Y., Aug. 3, 1949.




the

and

eco-

economic

predict the decline

tion in Tulsa, Oklahoma.

After

mise
some

or

Over

Stock

the

-

-

of

coming to New York later, I used

with

the

of the Tidewater

then

President

organization, Mr.

R' D' Benson- °ne of these visits
time when the

was

reserve

statistics of Mr. Pogue and others
(indicated

a

nine

or

10-year sup-

gas

threats

serious

tinued

visit

the

industry

when

use

of

toward

gas

for

the

con¬

istic

Building,

second

of

the

par¬

COMING

EVENTS

Index

—

Booklet

recording

4, N. Y.

Caterpillar Tractor Co.—Circu¬
lar—Fahnestock &
way,

Co., 65 Broad¬

New York 6, N. Y.
available

Also

is

a

of

Georgia

on

Railway—

Consumers Power Com¬

Ohio

Southern

is

that

Edison Company

and

Company.

IBA

summer

golf tournament, Park

Country Club.

Sept. 9, 1949 (New York, N. Y.)

Security Traders Association of
and dinner at New York

Athletic

Sept. 9-11, 1949 (Oregon)
Pacific Northwest Group of the
Investment
Bankers
Association

meeting

at

the

Gearbari

Hotel, Gearhart, Oregon.
Sept. 16, 1949 (Cleveland, Ohio) ;
Bond
Club
of Cleveland fall

party

at

Sleepy Hollow

Country

Club.

Sept. 23, 1949 (Chicago, 111.)

Municipal Bond Club of Chicago
Field Day at Knollwood

Annual

Country Club, Lake Forest, HI.

Railway—

Sept. 23, 1949 (Pittsburgh, Pa.)
Bond Club of Pittsburgh Fall

Circular—Ernst & Co., 120 Broad¬

Outing at Chartiers Country Club.

way, New York
Also available

Oct

Florida

New

East

York

Coast

City.
is

a

Central

circular

Railroad

on

ance

Security

National

Founders Fire

&

Marine Insur¬

Company—Detailed analysis

—Hill

Spring

Richards

Street,

&

Co., 621 South
Angeles 14,

Los

Calif.

Annual

New Orleans Public Service Co.

Co.,

Ill

Broadway, New York 6, N. Y.

As¬

Traders

Convention

at

The Broadmoor Hotel.
Oct.

1949

11-13,
N.

Fall

Stock

(Atlantic

City,

J.)

meeting

Governors

—analysis—Ira Haupt &

(Colorado Springs,

5-9, 1949
Colo.)

Sys¬

North

American

Company—

of

of

the

the Board
Association

of
of

Exchange Firms at Haddon

Hall.

Dec. 4-9, 1949

(Hollywood, Fla.)

Annual Convention at the Holly¬

on page

35)

Memorandum—Stanley Heller &
Co., 30 Pine Street, New York 5,

wood Beach Hotel.

Dec. 9, 1949

it

has shown great powers of adapt-

(Continued

Colo.)

Denver-Rocky

Group

and

1949
Central Illinois Light Company

pany,

of

Club, Travers Island.

Analysis—Eastman, Dillon & Co.,
15 Broad Street, New York 5, N. Y.

on

(Denver,

Club

New York annual summer outing

circular

Philip Morris & Co., Ltd*
Central

26, 1949

Bond

Hill

*

*

*

Field

Investment

In

N. Y.

important character¬

industry

Francisco 4,

San

Calif.

Investment Bankers Association
some

ticular purpose.
A

Fields

Youngberg,

&

Industrial

Counter

de¬

competitor apparently offers

to

ad¬

*An address by Mr. West at

York Society of Security

tions,

Russ

Corp.; and Steel Company earn¬
ings.

*

;

these

when*

I worked i journalists, with the best of inten-

subsidiary

| oanies of the Tidewater organiza-

Simultaneously with

times

over¬

Gold

Consolidated

—Analysis—Stone

sociation

thought should not be

Hentz
New

4, N. Y.

on

suc¬

renders

Manufac-

Street,

Beaver

60

Yuba

United

letters

utility
industry
has
undergone many vicissitudes dur¬
ing its unusually long existence
gas

&

of

as

The

130-odd years.

Co.,

31, 1948—Ira Haupt & Co.,
Broadway, New York 6, N. Y.

the control of fire makes possible.

together with all the, arts which

of

&

York

Merchants

Inc.—-Analysis—H.

turers,

Dec.

Street, New York 5, N. Y. (Ad¬
dress request attention of Mr. W.
G. Bourne, Jr.)
Also
available
are
descriptive

illustrated

one

meeting

to

pendent upon gas reserve can be

com-

afterwards im-

for

luncheon

will

heavens and bestow it upon man,

This

Por

vances in

United
New

Also available is a

5, N. Y.

frolic

The old Greek

You

York

5, N. Y.

Prometheus, when he became —Descriptive letter—Service Com¬
grieved at the neglect which the pany,
The
Commonwealth
&
Olympians had shown mankind, Southern
Corporation,
20
Pine

and administering an industry de-

stronger

with the necessity for

Gas

York

serves.

did

New

New

that

be considered by those analyzing

proved methods of welding joints
away

leaflet of market comment.

Co., Inc., 70 Pine Street,

Mountain

need—the

—

Co.J 36 Wall Street, New

Saxton &

York

in the home, busi¬

itself.

circular

United Corporation—Analysis—

a

Bureau, Inc., 46 Front Street, New

need for heat is as

lization

—

Co., 209

on

the

believe

sential to the comfort and

Perhaps the best philosophy to

that

New

with

tem.

steel pipe became available

mfercially and

ap-

natural

of

of

indicates
that
this
basic as civi¬

mythology

service

the possibility

I

human

ness

of Steel opened

up

which

fold

from

serious

remove

those

basic

a

sufficient

its

issues

need for heat to be used for mani¬

prehension in the mind of anyone

from

—

information

of

&

South La
Salle Street, Chicago 4, 111.

Aug.

worthy of your consideration.
First, the gas utility industry

ln Hie production and fabrication

to

characteristics

Company

of

many

industry are important factors in
judging the outlook for individual
companies. My comments will be

Idte 1920s that technical advances

of piping gas

Trane

10-year performance of 35 indus¬
trial stocks—National
Quotation

industry-wide

an

Nevertheless,

these

con-

satis-

this method to make
comparisons as to
availability of various
sources
of energy and min^als. For inctance, such a method
gives an indicated reserve of 30

far

Digest

Stock
unlisted

and

Broad¬

50

Bache &

are

relative

lhe

will

on

general

some

use

as

in

factory to

The distribu-

limited fashion

1824

as

and

a

of

sumption.

the

tfon of natural gas for public

Started in

hand

Monthly
listed

Inc.—Anal¬

Co.,

New York 4, N. Y.

Cruttenden

compendium

&

Co., Russ Build¬

_

taken

Sterchi Bros. Stores,

ing, San Francisco 4, Calif.

through 1948, and the amount of

distributing
and
selling this quality fuel in locali-

"will

Invest"—Kaiser &

known

today,

at least 11 times those

wk°le rather than to the individGas Association and the i Hf
companies whicn make up
Petroleum Institute|th^
stry\_ and my coinmenjs

American

have

of

its

.

cubic

trillion

six

as

Thus,

American

country, to
bting nature's energy reserves in
a
highly ref ned state to distant
markets

list—G.

Walker &

mately 300 New Jersey munici¬
palities with population figures,
lax
rates,
tax
collections
1945

The Reserves Committees of the

of the

corners

j having been at one time Chiei
in spite of j Engineer of one of our State Pub-

iot taken the time to add up the j we too devote our statistical efotal amount.
( forts toward the industry as a

today about the
gas industry because it is
with a glamour by reason
dramatic way it has of
its
huge
steel
pipes
the ground, poking into

the

of

reserves are

is heard

natural

173.6

were

.

llc+ Service Commissions Every
;rate case involved a similar survey an<| procedure from the viewof which we were aware in 1919 P^mt of the consumer as well as
Respite the fact that so much nat-j
stockholder, and to some exural gas has been withdrawn initent' labor and management,
the intervening years that I have |
As a national trade association,

the

gas industry—but my discussion here will refer only to

touched

States

dthdrawals

tied"

Most

that

reported

•

the previous year

Tver

-

piped gas services and
operations.

American

the

of

proved natural gas reserves

growing industries in the
United States—the so-called "bot-

-

in

vestors—Revisions

two-page spread of quotations on
over-the-counter
stocks—G, A.

procedures call
for a careful survey of the past
history, present operations and

The industry falls generally into
sofar main divisions—natural gas,

fastest

Square, Boston 9, Mass.

East

of

organization."

I

know,
the
people have never had

been

trillion feet had

30

Committee

The

225

way,

the
far

Shaw,

dastry which they use.

division

investment

Co.,

vestment Funds—A Safer Way to

its geologist, Mr.
estimated that the

through

W.

fabrication of the products of in-

khown

&

data—Lerner & Co., 10 Post Office

ysis—Dreyfus

activities

1918, after 11 trillion feet had been marketed and

in the

gas,

their

Summary
of
merits—Loewi

Bonds—

Making Your Money Work Prof-!
itably—Brochure on "Mutual In¬

the

of the year of

or lesser degree upon the services
it tenders in their homes and com-

petroleum
as
"L.P.G."

Oregon Portland Cement—Late
Institutional

Catholic

So
Tidewater

neither.

oil if

as

discovered and un- j interested in the natural gas busidiscovered, including gas mingled i ness to keep in mind in arriving
with oil, fell between five and at their decisions,
15 trillion cubic feet at the end

greater

mtercial establishments and

New

Street,

Commerce, Toronto, Ont., Canada.

recoverable,

158,000 people earn their
Jiving in this industry and practically every person in the United
a

Pine

20

Company—Memoran¬

useful

as

and I have always fol¬
lowed that philosophy in planning

or gas

gas,

total

'decade.

dependent to

Corp.,

dum—Newburger & Co., 1342 Wal¬
nut Street, Philadelphia 7, Pa.

vey,

present rate of growth, will
bfe more than doubled in the next

is

ties

York 5, N. Y.

H.

E.

the

States

of

Co., 1 Wall Street, New
York 5, N. Y.

or

Mayor

which,

Bank

—

the United States Geological Sur-

statement.

its

in

invested

than

more

since

lines

made

~

,

Canadian

ply of oil, and I asked Mr. Benson Mason Street, Milwaukee 2, Wis.
Paramount Pictures—Circular—
what his attitude, as President of
Hirsch & Co., 25 Broad
Street,
the Tidewater Company, was toColombia-Bolivia
New study New York 4, N. Y.
ward this apparent prospect of oil of economic and
political develop¬
running out of oil.
He said, "Mr. ments—Zippin & Company, 208
Permanente Metals Corp.—Cir¬
West, as you know, my father was South La Salle
Street, Chicago cular—Rotan, Mosle & Moreland,
a Methodist minister, and he al806
Rusk
Avenue,
Houston
2,
4, 111.
ways told me that he did not
Texas.
believe that God Almighty would
Common Stock Program for In¬
ever let us run out of anything
Southern

to find it,

alone,
For example, in 1919,

contain oil and

customers,
have
been

whom

~

~

"

Monthly commercial

any reason
supply of natural gas in
commercial pools in the United to regret this company policy, and
States—both recovered and un-; perhaps it is a good one for those

utility industry

gas

of poten¬

whose natural gas branch showed an early flareup

—

The

—

firms mentioned will be pleased
the following literature'.

interested parties

send

to

(New York City)

New York

Northern

Engineering Works—
Circular—First Guardian Securi-

Security Dealers As¬
Annual Dinner at
the Hotel Pierre Grand Ballroom.
sociation

24th

Volume 170

Number 4828

THE

COMMERCIAL

Outlook for Business

FINANCIAL

By DONALD B. SMITH*

Regarding short-term outlook, Mr. Smith sees strong underlying
supports for business in backlog of need for capital goods and current well distributed
purchasing power. Regards long-term outlook
as
unpredictable, but expresses belief common stocks are reason¬
ably priced as compared with other forms of investment.

•

in

raw

all measures of business has been

should

slight.

economic forecast to

the

historical

overall

can

perspective

correction

to

hardly
be
dignified
as
strong a term as

even

sion.

This

satisfactory*

situation

has

spite

almost

of

been

date

defer

with

are

reces¬

general

maintained

frantic

in

attempts

by many businessmen to reduce
inventories and in spite of con¬
tinuance. of

a
punitive- attitude
business on the part of
government.

toward
This

condition

suggests

strong

underlying supports which
be catalogued as follows:

(1) A
needs

may

capital

ma¬

(2) A well distributed purchas¬
ing power, both in the form of
liquid assets and unused credit,

lower

his

where

trade.

is

The

phasizing the fundamental

Longer-Term

ture

does

that

not

the cash

forms.

budget, the government

is moving over an $8 billion an¬
nual

to

rate

of surplus
probable $4-$5

year

a

ago

billion an¬
nual rate of deficit a year hence.
Government
payments
in
the
form of subsidies to agriculture
and social security benefits have
a

bolstered

to

age'

the

income

spend

number

of

of

about

concerns

cour¬

substantial

a

persons.

(4) Widespread
possible economic
"stuff"

and

in

that

dangers

them

is

serious

ments are made of.

and

not

the

maladjust¬

If speculative

enthusiasm

was widespread, one
would have to assume that it was

creating serious strains.
Because

of

supports, it

these

underlying
reasonable to
business is in the

that
of shaking down from

process

the

part

are

and

parcel

capitalistic system and

not be avoided without

benefits

which

talism.

Our

can¬

giving

up

capi¬
government
has
accompany

5

million

this

year.

Re¬

cently
has

ket

a

two

in

Mexico

for

be

wia

season

ahead
in the

ex¬

White

D.

must go

The

closing.

tries.

European mill demand for Amer¬
ican cotton continues to rise.

competitors

they doing?
and hold

kets?

what are
we obtain

and

How can

our

These

the. heart of

'

share of these

mar¬

questions strike to
ability to export

The export demand for Amer¬
ican cotton arises almost solely

when conditions become ripe for

from

it. No government can prevent de¬
a

degree of

power

substantially reduce

personal freedom.
A desirable objective for gov¬
ernment would be to stop trying
to manage the details of business

social

secu'rity

and

which

automatic

.in

the

of

progressive

essentially
operation, it

are

their

be able to soften and keep
corrections
when
they
come.
Fixed
pegs,
whether of
prices, interest rates, or employ¬

an

overstrained, inefficient condition
to
a
hardhitting,
competitive
basis; that it is not necessary to
got through a severe liquidation
to accomplish this desirable end;
and that more good years are
ahead.
1948 was probably the
high of the economy as a whole
for many years to come.
1949
will undoubtedly be lower than

Common stocks
vestments

as a

reasonably

appear

other

to

ment.

gain
are

They

forms

are

not

of
on

There

is

these

years,

real

danger that the
being given
both by businessmen and govern¬
time

are

ton—such

ment

short-term

to

economic

forecasts is way out of proportion
to
the reliability either of the

basic

data

the

or

judgments of

those

interpreting
margin of error is

The
likely to be
too great to warrant more than
the crudest type of estimates. Cer¬
tainly they do not provide ade¬
quate basis for drastic changes of
business or government policy. It
does

tical

investor

who

a

or

tions

such
not

ance

sheet

tory

than

his trade.

as

at

Business

that, under condi¬
1947

or

over-extend
or

carry

the

1948,
his

he
bal¬

inven¬

more

of

a

talk

Stanford

Conference,

by

Mr.

University

Palo

Cal.r July 26,-1949.




in

other

foreign

coun¬

'

does

not

more

than 12 million of these bales was
consumed by foreign mills that
import cotton.
So the maximum
extent

of

cotton

for

nations

the

of

less

was

world

all

the

exporting
this

world
12

in

ton

has

SAN

Alto,

The

stantial.

But the cotton used for

imported. ' Some
required to re¬
working stocks so the

have

for

duce

their

in

total

amount

export from the mills situated

been

of cotton imported
consuming countries may
only about 10.6 million bales'

foreign countries that have to im¬
port all or nearly all of the cotton

into all

they

this

consume.

The mills of interest to

those

situated

have to

the

cotton

again
lets.

in

import all

they

narrows
As

we

us

countries
or

that

This

consume.

market

our

are

nearly all of

examine

the

be

must

now

they

.

words,

FRANCISCO,

Douglas R. Poston, E.
L.

buy

as

much cotton

J.

Oligher

and

C.

Of

which

need

and

are

able

♦An address by

Mr. White be¬

fore the
the

10th Annual Meeting of
Cotton Congress, Dallas,

Texas, July 28, 1949.

to

pay

These pro¬

gressive

restrictions present cer¬
our fulfilling the
real need for cotton by millions of
people living in various parts of
tain

barriers to

lars and cannot get them.

This is under

no

circumstances

to

buy,

or as a

The

to

be construed

solicitation of

as an

an

their

^wn

kind of money, such as

(Continued

offering of these securities for sale,

offer to buy,

offer is made only by

means

any

on page

or as an

offer

of such securities.

of the Prospectus.

'

•

NEW ISSUES

Pennsylvania Power & Light Company
75,000 Shares 4%% Preferred Stock
(3100 Par, Cumulative)

12,000 Shares 4

Price (both

Ch?onicle>

CALIF.—
R. Hanna,

sPreferred %
eireS% Stock

issues)

$103.75 per

Plus accrued dividends from

share

July 1, 1949

Raymond

Copies of the Prospectus

Street, members of the

York

and

San

Francisco

may

be obtained from

any

of the several underwriters,

including the undersigned, only in states in which such underwriters

Stock

Exchanges.
Mr.
Poston
formerly a partner in Needham & Co., of Palo Alto, with

act as

dealers in securities and in which such

Prospectus

may

are

qualified

to

legally be distributed.

was

which Messrs.
Sherwood

Hanna, Oligher and

were

Eugene Ballard Dies
:

The First Boston

also associated.

Eugene S. Ballard, partner in
Conning and Company and Bal¬
lard of Hartford, died at the Hart¬
ford Hospital at the age of 72. j

Corporation

Kidder, Peabody & Co.
Merrill

Lynch, Pierce, Fenner & Beane

Conse¬

quently ,they have no means with
to
pay
for
our
cotton.
They generally have plenty of

which

Irving Lundborg & Co., 486

California
New

as

Currency Problems
;

Sherwood have become associated
with

the

consume.

out¬
world

other

In

year.

mills have been compelled to use
their reserve stocks so that they

necessity, textile mill operr
ators must import the kind of cot¬

for American cotton.

Lundborg
Fiancial

bales.

been

mills

Douglas Poston, Others
to

season

million

3100 Par, Cumulative)

(Special

for

market

cotton

than

siz¬

home

for

basis.

Join Irving

the

mar-

estimated that during

now

immediate

attractive

to

the past year the world consumed
27.7 million bales of cotton.
Less

er

is necessary to serve
By the same token, he

♦Summary
Smith

statis¬

economic reasoning to tell

businessman

should

maximum

them.

elaborate

take

not

through the textile mills

other demand for cot¬

as

attention

and

valuable

a

cotton

consumer

the bar¬

Long-term bonds
unattractive and, for a bond
counter.

at

[First, I want to differentiate be¬ Actually, not quite that much cot¬

yield by affording an ultimate
opportunity to buy corporate and
municipal long-term bonds on a

1950 " probably
but

It

cotton.

It is

like

ultimate

invest¬

by
any standards except 1948, should
be generally satisfactory.

and
1949

moving

material

class of in¬

priced, both absolutely, and rela¬
tive

than

market, we find that our natural
outlets
are
restricted, first, to
spinning,
ton their mills are adapted to use
countries with textile mills; sec¬
quilting, manufacture of padded
ond, to countries which import and from exporting countries to
clothing and the like, and in the cotton for their own textile
mills; which they can make payments.
aggregate these demands are sub¬
and,
third, to those
countries Many mills do not have U. S. dol¬
There

ment, should be avoided in favor
of easing natural adjustments.

lower

1948,

it

may

require a
income,
short-term holdings for the time
being should be worth the low¬

than

raw

foreign countries producing
able
quantities
of
cotton

textile

house in order.

own

By doing an efficient, low-cost
job of performing limited services,
and by employing devices such as
taxation

demand

people in these

our

„

mills situated in foreign countries.

which would

China,

Foreign Mill Requirements

our

cotton.

the

Europe,

tween the cotton mills located

Extent of World Market

How large is the world market
for American cotton?
Who are
our

in

are

reach the

situated
now

for

Better ways must be de-

for

various

Japan

markets with
E.

until there is

us,

solution

kets.

world

cannot

than

season

Brazil—all

and, to a smaller
extent, Canada.
Many countr.es
with few, if any, spindles have
large populations to clothe.
We

exported

was

better

a

Sta+^s

raw

India,

in tne
just

ported

and

tinuously before

I present.
cotton veloped

United

the

that

cotton

more

t>ie

of

producing and exporting countries
—nearly all the cotton spindles in

cotton,, but
prospects
are

,

1

Outside

American

still

is, for all practical purposes,
to foreign consuming

mills.

large

markets

the world, generally in the underdeveloped sections of the world,
This problem should be kept con-

limited

subs tantial

cutback

i

these purposes is generally grown
within the country.
So our mar-

there

been

nearly

<$>

bales

neither the power nor the wisdom
to prevent
a
severe
depression

pression without

large markets, U. S.

tv/o

exports have been

orderly

seems

presume

belief

a

cotton

the export

war

>

avoid serious depres¬
future.
Business

we can

and to set its

of

awareness

View

indicate

war

market for American cotton has been increasinglyexpanded as a result of aggressive forward-looking programs
adopted by our government.
Cotton exports have increased from less than 2
million bales at tne war's end, to

The foregoing relatively
hope¬
ful picture of the near-term fu¬

of the

two

propo¬

sition of supplying the best goods
at
the
lowest
price
consistent
with financial strength.

,

takes

of

country
on
guessing
short-term
economic
swings but by everlastingly em¬

credit.

This

to a point
serving
the

companies
were
not built

fluctuations

policy.
Through

not

him to

great

this

unwise and excessive extension of

fiscal

or cause

inventory

he

sions

Government

him to

keep him in a
position
on

to

quality

and the absence of strains due to

(3)

cause

competitive

costs and

for capital

buildings, automobiles and roads.

short-term

any

Admits since

v

expenditures which

necessary

strong

substantial backlog of
goods, such as

,

allow

exports will continue, to increase.

Since the end of the

(1949-1950)
substantial

cotton

largely financed
by Federal Government, and recommends exchange of foreign goods and
strategic materials for raw
cotton wJh dollar-short countries.
Foresees no excessive carry-over of cotton
crop and no unusual
pressure of synthetic fibres in competition with cotton,

specific industries. Because declines
for individual prices and industries have been
scattered over a twoyear period and because consumers have continued to absorb
goods at
record levels, the effect on over-^
In

v

Agricultural Department specialist predicts, despite substantial set-backs in

.

not

•

Economic Cooperation Administration

Investment Counsellors

Short-Term View

9

By E. D. WHITE*

Assistant Secretary of Agriculture
Chief, Cotton and Wool Fibres Branch

Partner, Scudder, Stevens & Clark

Recent economic corrections have been
terial prices and in volume for

(553)

Expanding World Markets for American Cotton

And Investments
V

CHRONICLE

Drexel & Co.

Lehman Brothers

Eastman, Dillon & Co.

33)

COMMERCIAL

THE

(554)

10;

873,000

New

issue of $15,000,000

York, the net proceeds to be4>
for the payment of $8 mil¬

used

lion

short-term

of
for

made

loans

bank

construction
expenditures and the balance for
financing

the util¬

estimated cost of

The

firm's revised
construction
program for the
years
1949 to
1953, inclusive, is approximately
$95 million which, together with
the payment of $5 million of bank
loans outstanding at Dec. 31, 1948,
ity

expenditures by
during such five

will require gross
the

company

years

of approximately $100 mil¬

lion.

Cash resources from opera¬

trend
about $30

tions should, under present

provide

business,

of

million to meet such expenditures,
it

The balance of $70

stated.

was

however, must be
new financing.

million,

de¬

The
sale
of
the
above-mentioned
bonds and the sale in April, 1949,
from

rived

cumula¬

$10 million of 4.70%

of

preferred stock will reduce
remaining required balance

tive
this

approximately $45 million. If
operation of the proposed new
Northern Division generating sta¬
to

tion

can

be deferred until the end

about $5 million of such
be deferred until

of 1954,

would

balance

that year.
.*

offering price for
242,785 shares of Illinois Power
Co.

(no

stock

common

par

$28.50
$28.9938
per share. Straus & Blosser is
participating in this
offering

value)

reduced

was

share,

per

net,

to

from

publicly on
June 21 for the account of North
which

made

was

American Co. and North Ameri¬

Co. The

Light and Power

can

reduction

in

the

price

reflects

the fact that the common stock

is selling ex-the dividend of 50
cents per share which was paid
on

Aug. 1.

.

*

Sealed
until

11

bids

'

,

*

*

will

received

be

(CST) on Aug. 18
by Bryan Hartnett, District Clerk,
for the purchase of $8,300,000 Chi¬
a.m.

cago Sanitary District construc¬
tion, series 14, construction bonds
to be dated
Sept. 1, ,1949.
At
least
three banking groups
are

reported to be entering the com¬

petition for this issue.
These in¬
clude one led by Halsey, Stuart
& Co. Inc., one by the Continental
National

Illinois
Co. and

Bank

&

Trust

by the Chase National
Bank of the City of New York.
On March 24, last, the District
one

sold $15,000,000 bonds

headed

to

a group

Stuart & Co.

by Halsey,

Inc.

'
*

*

*

.

.

,V-'i

July 27 headed
fered

gen¬
mortgage 2%%

1974,

bonds, series B, due Aug. 15,

Wheeling and Lake Erie

the

of

accrued in¬

Ry. Co. at 98% % and

1979,

underwriting
publicly of¬

an

which

issue of $13,000,000

G.

laney,

Co. Inc., Mul-

Becker &

Wells &

Co.,

Ketcham &

Co.,

Sills,
The

Fairman
net

Detmer &

Nongard,

and

Harris,

Inc.

&

proceeds will be used

to pay for new construction.

Co. Inc., pub¬

990,000 Chesapeake & Ohio Ry.
2 y8% equipment trust certificates,7
third equipment trust of 1949, at
prices to yield 1.10% to 2.55%,
according to maturity; on July 21,

to

nationwide

2% %

Tel. DEarborn 2-5600

Tele. CG 146-7




On

leading

companies in the industry,
covering the first half of the

report

a

consolidated basis covering the Aetna Insurance

a

Group

an

interest.

The

of the year

earlier. On the same basis investment income amounted
$1,786,922 compared with $1,695,099 for the year before or, a gain

gain of $2,382,735, totaling $52,365,843
as against $49,983,108
in 1948. Premiums earned showed a similar
trend rising from $45,468,839 to $47,553,842 for a gain of $2,085,003
losses

The

k

due
and

same

able results
half and

Chicago

record

a

The

general factors which have contributed to these favor¬
still present and should result in an excellent second
year for insurance industry
fire losses has been moving

of

trend

be

in

the

A.

Becker

G.

$24,579,336 a year ago to $21,017,669
losses to both premiums written

are

to

Co.;

down from

were

A.

&

a

4.6%.

first of the year.

Whipple

.

,

Premium volume showed

As

$150,000,090
(New Jersey)

debentures
at 100^%

1974,

about

For the first

10%

decrease

below

a

year

downward since the
months the total is estimated
Part of the reason for this lies

seven

ago.

practically all goods and property

the prices of

in

earnings.

& Co. Inc.; William

Blair & Co.;
Blunt, Ellis & Simmons; Central

from

Republic Co. (Inc.); Julien Col¬

the companies to have a better experience on these lines. Here, also,
lower costs for repairs have been a consideration. Fuller covrage of
risks has been another factor which has and will continue to affect

lins & Co.; Paul II. Davis & Co.;

Farwell, Chapman & Co.; Glore,

Forgan &
Co.

Harris, Hall &
Illinois Co.;

Co.;

(Inc.);

The

Kebbon McCormick &

Co.; and

Mullaney, Wells & Co.

the high levels of 1947-1948.
The adjustments of rates on automobile coverages

has also helped

operating results.
^
When prices were rising, property was not generally coveredfor the full value and it took several years for the under-insured
risks to take greater coverage.

This lag resulted in a rise in the loss
leveling off or declining a reversal
previous trend is indicated.
These improvements in underwriting experience and the con¬
tinued gains in investment earnings have found reflection in the
dividend policies of some companies.
At the end of last year a
number of concerns increased payments by small amounts or made
ratio.

Now with property values

of the

or extra distributions.
During the past few weeks, how¬
there have been several other leading units announcing changes

year-end

share for the corresponding period

ever,

of last

in their payments.

Net sales during the

year.

period

$14,078,176,

were

Possibly the most noteworthy change of policy was that of the
This Company had continued a .most con¬
servative policy for a number of years and some change had been

Hartford Fire Insurance.

Julien Collins & Co., Detmer

McCormick

the first half of the current year,

expected for quite

& Co. and Kebbon,

$14,572,476

sales totaled

participated on July 14
in the initial public offering of

net

440,000 shares of Gas Industries

$1.20

per

(par

sales

of

Co.

&

Fund

Inc.

$16.25

per

share

000

following prices:
share on each unit

$15.99 per
each unit sale of $50,-

on

but less than $100,-

or more

$15.82

and

000;

sale

unit

each

investment

end

wrote

the

shares

of

op¬

"specialty

fund," concentrating its invest¬
in

ments

securities

of

compa¬

nies identified with the gas in¬

dustry.

completion

The

of

400,000 shares

of the

nounced

ceeds

*

Oliver

The

Fund

the

to

5,

Aug.

on

an¬

was

with

pro¬

amounting

*

*

Corp. Chicago, has

privately to • an insurance
$15,000,000 3%% promis¬
sory
note
due
July" 1/ 1969,
through Blyth & Co., Inc. The net
proceeds Will be used to pay $7,500,000 in bank loans, and the
a

*

offering

of

972,624

Booth Fisheries Corp.,

at $20 per share to the

latter

firm's

holders

common

the

were

Chicago,

year.

Net

$589,012,

Co.,

Blunt

Ellis

Collins
Co.

Blair

William
&

(Inc.)

&

Harris,

Working

&

subscribed
for
by
the
stockholders, the 69,750 remain¬

ing shares being subscribed for

compared

with

share
$2.65

April 30, 1948.

capital, iqcrease.cf.from

33J/3%

would

be

In other words

a

stock

paid to existing shareholders.

The President of the Company also announced that if the addi¬
tional shares are approved and issued, it was the intention of the
Directors to continue paying the present dividend of $2.50 on the
increased number of shares.
The

their

Insurance

Home

is

another

of

the

companies

increase

to

stockholders'

payments. Last June the semi-annual rate was
raised from 65 cents to 70 cents. A similar increase was made at the
same

time

a

The annual rate is now
recently declared a 20

year ago.

Insurance

Aetna

$1.40.
extra

payment

This will increase the total payment

indicated

cents

The

Company had been paying semi-annual dividends of 25 cents with
extras of.
ment

was

In July the pay¬

10 cents for a total payment of 70 cents.
increased to 45 cents

or

90 cents a

at the annual rate of

share.

These

dividend

changes

are

believed

to

be some

of the first

in

a
rather general upward adjustment of payments.
Numerous
others should follow throughout the remaining months of the year.

by employees.
*

*

*

With

Caterpillar Tractor Co. for the
month

of

June,

1949,

reported

charges and Federal taxes of $1,compared

with

sales

(Special to The Financial

and

half-year ended

profit

nold P. Staunton has become

members of the New York

Exchange
Mr.

fect

of

of

1948.

the

strike

Staunton

other

Stock

exchanges.

Operations

for

which ~ started

Co., and

York

New

elected

been

a

Stock

member of the
Exchange, has

Chairman

the

of

Board of Directors of the Roches¬
ter Transit

Corporation to succeed

the late Gilbert Mosher.

formerly with

was

Mueller With Charles Brew
LOS

George

ANGELES,
K.

affiliated
&

Co.,

He was

April 8, 1948 and ended May 12,

^ett

1948.

Inc.

v

and

With Dempsey-Tegeler

six

half-year reflect the ef¬
a

as¬

$8,639,852,

first

Baumer, partner in Erickson Per¬

G. Brashears & Co.

against $90,149,091 and $1,841,071,
for

CALIF.—Ar¬

Goodwin, 550 South Spring Street,

30, 1949, sales totaled $128,-

004,717

Chronicle)

kins &

ANGELES,

sociated with Walston, Hoffman &

corresponding month

the

LOS

of

137 for

of

ROCHESTER, N. Y.—Walter H.

$834,-

and

profit

Chairman of the Board

Walston,;

Hoffman Firm

sales of $20,989,242 and profit after

the 1948

for the year ended

Hall

aggregate of 902,874 shares

547,

$2.57

Co.,

Simmons, Julien

Co.,

months

were

&

and The Illinois Co.

After preferred dividends of $55,common

of

for the year to $2.00 as compared with $1.80 last year.
American Insurance has also stepped up its distribution.

&

respectively,

per

dividend

lyn & Co., Inc., Bacon, Whipple

June

was

existing stockholders in the ratio of one

additional share for each three shares held.

following

$19,864,636

against $26,228,-

taxes

tional shares at par value to

for its shareholders.

of

earnings

stock¬

j

Chicago underwriters: A. C. Al¬

last year. For the

after

par

value)

ended April 30,
1949 reported sales and revenues
as

(no

time.

12, 1949 Hartford Fire announced that subject to the
approval of the stockholders, the capital of the Company would be
increased from $12 million to $16 million by issuing 400,000 addi¬

Electric

stock

*

for the fiscal year

$27,072,151,

102

Philadelphia

common

274,003,
*

*

some

On July

were

sold

firm

Co.

An
•

*

in the group of

investment hankers who under¬

or

firm—will

were

*

.<

$100,000

of

so-called

a

as

V'

Included

on

Gas Industries—an open-

more.

VJ

share

per

$28,650,652 and

$2,398,528, or
share, compared with
$29,613,548
and
net
profits of $3,442,000, or $1.73 per
share, for the first half of 1948.

$50,000;

under

sale

stock

common

the

at

$1)

net after taxes

compared with $607,280 last year.

209 S.La Salle Street'Chicago 4

the

of

issued

Co.,

for the three
months ended June 30, 1948. For

538, for the preceding

Exchange

another

for the current period, the ratio of
and earned improved materially.

participating
were:
C. Allyn & Co., Inc.; Bacon,

against

income

Members of Chicago Stock

week

Insurance

with highly satisfactory results.

year

or

headed

sold

and

of

group

houses,'

15,

1949

$44,600,000.

William A. Fuller & Co.

This

Aetna

of about 5%.

$3,990,000 Kansas City Southern
Ry. 2Vz % equipment trust certifi¬ f Acme Steel Co., Chicago, re¬
cates, series I, at prices to yield ports a net income, after Federal
1.10% to 2.675%, according to ma¬ taxes, of $1,111,680, or 55 cents
turity; and on July 28, $5,640,000 per share, for the quarter ended
June
30, 1949, which compares
Louisiana & Arkansas Ry. 2%%
with $1,286,848, or 65 cents per
equipment trust certificates, series

Northern Indiana

Common & Preferred

by 10% to 12%.

bankers

remainder added to working capi¬
tal which
will then amount to

Public Service

their semi-annual statements showing a substantial underwriting
profit for the six months period compared to a, loss in the year
previous. Investment income continued to increase and was higher

to

accrued

licly offered the following equip¬
ment trust issues: On July 13, $3,-

at prices to yield 1.10%
2.50%, according to maturity.

i

pleted, and transfer of operations

July

"...

D,

'/]/:;

covering the first six months
of operations of the current year, results have been about in line
or
slightly better than had been expected. Two weeks ago the
Continental Ins. Co. and the Fidelity-Phenix Fire Ins. Co. issued
far

so

underwriting profit of $2,£35,171 was reported for the first six months
Compared with an underwriting loss of $1,659,877 for the same period

25-year

to $6,012,000.

A.

modern

o r y

Standard Oil Co.

addition, three other groups
of underwriters, also headed by

at

101%% and accrued interest.
Other Chicago bankers partici¬
pating in this offering were:

a

reports issued

for Borg-Warner's
parts
division,
near
Cleveland, Ohio,
is now com¬
t

offered

In

Stuart &

of

Construction

o r a

in¬
by
Morgan, Stanley & Co., New
York, N. Y., on July 13 publiciy

29, $5,500,000 Worcester
County Electric Co. first mortbonds, series A, 2 %%, due July 1,
1979, at 100.75% and accrued

3%
1, 1974 of
the Columbia Gas System, Inc.
debentures due Aug.

b

the

aviation

a

A

July

Halsey,

the automotive in¬
approaching record. fig¬

From

that of

vestment

England Power Co. first
mortgage bonds, series C, 2 %%,
due
July 1, 1979, at 100%%
and
accrued interest, and on

U,

indi¬
vol¬

by the end of September, he ad¬

New

*

third-quarter

writing profits and investment earnings.

manufacturing plant and research
1

at

*

the

"sales fore¬

ded.

3% series due July 1,
102.25% and accrued
on
July 22, $5,000,000

bends,

that

announced

for

President,

Davis,

S.

This Week—Insurance Stocks
The fundamental factors affecting the fire and casualty insurance
industry continue to be favorable from the standpoint of under¬

to the new site will be completed

$4,750,000 St. Joseph Light
Co.
first mortgage

sale

an

C.

ures."

Power

interest

continues

condition

financial

dustry

July 13, $2,000,000 first mortgage

&

after
$10,889,052, equal
to $4.52 per share on the common
stock after preferred dividend re¬
quirements, and compares with
$14,587,832, or $6.09 per common
share, for the six months ended
Jun6 30, 1948. The corporation's
totaled

taxes,

ume,

4^% bonds, series A, due July
1, 1974, of the Akron Union Pas-,
senger Depot Co. at 100% and
accrued interest
(which issue
was
oversubscribed); on July

By H. E. JOHNSON

compared
first-

$146,028,940,

cate the continuance of good

past months also publicly offered
the
following
securities:
On

21,

totaled

casts

Halsey, Stuart & Co. Inc. (as
underwriter)
during the

sole

Bank and Insurance Stocks

Borg-Warner

of

with $161,877,865 during the
half of
1948. Net profits,

also

*

*

*

sales

net

Corp. and its subsidiaries for the
six
months
of this
year

first

strong.

terest.

erate

>

...vv;.:

Halsey, Stuart & Co. Inc. on
syndicate

Aug. 3

on

$6,870,000

offered

publicly

*

the

8

City,

Co. of New York

interest.

1

As of the opening of business

July

with R. W. Pressprich &

gether

eral and refunding

construction.

new

Co. Inc. to¬

&

Stuart

Halsey,

on

on

The

Illinois Power Co, first mortgage bonds,
2%% series due July 1, 1979, was publicly offered on July 28 at
100.50% and accrued interest by a group of underwriters headed by
White, Weld & Co. and Merrill Lynch, Pierce, Fenner & Beane of
An

Thursday, August 11, 1949

May 1, 1948 to $3,April 30, 1949.

$3,682,000

Illinois Brevities

CHRONICLE

FINANCIAL

&

&

Johnson

with

210

CALIF.—

has

become

Dempsey-Tegeler

West

Seventh

Street.

previously with C. E. AbCo. and Slayton & Co.,
I

{Special to Tie Financial Chronicle)'

WAUSAU,
Mueller

has

WIS.—Arthur E. A.
become

with Charles W. Brew

North
Mr.

Water

Mueller

A. C.

Street,
was

Allyn & Co.

associated
& Co.,

735

Milwaukee.

formerly

with

Number 4828

170

Volume

COMMERCIAL'&

THE

Will U.S.Private Capital

FINANCIAL

CHRONICLE

No Need to

Flow to Britain?

Member, Small Business Credit Commission, ABA

forecasting little additional U. S. financial assistance io

;

Britain in

approaching conference with U. S. Treasury officials in
Washington, notes that public attitude toward private U. S. capital
investment in Britain has become more friendly, but expresses
doubt it will

LONDON, ENG.—The end-of-July slump in government loans
gives some indication of the degree of anxiety that prevails in Britain
about the outlook.
It only indicates, however, the sentiments of a
small fraction of the community. The large majority of the British
public is not
concerned
established
by
British
capital.

Consols
War

This

investments 4

more

the

earned

up

millions
Dr. Pki]

industrial

of

Einzif

their

complacency.

is

It

only the financially-minded busi¬
and the

nessman

that

regards

British

by

dollar

the

dividends

payable

of

fled

as

the

of

result

a

was

capable

approaching storm.

Marshall

terprise

far as industries pro¬

as

the

ducing stockpiling materials are
concerned.
Moreover, the, United

mism.

States

This section of the public views
outlook with growing pessi¬

Although hopes of a sat¬
of the coming
Washington talks have not been

abandoned,

people

few

has

Government

aside

set

special fund for the purpose 6f
granting transfer guarantees to
In practice,
really American investors.

isfactory outcome

R.

a

expect a solution to emerge from

the extent to which these new fa¬

that

cilities

those who

The

form

can

Government

States

of

number

an

opinion

are

none

as

too

bright.
Judging by the attitude
Congress towards the second
annual
instalment
of
Marshall

of

Plan

aid,

but

none

optimists

rigible

American

a

few incor¬

expect

financial

that

assistance

in

have

been

does

view

a

what

for

The

purposes.

made

its

.Committee

report

on

Feb. 2,

1948,

been

case,

this view

enacted

and

It

was

by

which

to

guar¬

adjustment had to take place be¬
the economy could not con¬

spiral.

ary

been

Nevertheless,
sufficiently

no

Senate

are

left to

Banking,

materials

financed

are

to

transfer

the

This is not an

she

stands

to

gain is couragement of American invest¬
have ment in Britain and in the British
material Empire, even though such invest¬

steadier

resulted in

prices.

raw

ment

•

forecast

latest

The

American

assistance

is

would

that
as¬

American
in

investment

in

Britain

the

Sterling Aiea.
The
two governments
would confine
themselves to doing their best to
and

such investment.

encourage

It is

expected
in > London
that
the
Treasury's experts will submit to
Washington meeting in Sep¬
a
series of practical pro¬

the

tember

posals

to

indeed

a

that effect.
There is
perceptible change no¬

ticeable in the government's
tude

towards

ment.

American

atti¬

invest¬

Until

comparatively recentlv the Treasury's policy was
to refuse permission for American
firms to establish works in Britain
unless

(1)

the

undertaking
dollars

the

or

same

is

save

new

June

30,

1947,

should

tion 4.

to

pursuant
not

exceed

$1

to

dollars;

and

earn

(2)

industries could not be




to

be

more

costly

is

occur

It

and
detri¬

not seem to
to them that the admission

American

ing

was,

be

to

on

the

marketable

British

overseas

in¬

vestments, constitutes yet another
the liquidation of Brit¬

stage in

ain's national assets for the sake
of

In

advancing

reasons

why

the

people realize that this policy

the
gap

need

with

faced.

the

day

when

hands

has

to

postpones

the

that the average

'

accompanying the
RFC legislation of 1948, in which
the
10-year limitation
on
RFC
loans was originally imposed, tne
Senate
Committee stated:
"The
Committee recommends a limita¬
In

tion

its report

of

lieves

10

that

Will

that

it

because

years

discre-

be

the

government

(Continued

or an

even

on page

38);

j

or a solicitation
only by the Prospectus.

effer to buy,

The California

Oregon
Company

Power

Common Stock
(Par Value $20 Per Share)

Price $23.25 per

share

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

offer these - securities

under applicable securities laws.

The First Boston Corporation

Blyth & Co., Inc.

Kidder, Peabody & Co.

Eastman, Dillon & Co.

Dean Witter & Co.

Merrill Lynch,

allow" RFC

Smith, Barney & Co.

Pierce, Fenner & Beane

Central Republic

II. M. Byllcsby and Company
(Incorporated)

Wulff, Hansen & Co.
Brush, Slocumb & Co.

Davis, Skaggs & Co.

Mitchum, Tully & Co.

Pacific Northwest

Pacific Company

Wm. P.

Harper & Son & Co.

Mason Brothers

Atkinson, Jones & Cow

Campbell & Robbins

Blankenship, Gould & Blakely

Incorporated

Incorporated

Handel, Lundborg & Patten, Inc.
*A

fore

statement

the

by

Senate

Mr. Muir be¬
Committee on

tion

Finance

Corporation

Washington, D. C., Aug. 2,

Act,

1949.'

Sutro & Co.

-

August 10, i()4\?

of California

Kayden, Miller & Co.

Irving Lundborg & Co.
Raggio, Reed & Co.

Company

Foster & Marshall

Davies & Mejia

Hill Richards & Co.

Revel'Miller & Co.

Walston, Hoffman & Goodwin

William R. Staats Co.

Bateman, Eichler & Co.

Graham, Parsons & Co.

Elworthy & Co.

E. M. Adams & Co.

First California Company

Schwabacher & Co.

Company

(Incorporated)

be¬

Banking and Currency with refer¬
for handling the dollar
ence to Bill to amend Reconstruc¬

firm

lead

the removal of
loan maturities

beyond 10 years on loans made by

bringing temporary relief. Very

few

the

does

investment, follow¬
liquidation of easily

could

on

250,000 Shares

bil¬

maturity limit should be extended

make.

legislation.
of

assistance

bound

severe

In other words,

this limitation

offering of these Shares for sale,

Sec¬

corporation, witnesses stated
maturity.of pres¬
ent RFC loans is 5 to 6 years and
mental to British trade within the
that a 10-year maturity is ade¬
Sterling Area.
Possibly the ex¬
quate for loans to most business
planation
is that Conservatives
enterprises.
We believe that 10
hope that, for the sake of encour¬
years are more than ample time
aging the
inflow of American
for the liquidation of any business
capital, the Socialist Government
loan that the RFC is authorized to
would call a halt to anti-dapitalist
effect

industrial merely

expected

bound

official

than

its

mainly the form of private

sume

is

there

investment, leaving the gov¬
capital.

.

that
are
sufficient
to
warrant
Curiously enough, the Conserv¬
sterling account set aside under
further amendment of the Act at
the Marshall Plan for that pur¬ ative quarters which were op¬
this time.
pose.This means that Britain posed to the American loan of
does not- receive any dollars for 1946 and to Marshall Plan aid do Why Maturity Limit Should Not
to object to the en¬
these exports. - The only indirect not seem
Be Extended

advantage

ital

ernment funds as the sole

of an offer to buy, any of such Shares. The offering is made

risk,

that the American purchases

made, renewed and extended
indefinitely.
There
are
three

Currency
Commiitee in its report of Feb. 2,

of the

out

be

and

there is no lion outstanding at any one time.
likelihood
of
any
large-scale There were certain minor excep¬
loans would be increased in order
American investment in Europe. tions to this and one major excep¬
to fill Britain's widening dollar
is
that
outstanding
loans
Prospects are considered to be tion
gap.
Until a few weeks ago hopes
somewhat brighter for American which were made prior to June 30,
were
built mainly on American
investment in the Sterling Area 1947, were not to
be included.
stockpiling
purchases.
In
the
the
countries.
But it is bound to take Subsequent amendments to
meantime, the United States Gov¬
law have increased the corpora¬
time and it would be idle to ekernment
has
in
fact
resumed
tion's
lending-, and
investment
pecl'thc flow of American private
these operations, out of the ap¬
It does
capital—if there should be any— capacity to $2^2 billion.
propriations for 1949-50. But the
bring relief to the dollar position not appear that there have been
purchases for Sterling Area raw
changes in the economy since
in a matter of months.
the form of grants or government

is

loans could

the conclusion of the

The Committee
also
recom¬
Europe is not considered to
satisfactory field for Amer¬ mended that the total amount of
ican investment, owing to po¬ investments, loans, purchases and
litical uncertainty.
Unless means commitments made subsequent to

devised

some

reasons

tinue indefinitely on the inflation¬

investing authority to $5 bil¬ maturities

lion.

a

are

conceivable that

it

on

is held out

antee the political risk in addition

corporation,

resulting

were

that

be

the

from the report changes in the over-all condition more deeply into thA channels of
of business to warrant an abandon¬ private
business and industrial
May 25, 1948;
ment of these principles which production.
It is the experience
In testifying on S; 2344 we yyisli
the : Committee
laid
down
last of the banking business that bor¬
to
express
our
views on tWo
rarely
require business
year, nor have witnesses for the rowers
phases of the Bill, the first in
advanced
sufficient loans, as distinct from equity cap¬
Section 1 which would waive the corporation
reason for doing so.
ital, for periods as long as 10
time limit on loans, and the other
It seems to us that any
If all limitation on maturities years.
in Section 2 which would increase
is r removed
and loan with a repayment schedule
the corporation's over-all lending of RFC loans

Act

negligible.

any

and

of

not

cause

and the amendments to the RFC have

used

far

aid

funds which

has thus 1948, that the maturity of RFC
loans be limited to 10 years be¬
The main
cause the Committee believed that
to the nature of the solution they reason is probably that the trend
this would allow the RFC to en¬
is at present against an expansion
expect is even smaller.
in
longer-term
financing
of commitments, whether at home gage
It is now almost generally real¬
without supplying capital funds,
or
abroad,
for fear, of losses
ized that the chances of additional
which is the function of private
through a trade recession. But, in
financial assistance by the United
investors..
*.

meeting.

such

the

vent

and S": its

Muir
,

modi-

for

need

a

yet will tend to pre¬
supplying
of
capital
is really the task of
private investors.
This limitation

and
Earl

an¬

the

to

\

British attitude

The

Jf j

cap¬

the increase of the burden of

nual

gen¬

price

-

>

through

shortage

where

tion

why this in inadvisable.
First, such a loan tends to become
apply to securities or permanent equity investment by
to
determin¬ obligations • received - in
bank¬ the government in private enter¬
ing
whether ruptcy, reorganization or receiv;- prise; second, it tends to keep the
it
should
be ership.;
Financial assistance in marginal or weak producer in
aid of public projects may carry business in competition, with the
continued
or
discontinued a maturity up to 40 years."
: ■ ; i
strong and established self-reliant
There has, of course, been
and
,if
con¬
a producer; and third/ it might be
tinued,
with downward turn in business since possible for the owners to divert
what
Such an from the business their own cap¬
powers the first of the year.

be

Aid
as one of the
Pact,
under which Britain
economic barom¬ gave an undertaking not to dis¬
of
indicating
an criminate
against American en¬

remaining

eters

not

loans

government
few

could

ing

activities,

or

intelligent United States.

more

section of the community in
eral

saved

or

chronic

workmen

from

that

'

'

;

:—

in longer-term financ¬

with

the

earns

thor¬

a

engage

corpora¬

.

tion

paid or,
United

Unless*

changes in bank-

-v

_________

to

ough study of exists,
•the

ital, the result would be merely
a
temporary relief of the dollar
position • through the transfer of
the American capital, at the ex¬
pense of a deterioration of the

does

the

the

by

investment

dollars

saves

Stock

shake

not

Government.

American

Exchange

prices

granted

States

figures
of
gold losses. A
in

"made

be v; several

would

loans

with

quarterly

fall

Currency^
Comm ittee

such

on

times higher than what is

than it is con¬
cerned

dividends

For

ment.

.

and functions of the Reconstruction Finance Corporation have been ex¬
panded and modified from time to time. After the end of the war, it was obvious that a
review of the Corporation's powers was needed.
Only two years ago the Senate Banking

borrowing dollars in
the form of costly private invest¬

or

not sufficient to warrant

The powers

to the dd-

due

was

Says downward trend in business is
ing policy.

sire to avoid

Loan,

any,

attitude

Spokesman for American Bankers Association tells Senate Committee ample credit facilities by com¬
mercial banks are now available to business, and, in view of declining volume of commercial
loans,
there is no purpose in expanding powers and functions of Reconstruction Finance
Corporation. At¬
tacks proposal to waive time limit on RFC loans and to increase its over-all lending and
investing

authority to $5 billion.

permanently solve dollar-gap problem.

with the quo¬
tation of'Old

By EARL R. MUIR*

President, Louisville Trust Company

y

By PAUL EINZIG

Dr. E .nzig

11

Expand RFC Powers

V

-

(555)

William D. James Company

Wesley Hall & Co.

;

Lester & Co.

Whiting, Weeks & Stubbs

12

THE

(556)

COMMERCIAL

FINANCIAL

&

CHRONICLE

Thursday, August 11, 1949

the money properly?

Unless she is experienced in investing, prob¬

ably not.

Mutual Funds

NAT 10

the future, so
will be sure

Details

of

prospectus

NATIONAL

and

request

upon

First Mutual Fund Conference
first

The

&

CORPORATION

annual

Mutual

Fund

Conference,

by

the

ers

Louis H. Whitehead—Louis H. Whitehead

not

Co.

Matlock—Broad

business

in

high

regard

items

Wednesday p.m., Aug. 17, a humorous skit written by John
Straley will feature Douglas K. Porteous, Norman Stabler and
On

50 State Street. Boston

Thursday afternoon a meeting open to the public will be
answers
to questions from the floor will be supplied by
following panel:

Louis H. Whitehead, Chairman; Mrs. R. H. Axe, Vice-President
Axe-Houghton Fund; Edward C. Johnson, 2nd, President, Fidelity

Fupd; Paul A. Just, Sales Director, Television Fund; G. L. Ludcke.
President, Putnam Fund Distributors, Inc.; William A. Parker, Pres¬
ident, The Parker Corporation; Karl D. Pettit, President, The Knick2rbocker Fund; Miller H. Pontius, Vice-President, Ghemical Fund;
Douglas K. Porteous, Sales Manager, Cohu & Co.; Edward P. Rubin
°resident, Selected American Shares; Joseph E. Welch, Executive
Vice-President, Wellington Fund, Inc.
We

Fundamental

want to congratulate the "Investment Dealers Digest"
untiring efforts to make this forum a success.

.heir

Women Live

Investors Inc.

cn

lusbands, they usually outlive Their husbandfc. .If you are a t^pica
American husband, the chances are your wife will outlive you by

are

,

insurance

made a study oi
he disposition of the insurance money left outright to widows.
Th<
ompany found that on the average, this money was large dissipated
>ened

seven

because

Take your

I any of

•

{

women

and

situations

are

interested in

or

life and

see

know much

the bonds and preferreds

were

you

might own?

called, would she reinvest

5TREET. NEW YORK 5, N Y

to
is

man

might make Brown wish he could bring
conference that would result in more intel¬
that has been done, I bring Smith back ito

a

Once

"too

once

a

year

I die—and I

thereafter."

lor

am

firmly convinced that these
executor to probate my will
easily, so that my family will be well provided

'deaths' will make it
and settle my estate

possible for

my

1

-

;

.

There

is

doubt

no

that

Mr.

Smith

has

devised

:

-

an

method

ingenious

of forcing himself to take an
outsider's look at his affairs.
Whether you have doubts about your own
estate, or whether you
are certain that it is well
arranged and protected, it might be well
for you to try Smith's system. Become
your own executor once, and
we think you will find its well worth
repeating year by

year.—From

The

Keystone "Investor."

J

1

f

'■

'

Isn't 100 Years Long Enough to Prove a Point? it
Excerpts from a Standard Steel Springs ad: "Back in
1847,

German gent named Karl Marx
wrote a book he called 'the
Communist Manifesto.' It was
during the era the history books call
me 'Industrial Revolution'—when
machines were beginning to take
me strain & sweat off men's backs.
Marx
predicted that capital¬
ism, under the machine age, would gobble up all the
wealth, and
leave the
waging man in a state of pitiful destitution unless all
peoples of the world could be organized on a uniform socialistic
a

.

■oasis

.

/■

.

.

.

"

"rom

the

of

look at how far

a

day of Karl Marx.

rule.

hours

Backs
the

and

..

■

"Now, let's have

the

properly supervising the securities

we

uses

changes are made that will sim¬
plify Brown's problems as my executor. A year
later, I repeat the
process. Almost invariably I find that Smith
again has made foolish
mistakes. Again I make changes, until I'm sure that
Smith's estate is
straightenedjmt for at least the next 12 months.

This han-

to die suddenly, would

you were

knowledge

to it that the
necessary

In

we

bent

under

have come—and why—
and men did 70%
Crude implements were

1850—animals

Machines—only 30%.

,,

If

and

that

of this nation's work.

wife for example.

he be capable of

HUGHW. LONG&CO.

few

very

ibout investments.

Prospectus from your Investment Dealer or

company

usually through unwise investments.

years

.

told us about a formula he
in the best possible condition.
This

.

,

Some years ago a large life

vithin

.

judgment

a

ligent planning.

Longer

Women live longer than men in this country according to life
'nsurance statistics. As most married women .are younger than thei

10 years or more.

whose

recently

his affairs

sure

only

acquaintance

testament, his insurance, his business interests, his real estate hold¬
and his other sizable investments. Mr. Brown's executor's
eye, I go over them very carefully.
My purpose is to uncover any

leld -and
Putnam Fund Distributors, Inc.

more.

cost, even if you have
through Balanced Mutual

dollars to invest,
Wellington bulletin..

a

or

reasonable

hundred

Smith back to life for

,he

minimum fee of $500

a

a

ings,

On

request

•

companies charge

"I 'die' at least once a
year," says Mr. Smith, "and put myself
in the shoes of Mr. Brown who is the executor
of my estate. I drop
Smith's burdensome problems and assume Brown's
problems in so far
as they are concerned with Smith's
estate. I take all the documents
and papers that bear on Smith's financial
situation—his last will and

U.—Equitable Life Assurance Society.
Street Sales Corp.
Grady Clark—Investors Diversified Services.
William T. Cobb—Distributors Group, Inc.
Raymond Trigger—Investment Dealers Digest.
Harry A. McDonald—Securities Exchange Commission.
Woodford

V.

."0"y

successful business man; he is also an astute investor. Con¬
sequently, his estate is considerable—and so are his problems.
For
anonymity's sake, we'll call him "Mr. Smith."

..utile Tomlinson.

iNCOt'OITAJtS

few

a

make

Russell E. White, C. L.

/jjO'iton

48 WAIL

only

hold

Alfred J. Stalker—Shields & Co.

FUND

trust

Funds.—From

A

Robert E. Clark—Calvin Bullock.

'Prospectus upon

firms and

But you can get this service at

<(Once A Year I Die

Custodian Funds.
Group, Inc.
Albert R. Hughes—Lord, Abbett & Co.
Douglas H. Laird—National Securities & Research Corp.
A. J. Wilkins—Wellington Fund, Inc.
Eugene J. Habas—Hugh W. Long & Co., Inc.
Charles F. Eaton Jr.—Eaton & Howard, Inc.

PUTNAM

leading investment

big enough to justify the cost
Many large investment counsel

James W. Bridges—Keystone

Herbert R. Anderson—Distributors

.Oeorrje

or

'•''/.

include:

BROADWAY, NEW YORK 5, N. Y.

SFAe

large trust company

a

provides.

You may think your estate is not
such professional management.

of

sponsored

Dealers

Digest, will be held in New York City from
Aug. 15-18 at the Statler Hotel.
It is designed primarily to give
dealers and salesmen a better understanding of the business. Speak¬
investment

SECURITIES

RESEARCH
120

program

counsel firm

soon.

Still, it is wise to plan for
that if the unexpected happens, your wife and children
of having competent
supervision of your estate; the

kind of supervision that

By HENRY HUNT

INVESTMENT PROGRAM
An Open
Inves^mlfiOctount

-

No healthy man expects to die

the

strain.

The

work

week

was

70

worker's output per hour bought 27c worth
services, measured in present day buying power.

average

goods-and

Today—a

century later, animals and men do 6% of this nation's
Machines—94%! The work week is 40
hours, and the aver¬
age worker's output per hour buys $1.40 worth of
goods and services,
measured
in
today's buying power.
And here's the payoff—the
work.

to Karl Marx and all the little
Marxes. In 1850, with a pop¬
ulation of 23,191,876 the number of
gainfully employed was

answer

American Business

Shares, Inc.

Keystone

i

-

THE

upon

request

LOBD-ABBETT

INVESTMENT

Custodian

Prospectus

COMPANIES

'

7,700,000
mcluding farmers, or 33.2% of the people. In October,
1948, the labor
force was 60,134,000 not
including farmers, in a population of 147,280,000, or 40.8%.
"So

it

sponsible

turns

that

out

for

of

the

the

machines

men

feared

have

been

re¬

the

biggest labor force, working the shortest
hours,
at the highest wages in world
history. And the ultimate answer to
aur great productive
capacity and wage earning ability is that every
American worker ;is backed by a
capital investment twice to 10

•imes

that

Seemed

worker

in

other

countries."

From

"These Things

Important," issued by Selected Investments Co.

of

Chicago.

Lord, Abbett & Co.

Funds

New York

Chicago

—

New Orleans

—>

R. A. Rowan & Co.

Lo» Angeles

LOS

Certificates of Participation

with

INVESTMENT FUNDS

Robert Gibson Opens

ANGELES, CALIF.—R. A.

Rowan

in

&

Co.

has

offices at 458

been

formed

South

MILLBRAE,

CALIF.

Spring Gibson is conducting

a

—

Robert

securities

Street, to engage in the securities

investing their capital
IN

A

business.

Diversified Investment Company

BONDS
(Series B1-B2-B3-B4)

PREFERRED

Officers

President;

are

R. A. Row¬

Eugene

Battles,
Vice-President: C. A. Sain, VicePresident
and
Secretary;
and
Stanley
H.
Woolery,
Assistant
Secretary and Assistant Treasurer.
an,

business
press

from

offices

Avenue.

Mr.

at

612

Gibson

and Merrill

Lynch, Pierce, Fenner

& Beane.

STOCKS

EATON & HOWARD

EATON & HOWARD

BALANCED FUND

STOCK FUND

(Series S1-S2-S3-S4)

Prospectus from
your

local investment dealer

or

PROSPECTUSES OF THESE TWO MANAGED INVESTMENT FUNDS MAY
BE OBTAINED BY

Tke Keystone Company
of Boston
50

Congress Street

Prospectus
your

be obtained from

local investment dealer,

&

HOWARD

INCORPORATED

INVESTMENT MANAGERS

or

BOSTON

Boston 9, .Massachusetts




REQUEST TO YOUR INVESTMENT DEALER OR TO

EATON
may

THE

PARKER

200 BERKELEY

CORPORATION

ST., BOSTON 16, MASS.

Established 1924

24 Federal St.

BOSTON

was

formerly with Wm. R. Staats Co.

(Series K1-K2)

COMMON STOCKS

Cy¬

333

Montgomery St.

SAN

FRANCISCO

170

Volume

Number 4828

Riiml Favors

THE

Repeal of Wartime Excise Taxes

Former Chairman of New York Federal Reserve

Macy & Co. executive,
in

present rates

says

industries, and

some

COMMERCIAL

longer

no

;

serve

purpose

in

rates

of

the

United

States

should

Asserting the Constitution is taking on
velt New Dealer and ex-head of
NRA,

this
month, this

gust,

rate

excise

s„"

r

i

"Last year's Federal

:.

show

I f

business

a

v.

cise tax repeal

11 %

i

pressed

a

Beardsley Ruml

We

have

■

Constitution?

Have

from wartime

ex¬

it,

<

applied

the cost of do¬

on

"Im provised

ndowed

with

repealed

public

works

demand
and

rates

tax

reduce

to

civilian

selectively in time of war,

properly

so.

succeeded

rates

excise

wartime

These wartime
in reducing de¬

industry
the

other

industries

by wartime excises.

pressed

spending

tive

business spot.

This is not

unnecessary

because

stantial net loss of

loss

net

could

hardly be greater

than $600,000,000 and
little

as

as

The

revenue.

it might be

$200,000,000,

or

even

estimate

"This

is

the following way.

ceipts from
1948

was

arrived

at

come

vital

buying
ernors

setts

The gross re¬

excise rates
$1,800,000,000.
With

be estimated

disastrous

be

autumn

and

Rhode

and

Island

tional

at $1,400 000,000

Offsetting this figure are

al¬

excise

lay in buying
chants and

in

taxes at

the

corporation
income
manufacturing level,

losses of tax

receipts at the whole¬

on

Half

rates.

the part of

the citizen

the

embrace

to

to

free

be

right of
the

in

en-

ioyment of all his faculties; to be
free

to

use

them

in

lawful

all

to live and work where he
will; to earn his livelihood by any
ways;

lawful

calling; to pursue any live¬
lihood or avocation, and for that
purpose to enter into all contracts
which

to

may

be

Lord

ery—from the cradle to the grave.

mer¬

their customers.

We made

tentative step in this

a

direction in the late,

"There is still plenty of time to

that

true

■.

,

a

his carrying

purposes

trials

for

tional

liberties

above mentioned."

No

one

his

tongue

but

provides

a

a

in

that

deny

The

of

constitu¬

the

our

communist

stout shield for every

Eve ,'

criminal

can

have

\

.

(Continued

on page

84)

JUST
MID-YEAR 1949 EDITION OF

-

"SECURITY DEALERS Of NORTH AMERICA"

never-to-be-

retail level, losses from
withholding tax receipts, a signal from the White House is
and
increased
out-payment for required. It has even happened in
unemployment benefits. Estimat¬ the past that tax legislation af¬
ing these offsets at from $800,000,- fecting the public
interest has
000 to $1,200,000,000 for the four been
passed over the President's
sources
combined, leaves a net veto.

Nevertheless the subsequent

loss

dation

sale

and

slated above from

as

$600,000,-

C00 to $200 000,000.

"After
to

all,

declare

ized"

in

noble

experiment.

1935

it

knocked

to

down;

approve
this
The Congress
ar.d the Su¬

Court sat upon it so heav¬
that it suddenly expired.
vali¬

preme

ily

Congress was ab'e
on
Japan in 24

the

war

of

Agricultural

the

Wagner

Acts,

Act, the Wage-Hour

the issues involved and the selec¬

Price Control Acts, the
other so¬
cializing laws, indicates that the
destruction of the NRA was only
a stumble in the onward march of

tive unemployment produced.

paternalism.

Act,

"The possible net loss from

the hours. It need not take more than
wartime excises is not a week for Congress to declare
an important amount in a budget
war on unemployment."
of over $40,000,000,000 in view of
repeal

"The

v/artime

excise

rates

Reynolds & Go. Have
are

not

only unnecessary, they are
also inappropriate.
Not only are
they selective and discriminatory,
but they are being used to meet
non-recurring capital items in the

budget which have nothing to do
with ordinary recurring Federal
expenditure. The most conspicu¬
ous item of this kind is over $2,-

the

Social Security Acts and

of

only COMPLETE directory of stock

and bond houses in the United States and Canada

The Banger of National

Exhibit at Fair

America's

now

Commissions

ready for

your

Reynolds & Co., 12* Broadway,
York City, members of the

New

York

low,

a

we

establish

Stock

Exchange, are
taking a new step in carrying the
story of investment to the general
public by setting up an exvibit at

go forward to
national com¬
regulate all our eco¬

may

now

enough

missions to

nomic and social activities.

Even¬

leaders, all completely dependent
upon the Federal Government for
stocks listed on tve
i a livelihood, the President and
New York Stock Exchange
will his
cabinet, as a Politburo, should
be on display at the Morris
be able to lay down "the party
County Fair, Morristown, N. J.,
Aug. 23 through 27.
*An address by Mr. Richberg

tp veterans for excess premiums

over

war

expense

A

of

years

the

for
an

of operation of Fiscal 1950.

reserve

to

care

of these

collections should have
at

war

life insurance. This is not

time

the

excess

seen

set up

collections

were

made, that is prior to 1946. In 1946

paid off some $26,000,000,000
public debt. If we had set aside
$2,000 000,000 as a reserve against
we

of

these

premiums,

we

still




could

cover

to cover—containing

6,000 important changes in data indispen¬

sable to anyone

in the investment business.

Bound in durable

vealed.
196

Entirely revised from

tually, with farmers, business men
and workers, and their political

forthcoming fa r, it was re¬
The exhibit, featuring the

000,000,000 to provide for refunds
paid during four

daily reference.

With constitutional barriers la:d

New

limp fabrikoid

—

'^10*^

common

Included

sample

in

stcck

the exhibit will be

certificates

and

a

before the Annual Meeting of the
I
'

display of the products of msnv
of the companies listed.
Reynolds

Virginia

State

Bar

Association,

ex¬

Sulphur Springs, W. Va.,
July 29, 1949. Mr. Richberg is now
a
member of the
law firm
of

plain the workings of the s^*r,ines market and answer questions.

Davies, Richberg, Be6be, Busick &
Richardson, Wasnington, P. C.

officials

will

be

on

hand

to

White

ENTER
I

.

YOUR ORDER

*

TODAY

'

,

.

HERBERT D. SEIBERT & CO., INC.
25 Park Place

:
#

REctor 2-9370

/;

PRESS

THE

Senator George,

lower

his

day in court; and if he engages in

excise tax rates .forgotten NRA with which I had
some experience.
But neither the
Senator Lucas and other legisla¬ Congress nor the Supreme Court
had
been
tive leaders have said that only
sufficiently
"liberal¬
15.

(with

his cheek) could
constitution still

wrongdoer.

thf

(Al-

crime.

actual, or
probable, or prospective enemies
of society, criminals, revolution¬
aries and fanatics, are still jeal¬
ously, even tenderly, protected.

out

conclusion

successful

of
assembly,
freedom
police oppression and unfair

get the wartime
off by Aug.

wi¬

the

Supreme
has recently reasserted! in
strong language the rights of free
speech, freedom
of the press,

necessary

proper,

essential to

business, the agriculture and the
labor of the nation, and to estab¬
lish economic security—and slav¬

will only encourage de¬

tax

by incarceration, but the term is
deemed

and

designation of the President
High Commissioner of
the
General
Welfare,
invested
with
authority to regulate the

should
repealing the

measures

not

the

as

measures

in

wartime

losses from four important sources
—losses

half-way

undertaken

the national

of

objectives

impediments to tyrannical
authority, 'created by a division
of powers between the executive,
legislative and judicial branches,
have been gradually destroyed by
creating
commissions in which
laws are made, interpreted and
executed by one body of men. It
will soon be only a short step to

They will doubtless be joined

"No

longer

The

States.

be

no

government.

Christmas

have

is

that it

to overthrow our gov¬

being sanctified by Congress
within the constitu¬

itep,

of 1949. The Gov¬
of Connecticut, Massachu¬

liberty mentioned in that
(the
Fourteeenth)
only the right of the

Amendment

■■■>■: yC-}',

y-'yy

.

is

Court

freedom

and Courts as

seasons

dren.

from

Utopia. All they need to do,
apparently, is to take over the
government, whose stumbling ad¬
vances into socialism, are, step by

to

lan¬

physical restraint of his person, as

slave

ready asked for excise tax relief

wartime

from these tax rates in 1949

less.

or

would

Many

clear

na¬

them

Ask

percentage of their earn¬
ings are taken by the national
government, and spent for them
as a father might take and spend
the earnings of his immature chil¬

citizens to be free from the mere

that
impressed

are

ernment in order to establish their

important industries during

this

in

the

by

government?

the moment it appears

necessary

in by the Governors of other affected

sharply lower business, gross in¬
can

the

now.

less.

in

duction
many

law

indirectly

or

what

lt

means

asserting

a

.

are

repeal of the wartime excise
tax rates would result in no sub¬

of headstrong

image

all power¬

government?

guage:
"The

tion.
in

time
for
excess
spending,
but
then, and they are reduc¬
rather
for
tax
reduction
from
ing demand and employment se¬
wartime discriminatory rates.
lectively now. AH wartime excise
"The time for a reduction of
tax rates; except those on gasoline
consumers taxes has always been
tobacco
and
alcohol, should be
recognized to be the summertime.
repealed at once.
"As far as the government fi¬ That is when business is lightest
and
postponement of purchases
nancial
requirements
are
con¬
cerned, the wartime excise tax waiting for tax reduction will do
Delay to
rates are both unnecessary and in¬ business the least harm.
January, 1950 for excise tax re¬
appropriate.

"They

Richberj

this appearance of rejuvena¬
They may be half-sincere

by

mands

the

-R.

Donald

an

un¬

rectly
tional

Communists

ror

even

aggravate demand at the most ac¬

titude of restrictions enforced di¬

the Supreme Court laid

the

down

youth?

will

such

contrary

years ago

it

the

national

work

and

Ask the

today?

the business men, the
workers, unionized or independ¬
ent. Do they enjoy such liberty,
or are they working under a mul¬

constitution?

der the direction of
ful

trying

iti

over

national

the

individuals to live

vital¬

make

o

de¬
On

or

it

have'
merely
its

in

ity

in

Is that the law

farmers,

they not stop the march of
regimentation
and
prevent the
enforcement of laws that compel

or

mature

spending on roads, school build¬
ings, housing or the like cannot
give employment to the fur indus¬
pyramided and raise costs and
try,
the
leather
industry,
the
prices to the consumer of every
jewelry industry, the appliance
article of commerce.
intended

-

578.)

Will

apped

ing business, such as transporta¬
and
communication, ,are

"The

ten

new

vigor,
they

tion

were

sav¬

it lie po litihans actually

with.

unemployed at the present time.

face

and

ing of big and

both
inappropriate
forth¬

and
be

should

who prefer economic security to
liberty — which is currently as¬
sumed to be a vast majority of
the people.
But, what of the guarantees of
individual liberty which are writ¬

e-

treat-;

ents, tfle
:ace
lifting

financial point of view are

unnecessary

t h

gland

in Fiscal 1950.

"No matter how you look at

and

between iO million and 12 million

Excises

on

the wartime excise tax rates from

de¬

would

budget

is

as

net loss

mated

were

equally

deficit

a

Condemns government by

Long, long ago, when the sages of today were sweet 16, there was a Constitution of
the United States which looked like the
spirit of 1776. Today that Constitution has a new
look. In fact, to
many it has the look of the beckoning spirit of National Socialism. What has
<$>happened
t o
he dear, old
line" and have it followed by all lepeyer v. Louisiana, 165 U. S.

generally be¬
lieved. On the contrary, theie was
a
surplus larger than the esti¬

indus-

e s.

re¬

man¬

consolidated basis did not

a-cash

depresin af¬

fected

by debt

agement and not by current taxa¬

m 1
said,
"are, produc¬
ing ;an
ever
widening

black

be handled

the

collections

excess

employment practice legislation.
and political traders.

pressure groups

It

tion producing unemployment.

M r.

R.u

sion

of today,

as

these

of

should

war¬

time

tralized power, and attacks current fair

repealed by the

paid off $24,000,000,000.

fund

;

"The

be

can

is clear that

;

year.

and

have

"new look" of the spirit of National Socialism, former Roose¬
individual liberty imperiled by aim for economic security

a

sees

as well as
growth of centralized government. Sees safeguards against tyrannical authority being stead¬
ily destroyed by all powerful commissions. Calls for revival of States Rights doctrine as curb on cen¬

<8>

Au-

.

'

Beardsley Ruml, former Chairman of the Federal Reserve Bank
of New York (who is visiting Murray Bay, Quebec, with Frank B
Common, K.C., of Montreal), stated on Aug. 4 that the wartime excise
15th

13

Former Administrator, National Industrial Recovery Administration

.

tax

(557)

By DONALD R. RICHBERG*

>

depression
for which they
a

intended.

were

FINANCIAL CHRONICLE

The New Look of the Constitution

Bank, and E. H.

creating

are

&

New York 7, N< Y.

14

THE

(558)

Public

COMMERCIAL

Utility Securities

CHRONICLE

FINANCIAL

&

The foreign lending that
I probably be applied to these earnings, resulting in a share value States.
around 14. Applying the two values we have the following results: C has taken place has been prin¬
cipally intergovernmental.
\
Value
No. Shs.
Value
Approx.
Recent

New Stock

Price

Under Plan

12 V2

8.7

108

7.7

89

Long Island Lighting 7% pfd—

By OWEN ELY

Thursday, August 11, 1949

..atv

•

Direct investments continued to

VNv.'.atr

•

14

be made

121

:

of

80

Long Island Lighting 6% pfd—
Queens 6% preferred
Nassau 7% preferred^.

Long Island Lighting

purpose

Island Lighting's latest merger-recap plan approved
by the New York Public Service Commission in June 1948, and later
submitted to the SEC, Queens Borough Gas & Electric and Nassau
& Suffolk Lighting will be merged with the parent company.
The
new company will issue 2,417,377 shares of new common stock with a
stated value of $10.
Holders of preferred stocks (with arrears) of
the three companies will receive
j new common stock as indicated in

51.

108

54

60

during

3.7

42

96

4.3

■

46

52

War

Under Long

the

table

below.

plan the company proposed a payment of 35c per share
in cash ($1,050,000) to the common stockholders and cancellation of
the stock. This particular provision was opposed by Chairman Maltbie
In

its

(since resigned) but the provision remained in the plan
submitted to the SEC. As stated in Moody's Manual, "this was in

of the PSC
as

the previous decision of the New
stock had no value, and the con¬

the form of a compromise between
York Commission that the common

equity shareholders are entitled to
participation in the new enterprise." A committee representing
the common stockholders has opposed the cash payment and sought
an allocation of new stock.
Hearings before the SEC were concluded
Jan. 12 this year, but no decision has yet been announced; it seems
cepts of the SEC in all cases that

some

probable that the plan is now in the

opinion-writing division.

for the company, in May an¬
nounced a slight modification of the plan. Originally, in a move prob¬
ably necessary to gain approval of the New York State Commission,
it was proposed to increase the depreciation reserve by $10,300,000,
in order to place it on a retroactive straight line basis, in accord with
the well-known theory of Chairman Maltbie.
Mr. Blakeslee now
proposed instead that the amount be placed in a special surplus ac¬
count, as has been done by Niagara Hudson and Consolidated Edison.
(Niagara Hudson has agreed to actually transfer the account to depre¬
ciation reserve when the merger is effective, but Consolidated Edison
has not yet agreed to do this.)
C. G. Blakeslee, General Counsel

a

95-5

90-10 allocation might be setup, this would of course mean

or a

that the values in the above table would be

the claim of the

marketwise at 10 times, one
In other words, on the basis
of current net of $3,456,000, each of the 3,000,000 present shares
might be worth a hypothetical $1.15. But if the allocation were 95-5,
this value would be halved; and if the plan remains unchanged, the
common gets only 35c. Hence the common stock seems to have largely
discounted future possibilities by advancing to the recent quotation
of 1.
:
■
•'
•
-'
.

appears

$10,500,000 were not reinstated

f

submitted

Currency Committee in Washington on Aug. 9
in support of Senate Bill 2197, which

would

amend e

Act

so

to

as

permit

this

the foreign exchange resources

or.

of the debtor countries.

>

.

It is the policy of this Govern¬

guarantee ment that foreign investment for
United

States

abroad

as

desirable

purposes should be un¬
investments dertaken
through private channels

tion

of

an

Presi¬

de¬

Secretary

clared that "in
my

opinion,

the

proceeding
in

rate

objectives

Some

of

of

at

a

very

foreign

many

because

insofar

countries
obstacles.

numerous

these

obstacles

be

can

only through action of
the particular country concerned.

Others, however,
by

action

This
carry

of

be abrogated

can

the

legislation

United

States.

is

designed
to
out this action by the United

States and I would

like, therefoie,

to address

myself to the particular
financial considerations that make

Ohio Edison Company

this legislation necessary.

Southern Company

possible.

as

This

policy

are

being mailed by these companies to the respective
or

stockholders

common

of

The

pre¬

Commonwealth.

& Southern

Corporation in connection with the distribution
of Commonwealth's holdings of these companies' common'
5tocks pursuant to the Commonwealth Plan of dissolution.

(■. The development of underde¬
veloped areas can be sound and

lasting only if these
own

at

&

Southern

On

capital

Company, The Commonwealth
Corporation (New York), 20 ;Pine Street,
N. Y., W. G. Bourne, Jr., Hanover 2-0170.

the

development

-

even

?




.

.

.

.

;

in

There

is

for

need

investments in other countries and
in other industries.

■

questions:

not these investments

were

greater in volume and better dis¬
tributed geographically? and
What can be done to increase
the

volume

investments

of

and

their distribution?

be

must

sources

provided

by the foreign
This is true

in

the

cost

program

is

of

for

any

the

local materials and

development
purchase
the

wages

of

industrial know-how.

notably true
ing, and in
service

in

the

the

fields

ects,

This

ence

domestic

between

and

for¬

eign yields on eauity investments.
Hence, there is little incentive to
invest abroad particularly so long
as formidable obstacles to foreign

of

private.

In

desirable

to

vestments

These

in

these

the

pre¬

are

private in¬

other

facilitating

Obstacles to Private Investment
Abroad

Obstacles

fields.

investments

in

the public sphere

are of the type
normally expected to be financed
through the public sale of local

government obligations or through
institutions as the Interna¬

tries

Bank

for

Reconstruction

and

Development and the ExportImport Bank.

u

coun¬

chief

r

These

governments.

'

■

The anti-foreign sentiment

(1)

generated by the regrettable ex¬
perience of some foreign countries
with investments from ab-oad;
(2) The growth of ideolo-ies fa¬
voring state ownership and con¬
trol of industry;
(3) The existence of political
instability and extreme nation¬

alism; and
(4) The prevalence of exchange
controls stemming from economic
difficulties.
5
.

additional

An

the

is

abroad

deterrent

of

investment

Foreign Investment Not New

of

most

are

which influence t:e action

foreign

are:

abroad

"derdevelooei

spring from fo

and

causes

such

tional

in

common

of

the investment

to

capital

private

than

fields

facilitate
in

are

rather

made largely in
indus'ries rela¬

in

and

tively free of such obstacles.

with

instances public

some

investments

countries

and

endeavor

public

recent years were

In¬

is

manufactur¬

extractive

the other hand,

on

dominantly

private
fear

or

the

to

capital

threat

of

Investing abroad is not a new
activity for investors in this coun¬

war.

try.

be done to increase the volume of

It attained

prominence

some

As

early as 1900, especially in min¬
ing enterprises in Latin America

to the

them

and

dress

as

Canada, but also in manufac¬
turing plants in Canada and Eu¬
rope.

I,

question of what
and

investments
more

to

can

distribute

broadly, we must ad¬
primarily to the

ourselves

problems of eliminating the ob¬
During and after World War stacles which stand in the way of

American

assumed

investments

abroad

large

proportions, par¬
ticularly in the form of the public
flotation of foreign bonds in this
country.
Throughout this period

the investment of American
tal abroad.

task

removing such obstacles
attacked both by for¬

of

should

capi¬

It is essential that the

be

eign countries and by the United
States.
Foreign countries must,
vestments which involve a meas¬ however, accept the maior re¬
ure
of
control
of
enterprises sponsibility for clearing the ex¬
abroad—were also made in sub¬ isting obstruction to a broad and
investments

—-

that

is,

in¬

stantial

volume.
The depression
early '30's and the defaults
foreign bonds which occurred

beneficial flow of private capital.

of the

at that time put a sudden stop

foreign

lending

flotations.
of

have

cleared

led

trust

the

of

foreign

a

record

reasons,

1.930 only

of

worthiness
even

of

those

of

payment

con¬

For this and other

there
a

.some

been

not

widespread dis¬

credit

good.

of

eign

to

to

public

defaults,
still

countries

whose
tinued

through

These

which

of

labor, but also because capital ob¬

foreign conditions. An important
point is the rather small differ¬

vestments that have been made in

on

underdeveloped countries
not only because the larger part
of

corporation

ad¬

side

help to speed

can

countries themselves.

COMMONWEALTH & SOUTHERN

their

fullest

financial

Most of the capital for

program.

from local

\

areas use

the

the

the process, but it cannot assume
the major role in financing the

the office of the Service

New York 5,

to

resources

vantage.
outside

COPIES ARB AVAILABLE

concentrated geographically
Venezuela, the Near East, and
Canada and, to a significant ex¬
tent, in only one industry—petro¬
leum.
Although
substantial
in
amount, these new investments do
were

investments continue to exist.

economic

direct

Financial Aspects
ferred

previous high years <of the
but the. investments

1920:s,

with

slow

removed

Company

the

late

has particular merit in connection

development be¬
dent Truman's cause
investment by private en¬
"Point
IV"
terprise carries some of its own
program. The technical assistance in the form

been

Consumers Power

in

broaden

to

^

Light Company

ex¬

}
Exports tained by borrowing abroad may
"'J The answer to the first-question
Import Bank result in unduly heavy demands
relates to tmFown'aS well as to

Long Island Lighting recently issued a very favorable statement i The economic development is
for the 12 months ended June 30, showing net income of $3,456,000,
closely tied to the process of capi¬
equivalent to pro forma share earnings of about $1.43 on the new tal investment for it is essential
common
stock.
Since earnings may not have reached a maximum that
the means of production be
level, considering the phenominal growth of home construction in available before a
country's stand¬
certain areas of Long Island, a liberal multiplier approaching 10 can ard
of living can be improved. In
the past few years investment has

Central Illinois

totals

the

Island proposal is designed to implement
Lighting after consummation of the merger-recap plan, and on Dec. 8 in part the Point IV program the
made a more definite proposal, to offer $11.58 par value of convert¬ President proposed
in his inau¬
ible debentures (similar to the present outstanding issue) for each gural address. This program is in¬
share of common stock of the new company, on a voluntary exchange tended to aid the efforts of under¬
basis subject to certain restrictions.
Assuming a value of 108V2 for developed areas of the world to
these bonds (the present price for Edison convertibles), the exchange increase
their
productivity and
value of the new common stock would approximate 12V2.
living standards.

;

$660

million

$800

latter

ceeded'the highest figures reached

Why

statement

a

N. Y, Public Service Commission to acquire control of the Long

relating to

reaching

and

with two related

as

/

1947

These

countries seeking economic
development are thus concerned

Secretary of the Treasury John Wv Snyder appeared before the
Senate Banking and
and

100

DESCRIPTIVE LETTERS

rapidly,
in

1948.

eign

Committee in support

pf the proposed legislation are of
private enterprise also having an
surplus, however, the debt
the highest importance."
ratio would be 70% and the stock ratio 30%. The two book value
important place in many public
Continuing his statement, the utility developments. Other fields,
figures for common stock would be respectively $15.60 and $11.40 as
of Dec. 31, 1948.
such as highway
Treasury Secretary said:
construction, ir¬
conservation proj¬
Consolidated Edison on Sept. 21, 1948 filed a proposal with the i As you know this legislative rigation and
If the

creased

million

The United States and the for¬

before Senate Banking and Currency
of bill vesting in Export-Import Bank power
to guarantee U. S. investments abroad under Point IV program,
Says objectives of proposed legislation is of highest importance.
Treasury Secretary

136

$104.2

capital put in. In 1945,

new

development.

John W. Snyder

Total

of

.

Snyder Favors Guarantee of Foreign Investments

64

37.7

World
capital

During

withdrawals

not therefore lead to well-rounded

-

$66.5

a

calculation would cancel out the other.

implementa¬

—

Under

income, and

assuming this amount was capitalized

$10,300,000 referred to above.
If this amount were transferred
surplus, the pro forma capital structure would be approxi¬
mately as follows (including $10.8 million of the $16 million deben¬
ture 3%s recently issued):
Millions
Percentage1
Common Stock

stock?

common

be entitled to one-tenth of net

it would

back to

Debt

ceeded

in

What would happen to

90-10 formula

correspondingly reduced

"

by 5% or 10%.

institution

v

II,

common

hope of Long Island Lighting common stockholders that the $10,300,000
would remain in regular surplus account, thus bolstering their equity
position in the new company. The pro forma balance sheet as of
Dec. 31, 1948 showed depreciation, reserve of $38,863,000 which
amounted to 28%
of plant account and presumably includes the

:

'30's.

stock, which is now cut off with the i
however, new direct investments
$1,050,000 cash payment. If the SEC should decide to reallocate some again became
important, amount¬
part of the assets to the common how would this affect the results?
ing to $100 million. * Since that
Space prevents discussing the problem in detail, but assuming that time these investments
have in¬
respect to the

;' In seeking to impose this depreciation theory on other New York
utilities, the commission some time ago denied approval of necessary
financing by Rochester Gas & Electric. This was taken to the courts
and the Commission lost. This decision apparently strengthened the

.v

also greatly reduced

was

the

from such investments abroad ex¬

figures assume that the plan will not be changed

But the above

with

,

>

although the net outflow
States capital for that

United

'

have

been

since

few offerings of for¬

securities

in

the

It is

ican

abroad
better
than

commonplace that Amer¬

a

private
more

results

it will

capital will flow
freely and produce
if it is encouraged

if

it is

coerced.

Ac¬

although we recognize
the right of any country to insti¬
tute necessary security measures,
foreign governments must recog¬
cordingly,

nize that the right to do
in

their

countries

on

business

reasonable

terms, including the right to con¬
trol and manage one's
is very

investment,

important to our potential
Legislation in foreign

United i investors.

Volume 170

countries

Number 4828

<

THE

requiring that local cit¬

izens shall hold

a
majority of the
will, in general, be

stock

common

significant deterrent to
pective investors.
At
the
a

pros¬
same

time it is recognized that our in¬
vestors
must
afford
reasonable

opportunities

participate
and

for

in

control

foreigners

to

of

abroad.

*

Another

the

income

investments
transfer
the

into

an

dollar

con¬

from

dollars

and

to

share

appropriate

proceeds to

their

of

their

own

country. This problem arises from
the

existence

gencies
under

all

of

exchange strin¬
exchange
controls

and

conditions

difficult
of

for
the

which

countries

make

to

it

obtain

dollar

exchange re¬
quired for their needs. But, while
recognizing the seriousness of this
problem

in

negotiate treaties de¬
signed to provide the assurances
necessary to induce our investors
to send their capital abroad.
The
negotiation of such treaties is of
very
great
importance
to
the

countries, pri¬

many

vate investors need the
assurance

capital.

*

United

vate

abroad.

point

This

Still

another

of

is the
to

deterrent

American

tendency of

nationalize

some

of

some

the

abroad

countries

their

By WILLIAM J. McKAY
"The

of reducing U. S. dollar expenditures
tially makes Alberta oil one of the most important and

assurances

recent

investments

the

S.

would

port

Bank

particular
is ad¬

2197

to

berta

United
capital
invested
abroad against the risks peculiar
to foreign investment. These risks
might include (1) the inability to
convert earnings in foreign cur¬
States

guaranty

or
other amounts
in
connection
with

ceived

tion

government

and

and

adequate

property

issued

situation

to

seems

subject to an equally strong ob¬
ligation to make satisfactory com¬
pensation. Foreign capital is not
going to be invested freely and
productively in countries where it
will be in jeopardy.
Accordingly,
some
acceptable means of com¬
pensating those whose property is
expropriated must be provided if
the underdeveloped countries
to obtain the capital which is

are
re¬

quired for their development,
The

t

United States Government
contribute to the removal of

can

these

obstacles by making a spe¬

this

at

time

the

of

type

it

ulating investments,
sibility of loss to

the

or

the

pos¬

United

States under

the program.
It is,
therefore, essential that the au¬
thority
of
the
Export-Import

Bank

be

flexible

and

broad

for

only

through careful study and
experience can the full potential¬

the

program
will have to be worked out
grad¬

ually by the Export-Import Bank
in

consultation with the National

I'm heading for the NSTA Con¬
at the Broadmoor Hotel,

vention

Colorado

your

to meet me

now

Colo., .Oct. 5reservation

Springs,
Make

9.

Oct.

there.

For

communicate

tion

with

Larry A.
Higgins, Hulberd, Warren &
Chandler,
Chicago;
Harold
B.
Smith, Pershing & Co., New York;
Herbert H. Blizzard, Herbert Ef.
Blizzard & Co., Philadelphia; John
E. Sullivan, Jr., F. L. Putnam. &
Co., Inc., Boston^
,
."'H'

C. 6. Whitcomb Heads

Macklin
dent

Guarantees

Operated
OHIO—Cecil B.

Later

Presi¬

Senate Banking and Currency
Aug. 9 in favor of the Administration's bill to
expand
the powers of the
Export-Import Bank, by providing guarantees to
certain private investments
abroad, Winthrop W. Aldrich, head of
on

the Chase Na¬
New York and

the President's

Advisory

nancial

1

e

m

Bilateral

on

not

for

offer

investment

climate
abroad.

He

added, however, that the pro¬
posed bill "will materially assist
in

the

in

which

ment

!

creation

will

Mr.

that

an

atmosphere

foreign invest¬
/

made."

Aldrich
after

made

of

private
be

all

was

<

were

compare

the

risks

the

which

The last will be "one

most

the

important
dollar

gap

bridged."

in
be

ways

may

::V;-'

.

With R. H. Johnson & Go.

for

investment in

this

try,

BOSTON,

Wholley
R.

New

York

banker

that, in his view, it

was

H.

MASS.

—

has joined

Johnson

stated

sible to encourage American pri-




With J. A.
-

impos¬

of

were

"The mush¬

1947,"
a

When Leduc

8 million
rights' in Al¬

some

Crown, oil

much

now

more

doubled in 1947 to 880,000
practically doubled again in
to 1,660,000; and the rate is
climbing, the figure for the
five months of this year

ing

Brigadier General, he joined

a

and

with

Gordon

became

S.

Macklin

Secretary-Treasurer

in

in

the

fiscal

31, 1949.

Alberta

during

year

which

than

1947

years

would

ended

Refinery capacity

more

the

doubled

and

are

1948

planned

raise Alberta

refin¬

ing capacity to around 50,000 bar¬
rels daily.
i
"Review"

The

thing

also

has

some¬

about the longerrange effects which large-scale oil
to

say

development is likely to have on
the economy of the Province.
If
discoveries continue to be made
and

the

fall

production

crease

and

first

will

follow

approach¬

and

natural

materials

of '1948,

second

a

continues

the rate

at

now

it is possible that the

this fidence

chemical

some

de¬

fuel

in

based

is

gas

less

petroleum
fuels or raw

on

as

certain.

Cheap

the form of coal has

ex¬

isted in Alberta

for years without
Redwater, was dis¬
covered and is being rapidly de¬ serving as the basis for any con¬
veloped, and promising finds, the siderable industrial development.'*

major field,

potentialities of which are not yet
fully known, have been' made at

Barrhead,

Bon Accord,
Golden
Joseph Lake, Whitemud

Spike,
and

Stettler—all

the

in

central

of present Canadian require¬

care

are roughly 300.000
daily, proved reserves of

barrels
at

the second World War and becom¬

rev¬

been swelled

1948 velopment is likely. . "Whether a
still more extentive industrialization

'

ing 1,200,000."

least

and.

two

1945,
billion
in

in

Government

year ago.

have

to in¬
indicated,
oil industry
than trebled gnd extensive tracts may grow "to rival agriculture in
in
Saskatchewan and Manitoba importance in the economy of the
have, also been taken under reser¬ Province, as it has in the great
vation. The number of geophysi¬ oil
state
of
Texas.
Producers'
cal crews at work has increased gross revenue from oil even" in
from
15
to
70, the number of 1948 was equal to 8% of gross
drilling rigs operating from 20 to farm income of roughly $450 mil¬
90.
The
oil
industry considers lions. "The growth of supply in¬
footage drilled the best index of dustries to serve and support the
activity.
The
1946
figure
of oil producing and refining indus¬
roughly 400,000 was more than tries can be predicted with con¬
under permit or lease;

figure has

barrels

years

a

half to three

would

be

neces¬

Harold Helme Forms
Sole

Proprietorship

(Special

to

The

OMAHA, NEB,
Helme

is

,

Chronicle)

Fiancial

&

John

C.

the staff of

Co.,

30

State

.

(Special

to

The

Hogle & Co.
Fiancial

DENVER, COLO.
McKenna

has

Chronicle)

—

James W.

become

affiliated

with J. A. Hogle & Co.,

Equitable

Building.

j

HaroldH.

-

engaging in the invest¬

ment business from offices in the
First National Bank Building un¬
der his

own

name.

Mr. Helme

was

states the "Review." "Proved formerly President and Treasurer
reserves in Alberta are now esti¬
of the Central Securities Co., In¬

sary,

mated

at

billion

something

than

less

How

barrels.

much

a

oil

corporated.

Associated

with

him

will be Harold Hultman also for¬

will

eventually be found is, of
course, merely a guess. But geolo¬ merly with Central Securities Co.
gists talk of Alberfa as possibly
manages over 16 properties, among
one
of
the
world's
major oil
which are Moreland Courts Apart¬
fields and competent opinion con¬
ments and the business properties
of

the

newly

-

Macklin

formed

Operated, Inc., which at this date

facing

on

Shaker
his

and

siders it a not unreasonable guess
Square which
that at least 5 billion barrels of
associates pur¬
oil may be found in Alberta in

chased for

$6,000,000 shortly
the near future."
They also manage
Wade Park Manor, the Auditorium
Output from the new wells, the
and Sovereign Hotels, The Fla¬ "Review" points out, is sharply
mingo Hotel in Miami
Beach, restricted because it has outstrip¬
Florida,
the
Le
Veque-Lincoln ped available markets. By March
Tower building in Columbus, the of this year Alberta and Saskat¬
over

Butkley Building and

other

many

chewan

CANADIAN BONDS

refineries,

with

total

a

GOVERNMENT
PROVINCIAL

MUNICIPAL

rated

capacity of around 60,000
business properties in Cleveland.
barrels daily, were running al¬
Other newly-elected officers of most entirely pn Alberta crude

CORPORATION

Macklin Operated, Inc., are C. D.

First

and, with storage tanks rapidly
and filling up and new wells constant¬
ly coming in, production from in¬

Vice-President,

Harry L. Rockwood, Jr., Assistant
Secretary

and
as

Treasurer.

before

are

William

T.

ALBANY,

the

&

New

N.

Skelley,

Vice-

have opened a

State

Street,

Y. —Edward

Inc.,

Co.,
York

A.

members of

Stock

Exchange,

ment of Miss Etta M.

the

fields

new

"Until

CANADIAN STOCKS

pipelines are con¬
carry
Alberta
oil
Prairies, the oil in¬
dustry
Alberta
must
pass
through a painful period when
production will have to be strictly
regulated and when the inability
to reap returns on the big invest¬

ment
cause

manage¬

Werking.

:

to

the
in

beyond

involved

The

the

"Review"

new

the wells
for

many

A. E. AMES & CO.
INCORPORATED

TWO

WALL STREET

may

com¬

NEW YORK 5,

N. Y.

■

to some of the

of

in

difficulties

panies,"

branch office at 50

under the

in

be cut repeatedly.

to

board, structed

President.

Purcell

wells

dividual
had

John C. long-distance

Lincoln, Chairman of the
and

Those

Purcell Branch in Albany

do¬
very

,

five

Street.

coun¬

adding that "yields on
mestic equities have been
high here."
The

over

remaining

(Special to The Financial Chp.onicle)

and yields of possible for¬
eign investments with opportuni¬

ties

serving

Kyle,

of the opinion

guarantees

would- still

of

/>

available, the American in¬

vestor

by private investment in for¬

eign lands.
favorable

a

private

and

W. W. Aldrich

proposed
guarantees,

a

enues

before his death.

greater U. S. imports of foreign
goods, by American tourist travel,

ions,

with the

Late

Exchange.

after

Macklin

ropean
Recovery
Program
the
problem will have to be met by

present world

do

betweenP this

after the termination of the Eu¬

generally
speaking,
d i t

Stock

Commenting on the world dol¬
lar scarcity, Mr. Aldrich said that

the

describes

and ments, which

Secretary

became

he added.

opinion that,

co n

treaties

ex¬

pressed

even

"through

country and countries seeking dol¬
lar investment would be
needed,

Fi¬

Prob-

s,

investment abroad

(a global treaty," such as the ITO,
since too many countries make
exceptions in such broad charters.

Chairman of

Committee

he

forces
vate

Macklin

of

Secretary

General Manager of the Cleveland

Although appearing before the

Foreign

and

business after the first World War*.

Banking Committee present is
"favorable climate for putting funds abroad."

tional Bank of

to

Operated, Inc;, to fill the post'left
part of the province.
vacant by the death of Gordon §.
To assure a sustained rate of
Macklin on July 14.
The new
President entered the investment production large enough to take

Foreign

says

and further increases

briefly

discovered,

In

CLEVELAND,

Chase Bank Chairman tells Senate

Committee

res¬

ervations and additional informa¬

Whitcomb has been elected

not

serious

and

extension

an

striking figures.

berta

Advisory Council.

Aldrich Doubts Effectiveness of

Review

acres

of
guaranties be realized.
Questions arising out of the actual
of

of

well blew in early in

was

ities

administration

Regina

20-inch

the Lakes."

of

of their effects;

this

which should be covered, the ef¬
fectiveness of guaranties in stim¬

projected

says,' "can be indicated, by

few

it.

risks

to

head

ery

per¬

in¬

borders is inherent in
sovereignty
but that the country
resorting to
the exercise of that
right becomes

the

rooming of oil activity in the
Province since the Leduc discov¬

non-

Before concluding I should like
to
emphasize the experimental
foreign
nature of this guaranty program.
States Government con¬
Since- there has been almost no
siders that the right to national¬
experience with programs of this
ize property within
any country's kind, it is
impossible to anticipate

over

March

The

those belong¬
investors.
The

to
United

life,"

substan¬

encouraging
the current

by pay¬
balance, self- ments for oil and gas rights, which
Even
present amounted to something like $12JA

the recent oil finds in Alberta and

dustries, including
ing

on

hope that

reasonably

mil] ion

some

compensa¬

warrant

the

oil.

consideration

other risks if the

cover

be,

in

justify

the

convertibility of local currencies
to begin with and later be ex¬
tended to

future

pipeline

re¬

without

against the

economic

to

the

Guaranties may

war.

Canada's

production is considered sufficient

physical destruction
incident to interna¬

(3)

in

may

sufficient

tion of the investors' property by

foreign

in

hold out the

now

near

foreign investment, into United
States dollars, (2) the expropiiaa

developments

Canada

private

rencies,

prospect

"Monthly Review" of the Bank of Nova Scotia. "Last year oil im¬
ports cost $300 million, which had<S>to be disbursed almost entirely in
May 1, Alberta among the prov¬
U.
S.
dollars
since
the
United inces and Edmonton
among the
States and Venezuela supplied the cities of Canada showed
much the
major part. Developments in Al¬ largest increases in employment

This proposed legislation
authorize the Export-Im¬

haps be

to

capital

Canadian Securities

dressed.

tional

flow

is

which

to

of

Nationalization

States

lk

(559)

the Trail!

on

investors through the issuance
guaranties with respect to pri-!

of

income from their investments.

Industry

CHRONICLE

also help

can

b,y supplementing these

prompt

The Question of

FINANCIAL

j

This government

that only the essential needs of a
country will receive h gher pri¬
ority than the remittance of the
:

I'm

&

stimulation of the flow of private

to

important

very

sideration to persons
making for¬
eign investments is the right to
convert

cial effort to

the

management
their enterprises

COMMERCIAL

draws

attention

stimulating effects

oil developments.

At

WORTH 4-2400

NY

1-1045

(560)

16

THE

COMMERCIAL

&

CHRONICLE

FINANCIAL

Thursday, August 11, 1949

ECHO LAKE

in

ly

the

evening,

convenience

the

meet

to

customers."

their

of

The

Chicago "Daily Tribune"
Aug. 6 reported that the split
in the observance of the day for
closing, made more confusing by
widely
varying
extensions
of
of

NSTANotes

,,

week-day

hours by many banks
to compensate customers for a lost

The NSTA Convent'on October 4, 5, 6, in Colorful
Colorado Where the West Begins

banking day, is a reflection of the
controversy
that
preceded
the
law. Says the "Daily Tribune"

;

"The conflict in turn

varying
By EARL M. SCANLAN
Earl M. Scanlan & Co.,
;

.

There

are

Denver

mirrored lakes fringed with huge

pop

,

An
item, bearing on the bill
giving Illinois banks the right to
operate on a five-day week, was
signed by Gov. Stevenson on June

pine trees,

fly they'll

es¬

week."

glimmer and teem—

With those big mountain trout, for a
It is truly a vacation dream.

from

arose

conditions,

pecially the large Saturday trade
of outlying banks and the
big in¬
stitutions'
difficulty
in
hiring
suitable employees for a
6-day

Come to Colorful, Cool Colorado, •/
On that summer vacation you plan;
People come for a day, then decide that they'll stay,
We have plenty of room, if you can.

And the rivers just

business

9,

out;

and

referred

was

columns June 23,

.

in

to

these

2727. '

page

>

'I-

;

,

#

And the Broadmoor—A veritable

palace,
With its pleasant surroundings and
charms,
Is just waiting the day-^to encourage your stay—
With out-stretched and

welcoming

The

has

You will live in

of

can

sort of

a

or

walk,

play bridge,

or

;

Hear the

just talk,

*

At the foot of Mount Evans towering 14,260 feet above sea level.

Bring the dear wife and all of the kiddies,
But for-males without sweethearts

Springs via

The complete convention program
latter part of August.

You'll forget about fourths,
eighths and half
And the dividends all will be
good;
You'll cash in at par—come out winner

So

.

<

y

,

%

rison

SECURITY DEALERS

ASSOCIATION

President—Alonzo

H.

Lee,

Sterne, Agee

&

Leach, Birmingham, Ala.
First Vice-President—J.

ASSOCIATION OF LOS ANGELES

Harrison had

Mills

Thornton, Jr.,

He

./

:

*

of

Treasurer—Drayton
Alonzo H. Lee

Nabers,

First

the

vr^f- registArati°ns received

and

*

lu

t-i

order that all

j

_,kave been

..

a number of inquiries

as

the type of clothing

light
weight clothes suitP°°i is heated and one should bring a
indoor pool and a
dip will be possible

S iu-

•? We?u

e outc*oor

bathing suit, as there is also
regardless of the weather.

an

and medium

The nominating committee solicits
suggestions and recommenda¬

tions lor

candidates

suggestions

as

soon

of the committee:

R. Victor

lor
as

oLicers of the NSTA for 1950.

possible to any

Moseley, Cha'rman, Stroud

Ora

Please send

of the following members

& Co..

Inc., Philadelphia.

Co., San Francisco.
Quigley, Quigley & Co., Inc., Cleveland.
M. ferguson, ivicriiil
Lynch, Pierce, Fenner

Louisville.

Beane

Stanley Roggenburg, Roggenburg &
Co., New York
Co., Dallas
Sirauss & Co., Chicago.

James J. Jacques, First
Southwest
Robert Strauss, Robert

tainment

Springs,
travel

on

on

Tuesday, Oct. 4, for all who

are

enroute

to

Colorado

Those who arrive from the West and
South who wish to
the special train from Denver to
Colorado Springs must




Company

Illinois

week,

Discretionary Com¬

mon

^Trust

Fund

"A"

in

tion.

This

Fund

says

the

pany

is

designed

opera¬
com¬

primarily

to

33

had

been
Iron

York

Commerce"

to

of

added

that

tions

will

those

hours within

possessing

larger

property

who may wish small trusts estab¬
for

various

it

It

added

that

of

this

is

vantage

is

stated,

purposes

find

in

a

useful.

cided

special ad¬
Common Trust

date.

eliminate
the

next

It

merce"

in its invest¬

securities

producing, thereby,
more satisfactory returns to each
participating
trust."
Establish¬

Co.;
President
of the
Publishing Co.; President
Railway Service

was

institu¬

"All

Loop

of

the

paper we

12

banks

in

the

authorized

the
directors of the Trust
Company in a Plan of Operation i Avenue National start closing toapproved by the New York State | day. The Michigan Avenue bank
Banking Board in December of ; will inaugurate Saturday closing
in

The Fund has been invested

broad

a

list

of

bonds

stocks.

next week.

|

"Widespread inauguration of

! 5-day

•*

In

and

accordance

*

week

is

bringing

a
other

<«

with

| changes in banking hours. Many

recently | banks going to a 5-day week are
enacted law permitting banks in i
adding hours on other days, most¬
a

part in the
other business or¬

leading

a

work of many

ganizations.
'
A brother, Lawrence S. Harri¬

is Business Manager of the
Metropolitan Museum of Art.
son,

■

*

-

Bank

*.

Franklin

of

increased

has

$800,000

its

.

National

Square,

capital

N.

Y.,

from

$830,000 by a stock
$30,000.
The new
became effective Aug. 1.
to

dividend

capital

v.

;."V *

Square

Franklin

The

quote:

area,

took

also

six

including the Federal
Reserve
Bank,
are
closing
on
Saturdays. All but the Michigan

by

City of New York; director of the
Citizens National Committee. He

Saturday
six weeks,

says

same

National

the

Housing Authority, City of
N. Y.; member of the
Board of Trustees and Assistant
Treasurer of the Institute of the

area

From the

of

Seiberling

Yonkers,

total of 43 out of 84
banks that have de¬

a

the

Bank

of the

on

dition,

widely diversified list

was

that

additional

Saturday closing. In ad¬
the "Journal of Com¬
more
Chicago banks
will inaugurate a 5-day week by
eliminating
Wednesday
hours.

"the

Fund is to be found
ment

it

making
Chicago

will

10

of

and

of the

Director

a

National

Corp.; publisher and editor of the
Savings Bank Journal; Chairman

banks

area

benefit persons of moderate means
who wish to create
trusts; but

also,

the New
Savings

of

National

and

and

of

operate on a five-day
in the Chicago
began the observance of the
5-day week on August 6, accord
ing to the Chicago "Journal of

of New York reports that on
Aug.
1 it placed its

1948.

The Bond Club of Denver has made
elaborate plans for the enter¬

the

number of years as

New

Trust

ment of the Fund

&

He

Natamsa

Manufacturers

of

John F. Egan, First California
J. L.

one

State

Rubber

lished

a

Manager

Coal

at

hat should be worn in Colorado
Springs. The days can be expected
to be rculd and
sunny, and the nights cool, which would make a

topcoat advisable, and sport clothes

Bankers

one

in the history

and labor,
highly regarded by both

Bank Associations.

and

OFFICERS, ETC.

of

may be assured of accommodations

member
In this

management

for

served

CAPITALIZATIONS

®r®a<**noor, *t is imperative that registration forms
together
with registration fee be sent
to Morton A.
Cayne, Cayne & Co., Cleve¬
land, Secretary, before Sept. 1.
-

Board.

was

York

REVISED

5-9

years a

Executive

CONSOLIDATIONS

NEW

it will be

four

Governing

groups.

News About Banks

National

Security Dealers, to be held Oct.

^©Broadmoor, Colorado Springs, would indicate that
°f J!?e
weiA as ,one of tlle ^est conventions

ex¬

Mr. Harrison brought about

Stubbs,

annual convention

and for

its

railway

i

NEW BRANCHES

to date for the

economic

as

important

organization of the New York
State, National and International
Savings Bank Associations —

Bank, Birmingham, Ala.

National Association of

in

capacity he rendered an important
as
conciliator
between

Pictures taken at the outing appear elsewhere in today's paper.

NATIONAL SECURITY TRADERS
ASSOCIATION
a-u

served

and

service

Vice-President—James S. Crow, Jr.,
First National Bank of
Mobile, Mobile, Ala.

Secretary—George H. Stubbs, Jr.,
Lombaido, Birmingham, Ala.

the

for 11 years President of
Security Owpers Association,

Inc.

Second

SmiLi U

of

was

the

This outstanding annual meeting of the Southern California
Traders and guests once again was acknowledged as an event not to
be missed.

Chairman

corporations and associations.

ness

capable hands of Dick O'Neil of
Edgerton Wyckoff & Co. ably assisted by Roy Warnes of Hill Rich¬
ards & Co. The photographs were taken by C. Lueker of Hill Richards
& Co., and Jack Weller of Wagenseller & Durst.

Thornton, Mohr & Co., Montgomery, Ala.

a

ecutive capacities for many busi¬

the

in

were

also

was

consultant

shuffleboard and general inside relaxation.

Arrangements

of

derstanding of government spend¬
ing and taxation policies.
Mr.

including swimming, golf, tennis, riding,

Officers of the Alabama
Security Dealers As¬
which was recently admitted to the
Na m al
vSeeurity Traders Association as the 29th
affiliate are:

died

years

a newly
organized corporation, COST, Inc.
He had brought this organization
into being for the purpose of edu¬
cating the public to a better un¬

in the San Bernardino Mountains during June 24, 25 and 26. Fiftytwo members of the trading fraternity from Los
Angeles, four guests
from San Francisco and representatives from the press participated
in a round of activities

sociation,

1

SECURITY TRADERS

27

Railroad and President of

Security Traders Association of Los Angeles held its annual
three-day outing at the beautiful Arrowhead Springs Hotel located

come

ALABAMA

for

Board of the Midland Continental

The

with your chaps and your
spurs on,
And your six gallon hat and
your gun;
We will show you the best is
right here in the WestThirty hours of hilarious fun!

..

of

pital in Bronxville, N. Y. on Aug.
He was 60 years old. Mr. Har¬

by far,

On the Bonds that bind true brotherhood.

member

a

Committee

8.

will be published during the

The Alabama Security Dealers Association has been recently ad¬
mitted as the 29th Affiliate of the NSTA and a 30th Affiliate may be
announced at the Convention.

points,

*

heart attack at the Lawrence Hos¬

the Denver, Rio Grande and Western R. R.

wives,

or

There'll be Squaws on the loose, without their
Papoose,
Just to show you the time of your lives.

*

Harrison

Executive

the

trustee

have their tickets routed between Denver and Colorado

W.

the Bowery Savings Bank of New
York of which he had been a

galore,

|

suc¬

Bank at the head office in Manila.

'

f

Agency

with

haze,
of

There'll be Cowboys for sure and Indians
To escort you up to your hotel.

G.

was

Milton

jell,

York

the agency, of
appointed head in
1925. Mr. Azanza, prior to joining
the New York agency staff two
years ago, was for several years
an
officer in the foreign depart¬
ment of the Philippine National

echoing Carillon chime.

And don't forget about
Denver,
Where the frolic will start in to

Roman

placed in charge

New

Joseph H. Foley, who re¬
July 31 after 32 years'

which he

See the famed Cheyenne Zoo in the mountains,
See Will Rogers Memorial Shrine,
Climb the stairways and gaze at the mountains blue

V

that

'v.t'1

Bank

on

association

In fact, there's no end to your fun.

National

Broadway. Mr. Azanza

tired

trance.

or

Bank's

ceeds

drive to the summit of Pikes Peak,
Or bask in the warmth of the sun;
ice skate

the

at 25

•

can

You

a

announced

Azanza has been

arms.

There'll be golf on its world famous golf
course,
■
V v% You can dine, you can wine, you can dance;
Take a dip in the pooi, ail glassed-in where it's
cool,'

You

Philippine

of

*

%

*

';v

Chauncey W. Cook, President of
the Manufacturers National Bank
of

He

Troy,
was

vices

to

N.

Y.,

died

the

New

Aug.

on

62 years of age.

4.

Troy ad¬

York

"Times"

Bank, the Marine Midland Group,

(Continued

on

page

38)

Volume 170

Number 4828

THE

COMMERCIAL

Telephone Companies in New York Stale
Spencer B. Eddy, Deputy Chairman of N. Y. Public Service Com¬
mission, says cooperation of local banks has been obtained to 7

government loans is

right direction,

matter

Cleveland,

9

Ohio,
•''■

11>,/

Aug.

on
x:

worked

that

out

the

New

York

Commission

has

V

a

The Gold Standaid Will Relnm!

a

President, Kennametal, Inc., Latrobe, Pa.

Mr.

normal" conditions.

more

of

By PHILIP M. McKENNA*
National Chairman, Gold Standard League

step in the
sign that we ap¬
a

But the gap will still exist.
is

fact,

long

as

As

*

the

from gold
the

save

the

smaller

tele¬

that the situation confronting the
smaller

telephone companies is
peculiar to New York State,

phone compa¬

not

nies

and

in

York

New

from

help

threat¬

ened

extinc¬

tion

im¬

and

areas

eral

their

prove

service.

Commission-

B.

known

Eddy

without service, or the Fed¬
Government will enter the

:^;xx''. field

with

that

f*-er*Eddy made
Spencer

if

something is not done to
these local utilities provide
this vital service, they will either
go under, leaving the franchised

State

of

the

Rural

Administration

that

of

the New York

plan

some

similar

to

Electrification

in

the

formation

cooperatives for the extension

of

lines

in

rural

Commission, with the aid of Gov.

territory.
This,
according to Commissioner Eddy,

Thomas

would

E.

Dewey, has enlisted
group of local banks
which will undertake to adyance
funds to provide for needed con¬
the aid of

a

by

justified, and are approved
the Public Service Commis¬

sion.
of

In

the

ficient

local

cases

local

.

to

where the
bank

service

banks

.

.

,

York

State

there

are

telephone companies subject
to regulation.
Of. these, 18 have
revenues
ranging from $100,000
hundreds

to

annum

Utilities

told

the

Service

Railroad

Commissioners

that

area

154

per

and

Public

loan, other
will be collapse, their plants in deplorable
participate in the; condition and that there was no

financing.
New

New York

in certain instances small compa¬
nies are on the verge of financial

the

the

in

brought ia to
In

encroach¬

authority in the
local regulation,

purely

Commissioner

suf¬

not

of

The

resources

are

further

a

Federal

of

mil¬

:

possibility of rehabilitating them
under any circumstances^
In such
instances, in informal conferences,
he persuaded the managements of
the
large,
economically

strong

companies to take

over

the plants

lions of dollars, as in the case of
New York Telephone Co.* At

of the

the other extreme

the larger company agreed to take
over
as
much of the facilities of

the

about

with

90

a

telephone

small revenues,

badly

of
companies

are

group

their plants

out and needing im¬
mediate rehabilitation. These com¬
worn

panies,

however;

have virtually
resources, and in in¬

credit

no

stances where

some

of them could

The

serve

the

weak, small companies and
the

existing

could be
their
a

territory. In these

small

put to

own

ample

use

cases,

company

and then

resources to

as
use

bring

high standard of service to

cus¬

ofj new
shall not

to

shall, in ad¬
dition, have to develop an import

a

surplus."

restrained

our

exports;

we

necessity of developing an
import surplus is inherent in otfr
as

report'

points

loans

a

debtor

to

cease

flow

creditor

and

both

economies

creditor

burden.

these

•

At .some

interest

point

and

loans.

new

From

then

an

and

any

Survey, entitled "The Foreign Trade Gap," prepared for National
Manufacturers, hold U. S. must discontinue help in
form of gifts and continuous loans as they will cause multilateral

and

expand. Sees only remedy in
U. S. import surplus.

the

we

take

the

alternatives
attitude

are

that

if

the

problem cannot be solved and the
world

to

so

the level of
tional

shrink,

will
our

at

once

multilateral

and

drop to

imports; internawill

trade

regionalism

and

tionalism will gain.
v ;
The
second
alternative
.

na¬

held
are

gifts that they would not want

fed.

is

to

we

Given enough time, so that
solve the problem gradu¬

can

continue help in the form of gifts

ally,

ad

our

shall be able to develop
imports, just as the debtors

injinitum; the rich nations
supporting permanently; the poor

will

nations.

their

Since

both

alternatives

N

we

be able to export more once

economies

are

thoroughly

Harry W. Besse

d

e n

-

of

France

gold,

with

in

has,

the

and

ton

Hodges, Schirmer, Ather& Co., Treasurer.
r.-'-S.;
,

of

the

Officers

and

Directors

is

about

to

be

propaganda
and

of

other

the

Fabian

of

proponents

thriving

ing standards of life and loss of
liberty in Great Britain under a
Labor-Socialist

government,
to
nothing of the conditions in
Communist-dominated countries—
say

eloquently testifies to the
of propaganda.
But as sure

Rise,

a

New

the

1920's

,

trend

new

.trends

of

power

'

^

.

The

as

Sun

will

always

thinking few;

masses

■

,

Will

begin.

begin

with

not >with

the

people.. Al¬
ready
in
England
Professer
Hayek's "The Road to Serfdom,"

was the
franc, lost

average

and Professor Jewkes' "Ordeal by

Planning,"

well

as

"Animal

George Or¬

as

Farm"

his

and

latest, Nineteen Eighty-Four," are
sparks evidencing the be- 5
ginning of a new trend.

first

1

definite slowing up of collections in the

a

with

deals

the

,

management inexperience in deal¬

ing with postwar finances and the
increased

of

cost

3

than

earlier date

an.

months

to

a

year

was

ago

as

conducting'a

XX

f
,3

months

ago

More
.

•

17%

the

true

Credit

percentage

year ago

As

of

Research

a

an

with

average

in the

10%
on

in
discount

cash

compared

there is

of

accounts

was

this

payments.

number

a

de¬
of

cash discount basis.

This decrease

seems

to

be

on

art

upward

trend as the percentage
was
given - as 6%' six
(6) months ago and 7% three (3)
months ago.
V;-.-,
.'.v,r
decrease

Less

No Change
32%
51%
29% '
54%'
30%X-X 50%

.

The

.

17%
cago, Friday, Sept. 23, was select¬ 6 months ago
unacceptable to the American reconstructed.
:
29%
ed
as
the date for the Annual 1 year ago—v-t.
"The gap which will still per¬
philosophy there is, actually, no
Credit executives are now alert
Field Day at Knollwood Country
alternative to our accepting an im¬ sist in 1952 should be closed
by
to the Indications that new ac¬
Club, in Lake Forest, 111.
port surplus, say the authors. -: the flow of private capital rather
Charles F. Hemenway, The Illi¬ counts appear on the past-due side
than by gifts.
In general govern¬
nois ' Company, - Club
Private Financing Instead of
President, of their ledger records. This is
ment
guarantees to private in¬
shown in the replies to the ques¬
/V/: Government Gifts *
vestors should as far as possible announced in a letter to the mem¬
tion:
What
percentage of your
"If private capital is expected be avoided; but if
by that date bers that the General Program
current delinquent accounts are
to
move
again- freely between private capital can, in special Chairman of the
Club, Edwin A. new accounts and is this more or
countries," the report points out, cases, not venture abroad
unaided, Stephenson, Chase National Bank, less than it was?
"we must discontinue foreign aid
it should be encouraged
More
Less
No Change
by the has appointed Milton S. Emrich,
in forms of gifts as soon as feas¬
ihonths bgo
52.§%
15%
32.5%
Bank
for
Recon¬ Julien H. Collins & Co., as
ible.
Another decade of grants in International
18.4%
26.3%
special 6 months ago 55.3%
1 year 'ago—
56.5%, *17.1%
26.4%
aid of the order of magnitude of struction and Development, and Chairman for this party.
The
study shows that credit
other international agencies and
many billion dollars would prob¬
Formal announcement and in¬
executives
consider
the
change
ably do more harm than good. In- the governments concerned. Even- vitations to out-of-town
guests from a sellers'
are

in

Foundation study is a decrease

crease

shown

of

shown

tion

Credit

Founda¬

Research

study further shows that in
period
covering
1946-1948

the

*

there

has

been

establishment
At

the

same

steady decline in

of

new.

businesses.

time there has been

"

-

a

steady

-

of

increase in the number
businesses.
In

discontinued

,

'

-

1946

there

new

1947

were

businesses
this

300 000

total

and

in

close

to

400,000
established.
In

had

1948

dropped
to

to

approxi¬

mately 100,000. Discontinued busi- 5

.

~

•

to

stead

of

rebuilding the interna-




tually capital must be distributed

will be mailed in the

near

future.

ket,

the

pinch

a

of

buyers' mar¬

nesses

in

1946

than

amount

to

a

little

in 1947 the
number was down to 300,000 and
in 1948 about 400,000. These same
trends are continuing during 1949,
more

200,000,

competition, the study indicates.

,

manu-^

>

by the answers to this
question: On turning over an ac¬
count for collection, is the average
meeting age more or less than it was: •*

The Municipal Bond Club of Chi¬

stocks

since 1920. That this spell has not
been broken—despite the lower¬

as was

the

"trend"

socialism who have been

its

accounts as reported in the
study was 7.5% while for a year
ago the average was 5.5%.
'""
A tendency
also is shown to
turn accounts over, for collection
at

a

"common

important business as primary factors in this
points affecting present day busi¬ delinquent new account situation.
From a credit executive's stand¬
ness activity On the financial side.
The average percentage of past point. one of the important trends

Chicago Municipal |
Bond Club Field Day
CHICAGO, ILL.—At

and

gold

due

Mark R.

that

the

Society

as

French

There has been

tion

Presi-

t;

an

in¬

as

the National Association of Credit<^-

Sept. 26,
Frank A.

Vice

average

"trend"

a

hypnotized by the outworn creeds

falter

a

V:voted

Day,
R.
L.
Day
&
Co.,

mal means; that the United States
cannot or will
not accept pay¬
ments for its exports^
This would
be most unfortunate and
unjusti-

by

Men. This study which is reported
at
the ■from
replies sent in by members
election to be
of the Credit Research Founda¬

are,

tional trade

such

upon

to borrow any more.

"Continuation
of
nothing to offer us.
gifts on
a
frist, that we discon¬ large scale after 1952 would, in ad¬
tinue help in the form of loans dition, create the impression that
and gifts—in which case interna-, the gap cannot be closed
by nor¬

.

we

money occurs,

in

accepts

facturing and wholesale fields during the last six months and, the
general trend seems to be advancing according to a study recently
announced by the Credit Research Foundation which is affiliated with

Ex¬

officers named

used

has

These

make the deficit countries

the

Reports Slowing Up of Collections

change. Other
be

when

Credit Research Foundation says average percentage of past due
accounts has risen to ll/%% compared with 5l/z% a year
ago;

a

to

or

It is true many businessmen are

1930's, we may awaken one
to find that our dollar, in

has

Boston

Stock

use

ard League, July 30, 1949.

■*.

study made for and distributed by the National Association
of Manufacturers on "The Foreign Trade Gap," made
by economists
connected with Tufts College, the authors express their belief that
the problem of the gap can be solved—but only if America is
willing
and able to i develop gradually, an^
import surplus. The report points tional capital market it would

for

*Extracted from the "Washing¬
ton Bulletin" of the Gold Stand¬

President of
the

it

encouraged
for
he
well

excellent

well's

for

nated

trade to shrink and nationalism to

Believe

was

reversed.

the

99% of its value.

nomi-

been

our

case

Par-

&

awakening,

standard

tion of
the

— Harry
W.
Besse, Hut-

are

"trend"

finally embraces

time

standard before further deteriora¬

na¬

kinson,

; v

There¬

reserve.

the

fail to return to

day

chins

Century

Revolutions.:

and

Pres. of Boston Excb.
ILL.

18th

citizens. But should

terms

Association of

what

after

gold

a

services."

w

late

adequate gold

case

CHICAGO,

the

in

own

run

the

long-term invest¬
ments" and that they would con¬
tinue to rise)^ that is the
very

writer is certain it will return to

tion to nation must be in the form
of goods and

it to re¬
printing press as a
raising more and more
encourages

the
of

Bolshevik

fore,

of the creditor country
will have to prove its ability to
import
more
commodities ' and
services than its exports.
Only
by importing goods and services
can the creditor expect to receive

con¬

times

to

response

that

were

Happily, the United States has
an

export surplus while the

for in the long
capital transferred from

this

believed

Philip M. McKenna

and in Russia in 1917—the French

economy

repayment,

to

France

deficit countries will have to de¬

velop

un-

"emergencies" and
this in turn gives rise to repudia¬
tion, which is almost always fol¬
lowed by political revolution and
liquidation of certain classes of
society,
such
as
occurred
in

the

on

an

(as was the case in 1928
when large groups of businessmen

money to meet

of time

due

businessman

of that

means

amortization

of

to

evitable

sort

debt

"the

writer

idea and

government

payments will outweigh the flow
of

knows

power

,

a

socialism.

this

by

with

currency

restrained

Obviously; as we decrease,.and
finally discontinue foreign aid,
our export surplus will shrink. In
the meantime, the deficit coun¬
tries will have accumulated

toward

gold; or
(2) The

country;

return

majority present

that

redeemable in

adjust themselves to the
changed
situations.
Loans, and
grants materialize in an export

among

arguments

a

it,"

not,

all

must

surplus for the

the

standard

grants extended to other

or

countries

which

a
thoroughgoing
gold

"Whenever

for

curred,
against

na¬

tion returns to

creditor nation," the

out".

ening,
by

and that

writer

honest standard of
monetary value
were countered
by arguments, in

•

the people

"The

position

k

awa

!

:

is, after
period of

discussion

the

%

...

out

recent

a

the

International Investments

In

At

businessmen

we

Besse Nominated for

a

of

ment

on

tomers of the defunct company.

Says Conlintied U. S. Foreign Aid Will Destroy

invariably

(Jj

power,

that govern¬

From then

away

an

occurs:

they enable the deficit countries
to
buy more. foreign ; products
and he said: "We fear the Greeks
than they could have bought with
even when
they bear gifts."' * ■' the
receipts from their expp^ts.
field

struction in c&ses where the loans
are

mean

of

ment

of

use

only have to accept imports equal

loans.

move

when the

^

form

permanent

medium.

as currency

ever succeeded in
forcing upon its people
irredeemable currency for more than a
generation, for
underlying human need for a standard of value is flaunted
by any government for a longer period one of two
things

borrower; will

have to pay interest and amortiza¬

in

a

is

reserve,

by its citizens.

use

"No government has

financing: obtain loans, the cost of the fi- tion
charges. The time must come
credit
plan, nanci'ng makes such funding pro- when we shall. receive more; dol¬
which,
it is hibitive.
',:v:
;
lars from old investments than we
hop ed, will
'Commissioner; Eddy warned
make, available

gold standard for

a

Denies trend toward Socialism indicates

to fill the gap we create
additional problem for the fu¬

ture," because

McKenna, asserting United States has adequate gold

certain nation will return to

a

capital

as

used

an

(561)

a

"v
~
problem, .however, does
here.
The replacement
by private financing of gifts and

Spencer B. Eddy, Deputy Chairman of the New York State Public
Service Commission, disclosed in an address before the
convention of

Commissioners,' at

on

end

proach

Railroad and Utilities

CHRONICLE

"Our

not

advance funds for needed construction;

the National Association of

FINANCIAL

through private channels
competitive business basis.

Discloses Scheme to Aid Small

-

&

i
*

1«

(560)

THE

„

COMMERCIAL

FINANCIAL CHRONICLE

&

Thursday, August 11, 1949

ECHO LAKE

in

ly

to meet the
customers."

evening,

the

convenience

their

of

The

Chicago "Daily Tribune"
Aug. 6 reported that the split

of
in

the observance of the day for
closing, made more confusing by
widely
varying
extensions
of
week-day hours by many banks

NSTANotes

to compensate customers for a lost

banking day, is a reflection of the
controversy
that
preceded
the
law. Says the "Daily Tribune"

The NSTA Convent'on October 4, 5, 6, in Colorful
Colorado Where the West Begins

"The conflict in turn

Earl M. Scanlan &

Co., Denver

Come to Colorful, Cool Colorado,
On that

People

summer

We have

There

you plan;
day, then decide that they'll stay,
room, if you can.

vacation

for

come

a

plenty ol

mirrored lakes fringed with huge

are

And the rivers just glimmer and teem—
With those big mou.uain irout, for a fly

week."

out;

pop

j

An
item, bearing on the bill
giving Illinois banks the right to
operate on a five-day week, was
signed by Gov. Stevenson on June
9, and was referred to in these

pine trees,

they'll

from

arose

varying business conditions, es¬
pecially the large Saturday trade
of outlying banks and the big in¬
stitutions'
difficulty
in
hiring
suitable
employees for a 6-day

By EARL M. SCANLAN

It is truly a vacation dream.

columns June 23, page 2727.
*

*

>

*

■

„

..

And the Broadmoor—A veritable

palace,
i
With its pleasant surroundings and charms,
Is just waiting the day—to encourage your stay—
With out-stretched and

welcoming

The

has

at 25

dine, you can wine, you can dance;
dip in the pool, ail glassed-in where it's cool,'

a

You will live in

You

can

a

tired

Cheyenne Zoo in the mountains,
See Will Rogers Memorial Shrine,
Climb the stairways and gaze at the mountains blue

ment

of

At the foot of Mount Evans towering 14,260 feet above

But for males without sweethearts

level.

sea

The Alabama Security Dealers Association has been recently ad¬
as the 29th Affiliate of the NSTA and a 30th Affiliate
may be

mitted

announced at the Convention.

rt

in the San

right here in the West—

Thirty hours of hilarious fun!
ASSOCIATION

sociation,

which was recently admitted to the
Na rn'al Security Traders Association
as the 29th
are:

H.

Lee,

Sterne, Agee

Fiftytrading fraternity from Los Angeles, four guests
from San Francisco and representatives from the press participated
in a round of activities including
swimming, golf, tennis, riding,
shuffleboard and general inside relaxation.

First Vice-President—J.

Mills

Thornton, Jr.,
Thornton, Mohr & Co., Montgomery, Ala.
Vice-Fresident—James S.

First National Bank of

Arrangements were in the capable hands of Dick O'Neil of
Edgerton Wyckoff & Co. ably assisted by Roy Warnes of Hill Rich¬
ards & Co. The photographs were taken by C. Lueker of Hill Richards
& Co., and Jack Weller of Wagenseller & Durst.

&

Leach, Birmingham, Ala.

This

Nabers,

First

lue
!5e

T5

National

i.

T?er<i

that should

been.

topcoat

a number of inquiries as the type of clothing
Springs. The days can be expected

■? weaF* Th.6 outdoor pool is heated and
an

indoor pool and a

should bring a
dip will be possible
one

The nominating committee solicits
suggestions and recommenda¬

tions lor

candidates

suggestions

as

soon

of the committee:

lor
as

oLicexs

of

the

possible to any

NSTA for
one

1950.

Please

send

of the following members

Moseley, Cha'rman, Stroud & Co., Inc.,
Philadelphia.
John F. Egan, First California
Co., San Francisco.
J. L. Quigley,
Quigley & Co., Inc., Cleveland.
Ora M.
Ferguson, ivleriill Lynch, Pierce, Fenner & Beane
Louisville.

Bankers

and

on

the

South who wish

to

special train from Denver to Colorado
Springs must




Harrison had served

and in

consultant

Mr.

economic

as

important ex¬

ecutive capacities for many busi¬

corporations and associations.
President of
the Security Owpers Association,
ness

He was for 11 years

Inc. and for four years a member
its

of

Governing

this

In

Board.
an

important

conciliator

between

capacity he rendered
service

as

railway

management

and labor,
highly regarded by both

was

Trust

Company

Illinois

of New York reports that on
Aug.
1 it placed its
Discretionary Com¬
mon

Trust

Fund

"A"

in

This

Fund

says

the

pany

is

designed

wish

those

to

create

possessing

had

been

and

Iron

York

He

to

33

tions

but

that
will

is

added

vantage

that

useful.

"the

special ad¬
Common Trust

this

of

in

a

merce"

widely diversified list

producing, thereby,
satisfactory returns to each
participating
trust."
Establish¬

ment of

by

the

the Fund

directors

was

of

Trust

total

a

Saturday

of

43

out

of

84

banks that have de¬

Saturday closing. In ad¬

says

six

From the

I,;

more

same

paper we

in

The Fund has been invested

list

broad

a

of

bonds

stocks.
•je

In

next week.
;

"Widespread inauguration of

a

15-day week is bringing other
| changes in banking hours. Many

*

recently ! banks going to a 5-day week are
law permitting banks in i adding hours on other
days, most¬

accordance

enacted

*

and

with

a

of

Assistant

and

of the

Institute

the

City of New York; director of the
Citizens National Committee. He
took

also

part in the
business or¬

leading

a

of many other

work

ganizations.
A

S. Harri¬

brother, Lawrence

is Business Manager of the
Metropolitan Museum of Art.
son,

Franklin

The

| Saturdays. All but the Michigan

Authority, City of
member of the

Y.;

Trustees

of

Treasurer

quote:

,

N.

Yonkers,

the "Journal of Com¬

"All of the 12 banks in the
Loop area, including the Federal
Reserve
Bank,
are
closing
on

authorized

the

was

institu¬

Chicago banks
will inaugurate a 5-day week by
eliminating
Wednesday
hours.

securities

more

It

date.

eliminate

area

on

dition,

Fund is to be found in its invest¬
ment

that

additional

hours within the next six weeks,

making
Chicago

It

of
10

of

Seiberling

Corp.; publisher and editor of the
Savings Bank Journal; Chairman

Board

added

property

it

Chicago

Commerce"

to

means

cided

find

five-day

of the

Bank

Co.;
President
of
the
Publishing Co.; President
Railway Service

of the Housing

also, it

stated,

a

the

on

in

of the

National

the

of

Director

a

National

and

began the observance of the
5-day week on August 6, accord¬
ing to the Chicago "Journal of

who may wish small trusts estab¬
lished for various purposes will

is

operate

banks

area

com¬

trusts;

larger

week,

opera¬

primarily

benefit persons of moderate
who

number of years as

a

Coal

Natamsa

Manufacturers

1948.

The Bond Club of Denver has made
elaborate plans for the enter¬
tainment on Tuesday, Oct.
4, for all who are enroute to Colorado
Springs. Those who arrive from the West

policies.

taxation

and

ing

New

Company in a Plan of Operation i Avenue National start closing to¬
approved by the New York State day. The Michigan Avenue bank
Banking Board in December of ; will inaugurate Saturday closing

Stanley Roggenburg, Roggenburg &
Co., New York.
James J. Jacques, First
Southwest Co., Dallas
Robert Strauss, Robert
Strauss & Co., Chicago.

a newly
organized corporation, COST, Inc.
He had brought this organization
into being for the purpose of edu¬
cating the public to a better un¬
derstanding of government spend¬

Rubber

of

R. Victor

travel

a

Manager of the New
York State and National Savings

CAPITALIZATIONS

tion.

Cayne, Cayne & Co., Cleve¬

;'

be worn in Colorado

bathing suit, as there is also
regardless of the weather.

a

of

Bank Associations.

and

OFFICERS, ETC.

REVISED

sunny, and the nights cool, which would make a
light
advisable, and sport clothes and medium weight clothes suit-

S !?•

been

died

Executive

NEW BRANCHES

j

to toe mild and

had

years

Railroad and President of

served for

CONSOLIDATIONS

NEW

to date for the annual convention of
Association of Security
Dealers, to be held Oct. 5-9 at

land, Secretary, before Sept. 1.

he

27

groups.
Mr. Harrison

News About Banks

Eank, Birmingham, Ala.

with registration fee be sent to
Morton A.

for

brought about the
organization of the New York
State, National and International
Savings Bank Associations —

Stubbs,

would indicate that it will be one
as weil as 0Iie of tbe best conventions in the history
*n 0*>c*er that all may be assured of accommodations
Broadmoor, ^ is imperative that registration forms together

JL

which

of

Board of the Midland Continental

and

roadmoor, Colorado Springs,

«

4u

'

Pictures taken at the outing appear elsewhere in today's
paper.

J?1?. registrations received

*

meeting of the Southern California
again was acknowledged as an event not to

Traders and guests once
be missed.

NATIONAL SECURITY TRADERS ASSOCIATION

*

annual

Mobile, Mobile, Ala.

Treasurer—Drayton

the National

outstanding

Crow, Jr.,

Secretary—George H. Stubbs, Jr.,
SmiLi U Lombaido,
Birmingham, Ala.
Alonzo H. Lee

Bernardino Mountains during June 24, 25 and 26.

two members of the

Officers of the Alabama
Security Dealers As¬

Second

SECURITY TRADERS ASSOCIATION OF LOS ANGELES
The Security Traders Association of Los Angeles held its annual
three-day outing at the beautiful Arrowhead Springs Hotel located

with your chaps and your spurs
on,
And your six gallon hat and
your gun;
We will show you the best is
come

President—Alonzo

of

pital in Bronxville, N. Y. on Aug.
8. He was 60 years old. Mr. Har¬
risonwas also Chairman of the

by far,

affiliate

member

a

Committee

complete convention program will be published during the
latter part of August.

on

DEALERS

♦

heart attack at the Lawrence Hos¬

The

the loose, without their Papoose,
show you the time of your lives.

SECURITY

♦

Harrison

Springs via

the Denver, Rio Grande and Western R. R.

On the Bonds that bind true brotherhood.

ALABAMA

Philippine National

Executive

the

York

You'll forget about fourths, eighths and half
points,
And the dividends all will be
good;
You'll cash in at par—come out winner

So

the

of

trustee

have their tickets routed between Denver and Colorado

wives,

or

two

the Bowery Savings Bank of New

galore,

}

staff

agency

♦

Bring the dear wife and all of the kiddies,

Just to

York

Bank at the head office in Manila.

forget about Denver,

There'll be Squaws

New

Milton W.

j

Agency

with

haze,

echoing Carillon chime.

Where the frolic will start in to jell,
There'll be Cowboys for sure and Indians
To escort you up to your hotel.

G.

years ago, was for several years
an
officer in the foreign depart¬

See the famed

And don't

Roman

placed in charge

was

1925. Mr.

the

just talk,

Bank

the agency,
of
appointed head in
Azanza, prior to joining

which he

Peak,

Or bask in the warmth of the sun;
can ice skate or
walk, or play bridge, or
In fact, there's no end to your fun.

that

Bank's New York

association

drive to the summit of Pikes

National

Broadway. Mr. Azanza suc¬
Joseph H. Foley, who re¬
on
July 31 after 32 years'

ceeds

sort of a trance.

You

Hear the

the

of

can

Take

announced

Azanza has been

arms.

There'll be golf on its world famous golf
course,
You

Philippine

Bank

capital

capital

by

$830,000

to

$800,000
dividend

Square,

its

increased

has

of

National

Square

Franklin

of

became effective
*

Y.,

from

stock

The

$30,600.

jj:

a

N.

new

1.

Aug.

*

'

.

Chauncey W. Cook, President of
the Manufacturers National Bank
of

He

Troy,
was

vices

to

N.

Y.,

died

on

62 years of age.

the

New

York

Aug.

4.

Troy ad¬
"Times"

Bank, the Marine Midland Group,

(Continued

on

page

38)

Volume 170

Number 4828

THE

COMMERCIAL

Discloses Scheme to Aid Small

private channels
competitive business basis.
"Our
not

cooperation of local banks has been
advance funds for needed construction.

says

obtained

to

proach

Spencer B. Eddy, Deputy Chairman of the New York State Public
Commission, disclosed in an address before the convention of

Service

the National

Cleveland,

Association of Railroad and Utilities

Ohio,

Aug.

on

9

worked

that-the

out

New

Commissioners, at

York

problem,

end

Commission

here.

CHRONICLE

on

however,

has

a"

normal

more

"

By PHILIP M. McKENNA*
National Chairman, Gold Standard
League

President, Kennametal, Inc., Latrobe, Pa.

Mr.

McKenna, asserting United States has adequate gold reserve, is
certain nation will return to a
gold standard for use by its citizens.

conditions.

long

as

As

a

capital

Denies trend toward Socialism indicates

used

to fill the gap we create
additional problem for the fu¬

an

ture,

because

the

from gold
"No

borrower' will

have to pay interest and amortiza¬
financing: obtain loans, the cost of the fi- tion
charges. The time must come
credit plan :
nanci'ng makes such funding pro- when we shall receive
more dol¬
which, , it is hibitive.
'
; lars from old investments than we

d,

e

will

save

tele¬

phone
nies

in

New

if something is not done to
help these local utilities provide
this vital service, they will either
go under, leaving the franchised
areas without service, or the Fed¬

extinc¬

tion

im¬

and

their

prove

eral

Eddy

Administration

undertake to

justified,

are

by

the

sion.
of

cases

Public

In

suf¬

ficient to \ service the loan, other
local

in

banks

the

will

area

be

brought in to participate in.. the
financing.
1
/;
,

In
154

New

field

,

York

State

there

are

telephone
regulation.

companies subject
to
Of these, 18 have
revenues
ranging from $100,000
per annum to hundreds of mil¬

the

formation

territory.

Federal

of

purely

when

even

The

encroach¬

authority in the
local regulation,

"We fear the Greeks

they bear gifts."

New

York

Commissioner
and

further

a

and he said:

con¬

not

rural

mean

ment of

resources

are

lines in

would

and are approved
Service Commis¬

bank

the

This,
according to Commissioner Eddy,

where the loans

where the

cases

local

the

in

•

cooperatives for the extension

of

advance

funds to provide for needed

struction in

enter

similar

to
Electrification

Rural

of

that

Commission, with the aid of Gov.
Thomas
E. Dewey, has enlisted
the aid of a group of local banks
will

the

will

plan

some

er-Eddy made
the New York

which

of

with

known

er

B.

•

that

Commission¬

Government

field

service.

Spencer

loans.

telephone companies is
peculiar to New York State,

and

threat¬

ened

make

not

State

from

warned

-

smaller

compa¬

York

Eddy

that the situation confronting the

the

smaller

Commissioner

Utilities

Public
the

told

'

Service

Railroad

Commissioners

that

in certain instances small compa¬
nies are on the verge of financial

collapse, their plants in deplorable
condition

and

that

there

was

no

badly

out and needing im¬
mediate rehabilitation. These com¬
worn

panies,

however,

have

virtually

credit

no

resources, and
in in¬
stances where some of them could

on

of;

the plants

over

of the

the

weak, small companies and
the

serve

much

as

existing

of

the

small

facilities of
company

as

surplus."

the

"The

necessity of developing an
import surplus is inherent in our
position as a creditor nation," the
report
points
out.
"Whenever
loans

or

countries
debtor

cease

and

;

to

flow

creditor

both

adjust themselves to
changed
situations, y Loans
grants; materialize

surplus for the

in

an

creditor

and

meantime,

the deficit

burden.

these

At

point

some

interest

services

its

In

expand.

U. S. import

for in the long
capital transferred from

chins

the

na¬

take

the

alternatives
attitude

are

that

if

the

to

problem cannot be solved and the

to

world

-

•

would

held

the level of
tional

drop to

once

imports; interna-

our

multilateral

trader will
shrink, and regionalism and na¬
tionalism will gain.
;• y
•

Day,

The

alternative

second

y

is

to

continue help in the form of gifts
ad .infinitum;
the rich nations

supporting permanently the
nations.
are

Since

poor

both .alternatives

unacceptable to the American

ments for its exports.
This would
be most unfortunate and
unjusti-

port surplus,
Private

is, actually, no
accepting an im¬
say the authors.
::

our

Financing Instead of

'

Government

Gifts

"

"If

private capital is expected
to
move
again - freely between
countries," the report points out,
"we must discontinue foreign aid
in forms of gifts as soon as feas¬
ible.
Another decade of grants in
aid of the order of magnitude of
;

many

billion dollars would prob¬

ably do
stead

more

of

imports, just

as

the

will be able to export
their economies
are
reconstructed.

philosophy there
alternative to

Given

enough time,- so that
we can solve the
problem gradu¬
ally, we shall be able to develop
our

"The

sist

in

gap

_

should

be

closed

by

the flow of private capital rather
than by gifts. In general govern¬
ment

guarantees

vestors should

as

to

far

be

private

avoided; but if by
private capital yean, in
cases,

it

special

not venture abroad unaided,

should

be

International
struction
other

in¬

possible
that date

as

.

and

encouraged
Bank

for

by

Recon¬

Development,

international

the

agencies

and
and

dent;

has,

the

French

A.

L.
Co.,

its

CHICAGO, ILL.—At
the

Officers

and

gold

was

cago, Friday, Sept. 23, was select¬
ed
as
the date for the Annual

Field

Day at Knollwood Country
Club, in Lake Forest, 111.
Charles F. Hemenway, The Illi¬

Company,

announced in

bers

that

Chairman

a

the

Club

President,

letter to the

Program

Club, Edwin A.

Stephenson, Chase National Bank,
has. appointed

Milton

Julien H. Collins &

S.

Co.,

Emrich,

as

special

Men.

vitations

tually capital must be distributed

will be mailed in the

to

Foundation

out-of-town
near

guests

Will

trends

will

always

and Professor Jewkes' "Ordeal
as

well

"Animal

by
George Or¬

as

and

Farm"

his

latest, Nineteen Eighty-Four," are
first sparks evidencing
the be- '
ginning of a new trend.
;

y

percentage of past due

1}/%% compared with 5^2%

a year ago.

^

a

This study which is reported

replies sent in by members
the Credit Research Founda¬

of

tion

deals

with

the

(important

points affecting present day busi¬
ness activity on the financial side.
The average percentage of past
accounts as reported in the

3

accounts

a

year

months

to

for collection

over,

than

earlier date

an

a

year

was

ago

as

true
was

shown

by the answers to this
question: On turning over an ac¬

count for

'!

rv

-

collection, is the average
less than it was: '

more or
J-

More

3

months

ago

6

months

ago

1

year

ago

;

..

Less

.

,17%
17%
20%

are

the "indications

that

to

No

32%
29%
30%*

Credit executives

v,

Change
51%
54%

study recently

>

is affiliated with

k

a

their

of

50%

now

ledger

current
new

-

new

ac¬

This

records.

percentage

delinquent

accounts and

is

of T your

accounts

is this

are

more

or

less than it was?
,

*5 months ago
6

Less

From

point.

year

year

ago

accounts

This

decrease

The
tion

from

a

the

sellers' to

pinch

a

of

an

and 7% three (3)
'•

•

<

.*.!•*

.

Founda¬

Research

been

steady decline in

were

new

businesses

1947

this

total

and

in

there has been

in the number
businesses.

discontinued
there

businesses.

new

steady increase

close

,

In

to

400,000
established.
In

had
1948

dropped to
approxi¬

to

mately 100,000. Discontinued busi¬
nesses

ket,

ago

Credit

has

more

that

on

percentage
given- as 6%~ six

At the same time

1946

be

the

as

establishment of
a

to

seems

study further shows that in
period
covering
1946-1948

there

of

average de¬

an

cash discount basis.

was

(6) months

26.4%

the

a

months ago.

26.3%

in

1946

than

credit number

was

amount to

200,000,

in

a

1947

little

the

down to 300,000 and

in 1948 about 400,000.

change
buyers' mar- trends
•

on

upward trend

18.4%

shows

Research

in the number of

10%

decrease

'17.1%

consider

there is

of

crease

56.5%

study

Credit

this

the percentage of cash discount
payments. As compared with • a

52.§%
55.3%

,32.5%

of the important trends

in

Foundation study is a decrease in

ago

<:

primary factors in this
account situation.

new

credit executive's stand¬

a

one

shown

ago__

months

15%

No Change

as

delinquent

300 000

More

;

ing with postwar finances and the
increased
cost
of
conducting' a
business

the

alert

shown in the replies to the ques¬

Wl'iat

rnanagement inexperience in deal¬

.

counts appear on the past-due side

in¬ executives

future.

trend

I

'

Sun

begin.
begin with
thinking few; not with the
masses
of
average
people.. Al¬
ready
in
England
Professer
Hayek's "The Road to Serfdom,"
New

says, average

from

The

annpuncement and

The

as

new

power

y.

.

the National Association of Credits-

1

Chairman for this party.
Formal

a

-

Reports Slowing Up of Collections

tion:

General

of the

mem^

-

the

the

j* A; tendency als6 is shown to

The Municipal Bond Club of Chi¬

nois

Rise,

lost

study was 7.5% while for
Atherago the average was 5.5%,

of

Fabian

definite slowing up of collections in the manu-^wholesale fields during the last six months and, the

meeting age

a

of propaganda.
But as sure

facturing and
general trend seems to be advancing according to
announced by the Credit Research Foundation which

.and

Directors

the

eloquently testifies to the

falter

a

franc,

as

accounts has risen to

Presi-

Chicago Municipal
|
Bond Club Field Day

of

government,
to
nothing of the conditions in

Planning,"

There has been

at

the governments concerned. Even-




gold,

Credit Research

turn

interna-

the

we

due

harm than good. In-

rebuilding

-*

Mark R. Hodges,
Schirmer,
ton & Co., Treasurer.

once

thoroughly

&

Vice

V

of
more

be

'

debtors

which will still per¬

1952

R.

Day
Harry W. Besse

the

to

Frank

are

-.

mal means; that the United States
cannot or will
not accept pay¬

fed.

voted

at

Sept. 26,

used

.

will-at

Ex¬

be-

upon

are,

tional trade

of

y

has

officers named

gifts that they would not want
borrow any more.

by

use

say

money occurs, as was
France in the 1920's

in

with

for

d

election

nothing to offer vus.
"Continuation
of
gifts
on
a
frist, that we discon¬ large scale1 after 1952 would, in ad¬
tinue help in the form of loans
dition, create the impression that
and gifts—in which case interna-; the
gap cannot be closed by nor¬

for

League, July 30, 1949.

Boston

to

be

broken—despite the lower¬
ing standards of life and loss of
liberty in Great Britain under a

.

'"Extracted from the "Washing¬
Bulletin" of the Gold Stand¬

Par-

Stock

willing

to

;

propaganda

well's

change. Other

has

These

;

99% of its value.

nomi-

e

about

been

1930's, we may awaken one
to find that our dollar, in

.

so

our

case

Presi'dent of

and able to

we

t

na

the

market it
make the deficit countries

standard

tion of

run

n.

been

is

since 1920. That this spell has not

Century

standard before further deteriora¬

W.
Hut-

&

k i n so

Sees only remedy in

capital

18th

fail to return to such

ard

Harry

—

Bess e,

study made for and distributed by the National Association
on "The Foreign Trade
Gap," made by economists
connected with Tufts College, the authors
express their belief that

the

late

and

•

a

what

in

ton

of Manufacturers

out

the

of

occurred

as

citizens. But should

Pres. of Boston Exch.
ILL.

"trend"

reversed.

Communist-dominated countries—

gold

a

terms

surplus.

develop gradually, an^
import surplus. The report points tional

in

classes

own

services."

.

stocks

Labor-Socialist

case

,

"common

long-term invest¬
ments" and that they would con¬
tinue to rise), that is the
very

writer is certain it will return to

^ CHICAGO,

the problem of the gap can be solved—but
only if America is

the

that

Happily, the United States has
an adequate
gold reserve. Therefofe, after ■ the awakening, • the

and

repayment,

Survey, entitled "The Foreign Trade Gap," prepared for National
Manufacturers, hold U. S. must discontinue help in
form of gifts and continuous loans as
they will cause multilateral
a

time

Bolshevik Revolutions.

and

de¬

exports.

Association of

trade to shrink and nationalism to

excellent

and in Russia in 1917—the French

Only
by importing goods, and services
can the creditor expect to receive

y

groups of businessmen

were

..tv

certain

of

such

France

Besse Nominated for
Internationa! Investments

large

believed

;

,

time

of

tomers of the defunct company.

Says Continued U. S. Foreign Aid Will Destroy

an

Society and other proponents of
socialism who have been
thriving

and

cus¬

average

society,

day

high standard of service to

the

and

any

a

when

finally embraces

liquidation

commodities

than

that

debt

coun¬
a

export surplus while the

more

encouraged
for
he
well

It is true many businessmen are
hypnotized by the outworn creeds

economy of the creditor country
will have to prove its ability to

import

was

repudia¬
tion, which is almost always fol¬

deficit countries will have to
an

are

lowed by political revolution and

aid,

amortization

and

times

response

Philip M. McKenna

government encourages it to re¬
to the printing press as a
of raising more and more
money to meet "emergencies" and

export surplus will shrink. In

tries will have accumulated

writer

this

when

un-

this in turn gives rise to

the

"the

due to the "trend"
socialism.
Believe
it or

businessman

Obviously, as we decrease
finally discontinue foreign
our

an

it,"

knows

means

and

of

to

idea and accepts a "trend" as in¬
evitable (as was the case in 1928

sort

of goods and

bring

by

they enable the deficit countries
to
buy more; foreign
products
than they could have bought with
the receipts from their exports.
.

that

this

not,

with

of that

power

a

by arguments, in
majority present con¬

the

toward
-

restrained

country;

for

countered

against

currency
redeemable in

export

among

return

curred,

na¬

gold; or
(2) The

discussion

arguments

which

all

the

recent

a

writer

were

.

a
thoroughgoing
gold

economies

generation, for

honest standard of monetary value

tion returns to

tion to nation must be in the form

resources to

At

people

standard

its people

upon
a

a

the

ening,
by

and that

grants extended to other

must

k

awa

;

than

more

businessmen, the

restrained

|

away

<£-

is, after
period of

their

ample

a

of

ment
a

move

standard of value is flaunted
longer period one of two things invariably

(1;

power

only have to accept imports equal
to our
exports; we shall, in ad¬
dition, have to develop an import

could be put to use and then use
own

need for

permanent

in forcing

succeeded

that govern¬

shall not

we

underlying human

occurs:

The

ever

a

medium.

as currency

irredeemable currency for

an

by any government for

new

velop

companies to take

over

with small revenues, their plants

From then

-

form

he persuaded the managements of
the
large,
economically
strong

about

companies

in

government has
of

use

when the

payments will outweigh the flow
of new loans. From then on the

territory. In these cases,
the larger company agreed to take

telephone

available

possibility of rehabilitating them
under any circumstances.
In such
instances, in informal conferences,

lions of dollars, as in the case of
the New York Telephone Co." At
the other extreme are a group of
90

the

,r

,

hop

17

The Gold Standard Will Retain!

does

The

But the gap will still exist.
matter of fact, as

is

(561)

a

replacement
by private financing of gifts and
government loans is a step in the
right direction, a sign that we ap¬

Spsncer B. Eddy, Deputy Chairman of N. Y. Public Service Com¬
,

FINANCIAL

through

Telephone Companies in New York Stale
mission,

&

These same

are continuing during 1949,
competition, the study indicates.

COMMERCIAL

THE

(562)

18

Down With This Class
Our

Reporter

Governments

on

CHIPPENDALE, JK.

job is to
If

don't

we

especially in the longer end of the list. . . . Demand for
all Treasury obligations was widespread, with Federal supplying the
market with short-term obligations. . . . Dealers, traders and invest¬
ors were in the ma ket for the higher income obligations, with the
year,

program,

housing
"We

professionals evidently getting the better of the early dealings.
Scattered sellers appeared here and there in the longest eligibles but
these securities were promptly taken, as were minor liquidations in
the restricted issues
After some backing arid filling and wide quot¬

set

Joseph

to the lowest level in eight years. . . . Ample
credit becomes more plentiful and the monetary authorities are taking
the necessary steps in an attempt to reverse the economic trend. . . .
To be sure, loans will not be made if there is no demand for them,
but sooner or later a large and growing supply of credit will leave
an influence upon the business situation.
.
.
.
Somewhere along the
line as conditions change, advantages will be taken of the plentifulness of credit to create loans, that will affect the economic picture.
To modify the business trend is the primary purpose of the pow¬
ers that be, in making decreases in reserves of member banks.
. . .
In the interim and until loans assume greater importance, the govern¬
ment securities market will be showing th^ effect of less restrictive
credit policies. . . .
months brings them

which are already owners of excess re¬

The country banks,

some

unpleasant

.

.

.

•

»

.,.

at this time of the year.
of the old and

.

amount
outlet in thev

newly available reserves will find an

}

v

government market.

been interested in the
reason

no

;.

These banks, as a whole, have never

y

.

.

short-term low income issues and there

have recently experiencd

to believe they

is

change of

a

'

*

policy.

.

.

.

eligi-

Accordingly, the longer-term higher income

'

benefit of purchases by these banks.

bles should get the

.

.

.

Herein

.

again,

little

a

time is needed to see whether a real

more

As

released

reserves are

on

.

.

■

.

Business

and

nomic

on

reached

hold

in

first

the

August

issue

^among the retailers."

Bassie

Mr.

"Orders
were
cut
quickly, but it took
several months to stop accumulat¬
ing. In that period, there tended
to
be a shifting
of inventories
points

distributors
and

from

out.

to

later

manufac¬
to

earlier

manufacturing, a shift
well illustrated by developments
of

in

rayon. By the second-quarter,
however, production had been cut
back to a point well under con¬

so inventories began to
rapidly." /?•/ >«, /
Continuing the business com¬

sumption;

successive Thursdays, this month

Nonetheless,

invested in short-term Treasuries.

not too unim¬

a

portant part of the newly freed funds will probably be
work in the longer end of the eligible

list.

.

.

The reserve city

.

of the higher in¬

banks in the past have been significant buyers
issues.

come

.

.

put to

They will most likely continue to make similar

.

commitments in order to maintain earnings.

...

ORDERLY MARKET CAN BE MAINTAINED

out

The lower

reserve

requirements for banks in New York City and

.

.

.

joint action of the banks and the mone¬
tary authorities.
The deposit institutions pushed rates down so
fast a disorderly near-term market resulted and when the authorities
came in and sold bills and certificates to stabilize things, rates went
up just as sharpjv as tney went down.
The banks had losses

ters was "fouled up" by the
.

.

.

.

on

.

.

most of their short-term commitments and refused to sell them to

Federal

at

market.

...

a

loss, when

the latter tried

\

Whether there will be
near-term market

and
the

Federal.
market

a

...

a

repetition of what happened in the

short time ago will

The

to ease the

to buy them

./.r; \-r

authorities have the

securities to

orderly if they want to sell them.

know the bulk of the banks in

short,

as

;

,

keep

They also

.

New York City and Chicago

they have in the past.

...

<

will

,

TREASURY FINANCING SIMPLIFIED
The easier credit conditions will be

in its deficit financing and

a

great help to the Treasury

refunding operations, and

as

usual they

rates at whatever level they choose.
There
seems to be one thing the Treasury likes and that is lower interest
costs for marketable obligations.
Treasury bills and Series D
can

and will

set

.

.

.

"For vthe

second-quarter

.

.

.

as

a

adjusted basis — an annual rate
of about $10 billion. Since prices
have declined only gradually, most
of this—perhaps $6 billion—rep¬
resents
real
liquidation. Hence,
from the fourth-quarter of 1948,
of

rate

of

$10 billion

to two-thirds

in

on

inventories.

ness

was

at the

$4 billion, to the second-

swing
account of busi¬

quarter of 1949, there

the

was a

This

amounted

of the total decline

national product,
$265 billion to
$250 billion. Since a $10
billion swing in inventory invest¬
ment would normally produce a
larger decline in the total, the
sustaining influence of other fac¬
tors is reflected in these changes.
which

gross

fell

from

about

depend upon the banks

'

go

'

whole, book values may be down
about $2.5 billion on a seasonally

in which accumulation

Chicago (central reserve cities) which takes place over a four-week
period ending Sept. 1, will tend to ease the tight money market con¬
dition in these two areas.
The short-term market in these cen¬

Approaching the Turn
/

"Today there

rate

are

signs that the

of

liquidation has reached
its peak. Efforts to liquidate are
continuing, of course, and seem
likely
to
continue for
several
months at least; but, in some lines,
there has already been a reduc¬
tion of pressure. In

per,

lead and cop¬
for example, fabricators have

had to

come

back into the market

to

replenish working stocks. Seg¬
ments of the textile industry also

(1.40%) are taking care of a substantial amount of the' indicate the beginnings of a re¬
.,,
The next refunding is Sept. 15, and the finan¬ versal. Revival in lines that have
cial community is not looking for anything out of the ordinary to already passed the peak of liqui¬
happen at that time. . . . The going market rate for short-term dation will offset further declines
obligations is looked for in the early fall operation.
The Oct. 1 in others where liquidation is still
certificates will no doubt be handled the same way.
*
increasing.
.




.

.

deficiencies

*

tories;

income

in

em¬

inven¬

and, in
all probability,
policy- will be directed
toward
preventing

merely

further

declines

newed

"Illinois

of

Business Review,"

accumulation.,

but

toward

re¬

Such

ac¬

.

,

high

not again go as
in earlier postwar periods

as

to make

a

definite contribution to

the recovery.

"All

this

suggests that the

will
merely

of

a

trend.

downward

a

re¬

substantial, and
minor interruption

be

covery

not

With

gov¬

ernment

expenditures up more
than enough to offset declines in
private investment, with construc¬
tion continuing at boom rates, and
with

spending a nor¬
of their income,
the high of $265 in gross national
product is likely to be reached
again before the middle of 1950."
consumers

mal

proportion

it

quickly ceases to affect produc¬
Specifically, when inventory
liquidation is no longer increasing,
this factor is no longer forcing

Calif.

production down, even though in¬
ventories are still being liquidated

Common

tion.

Oregon Power ;j
Market

on

rapidly. Thus, if recent easing of
An investment banking group
pressure is taken at face value, it headed jointly by Blyth & Co., Inc.
would appear that the recession is
and
The First Boston Corp. of¬
already about ended.
fered
publicly Aug.
10 250,000
"We may bump along near the
shares of common stock of the
lows for a while, but there is
California Oregon Power Co. at
nothing in the picture to drive ac¬
$23.25 per share.
tivity
much
lower.
Residential
Proceeds from the sale of this
construction has made a strong
stock, together with the proceeds
recovery, with new housing starts
from the sale of $7,000,000 of first
in June back at the record high.
mortgage, bonds which the com¬
The
decline
in new
plant and
pany proposes to offer later this
equipment expenditures has be,en
month, will be used chiefly to re¬
more
moderate
than
expected; fund
$9 000,000 of promissory notes
and, as the special article in this
which the company issued to fi¬
issue indicates, the forecast does
its

nance

not

suggest

tion.

any

abrupt accelera¬

,

"Again,
when
the
peak
of
liquidation is reached, inventory
changes
become
a
potentially
favorable

force.

The

factors that

usually force the dumping of in¬
are
sharply
falling

ventories

construction,

current

program.

Due

to

an

crease

in

the

and

unprecedented in¬
business activities

population in the

by

the

an

increase

company,

the

in

served

areas

there has been
sales

resi-&

to

dential, commercial and industrial
customers and

reduction in sales

a

credit. Neither
of electric energy at wholesale.
in the cur¬
This necessitated a large construc¬
rent situation. Considering, in ad¬
tion program which includes new
dition, that inventories foere rela¬
tively low at the outset and that generating facilities at Toketee
the rate of liquidation has been Falls, Oregon, and the, expansion
of the company's transmission, and
unusually rapid, it seems probable
v
that normal buying will be re¬ distribution systems.
The
company
believes that
sumed within several months at

prices and

shaky

of these is important

,

funds

the most.

"Since

there

is

likely to produce

no

an

other factor

offsetting de¬

will

occur

when

inventory liqui¬

dation ceases; for the cessation of

inventory liquidation is not

mere¬

easing of deflationary pres¬
sure, it is a positive force on the
upside. Liquidation can come to
an
end
only
as
production is
brought ,up into line with con¬
sumption. For this to happen, no
one has to expect recovery; busi¬
ness merely has to decide that in¬
ventories are low enough. When

ly

issue

the

bonds

available

will

stock

and

sold

later

this

to

"The

recovery

question

will be

un¬

then

becomes:

with

amountsr

internal

sources,

provide it with

struction

ample con¬
until
approxi¬

funds

mately Jan. 1, 1950. l:
Giving effect to the issuance of
hese

common

the

shares,

pro¬

posed $7,000,000 of first mortgage
aonds, and the prepayment of $9,-

of promissory notes, the
company's long-term
debt
and
capital stock will be as follows:

000,000

principal

$25,000,000
first
par

mortgage

bonds;

amount of
$7,416,600

value of preferred stocks; and

shares

800,000
common

of

rently being paid
at

$20

par

stock. Dividends

the

go? As

stock

production is stepped up to pre¬
vent further reduction of inven¬

share

per

which

was

How far will the recovery

be

from

an

it happens,
der way.

sale of

common

of

together

month,

the

from

available

this

Recovery Prospects

cline of comparable magnitude, at
least some measure of recovery

Tax Notes

deficit financing.

of

in turn

business
not

peak, and a high of $265 billion in gross national product
is likely to be reached again by middle of 1950.

Writing

move

Sept. 1, it is expected a sizable amount of them will be

quickening

and sales will

phasize

Research,

mentator stated:
and

"The

of University of Illinois Bureau of Eco¬
says
inventory liquidation has

V. Lewis Bassie, Director

stages

reserve

change in trend is in the making.

dencies toward further decline.
flows

Foresees Substantial Business Revival f

from

WORK

city institutions are also showing an increase in bor¬
While tne volume thus far is not too impressive, it
nonetheless is enough to warrant attention.
Certain of these
districts have reported larger loans for three weeks in a row. . . .
The

rowings.

the the new upsurge in activity.
Projects that have been postponed
will be reinstated, checking ten¬

be

cumulation need

turers

PUTTING INCREASED FUNDS TO

steady upward trend in
expenditures
will
felt, and its effects will be
apparent
when
it is
no

longer overshadowed by large in¬
ventory liquidation. Business ex¬
penditures for
new
plant
and
equipment will also respond to

consequences.

previous highest, may be expected
by the middle of 1950.
"The drive
to
liquidate took

On the other hand, a sizable

.

.

they

past.

years

"The

also be

monthly publication of the Bureau of Economic and Business Re¬
search, College of Commerce, University of Illinois, V. Lewis Bassie,
its director, says present business recession is an "inventory reces¬
sion," and there are already signs^
that
inventory
liquidation
has
"Activity responds quickly to
reached its peak, so that a busi¬ changes in inventory policy; but
ness
revival
equal to level of when the rate of change is stable,

in required
reserves.
Part of the released reserves will be used for
loans since it is indicated some of these institutions are having a
seasonal uptrend in borrowings. .
.
So far, however, this volume of loans has not been too sizable and it is still too early to
know whether the increase is other than the usual development
the first to benefit from the latest decrease

.

should

subsidies

be expected to

may now

government

program.

farm

Today

1947.

in line with income, as

typically have in

given some consideration."
—Joseph D. Keenan (AFL).

D. Keenan

...

serves, are

they

move

minimum

national

the

and

hour

an

of

expenditures are again
normal in relation to income;

near

,

Well, at least the gentleman does not hesitate to
call a spade a spade!
But some day we shall be obliged to have done
with this class approach to public questions—or take

requirements in less than two

reduction in reserve

second

The

for

.

GOVERNMENT MARKET

IMPACT ON

cents

a

consumer

more

rumored for several days that credit

.

75

to

up

unique event, like the exception¬
ally high rate of spending in the

We favor sup¬
port of prices for farm products,
regarding these as the farmer's
minimum wage. We think that
the plan of Secretary Brannan

unexpected,
would be
made easier.
The stagger system of lowering reserves will
tend to spread out the demand for Treasuries and will no doubt
enable the authorities to maintain a more orderly market. . . .
.

the minimum wage,
and health insurance.

want

as

farm

required reserves were not entirely

Changes in

expenditures will
correlative degree.
The
extraordinary first-quarter
decline in consumer expenditures
stands as a kind of aberration, or
and their

crease

second-quarter

wage. '
v
;V
t'vVe are also interested in the

ing, the market settled and then went ahead with out-of-town banks
among the important purchasers of the eligibles from 1952/54 on. . . .
Savings banks bought the restricted issues. . . . Plenty of swops
were made from eligibles into the restricted bonds.
.
.
.

since it had been

we

to it that we reelect our
are going to have a Repub¬

Congress. We must keep our people awake.
"Our objectives are not limited to the Taft-Hart¬
ley Law, but we have a great in¬
terest also in the social security

ments in the

the

see

lican

government market reacted to the lower reserve require¬
expected manner by pushing through to new highs for

The

Approach!

tories, other factors will not stand
still. Consumers' income will in¬
move

"Our
friends.

By JOHN X.

Thursday, August 11, 1949

FINANCIAL CHRONICLE

&

rate

on

the

of 40

value

are cur¬

common

cents

quarter, the latest
paid in July.

per

of

THE

Number 4828

Volume 170

COMMERCIAL

FINANCIAL

&

two indices quoted

United Nations SeesU.S.Occupying

to be

•

■

>

world

exports

in

the

last

I'/;-." In its elaborate "World Economic Report" for 1948, just pub¬
lished, the Department of Economic Affairs of the United Nations
stresses the key position which the United States now occupies in the
According to the report:

"The United States has

come

to3>

quarter

of that
a

year.

rela¬

.

,

United

the

from

States

countries

as

to

States

in

trade

food¬

dollar

their

mean

19

the principal supplier to the world

market,

by 72%;

exporting

13.5

million

metric tons in 1948, or more than

stuffs has undergone a spectacular Canada, Australia and Argentina
change ► since the 1930's. In 1937 together. Exports of other cereals
there was a net import of food¬ and rice have also increased since
1930's, and the prewar net
stuffs of $571 million, but in 1948 the
imports of eggs and dairy produce
a net export of $579 million. While
the quantum of imports in 1948 has beerv replaced by an export
remained smaller than in
1937, surplus. The increased export of

soft-

sources

foodstuffs. has been rendered pos¬
sible by the expansion of produc¬

tion, due to

series of good crops

a

and the rationalization of

agricul¬
by the relatively
States has become, since the war, high prices of foodstuffs."
expenditure.
that, if these

such countries in order to

This does not

7———7

imports of vegetable

and

"United

(563)

that
of
exports was over four
of times the 1937 level. From having
supply reflects in large part the been a minor exporter of wheat
trade controls employed by cer¬
in
the
late
1930's, the United
tain
duce

——

26%

cheapening of United States
Oxport prices.
Probably, there¬
fore, this redistribution of trade

currency

international economy.

fell from

in the first quarter of 1948 to 21%

tive
-

tenths,

oils and fats,

This decline coincided with

In report on

world economic situation for 1948, its Department of
Economic Affairs says numerous countries are now dependent upon
this nation as source of commodities and financial aid, as well as
"
<
for markets for their products.

is large enough

significant.

"The share of the United States
in

Key Position in World Economy

CHRONICLE

re¬

key position in the inter- confined, it appears, to the trans¬ controls had not been used, the
fer through the United States of
national economy as a result of
redistribution of trade would not
the yield of European investments
the
increased
have taken place. The indications
dependence after
in certain tropical territories.
In are that such a redistribution was
the war of
numerous
countries

ture

facilitated

occupy a

particular, certain British oversea
territories have been "dollar earn-

American market as a
supply of commodities
and of financial aid, as well as an
export market.
The quantum of
United States exports in 1948 was
almost twice that in 1937, as well
as in 1933; on the other hand, its
quantum of imports was only 8%
above the level of 1937 — though
50%
above that of
1938 when
the

upon

of

source

there
the

was

to

heavy contraction in
demand.
Exports

a

decline

in

value

from

May, 1947 to November, 1948; since
imports increased during the same
period, the export surplus de¬
clined rapidly.
It should be ob¬
served, however, that the mari¬
time strike

on

Nations

of the
imports from the
Stefan Osusky, expatriated Czechoslovak Ambassador to France,
ers
for the sterling area's dollar
United States by the shortage of
says it would be a peaceful weapon which could lick Soviet Russia.
pool. The United States import dollar funds and the absence of
balance from British Malaya, due
multilateral trade on a large scale.
Speaking at the First Annual Conference on American Foreign
largely to purchases of rubber and But if the trade controls had not
Policy at Colgate University in Hamilton, N. Y.,.on July 26, Stefan
tin, amounted to $285 million in been used it seems
likely that Osusky, Czechoslovak Ambassador to France, now a professor of
1947 and $270 million in 1948, as
either exchange rates or prices in philosophy at Colgate University, strongly urged that the Danubian
against $234 million in 1937. The
the various currencies would have
countries, now^
corresponding import balances
had to be adjusted so as to reverse
under Russian fight and
suffer for.
An idea
from British West Africa, result¬
the diverging movement of export
domination, launched at a proper moment is
ing in large measure from cacao
be made par¬ more powerful than armies.
prices referred to above. Under
Re¬
imports, were $48, $90 and $26
prevailing conditions, such adjust¬
ticipants in member that!
million, respectively. On the ments
would! in some countries,
President
"Beside the particular Danubian
other
hand, the prewar import
undoubtedly have been accomTruman's
balances
from
interest, there is a vital general
India, Indonesia,
p a n i e d
by unemployment and
Point IV pro¬
the Philippines and many other
European economic, interest in¬
other economic disturbances.
gram
of ex¬ volved in Point IV. Europe grew
tropical countries have been re¬
"One of the
most spectacular
tending mate¬ in numbers and wealth because
placed by heavy export surpluses

the east coast ham¬

the export balances with the
majority of countries, both in the
and that the export balance in¬
tropical and temperate belts, fell
creased
in
the
following
few
considerably from 1947 to 1948
months.
■ %;''
;yj': 7' •>;; ''V"
an adjustment
resulting from fi¬
;
"Since the beginning of the cen¬
nancing difficulties on the part of
tury, the United States has usually the United States trading partners
had an import balance with the after the critical international
tropical belt but a persistent 'ex¬ payments situation that developed
port balance with most countries in the second half of 1947. These
in the temperate belt and particu¬
changes in trade balances and the
larly with western Europe. Since gradual increase in United States
the war, there has been a net ex¬ aid rendered it
possible for other
port in almost all directions, fi¬ countries, during the last half of
nanced
largely by, American 1948, to reestablish part of the
grants, loans and investments, and capital
reserves
in the United
by
the withdrawal
of
foreign
States which they had been forced
liquid assets. Triangular trade not
to draw upon during the previous
involving the efflux of funds from
the United States has been largely two and a half years.
But

pered exports in November, 1943

-

Program Applied to Dannbian

necessary

limits

put

consequence

on

,

American

tended

Wants Point IV

•

facts—of

rial and

Europe

nical

particular importance to
is the failure of the
quantum of United States imports
—

tech¬

aid

to

undeveloped

she

could

her

get

and

raw

materials and minerals from

food

new

countries.

The leaders of Europe
regions.
should have foreseen that, in the
"The
Dan¬ course of
level, in spite of an in¬
time, the Americas will
crease of over 60%
ubian Basin is
in disposable
produce themselves most of the
both an area manufactured
personal incomes in the United
articles and will no
Stefan Osusky
States computed at stable prices
whose natural
longer need the services and cap¬
and recent reductions in import
resources
ital with which Europe paid for
tariffs.
While the lag in imports are undeveloped and whose popu¬
her food, raw materials and min¬
cannot be fully
explained here, lation is backward,", Mr. Osusky erals. But
European leaders went
there is reason to draw attention stated 'How come?' The Danubian
asleep and were awakened from
to the price disequilibrium as one Basin
is
a
cemetery
of
dead their slumber,
only when their
of its major causes. While the unit empires: Samarian, Hun of Attila,
countries' economic structure was

of finished manufactures to reach
the

1937

value

index

for

finished

manu¬

Avar, Khazak, Holy Roman Em-- collapsing.' Their: only salvation
pire, Ottoman Empire and the today .is to collaborate gratefully,
Austro-Hungarian Empire.
The devotedly
and, enthusiastically
present Danubian countries repre¬ with the United States in the im¬
sent the failures, the bankruptcies
plementation of Point IV, in the
of
successive
imperial systems. Danubian Basin, in Africa and
The ruling nations of those em¬ Asia.
Thus, in collaborating with
MERCHANDISE TRADE BALANCE OF THE UNITED STATES
likely to be due to the divergence pires, afraid that the peoples of
the United States in the improve¬
:v
1937, 1938, 1947 and 1948
in the price movements of import¬ the Danubian Basin
would not re¬ ment of the economic and social
ed
and
exported manufactures, main within their empires, if they
(Recorded balances of general trade in millions of dollars)*
conditions of backward regions in
which differ in
nature; but to had the means to be
1948
1947
free, have Europe, Asia and Africa, Europe
Country or area— •
1937 :
1938
some extent the disparity is likely
done
their
best
to
keep these will not only save herself from
World
265
9,607
5,544
1,134
to
represent differences in the
361
898
peoples just at the level of bare destruction, but, moreover, will
Balance with United Kingdom
334
403
movement since 1937 of prices in
existence
and
in
as
great
an contribute her share to the organ¬
Rest of Europe (including USSR)3,971
2,825
182
356
the United States and soft-cur¬
ignorance a§ possible." '
M
ization of a world order which
Argentina,-' Australia, Canada, New g
rency countries.
:
Zealand and the Union of South
"The river Danube is the great¬ will be the concrete and practical
:
"Though the United States pro¬ est river of the
935
1,994
manifestation of the unity of man¬
Africa.
: 172
385
European conti¬
All other countries
—423
—10
2,744
1,423 gram is stockpiling certain raw nent west of Russia.
It is 1,800 kind.
materials has undoubtedly tended
miles long, connecting the great
"The Western World has power¬
Source: Official statistics.
to
raise its
import of primary
industrial and populous regions of ful
peaceful weapons with which
♦Import balances indicated by minus signs.
products, this import was in 1948
Germany, France, Belgium and it can lick Soviet Russia. This is
less than a fifth above its level in
Luxemburg with the grain, meat, one of them. All that is necessary
"It is of interest to compare the price movements doubled the 1937. This increase
lags very con¬
recent
movement of prices
(or price discrepancy in the course of siderably behind the increase of fat and timber growing regions is clearly to define them, organize
of central and southeastern Eu¬ them
1948.
"unit values")
and
bring them
to the
of United States
about three-fourths in the manu¬
rope.
The
Danube
watershed knowledge of peoples today with¬
exports with
those of the re¬
Average Export Prices: Indices of facturing production, into which covers an area of about 315,000
mainder of the world, converted
out
hope.
This
is a crusade
the
imported; primary products
Unit Values in United States
to
square
miles, comprising south¬ worthy of the Western civiliza¬
dollars
at
current
exchange
are
largely absorbed. There has
and Rest of World
western
Germany,
Austria, tion and which will make America
rates.
The indices of such prices
been a very considerable increase
1937, 1946, 1947 and 1948
in the table below, computed on a
Hungary, Yugo¬ what she is to be in the history
in the import of certain products, Czechoslovakia,
Period
Index of average
Ratio of
1937 base, show that the export
slavia,
Bulgaria and
Rumania. of mankind."
index for
export prices
however,
which may forebode
rest of
(unit values)*
prices of the United States in 1946
lasting changes in the pattern of They have navigation, flood and
world to
water traffic problems, neither of
and 1947 were lower than aver¬
international trade. Thus the im¬
United
United
Rest of
which is capable of resolving them
age export prices in terms of dol¬
States
world
States
port of crude petroleum, gas oil
alone.
And above all, in a region
lars elsewhere.1 The convertibil¬ 1937
100
100
and fuel oil has risen from an an¬
100ity crisis in the last half of 1947, 1946
nual average of 57 million barrels, short of coal supply, the powerful
followed by the depreciation of
from 1936 to 1938, to 188 million flow of the Danube is allowed to
114
166
1st half-145
the French franc in January, 1948
L. F. Flammenghi has opened
in 1948, and the United States is cross the European continent
121
191
2nd half158
factures

exported from (the Unitec
States had risen only 87% from
1937 till the last quarter of 1948,
that for imported manufactures
had risen 171%, or nearly twice
as much.
Part of this disparity is

.

,

—

'

.

c

—_—

,

'

.

L. F.

Flammenghi Opens

Office in New York

of larger agricul¬
occasioned some de¬
cline in average export prices out¬
side the United States, so that the
price discrepancy was greatly re¬
duced in the early part of 1948.
From the first to the fourth quar¬
ter of 1948 United States export

and the prospect

tural

crops,

fell by 3%. The decline
was due largely to lower prices of
foodstuffs but the prices of goods
other than foodstuffs also fell—on
prices

the

average

other

by

1.

over

On

the

hand, the export prices of

the remainder of the world,

as

a

whole, increased during the same

period
lTo

by
some

8%.
extent

These

different

the price discrepancy

have been
due to the fact that
finished manufactures, which had risen
somewhat
less in price since the base
may

larger

represented a
United States

exports

the remainder

than
other goods,
proportion in the
than in those of
the world.

year

of




177

207

117

rapidly approaching a situation in
which it will have an import bal¬

117

ance

1947
1st half-

of petroleum and petroleum

183,

222

1st quar._

195

220

113

become

2nd

quar.

117

copper

quar.

233

121

rous

4th

quar.

194
193
189

227

3rd

238

126

wool has

2nd

half-

products.

1948

a

The United States has
large net importer of

and certain other non-fer¬
The import of raw

metals.

more

than trebled—from

generating hydroelectric
which would powerfully
contribute materially to the ad¬
vancement
of
agriculture
and
industry and make the Danubian
countries prosperous.
It would

without
power

create

a

factured

new

products

and

special

City, to engage in the

Mr.

business.

securities

di

Greenwich Avenue,

30

York

menghi

was

Flam¬

formerly with Banco

Napoli Trust Co. of New York;

market for manu¬

metric tons annually in agricultural products of over 100,Source: Based on data supplied
1936-38 to 345,000 in 1948, owing 000,000 people."
by the Statistical Office of the
„to the coincidence of a decline
"Can you imagine," the Czech
United Nations.
in domestic production and a rise statesman
continued, "the propa¬
*In terms of dollars.
in domestic demand.
Imports of ganda value of Point IV if the
coffee have increased in quantity
United States Government pub¬
"Naturally, any computation of
by half, and a similar increase is licly announced that it applied to
this kind is subject to qualifica¬
recorded
for' crude
rubbed, in the Danubian countries under So¬
tions of
various kinds, and no
spite of the heavy expansion since viet domination?
Under present
close comparability should be as¬
the 1930's of the domestic produc¬
conditions, it would be the best
sumed to exist between export
tion of synthetic rubber.
On the weapon to fight the Soviets and
price indices calculated by differ¬ other hand, imports of raw silk
their agents, the Communist par¬
ent methods in different countries have declined in
quantity by nine- ties in the satelite countries.
It
in which the commodity composi¬
would give the Danubian coun¬
tion of exports is very unequal.
2 The
increase
over
1937,
however,
Nevertheless, the discrepancy in when rubber imports were comparatively tries, in their abject misery, a
hope, something worthwhile to
both level and tendency of the high, was only 23%.
104,000

at

offices
New

was

with

the

New

York

State

Banking Department, and was an
officer of the Pan American
Co.

and

the

Sterling

Trust

National

Bank & Trust Co.

Charles W. Price to

Open Own Office
Charles

W. Price

19

fices

at

York

City,

to

engage

curities business.

Price

was a

will open of¬

Rector. Street,

New

in the se¬

In the past Mr.

partner in Syle & Co.

20

COMMERCIAL

TOE

(564)

or

to the

FINANCIAL

&

CHRONICLE

printing press to support
obligations

Sees Pace of Business Decline

the market for Federal

Money, Gold and Exchange

which constitute

large a pro¬

so

,'U ;/•/.
quotas
ex-land controls indispensable to the

(Continued from first page)
other units

—

relation to abolition of the system of

because money
by its volume, not maintenance

of fixed rates, Busi—
by its unit
and^ that volume is ness will soon thrive, employment
never static
For instance: Were will increase, international trade
-the volume of
money doubled will proceed and remain on.a balovernight how would the unit ex- ahced basis because free exchangee*
will extend the price system to
press the prices of today in con«»
the international field. Producers
trast with those of yesterday? On
and consumers alone will then de¬
the other hand, no matter how
termine prices everywhere, while
few or how many yardsticks are
currencies
will
always sell in
in use, each one always measures
terms
of each other for exactly
exactly three feet.
what
they are worth." That is
As to the unit of currency m its
multilateralism for which there is
relation to other units: For illus¬
no substitute.
tration, take the dollar and the
The freeing of the exchanges
pound sterling at a ratio of $4^
1£.
Accepting the Obvious fact requires no international agree¬
that monetary management every¬ ment nor consultation of any kind.
where is suited to the national It can be accomplished by a sim¬
.peed
suppose
that for reasons ple act of Congress: Today most
deemed good and sufficient the fixed, currencies are tied to the
Federal Reserve authorities re¬ dollar directly or through gold at
duce
circulation by $1 billion, $35 an ounce. If we sever the link
values

fjre'sses1

.

.

British Treasury in¬
circulation in England by

the

while
creases

£500,000,000, what then is
relationship of dollars

pew

,

the

and the dollar, if
we make the dollar irredeemable
to aliens as it is to American cit¬

gold

to izens, all exchanges will be free.

Hence this pertinent rea¬
soning: "What business have we to
tie the dollar t0 other units of
currency if we do not control the
volume of these other units? What
is there so sacrosanct about a rate
of exchange that it should be rigIdly maintained despite all eco¬
nomic disparities, of which the
volume of money is but one?
.The. demand for fixed rates of
exchange
is invariably accom¬
panied by promises of "stability"
and granted on that basis.
But
these promises are valueless be¬
cause monetary soundness and ex¬
change stability are products of
healthy fiscal management dnd of

pounds?

.

Thereafter any

linking of

a

cur¬

modity and security alike, would
the country to its founda¬
X

tions.

■

Redeemability

r

is

quietude,

a

currency.

of

born

fiscal

sound

economic

ment,

does not

in

confidence

bring

Confidence

"'XXXXXX/'

se

per

political
manage¬

well-being.

To

to confess
adoration for the Golden Calf by

is

otherwise

believe

lending magic to dead metal. We
live in an era of drastic readjust¬

political, economic.
trustees of Republican in¬

social,

ment,
As the

stitutions

we

Americans must pay

than lip service to free en¬
terprise by eschewing price-fixing
in any form and recognizing that
a free functioning price system is
more

the

very

essence

freedom.

and symbol of
X x-X.-X XX'-;/X'
■

could

-

thereafter

devote

a

welcome, if novel, departure in
All of which will

modern finance.

involve

the

dissolution

of

many

Government bureaus and the dis¬

persal

Group Offers Petin.
Power &

Light Pfd.

cal

value, divi¬

in respect to par

dends, redemption price and liq¬
uidation price.
This offering will
complete the marketing of all of
the company's presently author¬
ized

preferred stock.

"

,,,

,Prriceeds.-plus general funds of
be used to fi¬

the company will

If free

it corrects unbal¬ and

ance', if fixed it cumulates and
compounds disequilibrium as all
price-fixing does. Unbalance
temporarily be masked by the use
of -loans
to offset the growing
debits resulting therefrom,
but
this treatment of symptoms canhot * long endure because, with

4

*

ness

■

to

'

-

America in the markets for manu¬
factured goods because none pos-

the basis for low costs
..Tyhich America enjoys despite her
much higher wage sc^le.
In its
Wn vast internal market Ameri«esses

,

can

,

"know-how"

has

an

outlet

•unique oh earth which makes pos¬
sible 'mass production at low cost.

.

Indja, Russia, all have diate
redeemability, and who con¬
populations,
but
their tend that
when gold is made? free¬
availably no one will want it,
sume
are thinking ip terms of the l870's,
monwealth, whose total popula- not in the realities of
today.
At
Uon is also great, has no such inthe
China,

neither produce n&r conly
as we do.
The British Com¬

;

*

'

decline,

but at

a

slow¬

er

pace

in

May

than
and

"Specific

may

products

indica¬

trend

July.
of

in

is

cle

the
cy¬
a

Robert C. Swanton

in

reveals the greatest
the start of the

28%

our

strength since

decline, with 30%

increases:

compared

as

down

the

on

side.

The

downward

price trend is reported
showing a tendency to slow up
and level off, though Purchasing
Agents feel there are many ad¬
justments still to be made. Pur¬
inventories

chased

other internal
pany

a

up

and

of

in*

reduction

The

sources.

d d itio

na

would be undertaken.

continue

starch.

"Reported down: ammonia, as¬
phalts, trucks, butanol, carbons,
castings, except nonferrous, chem¬
icals, chipboard, coal tar, cotton
linters,
dyes,
electrical
equip¬
ment, feldspar, ferrosilicon, fiber,
foods, coal, coke, fuel oil, gelatin-,
leather, lumber, methanol, mer¬
cury, plastic powders, lubricating,
linseed, soybean oils.
Pipe and
fittings, platinum, paper and pulp,
paraffin wax, rubber, shellac, steel
scrap cotton and rayon textiles,
X "
t'X
tires, turpentine.

to

•

"Canada

—

Canadian

reported

predominant buying policy con¬
tinues to be very short-range. A
confidence, lacking in re¬

level

continues

than

to

general
slide

on a

the: United

off.

higher

States

for

several

months, July reverses the
position.
Commodity prices are

holding better; inventories are not
being reduced as rapidly as in the
United States.

Employment is in¬
mostly seasonal. > Buy¬

creasing,

ing policy about the
United

States."

same

•'•

as

the

"

'

com¬

"Commodity Prices
eral

1

/ j

is

to

—

The gen¬
prices

reduce

MIAMI

BEACH, FLA.

—

Baphe

though important basic commod¬

& Co., members of the New York

ities—copper, lead and zinc—have
shown
marked
strength during
July.
Competition • is becoming
more
active
and
more
general.

Stock

better

Salesmen

equipped to

stock

must

of

go

to

be

reduced

Miami
office

Beach
at

235,

Lincoln

Road,
Miami Beach,
Florida.

stocks

at

Schwartz:

Manager of
the
fir m's

before price stabiliza¬

"Inventories—Industrial

Qi;

as

still

tion is reached.

continue

XXxX-'; XXXXX"

Arthur Je-'

rome

that have been reduced have fur¬
ther to

the

appointment

be adjusted to
the lower cost trends. Many prices

prices

Exchange and other leading
and commodity exchanges,

announce

ne¬

gotiate are calling.
Opinion is
repeatedly?; expressed that many

financing

/

trend

Schwartz |o Manage
Bache Office in Florida

Mr.

Sc hw

the

a

artz,
former part-

.

.

an officer.
He is
30 days' buying range is the
a veteran of the European theater.
policy of 70% of the Purchasing
? Myron S. Zeientz continues as
watts at the Sunbury Station, ac¬ Agents reporting. Though there
cording to the company, is ex¬ is increased buying, the trend is Manager of Bache's Miami office
at 96 N. E. 2nd Avenue, Miami.
pected to be in full commercial to-order frequently in small
service before the end of 1949. amounts, even at the loss of quan¬
The balance of $48,400,000, it was tity discounts. Weighing the adstated, will be expended in con¬ vantage of quantity discounts
structing additions to and replace¬ against possible price reductions
ments of electric, gas and steam- and the
short - term production
plans being X generally followed,
heating facilities.
At the conclusion of this offer¬ finds Purchasing Agents being ex¬
Paine, Webber, Jackson & Cur¬
■■
ing and recent financing, capitali¬ tremely conservative.
tis, 25 Broad Street, New York

miles south of Sunbury.
The in¬
itial installation of 150,000 kilo¬

to

until he became

.

Oswald Clemens, Jr.,

Witli Paine, Webber

•

,

de¬

up were: alcohol, new
ceramics, corn, limerock,
oil, tung, oil, rosin,
XXX*";
X'::
'; X«:

Where they have been

note of

list

cottonseed

for the three
previous months. Our reports on
employment point to a slight re¬
versal of the past six-month trend,
45%
maintaining the June pay
roll average, 14% increasing. The
rate

^

side

increased

business

stated it was not able to say

when the

short

a

the

shrink at the same sharply declin¬

ing

.

"Others

reports
with 21%
on
the upgrade, and
49%
holding to previously re¬
duced schedules.
Order booking

to

on

With substantial

burlap,

showing

reporting

headed

production

p-

Produc¬

good

areas.

mand, these materials are reflect¬
ing a change in the supplydemand picture.
• ■/?.x;:
:
^ ;

August, show¬

ing that
declining

back.

readily

are

Commodity
Prices
extensive price de¬

commodities

which
be con-

firmed

called

or

workers

—Following
clines, copper, lead, zinc and their

several

tors,

retained

available in several

There

June.
are

:

being

White-collar

present time the ratio of our
tegrated. .market as we possess.
gold stocks tp dollars and their
Yet all these nations must live.
equivalents is very low indeed. By
Yhqy pari only do so on the ba$is equivalents are
meant bank; de¬
of balanced trade which they must
posits, Federal obligations which
and will achieve either by the
are but dollars With coupons at¬
natural
means
which free ex¬
tached, not to speak of State and
changes afford or by reducing to
municipal bonds. If, for any rea¬
a minimum
trade relations with
son, there should develop an un¬ zation will consist of $165,644,0.00
"Employment—41%, the lowest City, members of the New York
America.
usual demand for gold when it is in long-term debt; 515,000 shares
percentage of reports since De¬ Stock
Exchange rates should be freed
Exchange, announce that
of 4V2% preferred stock, $100 par, cember,
made freely available, Govern¬
show further employ¬
^despite ,the discomforts attending ment might not be able to stem cumulative; 63,000 shares of 4.60% ment declines.
Oswald Clemens, Jr., has joined
14%, which is the
readjustments from artificality to the tide that wohld set in until series preferred stock, $100 par, highest since November, report the institutional- department of
realism; for those will be the dis- irreparable damage had been in¬ cumulative; 12,000 shares of 4% % additions to pay rolls. Several in¬ the New York office of the firm.
flicted on the nation.
For if our series preferred stock, $100 par, dustries which were cut below 40
comforts of convalescence on the
Mr. Clemens has previously been
financial structure were to resist cumulative; and 3,327,868 shares hours a week have increased the
roaa to economic well-being. Free
y
a gold rush Government .would be of common stock without nominal running time. Productivity is im¬ associated with Alex. Brown &
exchanges will bring about the obliged to resort to forced loans or par value,
proving, with the better operators Sons and Lazard Freres & Co,

»

,

'

;The construction program, acr sharp pace set four months ago.
There
is
more
indication
this ;n e r
of La
cording to present estimates, calls
month that some inventories have Grange & Co., /
for the expenditure of $11,600,000
reached the lowest workable min¬ has a lifetime
during the balance of this year;
useful. Whether it ever again will $25,800,000 in 1950; $21,800,000 in imum. This is evidenced by in¬ of service in
Arthur J. Schwartz
financial
bp minted into coin is debatable; 1951; and $12,800,000 in 1952. Of creases in new orders, most of the
which are for limited quantities community. In
suffice
X
say that the free re- the
X-X
X
total, it is estimated that $26,deemabihty of the dollar in; gold 600,000 will be expended in com¬ and near-term delivery. Over-all addition to his wealth of experi¬
purchased inventories are believed ence in the securities field, he
could riot be entertained * in the
pleting the three generating units
to be in a healthy condition and also is an
near future without' exposing our
expert on commodities.
totaling 250,000 kw. at the SunDuring J World
War' II,x.Mr.
economic structure to certain dis¬ bury Steam •.Electric Generating in balance with current require¬
ments. XX/XXv XXX/X.f.XX'i;,X XX Schwartz entered the
Army as a
aster.".
Station on the west bank of the
Those who clamor for. imme¬ Susquehanna
River about; two
"Buying Policy—Hand-to-mouth private and rose through the ranks

; larger

masses

program

But any com¬ addition to the
proceeds from the
modity which is hoarded by Gov¬ recent offering of 415,983 shares
ernments, whose movements are Of common stock and from today's
hedged in by controls of every offering of preferred.
;
kind, needs must in time lose what
Balance of the funds for the
utility it once possessed.; That is construction work, it is stated, will
why we should have a free mar¬ be obtained from treasury funds,
ket for gold so that supply and
reserves,
retained earnings and

:X
;• v.!':
not one based on scarcity or in re¬
Exchanges should be freed be- flection of chaotic economic or
fore conditions go from bad to
political conditions. Because it can
worse* of circumstances force our enjoy, a market
everywhere gold,
hand.
Be it remembered that no as a concentrated instrument of
xiation can hope to compete with exchange, can once more
become

'

-

_

the

service to mankind.

the-drain."'

*

*

fur¬

contemplated

it will have
if to these qualities useful¬ to raise
$17,500,000 more from the
is added, they can render issuance and sale of securities in

time/the position worsens; loans
turn to gifts,
to "grants-in-aid" demand, unfettered, may set a
•or, better said, to "money-down- true price pn the yellow metal;

*

"

ther

a

Repeating Arms Corporation, New Haven, Conn., "July
re-

construction cent months, is evident in many
middle of reports for the July survey. It is
1950.
The company estimates on pretty, well offset, however by
the
basis
of
present conditions the caution generated by pending
that construction expenditures for wage negotiations in several im¬
the 3^ years ending with 1952 portant industries.
nance

expenditures

At this juncture a natural query
accepted by those who think only
in slogans.
would be: What becomes of gold will be in the neighborhood of
An exchange rate is a price under free exchange?
Ageless is $75,000,000. The company further
with all the corrective potentials man's attachment to things beau¬ estimates "that to complete thig
that any free market price pos¬ tiful and rare, gold among them; construction
sesses.

cording

a

dividends from July 1, 1949.
The
terms of the two issues are identi¬

-

*

business is

tion,- under
the handicap of vacations, makes

vising new methods of control, of 4V2 % series preferred stock,
new restrictions, new regulations,
both $100 par, cumulative, of the
by way of regimenting trade to Pennsylvania Power & Light Co.
the needs of money management,
at an offering price of $103.75 per
Treasury authorities and central share for each issue, plus accrued
bankers

Winchester

tom.

First BoslonDrexel

to the dollar would entail
An underwriting group headed
the risk of exchange, one which
by The First Boston Corp. "and
no
central banker in his right Drexel & Co. offered to the public
senses would for a moment enter¬
Aug.' 10, 75,000 shares of 4^%
tain.
Instead of wasting time de¬
preferred stock and 12,000 shares

their undivided attention to fiscal
and internal affairs.
This will be

According to a composite opinion of purchasing agents who com¬
prise the National Association of Purchasing Agents' Business Survey
Committee, headed by Robert C. Swanton, Director of Purchases,

proaching bot¬

rency

into private life of their
numerous personnel. However sad
fiat, by pacts or by agreement, as their fate few* will crowd the
evidenced by the failure^ of the mourners, ample comfort being
International Mone tary Fund found in the easing of the tax bur¬
which Was conceived in the name den as the upkeep of these para¬
of "stability," pressured into being sitic agencies is removed from the
by log-rolling propaganda, and budget.
balancing of international accounts.
They cannot, be had by

the

;

between

portion of the assets of our banks.
The impact on our markets, com¬
shake

Slackening

Purchasing Agents' Business Survey Committee, headed by Robert : 'i
C. Swanton, says there are several trend indicators pointing to
approaching bottom of business recession.

'

either of itself or in its

Thursday, August 11,1949

-




.

X

Volume

170

Number 4828

THE

COMMERCIAL

&

FINANCIAL

(565)

CHRONICLE

21

Security Traders Association of Los Angeles

Jim Cockburn, Crowell, Weedon & Co.; Nick Kirwan, Dean Witter & Co.; Jim
Reeves, Akin-Lambert Co.; Jack Quinn, Stone & Youngberg, San Francisco; Bill
Zimmerman, Bingham. Walter & Hurry

Jack Egan,

First California Co., San Francisco; Jack Quinn, Stone &
San Francisco; Bill Zimmerman, Bingham, Walter & Hurry

Youngberg,

<

Jack Alexander, Walston, Hoffman & Goodwin

Jerry Burrill, Blyth & Co., Inc.; C. Lueker,
Hill Richards

&

R.

R. O'Neil, Edgerton, Wykoff &

Fairman

Co.

&

Co.,

President

of

the

Co.; Bill Miller,
Security

Traders

Association of Los Angeles

I;

*■

J

1

Bob

Diehl,

Paine,

Webber,

Jackson

&

Curtis;

Jerry

Burrill,

Blyth

&

Co.,

Inc.;

Roy Warnes, Hill Richards & Co.; Bill Johnson, Sutro & Co.

Bill

McCready,

Geyer & Co.; Roy Warnes, Hill Richards & Co.;
Blyth & Co., Inc.; Nick Kirwan, Dean Witter & Co.




Jerry Burrill,

Jack

Hecht, Dempsey-Tegeler & Co.; Max Hall, Dean Witter & Co.; Dick O'Neil,
Edgerton-Wykoff & Co.; Chet Glass, William R. Staats Co.

Frank

Ward, Merrill Lynch, Pierce, Fenner & Beane; Bill Walker, Conrad,
Bruce & Co.; Larry Pulliam, Weeden & Co.; Bill Wright. Lester & Co.

22

THE

(566)

COMMERCIAL

&

Annual Outing at

Forrest

Jack

Shipley,

A.

S.

Quincy

Cass

Associates;

Jim

Fraser,

Stern,

Frank

&

Meyer;

First California Co., San Francisco; Scotty Stout, Blair & Co., Inc.;
Brown, Shearson, Hammill & Co.; Nick Kirwan, Dean Witter & Co.

Egan,
Max

McOmber,

Revel

Miller

&

Co.;

Pierce

Garrett,

Dorroh,

William

R.

Parky

Staats

Co.;

Bud

Tuttle

George

Hardcastle, Dean Witter & Co.; Jack Weller,
Green, Pledger & Co.




Arrowhead Springs

Front

row:

Parky Hardcastle, Dean Witter & Co.; Bill Walker. Conrad, Bruce & Co.;

Sam Green, Pledger & Co.; Frank White, National Quotation Bureau; Second row:
Bill McCready, Geyer & Co.; Max Hall, Dean Witter & Co.; Nick Kirwan, Dean
Witter & Co.; Rear: Roy Warnes, Hill Richards & Co.

Scotty

Stout,

Blair

&

Co.,

Lambert

Earnest,

Fewel

&

Co.;

Jim Fraser. Stern, Frank & Meyer

,

Thursday, August 11, 1949

CHRONICLE

Sam Green. Pledger & Co.; Bob Green, Pledger & Co.

Dempsey-Tegeler & Co.

Bud

FINANCIAL

Wagenseller &

Durst;

Sam

Inc.; Jim
Co., Inc.

Reeves,

Akin-

Group at the Party

Diehl, Paine, Webber, Jackson & Curtis; Bud Dorroh, William R. Staats Co.;
Bill Johnson, Sutro & Co.; Bill Pike, Buckley Brothers; George Earnest, Fewel & Co.;
Jerry Burrill, Blyth & Co., Inc.; C. Lueker, Hill Richards & Co. Bud Tuttle

Volume

170

Number 4828

THE

COMMERCIAL

&

FINANCIAL

CHRONICLE

(567)

Securities Traders Association of Detroit and

Paul Yarrow, E. F. Hutton & Co., Chicago, Executive
Council, National Security Traders Association; H. Terry

Ed. Miller, Andrew

Snowday, E. H. Rollins & Sons, President of Securities
Michigan; C. J. Odenweller, Jr., Regional Administrator, Securities & Ex¬
change Commission, Cleveland; A. N. "Bo" McMillin,
Manager, Detroit Lions Football Club; Philip A. Hart,

Yarrow, E. F. Hutton & Co., Chicago, Executive Council

Traders Association of Detroit &

C. Reid & Co., Treasurer of the Se¬

curities Traders Association of Detroit and Michigan; Paul
National

First
v

Security Traders Association; Les Muschette,
of Michigan Corp.; John Murphy, Paine, Webber,
Jackson & Curtis

Michigan Corporation and Securities Commissioner

Albert V.

Watling,

Warwick^ A.-M. Kidder & Co.; Chas. Bechtel, ' John Daniels, Chas. A. Parcells & Co.; Wm. Shoemaker,
Lerchen

&

Co.,

Vice-President of Securities

Traders Association of Detroit &

William P. Roney & Co.; B.

Michigan; Chas. Floyd,

L. Powell, A. M. Kidder &

Co.; Gregory Bader, Jr., Charles A. Parcells & Co.

Bradley Higbie & Co.; Ray P. Bernardi, Cray, McFawn
& Co.; George J. Elder, Geo. A. McDowell & Co., Secretary of Securities Traders Association of Detroit
, & Michigan

(Front

row)

23

Michigan

Reginald MacArthur, Miller, Kenower

&

Co.; H. Russell Hastings, Crouse & Co.; Frank Meyer,
First of Michigan Corp.; Raymond W. Miottel, Paine,
Webber, Jackson & Curtis; (back row) Victor Williams,
Paine, Webber, Jackson & Curtis; Ray P. Bernardi, Cray,
McFawn & Co.; LeRoy O. Jarvis, Paine, Webber, Jackson
& Curtis; John E. Murphy, Paine, Webber, Jackson &
Curtis; A1 Voss. Wabeek Bank

George A. McDowell, George A. McDowell & Co.; C. J.

Odenweller,

Jr.,

Regional Administrator, Securities &
Cleveland; H. Russell Hastings,

Exchange Commission,

Crouse

&

Co.

v

Collin, Norton & Co.; Toledo; E. J. Pierson,
F. M. Crandall, State Savings Bank,
Arbor, Mich.; Frank Cavan, Titus, Miller & Co.;
W. Titus, Titus, Miller & Co., Ann Arbor, Mich.

A1 Creighton,

Moreland
Ann

Dean

&

Co.;

Robert R. Stoetzer, Stoetzer,

Faulkner & Co.; Howard F.

Carr, Carr & Co.; Charles Exley, Chas. A.
Roy Chapin, Carr & Co.; C. Lee
Baker, Simonds & Co.




Parcells & Co.;
Jones,

Hurr, National Bank of Detroit; Frank Meyer, First
of Michigan Corp.; George R. Hollister, White, Noble &

Paul

Co., Grand Rapids; Lester Zubrigg, National Bank
Detroit; Roy Delaney, Smith, Hague & Co.

of

A.
Horn, First of Michigan Corp.; Paul I. Moreland, Moreland & Co.; Alex. McDonald, McDonald, Moore & Co.

Les

Muschette,

First

of

Michigan Corp.; Clarence

Reginald MacArthur, Miller, Kenower & Co.; John L.
John K. Roney, Wm. C.
Roney & Co.; Gilbert S. Currie, Crouse & Co.

Kenower, Miller, Kenower & Co.;

Baldwin, Michigan Corporation
and Securities
Commission; Philip A. Hart, Michigan Corporation and
Securities Commissioner; Davis Kales, Wood, Gundy &
Paul

Co., New York City; T. K. McNair, Wood, Gundy & Co.,
Toronto:

Palmer Watline.

Watlina. Lerchen & Co.

24

THE

(568)

Summer

Wm. E.

Shoemaker, Bradley Higbie & Co.; R. E. Cecil,

Chas. E. Bailey and Hussell Thompson, all of
Charles E.

Bailey & Co.

(Front row) Douglas H. Campbell, First of Michigan
Corp; Claude G. McDonald; Leo Killewald, guest; Henry
Earle, First of Michigan Corp.; (background) Robert
Shell, Moreland & Co.

John Daniels,

Chas. A. Parcells & Co.; Ray P. Bernardi,
Cray, McFawn & Co.; Bertrand Leppel,
Charles A.

Parcells &

A. Crookston, Hornblower & Weeks; Clifford E.
Verral, Nordman & Verral, Inc.; Fred A. Bargmann,
Braun, Bosworth & Co., Inc.; Hale V. Sattley,
H. V. Sattley & Co.

McDonald, McDonald, Moore & Co.; William H.
Adams, Braun, Bosworth & Co.; Fred Jones, National
Bank of Detroit; Fred Alliston, William C. Roney & Co.




Thursday, August 11, 1949

FINANCIAL CHRONICLE

Outing at Lochmoor Club

J. William Siler, Siler & Co.; Ralf A. Crookston, Hornblower & Weeks; Burley Laurimore, Michigan Investor;
H. Russell Hastings, Crouse & Co.

Herbert J. Schollenberger, Jr., Campbell, McCarty & Co.;
Claude G. McDonald; Robert Wallace, William C. Roney
& Co.; Dr. J. Locke, guest

Minton M.

Harold

Clute, Strauss & Blosser; Brackett Gardner,

A. H.

Vogel & Co.; Robert H. Stoetzer, Stoetzer, Faulkner
& Co.; Ira J. Ducey, A. H. Vogel & Co.; Myron D. Stein,
A. M. Kidder & Co.

George S. Allardyce, H. kentz & Co.; V. R. Eis, Moreland
& Co.; J. V. Worboys, McDonald, Moore & Co.;

Co.

Ralf

Alex.

COMMERCIAL &

Hyde, Smith, Hague & Co.; John E. Doherty, Jr.,
Hague & Co.; William E. E. Clark, Geo. A.
& Co.; Frank J. Garceau, William C. Roney
& Co.; Nick J. Allman, Geo. A. McDowell & Co.

Smith,

McDowell

William J. Axtell, White, Noble & Co.; Don W. Miller,
Titus, Miller & Co.; Donald B. Fisher; Claude G. Porter,

vC. Lee Jones, Baker, Simonds & Co.

Herman

Baker, Simonds & Co.

Anderson, National Bank of Detroit; Roy Neil,
C. Reid & Co.; Fred Huber, Andrew C. Reid
Walter Risdon, guest; Ross Sutherland, Cray,
McFawn & Co.; Oscar Miesch, guest

William C. Roney, Wm. C. Roney & Co.; Howard L.
Parker, M. A. Manley & Co.; A. H. "Bo" McMillin, Man¬

Louis Olson, Smith, Hague & Co.; Harold Hyde, Smith,
Hague & Co.

Paul Baldwin, Michigan Corporation and Securities Comf
mission; Stanley Wilkinson, S. H. Wilkinson & Co.;
William Fleischman, A. H. Vogel & Co.

Andrew
&

Co.;

ager,

Detroit Lions Football Club; George Dillman,
Harriman Ripley & Co.

Number 4828

Volume 170

To Determine
/

-

THE

COMMERCIAL

Mid-Wes'rExchange Merger Date

Representatives of five securities exchanges in Mid-Western area
to meet in Chicago on Aug. 15-16 to draft a constitution and make
arrangements for transfers of memberships from local to merged

India

Government

will

Chicago Aug.

in

meet

to

Repre-

sentatives
from

the

for

this

pur-

The

first three

ex-

changes/al-

stitution

Cincinnati and

for

now

are

listed

on

the

participating exchanges. The
period will encompass 60 days,

"during
which' the
corporations
may transfer their listings to the
new
exchange
without' charge,
merely by signing an application.
All the proceedings normally sur-

days

memberships

in

the

new

from

nancing

exchange

floor in

two way

country and the movement of

handle

port products.

work

a

to

orders/*

1

*

'

teletype net¬
buy and
sell

/

'

r

»

equipment

distribution

James E. Day, who has fostered
the idea of a mid-west exchange

markets for all stocks. We do be¬
lieve

that

which,

have

we

vehicle

a

period of time, can
built into a healthy, growing

be

over a

financial
vide

better

that

market

markets

curities

will

pro¬

liquidity for investors,

more

for

corporate

and

substantially
income for the majority of
bers in all

se¬

more
mem¬

cities."

our

23,348,224,000
produced
during
month.

■

/

Water

*

i

1.2%

was

the

above

Commission.

This

is

of

electric

the
investigation of an electric power
project which involves the con¬
struction
of
a
150,000 kilowatt
thermal plant at Bokaro, in the
province of Bihar. A. D. Spottswood,of the engineering staff of
the Bank,
arrived in India on
July 29 to complete .the Bank's
engineering study of this project.
The Bank is also investigating an
agricultural project for the recla¬
mation of weed infested land, and
D. R. Sethi, Special Agriculture
Commissioner for the Indian Gov¬

ernment, arrived in Washington
on July 29 to discuss this project
with the Bank.
Other projects in
Indian development program
also under examination.

the

kilowatt-hours in June.

preceding

plants of electric
produced
7,224,306,000

kilowatt-hours in June.

This

was

•4.2% above the 6,936,115,000 kilo¬
watt-hours from this source dur¬

produced*

decrease

of

1.5%

and the first
a

to

year

July

This is

a

1948

monthly decrease oil
comparison since

The

total

to
ex¬

industrial

Introduces Bill to

;

Widen SEG Powers
Sen. J. Allen

Frear, Jr.'s

would

Securities

make

f

measure

and

Ex-

put increased slightly from 30.5%

change Act of 1934 applicable to
unregistered corporations having
assets above $3 million and with

last year to 30.6% this year.

ing date

/

As a proportion of
total, water power out¬

ing June 1948.

Electric

utility

"

;

production

for

•

a year

before.

;

.

?

;/f

The combined utility and indus¬

the first six months of 1949 totaled

trial production of electric energy

143,467,865,000

was

This
the

was

an

kilowatt -hours.

increase of 4.5% over

28,024,514,000 kilowatt-hours
in June 1949, an increase of 3.1%

like

period of 1948. For the as compared with June 1948. Pro¬
year ending June 30,1949 produc¬ duction for the year ending June
tion reached 288,899,564,000 kilo¬ 30, 1949 was 343,824,592,000 kilo¬
watt-hours, greated by 7.4% . than watt-hours or 6.9% above the year
in the comparable period ending ending June 30, 1948. Utility and
a year earlier.
Production for »the industrial
generating
capacity
year ending June 30, 1949 is the totaled
71,924,216
kilowatts
on
June 30, 1949.
Jiighest total attained during any
12 months period to date, exceed¬
♦Bsaed on reports from about 800 gen¬
ing by 0.3% the previous maxi¬
erating plants, which account for some
mum set during the period ending
85% of the total industrial production of
a
*

month earlier.

Reports

'19494

■

received

indicate

that

the

capacity of generating
utility service/ totaled
'

'
'

kilowatts
is

as

/

;

during

i

July

energy

tended^ to
coverage.

in the United States, ex¬
100%
generation

represent

V '.'•''■•'V

.

plants in
58,681,937

of June 30, 1949.

This

Formed in New York

periods. The June capacity com¬
pares with 53,962,522 kilowatts reported in service on June 30 a

conduct;

a

business.

Mr. Cutter

earlier. The net increase in
installed capacity during the first
half of 1949 was 2,122,099 kilo¬

and

year

watts.

and

Production

Electric power plants of indus¬
trial concerns, including for purposes

proprietor
Mr.

general
of

H.

Plummer

from

the rate

in

question, there

of

so

prolonged,

business

as

have

„

;

railroad analysts is that the balance of the current year at least will
witness no important change in this respect.
This coupled with

clarifying general business picture could weH result in

a

tive

betterment

in

speculative

than 300 stockholders.

cumula-f
toward

Therefore, it appears not unreasonable to expect
that the recent wave of buying may continue and that the rise in
prices may follow through quite dramatically and over a fairly
extended period. As a matter of fact, there are many analysts and
technical students who are of the opinion that railroad stocks might
well outperform the rest of the market over the intermediate term,
just as their performance for some time past has been considerably
poorer than the rest of the market.

is in line

ommendations

with

the

rec¬

Securities

the

of

and Exchange

Commission, which
since 1946 has sought to extend
its
regulatory and
supervisory
powers
over
all large business
corporations.

little

been

in

the

important

of

news affecting
There was one
important development, however. That was approval of the Nickel
Plate-Wheeling & Lake Erie lease by the Interstate Commerce Com¬
mission. Barring an appeal to the full Commission it now appears
likely that this lease will be consummated by Oct. 1, 1949.; The lease
will materially improve the earnings status of the Nickel Plate
stocks which, incidentally, have been among the best acting rail
equities over the past month or so. Further strength should follow

railroad

securities

in

way

the

recent" past.

of the lease.

Walsh

New

Commodity Dep't
For Merrill Lynch
*■

the -direction

of

Alex

velop

in

ca§l}

also further de¬

growing business in this

our

In

B.

Tatistcheff, formerly chief statis¬
tician
for
the
Commodity Ex¬
change, Inc., and later principal
economist
with
the. Combined
Raw Materials Board.

Mr.

"Specialists
will

field."

A

under

said.

commodities

specialized commodity de¬
partment ' has been organized in
the
70
Pine Street,
New York
City,
office of Merrill
Lynch,
Pierce, Fenner & Beane, it'was
announced by William V. Walsh,
manager of the office.
The new
commodity department ' will be

Senator Frear, who is a member

addition

who

headed

tional

hide

ment,

the

to

Mr.

Merrill
and

members

70 Pine Street

Tatistcheff,
Lynch's na¬
depart¬
of the nejy

rubber

commodity depart¬

Thomas

J.
Cassady,
specialist in grains, cash commod¬
ities
and foreign
business; R^e
Allison, specialist in cotton, sugar,
and cocoa; William V. McLough-lin, ' meat and cash commodities
specialist;
Gray
Truitt,
butter,
eggs,
potatoes and onions; and
Walter M. Jensen, fats, lard and
ment

cash

are:

commodities.

Tatistcheff, together with
commodity specialists,
has

Senate Banking and Cur¬
Committee and Chairman

five

rency

of its

subcommittee

Commodity
Division
of
Merrill Lynch to staff the com¬ Weekly Firm Changes
The New York Stock Exchange
modity department in the down¬
town sales office. Mr. Walsh ex¬ has announced the following firm

the

SEC,
said his bill should have bi-par¬
tisan support as "the welfare of
investors
It

is

on

transcends party lines."

not

expected

that

hearings

the bill will be held this year,
but Sen. Frear expressed the hope
on

that

formerly
Cutter Co.

early next

was

;;

Exchange Act of 1934,
which relate to corporations regis¬
tered on
security exchanges, to
unregistered corporations having
assets above $3 million and hav¬
ing 300 or more stockholders. This
measure

has

actual consummation

and

investment

to

full

hearings
year.

hear from

any

all

may

"We

are

those

interest in this

be had
anxious

who have

measure,

and

transferred .from

been

the

Na¬

ments

in

all

the

of

offices

tem.

.;

be

available

Murray R. Spies Opens

bers

GARDEN

ment of

CITY, N. Y.—Murray
will shortly engage in
to Arthurs, Le- the investment business from of¬
Spies

fices at 239 Steward Avenue.

Exchange

plained that the organization of changes:
Transfer of the membership of
the commodity department in his
office
is
late Dudley
M. Cooper to
part
of
a
program the
launched by Merrill Lynch about Harry M. Jacobson will be con¬
sidered
a year and a half ago to establish
by
the
Exchange
on
specialized
commodity
depart¬ Aug, 18.
throughout the Merrill Lynch sys¬

R.

New York Stock

tional

to have the benefit of constructive

PA. —Arthurs,

Lestrange & Klima, Union Trust
Building, announce the change of
name

a

sentiment

,

Arthurs, Lestrange

their firm

and -investment

railroad securities.

'

"Our commodity

PITTSBURGH,

other factors working

are

had been feared a month or so ago.' Some lines
already begun to stabilize and even show some
recovery in isolated instances. The inventory situation has strength¬
ened considerably.
Crop prospects are good.
Finally, there has
been recognition by the government of the recession, with the accom¬
panying implication that steps will be taken to soften its impact.
Internally the railroad picture itself has not deteriorated to the
extent that had been talked of in so many quarters. It is true that
for most roads net earnings have fallen off sharply from the levels
of a year ago.
Nevertheless, and despite the decline in traffic, a
large proportion of the Class I carriers has met with surprising suc¬
cess in getting control over transportation costs.
To a considerable
degree the earnings declines have reflected the failure to cut main¬
tenance costs.
It is now generally accepted that this is due
largely
to the determination of the railroads to get as much work as possible
out of the way before the 40-hour week for non-operating employees
is instituted on Sept. 1. To the extent that this is so, it appears that
earnings reports for the last four months of the year will be sur¬
prisingly good.
For a long time now railroad stocks have been selling ridicu¬
lously low in relation to earnings and in relation to dividends. The
stocks of many thoroughly sound railroad properties have been sell¬
ing to afford an income return of 10%, or better. This reflected
uncertainty as to how far the recession might go and how seriously
earnings might be affected, and fears that some important dividend
cuts, or even omissions, might be in the offing.
So far the dividend record has been good and the feeling among

nor

criticism," the Senator announced.

of this report the stationary strange & Co.




G.

.

was

formerly
with F. J. Young & Co, Inc.

Now

Total Electric Utility
Industrial

ties

of the

Gutter & Plummer Is

increase of 480,054 kiloduring the month. OccaGeorge H. Cutter, Jr. and James
sionally capacity changes are not
reported promptly so that the fig¬ A. Plummer have formed Cutter
ure for any one month may reflect
&
Plummer with offices at 30
additions or retirements for prior Broad Street, New York City, to
net

a

more

;

Sen. J. Allen Frear, Jr. (Dem.Del.) has prepared a bill to ex¬
tend the provisions of the Securi¬

installed

watts
*

electric

Aside

a

increase

toward the building up of greater optimism toward railroad shares.
There are signs now that-the decline in traffic may not be so
great,

individual

generating capacity including the
railroad and railway plants was
13,242,279 kilowatts on June 30,
1949. This compares with 12,969,211 kilowatts on the correspond¬

the June

decision

in the pending rate case and
freight rates would be announced
shortly.
Certainly sufficient time has elapsed since the hearings
ended to justify the expectation that a decision should be coming
along soon. Also, it is generally considered likely that the Commis¬
sion will grant at least a further modest rise in rates.

There

and

4,407,090,000

year

1946.

India, returned
Aug. 3.
It is

on

final details of the
highesi; first loan agreement will be com¬
pleted in the near future.

from June

reached

,

of

Washington
pected that

June of

railroads

railways,

power

utilities

plants

the

over

kilowatt-hours

'/1/,// /:;■/'*' ://<* // !''■

.

,

Mr. Keith Roy, Deputy Secre¬
tary pf the Indian Ministry of Fi¬
nance, who has beeh designated
to negotiate on behalf of the Gov¬

a

June production total of record and an increase of 4.0%
last year. The June electric utility^

production total

the
ex¬

had

permanent

a

,

ernment

Power

the

within

goods

,

consolidation, stated that "We do
expect the new exchange to
create any miracles with a huge
increase
in: volume
or
perfect

not

4% increase over same
and 1.2% increase over previous month.

Federal

facilitate

to

of

The Bank is also engaged in

Production of electric energy by electric utilities in the United
^States totaled 23,617,424,000 kilowatt-hours in June, 1949, according
the

Indian

this

Federal Power Commission estimates

of

Commission

that

including

the

of

fi¬

in

exchange
economic

erating. All offices will be con¬
nected
with
the
main
trading

Reports June Electrical Output at Peak

release

Bank

After

$2,500.

for

'

a

the

the

rehabilitation

are

to

he current week, the railroad equity market developed a consider¬
ably better tone, Volume increased and prices all along the line
pushed forward. Apparently the immediate cause for the initial,
aulge was the rumors going around that the Interstate Commerce

from the Government of India for

the

month last year

Development an¬
Aug. 5 that the Bank
a formal application

the railways, the reclamation and ir¬
period ends, memberships may be rigation of agricultural land, and
obtained only on the open market. the development of electric power.
The
Bank
has
already com¬
Chicago
will
be
the
head¬
its investigation
of
the
quarters of the merged exchange pleted
because of its central geographical railway project involving the fi¬
location and large trading floor. nancing of the purchase of loco¬
Branch offices will be maintained motives,
spare
parts, and tank
in the cities where the participat¬ cars for the Indian railway sys¬
ing exchanges currently are op¬ tem which is in urgent need of

/

shares

on

the

exchange from corporations

whose

nounced

chase

60

that
of the

provided

Increased Optimism Toward Rail Securities
Late last week, and carrying through to the opening session of

construction and

members
participating exchanges can pur¬

within

.

new

be

also

ad¬

development projects.

assistance

-.«

25

-

asks

foreign
costs of a program of
development of India,

the merged institu¬
4
/
According to Mr. Day, at the
meeting also a period will be set
for acceptance of listings on the

tion.

will

listing will thus

new

a

avoided.
It

Mjinneapolis
exchanges have not yet voted on
the proposal.
/
•
= V'C
It
is
expected also that the
representatives': of the local ex¬
changes will draft a form of con¬
;

.

ready have
agreed •; to
merge
but

E. Day

rounding

St.

convene

p o se.

James

the merger

date for

a

India

of

The International Bank for Re¬

has received

be

Louis, Cleve¬
land, Chicago,
C i ncinnati,
and Minneap¬
olis exchanges
will

16, to set

into^

go

effect.

15 to

(569)

for railroad rehabilitation1

and
It was announced on Aug. 5 by James E. Day,. President of the
Chicago Stock Exchange, that the Mid-Western exchanges scheduled
to participate in the proposed merger with the Chicago Exchange

CHRONICLE

Applies for Loan

.

.

FINANCIAL

From World Bank
vances

institution.

&

to

specialists will

work

of the trade in

with

mem¬

Transfer of the Exchange mem¬

bership of
Whitlock

to

the late Frederick

be cbnsiderecl by the

the develop¬ Aug.

S.

Harry J. Breen will

Exchange on

18.

hedging programs, as well
Interest of the late Neville R.
consulting with account execu¬
HasJuck
in
Farr
&
Co. ceased
and customers on specula¬
j
tive
commodity problems," Mir. Aug. 5.

as

tives

26

COMMERCIAL

THE

(570)

butter sold

A Defense of Production

Payments

and orders, fooling
the taxpayer, promoting
ineffi¬
ciency and high cost, engaging in
partisan political activity, and so

for desirable

inducements

crease

on.

without ordering

adjustments
them.

"Holding

it

nothing in

them

offers

And

the

return

.

...

because many people

have not yet
realized there is a practical al¬
ternative calling for much less
with

interference

real

which

and

operations
mit all of

farmers'

will

per¬

people to share in

our

of

this conutry's great productive ca¬

is

there

.

.

obvious

an

vantage in this for the consuming
public and for handlers, dealers
business

whose

others

and

that

farm

declined

already

have

returns
about

belief

the

on

far, in relation to indus¬
trial and labor returns, as can be
as

relation

of getting

means

a sur¬

people had to deny them¬

will

We

the

either

of

not

consumer

the

or

dairy farmer
by taking great
quantities of dairy products off
the market, keeping them away
from consumers.
As I said be¬
fore, I would retain the purchase
and storage method as one price

mechanism.

support

a

There
its use.

are

We
even put first reliance on it.
we
must not put our main

times and places for
can

But

reliance upon

It

seems

that those

it.

very

it means continuing the
parity formula, which is
of date and under which

First,
far out

to

strange

me

who want to keep the

government out of business insist
in the same breath that the gov¬
be

must

ernment

biggest

the

of

all middlemen in the dairy prod¬

prices of milk and milk
bor returns."
If industrial prices
uct business.
One witness before
products are so unrealistic that
and labor rates decline, the farm
a
Congressional Committee re¬
they have little meaning. Accord¬
price support would also decline.)
cently said, in this connection, "I
ing
to
this formula,
milk; at
Now let me pause and remind
think I
understand what these
wholesale is still
above parity,
you
of
something.
When. I
They
and butterfat is almost at parity. people are talking about.
started listing these points, I told
want a market support price be¬
Milk and milk product prices
you I was trying an experiment.
cause in
that process everybody
have come down sharply during
What I have just done was to
along the line gets a slice of the
the
last year,
while prices: of
read excerpts from the testimony
government's
check."
He
was
things you have to buy have
I have given before the Congres¬
talking in favor of delivering the
stayed high or even gone up. For
sional
Committees
on
Agricul¬
price
support
directly to
the
example, the House Committee on
ture since April
7.
I hope it
farmer, as we would do if we had
Agriculture recently pointed out
sounded familiar to at least some
production payments.
that between March of 1948 and
of you.
I am sure it did not
XJxider the payment method, the
March of 1949, milk cans went
sound
like
what
some
people
farmer is sure of getting the bene¬
up in price by 9%, gasoline went
have been telling you I said.
fit of price support that the law
up 2%, and tractors went up 17%.
the purity

Some
people have been ex¬
tremely busy "interpreting" what
I
said
in their own way,
but
they haven't suggested that you
study my recommendations for
yourself.
They much prefer that
you let them do your thinking for

United

ting
were

in

been

1

as

know

they
silent

conveniently

statement

that

Agricultural
mission

on

from

come

Committee

Hoover Commission

have

of

the

—

a

the

,the

Com¬

Reorganization of the

on

Executive Branch of the Govern¬

is

Here

ment.

what

said:

that

group
.

,

"Free

for

market

perishables.

—The methods for supporting the

price of

perishable

such

potatoes,

as

burden

the

on

commodities,
put

double

a

He

consumers.

is

not

only required to pay a high
price for the product which he
but

consumes,

he

also

pays,

through taxes, the cost of carry¬
ing on the price support program.
Under a plan which would per¬
mit

free market, greater quan¬
tities would be consumed as food,
a

during periods of high production,
reducing the quantities to
While

uses.

support

the

might

this plan, the

cost

of

committee,

fourth

given to
mit

a

a

be

plan which would

per¬

with

price made
a

up

the

That

ing

ends

for perishable
difference

in

to the producer in

supolemental

the

recom¬

consideration

the

payment."

quotation

from
serv¬

the

Hoover

Commission.

Fortunately, this committee has
escaped
;

the

criticism

which

has

a

and

taxpayer's pocket,

out of the
far

as

the taxpayer is con¬

as

particularly

isn't

it

cerned

im¬

whether the cost was
charged to price support or relief,
Another

back to the farmer.

bargaining

the

it

does

How

markets.

in¬

other

and

competition for the government to
set a price at the top of the mar¬
ket.
The
government purchase
price is the market price. There's
else to

nowhere

go.

Where, is the incentive for ef¬
and
better
bargaining
that is claimed for the purchase
the

over

method?

I

;

payment

:

year the
Department of
Agriculture announced that, in¬
stead of buying butter and dried
milk
only at major centers, it

This

would

an f.o.b. shipping
One reason for this
to enable local co¬

buy on

point basis.
decision

was

and other small businesses to

ops

assemble carload lots and sell di¬

government. Rela¬
tively few have done so. The co¬
op in its function, as handler needs
a
large volume of business in
regular commercial channels. It
needs
to
keep
its trucks busy
carrying full loads to keep down
costs per unit.
Too often, when
the

to

rect

purchase program is in effect,
government substitute
for the co-op's regular commer¬
cial
business.
This
is
not an
a

substitute,

j.

also

over-use

purchase method could lead
less competition, less oppor¬

of the
to

incentive for the small
co-op and other small business,
more
government in the dairy
business, and a bigger share of
less business in the hands of big

tunity

or

;

business.

•; "

y

production payment for
along with the pur¬
method and the marketing

With

a

farmers to go

chase

orders, we can
satisfying interest
competition and your products
and

agreements
stir

in

up

will

very

a

when

I

me

hear

use

government purchase method
to
prevent production
and
(that
old
over¬

the

in

strange to
that we must

order

control

worked

To

epithet) "regimentation."
simple way of thinking,
best
assurance
against the

my

the

for

control is
greater consumption.
How does
the government purchase method
increase
consumption?
Are
we
need

production

,,

supposed to throw away

buys

government
will

be

room

to

so

the floors of the

store

therg,

more

<5?*

war

field

will be able to do
want them to do in¬
of becoming a way-station

and the government

between you

business; the three largest
firms-dealing in condensed and

evaporated milk had two-fifths of
the

before,

said

I

the

to

Somebody thought

phony money.
it

the

largest

three

trolled

of

three-fifths

than

more

the business—in fact

firm had

one

third of the cheese business. We

a

do not have recent

have

figures, but we
that

believe

to

reason

no

less concentrated in recent years.
The

both

farmer

need

the

and

consumer

the

competitive force
supplied by alert and
vigorous cooperatives — competi¬
tive force that helps to set fair
standards of price and quality—•
that

be

can

competitive
economic

force

standards of
As

to
better

and

living.

look

we

leads

that

progress

the

to

of

future

dairyland agriculture, let us con¬
tinue to inprove our cooperatives
and

make them

serve

They need the

our

member—interest

each

needs.

of

active interest
based

on

the farmer's determination to im¬

of his own
also continue to

the marketing

prove

product.

Let

us

fight for a price support system
which recognizes the dairy farm¬
er's product as a basic agricul¬
tural commodity.
These efforts in themselves will
not

automatically
bring
better
roads,
hospitals, telephone and
services;

substitute

will

nor

they

research

scientific

for

and its

practical application, solve
conservation,
guarantee
adequate
farm

the problems of soil
or

credit.

efforts

These

themselves

assure

will

not

in

opportunity for

people. All this we un¬
this, too, we know:
More of these other problems can

our

young

derstand.

But

be
separated
from the income
problem.
A fair and stable farm
income is a basic need, the firm

foundation

we

must have for con¬

tinued progress in our way of
build

To

and

a

them,

build toward
dairyland and all

we can

prosperous

that

of

and vigorous cooperatives
fair price support system.

With
a

life.

foundation,

reinforcement

the

need

we

firm

that

that

means

toward

a

strong

America.

the

think

I

cooperative is an important insti¬
tution.
Other people must think
so
too. Otherwise, they wouldn't
go

business;

firms in the cheese business con¬

and prosperous

buyer.
As

fifth of all the

a

butter

the job you
stead

controlled

Before the

.

firms in this

the three largest

strong

storage warehouses.

trouble of circulating
such vicious propaganda, includ¬
ing these phony bucks which ille¬
gally buck the co-op.
what the'
It costs a lot of money to print

that

.

held of all industries.

the hearts of your cus¬

warm

tomers instead of

seems

important also
public because they
involve the marketing of dairy
products.
In spite of the devel¬
opment of dairy cooperatives the
dairy industry is one of the most
highly concentrated and tightly
Your co-ops are

electric

danger that

is

There

v

.

to the general

sales to the

adequate

and who may live

to you

away.

economic control has become any

Your co-ops

It

far

ficiency

cold

Denies Regimentation

claim for the

strange

government purchase method is
that it helps dairy co-ops in their
effort to bargain for good prices

known

N. Y.

'

Saving & Loan

League Reports

Savings Drop
Zebuion Woodard, its

Executive

worth the money to them.

Yice-President, also reports de¬
produce?
Are we sup-s It was not spent for the amuse¬
cline in mortgage loans from
posed to give it away? If so, where ment of the public. It was spent
Under the present formula, 90%
is the "food stamp plan to make it
$133 million to $114 million
to convince the public that coop¬
of parity is $3.53 per hundred¬
possible?
Nobody seems to be eratives are against the public in¬
compared with year ago.
Under the revised for¬
Agricultural Act of

weight.
mula

in

the

would be $3.68, and
there is no guarantee that support
would be that high—that's the
top limit.
90%

1948,

But
of

to

keep the buying power

milk

from

would
tain

going

below

the

of the last 10 years, the

support

average

have to be $4.22.

that

price

I main¬

the

public interest re¬
to keep the purchasing

quires

us

power

of the dairy farmer's milk

from

going

From

the

such

a

that average.
standpoint,

and

maintain

balance

grain prices.

about it.
But I am still waiting to hear a
logical argument on the other
side.
At any rate, the parity re¬
visions recommended this Spring
Perhaps I

am

wrong

of the

regimentation of farmers, destruc¬

Producers Federation,

by

hard for that. I can
thing.
If we are to
support perishables, including
your milk, and do it effectively,

pushing

very

tell you

one

we

must have either a food stamp

production payment pro¬
gram.
I consider the payment
method to be more efficient, more

plan

was

we

or a

economical,

and more useful to
our economy.
The same amount
of
money
required
for
food
stamps, if used for production
payments, would go farther to¬
ward increasing consumption and
maintaining farm income.
It is claimed that purchase and

terest

throw fear

to

and

into

couragement

prospective co-op
I

of

here in

success

and

they have little hope

sure

am

dis¬

or

present
members.

Wisconsin. This

demonstration of your
strength and enthusiasm without
even
being intended that way.
picnic is

You

a

shown

have

that you value
and

to

intend

in

your

keep

many

ways

cooperatives
them.

But I

for
complacent

hope you will not take them

granted

or
about them.
For

the

become

most

part,

I

assume,

Wisconsin's

Charley Holman,
National Cooperative Milk

indicate

storage programs don't cost much
money.
But I can assure you that

consider them a part of your
everyday lives, a business tool,
and do not necessarily think very

if

level for milk is necessary

achieve

to

below

what

farmer's

been leveled at my recommenda¬
tion—charges of working toward




ago.

year

something wrong with
one thing that's
wrong is the parity formula.'
-

with

Agricultural Committee

than

There's

national

free market,

products,

lower

There

have.

no

averaging

this picture, and

be greater under
net cost to the na¬

therefore,

is

milk

The purchasing power of farm
dairy products at present prices is
already quite a bit below the aver¬
age of the last 10 years, which in¬
cluded years of low prices and
controlled prices as well as a short
period of high prices.
Yet, the
parity formula would indicate, as
some
big business interests say,
that you are getting more than
you are entitled to.
:

average

that

mends

and butterfat is
Here

him to

for

question as to whether a
market
price will be reflected
is

third lower and butterfat

a

price

tional economy would be less. The

less

intends

the average.

on

Wisconsin,

thus

be destroyed or diverted to other

for
wholesale than they

year ago,

28%

about
a

far

a

down

get¬

are

one-fourth

about

their milk at

you.

So

States farmers

brought about by
determination. It

fact

administrative
came

rather

butter was a

the

method

needs

the

serve

•

present

industrial and la¬

to

passed

our

selves food needed for health.

bill which would
postpone settlement of current
issues by continuing the present
price support program.
Let's take a look at what this
has

a

We never did have

because

Representatives

of

we

from

<

you

means.

permitted without serious conse¬
quences for farmers and for the
general public." (Note that I said
"in

House

The

need

for

crease

anything

learned

plus in relation to people's genu¬
ine demand.
We had a surplus

Delay

Criticizes Congressional

pends largely on the volume of
production and marketing."
Point
8—"This
legislation
is

is

there

lion

incidental

and

dairy products to the con¬

sumer.

produce? What is right from the
standpoint of your own future?

de¬

farm

based

milk

the

forms

various

its

ad¬

for

products.

experience, it is the fact

we

more

need in

citizens—the people who

pacity.

if

people

capacity

have

that

fellow

and

customers

American

the

prewar

opinions.

you

your

in
learned
was the

should

will think your way
through the controversy and do
what you believe to be neces¬
sary for the future of dairyland
agriculture and of the public.
What is the .right thing to do?
What is right from the standpoint

hope

recent

tremendous

a

And

an

have
war, it

should

milk and dairy

about this whole matter is that I

.

.

facts

Fed¬

Corporation paid $33 V2 mil¬

portant

problem.

one

that

fact
have

The reason I am talking to you

that we
are
divided
over
an
operating
method
? I think it is mainly
it is

from the

own

my

overlooking

of

inconvenient

sion."
Point 7—"Why

back up

to

danger

submis¬

into

starved

being

but

the

is anything that we

If there

views
merely to remind you that in
heat of controversy there is

effort

price cut is the

a

regimentation.

worst kind of

for

heads

farmers'

over

of

threat

the

recom¬

However,

standpoint.

agriculture

not

do

I

than fair from

no more

that's only

mention the recom¬
mendation of that committee in an
I

level

support

old formula is still in effect, and

•

.

the

your

agreements

this

The fact that

DPMA.

mended is

milk

of

..

eral

that

cooperatives, de¬
marketing

dairy

struction

would in¬

This program

pluses.

of

tion

(Continued from page 6)

by the Dairy Products
Association,
the

Marketing

On Nonslorable Farm Products
consumption and production of
farm products and, thereby, offers
more
protection
against
sur¬

Thursday, August 11, 1949

FINANCIAL CHRONICLE

&

often of their broader significance.

this

was

has

due

been

to

they didn't
support, and

true

in

point it
two
reasons:
First,
provide much price
second,

there

have

been

government agencies in the
business of giving away farm sur¬

pluses.

For

eral Surplus

ration

example, the Fed¬
Commodities Corpo¬

bought

nearly

all

of

the

you

Zebuion

Woodard,

Vice-President

of

the

,

Executive
New

York

State

Savings and Loan League,
reported on Aug. 8 that savings
and loan associations in New

York

State increased savings

half

first

million to

compared
than

$78

during the
of 1949 by almost $75
a total of $1,076 million,
with a gain of more
million in the corre¬

sponding period of 1948.
During first half of 1949 the
savings
and
loan
associations
made 20,760 mortgage loans ag¬

gregating $114 million, compared
23,177 loans totaling $133

with

million in the first half of 1948.
A

reversal of the recent down¬
trend

in

liquidity

of

However, I hope you will not for¬

ward

get that many other farm people
who need the help of the coopera¬

savings and loan associations was

tive

way

have

not yet developed

cooperation to the extent that you
have.
Your
example and your
continued success are important to
many

farm people who

are

un¬

announced

in

Mr.

ratio

Woodard's

re¬

port. After declining from a peak
of
36.8%
in January, 1946, to
17.4%

in May,

creased

at

the

1949, the ratio in¬
end of June to

20.0% of total resources.

.

Number 4828

Volume 170

THE

COMMERCIAL

&

expectation

The

Phony Depression

be

FINANCIAL

that

of

real

estate

values,
panics, etc.
Nothing comparable
has happened so far in the current
"slump,'7 and there is no evidence
of any such overhanging threat.
Bankruptcies have more than
,

doubled

in

number

against

the

much
than

during the boom itself. Nor

The fourth round

equal

Bank failures

what

their

conspicuous by

are

absence, and
them.

a run on

have

expects

no one

Real estate values

declined

by

about 10-15%,
nothing to speak about by histori¬
cal depression standards. And the
stock

market?

"dog-house"
the

It

be

not

may

fourth round

a

rather, there is

one under way.

Unemployment has doubled, but
does

that

mean?

For

one

thing, employment is rising, too;
and total unemployment has not
reached

than

more

tural effect on credit policies. In
addition, banking authorities put

about

7%

of

the

on

"screws":

the last

tions

of

National

be

Housing

Full

expected.

In

other

normal.

as

words,

after

nine

A

few

sufficed

trend—as

Presently,

has recovered somewhat from that

top of the cycle.
«Nor has the
shortening
of
working <• hours
reached anything approximating

or

depression-like proportions.

versed, too; bank

fallen

level.
The
and

contraction

industrial

been

almost

of

commercial

bank

as

loans

rapid at it

has

ever

of reversed

cycle,

unem¬

is

gress

the

moving

policies, it will reach at least $2

used

much

be

to

the

of

in

the

past on

the

And

shortening, such

as

$3

the

billion

fiscal

policies
ments

have

have

of

a

60% above where they stood

year

ago!

Cash in circulation is

declining,

while it used to expand typically
in the early stages of a depression.
"This

havior

extraordinary financial be¬
is

almost

matched

by the

"irregular"
movement
of
com¬
modity prices. Wholesale prices
have
receded
some
8%,
retail
prices even much less, which is a
small fraction only of what they
used to

within

do

on

that

such

occasions and

months.

many

Ac¬

cordingly, the liquidation of in¬
ventory values (by about 12%) is
lagging percentage-wise well be¬
hind
the
traditional
depression
pattern.
The decent of prices and
the shrinkage of inventories mean
'

less than what' the

even

indicate,

figures

age

percent¬

coming

as

in both
all-time highs.

in

has

year

five

months

climbed

to

of

this

all-time

an

record annual rate of $213

billion,
$6.5 billion above the rate during

;

the

same

period of last

year.

another spectacular feature of this
situation.

They have

about half

as

much

down
prices did.

come

as

In other words, contrary to

com¬

performance, the
physical
volume
of
consumer
spending tends to rise, and does so
from the highest rate
ever at¬
tained.
■}':
■;'^5- 'V
past

The index of industrial produc¬
tion has turned down sharply, by
some

which

12%,

is measurably

within the limits characteristic of

early depression periods. But the
remarkable thing is, contrary to
the books,
is in the

sticky wages
moderately
falling
prices and with sharply cut pro¬
duction, brings net corporate prof¬
its (after taxes) down to or near
the break-even point. Profits have
by

no

after

that the great decline
output of consumers'

mated to fall in the

July-Septem¬

by an insignificant
$200 million below the volume of
the same quarter of last year.
quarter

construction

in

the

half of 1949 is ahead of the

first
same

period of 1948: the first quarter's
excess more than compensates for
the second quarter's

deficit. The
decline in private home construc¬
tion is being offset by the rising
tide in new Federal and municipal
works—which have scarcely got¬
ten under way as

an

1947.

substantially,
sensationally,

very

means

but
this

average 27% or so rise in

1948 from

"pretty good" level in

a

it

But

would

have

been

sensational in any previous situa¬
tion of this kind if dividends had
been

maintained

they

anywhere

like

are now.

What happens, of course, is that
dividends

paid partly out of
earnings of the boom
Which goes to show, inci¬
are

accumulated

period.

dentally, that there is more than
one good reason for
accumulating
substantial

corporate

reserves

while the going is good.

are

any

there
ards

either

yet, to say noth¬

ing of the large-scale Federal
housing program : that has just
been enacted.

would behave in a
"sticky" fashion was to be ex¬
pected.
That has happened be¬
fore, but never before did they
rise during a depression or reces¬
sion year.
This is exactly what
they do presently, if only in a
That wages




and
of

nature

theory,

the

beast

called Business

completely,

or

Cycle has changed
else we have no re¬

cession.

treat from

we

a

re¬

inflationary top, and
a
very orderly one at that.
So
far, at any rate, nothing more oc¬
a

lull in

inflation¬

an

boom, comparable if at all, to

ary

1926 rather than to 1929.

A Wel¬

fare

Economy, under paternalistic
rules like ours, and with the vast
nation

this

of

resources

re¬

require¬

lowered, lately,
loan

Consumer

con¬

at

the

rulers'

has

of

the

occurred.

of

controls

and

preceding

most significant
the over-balanc¬
budget. Deflation to

perhaps

years,

among them was

of

the

tune of less than $8 billion—
so

or

of the total,

potential,
not

need

monetary
have

per

actual and
volume
—
an

se

appre¬

ciable effect. But the

implications
were
serious. Until only a few
weeks ago, it seemed obvious that
Uncle Sam was to keep his house
in order; that he even could, and
most likely will,
squeeze
a
re¬
current surplus out of the tax¬
payer's pocket.
Deflation
is
a
depressant, even in small doses,
if it is expected to continue.
Actually,
balancing
that
be
an

no

the

fact

alone—the

more

of

But

the

fear

of

exchange

-

price

speculation.

of foreign

course
-

and

That

is

-

inventory

what

pened lately in France. As
ter of

a

in

Italy

by

the

the in¬

construction,"

Gov¬

tinued.

ernment'

the

G.

F.

in

Addison, Jr.

fi¬

home

Federal

additional

some

having been satisfied,

•holdings of
ume

and

leval

of

an

by

an

have risen during the recent "re¬
an early outburst of con¬
spending on an enhanced

While farm prices are sup¬

ported

effectively,

supported

and

"We

re¬

will

be

further, the correction

persons

eiW

enterprises
possibilities

or

dangerous

up

and

favoritism

indi¬

to

or

arise in

depression, war, national
or
disaster which must
in this way.
But direct
should
be
absolutely

defense,
be

met

The

except for emergencies."
National
Chamber
fully

subscribes to this statement.

the information of the

For

Committee,

the Hoover Commission found that
30 Government agencies are lend¬

ing,

guaranteeing,

loans

various

of

home

loans

or

insuring

kinds, including

but

not

including

those which would be provided

H. R. 5631.

and

000

by

The 30 agencies have

investments

this Committee will

know

the

by
its

to

enterprises.
It invites
political and private pressure, or
even corruption. Emergencies
may

of H. R. 5631 in its present form.,,,

Both

lending

lending by the Govern¬

waste

viduals

effective

income.

direct

to

opens

of

by liquid

unprecedented

consumer

private home
Addison con¬

Government

"Direct
ment

I, II, and VI of the National Hous¬
ing Act, a number which would
unprecedented vol¬ be increased to 60 by the passage

great as ever, and an
demand at that, backed

for

Mr.

izens:

National Housing Act,"
stated, "wages and

Addison

indicates that

major

The report of the Hoover

about

say

the

of

enactment

the

original
Mr.

of

Commissioin dealing with Federal
business enterprises has this
to

nancing field.
"Since

funds

Federal

fluence of the
Federal

be

opposed to any operatioi*
involves
the
lending of

avoided

totaling

further

$12,500,000,commitments

from the Government of $9,000,so-called insurance
operation in which the assumed 000,000. Loans on deposits guar¬
risks outweigh the premium in¬ anteed
by these agencies amount
come
must necessarily be subsi¬
to $85,000,000,000, and outstanding
dized if it is to survive. This prin¬
insurance for veterans and others
ciple applies to home mortgage
agree

that

any

insurance

just

to

it does

as

amounts to $40,000,000,000."

any

*

of industrial prices thanks to en¬
hanced labor productivity and im¬

proved methods of business

favorable

a

the "recession"—is

ulate

econ¬

result

of

likely to stim¬

sales, too.

Federal Reserve Board

2% of

Already, significant raw mate¬
prices have turned upward
again: copper, lead, zinc, soya
beans, coffee, hides, rye and oats,

rubber,

wheat, (thanks to the
expansion of storage facilities).
The forecasts of the prognosticat¬
ing fraternity—whatever they are

For

even

three

required

reserves

years,

The

Board

nounced

of

Governors

and 1 % of time

effective

an¬

The reduc¬

follows:

as

On net demand deposits

Central

the President

Effective

city banks

,

From

20

to

23%

From

19% to 19%

August 18, 1949

to

22%%

From

19

to

August 25, 1949

From

18% to 18%

23%
23

From

22%

to 22%

to

19%%

23%%

From

depression.

years

Reserve

city banks

res.

From

Those
of the biggest
experienced. By the
turn of this year, he has discov¬
ered that an inflation was on, just
about when the inflationary proc¬
ess stopped or reversed itself. By
early July, he is back again pro¬
posing to combat the depression.
All signs seem to indicate that
he is wrong again.
If so, a new
and simple technique of forecast¬
ing with business cycle has been

August 11, 1949

18%%

ever

discovered.
watch

to

System

tion, which will amount to approximately $1.8 billion, will become

danger

a

Reserve

deposits the amount of reserves required to be main¬

to

of

time

of net demand deposits

tained by member banks of the Federal Reserve System.

24

three

Federal

the

of

on

bank cash.

on

Aug. 5, it has reduced by 2%

on

From

were

demand deposits and 1%

on

Releases $1.8 billion

deposits.

has warned the nation against the

boom

further graduated lowering by

announces

*

rial

All
Mr.

has

one

to

do

Non-res. city

Truman's

Sept. 1, 1949 '

■

banks

From

14

to

13%

August 1, 1949

From

13

to

12%

August 16, 1949

city banks

From

6

to

5%

city banks

From

6 to

5%

On time deposits
Central

Non

-

The

and

reserve

reserve

is

predic¬
tion, and to bet the opposite way.

res.

effect

lower the

of

reserve

these

the

decreases

August 11, 1949

August 16, 1949

Board

estimates

will

be

to

requirements of banks in central reserve cities by

approximately $500 million, of banks in reserve cities by approxi¬
mately $675 million, and of banks in non-reserve cities by approxi¬

John C. Watson Dead
John

C.

Watson

died

at

mately $625 million.
In

Metis

the

Beach, Que., Canada, after a brief

of

illness.

that it

He

was

74

years

of age.

Before his retirement Mr. Watson

had

mat¬

Head

mere

crease

breath,

hap¬

fact, similar effect has been

produced

which

the

fresh money would

inflationary

initely

in¬

buying public could catch its ried without crossing the intan¬
borderline that divides a
so to speak, and forgetting gible
its "scarcity complex", return to legitimate mutual insurance oper¬
its normal, bargaining attitude— ation from a concealed subsidy.
largely at the expense of inter¬ This task is made even more com¬
mediary profits and of "grey mar¬ plex by the fact that there are
ket" overvaluations.
now 47 distinct types of FHA-inThe backlog of demand is as sured loans eligible under Titles

goods

budget

reverse

but

would

could

"The National Chamber is def¬

lending

knowledge

printed—may stop and

tinue

subsidy

proportions."

*

con-

far such liberalization can be car¬

ble

monetary

three

the

would

only

FHA,

Federal subsidy. And

means a

this

vanished,

IV

fiscal

this

exten-

sion
not

Government is

the ultimate underwriter of

< -

and with it adjustment in the requirements
the consumer anxiety that breeds for FHA mortgage insurance is in
fantastic prices. The most urgent order. The difficult question to be
needs for durable and semi- dura¬ decided by this Committee is how

shortages

this time.
the

ground

an error should
the side of over-lib¬

on

Since the Federal

the
that

on

such

made

sooner or later a re¬
sulting deficit must be made up.'

due

much-advertised

disposal, is not permitted
worth—are virtually unanimous in
honest-to-goodness
predicting that an upturn is in
recession.
the offing.
*
»
What happened should be evi¬
Take

vising FHA terms,

Act,

are

shortly,

credits

to produce an

dent by

the

prices have moved to a new and
filling of the pipelines, consumer substantially higher level in terms
of. dollars. This fact, coupled with
resistance, etc.? Nothing of the
orthodox type of demand-collapse the favorable experience record,
What

omy—both

have is

an

curred than

sharply

reserve

cession,"; foreshadowing the prob¬

By all stand¬

experience

the

of

Credit

by this time virtually free of
inhibiting regulations.

"phony," if scale.

a

ever was one.

.of

end

ability of

II

Expenditures
on
new ing
plant and equipment are barely the
affected at all.
They are esti¬ 3%

Total

even

declined

goods.-

ber

;

The combination of

with

Indeed, what

Department store sales present

parable

neurial considerations.

This recession is

paid-out personal income
first

the

John
L.
Lewis,
has
been
brought about by trade union
strategy rather than by entrepre¬

the

consumer

loosened.

sumer

•.

But—and this is most "unortho¬
—

days under orders

instances, from

they do,

dox"

three

to

been

been

fected.

;

before

spending

year' 1949-50.'

trols

some

subservience

it

week

buy more bonds; And — a
unique feature for a "depression"
—their
security loans are now

in

Administration's

security and

but

a

to

the reduction of the miners' work

business,

have

we

ployment amounts to about what

happens.
But the total of bank
deposits
has been scarcely af¬
The banks lend less to

be

to

was

deficit again, and at the rate Con¬

months

evolving.

was

it

"disinfla¬

of

expire

down-turn

the

reverse

which

to

of

months

to

Presently, it
appreciably below
the boom-time 1owt, and already

boom

has not

on

eralization,

one among these methods
banking control, and the most
subtle one, could not fail to have
deflationary effects.

while

Employment

financing field.

Appearing before the House Banking Currency Committee,

re¬

behalf of the Chamber

'peacetime

years

greatest

the

home

ment into

i

of Commerce of the United States, on
Aug. 4,
requirements, tightened the
Francis G. Addison, Jr., President of the
for security and consumer
Security Savings and Com-i
mercial Bank, Washington, D^ C., expressed
strong opposition to
loans, put pressure on the banks
r
<$>to keep their commercial port¬ extending
certain
sec¬
other type of insurance. If, in re¬
folios "moving," etc.
Especially

tionary"

in

•

,

•

rules

the

centage

raised bank

serve

employable population—a per¬
which
was
considered
even
by the Beveridge report on

was

for 2%

world's

great

a

Opposes Housing Amendments

Banking and CurCommittee to object to further extension of Federal Govern-

rency

na¬

-

of the previous three,

any

but there will

period of last year—from an
all-time
low,
near-zero
level.

the

use

27

Francis G. Addison, Jr., appears before Senate

,

The end of inflation had its

fashion

has the ability of labor to
strike weapon suffered

or

same

restrained

(571)

U. S. Chamber

"

III

more

deal.

budget will

straightened out.

(Continued from first page)
collapse

the

CHRONICLE

was

&

been

&

associated

Co.

of

Montreal

Flagg.

with

Boston
manager

Chas.

and

later

for

Post

.W

>,

announcing the action of the Board Mr. McCabe, Chairman
Board
was

of

Governors

Federal Reserve System,

of the

taken after full discussion

stated

by the Board and the Federal

Open Market Committee of the coordination of policies with respect
to

reserve

credit

requirements, open market operations, and other system

instruments, with primary regard to the general credit and

business situation and the maintenance of orderly conditions

Government

security market.

-•«

;

,

,

i

i:.

■ i*

4 L I

*

i

in the

28

THE

(572)

V' :v As We See

:o

; •;'<

certainly

owes a

.

in these

FINANCIAL

CHRONICLE

Thursday, August 11, 1949
through

spending of the saving's of the
people.
'■

event,

conferences—agreements

of realism and of

Fooling
A

adequate understanding of the
situation, were we to regard this whole affair as essentially
a
Russian advance into the territory and the affairs of

States.

Typical 19th Century Tactics

an

The

China,

of the naivete of

or

were

tional

some

income.

We

must

reduce

problem to the possible sav¬
ings of the people after a desir¬
able

the

of

If we
Government's

Federal

estimate

of

such

but

a

which

It

people

Chinese.

savings that the

that

indi¬

their

into investment

way

sustain

we

stimulate

and

in'our productive system.

progress

One
and

is

for

the

better

or-for

for

the

It would

purpose

depend

upon

he

porations

they

large

grow

do

not

bigger.
develop

privately supported institu¬
tions
to
the
risk
of
becoming
dependent upon the state. Then
through politics we will under¬
mine

their independence which
gives stimulus to government sup¬
ported institutions.

stronger

grows

load

our

on

device

extravagance
the

to

govern¬
a

next

and

generation.

increasing government debts

can

carry immediate punishment
that is the road to inflation.

There

is far more courage in re¬
ducing our debts than in increas¬
ing them. And that is a duty to

to be their

children.

~

So

long

less

many

cold

must support the
national defense and

at

cost

of 24 days
Mr. Average W.
Citizen there are many comforting
things that should be deferred
war

a

own

affair.

And

is

no

room

for

good deal of doubt about the
the great

rank and file

this

spending and taxes except to cut
standard of living of most of
our people. It is easy to
say in¬
the

work per year to

is

passed

on

to

the

consumer—that is to every family.
It

is

easy

the

to

say

higher

increase

personal

$5,000
would

a

year were
cover

less

taxes

income

Think it

over.

erty

10%

.

or

profusion

If

we

.

a

and

servitude.

prevent

can

govern¬

from

wresting the labors
people under the. pretense
caring for them we shall be

the

happy.'-'

•

-

b

of

-

these

distortions is

by thosfe who support such
and

call

John

themselves

state

a

"liberals."

Morley would not recognize

them.
Out

of

these

and

thp

and

meanings

of

vague promises and

misty mirages,
from

slogans

new

words come

such

cradle

"security
the grave,"

as

to

which frustrate those basic humaiii

impulses
make

to

production

* which

dynamic nation.

a

Think it

over.

Where Blame Must Be Placed
-

is

It

custom&ry to

blame • the
legislatures
gigantic increase in spend¬
ing^ these levies on the nation's
Administrations

or

the

for this

work-days,

and

dead-end of

this

ride

to

unique and

our

a

suc¬

Back

Road

to Collectivism

Along this road of spending, the
either

government
which is

socialism,

stitutional

takes

over,

dictates in¬

or

economic

The American

life

mind is troubled

the

growth of collectivism
throughout the world.
few hundred

a

thou¬

sand Communists and their fel¬
low travelers in this
country. They
cannot destroy the Republic. They
are

nuisance and require atten¬

a

And

the

are

own

of

who

considerable

a

fuzzy-minded

people

engineering

are

a compro¬
all these European in¬

from the systems of Europe

for 250 years. They have the fool¬
ish notion that a collectivist econ¬
omy

can

serve

at

the

personal

same

liberty

stitutional government.
"

The

the

collectivist

title

should

tacle.

and

con¬

or

system

•

the

State

sufficient spec¬
It aims at a fuller life but
a

a

In

through governmental spend¬

the

end

these

national problems

always the

same

solutions

by spending
—■

power,

of
are

more

power, more centralization in the
hands of the state.

We have hot had

a

representatives

election.

feated
Our

by

They

these

officials

must

run

be

de¬

can

pressure

forced

are

groups;
to think

in terms of pressure groups, not in
terms of need of the whole people;

Perhaps some of my listeners
object to somebody else's pressure
Perhaps you support one

group.

of

own.
Perhaps some of
do not protest that your lead¬

your

you
ers

;

not

are

acting with your

au¬

/

Think it

over.

In

\

">•■';.•/"

'*■

Conclusion

And finally,
may
I say that
thinking and
debate
on
these
questions must hot be limited to
bate

halls.

them

in

We should de¬

<

every

should

resort

barrel

debate

to

the

in

school.
old

These

be dissolved in

sense

A

and

We

cracker

every

phrases

grocery.
gans can

corner

and

slo¬

common'

integrity.

splendid

storehouse of in¬
tegrity and freedom has been be¬
queathed to us by our forefathers.
In this

to

day of confusion, of peril
liberty, our high duty is to see

that this storehouse is not robbed
of its contents.
/
We

great social¬

ization of property, but we are on
last
mile
to
collectivsm

of f the

the legislatures.

for

legislative

ration.

Most Americans do not believe
in these compromises with collec¬
tivism.
But they do not realize
that

Capitols to press their
the Administrations

upon

un¬

"austerity" in Eng¬
be

building

empires.

Many of these groups maintain
paid lobbies in Washington or in

thority.

1

lowering
of the
living by this com¬

of

promised
land

pre¬

steady

standard

der

time

Govern-,

a process of free men.
Spe¬
privilege either to business
groups is not liberty.

Our

is

Federal

pressure groups

cial

or

there

the

pres¬

Government.

is not

of their utopia,
But

groups

Aggression of groups and agen¬
cies against the people as a whole

socialists

dream

Federal

within

ment

claims

peacefully

pressure

citizens. Also the state

municipal governments

surize

tion. We also have the doctrinaire
who

great

their

and

which is fascism.

by

of

among our

and

system. A large
growing confiscation

of this

cause

tude

The

over

confiscated, it
than

make

ily life.

to it at top speed.

taxes

must

we

of the work of the people
by our
various governments is the multi¬

an

tion

preserve our inde¬

...

cessful American

we

crease

corporation taxes. That is
illusion. The bulk of corpora¬

has

disguise for the to¬

a

state

do not wish to go down this
road to ruin of our national fam¬

if

ing and taxes, our nation is bliss¬
fully driving down the back road

on

In

there

The

state"

choice between economy and lib¬

endanger the family

as we

necessary

it ends in

brackets. But if all incomes

strength of the political belief of

are

neces¬

'

there can be no gainsaying the
fact that in China as such, the United States has been
badly
bested by the Kremlin, not
only bested, but made to look
like an amateur in the
game of world politics—which, of
course, we really are.: It is common, of course, to refer to
these developments as the
conquest of China by the "Com¬
munists." Whether the Chinese
people prefer this or that
form of government or this or that form of economic
organ¬
us

there

spending."

recognize this distortion of his
simple word
"welfare"
in
the

phrases

absolute

many

would

away

Increasing Taxes

ization and operation seems to

Everything At

fections. They fail to realize that
our American System has
grown

But
for

reduce

to

home and the family life. So it is
with the national family.

mise with

over.

disasters by more
borrowing. That is

waste

it may;

a

by

Government Borrowing

to

and

group

nation

ment

are

We have

other

these

is

have but cannot afford. To spend
for them or borrow money for

cor¬

Another end result is to expose
all our independent colleges and

No

road

urgent meritorious and desirable
things that every individual fam¬
ily in the nation would like to

gadgets of improved living.

our




the

It is proposed that we can avoid

The
precise ultimate meaning of the developments in China
is, accordingly, not easy to determine at this moment.

confess to

to

and

Think it

head-—which obviously could not be
forthcoming.

we

capital to
tends to be¬

subtraction.

provide, which the Russians are in no
position to supply, and which no Western businessman
is likely to provide except
against cash on the barrel

as

busi¬

the capital

Venture

Governments

;

not themselves

But be that

in

ideas

new

confined

come

small

the

best

is starved

find.

can

the aptitudes of mil¬

A Russian Advance

At

develop

of

proposed spend¬

them is that the govern¬

system.

the

wholly a matter of guess work. It would, moreover, re¬
quire vast amounts of capital which the Chinese could

sities

proposed spendings and taxes

nessman

would

course,

as

soft

by the route of
spending. Thomas Jefferson would

Once

major source of
credit and capital to the economic

are

altered

actual

the

of

main

There

ment becomes the

primitiveness, will in any large degree
near future come under direct con¬

life

result

end

to meet

certainly making more head¬
masses of the Chinese, living in

technically in power remains
doss the further question as to the degree

their

emerged

see

the

"welfare

a

talitarian

of

We Cannot Have

and

family security. From
savings
they
must
buy
their
homes, their farms and their in¬
surance. *Jt is from their savings

lions of the inhabitants of that dark
land, aptitudes now

any event,

the tax

pay

provide

must

vidual

are

now

of

We

/

into

"deficit

slogan

ment

and
waste
and
defer
desirable things for a while.

some

them

finding their

"collectivizing"
Chinese agriculture on the Russian
model—assuming it
feasible on technical grounds—would
certainly require
a
revolutionary change in the habits of the average

*

living to

And it is out of

certainly be remarkable if the Kremlin
was able to
organize the Chinese into any formidable world
power proportionate to their numbers, or vitalize their eco¬
nomic life in such a way that
they became large factors in
the affairs of the world.; In the
past they have merely
been exploited largely
by aliens who, individually, often
grew rich, but left the state of things in China funda¬
mentally unaltered for centuries at the time.
Of

some

collector.

reasonably

be seen; as

worse.

savings,
must reduce their

many

more

trol of the aliens who

in

the

standard of

viewed by Western eyes the Soviets prove
effective conquerors and more dangerous masters
of the Chinese people than did the Japanese remains to be

to

will have

The few

as

incredible

phrase

.

desirable

a

the
savings of the people.
In
practice it does not work evenly.

Will It Succeed?

and within

emotion.

borrowing and spend¬

transferred

Another

The

living.

absorb between 75% to 85% of all

almost

in

government

ing

have long
malign disthinking.
They

Constitution. Jefferson's idea of
the meaning of welfare lies in his

spending

standard

adopt

obviously a result of the existence and aggressive¬
ness of Japan as a first-rate power.
Any notion that
Russia would pass by an opportunity to regain what
Japan had in earlier years wrested from her in the Far
East, and to add to her acquisitions and power in that
quarter of the globe, was naive indeed. It should, of
course, have been clear that our policy as laid down in
Teheran and Yalta would end merely in a change in the
alien power which was exploiting China—i.e. Japan
for Russia. This in essence is what has happened.

way.

it

meanings dif¬
we

These

drug

drown

ings.

our

was

Territorially, they
Whether the vast

tortions

of

these actual and

Thinking-

advocates of

not

(Continued from page 6)

not, all things

standard, then the actual, and the
seriously proposed, national and
local governmental spending will

seen.

understood.

world situation and

a

Government

blithely ignored, that is most remarkable. Historically
Russia has long been one of China's despoilers. If not
much of this had been in evidence in quite recent years,

to be

failure

Dangers of Spendthrift

not

Whether

our

approach to that situation.

our

it

/

at all events

or

those

statement, "To

such arrangements with Russia were
justified at that time. It is rather that the
fact that certain of the inevitable consequences of enter¬
ing into such agreements were not foreseen, or else were

considered,

China,

these

gans to convey new

pendence

have been understood)
in the Far East and was

point here is not whether

in

part and parcel of

are

likely to overlook the fact.

But the

or

results

People's

of

ferent from

understandings, moreover, were not only typical
We have here, of course, another and
striking example
of 19th century imperialism/but were entered either in
of the readiness and the persistence of the Kremlin in mak¬
total disregard of the ultimate consequences or else under
ing use of discontent and hardship to penetrate foreign land
the spell of a strange brand of naivete and self-deception.
under the banner of a political
dogma which presumes to
Judgment upon the acts of President Roosevelt upon these offer relief. But it is
really a rather dangerous form of the
occasions must, of course, be made with full understanding
same old imperialism—and it is to be
hoped that all of us
and realization of the world situation as it then existed, and
will presently come to a full realization of the fact.
with a consciousness that without doubt the prospect of

not very

device

gigantic spending is the manipu¬
phrases and slo7

China. /

in

over.

the

lation of words,

These

heavy loss of American life in the conquest of Japan was
one of the major considerations in the mind of the Chief
Executive upon that occasion.
If in the event, it proved
that Russia's entry into the war with Japan was of rela¬
tively minor importance, that fact could not be confidently
foreseen at the time of Teheran and Yalta—not nearly so

it

In any

certain that it would be desirable in the in¬

we are

terest

wholly at the discretion of the President of the United

clearly as the fact (which should
that Russia had very vital interests

Think

.

ularly important element in the current situation.

collection

governmental

and

partic¬

/'f-; r/.'/K'

good deal of its growth and vigor to the

agreements reached

&

of the people of China—and, if we must be
perfectly frank
about it, the communistic evangelism of the movement in
that country does not appear at this distance to be a

It*//

(Continued from first page)

",

COMMERCIAL

of

dare

not

posterity

to

see

the

birthright

individual

inde¬

pendence, initiative and freedom

<

Volume 170

choice

of

Number 4828

battered

for

a

mess

My word to you, my fellow-citi¬
zens, on this seventy-fifth birth¬
day is this: The Founding Fathers
dedicated

the

structure

of

our

government "to secure the bless¬

of liberty to ourselves
posterity." We of this

ings
our

eration

inherited

blessing.
are

on

Yet

our

as

The

tional

life.

gen¬

our

1,710,500 tons, or 94.9% of the old capacity one
1,281,210 tons for the average week in 1940, highest

CARLOADINGS

Emdon Friiz
LOS

the removal

c. announces

Angeles office
the

announces

Emdon Fritz

Fritz

appointment

o.

office manager.

as

has

Vice-Presi¬

been

dent of American Securities Corp..
New York, since formation of the

firm in 1946.
Assistant

Prior to that he

was

VP'*-15 resident

Schoellkopf,

&

Hutton

in tneir New

OUTPUT

1947.

MODERATELY

Cash

FOR WEEK

BUT EXCEEDS

LIKE PERIOD IN

PAST

last

;eported for the corresponding period two years ago.

Coffee

PRODUCTION

SHADED

BY

HEAT

ADVANCE

WALKOUTS,

PAST

IN

WEEK

VACATIONS

Panama Bonds

"Ward's"

past

of New

added.

Fiscal Agent, is notify¬
ing holders of Republic of Pan¬

15, 1967, that $127,000
have

of

amount

principal

bonds

been

Sept.
ment

1949

15,

at

Pay¬

Office

Head

the

at

Fiscal A^ent, 55

of the

Wall Street, New

Output
It

was

LOS ANGELES,

Co.

Douglass &

Walters

have
Gross,

Mr. Romey

$5,000,

of 121,927

and 246 trucks

cars

failures

1947

the

exceeded

when

to

171

in

the

in

the

116

which

occurred.

occurred

in

the

Failures

were

as

noticeably

week of prewar 1939.

same

Small failures, those with liabilities under
48 from

31

and were

the week's increase concentrated

As

in failures; declines were

and

.•emained at

and

South

Atlantic

Harold
associated
& Co., 75
—

Judd
Nearing

Mr.

was

previously with Henry C. Robin¬
son
& Co., Inc. In the past Mr.
Nearing conducted his own in¬
vestment business in Hartford.

With Merrill Lynch Firm
Fiancial

more

than

twice the

rose

the past week

in these two lines.

in

regions.

In

SLIGHTLY

unit

>ierce, Fenner & Beane, 523 West
iixth Street.

(Special

to The Financial

WINTER
j,.

PARK, FLA.—Robert

taff

of

Security Associates,

108

first six months of 1946.
STATES FOR JUNE

ABOVE

electrical
a

Total

week

was

things were responsible for this rise: (1) increased pro¬
activity in auto plants and in a number of nondurable goods
industries; (2) end of the Ford Motor Co. strike, and (3) lengthening
of the average factory worker's work week from 38.5 to 3_8.9 hours,
hour below that of

sforth Park Avenue.

SIX

With Waddeli 6c Reed, Inc.
(Spec'al to The Financial

PRICE

'"'h-oniuM

ST. PETERSBURG, FLA.—Carl
H. Hobe is with Waddell & Reed,

Inc. of Kansas City.




INDEX

a

year ago.

SOARS

TO

spurn

merchandise.
Aggregate

high-priced

of August

advent

household

of

to

be

goods

was

moderately

furniture promotions, the retail
sustained the

below

that

past week but it

the

of

similar

week

HIGHEST LEVEL IN

MONTHS

a slight rise in the demand for refrigerators and some
appliances.
Luggage offered at noticeable reductions

was

moderate response.
retail

in

volume

the

period ended

estimated to be from 4 to 8%

Wednesday of last

on

below

a

year ago.

Regional estimates varied from the levels of

following percentages:

—4

to —8;

Pacific

an

a

year ago

by

New England, South and Northwest

East —1 to —5; Midwest —8 to —12; Southwest and)
to —7.

Coast —3

preparation for the Fall selling season many merchants placed
volume

increased

of

orders

last

wholesale orders continued to be

week.

The

dollar

volume

moderately less than that of

of

a year

ago.
There was practically no change in the number of buyers
attending many wholesale markets the past week, bat it continued
to exceed moderately that of a year ago.

Department store sales on a country-wide basis, as taken
the Federal Reserve Board's index for the week ended July 30,

from
1949,

from the like period of last year and compared
decrease of 10% (corrected) in the preceding week.
For the
by

11%

with

a

four

weeks ended

from

the

decline

July 30, 1949, sales registered a decrease of 10%
corresponding period a year ago and for the year to date
of 5%.

According

duction

FOOD

to

was

the

decreased

MONTH

The Washington Labor Department's Bureau of Labor Statistics
reported recently that factory workers' average weekly earnings have
risen from $52.86 in Mhy to $53.68 in June.

an

continued

meat

continued

In

During the first half of this year, new business incorporations in
43,883, the smallest six months' aggregate in
the postwar period.
This represented f'a decrease of 19.1%, com¬
pared with 54,238 for the similar period of last year and a decline
of 38.8% from the record number of 71,700 new charterings that
the 48 states numbered

Rhodes has been added to the

buying

of retail trade.

summary

With the
volume

a

Chronicle)

AFFECTED

weather prevailed

consumer

shoppers

for

Three

Security Associates Add

ADVERSELY

approximately equal to that of a year ago.
The
dipped slightly, but ham and cold cuts remained
popular.
Daily foods and bottled beverages were in large demand.
Purchases of coffee and tea slightly exceeded last year's levels. There
was a moderate dip in the interest in bakery products.

reported increases as compared with June last year.

WAGES IN UNITED

warm

volume

evoked

company formations during the month of June reached a
7,260, according to the latest compilation by Dun & Bradstreet, Inc., a drop of 2.5% from the 7,445 recorded during May and a
iecline of 15% below June a year ago with 8,550 new company
organizations.
Of the 48 states reporting, 19 recorded a larger num¬
ber of incorporations in June than in May, while only nine states

PREVIOUS

TRADE

in 1948.

of

LOS

of

for

Housewives decreased their purchases of food last week.

25, slightly below last year's level.

ook place in the

parts

mostly

.

week,

its current

the Pacific States failures

Chronicle)

ANGELES, CALIF. —Edvard L. Adams has been added
o
the
staff
of Merrill
Lynch,

very

Many

reported
registered in the West North

NEW BUSINESS INCORPORATIONS DROP

FACTORY

some

and

LATEST WEEK BY VERY WARM WEATHER

past

Stock

HARTFORD, CONN.

in

limited

was

WHOLESALE

AND

There

total

Ch.ionicle)

increased

continued

in many parts of the nation
dipped fractionally.
The dollar
volume of retail trade declined
slightly in the period ended on
Wednesday of last week and remained moderately below the high
level of the comparable week in 1948, Dun & Bradstreet, Inc., reports
the

The Middle Atlantic and the East North Central States

increase

cotton

crop

demand

month ago.

a

IN

previous week, but remained above the 97

Wholesaling and commercial service failures

an

mill

market

demand

with all of

but

new

Activity in cotton gray goods was well maintained last week
with prices strong and tending higher.
Volume of trading was the
best of the year.
There was good demand for print cloths which
made up the balk of transactions. There was also a lively interest
shown in other gray goods, particularly drills, twills and bag sheet¬
ings.
Finished goods were more active as buyers displayed more
interest in making forward commitments.

week

almost two and one-half times

were

69

rose

preceding week, Dun & Bradstreet,

BELOW MAY LEVEL

T. Nearing has become

The

made up

Securities Co.

(Special to The Financial

to

was

belt

ago.

year

for

SLIGHTLY

the

reported in the

increased to

Central

Brainard, Judd

Street.

30.38

"Ward's" said.

Chrysler,

number of the similar 1948 week.

was

With"

Brainard,

in

as

a year ago.

JUNE

(Special

Casualties

reports.

nc.,

occurring

with C. E. Abbett & Company

Pearl

RISE

168 in

CALIF.—John

Stock Exchange. Mr. Dion
was
previously
with
TurnerPoindexter
&
Co.
and
Nelson

with

4 from

Aug.

137

with

it

Casualties involving liabilities of $5,000 or more declined to

geles

Nearing

the

RETAIL
Ended

Rogers & Co., 458 South Spring
Street, members of the Los An¬

William

and

industrial

and

123 from

associated

the

of

other plants,

108,864 units and, in the like week of 1941,
41,795 because of model changeovers.
^

FAILURES

Commercial

E. Dion and Louis H. Romey
become

Ford

for the current week

Chronicle)

Fiancial

Tuesday

and
some

a year ago was

BUSINESS

Gross. Rogers & Co.
The

at

trucks built in the U. S. and 88

held down to

lumerous

to

Motors,

total output

3elow the 277

Romey and Dion Join

Monday

production

comparable week of 1948 and

City.

(Special

walkouts

the

a

buoyed to some extent by the announcement
of ECA allotments for the purchase of cotton for European coun¬
tries, the bulk of which is scheduled for shipment early next year.
Buying for export remained in small volume.
The mid-July parity
price for cotton showed a slight decline to 30.26 cents a pound, from

The low figures for Canada were due to vacation clos¬
ings of the plants of the three big producers.

of the drawn bonds will be

made

York

102%%.

down

week

same

The

Canada.

selected

by lot, through operation of the
Sinking Fund, for redemption on

j

its

nearby needs.

model changeover is taking place,

a

continued

inquiries

(revised) in the previous period

Some overtime work continued during the week at plants

and 22,446

cars

in

Heat

held

General
The

Se¬

Refunding Bonds, series B,

aggregate

of

stated.

week

as

these

the

Loss of production during the week came from the reduced

March

the

buyers generally held
Washington.
Reported sales in the ten spot market amounted to 64,300 bales
the latest week, against 56,900 the previous week and 59,100 in

in

138,727 units

output at Studebaker, where

Drawn for Redemption

due

CHANGEOVER

144,707 units from

of Aug. 4.

cured

support

week ago.
Trading was cautions and
sidelines awaiting developments from

a

the

to

.0

External

would
,

Army were noted during the week. Hog values advanced
receipts and cattle and lambs also sold at higher levels.
touching the lowest levels of the year early in the week
spot cotton prices turned upward and finished with a slight net gain

AND

viously reported in the Chronicle

3xk%

Agriculture

of parity.

After

motor vehicle production for the United States and Canada advanced

26-Year

sharply aided by the announce-;

of

Department

under smaller

over

AUTOMOTIVE

firm's Los Angeles office was pre¬

ama

the

lard to the

MODEL

The National City Bank

and prices advanced

that

epresented a decrease of 52,481,000 kwh. under the preceding week
146,595,000 kwh.br 2.8% higher than the figure reported for the week
ended Aug. 7, 1948, and
591,832,000 kwh. in excess of the output

According to "Ward's Automotive Reports" for the past week,

York,

considerable activity in the cottonseed oi! market

was

week

upward climb with current prices at the
highest ever recorded.
Lard rose sharply in sympathy with the
strength in cottonseed oil and other vegetable oils. Heavy sales of

the

association

a

light
]nd power industry for the week ended Aug. 6, was estimated at
5:466,004,000 kwh. according to the Edison Electric Institute. This

with

Fritz'

continuing to hold in

showing stocks of corn remaining on farms as of July 1 at a
high total of 1,277,000,000 bushels. Domestic demand for hard
bakery flours and new crop Spring wheat flours fell off
sharply in the latter part of the week following the heavy bookings
recorded in the previous week.

'1949 cct.onseed crop at 90%

The amount of electrical energy distributed
by the electric

years.

Mr.

active with prices

more

wheat

1948

iv.

many

was

record

menfc

of

Pomeroy,

corn

report

WEEK

onice

iorK

offerings

x-ange.

There
IN

week were

price trends irregular and volume of trad¬

week ago.

At times, however, there was some liquidation in
corn
futures, induced by continued favorable weather in the main
producing areas and publication of the Department of Agriculture

r

-

LOWER

a

Cash wheat prices fluctuated unevenly as increased

;

ELECTRIC

Aug. 2, compared with 23846

on

met with lessened demand.

and

revenue

21.5% under the similar period in

634

to

South Spring Street. The firm al?c

Inc.

somewhat unsettled with

freight for the week ended July 30, 1949.
according to the Association of American Rail¬
increase of 5,294 cars, or 0.7% above the pre:eding week. It represents a decrease of 170,565 cars, or 19.1% below
he corresponding week in
1948, and a decrease of 197,781 cars, or

Mgr.

The index closed at 239.87

week ago, and with 280.84 at this time a year ago.
Grain futures on the Chicago Board of Trade last

ing below that of

prewar year.

SLIGHTLY HIGHER TREND

firmer trend in many basic commodities, the daily

a

wholesale commodity price index of Dun & Bradstreet, Inc., moved
slightly upward the pasUwpek to reach the highest level in over a
a

otaled 723,810 cars,
roads.
This was an

ANGELES, CALIF.—Blaii
Los

Mr.

year ago

Reflecting

month.

ENDED JULY 30

Of Blair Branch
& Co., I

SHCUV

total of the price per pound of

WHOLESALE COMMODITY PRICE INDEX LAST WEEK CLOSED

narrow

Loadings of

its

f

v;

;

,

and

these qualities.

sum

31 foods in general use.

they

and

summon

of

what

above

or an increase of 1.2%.
This week's operating rate is equivalent to
1,517,200 tons of
steel ingots and
castings for the entire industry, compared to
1,498,800 tons a week ago, 1,434,300 tons, or 77.8% a month ago,

qualities of self-

represents the

29

AT HIGHEST LEVEL IN OVER A MONTH

well

preceding week,

people
have
crises in na¬

of ' integrity,
of
con¬
courage still live in
people. It is not too late to

pushed

Steel-making capacity of the industry will be 82.3% of capacity
for the week beginning Aug.
8, 1949, as against 81.3% in the

restraint,
science

Industry

(573)

index

The

The American Iron and Steel Institute announced this week
that the operating rate of steel
companies having 94% of the

precious
spendthrifts we

great

The

but

backlogs have been
the beginning of
July.

at

»veie

and

this

American
many

CHRONICLE

FINANCIAL

(Continued from page 5)

concludes,

of its inheritance.

solved

&

The State oi Trade and

to rob posterity

way

COMMERCIAL

o-

collectivist system.

a

THE

to

-

the

Federal

store sales in New York

Reserve

Board's

index,

department

City for the weekly period to July 30, 1949,

14% from the same period last year.
In the preceding
week a decrease of 10% (revised) was registered below the similar
week of 1948.
For the four weeks ended July 30, 1949, a decrease
declined by

of

11%

was

reported under that of last year.
7%.

For the year to date

volume decreased by

another page of this issue the, reader will find
comprehensive coverage of business and industrial statistics
showing the latest week, previous week, latest month, previous year,
etc., comparisons for determining the week-to-week trends of condi¬
tions by referring to "Indications of Current Activity," a regular
an increase of 11 cents, or 1.9%
over the $5.73 of a week ago, but
feature in every Thursday's issue of the "Chronicle."
it was still 18.7% below the comparative 1948 level of $7.18.

Following three mild advances, the wholesale food price index,
compiled by Dun & Bradstreet, Inc., registered its sharpest rise in
over a year last week.
The Aug. 2 index went to $5.84, the highest
it has been since Feb. 1, 1949, when it stood at $5.88.
It represented

NOTE—On

the most

j-

30

FINANCIAL

&

COMMERCIAL

THE

(574)

Thursday, August 11, 1949

CHRONICLE
reform of the tax

The Possibilities of Improved Equity
(Continued from page 4)
penditures of recent years is

other factor that has affected the
flow
>

of

individual

savings

than

more

funds.

The

the

availability

dollar

volume

cf

.iie

such

incomes

.he

mucn

greater

than they have ever been. In ad¬

of

aspect

substitutes

method

former

decisions of

now

study

problem is the extent to which

lie

saving in the hands of
individuals with relatively large
are

One

sales.

stock

.orn

individual savings and the volume
of

and

be given to the
.eiative advantages to the nation
ji ltie form that equity financing
.akes, that is, equity financing
.rirough the use of retained earnAgS as compared with proceeds
.mgnt very well

High taxation
prevailing levels of national
income, however, seems to be af¬
fecting the incentives to invest
of

thought

More

itures.

into

business equities.

much

directly

.mailable for investment expend¬

at

;

of retained earnings

.me

an¬

board for those of

a

Markets
1948,

of abnor¬

year

a

mally high profits in relation to
capital investment, business cor¬
porations as a group retained over

profits after income

half of their
taxes

compared with less than

as

in
1929.
Inventory
profits, however, represented a
much larger proportion of earn¬
quarter

a

much

1929. Inas¬

1948 than in

ings in

profits
increases

might be offset in whole or

and

capital

allocating

incentive

invest

to

in

Why

risk

industries

among

Not

assets that may yield high returns

outweighed by the advantage of
tax-exempt investments.
Tax-Exempt Investments

State

local

and

The

—

investment of upper income

ings in

sav-|

govern¬

ment securities and insurance pol¬

icies has been accelerated
tax-free

status

of

such

Business

Are

and

Enterprises

Obtaining More Funds

There

considered in
to be unavailable for

they

were

have

the

Perhaps

important

most

of

life
insurance
company
invest¬
ment income. The technical prob¬

low cost of debt money both ab¬
solutely and relative to the divi¬
dend disbursements prevailing on

in

applying

indi¬

inducements

vidual income taxes to State and

common

local

life

bank

are

money,

securitiy

holdings

insurance investment

difficult

and

numerous

tion.

There is

ever,

thdt

status

of

and

income

question, how¬
tax-free

no

the

solu¬

of

current

these

forms

income

of

1 has drawn funds of many

individuals

ments

in

wealthy
from
invest¬

away

the

common

stock

of

to

Cash

buying

investors

stock

more

the

been

Interest rates

on

and

loans

is

as

Availability of Retained Earn¬

Dividends Relative

Earnings—Some

not

stocks.

has

long-term bond
indicated in the
above table, are currently much
below
those of previous
years
while yields on common stocks
are
exceptionally high. This re¬
flects in part the unwillingness of
the public to buy stocks, as pre¬
viously mentioned.

business enterprises.
Small

are

because

they observe that ' many
com¬
panies are retaining a large pro¬
portion of their earnings rather
than paying dividends. The new
stock money that businesses might
obtain if they paid out higher div¬

ings

An

—

especially

attractive

of

equity funds has been
profits. This form
equity capital has been a very

source

undistributed
of

important
since

source

the

of business funds

of

end

the

war.

Un¬

distributed profits can in a sense
be
considered
free
of
carrying

charge, for their volume is deter¬
idends would have to be balanced,1 mined by management decisions
of course, against the smaller vol- i
concerning
dividend
disburse¬
TABLE

''1949

1939

1929

2.6%

2.8%

5.8%

2.8

3.0

4.7

7.1

5.9

3.9

3.3

1*7.0

6.8

15.7

16.4

on

12S

significance

more

ship

than

to

stocks.

divi¬

to

owner¬

reported

investors have been

certain

especially

whether

to

as

-

un¬

undis¬

tributed

earnings would eventu¬
ally result in higher dividends
and capital gain.
Tax Advantage of Debt Financ¬

ing—The

businessman's

between

as

has

structure

tax

affected the

debt

and

also

choice

equity fi¬

nancing. In the case of corporate
enterprise, interest on debt is a
business

therefore

and

expense

a

subject
to
taxes.
After
these
earnings have been reduced by
the full amount of the component
income tax,
any dividends
paid
from the remainder to individuals

included

are

structure
ment

in

These

come.

their

taxable

of

aspects

provide

in¬

the

tax

strong induce¬
corporations to finance

for

a

expenditures
than

with

that

and

dividend

interest

debt

capital.

equity

The

payments

payments

are

are,

not,

deductible from corporate income
in
computing taxes means that

spread

between

and

the

cost

of

bond

financing after
allowing for the tax advantages of
bond
financing
is
appreciably
greater, as illustrated in Table 2.

fFirst quarter.
TABLE 2

of

$5,000,000

Debt Capital

Company A

I

Company B

$5,000,000

___

$9,500,000
Surplus

Suggestions

500,000

4,500,000
500,000

should

$10,000,000

$10,000,000

like

to

What

Can

Situation

make

certain

Before taxes and fixed charges

$1,000,000

Less: bond interest

$1,000,000

$1,000,000
380,000

income taxes

*Less dividends

on

common

stock at 7%_«

$850,000
323,000

$620,000

$527,000

665,000

315,000

—$45,000

$212,000

Charges Applicable to New Capital:
Interest

on

Additional

businesses

to

wish
of

to

sell,

investors

which

the

and

who

re¬

might

Dividends

on

$150,000
tax

additional

stock

$57,000
350,000

a

per

♦Current

cent of

yield,

new

capital raised.

as per Table L




-

ad¬

investments in corporate

ditional

result from

a

rer

3.00%

much

how

additional invest¬

ment would be induced

by

in

held

wealth
other

forms

that

is

than

equity investment, might be

now

significant.
attention

should

be

also

given to the problem of tax ex¬
emption of individual income de¬
State

local

and

ernment

securities

status

life

of

gov¬

the

and

insurance

tax

company

Revision of this

investment.

that Congress initiate a
thorough
review of the tax situation from
the point of view of its
effect,
frequently inadvertent, upon the
availability of equity capital. Un¬
fortunately there never seems to
a convenient, time for
such a
basic review of the tax structure.
Last year, when we had a sub¬

surplus,

duce taxes without

structure.

do

not

of

want

elected to

we

revamping the

Now

to

us,

do

re¬

with
we

deficit

naturally

anything that

type

of

exemption might divert some
individual savings from such se¬
curities,

annuities, and insurance

to listed

stocks

small business

or

enterprises.

income

the

riod

of

time

sideration
From

deserves

than

it

con¬

more

received.

has

investment point of

an

view

the

of

objections to the
capital gains tax might be met if
a
method were devised enabling
individuals to average their capi¬
tal

gains and losses

ber of years

over

num¬

a

in order to determine

their taxable income.

However^ I

mention this only in passing, as it
is a complicated question and one
would

careful

require

Life Insurance and Fiduciary
Investments

My second major suggestion for
alleviating the equity capital prob¬
lem
be

would

be

given to

that

consideration

liberalization of the

a

investment opportunities open

to

fiduciary institutions, particularly
the

life insurance

companies.

In

view of the large volume of indi¬
vidual savings flowing into pri¬
vate

pension

insurance

and

re¬

the legal restrictions on
insurance companies and other fi¬
serves,

duciaries
from

which

prohibit

them

investing in corporate stocks

should

be

reviewed.

strictions,

These

re¬

rightly

established
many
years
ago
as
safeguards
needed at that time, may, in the
light of changed savings and in¬
vestment patterns, now be out of
date.

I

that the life

recommend

of adjust¬
ment of the personal income tax

insurance companies, in coopera¬
tion with the proper state authori¬

consid¬

ties, explore fully the opportuni¬
ties
for
investing in
common

There is another type

structure

that

should

be

ered in connection with the

equity

capital situation, that is, more lib¬
eral provisions for carrying for¬
ward

out

Such

a

Another
tax

of

feature

structure

our

is

the

double taxation of corporate divi¬
dends.

There

equity

grounds

little

is

to

reason

tax

both

the

on

on

income. How¬

same

there is the practical prob¬
levying a tax on that part
of corporate income not paid out
ever,

lem of

dividends

in

therefore

and

Two of the most
ments

restrictions

has been

that

not

to deduct
the

come

as

proposed is to

moderate corporate in¬

a

tax and

permit corporations
their taxable

from

dividends

they

in¬

to

pay

stockholders. An alternative solu¬

which was previously ad¬
vanced by the Magill Committee,
is that of allowing individual tax¬
tion,

one

credit for taxes paid by the
in computing their

payers

corporation
tax

If the basis of corporate

be

to

this

from

income

changed in the

(2) Possibility

undoubtedly

would

source

decline
by
an

offset

to

their

in

decline

but the potentialities for

revenue,

stimulating productive investment
of equity capital are sufficiently
promising to warrant such action.
Attention
toward
which

might also be directed

revision of the tax laws

a

would

rapid
depreciation of plant and equip¬
ment.
cerns

permit

Allowing
to

ditions

amortize
and

more

business
the cost

betterments

con¬

of

a

concentra¬

a

I

that there is

agree

element

of

risk

a

involved

certain
in

the

ownership of equity shares.
Yet
ground in past ex¬
perience to
support
the broad
premise
that
many
permitted

there is little

bond investments involve less risk

carefully

stock.

In

selected

common

general I feel that in¬
flexible

and

investment

policy together with sound judg¬
ment are much to be preferred to
rigid legal restrictions.
The ex¬
perience of endowment funds of
educational institutions, as well as
of
the
fire
insurance
industry,
which operate under more liberal
investment regulations, has dem¬
onstrated
ment

that

in

diversified

invest¬

stocks

common

nroduce

better

than

along

average

turn.

In

by

re¬

.

order to prevent domination

life

the

insurance

companies

of individual companies or indus¬

tries,

or

vestment

unwarranted risks of in¬
loss
through common
investment

stock ownership, such

should be carefully prescribed by

legislation.
Some
as
the
following
might be employed during the in¬
itial period, e.g., investment of
any one life insurance company in
appropriate

such

the

formula

common

stock

of

a

business

enterprise might be limited to 1%
the

of

outstanding voting shares

$1 million whichever is larger.

or

ad¬

over

a

period of time,
and to deduct these depreciation
charges in computing their tax¬
able net income, would provide
relatively

of

tion of industrial control in large

government

suggested

•

revenues

-

with other types of securities can

liability.
were

com¬

are:

life insurance companies.

lem

come

the investment op¬

ments.

formed

continue

argu¬

(1) The risks of equity invest-

than

taxed

on

panies and fiduciaries

personal
income. One solution to this prob¬

and

received

common

against relaxing the legal

portunities of life insurance

the

corporation and the individual in¬
vestor

modifying

income

consider

to

stocks with the aim of

these restrictions.

losses grow¬

backward

and

of business operations
change in the tax struc¬
ture would encourage direct in¬
vestment by owners of small un¬
incorporated
enterprises
a n d
partnerships.
ing

short

stimulus to business investment

Education and Merchandising
I

would like

to

urge

those

en¬

gaged in marketing securities to
give extraordinary consideration
to ways and means of informing
the public more fully about the
investment opportunities in stock

funda¬

this time.
Moreover, by per¬
mitting larger tax-free recovery,
through
increased
depreciation

study that would lead to

charges, of funds invested in plant

viewed in the 1948 Consumer Fi-

at

cause

even

revenue.

mental

of

feature

problem is the treatment of
capital gains and losses. The vol¬
atility of capital gains over a pe¬

income

current

accumulated

from

final

tax

small volume of

a

of

directly made available
for new investment by a reduc¬
tion in the personal income tax
rate in those brackets.
However,
the indirect effects in attracting

rived

activity

business

in

lessened.

be

which

be

Some

A

down¬

a

study.

out

previously

drift

Since the

large, only

would

given

a

amount

the high tax
not

ward

of income in
brackets is relatively

lowering of tax rates.
aggregate

funds

par¬

taxes

Taxation—My first suggestion is

will

8.14%

of income tax rates,

the Board of Governors.

tax

$150,000

tell

that

'of

sources

characterize

funds

would

short-run

the

equipment,

some

some

buy common stock.
such, these suggestions do not
necessarily represent the views of

financing facing
$407,000
As

be

to

somewhat,
though
not
equivalent
amount.
The Congress would, of
course, have to devise alternative

be induced to

stantial

bonds

income

the

made,
seem

doubt that

no

equities would

manner

might

be

Balance transferred to surplus—

been

below

most important.

There is

pediments

150,000

Before Federal income taxes.

Federal

opportunity oc¬
the many sugges¬

have

discussed

taxes

As

Earnings for Current Year:

After

that

ones

the

the

as

Among

suggestions which I think will
help solve this problem of the im¬

luctance
Total capital

to

as

Be Done About the

of New Equity vs.

Capital Structure (after flotation):

*Bonds—3% coupon

made

tions

deduction in determining earnings

stock

,

rela¬

earnings.
In the recent inflationary period

My
Cost

be

curs.

more

in

dends derived from stock

the

stocks:1

"Moody's Investors Service"" and based

*First half.

and

closely

more

fact

1948

2.7

1 From

tach

rather

2.7%
common

un¬

tion to dividends than to earnings.
This suggests that investors at¬

their

1

Interest Rates, and Bond and Common Stock Yields

Industrial

larger,

stock issues would have been

fluctuated

such

involved

been

attractive

more

new

been

and, for practical purposes, of all

lems

disbursements

been

High Cost of Equity Capital!—

securities

gram.

ticularly those applicable to the
higher brackets.
It is difficult to

powerful in¬
ducements
for
business
enter¬ ^sold.
Study of stock market behavior
prises to finance their recent ex¬
over
the period 1895-1946 indi¬
penditures in ways other than
cates the prices of stocks have
through stock sales.

by the

long-term corrective pro¬
The indicated changes can

a

duction

part by subsequent inventory
losses
resulting from price de¬

doubtedly stock prices would have

Through Stock Sales?

is

upon

in

dition, the proportion of incomes
that people save has been consid- 1
Lack of Knowledge — Despite many cases
distribution as cash dividends. In
erably greater since the end of
he general trend to safety and
addition,
depreciation
charges
the war than it was in prior pros- !
security there are many who are
based on original
cost are, be¬
perous years.
In 1947, the 10% willing to take the risks and in¬
cause of postwar price increases,
of individuals with highest in- vest their funds in
expectation of
insufficient
to
provide for re¬
come
(roughly $6',000 upward) j gain. Among these are a new
placement
of fixed
plant and
were
still responsible for some¬
group of people with savings, in¬
what over half of the total volume cluding farmers, skilled laborers, equipment at current prices.
As was mentioned earlier, these
of saving and the dollar volume
proprietors of small businesses
decisions
of
of saving by these individuals was
corporate manage¬
and
professional men. Many of
ments to retain a larger propor¬
far above that of earlier prosperj .hese potential investors, how¬
tion of earnings have probably
ous
years.
However, since-the
ever, lack knowledge about stock
had some effect on the failure of
highest rates of the progressive investment.
stock prices to rise. Had dividend
income tax apply to this group,
their

in
times
of
prosperity.
We
should, however, realize that basic
inequities may exist, and decide
as

inventory

these

as

the result of price

were

contraction of internal

systerh tends to
neglected and postponed in
times of receding business as well

clines,

in

market

free

firms.

;

In

ments.

and

be

a

temporary loss

Therefore,

a

ownership.

It should be recalled

that 30% of the individuals inter¬

Volume

Survey conducted for the

nances

Board
eral

of

Governors

Reserve

of

the

System

Fed¬

said

they

against

were

holding
common
stocks because they were not familar with them.

of

the

largest

since

the

Moreover,
gains

in

some

income

period
have
been among groups like
farmers,
skilled

laborers,

proprietors

and

those

-

is

stocks

facts

pose

We

small

do

to

not

incomes

that

merchandising
and

can

changing market

that

adjust¬

should
an

own¬

clear

seems

There should be

be

made.

adjustment to
and

ade¬

more

quate attention given to the ma¬
jority
of
upper-middle-income
who
on

invest, rather than
the minority who trade

equity securities.

'I doubt if the

great-majority of

trust

shares.

ment

trust

ings

of. preferred
other

can

with

Invest¬

have diversified

and

and-

hold¬

common

securities,

offer the small

and
di¬

saver

versification of risk together with
the higher income to be derived
from

equity

been

shares. ; There
great
increase
in

a

amount of

new

investment

almost

could

be

may encourage

attention

more

given

by corporations
cultivation of tbe

market for

future

ing.

the

stock issues.

to

Certain

ones

con¬

product

some

or

market

by

porations

usually

are

privately

sponsored and obtain their funds
from

equity financ¬
have

to

gone

giving the

leading citizens and estab¬

measures

of

deyeloping good public. relations
pany's
results

Stock

plants

which

are

the

located

often

Financing Agencies

capital problem^ for
even
if legislative

of

are

familiar with

the?
■

in their communities. Among
communities
with
prewar

still operating are

are

Maryland; Louisville,
and Easton Pennsyl¬
vania. More recent plans aimed at
aiding the reconversion or relo¬
cation of business
the

been

have

war

concerns

after

developed at

Albert Lea, Minnesota and Ashta¬

feasible

were

bula, Ohio.
The

,"

,

capital

bank

:

>

proposal

has

been advanced by many individ¬
uals and organizations in the past
and

most

recently

by the Com¬
mittee for Economic Development.
The general purpose of the pro¬
posal is to add to our present

banking

structure

a

of

set

and

if

provide long-term loan
and
equity capital to business,
particularly to small enterprises.
Concluding
Thus

far

Remarks

and

have

I

treated

debt

equity

sound financial

a

structure.

There is another aspect of the

relationship
should

be

generally
expansion in¬

debt

the financial

resources

business, and that debt

ment reduces those
is

attention

directed. We

that

assume

which

to

of

a

repay¬

resources.

This

correct view in the

but

over

the

debt incurred

on a

basis that calls

for its

field.

no

a

more

access

to

such funds at all. In the long-run,

be

country for

new

a

need

in

this

types of financ¬

ing agencies to meet this problem,
particularly
of

for

the

channelling

the

retained

loan

The

capital

to

small

and

five

extended

banks

and

to

by

most

15-year
many

term
larger

insurance

com¬

panies, with repayments budgeted
in accordance with expected earn¬

illustration of this type
-credit.
Another
example
is

ings, is
of

market

equity

drama¬

of

our

Sena¬

much concerned

an

borrowing

through

the

debenture. This type
obligation offers important in¬

convertible

medium-sized enterprises. At least

of

three types of financing agencies

centives to management to retain




the

tion <'ta

logic of his sugges¬

its

ultimate

conclusion,

place for Amer¬

no

ican oil but the United States and
the few remaining countries that
offord

can

to

spend their
dollars reasonably liberally.

own

ECA's Policy on the European Oil

Expansion Program

However,

Chairman in
address stated so clearly,

recent

a

must

we

grants

be

to

realistic

European

must

their

as your

evaluate

actual and

upon

our

own

about

our

natidhs

the

and

results

by

potential effects
Under

economy.

the ECA

enabling Law, we must
seriously im¬
pair the economic stability of the

not by our assistance
United

States.

basic to

our

This

concept

is

operations.

resources

know

we

are

available and the technology of
distributing those goods on a mass
basis

for

the

constant

ment of the standard
all.

To realize

tained

our

expansion,

concerned with

improve¬

of

living of

potential
need

we

assuring

sus¬

to

be

steady
adequate flow of savings into
equity ownership. I sincerely be¬
a

and

lieve

that

if

we

in

are

earnest,

ways and means can be found for

accomplishing

this

are

fair

one

purpose

that

concerned.

and

equitable to

every¬

their

ling

sterling income in the ster-*
non-dollar currency

or

In

this

areas.

connection, the
American oil industry, in order to
protect its outlets and at the same
same

time minimize the dollar costs for
its oil exports to Europe, is con¬
structing refineries in the Euro¬
pean consuming areas. In addition,
it might also decide to increase
procurement
in
the
importing
countries of

its equipment needs,
tankers,
services, etc.
This
would give the importing coun¬

of

tries

a

new

by

the

for

source

dollar income

that

countries

to

sizable

a

could

ports of American

U. S.

on

in

ECA, as I have stated to
before, feel therefore that a

dollar-saving

mere

the

oil

approach

problem

is

not

important

are

to
good

com¬

tegic considerations that must be
weighed. On the other hand, re¬
covery in Europe might well lead
to increased competition between
American
and
European goods,
but this by itself is certainly not
deplorable.
It must, however, be
fair and open

competition.

We

have, accordingly, taken the
position in ECA that an expan¬
sion of European oil facilities is
justified only to the extent that
the output from such facilities can
be

sold

without

the

of

use

of

restrictive

other

devices.

trade

We believe that the ef¬

fort of ECA to establish
in

Europe

should

recovery

and

not

the market

be

oil.

used

for im¬

pay

Such

ar¬

tween

the

This

policy,

lishes

goal,

must

also provides a work¬
yardstick for the evaluation

European petroleum

legitimate

commercial

tend

to

which

with

trade

one

in¬

another

and the rest of the world mainly
on
the
basis of exclusive,
dis¬

criminatory
bilateral
arrange¬
ments a la Schacht, On the con¬
trary,

if that

were

the result of

ECA's endeavors, recovery would
be further away than ever.
ECA's

tions

policy

are

aims

thus based

and inten¬
achieving

on

growing multi-lateralization

of
increasing relaxation of
an expanding con¬
vertibility of currencies. On the
basis of such a concept as applied
to oil, ECA does not believe that
Europe
should save dollars or
earn foreign exchange by driving
American oil from the European
market or from other foreign mar¬
a

trade,

an

restrictions and

kets by

exclusive bilateral barter

there

have

rangements
made

for

instance

by the United King¬

With Argentina which may
in fact close the Argentine market
to American oil during the next
dom

five

years.

large

United

at

are

And, as you know,
States investments

stake

lost

there

and

market

a

well

hard to
regain.
you that
we are perturbed about this situ¬
be
I need not tell

once

may

^:•

I

ing out this problem, costly re¬
adjustments may have to be made
by the American oil industry. The
problem is not an easy one which
can
be
described in simple and
elementary terms. It is a problem
where
many
interests must be
considered and where it is

to

sary

The

long-term policy goal as
here must, therefore, be

fortified and protected by

imme¬
diate, practical and effective ar¬
rangements to achieve the protec¬
tion of legitimate American oil
operations against discriminatory
arrangements. In such a situation,
reasonableness and

proach

balanced ap¬

are

certain

under

because

a

all sides

on

necessary

conditions

it may be nearly impossible for a

dollar-bankrupt country to sur¬
vive except by what may well be
called discriminatory trade prac¬
tices.

foresight. One must, in particular,
be

May

Oil

American

Companies

Their

Operations
Europe's Dollar Shortage
Adjust

this

In
and

connection

the

to

attitude

oil
companies and of the governments
concerned
are
of great impor¬
tance.
For instance, in any con¬
policy

is

American

the

of

the

where

moment

American

in

danger

to

British oil
because British oil is being sold
for sterling—even though its pro¬
duction requires the British Treas¬
ury
to
furnish
a
considerable
amount of dollar exchange—ar¬
rangements can,
I
believe,
be
made to protect American outlets
without retarding European re¬
losing

markets

Such arrangements among

covery.

others might consist in making it

possible
panies

ing

at

American

for

sell

to

sterling

areas

the

their

oil

oil

to

com¬

same

the

force of ar¬
gumentation or by complaints of
discrimination succeed in selling
oil to

non-

mere

markets that cannot afford

to
pay
for it.
One cannot get
water from stone or dollars from

non-existing dollar accounts, but
given time,- one can, I believe,
work
out
ways
and. means to
the dollar costs of Amer¬
j

Conclusions

The international oil
and
a

world.

industry is
dependent upon
a bankrupt

remain

will

and not

prosperous

As

far

is

ECA

as

con¬

at least be ad¬
mitted that it has postponed and,
cerned,

it

must

believe,

we

avoided

a

complete

economic and political collapse in

Europe.
lets

for

ECA has maintained out¬
oil in Europe

American

during the last

year

which other¬

wise would have been lost.

the

tried to

framework

ECA

establish within

of

the

European

both a shortterm and a long-term policy on
European petroleum development
Recovery Program

projects

that
are
designed
to
maintain for American oil a fair

and

equitable competitive position

in the world's markets.

AjDove all, the American oil ex¬
is, I am sure, aware that
ECA assistance to Europe is giv¬
ing him the time required and a
porter

chance

really

to

evaluate

the

world-wide dollar problem which
threatens his very existence and
to

plan and undertake the

neces¬

adjustments

in his future
operations.
If on April 3, 1948,
the American people had not es¬
tablished the Economic Coopera¬
tion
Administration,
the
thenimpending dollar bankruptcy of
Europe would have caught the
American exporter to Europe un¬
prepared and the ensuing eco¬
nomic collapse of Western Europe
might have destroyed his business.
Thanks to

ECA, this has not hap¬

the American people,
assistance, have
saved Europe by financing neces¬
sary American exports to Europe.
In
all
fairness, this should be
stated plainly.
If
Europe
achieves
recovery
pened

and

with their dollar

with

ECA

assistance

and

if

the

United, States oil industry adjusts
itself to the

realties of the situa¬

tion, I believe the lot of American
oil in world markets, while most
difficult, will not be disastrous as
is sometimes feared.

time

the

con¬

Clark, Dodge & Co. Admit

Dyer will become a
Clark, Dodge &
establishing Co., 61 Wall
Street, New York
responsibility of the American City, members of the New York

into dollars to

the

that

fact

for sterling, limit¬

vertibility of their sterling income

age

the

of

aware

sary

How

neces¬

with moderation and

act

has also

stated

will, there will

a

would, however, not be sur¬
prised if in the process of work¬

In order to cope with the
immediate
dollar
problem, ar¬
been

is

the

am sure,

way.

where.

of

self-sufficient

'

a

industry dur¬
minimize
ing the period of dollar crisis in
ican oil.
the United Kingdom and else¬

at

nations

operations

of the American oil

situation

of

pro¬

gram.
But in the immediate fu¬
ture it is not, I am afraid, too
effective a means for maintaining

oil

European

be

believe, estab¬
kets, cannot by
worthwhile
long-term

a

the

of

I

and

able

and

governments

companies affected, but, I

American oil industry, insofar as
it is dependent on foreign mar¬

places of the world.

crete

or

man¬

expan¬

part of the recovery
program is an expansion in line
with truly competitive outlets in

16

nations

this

as

not result in the establishment of

small

in

only European

ernment

dis¬

criminatory
trade
or
currency
practices and without the utiliza¬
tion

achieved

be

The

sion that can justifiably be ac¬
cepted by the United States Gov¬

We in
you

fact

ner.

ation.

mercial, foreign policy, and stra¬

ties and others have

may

was

one

very

enough. There

aggressive job of informing the
public about the advantages of
stock ownership.. Many individual
concerns, particularly small ones,
do not at present have convenient
access
to the savings potentially
available for investment in equi¬

stock and

common

businesses themselves did

there

It

oil- into Europe. The answer
is simple, because if we

followed

new

banks to

gradual repayment out of
earnings of enter¬
prise. Thereby, resources origi¬
nally
acquired
with
borrowed
capital are gradually refinanced
out of equity
capital. Over the
past two decades, there have been
important technical developments
along these lines in the credit

distributors of

face.

we

that

to

we

short-run,
business
longer-run, debt fi¬
changes in regard to taxation and nancing may be a means of build¬
investment outlets for fiduciary ing up equity. I have reference to
institutions

the

Industry

tically illustrated during hearings
before the Senate Appropriations

individuals who

a

equity

run

dilemma

there would be

creases

There might still remain a long-

is

where

Oil

more

advantage

com¬

in a high percentage of
ownership in those areas.

New

a

with

Impact of ECA

plans have the
diversifying risks
and yet at the same time leaving
the financing decisions with local

These

vestment.

order to achieve

other

in

gone,
frontier of

about
any
European threat
to
capital into contact with a Attiaerican oil, .asked me. if we
pool of funds composed -of smalt could not save more of the United
amounts
of money-* thatv might' states taxpayers' dollars by forc¬
separately not be available for in¬ ing the British to ship more and
pose

well.

areas

is

frontier*

31

rangements would, of course, re¬
quire complex negotiations be¬

tors, who is

Their primary pur¬
is to bring enterprises that

financing largely as
alternative means of raising capi¬
tal for a business enterprise. This
emphasis may create a somewhat
distorted impression of the part
which each plays. Debt and equity
are actually complementary ways
of financing business though they
must
be
properly balanced in

the

have

community.

particularly
their
information
about their operations, their fi¬
nancial position and their earn¬
ings. Some companies have also
cultivated
equity ownership by
their employees. Such ownership
can
improye working relation¬
ships
and
enhance
community
good will toward the company as

in

still

we

resources.

frontier

Committee when

gen¬

more

This and

Western

geographic

but

the opening up

was

great

lished business enterprises in the

eral

public,
stockholders,

our

The

a hundred
I Then, the frontier of

ago.

That

importance/ Thus, the
corporation provides a channel
(Continued from page 7)
whereby
equity
risks
can
be
pooled and financed, in part at in reducing dollar oil imports and arrangements or similar
devices;
least, b.y previously unavailable increasing its own oil exports.
nor
does ECA
believe that the
funds of fiduciary institutions.
I have talked at length about largest overall dollar savings or
I Community
problem
to
indicate
the foreign exchange earnings could
development cor¬ this

great lengths to prepare their fu¬
ture

and

development.

technology — the technology of
producing more and better goods

com¬

Baltimore,
Kentucky;

shares
million. Al¬

$700

themselves

have

plans that

the

company

'Considerably

expansion

are

Economic expansion to¬
day presents a strikingly different

scientific

placed in

,

new

economy

be developed that is of

process to

securities, purchase of existing

sale of

that

cerns

the

issues supplies sellers with funds
for the purchase of new issues
and by. helping to maintain a

strong market

our

growth.

(575)

funds

and established business

new

men

though investment company funds
are rarely used to buy new issues
of

founda¬

individuals, and in¬
in equities of

and

such

vests

the

of the Investment Com¬
pany Act of 1940. During the four
years 1945-48 sales of new opentotaled

panies,

since

money

companies

investment

educational

and

tions, established investment

has

passage

end

already

basic

firmly believe
characteristics of

need

small investors are familiar

investment

are

corporation
insur¬
trust funds, re¬

companies,

search

But

thus

financing agencies

the

I

of

public.

it

that

Examples of the first two types
of

ture of America.

development

to
se¬

overselling of stocks to
of

.!

(3) Capital banks.

com¬

stock.

common

which obtains money from

the risks of business

stocks

■i

to

As you will gather, I am a con¬
firmed optimist regarding the fu¬

mention by name, is a

ership.

in

'

so

challenge from that of

assume

fhcus

and

op¬

profits

be

years

income recipients who should not

savers

corporations,

CHRONICLE

induced

up

will

convert their bonds into the

pany's

funds

community

development

build

I have in mind, which i shall not

course,
many
involved in the mer¬

general

certain

\''V

and

holders

type of private financing company

characterized the years of the late
twenties.
There are many small

a

Special

(2)
and

compa¬

'

■

that

limited.

of

are,

receivers

ments

.V't

ance

the

financing

Private

(1)
nies;

earnings in order to expand
erations

-

educational

very
an

chandising of risk investments
want

V i

FINANCIAL

functioning. An illustration of the

merchandising challenge
engaged in marketing

.There
problems

suggested and deserve

&

knowledge of

curities.

the

been

further consideration:

of

profes¬

some

sional people whose

These

have

COMMERCIAL

prewar

small businesses and

common

THE

Number 4828

170

and

an

agreed percent¬

otherwise

oil companies to spend

the rest of

Walter

G.

limited partner in

Stock Exchange on

Sept. 1.

/r

32

Thursday, August 11, 1949

& FINANCIAL CHRONICLE

COMMERCIAL

THE

(576)

that without further analysis
condone or passively ac;ept them,' simply on the basis of
your familiarity with them under
very different circumstances. They
are
decidedly not derivatives of
the liberty
and freedom which
have served our country so well,
but are distilled variously from
dictatorship, bureaucracy, and so¬
ger

Enterprise in American Progress

Role of Free
(Continued from first page)
eauivalent

similar area on the

or

unity inevitably raises the human
,pirit to levels of higher and

accomplishment.

ngher

the

In

iphere of business it inspires men
structure which md women to embark upon worhas been reared in the United
hy enterprises, to venture capital,
States in less than two centuries .o work late into the night, and to
is the greatest the world has ever
known. Proof of its strength and
effectiveness is vivid in the

minds

One element of proof
furnished in striking manner

Of all of us.
was

during the decade just now draw¬
ing to a close. It stands out in bold
relief as an example of what our

When

industry can and must do.

freedom throughout the
was
threatened with ex¬

political
world

tinction, a few years ago, by the
armed might of irresponsible des¬
potism, American industry, re¬
sponding to the call to action,
poured such a weight of armament
the

into

come
ous.

struggle

desperate

allied forces

our

that

enabled to

were

through the ordeal victori¬
That was a formidable task.

had been amassing
materials and constructing imple¬
ments of mechanized warfare for
The

enemy

years in advance of open conflict,
confident that no nation or group

of

nations

could

match

over¬

or

by any means, the mass of
powerful equipment already pre¬
pared for world conquest and dic¬
tatorship.
The meeting of that
challenge and the successful issue
come,

which followed
what

are

earnest 0f

an

free

people, inspired by a
just cause, and skilled in the
ways
of large-scale production,
can accomplish.
a

Business Must Be Up and Doing

would

mean

situation
This price¬ cialism.

at

know that simple stand alone as examples. Attempts
principle of economics, as well as to establish fully regulated econo¬
the executive of the large mies
during bygone eras have
jorporation or the graduate of the taken their places, one by one, in
business college. Only in restrict¬ the hall of failures,
alongside all
ed circles thus far, but much too
presumptive attempts at world
widely at that, do we hear the domination.
fantastic doctrine that production
should be conducted for "abun¬
Must Be Alert Against Forces of
Destruction
dance" rather than for "profit."
ioes

organization and operation
)f any material business enter¬
prise,
whether it
be large or
imall, requires the investment of
capital.
Without
capital
there
The

could

be

no

business

structure.

With

mus.t be PT

t.

fhe

hu.i-

such

great values as we
stake in America, we

at

have

must be

equally alert against the
discernible forces of de¬
which come from the

easily

struction

outside, and the more subtle, dan¬

_

Jacl|lties
-nnniies
-"nen^ raw materials and supp

gerous
within

fermentation which works
body politic.

our

One grave

such

fermentation

is

the

of

American

Corporations

there

regulated

fully

economy

is

the

The

elements

strated

of

strength

which all of

as

of

us are

,

■

favor

Of life
ance

things

is

blessings to be had
the

established

record

of

It is not surprising that the at-

mosphere of
provided by
ment,

liberty
our

and

justice

form of govern-

originally

conceived,
should have encouraged the citias

of

America

best efforts.
fair

of

our

nation

have

been

j mentioned, side by side, for your
here. I repeated consideration.
I reiter-

competitive private enterprise operating in this land of opportunity,

zens

ment

comparable to the abund-

of

Such

*

balance of the good

a

to

The

exert

their

ate that the two

are

inseparable,

They bear to each other the relationship of cause and effect. With

fFeedora and the consequent

na-

f;°nai development prompted by
lt: we bave come rapidly and far
al°ng. the Pathways of progress,
£hf Jou™ey has been strenuous
but

heartening.

The

compensa-

for

excellence

require

accounting

an

the performance of the public
servants elected to work for the

on

national

welfare.

Ignorance and
hands

indifference play into the
of

the

discontents

spread

the

who

ferments

mentioned.

mined action

would

have

we

Alertness

and

deter¬

foil them. To the

can

most recent group

dates

of young candi¬
seeking to launch sue-

now

cessful careers in business and in

the life of
your

nation, I

our

candles in the

light

say,

surround¬

new

ings. Keep them burning that you
may distinguish between the true
and the false.

With constantly in¬

attractive

more

Is the individual

there than here?

Soviet citizen enjoying freedom of
choice in any of the important as¬

of life?

pects
there

think not.

I

Yet

George Southworth Is I
With Income Funds

for our
NEW HAVEN, CONN.—George
which, if
adopted, would take us along the B. Southworth has become asso¬
with Income Funds, 152
road to a similar situation, and ciated
they
might
win
by
default. Temple Street. Mr. Southworth
Wherefore the necessity of being was formerly Vice-President of
continually on guard, with the George C. Lane & Co., Inc.
are

ever

consideration

present

measures

firm conviction that freedom must

is to

it

be

pre¬

Robert Tutwiler With

Barclay Investment Co.
Weakness of Paternalistic

(Sneeial

Measures

Recourse to
ures

state

or

assurance

paternalistic

meas¬

socialism offers

no

that the judgment of an

officialdom would

appointed

to

ex¬

Tutwiler

Robert

—

Investment

Barclay

South

Salle

La

Tutwiler

Mr.

E.

associated

become

39

Company,
Street.

ILL.

has

the

with

Chronicle)

Financial

The

CHICAGO,

cal care, housing, financial secu¬ bers of trained citizens whose ca¬
rity, and the higher education are reers are devoted to useful enter¬

advocated

that

and should

pre¬

was

thority, with consequent belittl¬ cel that of private agencies in viously with Adams & Co.
ing of the rights of the individual prescribing for manifold human
and of local political subdivisions, needs, or in the administration ol
such as the States. Controlled pro¬ business.
One
may
reasonably Watling, Lerchen Add Two
(Special to The Financial Chronicle)
duction, controlled prices, speci¬ question the possibility that any
fied wages, regulated distribution, government can or could equip it¬
DETROIT, MICH—Thomas B.
and regulated profits, if any, are self
so
thoroughly with super¬ Anderson, Jr. and Hugh A. McFeatures of the proposed System. men that their wisdom and per¬ Pherson II are now with Watling,
Socialized this and socialized that, formance would match the inte¬ Lerchen & Co., Ford Building,
including such matters as medi¬ grated abilities of the large num¬ members of the New York and

responsibilities of
demon- are listed numerous organizations
industry, to and
companies which manage governmental commissions or bu¬
reaus rather than of the citizens,
witnesses, were ^arids. and provide insurance for
fostered
by
the
system
under addltl0r?al
millions of peciple, acting alone or in groups. Busi¬
which the American people have many times the number of direct ness, as well as many other activ¬
lived
and
shaped their institu- stockholders. Thus the stakes in ities of life, would thus have its
tions during the relatively short Prl,v,at? competitive enterprise are course prescribed by a few men,
period of our national existence. be d by an astonishingly large appointed and clothed with fed¬
From
the
very
beginning, the segment of our population, and eral authority, while private com¬
framework
of
our
government every man and woman so included petitive enterprise as such would
was
fashioned to
disappear. Personal initiative, cre¬
magnify the *s a capitalist.
ative ambition, and the urge to
'rights of the citizen and to 'en¬
Misrepresentation of Capitalism
rise above the average by virtue
courage individual initiative, not
The system by which capitalists
as a
of genuine proficiency could hard¬
concession but as a natural
belonging. Restriction, regulation, pool their interests in constructive ly exist under such a regime.
poal tPe11^ lnte.rests in cons
A special word should be insert¬
and repression were held at a undertakings is referred to as capminimum. Throughout all politi- ltalism> a term which is sometimes ed here for the young men and
cal history, only a small propor-1 misrepresented
as meaning an women who period of adult think¬
tion of the peoples of the earth'«
element in the social order, ing began approximately with the
'have enjoyed the personal lib-a<Jvocates of different po¬ outbreak of the recent World War,
lity and freedom of action which lltlca* and economic philosophies or shortly thereafter. They came
our forefathers knew in
America, S?uldm,.have ^ Public believe into maturity at a time when nor¬
and
which we, as citizens of a thls- They would also llke to cul" mal peacetime pursuits and meth¬
powerful representative republic, I ftVat? the erroneous idea that cap- ods Were giving Way temporarily
have the right to inherit.
Again
ltallsts are a small group of per- to measures dictated by military
throughout all history, only a sons seeking special privileges for necessity. It is essential in times
small proportion of the peoples of tl*eir °,wn exclusive benefit. Hap- of war to focus all effort toward
the earth have progressed so rap-'pily the
record> which a11 may victory, to submerge customary
idly or so far along the avenues readlly understand, bears, testi- economic considerations, and to
of
substantial
accomplishment.1 ni0"y .to *he hollowness and falsity devote all resources to the cause
Few indeed have built such struc- iof their allegations, with abundant of
national
security.
Wars are
tures, provided such facilities, or ?vid?.nce that capitalism as it has managed and waged by govern¬
organized such tools of production functloned in our economy has ments, not by private concerns or
oeen a creative
force, contributing individuals.
as are to be found within the bor¬
In such periods of
decisively to our present high crisis,
ders of our country. One
personal rights and prefer¬
may look
position.
the wide world
ences must yield to the rigid con¬
over, nation by
Quite intentionally the charac¬ trols of national planning. Abnor¬
nation, all the time assessing deb¬
its and credits, and not find a teristic freedom of our American mal restraints are to be expected,
national
unit
which
has
in its ways and the amazing develop- for the interim. Governmental dic¬
.

political procedures, by
ad¬
visability of an enngntened elec¬
torate.
Individuals
must
think,
decide, raise their voices, and ex¬
ercise their franchise. They must
know the extent of their rights

and

move¬

ioai of those who profess belief
m the inflation of centralized au¬

Our

met.

their very nature, project the

soft promises creasing faith you will develop
of security? Do we now look with the courage to step further into
envious eyes at a dictated and the darkness, and find, to your
managed economy operating in amazement and satisfaction, that
Eastern Europe? Are the reward) the light still follows.

regimentation

be defended, if
sign of the activity of served.

purchasing public. Private busi
ment favoring a gross enlarge¬
ness normally employs funds de¬
ment of the powers and functions
rived basically from the savings of
the Federal Government.
A

retrogression.' which there are approximately 18
at
the
present
time,
the stockholding owners

disaster.

good reasons why we

are

.ruck gardener

Any retrogression, in turn, under million
present world conditions, might Among
mean

There

should take stock of our
less

has no vaca- of individuals, augmented from
responsibili- tlme. to time by part of its own
ties.
It must be up and doing.1
and thus furnishes a
Whether functioning as an indis- mea"s by which money may be
pensable national asset in times Put to work arri likewise a'*0l<J
of armed conflict, or as the peace- 6alnfui livelihood to millions
time servant of the people,
cater-j emPl°yees*
ing to their daily civilian require-!
Some, but by no means all,
inents, it must be kept ready and units of business are incorporated.
Strong, capable and progressive,! Corporations
have stockholders,
^adaptable and solvent. Any other, that is, stockholding owners of
course

teaches

should we pause to speak of
darkness, or of any occasion for
the lighting of candles?

frequent intervals.
freedom which has meant so
We find it difficult to believe
much to us has a way of slipping
that the spirit of self reliance has
The Profit Motive Essential
beyond our grasp unless we guard sunk so low in America that a
Under such auspices, rewards in and cultivate it diligently.
That free
and
independent
people
proportion to honest effort are the very thing has happened else¬ would
willingly
assign to
the
lormal
where in the past. From long cen¬
expectation;
the
profit
bureaus of a centralized govern¬
notive is considered a logical ac- turies of history we learn that,
ment the management of practi¬
jompaniment of ambition and a time and again, such liberties as
cally all of its concerns. What gain
>pur
to attainment.
Profits are nave been won by the people have is to be realized in
trading per¬
nade, and are regarded as neces- been curtailed or lost by encroach¬
sonal liberty and the opportunity
;ary and honorable, because with¬ ments from within or from with¬
,of engaging in stimulating enter¬
er them any business would perout. Ancient Athens and Rome, as
prise which builds character, if
sh. The shop-keeper, the propri¬ we'll as modern Germany, tell a
the transaction brings, in return,
etor of the service station, and the
significant story, and they do not

build for the future.

Industry, of course,
tion from its various

well

view of what the evidence

uSj

industrial

I'ne

you may

tation

and

prises. A look at the difficulties
being experienced persistently by

appetite for the institution of
a
similar program in the United
States. And we may well make
note of the fact that the strength
of our particular kind of so-called
"capitalistic economy," developed
in an atmosphere of personal lib¬
erty, is being called upon to sup¬
port the functioning of political
units in many parts of the world
today. Such strength is not flow¬
ing in the opposite direction.
our

A further negation of individual
freedom/the thing called commu¬
nism, is one of the most presump¬
tuous foreign yeasts working in
our society.
It presents itself for
appraisal and acceptance without
haying established any record oi
beneficial accomplishment, wide¬
spread use, reliability, or con¬
structive

forms

it
the

even

In

the

Yet

effort.
has

circles within

in

various

into

reached

many

midst, including
pulpit and the campus.

are

omy

and

amazed

*ame

of

wartime

a

econ¬

not immediately shocked

color

that

measures

should

be

for imoosition upon our

of the

advocated

Stock

Exchanges.

With John J. O'Brien & Co.
(Eoccial

the world's most recent addict to
socialistic measures does not whet

Financial Chronicle)

to The

CHICAGO, ILL.
Chandler

South
of

the

affiliated
Co., 231
members
Chicago

Salle

La

Russell M.

—

become

O'Brien &

has

with John J.

Street,

York

New

and

Stock Exchanges.

With Waddell & Reed
(Special

to The Financial

BEVERLY

Earl

V.

with Waddell
Wilshire
was

Chronicle)

HILLS, C A LIF.—
is now associated

Olson

&

Reed, Inc., 8943
Mr.
Olson

Boulevard.

previously with C. E. Abbett
Slayton & Co., Inc.

Co. and

&

■■

I

Joins Akin Lambert Co.
(e~„ojai

LOS

t,o

The

Financial

Ch onicle)

CALIF.—
Bryan B. Odom has become asso¬
ciated
with
Akin-Lambert Co.,
Inc., 639 South Spring
Street,
ANGELES,

members of the Los Angeles and
San Francisco

Stock Exchanges.

our

latter you

may

recognize

G. Brashears & Co. Adds
cw-onicle)

•"«nnr»*

it, thinly clad, improperly wear¬
LOS ANGELES, CALIF.—Har¬
ing the disguise of the respectable
lan C. Cottrell has been added to
privilege
known
as
"academic
the staff of G. Brashears & Com¬
freedom." With nothing of value
South Spring Street,
to offer the American citizen, we pany, 510
members of the Los Angeles Stock
sometimes wonder why the apos¬
tles of communism find room for Exchange.
the preaching of their gospel here.
Yet one must remember that there

regulation have their was a
discordant note even in the
day in the sun while the armed Garden
of Eden, and that the out¬
forces of the enemy are on the
come of the movement was not to
march. You have had experience
the disadvantage of the tempter.
with that very situation.
So it
We are quite definitely informed,
may be that many of you who be¬
however, that it was of no profit
came familiar, first and foremost,
to Adam and Eve.
with procedures adopted for the
The forces which would infringe
management

Detroit

our

liberties

Our

are

country can

what

should

its

be.

not

But

in

"ial

BOSTON, MASS.
Coveney and Louis

ch-onucle)

determine

the

matter

it

of

f

.

John J.
P. Schultz

—

have become connected with John

G.

Sessler

&

Co.,

Square.

10 Post
-

Office
1

Inc.

irresistible.

be substantially

citizens

Two With John G. Sessler

"

BOSTON, MASS.—Colonial As¬
sociates

Inc.

has

been

with offices at 49 Federal

formed

Street.

peacetime determining what it should be, The firm will act as distributors
lifting power of
be°n a^ndp^t a^d
play and widespread oppor- widely distributed. Why then, in activities. There is the added dan¬ there are some conditions to be of Gas Industries Fund,
'/• '




Volume

Number 4828

170

THE

COMMERCIAL

&

FINANCIAL

CHRONICLE

(577) ' 33

of the world could

that time, we had just com¬
pleted the transfer of about 600,000 bales of surplus; cotton for

At

(Continued from page 9)

;

v

francs, guilders,
zlotys and lira, but to buy
they must have United

: marks,

yen,

crowns,
our

nearly 90,000 tons of

couon

white

pure

States

dollars—money that

crude rubber in slab form

spent

in

from

lies
as

the

can be
th's country.
Therein
difficulty—theirs as well

It

ours. -

that
the
est

big

the main problem

was

war

How

to

dollars

get

cotton?

to

mills everywhere

is

abroad

of

part

national

our

a

supply

broke out and

sourcefulness

and

than the world produced.

business.

overseas

their

re¬

their

to

inge¬
nuity. It is a type of operation
adaptable to private trade.
We
would
welcome
suggestions
on
how
to
best
develop this new
business

and

will

we

entertain

were to

ther, world

production

had

Fortunately, 1
had at that time an

increase.

to

believe,

we

unusually good
time

the

The

say-

benefits secured from

that

The danger I see lies in becom¬

ing

complacent.
ourselves

cern

accumulation

We

must

con¬

the

about

more

of

of

have

world

of

been

came

consuming

just at
mills

warned

I

re¬

continuing supply

a

cotton

raw

It

adequate

Our

large

looked

to

meet

crop may

by some
In retro¬
spect, I believe the excellent yield

as

a

upon

calamity.

near

made when the War ended to

surplus stocks.
of last year will be
regarded as a
and means of
good thing.
What was not needed
converting our valuable surplus
was the increase in planted cotton
resources
into something useful
acreage in the United States this
and
beneficial to the
American
year.
An acreage about like that
economy.
To sit back, wait and
oi last year with normal yields
do nothing is a down-nill road to
would have been about right.
disaster.

elsewhere in Europe told me only
a few weeks
ago. The same situa¬

exchange some of our surplus cot¬
ton for something more benefi¬

The larger crop just referred to
in the United States together with

tion is true with respect to China

cial?

and

of how to reach the markets that

for cotton textiles.
The ravages of war had left the
world outside of this hemisphere
poorly clothed and ill-fed. Many

exist.;'

countries had acquired U. S. dol¬

,ing.

They add, "I have
kind

our

exchange

money—

of money—but I cannot

have

program

never

exchange it for dollars—American

been in doubt—from the very out¬
set of the War.
It was all to the

dollars.

good.

What

I do?"

can

This :'s what textile mill

had

owners

a

We must think in terms

I'';;'

'

•

lars

American cotton

exports have

the Lend-Lease

Program.

It

by

the

men

Export-Import

of

So it

the $60,000,000 Japanese loan and
'the $150,000,000 Federal revolving

fund.

Now

we

have the ECA pro¬

During the first year,
1948-49, around $400,000,000 was
gram.

under

this

coming
coming

the

season
season

annear
appear

now

now

■

)he view

1

is

able

going to

to

sell

customers

pay
I am

earned dollars?

know.

I

do- in

what

th ere

the

we

volume

with

to

I don't

sure

anything

meantime

more

doing?

are now

can

we

than

I think

should look carefully to see.
The situation we face demands
we

that that

be

we

getic and

resourceful,

ener¬

ur,dertaken.

and

that

were

that

good idea to

exchange goods of which
goods which

Agriculture
business
all wrong.
Others

if

we

we

of

textile

the

was

sure

foresaw

undertook

we

would

see

the

the

time

would regret having done

But

fortunately courage and
optimism
prevailed.
The
ar¬

so.

rangement was undertaken /and
successfully carried to com¬
pletion. It was a very profitable

was

operation to all parties concerned.
There

are no

critics of that pro¬

gram today.
Like the cotton-forrubber exchange on the eve of

Exchange of Goods
a

others

Department

getting into

courageous.

Would it not be

Some took

that

shippjng cotton to
newly occupied enemy territory
was a £reat risk to° hazardous to

their business

afraid it will not be

am

Is

soon.

again be

we

in

cotton

who

the final

be

will

When

Pearl

Harbor, it stands fully ap¬

Regaining the German
Japanese markets for Amer¬
ican cotton over synthetic fibers
proved.

have
need

and

but do not possess?
You may sav
we have been trying to do that all

and

we

too much for

along.
the

we

We have, it is true.

results

are

less

than

But

desired

largely because of the world

cur¬

foreign

garded

cotton is

grown

re¬

accomplishment

an

as

worthwhile.
Now

about

what

is what I

rency

That

just

the

future?

leading up to.

That is my

situation- of which I have
spoken.
If we have more

cotton than

we

need, the surplus

Any discussion
kets

for

world

of

cotton

mar¬

requires

some

analysis of the world cotton situa¬

the reduction in cotton consump¬
tion of more than a million dur¬

ing the

am

main point. What are
going to be our views and atti¬

has lessened the

season

manufacture

goods

rayon

for

export to this market.

Furthermore, this decline in de¬
mand

for

countries.

likely

other

to

deterrents to

in

the

will

but

will

act

further increases

manufacture

export,

be

to

consuming

These factors

as

effect

is

rayon

extended

of

for

rayon

have

but

little

manufacturing programs
meeting the fiber require*within the country.
Thi3
latter outlet for rayon goods will
be by far the largest and most
important.
on

for

•ments

ways

Cotton Situation

In this discussion of world
marr

kets

to

for American cotton,

point out
should

we

of

some

continue

the future,

with

ing attention
lems

than

take

courage

in

to focus¬

main

the

on

confront

things

watch

view

a

I tried

the

to

prob¬

Let

us.

us

in the future, be
more
optimistic about what it
holds, and make full use of every
opportunity.
The situation re¬
quires that kind of attitude. It
.

ending has re¬
regarding is the basis from which much
good
reduced
carryover
stocks.
The work can
You will remember during the
begin.- We have already
world carryover at the beginning
accepted the challenge and the
period of the 1930s that more cot¬
of the new season, next Monday,
ton was produced in the world
goal is not beyond the realm of

tion.
By way of review I should
like to recall the trend* of events.

than

consumed.

was

resulted

in

That

this

accumulation

an

of

carryover stocks that exceeded on

world basis 23 million bales by
the time the recent European war

season now

versed the world trend

is expected

lion

bales

million
This

to be about 15.1 mil¬

of cotton—up about a
from a year ago.

bales

is

not

carryover.

it should

But

food

result

that

was

when

the

war

ended the world carryover of cot¬
ton exceeded 28 million

bales, the

largest
than

record

on

far

and

more

in

being planted

not

be

in the

the 1945-46

year

season,

the

after

than

This

world.
over

the

a

world

in the

the

like amount.
year, the 1946-47

by

second

reduced

again

is

of

could

sive.

the world
again become

cotton,
There

are

exces¬

number

a

now

carry¬

of

point in that

direction.

the world

produced

was

This

carry

the

In

season,

consumed

of rayon
been

on

the end

more

than

S.

the/desirability

of main¬

taining cotton stocks in amounts
equal to about four months-mill
consumption.
This amount
of

in

se¬

vision

oi

and women

Hunter

College,- it

was

announced by Professor Broderick
Cohen, Director. The course will
be

taught by Leonard Fischer of

Merrill

Lynch. Pierce, Fenner &
Beane, who was formerly assistant
to the manager of their Securities
;*The

■'.*

which will cover
throughout the world has stock market trading, Investment
an
upward trend since planning, types of securities and
of the war.
World pro¬ sources of financial information!,•

is generally known, the use

by

shows

course

men

Research Division.

Synthetic Fibers
As

duction of rayon in 1948 exceeded
was
produced, this the
production in the last prewar
nearly 7 million bales. year by 10%.
The present ca¬
In the following season, 1947-43.
pacity to manufacture rayon is
world
consumption
again about 50%
larger than the amount
exceeded production and by
of rayon produced last year.
In
nearly 4 million bales.
By this Europe and
Japan, manufacturing
time the record world carryover
capacity for rayon staple fibre is
of cotton of 28 million bales Of
twice as large as the quantity of
three years earlier had been cut
rayon produced in 1948 and this
in half.
It was down to 14 mil¬
capacity for continuous filament
lion
bales.
Meanwhile,
work yarn is about 40% larger than tne
consumption of cotton had in¬
quantity manufactured last year.
creased about 20% and the 14
Most of the excess capacity in Eu¬
million bale carryover was
only rope is outside France and Great
enough cotton to last the consum¬ Britain.
In France and in Great
ing mills of the world six months Britain manufacturing
plants are
The carryover in the United States
being run to near capacity.
A
had been reduced by much more
large increase in Great Britain's
than half from over 11 million
manufacturing capacity is now re¬
bales to about 3 million bales—
ported taking place.
an
unsually low figure.
The imperative need for all for¬
Our experience in supplying the
eign countries to conserve their
German and Japanese cotton tex¬
scarce foreign
exchange, such as
tile mills since the war clearly
U.
cotton

time

An adult education

curity investment will be offered
by the Evening and Extension Di¬

consumed 4 million more bales of

cotton

cotton.

Bourse at Hunter

again

production and, without an
e:qual rise in the world consump¬

indications that

During the first

is

/

Security Investment

cotton

over

were

to

resource¬

adding to the rising trend in world

enough to supply the whole tion
an entire year.
Eleven

United States.

countries

active

an

this fall for both

world for

million of those bales

some

realization for

ful people resolved to see the job
well done. ;.v
;
../■

world

excessive

an

a

war,

remember the

you

*hat proposed deal.

the

What
answer?

was

criticism that was leveled against

United,fce

States Government.

to purchase it

we

Perhaps

good.

So, all in all, financing cot¬
ton for export has been and still
is
in
the*hands of the United
is
in
me
Hands
ot
Uie

the

with the money to-pay.

during I

program

nor

to the countries in vital need and

advanced for the purchase of cot¬
ton. Prospects for increased
ness

cotton

raw

only natural to suggest
ship the remainder of our
surplus cotton—much of it dregs
from previous years' accumula¬
tion—to the occupied areas and
take payment in textiles; then, in
turn, we would sell those textiles
that

through

cotton,

neither

funds with which

which accounted for around $215,-

worth

for

about

increased,
With world, food de¬
began.
You may also remember
mand now being better met than
that during, the war cotton pro¬
it was a few years ago, some of
countries had the machines
duction dropped abruptly and tnat
the acreage previously devoted to
and the know-how, but they cotton
consumption did also. The

had

Bank and the German and Japa¬
nese
cotton-for-textiles program

000,000

not

was

during the

torn

was followed by the $100,000,000
special cotton loan program an¬

nounced

it

but

They had the money to pay for
cotton textiles, but the War had
brought cotton manufacturing
virtually to a standstill in Europe
and nearly so in Japan.
The war-

largely been financed by the Fed¬
eral
Government
and
through
programs carried on by the Fed¬
eral
Government.
First, there
was

time

proposal that

their

us

in 1945

war

a

war by shipping
goods or by providing
facilities for our military forces.

>.■)"' What Has Been Done
Since the end of the

a

This

rubber,

So,

v:'

such

was

it is not simply
question of finding a market for

cotton.

splendid to have
good foresight. But

was

what happened to

in France, Italy, Spain, Czecho¬
slovakia, Poland, Germany and

Japan.

It

More

to

cotton

of

of cotton in

crop

when

around

increase fur¬

,

the United States.
a

their needs.

was

If mill

consumption

assurance

war

of the military establishments for
safekeeping and essential use.

what

are

rubber constituted

challenge to

a

Credit Corporation to the control

for

pay

That

Malay

raw

on

is

opportunity of European countries

no longer con¬
"substantially "more cotton

sympathetically sound proposals
transferred from the Commodity for specific business, transactions.

problem since the War's close.

^American

of

when the

faced in the years before
and it remains our great¬

we

the

stock

shipped
States.) This

salesmen

This

States this

sume

Expanding World Markets for American Cotton

■

course,

is being added to the Hunter Col¬
lege evening curriculum in recogn¬
ition

of

terest

in

the

growing public in¬
problems,"

investment

Professor Cohen said.
Fischer

'Mr.

will

that

explained

addition to the

lectures

in

which he

give, arrangements have beenfor
outstanding specialists

made

in the field to

Instead

of

be guest speakers.

using

academic text
books, those attending the course
provided with investment

will be

material
actually
being - used
week-by-week in the financial in¬
dustry.
'
^ /
In addition to his practical ex¬
perience, Mr. Fischer taught Eco¬

nomics at City College before the
war.

He holds

from

Master's Degree

a

Columbia

and

lectures

-on

investments at the School of Com¬
merce

of City College.

.

dollars, tends to increase the

pressure

to

raise

the

output

of

Most countries either pos¬
most of the raw materials

rayon.
sess

With Paine, Webber Co.
(Special to The Financial CheonicleK *

LOS
required to make rayon, such as
ANGELES,
C A LI F.—
necessary in order to
wood
pulp, coal, and sulphuric Clarence H. Staples is now asso¬
Why not then exchange this sur¬ welfare is bound up in the future. sustain mill operations at any
acid, or can buy these materials ciated with
plus with some foreivn country
Paine, Webber, Jack¬
given level of production.
Thir
Cotton for Strategic Materials
with the soft currency they have.*
that is unable to buy cotton from
past year's experience under the
son
& Curtis, 626 South Spring
It is therefore much easier from
The recent amendment to the
us?
Take something they have
ECA program has also shown the
a
financial point of view to fi¬ Street.
that we need.
Credit Corporation'j? same
Would it not be Commod ity
thing.
It therefore seems nance the
charter has given the corporation
manufacturing of rayon
better to have our funds invested
clear
that a
desirable
working
than it is to finance the imports
in something that we want and authority to undertake programs stock of
cotton is equal ;to about
With King Merritt & Co
tion
of
raw
cotton, especially;
exchanging sur pi us farm four months' mill
need either new or in the future, of
consumption. American cotton
(Special to The Financial Chronicle) f that must be
than to have our money tied uo in products for strategic and critical
Any
smaller
supply
definitely
SAN
FRANCISCO, CALIF. —
paid for with U. S. dollars.
There are more than
surplus cnttoo—a commodity that materials.
tends to restrict mill operations
50 kinds of such materials listed
On the other hand, however, Philip B. Taylor has become con¬
we can a'ways produce in plenty?
Restrictions of this sort, a short¬
on the active procurement list of
(he lower level of cotton prices nected with King Merritt & Co.,
I would Fke you to recall the
age in the supply of raw material,
the
military
munitions
board.
quickly stimulated the production during the past season has made Inc., 220 Montgomery Street.
authority given tve Department
He
This- new authority opens up a
more
competitive
with
of Agnntiiture by the Congress in
of synthetic fibers—the alterna¬ cotton
was
formerly with Hannaford &
new
field of activity for opera¬
Still, rayon has
1939.
tive raw material—the substitute rayon pricewise.
We were authorized to ex¬

is

of

no

particular benefit to

us.

tudes

about

it?

For

our

whole

cotton

is

^

»

j

change surplus cotton for rubber
with
Some
that

British

the

doubled the
program

at

Government.

advisability of
t^at

time.

I

know, for I wa* then in Com¬
modity CredH Corporation and
was
helping handle it. Some heH
visions
was

and

of

failure

hard +o

regret.

It

the opportunities

see

benefits.

and

I

remember

how

views changed after Pearl Harbor.




tion.

Its future depends upon our

clear

vision

the energy
sued.

of

possibilities

and

with which it is

pur¬

1 say "we"

because it is

a

chal'enge to everyone in the cot¬
ton business.

We

should

look for and should

receive much help from those en¬

gaged in merchandising and ship¬
Their business is to
negotiate trades.
They are the

ping cotton.

for

rav/cotton./

At

this

of

stocks

only

six

ments.

time

■

last

cotton

months'

Some*of

year

down

were

mill
this

-been cheaper than cotton in such
world important consuming countries as

to

require¬

was

extra

the

United

Great

States,

Britain.

France

and

Any further low¬

long
staple
Egyptian cotton ering of world cotton prices dur¬
clearly in excess of world needs ing
the
coming
season
would
as was also some of the very low i
make
cotton
more
competitive
grade short Asiatic type cotton |
with rayon.
The decline in the
in
India and Pakistan.
It
evident

therefore

that

the

wj»S| demand

mills.

for

textile in the United

Talbot.

Investment Service

Corp. Adds
(Special to The Financial

COLO.

DENVER,

Chronicle)
—

Paul J.

Lundberg and Howard D. Warren
are

with Investment
•

Service Cor-

Thursday, August 11, 1949

FINANCIAL CHRONICLE

&

COMMERCIAL

THE

(578)

34

fl

is

it

time

10 stocks, seven make
That's
daily lower prices. The three

say

Tomorrow's

that don't are in the averages.

sentence

a

me. I've
before.
I

original with
somewhere

Markets

Walter

There's

By WALTER WHYTE=

greater

Top signals becoming
market

as

the

of

action

The

few days —
last Saturday

tape in the past

particularly
and

Stocks went up

in

seen

a verve

that hasn't

long
news fa¬

was

advance.
In
apparently
swept clean of all clouds. The
voring further

the sky was

fact

ahead

road

The

clear.

was

overwhelming sentiment was
get aboard before it was too
late.

realize

*

*

the

mixed meta¬

I put

are confusing.
them in because it is

ac¬

an

board

of

reflection

thinking, a condition
frequently a source
of considerable amazement.

room

which is

*

*

%

*

everybody is bullish

take

by a policeman. Thieves and
crooked gamblers may

of pump priming, so
much decried in the years of
the Roosevelt New

Deal, are
back again. This time it isn't
gigantic WPA projects. It is
something else. But what¬
ever
the objective there is

may

Commun¬

picket courts and seek
juries; but police¬

may

intimidate

interfere

not

must

men

with

Massed armies
of pickets may terrorize workers,
destroy business and beat up men
who want to work; but the na¬
tional government must not in¬
terfere, unless citizens outraged
b.y lawlessness take the law into
their own hands. Then there is
cheir free

speech.

clamor for the national

great

move in to make
that the constitutional rights
are

Constitutional Inconsistencies

not

do

Please

creeping ad¬
few weeks.
upsurge is the
by public par¬

froth

caused

ticipation,
kind of

a

danger to
The
made

a reflection of a
bidding that spells

me.

high for the
when

trials

crossed

brought out
ing. Yet, if
of

made

move was
Dow Indus¬

the

181,

—

which

still new buy¬
a close study be

individual

rather

than average market action, it
will be discovered that out of

I believe

me.

tional

rights

cused

of

tected.

Orders Executed

on

Pacific Coast Exchanges

Schwabacher & Co.
Members
New

New

York

Stock

Exchange

York Curb Exchange (Associate)

San Francisco

Stock

Exchange

Chicago Board of Trade
14 Wall Street

OOrtlandt 7-4150

New York 5, N. Y.
Teletype NY 1-928

Private Wires to Principal Offices

San

Francisco—Santa

Barbara

Monterey—Oakland——Sacramento
Fresno—Santa Rosa




such

Congress power to
create
a
new
civil right.
On the

the

the

10th

free will to select his em¬

no

Would this be involuntary
Apparently not, if the
Supreme
Court should approve
the
present
arguments
of
the
FEPC advocates, because in a law
forbidding discrimination against
an employer the employee would
have the same right that an em¬

sires,

first

and

the

in

the

all

should

be

of

curb

the

breaks

a

breath

work

rare

in

out¬
the

stop

ancient

our

wave

out

the
that

few
still

remain between us and the deluge.
"The Anachronism of States

greatest constitutional bar¬
against the tyranny of na¬
so bat¬

The

tional socialism has been

play is
by the

of

association in

clearly
people

This is

an

a

of

right
the

individ¬

ual right

which not only protects
association
but
also
must forbid any compulsion to as¬
sociate.

Otherwise

it

would

be

or to
refuse
with each other.
Fair

compel

Strange

to

Employment Practice

tyranny

Legislation
FEPC

Clay, "Jefferson

Henry

Calhoun,

Davis, .and all their ideas of state
sovereignty are supposed to be
forever and completely buried.

the political
principles of Thomas Jefferson are
still regarded as so vital and en¬
during that political partisans of
every stripe from conservative to
association radical acclaim his wisdom. Yet
no
man
exceeded
Jefferson in
hatred and fear of the inevitable

meaningless. If I could force my
companionship on you, then I
could destroy your freedom. You
and I must have equal rights to
accept

youthful ears any assertion of
States' Rights sounds like a voice
from the tomb wherein John C.

ment.

It

of
was

say

is

another

new

look

of

jority

of

the

people to special
which are granted to
a
politically
strong
minority.
Every
lawyer knows
that the

privileges

Constitution

does

not

grant

a

single

right to any minority of
It only grants rights to
to individuals; and every liberty
guaranteed is the liberty of an

legislation, which would that—"A
single consolidated gov¬
one man to employ an¬
ernment would become the most

employ,

tutional

contracts.

But, so far as I am
this is the first instance of
attempt to compel a man by

aware,
an

law to make a contract with a per¬
son

with whom he does not wish

to make

a

contract.

persons.

And

so

it follows that

minihg,

education, the practice of medi¬
cine, and the unknown, glimmer¬

social

No one can doubt that

government

national

the

such

an

of operations for

field

extensive

was

Indeed,

a

contract under which
to

employer would be forced
serve
an
unwanted employee
an

so

closely resembles a contract under
right and mine must be ex¬
which
an
employee would
be
actly the same.
Yet, we hear
forced to serve an unwanted em¬
solemnly proposed, and endorsed
ployer, that involuntary servitude
by political party platforms, a
Federal law to compel business appears to be the result in both
cases.
Even labor laws, which re¬
men
to
employ workers whom
quire bargaining and affect the
they do not want to employ and
scope of contracts, do not compel
to compel workers to work with
a
man
to make a contract.
But
men with whom they do not want
FEPC laws, making it an offense
to work. This is called in uncon¬
to refuse to hire an applicant be¬
scious irony a "Fair Employment
cause
you don't like him, would
Practice Act."
cut the
heart out of liberty of
The announced purpose of such
contract.
If such a law be held
a
law is to protect the alleged
constitutional then where is the
civil right of persons to employ¬
constitutional barrier to complete
ment which might be denied to
political control of labor?.
them because of race, color or re¬
Organized labor may in time
ligion. There is not one word in
learn this lesson, as it learns so
the Constitution establishing any
many lessons — too late.
Labor
such right. And so the drafters of
fought successfully for years to
the
Federal
bill
thoughtfully
stop discrimination by employers
wrote in a provision
by which
Congress would undertake to es¬ against union members. But, when
recently laws were passed to for¬
tablish this non-discrimination in
bid a closed shop discrimination in
private employment as a civil favor of union members, the

Better

Have More and

Should

Local Laws

told that the social
conditions of 1787
disappeared. We live in an

But,

we are

and economic
have

civilization,
with
industries of 150

industrialized

and

lives

the

million

into one
by transpor¬
communication facil¬

people

national

and

tation

woven

enterprise

ities unknown to

forefathers.

our

become

have

We

so

interde¬

pendent upon one another that, it
is argued, only national laws can
centralized govern¬ insure that cooperation and har¬
Jefferson who wrote mony which are essential to our

corrupt government
on
earth,"
also violates the consti¬ and who
prophesied that the road
liberty of contract to a to destruction of the United States
Constitution
affecting civil
degree
never
before attempted. would be
liberties
which
I
"by a consolidation first,
deplore; and Laws have been enacted
making
and then corruption as its neces¬
that is the tendency to subordi¬
certain contracts illegal, or con¬
nate the civil liberties of a ma¬
sary consequence."
trolling the form or substance of
There

the

merchandising,

housing, with national ten¬
tacles
stretching out to control

and

and economic security?

other whom he does not wish to

South.

work,
agriculture, the growing
and marketing of crops, manufac¬

ing, beckoning objectives of

Rights"

rier

that

relations, wages and hours of

bor

how

whenever turing,

over

-barriers

constitutional

about

come

this profound principle is
ignored
and
we
have national
laws regulating such matters of
intimate and local concern as la¬

landmarks

away

breaks

it

has

How

today

point

washed

be

this

for the

safety, welfare and permanence of
the Nation as a Nation."
*
,

have said too much
but since this hor¬
rible prospect is riding high on
the tidal "wave of the future," it
to

with or

absolutely necessary

less

I

well

to interfere

government

administer their local affairs, un¬

livelihood!

seems

conducted

be

could

and

otherwise; and they were not in¬
clined to authorize such a central

FEPC,

voluntary

demands

lawlessness

been

tered by storms of reform in

to the people."

freedom

or

Federal law to

comparatively
of

be free to

would

government had

centralized

and

ployer now has under FEPC. He
would not be "actually compelled"
to make a contract of employment,
a

or

last 50 years

be

of

next

passage

or

man

ac¬

the prejudices Of the gov¬
they knew that a distant

erned;

because he

ex¬

and they intended to
preserve the principle, that a local
government is a responsible gov¬
ernment — a
government which
can
never
long be conducted in
defiance of the opinions, the de¬

servitude?

earning

from

knew

framers

the never contemplated by the au¬
that when its broken thors of the Constitution. No one
And, most decisively, the 9th
reef occasionally appears eveh can doubt that they deliberately
Amendment provides that:
scholarly critics refer to it as "the denied any general police power
"The enumeration in the Con¬
anachronism of States' Rights." The to the national government which
stitution of certain* rights shall
new look
of the Constitution has
might authorize the extension ' of
not be construed to deny or dis¬
been fashioned in the image of its authority into such realms. It
parage
others retained by the
headstrong
youth.
The young- was James Madison who wrote
people."
man - in - a - hurry commonly as¬
in
"The
Federalist"
(Jan.
29,
There is no more elementary
sumes that the 14th Amendment,
1788): "The powers reserved to
right of any free people than plus the national money power the States will extend to all the
"freedom of association."
There
granted in the Sixteenth Amend¬ objects which, in the ordinary
is a fragment of this right spe¬
ment. plus the judicial enlarge¬ course
of affairs, concern the
cifically preserved in "the right ment of the national commerce
lives, liberties and properties of
of the people peaceably to as¬
powerf have made the States hope¬ the people and the internal order,
semble," which is protected by lessly subordinate to, and dependimprovement and prosperity of
the F^rst Amendment.
But, the
•
enteupon, national law-making. In the State."
^

spectively,

every

pro¬

"The

perience,

ployer.

Amendment

reserved to the States re¬

are

should

of

crime

law

tion

United States.

the

believe that officers of

I

individual.

Securities

the

constitu¬

that

compelled to obey the law.

.your

Pacific Coast

has

rapidly

retained

>

of the past

word

overall

misunderstand;

But,
little doubt but that Amer¬
I do detest the political hypoc¬
ican industry will benefit.
risy that proclaims that murders
and organized crime by gangsters
and
labor
gorillas in Northern
The market, however, has cities must be dealt with
by the
anticipated this latest devel¬ local police, because a Federal
law
would
be
unconstitutional;

opment by its

ployes, then day after tomorrow
it may be held that the employee

will

However, there is not one
in the Constitution giving

right to exercise

no

of our

student

profound

a

Constitution:

will in selecting his em¬

his free

the telephone; but

use

to

right.

ren,

it should be held that an

morrow

Perhaps

spies
mis¬ provides that:
policemen
"The powers not delegated to
not intrude on the privacy the United States by the Constitu¬

and

ness

current

the author only.]

contrary

During the past week
of the original law-breakers
developed that the old busi¬ protected.

The

of the
presented as

(Continued from page 13)

profitable crime it is a long, long
day. Gangsters may slay and tor¬
ture; but even the most notorious
must be handled with kid gloves

sure

vance

at any

those

The New Look of the Constitution

the government to

news.

:

are

appealed

about

a

let's

all

of

First

it

"When

those of

with

They

Chronicle.

ists

phors

curate

not necessarily

do

coincide

time

*

*

•A«

of their conversations.

,

*

article

sold."

to be

a

many

There

month.

the

is

onlookers.

with

assurance

an

•been

I

has

Monday—must have been

quite gratifying to
and

heaviest

always spelled danger. It sold.
More next Thursday.
sort of action which
—Walter Whyte.
brings to mind that old mar¬
[The views expressed in this
ket cliche, "stocks are issued
ticker

draws in

upsurge

buyers.

new

good they are. Actually
participation is everybody around you agrees.
It's hard to shy away from
■n stocks which haven't done
the crowd. It is just at such a
very much in the past few
weeks.
This kind of action time, that stocks should be
how

che

in vain to the
Supreme Court to declare such
laws unconstitutional.
So, if to¬
unions

know, employer has

talk about the auto stocks and do lone wolf tactics pay off.
It's easy to be bullish when

Whyte

Says—
=

read it

of however, that in few places

deal

great

a

stock."
that isn't

take

to

Also he wrote: "It is not by the

consolidation

concentration of

or

In a
told that the na¬
tional government must exercise
a
police power superior to the
police power of the states; and
by legalistic magic such a power
is being transmuted out of the
national power to regulate com¬
safety, health and welfare.

word,

we

merce

among

out of the

are

the several states, or
national power of tax¬

ation, or—with the ghost of Mad¬
is effected. ison violently protesting—out of
already the "general welfare" clause. •
divided into states, that division
If, however, we should "recur
fundamental principles," we
must be made that each might do to
for itself what concerns itself di¬ would see that, while these social
rectly, and what it can so much and economic changes may seem
better do than a distinct author¬ to call for more national law¬

powers, but by their
that good government

Were

this

not

distribution

country

ity."
(Writings <of Thomas Jef¬
ferson;
H. A.
Washington
ed.
VI-543; VII-216, 223.)

making in order that

the Ameri¬

people may be efficiently
governed, they more insistently
demand more local law-making if
In his First Inaugural Jeffer¬
the American people are to con¬
son called for "the support of the
tinue to govern themselves,
c
State
governments in all their
rights, as the most competent ad¬
A Government of Pressure
ministrations
concerns

against

for

our

can

domestic

Groups and Political
Traders

and the surest bulwarks

anti-Republican

tenden¬

government of 150
has already be¬
and will remain, a govern¬
of pressure groups and po¬

million
The principle of
ernment

local self-gov¬

written

was

into

the

Constitution, not merely to induce
the separate colonies to agree to
the creation of a Federal union,
but

primarily to
maintain the
responsibility
of
a

democratic

government which resides close
to the people who are governed
and which is
immediately sub¬

ject to

their

control.

Let

come,
ment

litical

fense

and
to

has

the

of Charles (War¬

traders.

A central govern¬

has

a

clear

spending bil¬
national de¬
objective ancF

unquestioned responsibility. But,
a
central government, gathering

quote the pene¬

trating wisdom

people

ment, gathering and
lions of dollars for

scrutiny and their
me

;

central

A

cies."

r

spending
the

billions of

dollars

general welfare,
dubious objective- and

advance

the

questionable responsibility .of

taking from one man to

give'to

Volume

Number 4828

170

THE

another, of robbing Peter to pay
Paul, of satisfying those pres¬
sure
groups
that may
deliver
than

votes

more

the

pressure

groups unsatisfied, of feeding cit¬
izens who ire vocal and organized
the

at

of

expense

citizens

who

dumb
and
unorganizedk of
paying for the votes of classes and
communities that will support the
party in power, out of the pockets
of the opposition. This is, bluntly,
that present corruption of gov¬
are

COMMERCIAL

&

FINANCIAL

CHRONICLE

greater

powers
to promote the individual
liberty
and
genuine
self-government will fade out of
to enlarge its authority. If the Constitution and out of the
they believe that more local self- lives of the American
people. But,
government is essential to their if that
golden dream, which in¬
liberties and their pursuit of hap¬
spired the writing of the Consti¬
piness, they will find the way to tution, and inspired the American
enlarge the authority of the states, people / to lead the advance of
and the municipalities.
civilization
for
more
than
150

general welfare they will find the
way

ate

in

the

gas men's

(579)

role

of

in

professional

a

society, with

some

5,00C

Our

annual

makes
size

the

of

budget runs ap¬
$3,000,000.
Thir

Association

its

average

member.

The

about

gas

£

ion, i level.

company

Association

operations

of

the

and

people

anxious

to

are

in¬

have

a

ting and distributing its product.
The
lost

manufactured
its

industry

gas

,v;
On the other hand national mis¬

where

the

people

neither

want

no# deserve such government. For
pertinent example, Virginia is

a
a

state whose citizens

as

a

ufactured

bilities

during

the

whole

The

and

of

these

a

spirit

of

companies

The Outlook for the

pre¬

branch

exert-

the services they render.

and

The

manufactured

to

upon

newness

vious year.

seven

for

these

million

coopera¬

tion with its ally, the oil industry,
continues to build up proved nat¬

asked

from

these
expenditures during
past, but would point to the
important steps which have been

the

takm to

bnng about

even

greater

results in the future.
I w uld point out that one com¬
mittee of the Association now has

the

final
responsibility for the
planning of all of the Association's

work,

icsearcn

the rate of
a

I

year.

running

now

at

approximately $800,000
would

that

state

an¬

other committee has the final

re¬

sponsibility for the planning anil
conduct

all

of

of the

Association

advertising and sales promotional
activities, now running at the rate
of $1,200,000 a year.

emphasize

And I would

particularly

the

fact

that this latter committee also has
the obligation of
coordinating and

integrating all these promotional

dol¬

activities

This is
in addition to the $600,000 spent
annually for customary trade as¬
purposes.

only

of

with

the

each

Association

other,

not

but

with

sociation

similar activities of the gas appli¬
ance
manufacturers and the gas

of

companies.

activities.
The volume
these' special and additional
cooperative efforts has placed th<~
American

Gas

Association

at

In

the

light of all that I have

said,

we at Association headquar¬
ters feel that the gas utility indus¬

th'

head of 64 national trade associa

Industry

industry, in

gas

~

lars

one-half

and

a

fell below the vol¬

gas

marketed

ume

majority of manufactured
companies may be expected to
inject an important leavening ef¬
fect :: upon their economic possi¬

basic

lighting load be¬
tween 1888 and 1910; but
gained
other markets at such a pace that
government, entrenched in one
there were only two'years during
part of the country, spreads its
evil authority over another part this period when the sale of man¬
change.

of

gas

were

future,-1 would not cite the
accomplishment that have come

Important Aspects
oi Gas Industry

formed

But if I

the

now

-

majority

production, dis-

^oint out the most important
signals of industry progress in

Herbert

was

of

to

(

ranks
among the 10
largest ir
Spencer who years—if that dream still inspires
the
United States.
This seerrv
said that—"No philosopher's stone
them, they will reestablish home
appropriate because the gas util¬
of
a
constitution
can
produce rule as the only trustworthy guar¬
ity industry ranks sixth in poin
golden conduct out of leaden in¬ dian of their
liberties; and they of invested
capital.
ernment which Jefferson warned stincts." If the leaden instinct for will never cease to
fight against
In 1944 the Association set ur
was
inevitable after' centraliza¬ economic security so dominates that
centralization
of
power a new
program for enlarged pro
the common thought that men and
tion.
which,
as
Jefferson
said, "has
motional, advertising and research
Isn't this also a defect of all women are willing to accept the destroyed the
liberty of man in activities.
The objective was tc
local governments? Certainly it is paternalism of a national welfare every government which has
ever
raise an additional million anc
a
defect of all popular govern¬ state, then the golden dream of existed under the sun."
one-half dollars a year from gar
ments.
But there are many re¬
utility companies to enlarge the
deeming virtues in misgovernment
industry's research, promotional
by; cities, or counties or states.
and advertising activities in order
First, they provide the kind of
to advance the growth of the in¬
misgovernment which the people
dustry.
The plan was to double
wfyo are governed want, or de¬
the Association's national adver
serve. Second, they are so close to
tising, to quadruple its promo¬
the people that their misdeeds are
tional activities and to increase its
(Continued from page 8)
easily seen and exposed. Third,
research work to an even greater
the responsibility of their public ability—adaptability to changing last 20 years.
The natural gas
extent.
This Plan is now in itofficials
is
direct
and
obvious. markets—to changing supplies of branch itself thus constitutes
a
fifth year and the Committee ir
raw
materials, and to- changes in young and growing industry and
Fourth, a bad local government
charge has raised approximate^
can
be
changed as soon as a methods for producing, transmit¬ its integration into the
It

fields

auvertismg ana promocuring recent years by these
efforts of the
industry on the na-

individual members.

proximately

the

35

try

has only

begun to

and

tions in the matter of cooperative

programs.

capitalize

upon

tialities.

The activities of the Association
believe in economical government. the industry has long followed the
But, its Senators and Representa¬ policy of utilizing the type of raw ural gas reserves by finding more as a whole are so numerous an '
multifarious that it would be an
tives in Congress are powerless to materials
and
the
production than enough new gas each year to
imposition upon your time anc
save citizens of Virginia from the
processes which result in the low¬ replace what
the country uses.
taking arid spending of their in¬ est cost for the manufacture and As I have indicated, this proced¬ attention to give you" even a brie
Instead
comes
by the National Govern¬ distribution of a refined form of ure may be expected to continue listing of each of them.
I will place you for the moment ir
ment in a spendthrift paternalism heat
How¬
energy in a given community. for the foreseeable future.
the position you would be as one
that would not be tolerated with¬
Beginning with the production of ever, it is unlikely that the tre¬
of
our
member companies an
in their own state.
gas from coal, the industry has mendous
price
advantage
that
Consider
for
a
moment
the greatly increased its repertoire of natural gas has enjoyed over coal give you a quick picture of wha
we do with the membership arc
regulation of labor relations by production processes to encompass and oil can continue indefinitely
subscription payments that yov
the Federal Goyernment. The the cracking of oil to produce at present levels.
The price of
would forward us.
;
pressures of organized labor come blue gas, producer gas, oil gas and
gas
at the well has been low,
Much
has
been
accomplished
from the industrial centers of the carbureted water gas.
Catalyth selling at around five cents per
nation, and largely from a few and thermal reforming have been thousand feet until recently when
great industrialized states. The added to this list in recent years price increases began to develop.
people who inhabit the vastly and within the past year the Hall Transportation and distribution of

With

recognize

its full poten¬

the

continued

support of all elements, we be¬
lieve that the outlook for«' this

133-year-old

industry

bright

it is today.

so

as

Association

The

was

never

publishes

an

Annual Report which summarizes
the
year's progress in
all
the

fields which I have mentioned.
have

a

few copies of the

port with

1948

I

re¬

and I will be glad

me

to distribute them to any who are
interested.

'

V

Sees Government

lafger area of the United States regenerative

for produc¬ gas is also expensive, so that
are
economically a n d socially ing 1,000 B.t.u. gas from 13% car¬ builders of pipe lines must watch
antagonistic to the monopolistic bon oil has been developed and and carefully evaluate their mar¬
demands and oppressive practices perfected.
kets before stretching their in¬
of'labor unions. As free men they
vestments in transmission systems
An Old Industry
should be permitted to live and
beyond an economic point.
free from the remote

work

Hiking Minimum Wages
Through Administrative Subterfuge

process

Publication of Chamber of Commerce of United States calls atten¬
tion to action of Secretary

of Labor under Walsh-Healey Public

Contracts Act.

con¬

The gas industry is not simply
Third, the industry is. an old
The weekly publication of the Chamber of Commerce of the
industry.
Started in the United sitting back and depending wholly
States in 1816, so far as manufac¬ upon the prospect that there wiil United States, called "Business Action," on July 29 called attention
privileges and protected in evil tured
be a never-increasing supply of to hikes in minimum wages that are being made by the government,
gas
is concerned, by the
practices by special immunities time
early natural gas operations natural gas. It is carrying on si¬ outside of the present Fair Labor Standards Act. "All this is coming
granted by a remote national gov¬ assumed
a
substantial re¬ about through a federal law U®
potential importance in multaneously
ernment.
a
few localities, there were al¬ search program to develop and which employers pay little atten- article, "that the will of Congress
ready 297 manufactured gas com¬ continue to improve old and new tion until they find themselves under the Fair Labor Standards
p Anti-Closed Shop Laws
panies in the United States serv¬ processes for the manufacture of confronted with it the publica- Act is being ignored and the min-

trols of remote labor organizations
which are endowed with special

'
gas from any available fuels for tion states.
"Those
employers
who
have
Fourth, the natural gas branch peakload shaving of natural gas
faced
the
made the closed shop unlawful. It
requirements of the
of the industry, which is the larg¬ operations and for those few com¬
was argued to the Supreme Court
Public
Contracts
est
division today, has all the panies that will remain wholly in Walsh-Healey
that these were states where or¬
the
manufactured gas business. Act are aware of what it has been
attributes of a new industry, and
Marked progress has been made doing to industry, but unfortuganized
labor
was
not
strong the spread of natural
gas is be¬
in the development of processes nately most employers learn little
enough to defeat such laws; so the stowing these characteristics
upon
Supreme Court was asked to hold more and more of the manufac¬ which approach the economics of or nothing about it until it strikes
W It is

ized

a

bitter complaint of organ¬
that
16
states have

labor

them

unconstitutional!

The

Su¬

Court happily declined, be¬

preme

ing fortified by the provision of
the Taft-Hartley Act which gra¬
ciously permitted the States to en¬
act such laws. Now in the battle
against
have

Act we
full power of the
and
a
national party
the

President
machine

the

Taft-Hartley

the

seen

to

exerted

states

a

impose upon
renewed tyranny of

national labor law enacted to ad¬

the special interests of or¬
ganizations of a minority of the
people, living and working in a
small fraction of the total area of
vance

the

United States.

This discussion could go on in¬

definitely.
Let me terminate it
abruptly with a few general ob¬
servations.
As an active practi¬
tioner, and

a

prospective teacher,

of constitutional law I must make
a

clear

distinction

between

the law is and what the law

what
ought

Supreme Court is the
the final arbiter of what the law
to

is.

be. " The

But

the final
what the law ought to

the

arbiter of

people

be and eventually
believe
ment

that

should

the

are

shall be. If they

national govern¬

have

and

exercise




ing 5,000,000 Americans.

'imum

tured gas

the

a

companies which have
long historical background.

natural

for

gas

bulk

of

in 12 states.

whom
Vast

located

were

new

sources

of

natural

gas were discovered and
during 1928-29 large cities in
Louisiana and California started

the

parade

natural gas.
snaked out

of changing over to
Some pipelines then
as

far

300

as

miles.

This is today about the top limit
for the transmission of energy in
the form of electricity.

Straight natural

is

gas

although

these

purposes,

now

mixed

available

form

in

in
36

the

states.

It

or

is

made

it

expect

to

them.

....

.

"The law, passed

Current

re¬

possible

for

and more natural and manu¬

to

gases

under such contracts.

of the law,
so fixed
is

"Under the language

minimum

the

wage

minimum

fined heat.

,

the aircraft manufacturing indus-

J substantially, but to broaden the

"t

1

definitions of the aircraft manufacturing industry,
- "Employers
are

thus finding
themselves confronted with two
minimum wage laws — the Fair
Labor Standards Act and the
Public

Contracts

excuse

Walsh-Healey

for having

Act."
"There is

these

no

laws

two

sistent

producing incon¬

results," it is stated.

minimum

wage

be fixed by

"All

standards should

Congress.

for

thus raised

is

cer¬

bureaucratic

edicts."

-

employers in an industry ob¬
viously the minimum wage for
all
employers! in the industry
tain

The American Gas Association

The
now

American Gas Association

serves some

440 gas company

tends

to

members who

in turn

serve

nine

"Indeed,

l

i"

•

,

1 'I

t

t ?•.

.

'

I Vjv". '.<•

•

1 ««

«

t- i

\

.

>

J. H. Goddard Co. Adds

affected.

be

some

(Snecial

•

*•

•-

'

to

The

Financial

BOSTON, MASS.

students

'

r

up

blended.

be

of the
certain that it will be available
urge
that an effect on
out of 10 of the nation's gas util¬ subject
in New England within two years.
wage differentials throughout all
In addition, we
This widespread transmission of ity customers.
industry is inevitable when such
natural gas to the great majority serve more than 500 manufacturer an increase takes place."
of states has all taken place in the company members and also oper"The
point is" continues the
To.
'
'
i
;
>
i
li
-

pushed

supposed to approximate the pre¬
"If we are to have both laws
Everything that is being done in
vailing minimum in the industry. remain on the books, the mini¬
the
field of
research
tends
to
"The tendency, however, is to
mum
should be the same under
prove that gas is and will con¬
use these orders to up the mini¬
tinue to be the most economic
both. Otherwise, the will of Con¬
mum above that fixed by the Fair
method of utilizing and distrib¬
Labor Standards Act.
Once the gress is going to be defeated by
uting energy in the form of re¬

now

pure

has

factured

served to 11,000,000 customers and

is

conditions.

new

search
more

cannot

man

being

is

try where a hearing has just been
held, and it has been proposed
not only to increase the minimum

in 1936, gives1
equal or excel nature in the syn¬ the Secretary of Labor power to
The growth of natural gas came
thetic pro duction of natural fix minimum wages in industries
along more slowly and did 'hot
products.
Even though the sup¬ where employers contract with
reach a state
of importance in
ply of natural gas should become the government to furnish supsome
regions until the first two
limited or exhausted, the gas util¬ plies and materials, the contract;
decades of this century.
By 1925
ity business as constituted at that value of which exceeds $10,000.
the
manufactured
gas
industry time would not be faced with
any
"Scores of orders have been is¬
was serving nearly 11,000,000 cus¬
revolution.
It is a changing in¬ sued during the life of this law,
tomers and the natural gas indus¬
dustry, capable of adapting itself fixing minimum wage standards
try was serving 3,500,000 people, to
such

wage

bit by bit through use of the administrative order device.
"The most recent danger is in

■

Colley

has

been

—

Chronicle)

Russell L.

added

to

the

staff of J. H. Goddard & Co., Inc.,

r>»vonshire Street, members of
the Boston Stock Exchange.
■*.

..

».

»

..

.....

,

,

,

36

(580)

THE

Fund
(Continued from page 2)

I

COMMERCIAL: &

FINANCIAL'CHRONICLE

Thursday, August 11, 1949

Managers Show Increased Confidence

Hudson Power and North Ameri-

Phillips were five sales, but sell¬ only transportation unit in par¬
can
which
also
are
completing ing of the other three concerns ticular favor during the period.
these
pur¬
chases
were
executed
through plans for final dissolution. Cleve¬ was confined to one or two trusts.
land
Electric
Illuminating and Nineteen funds made additions to
Building Issues
rights also received as a liquidat¬
Illinois Power were acquired by Standard of Jersey but much of
ing distribution from United Light
Building issues were spotlighted
five more funds. The latter had this stock represented a 2% stock
and Railways.
:
by a marked interest in the ce¬
been top favorite in the previous dividend. Standard of Indiana was
ment companies.
Five manage¬
Commonwealth
and
Southern
Traction).

was

1

of

Part

the issues in this group

among

most

heavily bought, also in an¬
ticipation
of
liquidating
ex¬
changes to be received under a
dissolution

program.

purchased

a

shares.

Ten trusts
of
274,200

total

State Electric

New York

and

Gas, Central and Southwest
Corporation and Wisconsin Elec¬

tric

Power

each

were

added

to

eight portfolios. These companies
were

also all favorites in the pre¬

ceding quarter. Public Service of
Indiana

California

Southern

and

Radiator

quarter.

Its acquisition

ulated through

was

stim¬

special offering
made by the North American Co.
a

purchased

and

the

of

was

which

Cities Ser¬

bought by six trusts,
made

new

a

one

commit¬

of

to

gas

made

during the quarter.

A third

of the additions in this group rep¬
resented
natural
gas
production
and

Northern

Natural

Gas

two

Plywood

issue from

eliminated the

or

their

portfolios.

Two
1,100

companies

also
purchased
shares of Sherwin Williams.

no

of

small

a

like

bought

managements

Cement,

sale

of

there

200

was

shares

of

one

this

Also well liked in this

company.

transportation
companies.
Purchases were triple the number
of selling transactions. The latter shares of the latter. 20,000 shares
Republic Natural Gas were
were concentrated on no indivi¬ of

While

total of 15,600 shares of General

Portland

standing
in
popularity.
Eleven
managements acquired each one
of these issues, purchasing 60,000
shares of the former and 27,000

added

each

were

portfolios.

number
a

out¬

were

others decreased

purchased

were

Portland which

of petroleum and natu¬ ment.
Among the natural gas com¬
companies equalled 17%
total
purchase
commitments panies, Mississippi River Fuel and

Shares
ral

S.

U.

Together with the last group of
Lone Star and stocks, and the utilities, oils and
offsetting sales. natural gas companies, additions
Neither was there any liquidation of metals and
mining companies
in
Alpha
Portland
or
Lehigh accounted for about half of the to¬

managements ments
acquired there

number

Seaboard of Delaware.
vice

Petroleum and Gas Acquisitions

five

by

same

stock.

liked by three trusts-, but two

was

1

general group were U. S. Gypsum,
Jobns-Manville
and
American

Radiator,

each

being

purchased

tal purchases made for trust

folios

during

review.

the

The

this latter

prime

category

port¬
under

quarter

favorite

in

Kennecott

was

Copper which had appeared to be

losing its popularity in the

pre¬

vious

quarter. Nine managements
purchased a total of 30,70u shares.

Partially offsetting sales of 9,000
shares

made by four trusts,

were

While the largest two of which completely elimi¬
added to five portfolios. Four in¬ by five trusts.
Edison were each acquired by six dual issues unless
offset by like
vestment companies bought 7,100 block bought was one of 10,800 of nated the issue from their hold¬
trusts which added 30,000 shares purchases.
Phillips, Continental, shares of Oklahoma Natural
Gypsum, two funds completely ings,
Phelps Dodge did not fare
Gas,
of the Indiana stock and 40,000 Gulf and Texas were
top favorites while a like number made addi¬ eliminated this issue from their as well during the period, four
holdings. Two managements also additions being more than matched
of the California issue. Four trusts each
finding their way into seven tions of Southern Natural. Ten¬
lightened their holdings of'Man- by five decreases in portfolios.
each purchased shares of Niagara portfolios.
Offsetting additions of nessee Gas Transmission was the
ville, while three others sold the International Nickel,
however,
well

thought of by five man¬
who
bought 36,400
shares.
Two of these represented
new
commitments; there were
three
sales.
American
Metals,
American Smelting, Newmont
Mining, U. S. Smelting and Rey¬
nolds Metals were each acquired
by a couple of managements. Two
was

Balance Between Cash and Investments of 59 Investment
End of

Quarterly Periods March and June

-riii a oi.

American

;

Business

Axe-Houghton
Axe-Houghton
Boston
-

Shares

697

68.9

13.6

9.5

ica

2.8

7.3

83.6

309

83.2

17.5

13.5

12.1

16.0

small sale of 200 shares.

70.4

70.5

15.3

23.8

24.6

64.2

60.1

Wellington

572

7.7

9.0

24.6

26.4

67.7

64.6

4,240

10.6

10.4

25.9

27.6

63.5

62.0

577

64.4

14.5

15.5

18.9

20.1

223

66.6

304

12.3

18.4

8.0

5.4

79.7

76.2

4,919

5.3

3.6

32.0

30.9

95

62.7

104

65.5

23.9

24.7

15.9

11.0

60.2

64.3

3.4

14.9

17.1

81.9

79.5

2.7

26.9

29.7

66.8

67.6

21.4

21.4

20.6 *•'

70.1

58.0

396

•

.

Wisconsin

3.2

310

6.3

38

88

r

8.5.

4,332

3,432

15.3

11.9

18.5

20.2

300

;

Clark

&

411

734

—

66.2

340

67.9

22.4

25.4

23.5

29.0

54.1

45.6

t

14.2

f

25.5

f

60.3

f

3,608

253

Fund

572

9,629

Whitehall Fund
>

■

559

Shareholders Trust of Boston
..

12.0

467

Fund

Securities

Scudder Stevens

5,761

7,152

George Putnam Fund
Russell Berg Fund
>

purchases of Aluminum of Amer¬
59.8

Securities—Income

Nesbett Fund

June

14.5

4,211

Balanced

Mutual

Nation-Wide

March

16.9

4,306

Mutual

National

June

16,6

Fully Administered Shares
V>VV General Investors Trust_____.
Johnston

-End of

March

23.3

x

Investors

Per Cent

End otJune

5,176

"B" r_

Howard

March

396

Fund

Fund

&

Grade Bonds & Pfds.

Ena ox-

June

7,580
1,103

__

Commonwealth Investment
Eaton

Per Cent

Com. Stks. Plus Lower

Preferred Stocks
Per Cent*

Net Cash & Gov'ts

—

March

Companies

1949
Invest. Eonds &

Net Cash & Gov'ts
Thoiis, of Doliars

Open-End Balanced Funds:

agements

7.5

12.3

32.9

30.2

59.6

57.5

9,581

.

13.5

12.6

23.9

22.6

62.6

64.h

43.9

51.9

53.8

7.0

79.7

74.9

55

Investment

Co

232

—

19

307

6.6

2.3

41.5

13.4

18.1

3,600

8.7

4.1

None

None

91.3

95.9

None

1.9

81.1

86.6

*■

6.9

Open-End Stock Funds:

partially

were

by

a
;

Safeway

of the best
liked
the
retail
stocks.
Purchases of 44,600 shares
were
represented by four new
was one
issues
among

commitments

addition.

and

There

portfolio

,one

sales of

were no

this company. " Five trusts added
to
holdings
of Sears
Roebuck

while two others lightened

portfolios.

their

The backing which the

controlling element in Montgom¬
Ward appeared to have se¬
cured in the management scuffle
ery

last

Spring seemed to be somewhat

questioned

by

large

a

number
Al¬

of management transactions.

though

there were additions to
five portfolios of 10,000 shares, six
liquidated

managements

Affiliated Fund

offset

blocks

totaling 26,500 shares. Those sell¬

7,099

ing

Adams
Express
and
International, General
American Investors, N a t i o n a 1
Shares
Corporation, Dividend
Shares, First Mutual Trust Fund
were

Bowling Green Fund__l

103

59

18.9

11.5

Broad Street Investing
Bullock Fund

718

737

7.5

8.0

5.5

6.8

87.0

311

85.2

7.0

5.4

None

None

93.0

31

94.6

,8.6

1.6

2.2

8.7

6,423

89.2

-4,546

89.7

10.4

7.5

None

0.9

230

256

89.6

91.6

10.7

11.7

5.5

2.8

83.8

2,414

85.5

14.5

11.3

0.3

0.5

77

128

2.5

4.3

18.5

20.9

3,052

79.0

3,407

74.8

England Fund.
Woolworth,
Grant,
Newberry
Penney were each acquired
by
two
investment
companies.

9.0

9.8

None

1.3

88.9

The

459

91.0

3.8

5.6

0.3

None

95.9

94.4

additions made by three trusts in

414

Delaware Fund

Dividend
Eaton

:

Shares

&

Howard

Stock

Fidelity Fund
Fundamental Investors
General Capital Corp

341

Incorporated Investors

J

Investors
Mass.

-

3,747

88.2

and

portion

greater

portfolio

of

7.0

6.6

None

None

93.4

of

121

93.0

shares

193

9.0

6.1

None

None

91.0

93.9

from

5% stock dividend.

1,266

21.3

Fund

None

Investors Trust

24.9

None

641

685

7.2

8.2

None

204

Management

85.2

an*! New

1,147

Shs.—Stk. & Bd. Gr

Knickerbocker Fund

<

.

4,295

Investment Co. of America

y

.

2,991

First Mutual Trust Fund

Institutional

144

American

206

2.4

2.6

None

78.7

75.1

92.8
97.6

97.4

None

95.3

95.6

Union

Grand

resulted

90.5

None

a

13:

y

Tobaccos

Liked

Tobaccos continued to

be well

10,142

9,495

4.7

Mass. Investors 2nd Fund
Mutual Investment Fund

4.4

None

600

528

3.8

3.5

None

None

57

96.2

96.5

New

51

8.2

National

9.6

17.6

479

18.7

74.2

640

71.7

3.1

4.3

None

466

None

493

96.9

95.7

17.0

20.1

3.8

130

4.0

100

79.2

75.9

8.9

6.8

None

5.2

91.1

2,936

88.0

Myers were made by nine man¬
agements; eight others added to
portfolio holdings, exercising re¬
cently distributed rights.
Amer¬

16.7

21.8

1.2

1.4

76.8

ican

22

82.1

3.8

6.1

14.2

22.9

71.0

nounced favor, two trusts

13,672

82.0

20.4

22.1

None

None

79.6

77.9

new

312

32.2

26.9

None

None

67.8

73.1

adding to present holdings. Philip

Investors

New England

Fund
Republic Investors

-

Selected American Shares

•

2,403

§Sovereign Investors

15

y

State Street

y

Wall Street Investing Corp

Investment

Corp

13,072 '

'

378

-

liked

Tobacco

,

Blue Ridge Corp

5,923

i.

Lehman

& International

♦Investment

bonds;

Fitch's

bonds

AAA

tNo interim reports
of

securities

ures

revised,

in
x

81.0

22.9

21.2

7.6

16.3

69.5

62.5

16.2

11.7

4.3

4.4

79.5

83.9

24.2

20.8

0.9

0.9 r

74.9

78.3

8.9

9.4

10.4

10.7

80.7

79.9

19.1

0.5

3.7

78.7

77.2

10.0

None

None

89.7

90.0

3.5

76.4

78.8

648

-

6,496

v

20.8

406

10.3

21,129
1,772
2,432

Corp

4,521

JU. S. & Foreign Securities
S.

81.4

439

Selected Industries
Tri-Continental Corp
U.

6.2

7,305

Corporation
Shares

3.0

631

General American Investors
General Public Service

National

12.8

6,064

7,425

Capital Administration

15.6

1,713
2,004

1,905

-

14,927
2,304
2,682 '
3,884

22.9

:

17.7

19.3

25.6

6.9

5.3

73.8

69.1

5.8

6.5

12.6

13.9

81.6

7.0

79.6

6.3

12.6

13.1

80.4

80.6

None

None

93.5

98.3

None

None

90.9

77.0

2,103

532

6.5

1.7

3,314

Securities

0.7

8,044

9.1

:

23.0

;

and

preferred stocks:
Moody's Aaa through Ba for
through BB and approximate equivalents for
preferreds.

issued

to stockholders

subsidiary or associated
Group securities.




on

this

date.

companies.

JPortfolio exclusive

§March

quarterly

fig¬

S

U M M A

Balanced Funds

■:

•••'•

9

7

was

4

8

* v j ■-> 4 -51

„

10

8

9

'

equipment and appliance manu¬
facturer, while six others sold a
total
of
18,000 shares. On the
other hand,

Westinghouse Electric
popular, six manage¬
ments
acquiring
24,000
shares;
there were only two sales.
12,400
more

was

shares of

-

*

>f *4 «-J*.:*. <f * *$ n * |

*

26.

*-

•»

-14

Bullish
Four

•* •* m ?!' * st «* «* 4 i?>i H a

,»

;

on

were

eliminated

concerns

were

favored
trusts

in

Finance Companies

financing

14

!-.»

Philco

funds and decreased
the portfolios of three others.
two

26

—

of the 40 total portfolio

Five trusts
bought 20,900 shares of this major

20

2

20.

also bought.
was

rhanges in the group.

and

,j..y Totals—All Companies..

pro¬

making

Gereral Electric which accounted

for 25%

•

3

Cl?>sed-End Companies

in

divided in the
equipment issues. This
reflected by transactions in

was

by

R Y

Change in Cash Positions of 60 Investment
Companies
Open-End Companies:
Plus
Minus
Totals
Stock Funds

still

electrical

4,518

2,833

_

.

was

commitments and three more

Activity
Adams Express
American European Securities
American International

previous quarter.

commitments in Liggett and

Morris

Closed-End Companies:

in the

as

.60

0

$ f'5 irf'W <*.

of

a

by management. Three
acquired C. I. T. Financial

like number made

Commercial

purchases

Credit; the latter
*> it;

Number 4828

170

Volume

THE

COMMERCIAL

&

FINANCIAL

CHRONICLE

(581)

V

however, was lightened
portfolio. Two funds also
holdings of Associates
Investment, while two others pur¬

37

concern,

in

;

one

added

to

Finance.

Household

chased

investment

(March 31-June 29, 1949)

Two

companies made

new

scattered

individual

Four

funds.

total of

a

ican

from

of

two

No. of

No. of

No. of

No. of

Shares

Trusts

Trusts

Shares

Shares

Trusts

None

None

5(2)

20,800

Republic Natural Gas

4,000

1(1)

None

None

5(4)

25,800

Seaboard Oil of Delaware

None

None

1

3

2(1)

2

10,700
13,000

Agricultural Equipment:

2(1)

;

2(1)
3

6,400

five

to

shares

portfolios of

Continental.

of

7(3)

transactions

market
Pont

which

the

stock

new

was

16,800

International

900
Harvester.

6,100

4(1)

6,600

Chrysler

3,500

General Motors

2

8,200

None

four

of

None

5(2)

chemicals

which

Bendix Aviation

3,000

Sperry Corp.

5

with

met

9,200

4(2)

pronounced favor were Na¬
tional Lead, Mathieson Chemical,
Kodak, Koppers
Company and
more

700

United Aircraft

Distillers

Corp.-Seagrams

None

Building Construction & Equipment:
2.200
Alpha Portland Cement——
5
10,400
American Radiator
5(2)
9,400
Johns-Manville
2(1)
6,300
Lehigh Portland Cement.—

market

in

Eastern,

although

5

sales of 30,600 shares offset pur¬
chases
of
blocks
totaling only

The

2,500.

3,500

1,100

2(1)
5

Sherwin

United

Williams
States

17,550

Eastman

12,200

United

and

3(1)

concentrated

were

for

the

most

and

sales

were

proximately matched among the
auto

and

Five

trusts

auto

parts companies.
liked Chrysler, how¬

ever, and only** three liquidated
this issue. 3,500 shares of General
Motors were added to two port¬

1

2
6

24,000

by

trust

total of

a

None

16,800 shares of International Har¬
vester while there were only two
sales.

Three

folios

were

additions
made

of

both Case and the
of

to

there

is

ment

two

the

to

as

other

lists.

unanimity

no

the

during the March
was

in

limited amount of

a

certain

shares

2

13,000
None

3 767

%

Eastern

shares declared

5

2,480%

as

None

None

1

600

100

changed

as

None

5,400
3,050
36,400

9(1)

stock

2%

securities

from

Chalmers

Food

2,300

5(2)

Pipe Line.

in

_

N. Y. State Electric & Gas
Niagara Hudson Power

None

30,900
27,000

North American

None

11,090
900

2(1)
13(11)

3,200
86,600

Pacific Gas & Electric
Peoples Gas Light & Coke
*
Public Service of Colorado
Public Service Electric & Gas 4-

6(2)

29,900

Public Service of Indiana.-

8(1)

4% liquidating
Light & Railways.
2,331%

30,700

2(2)

4(1)

but

dividend

shares

on

5(2)

_

None

Products

Mach. &

None

2(1)

None

Ingersoll
•

900

American Machine & Foundry—

Babcock

and

Wilcox

Dresser

Industries

Fairbanks Morse

purchases
by
one

__

cf

are

one

included

distributed

5%

as

—

American Metals Co., Ltd
American Smelting & Refining
International Nickel
-

Copper

600

Reynolds Metals
U. S. Smelting & Refining

\

2,000

6,800

1(1)

2(1)

Century-Fox

100

KD

Film-

700

2(2)

None

None

Union Pacific

None

None

Louisville & Nashville

None

3,800

2(2)

7,900

3(1)

Air

Line, v.t.c.——.

Railroad Equipment:
None

None

Pullman

Retail Trade:
3

Grand Union 9

3,475

2(1)

None

14,800

None

J.

900

2

None

.

W. T. Grant.—.

15,000

None

None

None

None

None

None

J.

Newberry.

Penney
Safeway Stores.
Sears

Roebuck

12,600

.

None

Woolworth

3,700

None

2

None

Rubber and Tires:

2

500

Firestone Tire & Rubber.
General Tire & Rubber-

4,800
1,300

4(2)

None

1
None

2(1)

4(2y

Steels:
2

2,500

4
3

800

None

None

6,100

9,000

__

Mining

2(1)

None
None

3(1)
4(2)

_—

None

None

None

——

International Business Machines

300

Inland

5

990

Jones

2(1)

None

Laughlin 19

None

None

Steel
&

None

None

Republic

None

None

None

None

None

———-—-—

500

Youngstown Sheet & Tube

4

2

3,500

4(3)

7(4)

3(1)

Textiles:

2

5(1)

3

2(1)

5,100

7,400

1,200
12,600

7(3)

None

None

None

None

4,500

None

None

Tobaccos:

1,800

4,300

Wheeling Steel

800

1

Steel

United States Steel (new stk.).

15,300
12,664
52,000
700

Bethlehem Steel

6,000

None

5(2)
2

50,675

3(1)

American

5,500

17(9)

300

Tobacco

5,900

1

5,600

1

1,500

Liggett & Myers 11—

1(1)

1(1)

Petroleum and Natural Gas:

6(1) V

14,000

12(6)

111,400

Cities

Service

Columbia

Gas

System 4;

survey
or

covers

sales

of

60

trusts

manager

Overseas

addition

to

spon¬
are
sev¬

Securities

the

is

companies

listed in the companion table.




Continental Oil
El

20,750

Corp
Oil, v.t.c
Hugoton Production 2
Mississippi River Fuel Corp..

7(1)

trusts

management
group
For example, the

unit.

11,200
26,500

2

^

4(4)
11(6)

7.000

13.700
.

60,488

11(2)
4(1)

27,080
6,400

4(1)

7,100

7(1)

18,500

Paso

Gulf

Natural

Oil

Oil

Oklahoma

—.

Natural

Phillips Petroleum

None

5,750
None
17.000

None

Gas

3(2)

None
None

SUMMARY

2(1)
None

2(1)

y

60

None

2(2)
None

300

1(1)

3.500

Northern Natural Gas

Purchases and

None
None

General Shoe

1

4,900
Gas

Houston

Ohio

2(1)

200

3,600
15,200

Balance

2
700

—

2(1)

by J. and W. Seligconsidered as having the weight
in

2,000

8,600

Atchison, Topeka & Santa Fe.
Seaboard

3,600

5

3,300

—

—

Paper and Printing:
6(1)
9,300
International Paper
4(1)
10,700
Rayonier, Inc.

:

eral trusts sponsored
man

Twentieth

17,700

None

Office Equipment:

Light

purchased through rights.

a

8,000

1

7(1)

sored

as

None

1,000

Kennecott

3(2)
2

5(4)

None

2,210,

Combustion Engineering-Super¬
heater

None

6,000
5,700

1(1)

2(1)
2(2)

16,700

None

None

Southern California Edison
West Penn Electric
Wisconsin Electric Power 11

None

None

Rand

None

None

3,200
44,600

3,03-3

—

'< None

South Carolina Electric & Gas__

16,979

2(1)

Chemical 3

None

None

Railroads:

None

1,000

_

None

1

None

1,200

1

None

39,700

„

5(2)

None

None

None

1,000

Co

;

Radio and Amusement:

None

None*

__

Co

Newmont

United

.

5% stock dividend.

as

NOTE—This

treated

Light—

10,000

8(1)

None

._

600

2

ex¬

dividend.

10 Received
11 Part

&

Miscellaneous:

8

stock

Gas

'

and Traction

9

19,017
•

3

6(4)
3(3)

None

Ni Y
_

2(1)

Light

American

None

3

2(1)

3,300

2

stock

change
for
Electric
Power
and
$6.00 and $7.00 preferred issues.
7 Name

Allis

18,000
2,690

2(1)

stock

% %

4(3)

None

Madison

474,230

2(1)

Dairy

3
other

None

3,200

—

dividend
with

1

None

National

None
.

in

shares received

6 Received

1

15,500
15,300

General Foods

8,200

None

chiefly

securities

Insurance

Biscuit

2

stock received with
exchange for United
Corp. $3.00 preferred.
other

1

None

Webster

National

9

dividend.
4 Includes

and

Boston

Finance

4-3,570

2
Panhandle

Stone

8,700

5(1)

Represents In large part stock divi¬
from

3(1)

1,000

Fire and Marine 2

St. Paul

1

1(1)

I

Middle South Utilities 6__

20(20)

None

None

Continental Insurance,
Household

260

None

2,000

None

4(2)

Machinery and Industrial Equipment:

interest

25%

Indianapolis Power &

2(1)

4,400

Portfolio

Securities

Bought

Balanced Funds..

Sold

Matched

Totals

16

Open-End Companies:
Stock Funds

Sales

Investment Companies

3

1

20

14

5

7

26

8

1

5

14

38

9

13

60

1(1)

6,300

5(2)

••...■

None

None

Share__i

&

None

None

2,892

4(1)

Metals and Mining:
as

Bond

None

/,

None

1

||

_

2,100

3(2)

as

dividend.

dend

^ *>Jf

500

C. I. T. Financial

3,800

ADJOINING

received

None

Electric »

None

TABLE
13,350

13,145

None

None

TO

4,270

7(5)

2

1

FOOTNOTES

2(1)

None
None

None

38)

on page

5

None

4(1)

block of 1,000 shares.

a

(Continued

None

1(1)

Food Products:

leading blue
chips. Four trusts purchased a to¬
tal of 46,570 shares of National
Biscuit; one other fund completely
eliminated

None

None

General Public UtilitiesIllinois Power

11,900

Co

Commercial Credit

None
2

1,400

None

Electric

Bank

4,400

1

3(2)

None

None

57,000
20,000

1,500

Manhattan

None

7,000
9,400

Electric

21,500

2,000

2(1)

the

of

Ohio

So.

3(1)

None

Consolidated Edison, N. Y
Dayton Power & Light—
Detroit Edison

'

85,000

there

quarter,

5,500

5(1)

None

were

favor

pronounced

as

&

1(1)

5,300

(new stock)
Commonwealth & Southern—

11,500

2(2)

2

in

2(1)

2(1)

None

2

ments.

not

None

2(2)

None

equip¬

Although the food stocks

Columbus

274,200

12,400

2(1)

While

farm

10(3)

Associates Investment Co

10,500

;

3(2)

(new stock)
(new stoc/c)-—

2

today
of
Caterpillar, the
weight of authority still favors its
with

2

2,000

1,900

3(2)

tion

inclusion

50,033

27,000

10,000

Philco Corp.

of

2(1)

4,700

Gas7"11

3

None

Sunbeam Corp.*
Westinghouse Electric

None

3

each

of agree¬
classifica¬

proper

13(8)

2(2)

and

were

51,300

Brooklyn Union Gas
Central Illinois Public Service..
Central & Southwest Corp.____
Cincinnati Gas & Elec. 4—
Cleveland Electric Illuminating

14,900

Financial, Banking and Insurance:

split stock

new

15,200
27,300

2

port¬

Deere

Caterpillar Tractor,

added

to

C.
3(2)

Electric

Electrical Equipment:

management.

trusts purchased

American Natural

1(1)

A

Merck and Co

3,375

favored

American Gas &

None

200

Abbott Labratories

4,850

2

7,000

96,-340

2

None

Continental Can

None

contrast, the agricultural
equipment
makers
were
more

Gas

21,800

5

None

-

-

Anchor Hocking Glass

10,900

None

folios. In

Seven

(Charles) Co.

Drug Products:
3(2)
3,600
American Home Products
5(3)
12,500
Colgate-Palmolive-Peet
3(2)
21,300
Sharp and Dohme
2(1)
6,000
Sterling Drug

ap¬

Natural

4(2)

3(2)

500

American Can

2,100

5

Motor Industry

Purchases

Pfizer

15,900

2(1)

Arkansas

1

60

Corp.6__

4,000

-----

5,300

4(2)

mentioned previously.

as

Gas

None

—

Containers & Glass:

part in Bendix, Sperry and United

Aircraft

27,200

2

part

Kodak

None

None

3,400
United

None

3

8,600

4(1)

single sale of 3,000.
manufacturers

a

in

None

None

1,400

Koppers Company
Mathieson Chemical Corp
National Lead

purchases of 13,400 shares of

10,025

None

None

—:

-

2

Increases

5,300

None

None

Gypsum

3

two

3(1)

Chemicals:

were

None

2

10,800

•

Public Utilities:

2

None

American

There

5,000

Lone Star Cement

type of picture
was presented by single transac¬
tions on the buy and sell side in
same

Air Lines.

None

———

three transactions on each side of

5

None

Tennessee Gas Transmission

572,840

4

4,200

1

4,8403/4

8(3)

3,000

2

Opinion on the air lines was
fairly well divided. There were

7(1)
None

1

400

16(2)

13,400

2(1)

17,500

20(20)

1(1)
None

1,400

None

-.

_

Beverages:

Pfizer.

the

2(1)
v ItjTV.w

....vyy

2,000
None

21,000

2(1)

2

2,200

_

19
2

4

2.700

_

Aviation:

been split four
companies among

None

4,000

Doehler-Jarvis Corp.
Nash-Kelvinator

None

3

Gas—(Concluded):

2,100
Standard Oil of Indiana.
25,225
15,046 y2 Standard Oil of N. J. 5_.

5(1)

4,400

.

Borg Warner

None

None

Du

had

Other

ways.

Deere and Co

2

10,900

were

:)

either side of the

on

the

in

J. I. Case Co.

5(1)

in part offset by three sales total¬

ing 10,000 shares. There

600

Auto & Auto Parts:

were

This

Petroleum and Natural

5,100

making

commitments. Additions

new

made

Sold

No. of

several

these

—Bought—

No. of

15,900 shares of Amer¬

Can,

-Sold-

No. of

Shares

purchased

managers

sellers—or sellers exceed buyers—by two or more management
groups.
Issues more heavily
Numerals in parentheses indicate number of
managements making entirely new purchases of an issue, or
completely
lrom their portfolios.

—Bought—

The two major can concerns re¬

approval

italics.

No. of

purchases of several others.
ceived

in

Trusts

during the period, although
were

are

eliminating the stock

tan, the only commercial banking
institution to be in any marked
there

,

'

Transactions in which buyers exceed
sold

commitments in Bank of Manhat¬

favor

V Changes in Common Stock {foldings of 44 Investment Management Croups

■—

Closed-End Companies.

Totals—All Companies—

,

t

x

*

38

COMMERCIAL

THE

(582)

After

Fund Managers

Show Increased Confidence

first

(Continued from page 37)
Dairy found three pur- Jiated in the last quarter of 1948,
General Foods was1 11 this stock was still held in the
"
A
1
hove portfolios on June 29.
added to two other portfolios.
and

Atchison

the rails, five trusts
purchasing small lots which to¬
among

2,000 shares. Seaboard Air
Line voting trust certificates and
stock of Union Pacific v/ere also
taled

each

bought by two funds. Two
managements eliminated Louis¬
Nashville

ville and
tion

which

of

is

transac¬

one

interest

of

be¬

was made by two funds
Seligman group which had
held the stock for some time.
A

it

cause

Secretary.

Dellmuth

40

is

recently

and

has

a

year's

returned
the

around

tour

of

years

world.

oncentrated

United

on

which

to

Getting

bid

for

der

some

portfolios,

were

heet

Tube

this

carrier

purchased

lade

commitment

new

a

and

one

and

a

Industrial equipment man-

Iteel.

nvestment
their

3abcock

companies
concent¬
liquidation
were
and

Wilcox

and

Com-

mstion.

Engineering-Superheater,
Industries

vestors and Investors Management

Fund, Affiliated Fund, and Wel¬
lington Fund and, with the excep¬
tion of a small lot sold by Affi-

issue

is out of the way.

rated

sold

was

by

three and

American Machine and

foundry

and

were

Fairbanks

Morse

fillip

a

Reserve

run

"ideas," instead of poten-

to lend a

course,

business revival.

trade have been in
ward

trend

But

lendable

funds

months, it

some

reduced

will

long down¬

a

the

and

has

volume

been

of

ample

that

appears

require¬

reserve

hardly

Even

carry

any

the

Federal
a

Govern¬

program

deficit financing which

could

to five billions of dollars

of

run

loans

the

as

in

date
the

aid

to

certificates.

concerned with

be

need to

we

steady and adequate flow of savings
into equity ownership.
I sincerely believe that if we are in earnest,
ways and means can be found for accomplishing this purpose that are
fair and equitable to everyone concerned."
a

has

been

pushing steadily

since

ward

policy,) and

ary

for¬

when the

June

Re¬

reversed its anti-inflation¬

serve

took

another

sharp stride ahead in the

way

of

the current action.

A precept that surely is worthy and in every way
able—but rendered tragically

ments

by

imposed

pathetic

our

Congressional

our

unexception¬

futile by the cold hard cash require¬

n-th degree spending,
fiscal

leaders

matter how

no

might

be.

sym¬

equity

Our

markets need MORE Byrds in Congress!

of

excess

10

As

years.

Banking and Currency Com¬

1948,

loan with

any

of

excess

10

the

was a

Manufacturers

director
National

Bank, the Marine Mdland Group,
Inc.; the William H. Frear & Co.,
etc.

He

ber

of

the

Russell

was

the

trustee and

a

finance

a

mem¬

committee

of

Sage College. At the
beginning of the first World War,
said the
the
a

advices, Mr. Cook joined

Army and

was

commissioned

Captain in the Corps of Engi¬

neers.

He

chief

was

of

construc¬

tion for all American hospitals in
France.
After
the
armistice
he
served

as

Assistant Chief-of-Staff

of the

Eighty-Ninth Division with
the Army of Occupation. He was
discharged in 1919 with the rank
of Major.
*

*

sjs

The capital of the Norway Na¬
tional Bank, of Norway, Maine,

enlarged on July 28 from
$50,000 to $100,000; part of the in¬
crease
was
brought about by a
stock dividend of $25,000, while

was

the

remainder

of

the

increase

any

a

financing.

;

r

Some

houses, in fact most, do
checking first and then pro¬
organize. But apparently

their

a

bit overzealous,
given

are

a

few these days

"jumping-the-gun"

to

ents

certain of their constitu¬
bit "irked," what with the

a

for

additional
investment

bank

re¬

naturally
in better

puts those institutions
position to take up new Treasury
paper as it comes on the market
and, accordingly, keeps interest
down

to

from the banks and other

credit

private

sources.

war

reconversion and reconstruc¬

million.

Most

increase

this

of

took

of

a

encroaches

capital financ¬

If the Congress believes that

,

government should aid small

business in meeting its capital re¬

American
was

in bank

lion.

Association

Bankers

under

the net increase
was only $700 mil¬

way,

loans

This program of credit con-i
received
the
generous

trol

quirements, the best form of aid approbation of the Administration
it

provide is tax relief which

can

will enable small

business to

ac¬

and members of Congress.

Since last December, bank loans

have declined, not because of any
reversal of bank lending policies,

but

because

of lower

commodity

prices, restricted inventory poli¬
cies

on

the part of

business, lower

industrial production and

funding

of

bank

loans

the

into

re¬

new

lending issues of industrial securities un¬
capacity of the corporation to $0 der
present
favorable
market
billion, we believe that the cor¬ conditions. All these factors have
poration's present lending capac¬
lessened the demand lor credit
ity is adequate and that no in¬ and have
brought about a decline
crease is required.
At the present in the volume of bank credit out¬
time the corporation has a total
standing.
lending capacity of $2J/2 billion,
As of July 27, business, indus¬
excluding the $1 billion 100 mil¬
trial and agricultural loans out¬
lion outstanding prior to June 30
standing by weekly reporting
1947.
Of this $21/2 billion total,
member
banks
totaled
$12,875
approximately $1 billion is pres¬
million, a decrease of only $1,627
ently unused.
It is immediately
million below their level a year
available to the corporation to
carry

minimum, like¬

a

RFC Powers

place in 1946 and 1947. Dur¬
ing 1948, when the Voluntary
Credit
Control Program
maturity in
of the

years

the field

upon

on

earlier.

its business.

view

In

of

decline

the

in consumer

In view of the existence of this

wise the cost of government bor¬

demand, lower inven¬
tory policies, reduced production
and the refunding of bank loans
into long-term securities this net

large amount of available funds,
see
no
reason
for increasing
the
65
the corporation's capacity to lend
years,
including Adrian
reduction in the amount of loans
The corporate new issue market at this time.
If the $1 billion 100
Riker, father of the present Presoutstanding is relatively small.
remains virtually at full
dead- million of loans made
ident, Irving Riker. The bank's
prior to
resources
are now over
$20,000,- center for the moment and seems June, 1947, which are in process
Flexibility of Bank Credit
destined to stay pretty much in of
000, marking, it is said, a jump'
Policy
liquidation, are excluded from
of $7,500,000 in the last five year's. that position for several weeks
consideration,
the
present
bill
Banking in the present period is
would double the lending capacity
Marking the anniversary year five longer.
again demonstrating the flexibil¬
members of the staff serving 25
However, an occasional small of the corporation.
This is
a
ity and adaptability of its credit
years
or
more
were
presented emission makes its appearance, as drastic increase and should be
policies.
It is sensitive to the
with gold wrist watches.
for
example
yesterday
when carefully considered by the Con¬ ever-changing trends and condi¬
❖
*
*
bankers brought out a block of gress
before
it
is
authorized. tions
affecting the credit needs of
Appointment of Carl K. Dell- 41/2% preferred shares of Penn¬ Adequate and detailed study of business
borrowers, as well as
muth of Swarthmore, Pa., as the sylvania Power & Light Co., priced the proposed increase should be those
of the economy as a whole.
first full-time
carried out by all Interested par¬
Secretary of the at 102%..'
Banking has responded to the
rowings.

(Continued from page 16)
state that Mr. Cook

Releasing
serves

rates

News Abcat Banks and Bankers
of

plans for

mittee pointed out in its report in

which would increase the

The government bond market

the following

potential sustained expansion,

assuring

statement that it has no pending

small

cumulate and attract the capital it
regarded by the British, has been earnestly endorsed by
current fiscal year.
A start al¬ needs
this writer.
But to extend this concept in practice, particularly since
as the business grows.
ready has been made along that
the difference between capital gains and ordinary income admittedly
line by the Treasury's
No Need to Increase RFC
recently
is nebulous at some points, to so great a differential as between a
.x?...........
Lending Power
80% and a 25% tax, would seem to be too much to expect within the adopted program of obtaining ad¬
ditional cash in the course of re¬
"With respect to the provision in
bounds of practical possibilities.
A prerequisite to capital gains
financing its maturing bills and the Bill now under consideration
reform is a reduction in the ordinary income rates.

sentences: "To realize our

off

Throughout the period of post¬
RFC

the

over

as

statement with

is reported
with the

company

thrown

busi¬ tion, the banks increased their
ness in getting started should not
business and industrial loans out¬
in our opinion have a maturity standing by approximately $8,600

ing.

ment is committed to

such

advance

may

the

However,

actually unfair at a time when ordinary income is being taxed up
to 80%.
The concept of a capital gain being fortuitous and not real

his

the

have

heat.

people's skin.

exceeding 10 years is an equity
capital loan which should not be

tion.

(Continued from page 5)

concluded

to

(Continued from page 11)

near-term weight in that direc¬

Observations

McCabe

which

No Need to Expand

the

of

since borrowings of industry and

ments

Chairman

bid for a

of groups forming to

Milwaukee Gas Light Co. issue,

ceed to

supplied by the government.

for

sold by two managements.

summer

intention

is, of

to

spur

the

once

avowed

The

the

income,

and now one hears

im¬

any

new

of member banks—could possibly

provide

dresser

as was

Although not providing
mediate stimulus for the

ifacturers in whose securities the

the State

year,

may

particularly

The

underwriting trade.

issues, is beginning to get unleaving
organizing banking syndicates to

selling pre- market, the latest credit-easing ac¬
Youngstown tion of the Federal Reserve Board
and
Wheeling —lowering reserve requirements

block, by Fundamental In¬

during last
Street

also

were

of

is possible

Well, you can't blame a fellow
trying. But this business of

in which

ominated

blocks

and

now

Bit Nettled

a

in the

trust

other

ompanies

substantial

total

a

gets from talking to people

tial

lot.

a

the same rail in the March quar¬

that

of such

while a fourth sold part
Although 15,300 shares
of Bethlehem were liquidated in
of

ter.

note

between

in view of the cutting back of car
and engine orders by the carriers.

public

ixth increased its holdings. Other

period of a block of 17,200 shares
of Pennsylvania by State Street
Investment Corp. It is worthy to

floated

impression

At least that is the
one

game goes on

for

third fund in this group eliminated

attached

issues.

new

this would indicate
roughly $100,000,000 remains

be

52,000 shares were disposed
of.
Three
managements
also
cleaned out their holdings of Re¬

our

significance has been
to the sale during the

$450,000,000
sight, approximately
has been accounted

Although
that

ngs;

in the

Some

in

was

$345,000,000
for by way of

hold-

portfolio

lightened

calculated that of the

short

States

>teel, four trusts completely elim¬
inating
this
issue
while three
ythers

Thursday, August 11, 1949

the close of the year, it
that
actual
flotations

Sales of the steel stocks were

the leading favor¬

was

Swarthmore

Steels Sold

Rails

ite

age
from

in business he
as
its

years

to

Alumni

Mr.

National
chasers

seven

returned

CHRONICLE

FINANCIAL

&

we

On Dead-Center

,

Pennsylvania

Bankers

Associa¬

tion, has been announced by Nor¬
man

T.

Association.
years,

President of the
For
the
past ten

Hayes,

Mr. Dellmuth has been

administrative officer of

an

Swarth¬

College and, simultaneously
with the PBA announcement, the
College announced acceptance of
Mr.
Dellmuth's
resignation
as
Alumni Secretary and Director of
Athletics, so that he can devote

Demand

reported

was

indications

with

cleaning

up

dentally,

it

of

of

the

was

a

brisk

quick

deal.

Inci¬

expected

that

issue of 80,000 shares of

an

Co.

and the need for such an
increase should be clearly estab¬
lished after full and careful con¬

sideration.
The

cu¬

.

proposed

$30

crease

in

of Iowa Southern Utilities

pacity

to

mulative

preferred

more

par,

ties,

stock,

of Delaware,

market

there

early

was

said

would reach
next week, and
to be

good

pre¬

liminary inquiry for the shares.

the

$2%

billion

Corporation's

lend

ca¬

impose a
further financial burden upon the
it

again

deficit

tion

has

had

a

return

to

financing.

If the corpora¬
to use all its requested
to lend an additional

were

needs

of

busi¬

ness,

certainties

bank

which

reserves

submitted

have

the Congress

to

been

in

re¬

cent year.

time when

to

credit

notwithstanding many un¬
regarding
monetary
policies,
and
many
disturbing
legislative proposals affecting
in¬

may

government now, at

legitimate

The

report

Council

of

of

President's

the

Advisers

Economic

submitted to the Congress by the
President

July
11,
states:
his entire
So it begins to appear that in¬
time to the
bankers
authority
through the issuance of new post. The selection of Mr. Dell¬ vestors once more are
"Business
credit
is
in
general
disposed to
stock to the amount of $25,000, ac¬
$2^ billion, it would have to
muth is in line with the Asso¬ look at senior equities
which, only obtain money from the Treasury. available in ample amount and on
cording to the weekly bulletin of ciation's
program as approved at a few brief months before could
the Office of the Comptroller of
Already confronted with deficit favorable terms and there is no
its annual convention in Atlantic not get a hearing.
the Currency. *
financing, the
Treasury
would evidence of serious banking pres¬
City in May, creating this new
*
*
*
■J.r
Rail Equipment Issues
to
have to obtain these funds from sure*011 borrowers
liquidate
post and the opening of perma¬
The
65th anniversary
of the nent headquarters in Harrisburg.
Chicago, Milwaukee & St. Paul the open market, in addition to their loans."
came

Franklin

Newark,

Savings

N.

J.,

Institution

of

observed

on

was

1.
It is learned from the
Newark "Evening News" of that

Aug.

date, that the bank has launched
a

modernization

will increase

banking floor
Street.

program

which

by almost 75% the
space at 770 Broad

It is also stated that there

have been only six Presidents in




Mr.

Dellmuth

fices
North

in

the

Front

Heretofore,
man,

tional

Bank
as

have

his

quarters

at

of¬

17

Street, Harrisburg.
Charles F. Zimmer¬

President

has acted

will

new

of

the

First Na¬

& Pacific RR. is scheduled to open

bids
an

ment
are

indications

that

this

of Huntingdon, Pa., financing is slated to
Secretary of the As¬ in the months ahead.

sociation.
Mr.
Dellmuth was
graduated
from Swarthmore College in 1931.

the

other

borrowed

money

Such

type of
slow-down

offerings have been

ernment

financing
not

com¬

credit

conditions.

thus

capital

this year

and it is

now

assist

private

in

the

business

is

justified by present economic

ing to market in sizeable amounts
far

of

to

is

Adequate
presently

Certainly

re¬

Aug. 24, in Chicago, for
This
of $5,640,000 of equip¬ quired to meet its deficit.
trust certificates, but there further resort to the use of gov¬

on

issue

working
available

on

of

ment

has
of

not

credit

and

to

demand

business

into

stringency.
private
meet
for

adjust¬

past several months

developed

other

ready

the

the

a

lenders

every

business

period

The banks
stand

legitimate
and

indus¬

trial credit.

j

Volume 170

Number 4828

THE

following statistical tabulations

shown in first column
IRON

Indicated

AND

steel

Equivalent

AMERICAN

Gasoline

or

month ended

on

Previous
Week

that date,

Month

Week

capacity)

Ago

to

of

Ago

81.3

77.8

(bbls.)_____

output

1,517,200

1,498,800

1,434,300

1,710,500

each)

Residual

fuel oil
and

Kerosene

at

gasoline

(bbls.)

oil,

and

distillate

fuel

oil

5,143,000

4,279,000

15,760,000
1,499,000

2,213,000

6,293,000

5,807,000

4,495,000

6,785,000

1 -July 30

.

(bbls.)

Revenue

OF

of

domestic

ENGINEERING

RECORD:
Total

U.

Indicated

22,850,000

20,936,000

54,758,000

52,429,000

63,517,000

30,737,000

48,618,000

(number of

July 30
cars)____ July 30

723,810

718,516

644,182

553,004

559,030

of

Private

CONSTRUCTION

—

ENGINEERING

of

motor

Volume

of

freight

1

construction

State

and

_Federal

of

zinc

i;

;

$239,245,000

$131,819,000

$138,526,000

$153,594,000

4

100,250,000

51,921,000

42,884,000

65,811,000

Shipments

138,995,000

79,898,000

95,642,000

87,783,000

Stocks

Unfilled

Aug.

—

4

111,952,000

61,870,000

64,839,000

4

27,043,000

18,028,000

30,803,000

of

65,684,000

Aug.

—_____

4

Aug.

municipal

22,099,000

2,000

OUTPUT

(U. S. BUREAU OF

CARBON

MINES):
♦6,995,000

965,000

1,059,000

Juiy 30

coke

7,360,000

end

STORE

SALES

INDEX—FEDERAL

RESERVE

11,200

*5,900

208

207

end

Exports

U.

Electric output

;;

.Aug.

6

5,466,004

5,518,485

4,982,173

S.

of

OF

(tons)

(COMMERCIAL

AND

INDUSTRIAL)—DUN

&

OF

-Aug.

4

171

168

153

exports

102,114,000
102,168,000

19,558

28,283

609,843
291,152

616,931

611,903

358,658

450,969

MINES)-

of

Pennsylvania

anthracite

tons)

North

and

South

America

Europe

Central

(net

COAL OUTPUT

116

106,596,000

90,430,000

*171,332,000

Not Avail.
BUREAU

105,356,000

178,645,000

America

(net

tons)

<

tons)

33

195,297

21,719

tons)

199

296,850

(net

Asia (net tons)
To Africa ' (net tons)

BRAD

64,922

MINES)—

To

FAILURES

45,671

42,705

June:

To

5,319,409

67,377

*82,919

90,624,000

To

INSTITUTE:

(in 000 kwh.)__

period

(lbs.)

EXPORTS

(net
ELECTRIC

of

.

(lbs.).

To

EDISON

69,888

*66,900

53,423

(tons)

97,937,000

138,900

235

*73,989

85,408

(tons)

(lbs.)

19,400

238

317

2,997,286

72,080

grades

(lbs.)
stocks

,

*317

*2,826,934

Month

June:

Shipments

Month

July 30

183,736,000
13,722,000

317

—

lbs.)

(BUREAU

Producers'

SYS-

5,835,000

3,013,691

(tons)..
INC.

all

2,000

period

at

BLACK
of

output,

of

orders

1,231,000

COAL
DEPARTMENT

174,649,000

74,569

transported

of

12,561,000

*

4,519,000

export

)____

63,000

1,310,000

28,000

10,293,000

5,832,000

9,444,000

and

11,000

11,952,000

5,074,000

carriers reporting

(tons

Production

July 30
July 30
Beehive

lbs.

at

Month
COAL

11,000

12,669,000

_.

ASSOCIATION—

INSTITUTE,

smelter

4

Aug.

!

182,646,000
170,574,000
12,044,000

12,335,000

July;

Slab

.

ZINC

Aug.

construction

Public

NEWS-

V;

150,354,000

June:

Number

703,678

162,700,000

154,146,000
12,465,000

42-gal-

_

.

894,375

564,852

70,271

174,921,000

consumption—domestic
(bbls.)
Increase—all stock (bbls.)
TRUCKING

2,007,558
167,263

96,576

166,622,000

of
i

9,311,000

24,544,000

175,731

.-1,

(bbls.)

99,201,000

construction

s.

(bbls.

5,095,000

AMERICAN
CIVIL

production

97,551,000

•69,365,000

2,272,543

Ago
2,i, <±o,092

INSTITUTE—Month

7,439,000

67,166,000

2,544,850

162,594

>•'

,

110,569,000

70,767,000

Year

Month

82,584

7,205,000

25,547,000

:

Previous

2,070,690

thefms)_

Benzol

Month

cars)

connections

:Vv.

,

lons each)
Domestic crude oil output
Natural gasoline

RAILROADS:

freight loaded (number

Revenue freight received from

,

■•

;

(M

therms).

109,964,000

-Juiy 30

Latest

therms)

sales

(M

-July 30

at

of that date)

2,315,868

output (bbls.)
output (bbls.)
Crude oil imports (bbls.)
Refined products imports (bbls.)—

pipe lines-

at

AMERICAN

(M

gas

July 30

at

month

.

PETROLEUM

AMERICAN
ASSOCIATION

sales

sales

gas

of May:

Total

17,646,000

1,491,000

-July 30

oil

gas

Mixed

5,774,000

18,301,000

1,478,000

-jJiy 3J

fuel

(bbls.)

115,187,000
18,058,000

are as

For

•

Month

(M

Manufactured

5,455,450

-July 30

_______

Residual

4,819,950

4,684,700

-Juiy 30

bulk terminals, in transit and in

unfinished

(bbls.)

4,676,600

-Juiy 30

t
____

oil

output (bbls.)
(bbls.)-

output

Stocks at refineries, at

-July 30

___

ASSOCIATION

therms)

gas

AMERICAN

(bbls. of 42 gallons
(bbls.
I

(bbls.
fuel

GAS

June:

Total

94.9

average

output

and distillate

Finished

39

month available (dates

or

of quotations,

cases

Natural

82.3

-Aug. 14

-v.?

stills—daily

in

or,

AMERICAN

Year

-Aug. 14

castings (net tons)

average

runs

Gas,

of

to—

Gas, oil,
i

(percent

output—daily

oil

(583)

production and other figures for the latest week

INSTITUTE:

Crude

Kerosene

cover

either for the week

INSTITUTE:

PETROLEUM

Crude

■

are

Latest

STEEL

operations

Steel ingots and

CHRONICLE

FINANCIAL

&

Indications of Current Business Activity

The

AMERICAN

COMMERCIAL

62,943

158400

"2",829*

(BUREAU OF MINES)—Month

of July:

Bituminous coal and

IRON

AGE

COMPOSITE PRICES:

Pennsylvania
-Aug.

2

J3.705C

Aug.

2

.Aug.

2

Pig iron

3.705c

3.705c

3.720c

$45.91

$45.91

$45.91

$43.94

$19.92

$19.33

$19.33

$43.16

Beehive

Electrolytic

(E.

M.

&

J.

coke

Beehive

QUOTATIONS):

copper—

3
3

17.550c

17.550c

15.925c

23.425c

-Aug.

3

103.000c

103.000c

103.000c

103.000c

3

14.750c

14.500c

12.000c

19.500c

3

14.550c

14.300c

11.350c

19.300c

Without

10.000c

10.000c

9.000c

S.

BOND

PRICES

Government

DAILY

17.325c

15.700c

22.900c

DEPARTMENT
SERVE

103.77

103.21

103.36

100.74

-Aug.

9

114.46

113.89

113.31

*111.62

9

120.63

120.22

119.20

9

-Aug.

118.80

118.40

117.60

114.27

9

113.70

112.93

112.37

111.07

105.86

105.17

104.66

9

109.24

108.34

107.62

115.32

115.43

115.04

119.00

118.40

117.60

9

2.23

2.27

2.26

2.93

2.96

2.99

3.08

2.62

2.64

2.69

2.34

9

2.71

2.73

2.77

2.94

2.97

3.01

3.04

3.11

For

3.40

3.44

3.47

3.42

For

9

3.21

3.26

3.30

3

2.86

2.88

2.90

3.06

(short

9

2.70

2.73

2.77

2.88

Unfilled

INDEX

342.2

341.8

334.9

-July 30

161,429

152,210

161,576

176,753

July 30

162,831

158,764

153,317

178,892

80

Production

76

75

92

July 30

268,530

ASSOCIATION:

(tons)

(tons)

_

-

OIL,

PAINT

AND

DRUG

REPORTER

PRICE

INDEX

243,297
V

358,955

123.5

127.9

144.7

•

'

EXCHANGE—SECURITIES
Odd-lot

sales

Number

of

Number

of

shares

Dollar

of

short

Customers'
Number
;

of

"v

.

,

of

Number

sales

Other

sales

of

(per

pound)—East St.

(per

York

York,

99%

(per ounce

15,793

15,739

13,576

26,695

Antimony

441,561

447,832

363,141

804,551

6,604

9,645

5,577

5,427

434,957
$13,893,415

438,237

357,564

799,124

$14,148,078

$11,678,126

$28,578,780

(per

10~9~400

231,630

.—July 23

185,550

178,870

160,410

PORTLAND

S.

DEPT.

OF

CEMENT

end

and

metal

169.3

165.6

193.4

161.2

161.3

187.0

144.9

145.1

144.5

152.9

Total

139.5

139.1

133.3

149.1

Total

130.2

130.6

130.6

136.9

167.9

167.9

165.6

169.8

190.0

190.4

189.9

202.4

Net

2

124.0

124.2

124.6

134.5

•—Aug,

2

-Aug.

products—

2

Building materials
-Aug.

*

OF

152.6

152.8

153.2

178.9

Aug.

210.5

207.8

206.7

274.3

Aug.

222.2

225.2

224.0

279.4

Aug.

184.9

183.4

181.6

Meats

•

Hides and skins
♦Revised

1943

1941
to

to

1948

figure, -([Includes
date.

The

442,000 barrels of

weights used

inclusive.




are

based

foreign crude runs.
JThe weighted finished steel composite
the average product shipments for the 7 years 1937 to

on

$89,154

$2.00000

$1.75000

$2.07500

$1.77500

$2.15000

$1.80000

17.000c

17.000c

16.000c

20.500c

20.500c

20.500c

•40.000c

35.913c

$2.00000

—

OF MINES)—

20,667,000

18,279,000
(bbls.)

Operating

RRS.)— Month

89%

(ASSOC.

of

June:

revenues

$735,439,107

$741,068,551

588,177,393

600,852,442

79.98

81.03

74.70

$72,407,446
61,263.279

$69,181,314
57,595,281

$72,687,139

43,400,000

32,000,000

94,000,000

cent

railway operating income before charges
after

OXIDE

86%

17,757,000
21,426,000
12,422,000

expenses

ratio—per

Net income

*22,170,000

87%

——

ROADS

I

18,622,000
19,428,000

19,782,000

(bbls.)

month)

CLASS

—

operating
operating

charges (est.)—

(BUREAU

OF

$833,105,949
626,089,812

124,972,363

MINES)—Month

'

■

■■

Production

(short

tons)

9,199

Shipments

(shore

tons)

12,017

Stocks

at

♦Revised

years

$70,154

35.000c

223.2

Aug.

Livestock

(BUREAU

mills
of

AMERICAN

of June:

Grains

Nominal

$2.07500

used

EARNINGS

RR.

ZINC

Special indexes—

35.500c

Nominal

$2.15000

Taxes

2

lighting materials———

and

152.7

164.3

160.6

2

Metals

152.8

134.3

2
2

Fuel

(at

Capacity

152.6

2

-Aug.

39.000c

$69,000

(bbls.)

from

2

Foods

38.170c

38.500c

Month of June:

Shipments

L/»»OR-

$75,423

41.730c

Nominal

pound)

Stocks

SERIES—U.

1926=100:

$35,000

$30,269

39.000c

Nickel

263,190

102.400c

$35,000

38.500c

__

Aluminum, 99% plus, ingot (per pound)
Magnesium, ingot (per pound)
**

158,020

102.000c

41.730c

(per pound)

§Cadmium

lTuoio

103.000c

40.000c

JCadmium

Juiy 23

12.462c

103.000c

$78,160

pound), in cases, Laredo—
Antimony (per pound), Chinese Spot
Platinum, refined (per ounce)
tCadmium (per pound)

231,630

9.548c

$35,000

(per

109,400

45.000d

$4.02750

102.000C

.

price)—.—

Antimony

by dealers—

NEW

(§§)

S.

148

—July 23

PRICES

min.
U.

(per flask of 76 pounds)—

26,843

158,020

74.625c

43.500d

$4.02557

9.360c

Straits

Gold

71.500c

43.500d

Louis—_______

141

141,010

17.608c

pound)—

Production

WHOLESALE

71.500c

13,717

July 23

17.808c

11.850c

$4.02513

ounce)

per

(Check)

252

sales

12.000c
/

103.000c

(pence

July 23

shares™

13.378c

—

188

July 23

21.663c

13,562c

Louis

(per pound), (E. & M. J.)
(per pound), bulk, Laredo

—

purchases

Number

York—

New

St.

Sterling Exchange—
New York (per ounce)

([Antimony

sales——

21.375c

16.543c

and

15,991

by dealers—

16.342c

17.140c

-July 23

sales

Round-let

17.059c

refinery

refinery

July 23

i

._.

shares—Total

export

15,981

sales

ikl,553

QUOTATIONS)—
July:

of

domestic

New

852,218

34,313

94,958

M. J.

&

New

$32,226,717

24,307

76,073

sale

T'-lv 23

_—

Short sales

.

388,337

$13,834,953

33,740

,

sale

'

(E.

42,333

29,601

78,944

for
for

month,

of

61,329
31,723

26,929

11,629

cancclaltion,

July 23

total

other

Dollar value

Round-lot sales

Tin

28,335

54,572

_

pound)—

Quicksilver

sales-.

short

Customers'
:/■

14,062

sales)—

___

shares—Customers'

Customers'

$17,148,809

16,205
471,820
$17,503,389

OF

tons)—

July 23

sales

other

total

462,012

4-July 23

dealers (customers'

orders—Customers'

Customers'

16,162

juiy 23

value

purchases by

Number

Zinc

July 23

130.7

of

27,643

end

Sterling Exchange

COMMISSION:

orders________

Odd-lot

•

EXCHANGE

by dealers (customers' purchases)—

ttl21.7

—

middle

(DEPT.

162,367

157,109

May:

(short

use

less

Silver,
Silver, London

STOCK TRANSACTIONS FOR THE ODD-LOT ACCOUNT OF ODD;
LOT
DEALERS AND
SPECIALISTS ON THE N. Y. STOCK

of

*116,975

♦171,101

J+ 118.9

at

tons)

for month

(per

Silver

93,053

(per pound)—

Common,
Common,
128.2

' 39,309,819

163,549

.___

COMMISSION

tons)

Electrolytic,
Electrolytic,
Lead

41,355,266

June:

CASTINGS

own

orders,

PRICES

Copper

6
5

;

274,741

41,561,493

31—

tons)

Average

:

19,162,732
$341,931,600

CON¬

tons)

(short

booked,

427.4

METAL

PAPERBOARD

(short

20,419,691
$374,712,800

(AMER¬

average—100)

producers'

(short

9

Aug.

of

COMMERCE

IRON

sale

Orders

May

STEEL

Railway Employment

Shipments

3.30

at

STEEL

OF

COMMERCE)—Month

9

received

243

19,914,218

(tonnage)—estimated
(tonnage)—estimated

MALLEABLE

9

Aug.

customers

STRUCTURAL

(1935-39

-Aug.

Orders

311

267

of

closed

of

-Aug.
Baa

COMMODITY

284

consumers—

omitted)

customers—month

INSTITUTE

June

2.45

9

ultimate

(000's

STRUCTION)—Month

Index

-Aug.

9

NATIONAL

282
220

variation..

ultimate

ultimate

Shipments

115.43

-Aug.

MOODY'S

855,635

INSTITUTE:

May

of

Contracts

DAILY AVERAGES:

Aaa

561,300

1,747,677

$368,577,900

ICAN

112.00

9

of

from

INTERSTATE
Bonds—

5,616,500

•527,525

(FEDERAL RE¬

adjustment

ELECTRIC

FABRICATED

107.62

9

-Aug.
YIELD

SALES

seasonal

seasonal

Number

105.52

-Aug.

BOND

6,177,800

5,798,230

1,705,236

(net tons)

■: M Mar

116.22

■7

9

-Aug.

Government

♦6,325,755

266,610

__

SYSTEM)—(1935-89 Average=10<»
July:

Revenue
,

S.

453,100

5,242,437

tons)

STORE

for

month
9

Baa

U.

4,365,000

*266,600

5,509,047

tons)

(net

Kilowatt-hour sales to

-Aug.

Average corporate

MOODY'S

48,611,000'

♦3,403,000

47,600

Month of

AVERAGES:

Bonds

"

Aaa

35,274,000

3,921,000

15.000c

-Aug.

17.325c

EDISON

U.

(net

coke

Adjusted

3

(St.

26,040,000

tons)—

Oven coke stocks at end of month

-Aug.

MOODY'S

tons)

(net

(net

tons)

(BUREAU OF MINES)—Month of June:
Production (net tons)

-Aug.

Lead

(net

COKE

Oven

METAL PRICES

lignite

anthracite

coke

was

1940

revised for the

inclusive

and

end

of

month

(short

tons)-—___

_

27,278

10,054
..

30,096

S°^Va-J'

Not Avail.
Not Avail.

quotation.
tBased on the average of
the producers' and platers' quotations.
§Based on platers' quotations.
([Domestic, five
tons or more but less than carload lot packed in cases, f.o.b. New York.
**F.O.B. Port
Colbourne, N. S., U. S. duty included.
§§Tin contained. ^Preliminary figure.
figure.

tBased

on

the producers'

40

COMMERCIAL

THE

(584)

Anchor Steel

Conveyor Co., Dearborn,

&

Mich.

(letter of notification) 10,000 shares ($1 par)
common stock.
To be sold by Francis I. LeVeque, Dear¬
born. Underwriter—Bradley Higbie & Co., Detroit.

July 21

Bondstock

Wash.
Aug. 5 filed 300,000 shares ($1 par) common stock.
,Underwriter—Frank
Russell
&
Co.,. Tacoma,
Wash.
Price will vary as market price varies. Business—Non•

Tacoma,

Corp.,

V5 diversified closed-end management
Bradshaw

Oct. 8

.

Mining Co., Tonopah, Nev.

1,500,000 shares X?c par)
Underwriter

(letter of notification)

Price—20 cents per share.

stock.

common
.

investment^company.

To repair and renovate mine
of company and to exercise option to purchase processing
mill and move and erect such mill on the company's

a/

Buzzards

Bay Gas Co., Hyannis, Mass.
(letter of notification) $220,000 3%% Series A

July 26

bonds, due 1971. Underwriters—To be offered
competitive bidding and sold for not less than

25-year
'

under

California

(8/16)
July 26 filed $7,000,000 first mortgage bonds due 1979.
Underwriters
Competitive bidding. Probable bidders:
ftalsey, Stuart & Co. Inc.; Merrill Lynch, Pierce, Fenner
& Beane and Kidder, Peabody & Co. (jointly); Lehman
Brothers; Shields & Co. and E. H. Rollins & Sons (joint¬
ly); Blyth & Co., Inc. and The First Boston Corp. (jointay); Harriman Ripley & Cb. Proceeds—Finance in part
;k construction program.
Bids—Bids for purchase of the
bonds will be received at office of American Trust Co.,
Oregon

Power Co.

—

'

464 California

St., San Francisco, prior to 8 a.m. (PST),

Aug. 16.
•

&

Water

Service

(8/24)

Corp.

Proceeds—For construction.

Co., San Francisco.

Carnegie Mines Ltd., Montreal, Canada
April 27 filed 500,000 shares of common. Price—60 cents
ft per share. Underwriters — Name by amendment. Pro¬
ceeds
For working capital, exploration, development
—

and other purposes.

Consolidated
March

filed

30

Price—$2.50
be

sold

to

per

the

Caribou

Silver Mines,

York.

Inc.

376,250 shares (no par) common stock.
share. An additional 50,000 shares will

underwriter

at

Underwriter—William

ment.
<

•

$1

per

share for invest¬
& Co., New

Burton

L.

Proceeds—To develop mining properties.

Cooperative G. L. F. Holding Corp., Ithaca, N. Y.
29 filed 44,088 shares 4% cumulative preferred
Offering—To

non-farmer

affiliates.
,

patrons

offered

be

of the

G.

farmer and

Exchange and its
Proceeds—To replenish

Underwriting—None.

working capital.

$100 to

at

L.

F.

,

Cooperative Grange League Federation
Exchange, Inc., Ithaca, N. Y.
June

29

filed

1,200,000 shares

Offering—To be sold
Underwriter—None.

to

($5 par)

members

and

common

farmer

stock.

patrons.

Proceeds—To be added to working

capital and used for general corporate purposes, includ¬
ing payment of $12,693,000 in loans to an affiliate, Co¬
operative G. L. F. Holding Corp.
Diesel Power Co., Pittsburgh, Pa.
July 28 (letter of notification) 25,000 shares of common
stock (par $1).
Price, $50 per unit of 50 shares each.

Underwriter—Graham & Co., Pittsburgh.
•

Edgewood Junior College, Barrington, R. I.
(letter of notification) $182,800 6% first mort¬
gage serial bonds.
Underwriters—Pilgrim Land Devel¬

Aug. 3

Inc., Cranston, R. L, and A. C. Beals Co., Inc.,
Providence, R. I.
To pay off mortgages.
opers,

Emerson
June 7

Radio

&

Phonograph Corp.
filed 235.000 shares of capital stock. Underwriter

—F. Eberstadt &

offering

Co., Inc.

have not

yet

The terms and price of

been

the

8 (letter of notification) 8,600 shares of capital
(no par), to be sold for benefit of CzarnikowRionda Co.
Stock will be sold on the New York Stock

Exchange by A. M. Kidder & Co. and in no evenj will
the aggregate offering price exceed $100,000.

offering. Proceeds—
are from
holdings of Mrs. Benjamin
Abrams, Mrs. Max Abrams and Mrs. Louis Abrams, wives
of principal officers and directors of the
company, and
The shares to be sold

do not involve

new

financing by the

company.

Following

sale of the shares, the Abrams

1:

be

applie.l

toward

family will own approxi¬
mately 25% of ■the company's 800,000 shares of common
stock.

Transportation Co., Jacksonville,

Florida

May 31 filed 620,000 shares of class A participating ($1
par) stock and 270,000 shares (25c par) common stock.
Ottering—135,000 shares of common will be offered for
subscription by holders on the basis of one-for-two at
25 cents per

share. Underwriters—Names by amendment,
and may include John J. Bergen & Co. and A. M. Kidder
& Co.
Underwriters will buy the remaining
135,000

MacFarlane's

July

Candies,

(letter

stock.

Maumee

Oil Corp., Toledo, Ohio
12 filed 8,000 shares (no par) common, of which

May

only about 2,614 shares will be offered publicly at $100
per share.
No underwriter. For general working cap¬
ital.

SEC held hearing June 6 to determine whether
stop order should be issued suspending the effective¬
ness of the registration statement.

•

Mellin's

Food

Co.

of

North

purchase of five shares.

mum

For working capital. No
Office, 41 Central Wharf, Boston, Mass. /

underwriter.
•

Memorial Community

Hospital, Upland, Calif.

4 (letter of notification) $150,000
sinking fund debentures.
To construct
•

New

•

Haimes

Litho

Laboratories, Inc., Wash., D. C.
notification) 2,950 shares ($5 par)
class A common stock; 6,950 shares ($5 par)
class B
non-convertible
(preferred at 5% accumulative) and
I,749 shares of class A "voting stock."
The latter is to
be offered b,y Sidney S. Haimes, President and Treas¬
3

Aug.

(letter

of

classes, $5 a share.
Underwriter—Ed¬
Jacobs, Washington, D. C. For additional equip¬
working capital.

and

Hawaiian Electric Co., Ltd.,

Honolulu
E cumulative ($20

June 21 filed 150,000 shares of series

par) preferred and 50,000 shares of ($20 par) common.
Offering—Preferred will be offered to preferred holders
at

l-for-3 rate and

common

will be offered to

common

stockholders at l-for-9 rate.

Underwriters—Dillon, Read
& Co. Inc. and Dean Witter & Co. will buy unsubscribed
preferred; unsubscribed common will be sold either at
public auction or to the underwriters. Proceeds—To pay
off short-term promissory notes and to carry merchan¬
dise inventories and receivables or to replenish treasury
funds. The balance would be used for other corporate
purposes

C

or

construction.

Heidelberg Sports
Pittsburgh, Pa.

'

.

per

balance for related purposes.
•
Heliogen Corp., New York
Aug, 4 (letter of notification) 2,000 shares of capital
stock (par $5).
Price, par. Underwriting, none.
Cor¬
porate purposes, including advances, maintenance of
laboratory, etc. Office, 17 West 60th Street, New York.

Household

Finance Corp., Chicago, III.
filed 60,000 shares (no par) common stock.
Price—$23 each to employees, executives and certain
other persons.
No underwriter.
Proceeds — Working
capital.

10

Aug.

Idaho-Montana Pulp & Paper Co., Poison, Mont
Nov. 23

(by amendment) 180,000 shares ($10 par) com¬
to be offered at $10 per share and 20,020
shares to be issued in exchange for $170,200 first mort¬
gage bonds.
Underwriter—Tom G. Taylor & Co., Mis¬
stock

mon

soula, Mont. Proceeds—To erect and operate a bleached
sulphate pulp mill with a 200-ton per day capacity.
Iowa Southern Utilities Co. of Del. (8/17)
July 26 filed 80,000 shares of cumulative preferred stock
($30 par), convertible on or before June 1, 1959. Under¬
writer—The First Boston Corp. Proceeds—For construc¬
tion.

Kaman

Aircraft

Corp.,

Windsor,

Locks,

Conn.

May 23 filed 170,456 shares of class A non-voting com¬
mon stock
(10c per share non-cumulative dividend) and
II,362 shares of class B voting common stock. Price,
per share.
Underwriter—None. Purpose—To ac¬
quire machinery, tools and equipment; to buy land and
buildings; to produce 30 helicopters and accessories; to
complete engineering changes; to setup sales and serv¬
ice departments; and to train service personnel.

$5.50

Keller Motors Corp., Huntsville, Ala.
May 10 filed 5,000,000 shares (30 par) common. Under¬
writer—Greenfield, Lax & Co., Inc., New York. Price—
$1 per share. Proceeds—For plant facilities, equipment

at

—None.

rate

of

one

new

notes

Proceeds—To

and

make

pay

additional

New
June

9

ferred

Philadelphia

San Francisco

Private fVires




to

all

offices

Chicago

Cleveland

Gas

and

a

20,000

shares

($100

to

Probable
Beane

be

Electric

and

Brothers

determined

bidders:

White,
and Blyth

held.

10

Underwriter;
short-term

of

stock

investments

cumulative

par)

Underwriters—Names

to

pre¬

determined

be

through competitive bidding.
Probable bidders: Kidder,
Peabody & Co.; Smith, Barney & Co.; W. C. Langley &
Co.; Lehman Brothers. Proceeds—Will be applied to the
payment of the cost of, or in reimbursement of payments
made

for, construction of additions and betterments sub¬

sequent to April 30, 1949.

Sale deferred until later this

year.

New York & Cuba Mail

Steamship, New York

June 17 filed 190,125 shares of 5.6% cumulative preferred

($25 par)

stock, which Atlantic Gulf and West Indies
Lines is offering in exchange for its own
non-cumulative $100 par) at the rate ot

Steamship
preferred

(5%

Atlantic

share

for three

shares

of

Cuba

Mail

pre¬

No underwriting.

Indiana Public Service Co. (8/16) v
1 filed 311,654 shares (no par) common stock.
Offering—To be offered for subscription by stockholders
of record
Aug. 15 in a l-for-7 ratio.
Rights expire
Aug. 29. Underwriters—Central Republic Co., Inc.; Blyth

Aug.

&

Co., Inc.;

Merrill

Lynch,

Co.

through competitive bidding.
Lynch, Pierce, Fenner &
Weld & Co.
(jointly);
Lehman
& Co., Inc. (jointly); Otis & Co.;

Merrill

Pierce,

Fenner

&

Beane.

Proceeds—For construction.
Northern States Power Co.
(Minn.)
(8/23) •
July 8 filed $15,000,000 first mortgage bonds, series due
Aug. 1, 1979. Underwriters—To be determined through
competitive bidding. Probable bidders: Halsey, Stuart &
Co. Inc.; Lehman Brothers and Riter & Co. (jointly);
Equitable Securities Corp.; Merrill Lynch, Pierce, Fen¬
ner & Beane; Union
Securities Corp.; Glore, Forgan &
Co.; Smith, Barney & Co. Proceeds—Will provide part
of the new capital needed for company's construction
program.
Expected Aug. 23.
•

Oklahoma

Gas

&

Electric

Co.

Aug. 4 filed 200,000 shares ($20 par) common stock, to
be sold by Standard Gas & Electric Co. UnderwritersNames

be

to

Probable

Beane

determined

bidders:

and

The

through competitive bidding.
Lynch, Pierce, Fenner &
Corp. (jointly); Lehman

Merrill

First

Boston

Brothers and Blyth & Co., Inc.; Otis & Co.; Smith, Barnew & Co.
Proceeds—To be applied toward Standard's

corporate indebtedness.

.

-,

Oregon-Washington Telephone Co., Hood River/
Oregon
July 22 (letter of notification) 1,500 shares ($100 par)
preferred stock and 5,000 shares (no par) common stock.
Price—$98 per share for preferred and $21.50 for com¬
mon.
Underwriter—Conrad, Bruce & Co., Seattle. For
extensions and

betterments.

Palestine
June

29

Cotton

(Israeli) pound

Mills,

300,000

filed

ordinary

par

Ltd., Tel Aviv, Israel
(common) shares, one
value. Underwriter—The First Guar-

low-priced,

Aug. 4 filed 250,000 shares (no par) common stock, to be
sold by Standard Gas & Electric Co.
Underwriters—
Names

each

Jersey Power & Light Co.

filed
stock.

No underwriter at present.
Names to be furnished
underwriters are engaged.
Office, 400 Madison

Louisville

for

$1,125,000

common

Avenue, New York.
•

share

in subsidiaries.

Kenilind Oil & Gas Co., Inc., New York

etc.

25-year

hospital.

Northern

(pai
share. Underwriter—None. Pro¬
ceeds—$600,000 to be used for spectator grandstand and
$100). Price—$100

new

Offering price to be filed by amendment.

ferred plus $25 in cash.

Inc.,

June 25 filed 5,000 shares of class B common stock

•

holders

one

Enterprises,

of 4%
a

England Gas & Electric Association,
Cambridge, Mass.
Aug. 10 filed 124,601 common shares of beneficial inter¬
est ($8 par).
Offering—To be offered present stock¬

Price, all

urer.

when

Pittsburgh

,

/

underwriter.

Aug.

Aug. 3 (letter of notification) 600,000 shares of common
stock (par 100).
Price—500 per share.
Drill test well,

i;

America, Boston

Aug. 1 (letter of notification) 10,000 shares of 5.% cumu¬
lative preferred stock ($10 par). Price, par, with a mini¬

No

unsubscribed shares of the new common.
price of class A $5.
Proceeds—To complete
an
ocean ferry, to finance
dock and terminal facilities,
to
pay
current obligations, and to provide
working
capital.

•

Boston

Oakland, Calif.

of notification) 9,545 shares ($1 par)
Price—$9 per share. Underwriter—Ste¬
phenson, Leydecker & Co., Oakland, Calif.
' (

18

Offering

and
working capital to
manufacture
medium-sized station wagon.

New York.

corporate

Standard's

a

Atlantic

Gulf

determined, but the stock

will not be sold below the market
price on the New York
Stock Exchange at the time of the

•

Proceeds—To

indebtedness.

common

stock

Tem-

June

stock.

r

Francisco Sugar Co.

porarily postponed.

;

phosphorus.

Glore, Forgan & Co. and W. C. Langley & Co. (jointly).

Aug.

ment

Aug. 4 filed 60,.000 shares series E ($25 par) cumulative
convertible preferred stock.
Underwriter—Dean Witter

!

—

ward A.

California

ISSUE

PREVIOUS

shares, plus

For payment of outstanding notes.

par.

SINCE

Machinery & Equipment Corp.

manufacture of elemental

Thursday, August 11, 1949

Registration

(8/16-17)
July 26 filed $8,000,000 20-year debentures, due 1969.
Underwriters
Kidder, Peabody & Co. and Mitchum,
Tully & Co. Proceeds—General corporate purposes, in¬
cluding completion of facilities being constructed for

—Batkin & Co., New York.

property and for working capital.

'

Food

in

ADDITIONS

INDICATES

CHRONICLE

FINANCIAL

Now

Securities
•

&

brokers

[dealers
underwriters
fa*.

«■.

v

'

-

C

>/

Volume 170

Number 4828

THE

COMMERCIAL

&

FINANCIAL

CHRONICLE

holders.

Consolidated Electric & Gas Co. and Middle
West Corp. will sell 120,000 shares and
34,000 shares, re¬

NEW ISSUE CALENDAR

spectively.
Utah

August 16, 1949
California Oregon Power Co., 8 a.m. (PST)__Bonds
Food Machinery & Equipment Corp
Debentures
Northern

Southern

Transmission

Common

—For construction purposes.

August 23,

1949
Northern States Power Co.
(Minn.)

Utah

Noon

(CDT)

Preferred

Equip. Trust Ctfs.

Indiana Harbor Belt RR

/

'

&

—For construction purposes.

September 8, 1949

•

September 21, 1949
New York Central RR
Equip. Trust Ctfs.

dian Securities Corp., New York.
Price—$5 each.
ceeds—To expand weaving facilities.

Pro¬

Power Petroleum Ltd., Toronto Canada
April 25 filed 1,150,000 shares ($1 par) common of which

1,000,00c) on behalf of company and 150,000 by New York
Co., Ltd.
Price—50 cents per, share.
Underwriters—
S. G. Cranwell & Co., New York. Proceeds—For admin¬
istration expenses and drilling.
Statement effective
June 27.

Renaissance Films Distribution,

Victor

Western American Life Insurance Co., Reno
March 30 filed 11,975 shares ($10
par) common stock.
Price—$40 each. Underwriter—To be named by amend¬
ment.

Proceeds—To qualify the company to sell life in¬
in any state.

surance

Western Oil

Fields, Inc., Denver, Colo.
May 19 (letter of notification) 800,000 shares of common
capital,
Price, 250 per share.
Underwriter—John G.
Perry & Co., Denver, Colo.
For working capital and
drilling of wells.
V

Inc.,

29

filed

40,000 shares

(par

$25)

5%

B preferred will be offered at $25 per share with one
share of class C given as a bonus with each 4 shares of
class B purchased.
Proceeds—To pay balance of current

liabilities and working capital.
Resort

Airlines, Inc., Southern Pines, N. C.
of notification) 54,000 shares ($1 par)
stock, of which 50,000.shares offered by com¬
pany and 4,000 shares by George B. Wilkinson, Charlotte,
(letter

C.

Underwriter—Marx

&

Co.j New York.

Price—

$5 per share. To be used for equipment and additional
working capital in connection with the company's air
'

cruise service.
•

St.

Aug.

.

common

stock.

Offered—Offered

by Eastern States Corp., Baltimore,
1,000,000 shares, in exchange for outstanding

of

owner

securities of Eastern States.

For each of the 40,000 shares

of Eastern States series A $7 dividend preferred
stock,
9 shares of St. Regis and $4.79 is
offered; for each of the

60,000 shares of Eastern States series B $6 dividend
ferred, 8Vs shares and $4.43 is offered.
•

Sierra

pre¬

Madre

Mining Co., Spokane, Wash.
Aug. 2 (letter of notification) 400,000 (250 par) non¬
assessable common shares.
Price, par.
Underwriter—
Alvin William Mackey, Spokane.
ate

mining properties.
Spokane, Wash.

Alabama

Eugene J. Nord.
& R. C. Miller &

711

20,000 shares of capital

by Edward G. O'Brien and 20,000 by

Price—$1.10 each.

Underwriter—E. W.

Co., Philadelphia.

Co.

company may acW

banking
possible
Boston

$80,000,000 of bonds
3%s, due 1972.
Investment

reported as preparing to compete for a
issue include: Blyth & Co., Inc.; The First

groups
new

Corp.; Halsey, Stuart & Co. Inc.; Morgan Stanley

& Co.

American

July 27

Gas

reported

&

Electric

four

Co.

investment

banking groups are
forming syndicates to submit competitive proposals for
the

underwriting

500,000

additional

company's

of

common

proposed

shares.

The

offering
groups

of

are:

Union Securities Corp.; The First Boston Corp.; Dillon.
Read & Co. Inc.; Blyth & Co., Inc. and
Goldman, Sachs
& Co. (jointly),
The shares will first be offered, about

Oct. 1. for subscription by company's stockholders, in
the ratio of one new share for each nine held.

Appalachian Electric Power Co.
July 23 reported company expects to sell, probably after
the turn of the year, $30,000,000 in new first mortgage
bonds.
Probable bidders include: Kuhn, Loeb & Co. and
Union Securities Corp. (jointly); Harriman Ripley &
Co.'Inc.; The First Boston Corp.; Halsey Stuart & Co.
Arkansas
June

29

Power

reported

&

Light Co.

company

,

plans sale in

Probable bidders:

September of

Halsey, Stuart &

Inc.; The First Boston

Corp.; White, Weld & Co.;
Webster Securities Corp.
(jointly); Equitable Securities Corp.

Lehman Brothers ajird Stone &

Central

and

and

100

shares of 6%

sale

(8/24)

of

preferred stock.

medicines

and

for

stock

For manufacture

medical

research.

No

underwriter.

Texas

Gas

Transmission

Co.

(8/18)

July 28 filed 211,225 shares ($5 par) 'common stock (part
of
at

250,750 block bought by 14 stockholders last July
$8 a share). Underwriter—Dillon, Read & Co., Inc.
a

Mrs. Tucker's

Foods,

Inc.,

Sherman, Texas

Nov. 26 filed 200,000 shares of common stock (par $2.50)
of which 80.000 will be sold by the company and 120,000
Ehares by certain stockholders. Underwriter—Rauscher,

Pierce & Co., Inc.,

Dallas, Texas. Proceeds—For genera)

corporate purposes.

"

,

'

•
2413 Farragut Avenue Building Corp., Chicago
Aug. 5 (letter of notification) 630 shares ($5 par) com¬
mon
stock.
Price—$100 each.
To be sold by Sol A.
Hoffman, President; David Greenberg and Samuel J.

Hoffman,

Vice-Preside

Underwriter — Draper

&

V
United Minerals Reserve Corp., Chicago
July 27 (letter of notification) 270.000 shares of common

Underwriter—Edward W. Ackley
& Co., Boston. For development of mining properties,
Price—$1 each.

/
Upper Peninsula Power Co.
Sept. 28 filed 154.000 shares of common stock

Underwriters—SEC has

The company will receive bids at noon

(CDT) on Aug.
24, in Chicago, for its proposed offering of $5,640,000 in
equipment trust certificates. The certificates will be
dated Sept. 1, 1949, and are to mature in 30 semi-annual
instalments of $188,000 each, beginning March 1, 1950,
and ending Sept. 1,
1964.
Probable bidders: Halsey,
Stuart & Co., Inc.; Lee Higginson Corp.; Salomon Bros.
& Hutzler; Harris, Hall & Co. (Inc.); Harriman Ripley
& Co. and Lehman Brothers (jointly).
•

Cuba,

granted

petitive

(par $9).
exemption from com¬

bidding. An investment banking group man¬
aged by Kidder, Peabody & Co.: Merrill Lynch, Pierce,
Fenner & Beane, and Paine, Webber, Jackson & Curtis,
! may be underwriters. Proceeds—Will go to selling stock¬




Republic of

Aug. 4 Havana official circles confirmed reports that the
Cuban Government is negotiating for the sale of approx¬
imately $100,000,000 of bonds in the United States to
finance a comprehensive program of public works.
It
was stated that $40,000,000 of the loan will be obtained
this year, $30,000,000 in 1950 and $30 000,000 in 1951.
Out of the first instalment of the loan, Cuba would repay

$6,000,000 of the $25,000,000 loan obtained from the Ex¬
port-Import Bank in 1941. The First Boston Corp. was
mentioned

Kramer, Inc., Chicago.

stock.

Chicago Milwaukee St Paul & Pacific RR.

Enterprises, Inc., Andrews, N. C.
common

Service

a

market in September.
Probable bidders:
Halsey,
Stuart & Co. Inc.; Union Securities Corp. and Harriman
Ripley & Co. (jointly); Merrill Lynch, Pierce, Fenner &
Beane and White, Weld & Co. (jointly); Blyth &
Co.,
Inc., and Kidder, Peabody & Co. (jointly); Lehman
Brothers and Stone & Webster Securities Corp. (jointly).
•
Hartford Electric Lig'it Co.
Aug. 31 stockholders will vote on creating an authorized
issue of 300,000 preferred shares (par $50).
Company'
proposes to register with the SEC 160,000 shares. Pro¬

will

be

Indiana

to

used

Probable

program.

finance

company's

underwriter:

Parbor

Belt'RR.

Putnam

construction

&

Co.

(9/8)

July 18 reported company expects to sell September 8
$2,970,000 10-15 year equipment trust certificates. Prob¬
able
&

bidderr: Halsey, Stu"rt & Co. Inc.; Salomon Bros.
Hutzler; Harris, Hall & Co. (I • c.); Harriman Ripley
(jointly).
■ v

& Co. and Lehman Brothers
•

Iowa-Illinois

Gas

&

Electric

Co./;-*"!'- •'•••

Aug. 8 reported

company may be in market in Septem¬
$10,000,000 bonds.
Probable bidders:
Halsey, Stuart & Co. Inc.; Blyth & Co., Inc.; Glore, For¬
gan & Co.; Harris, Hall & Co. (Inc.); Lehman Brothers;
Harriman Ripley & Co., Union Securities
Corp.; and
White, Weld & Co. (jointly); Equitable Securities Corp.;

ber-October with

The First Boston Corp.
Iowa

Power

&

"

Light Co.

Halsey, Stuart & Co. Inc.; Salomon Bros. & Hutzler;
Kidder, Peabody & Co ; Lehman Brothers; Blyth & Co.,
Inc.;

W. C. Langley & Co., and Union Securities
Corp.
(jointly); The First Boston Corp.; Glore, Forgan & Co.,

and A.

in

reports

as

a

principal in the negotiations.

Press dispatches from Havana, Aug. 9, however, stated
that Cuban banks have notified the government that they

willing to underwrite a government bond issue of
$35,000,000 with option to subscribe to $32,500,000 in
each of two succeeding years.
•

(jointly); Harriman Ripley &

•
Kansas City Power & Light. Co. :
Aug. 8 reported company probably will be in market later
this year or early in 1950 with $12,000,000 bonds. Prob¬
able bidders: Halsey, Stuart & Co.
Inc.; The First Boston
Corp.; Glore, Forgan & Co. and W. C. Langley & Co.
(jointly); Lehman Brothers; Equitable Securities Corp.;
Kuhn, Loeb & Co.; Salomon Bros. & Hutzler and Union

Securities

El

Paso

issue of

Natural

Gas

Co.

stockholders

issuable in series.

It is understood that 65,000

the

issued

stock

will

50,000 will be

be

offered

in

the first

series.

•

and

White,

company possibly will raise additional
funds this Fall through sale of $5,000,000 bonds. Probable
bidders: The First Boston Corp,; Halsey, Stuart & Co.

Inc.;

Union

Securities

Corp.;

Harriman

Ripley

White, Weld & Co.; Blyth & Co., Inc.
•>'

New

York

Central

RR.

&

;

(9/21)

Co.;
,

©

July 30 stated that company is expected to sell at com¬
petitive bidding about Sept. 21 an issue of $9,120,000
equipment trust certificates. Probable bidders: Halsey,
Stuart

&

Boston

Co.

Corp.;

Inc.; Salomon Bros. & Hutzler; The First
Harriman Ripley & Co. and Lehman

Brothers.
New York

Chicago & St. Louis RR.

Aug. 10 reported

company is planning the sale of $3,500,000 equipment trust certificates. It is expected that this
issue will be ready for sale at competitive

bidding early
Halsey, Stuart & Co.;
Salomon Bros. & Hutzler; Harris, Hall & Co. (Inc.).
in

October.

Probable

bidders:

Pacific Power & Light Co.
June 28 company contemplates the Issuance by Nov.

15,
next, of approximately $7,000,000 additional first mort¬
gage bonds to retire outstanding notes and to finance

its

construction

program.

Probable

Stuart & Co. Inc.; Blyth & Co.,
Co.; W. C. Langley & Co. and

bidders:

•

Tennessee

Gas

Halsey,

Inc.; Kidder. Peabody &
The First Boston Corp.

(jointly); Union Securities Corp., Equitable
Corp. and Salomon Bros. & Hutzler (jointly).
Transmission

Securities

!

Corp.

July 20 the FPC in granting company authority to extend
its natural gas pipeline from Eastern Kuntuck to Buffalo,
N. Y., conditioned its order by requiring company to sell
at competitive bidding any debt securities issued to fi¬
nance

the facilities. Probable bidders:

Stone

&

Webster

Securities Corp. and White. Weld & Co. (jointly): Kuhn,
Loeb & Co. and A. C. Allyn & Co. (jointly); Halsey,
Stuart & Co. Inc.
•

Union

\

Electric

Co.

■y>:\

of Missouri

Aug. 8 reported company will be in market before year's
with a bond issue of $15,000,000. Probable bidders:
Halsey. Stuart & Co. Inc.; The First Boston Corp.; Har¬

end

riman
•

Ripley & Co.; Blyth & Co., Inc.

West

Penn

Electric

Co.

Aug. 9 directors authorized filing with SEC a refinancing
plan, which will provide for issuance of $31,000,000 sink¬
ing fund collateral trust bonds, to be sold competitively,
856,895 additional

be offered

to

common

shares, 468,621 shares to
stockholders at rate one-for-five,

common

the balance, 388,274 shares to be offered in exchange for

shares of

preferred
written.

these,

Co.

&

Kansas Power & Light Co.

Of

to holders of $5,000,000 of the

Shields

Aug. 8 reported

and

will vote on authorizing a new
200,000 shares'of second preferred stock (no par)

12

Corp. (jointly);
(jointly).

Weld & Co.

are

Sept.

G. Becker & Co,

Maine Power Co.

•

Swan's

bonds.

•
•

toad construction, exploration and development.

Aug. 1 (letter of notification) 100 shares of

SEC

the

Inc.

per share (U. S. funds). Underwriting—None. Proceeds
—Funds will be applied to the purchase of equipment,

•

the

registration
25-year first mortgage
It is expected that the issue will be
ready for

Co.

Aug. 9 reported company expects to raise construction
funds this Fall through sale of additional common stock.
Expectations are that -the number of shares to be in¬
volved in the offering will range between 150,000 and
300,000. Probable underwriters: The First Boston Corp.

Sudore Gold Mines Ltd., Toronto, Canada
June 7 filed 375,000 shares of common stock. Price—$1

(subsidiary of Cities

company

preparing to file with
covering $18,000,000

4 reported company may be in the market this
with $7,500,000 first mortgage bonds and $3,000,000
stock, the latter to be sold to United Light &
Rys. Co. (parent).
Bidders for bonds may include

to refund its first mortgage

Co.

Denver^ Colo.

(letter of notification)

stock to be offered

Power

July 28 reported

$8,700,000 bonds.

Silver Bell Mines Co.,

July 27

To develop and oper¬
Hutton Building,

Office,

is

common

.

Regis Paper Co.. New York
filed 860,000 shares ($5 par)

8

Co.)

statement

year

common

N.

Service Co.

Aug.

cumulative

convertible class B preferred stock and 10,000 shares of
C stock (no par). Underwriting—None. Offering—Class

July 27

Gas

:

•

Montreal, Que.
Oct.

White, Weld & Co. and Stone & Webster

July 23 reported

ceeds

Valley

Housing Corp., Victorvslie, Calif.
Aug. 1 (letter of notification) 100,000 shares ($1 par)
common stock.
Price, par. No underwriter. For organi¬
zational work, architects and engineers' fees on new
housing project.

Equip. Trust Ctfs.

The remaining 15,000
shares would be sold for about $100 a share,-Traditional

Securities Corp.

Light Co.
July 28 filed $3,000,000 first mortgage bonds, due 1979.
Underwriters—Competitive bidding. Probable bidders:
Halsey, Stuart & Co. Inc.; The First Boston Corp.; Salo¬
mon
Bros.
&
Hutzler; Lehman Brothers and Bear,
Stearns & Co. (jointly); Kidder,
Peabody & Co. Proceeds

Bonds

August 24, 1949
California Water Service Corp
Chicago Rock Island & Pacific RR.,

Power

41

company's convertible debentures.
underwriters:

Co.; W. C. Langley & Co. and Glore, Forgan & Co. (joint¬
ly); Kidder, Peabody & Co. and Merrill Lynch, Pierce,
Fenner & Beane (jointly); Blyth &
Co., Inc. Proceeds

1949

Co

■

,

Unsubscribed shares will be sold at
compe¬
bidding. Probable bidders: Harriman, Ripley &

titive
Preferred

August 18,
Texas Gas

,

shares held.

1949

Utilities Co

Light Co.

July 28 filed 148,155 shares of common stock (no par).
Offering—To be offered for subscription by stockholders
of record Sept. 13 at rate of one new for each
eight

Indiana Public Service Co.___j_Common

August 17,
Iowa

;

Vv.

Power &

(585)

Co.

stocks.

Unsubscribed

shares will be under¬
Ha^ey, Stuart &

Probable bidders for bonds:

Inc.; The First Boston Corp.; Lehman Brothers.

.

,

42

COMMERCIAL

THE

(586)

FINANCIAL CHRONICLE

&

the civil

New Steel Wage
(Continued from page 3)
if they were in
terly unrelated to
in
the
economy.

as

vacuum, ut¬
other factors

a

Plant prices
jobber prices in

were

less

the

market.
Prices depend
capacity of operation.
At

than

102%, there was
At about 100%
was

a

black

a

market.

capacity, there
market.
At 90% of
the market is normal

gray

capacity,

and at 70% of

capacity, prices

are

How could steel prices be re¬

cut.

fifth

pacity and the first quarter 1949
with over 101 % capacity.
Is this
or correct?
Obviously pro¬
ductivity per man depends on
total production.

What

absurd result.

an

How¬

if he had used comparable
years when the industry operated
at about the same percent of ca¬
pacity, the increase in productiv¬
ity would be
consistently low,
ever,

about

3 °/o

per

For

annum.

the worker

talk

Is

months

seven

thermore,

scrap

materials
this

are

the

later?

time

Fur¬

other

and

rising

now

to

raw

again.
selling

cut

prices?
Mr. Nathan present

fragmentary

and misleading data. "In the past,
the industry has preferred to cut

of

good year, he could have ob¬
even more exaggerated re¬

a

comparing
capacity with 1941
at 97% of capacity, the increase
in
productivity averages 10.6%
per annum.
Such juggled statis¬
sults.

For

underlie

tics

support

diately following

ises

Production

and

From

to

1937

Price

1938,

"Past

Trends."

steel

wage

a

the falsity

conclusions

about

The worker contributes little to

increasing

Mr.

Nathan Omits t(> mention that the

hourly wage rate was pushed up
by the union during the 1937
boom by the same tactics that it is
now
using.
As a result, wages

productivity.

rises

when the work flows less smooth¬

Increasing productivity is due
to the investor who puts up new
money, to the managers and en¬
gineers who devise better methods
ly.

machinery.

had

the workers'

steel

prices

been

cut

more

drastically?
It is not true that, "In the past
steel industry has not cut

prices."

Scrap

falls

finished steel later.

first

For

and

example,

from' 1913 to 1914 heavy melting
scrap,
Chicago, fell from $11.21
to $9.55 and the price of finished
steel

from

$33.22 to $28.66.
In
1920, scrap dropped from $23.71
to $12.61 in 1921, while finished
steel
dropped
from
$74.74
to
$42.48

in

1922.

Similarly,
in
scrap dropped from $16.30
to $7.54 in 1932, whereas finished
steel
dropped
from
$44.18
to
$37.02 in 1933.
These price de¬
1929

clines

are

and the inventor who creates

fact, in

the

substantial.

In

mak¬

Mr.

Nathan finds it convenient to ig¬
them to suit his case.

nore

production

and Productivity

Production

fluctuates

but
is

the

3%

long-term

per

annum.

violently

growth
Mr.

trend

Nathan

states that

two

10.6%

to

than

here.
steel

He

at

61%

capacity and 1948 with 94%
PRICE RANGE OF U.S. STEEL

ca-

wages.

How

can

any

,

industries and Soviet state trusts
demand

profits.
However, Mr.

statistical

years.

Nathan's

grave

and his resulting
conclusions
and
unsound
error

recommendations

ex¬

1939

compares

operations

de¬

system work without
profits? Even British nationalized

revealed

with

wage

Murray constitute
increase, or more
current percentage of

the

economic

The

Mr.

20%

profits to

false

posed

13.3%.

of
a

afford to raise wages now.
Nathan's basic fallacy
is

1939

even

anomalous

productivity rose 50%
to 1949, first quarter.
Therefore, the steel industry can

from

"The steel workers have

scarce¬

ly shared in the high prosperity
of the industry," says Mr. Murray.
Well, that depends on what years
you select for comparison.
From
1939 to 1944, U. S. Steel produc¬
tion rose 1.75 times, employment
costs (annual wages, social insur¬
ance, etc.) rose 2.48 times and in¬
after

come

profits tax rose
Mr. Murray says, "The
shared
modestly." The
excess

1.48 times.

workers

figures indicate they shared hand¬
somely.
Mr.

Nathan supports Mr. Mur¬

stand

by

clearly
similar

comparing
More comparable years

are

1923 or 1926, considered normal
inU. S. Government statistics, with
1937, which like 1926 was the

CORP. COMPARED WITH ALL

INDUSTRIAL STOCKS

30Q

times and income

Therefore,

rose

3.14 times.

should be raised,
says Mr. Nathan.
However, if he
had used the deficit year 1938 as
a
base, he could have presented
figures showing that profits in
1948 increased even more, rela¬
tive to wages and, therefore, an
even greater wage increase would
be justified.
If 1932 had been
used as a base, he would have
had a fantastically distorted rela¬
tion

to

that wages

prove

However, let

should

and

accurate

try to be fair

us

and

compare

1937,

the best year of the decade with

comparison would be two years
with steel operating at about the
same capacity, like 1937 and
1946,
when capacity was about 72%.
Output rose 1.08 times, weekly
earnings

1.54 times, employ¬

rose

ment costs

2.02 times and in¬

rose

fell to 0.94.

come

Such wages do

not

reflect, as Mr. Murray charges,
"exploitation of workers."
They
participated
in
the
prosperity
generously, not modestly.

goods

shows

odd-looking table

that

from 1939 to
1948,
hourly earnings rose 1.87
times and profit after, taxes 4.74
times.
But using 1937 as a base
for 1948 and the figures reported
by the U. S. Steel Corp. instead
of the entire industry, the in¬
creases are
1.95 times in hourly
earnings and 1.31 times in profits
average

after taxes.
The steady rise in the

earnings,

hourly and weekly, was accom¬
panied also by a relative rise of
wages compared to profits after
The ratio of wages to prof¬

taxes.

its

was 256% in 1913 (at 90% of
capacity), 470% in 1927 (at 80% of

capacity), 470% in 1937 (72% of
capacity), and 800% in 1948 (94%
of capacity). Thus, over a 40 year
the

workers'

share

has

steadily increasing and the

stockholders'

share

has

been

steadily decreasing.
Mr. Murray's demand of 30c per
is equivalent to about 20%

hour

of

the

S.

U.

hourly

wage

and

Steel Corp. would

for the

be equi¬

valent to about $200 million, thus

wiping out the income after taxes
of $130 million. The labor spokes¬
men

never

have made clear what

might be regarded

as a ceiling or
increases for or¬
ganized labor which must be paid
a

limit to wage

for

by

the

white

collar

classes,

prices stay

up.

desirable that would be for
the argument!
But this combina¬
tion has never yet been witnessed
in history.
Raw material prices are too
as

a

of

measure

Suppose steel
Will

another

the

ask

Suppose

argue

in¬

falls

scrap

they do

as

Nathan

un¬

wage

CIO

increase?

prices rise,

for

scrap

Will

now.

eloquently

as

for

a wage cut?
Raw material prices swing vio¬
lently. Wage rates hardly fluc¬
tuate. To yoke these two costs is

impractical, unsound and mean¬
ingless. Raw material prices at

not high.
percent of

are
as

a

1941

similar

very

and

1929

and

that

to

of

slightly

only

higher than 1937 and 1939. Cerf
tainly these tables present no iota
of justification for the great wage
increase

which

and Nathan

Messrs.

Murray

demand.

Dividends

Are
Low—The
Steel
Stockholder Has Been Subsidizing
v
The Steel Worker
\
„

Diyidends have risen less than
wages

U.

the

or

cost

of

living.

S. Steel for the period

1948, weekly
194%,
total

In

1940 to

have risen to

wages

employment

costs

(annual wages, etc.) rose to
and dividends rose to 150

223%

%.

The ratio of dividends to
wages
small but the amount undis¬
tributed equals the dividends
paid.
For the 47 years 1902 to

is

1948*
Corp. paid in div¬
7 % of its total em¬

the U. S. Steel

idends only

ployment

costs

and

the

undis¬

tributed
earnings amounted
to
temporary, flex¬ 6.5% thereof.
The ratio of divi¬
ible and subject to free sensitive
dends to wages was 5.0% in
1947,
markets.
Wages are relatively
4.9% in 1946, 3.8% in 1943, zero
permanent, rigid and monopolis¬
from 1932 to 1939
(except in 1937
tic. Besides, on what grounds can
—1.9%), 7.5% in 1926, 6.3% in
the worker claim to
participate in
1923, and 12.2% in 1913. These
such a windfall? What has labor
figures of dividends to wages are
any moment are

done to create the windfall?
the

who

owner

profit.
loss

the

takes

loss

It is

realistic and significant. Both are
risk, paid in cash. Profits are not
cash,
the but
only a bookkeeping figure.

the

and

take

Is labor willing to take a
cut wages if scrap prices
Or does labor wish to eat

or

its cake and also still have it?

Mr.

Nathan

steel

say

But stockholders

ple.
ber

individuals

by

profits

These

serves.

have been high for a decade since

attention

1939.
However, this is an ab¬
normal period of high operations
due first to war demand and then

claim

to

values.

deferred

postwar

needs.

also peo¬

are

In many companies the num¬
of stockholders exceeds the

number of employees. Some steel
stock is held in pension funds and

Are Steel Profits High?
The Record Says No

In

as

for

old

deserve

-

age

re¬

much

as

the workers' present

for

pensions. The average
of steel stock is smaU,

holding
less than

$2,500 at normal market

80 %

of

the

holders

own

peacetime, the steel industry is less than this modest amount. The
either "prince or pauper."
In the cost of living has risen for stock¬
past 40 years, except for 1948, holders also. If the stockholders
there

was

no peace
period when
industry operated over
90% of capacity for any two con¬
secutive years, nor in the past 50
years, except for 1906. The past

the

steel

abnormal

reliable

decade

as

is

utterly

un¬

Mr.

were

Nathan's

past

organized on the same prin¬
as the CIO, then the fate

ciple
of

these

the

10

com¬

parisons and future estimates

are

15 million
of

people,

American

so¬

pre¬

sented.
Ruthless union

frightening

profit

to

backbone

ciety, could be dramatically

basis for determin¬

a

ing normal peacetime policy.

will

new

policy has been
investors. Where

away

come from,
to
industry and maintain
employment? Investment counsel

money

sustain the

meaningless. His table, "Historical
profits after taxes," makes mis¬

have been

leading comparisons.

from

of

1939-41

80%

of capacity

war

at

about

operations.

during
much

were

The profits

made

were

operations

and

But

after

the

higher and, ob¬

eliminating steel stocks
portfolios since 1937. Pro¬
investors do not hold'

fessional

steel stocks.

In 1947, the National

Association

of

Investment Com-,
panies reported that of 30 invest¬

viously, profits should be higher.
During the war, 1942-45, there

ment

was

an

and

the

about 75% of the total diversified
investment companies, there were

was
can

Mr. Nathan's

been




finished

wages

increase astronomically by 1948.

and

How

rise?

period,

Source:
Standard & Poor's.
Note that U. S. Steel Corp. per¬
formed better than all industrial stocks from 1907 until 1933 but has
done decidedly worse since 1937.
;
■'1

if

times, employment costs

2.70

Mr.

says

Murray

can pay increased wages if
materials costs stay down and

must bear

rose

per

dustry

by comparing the anomalous
years, 1939 and 1948. During that
period U. S. Steel output rose 1.66
ray

increase,

Messrs.

30c

Nathan maintain that the steel in¬
raw

Mr.

cases

percentage

Using

wages.

about

if

even

all beyond
to affect. In

are

power

some

and

mands

now

Privileged Position

than

more

wage

further.

has set up.

Wages—The Steel Workers'

new

of profits to
Mr. Nathan's
years, depressed
1939 and prosperous 1948, wages
per ton rose from $22 to $44, or
2.0 times, but profits per ton rose
from $2.34 to $3.80, or 1.62 times.
Surely this is no argument for a
wage increase.
The
percentage of' profits to
wages rose in 1939 and 1948 from
con

them

mind

These

of

creases.

Mr. Nathan

that

they have as operations at 72%, with 1948 at 94%
little to do with increasing pro¬
capacity. The increases were 1.41
ductivity as any passing observer times in
output, 1.97 times in
or the "sidewalk superintendents."
weekly earnings, 2.31 times in
Mr. Nathan's fallacy is exposed
employment costs (wages, etc.)
by figuring* wages and profits per and 1.37 times in income. A fairer

ing policy, steel executives bear
in

Produc¬

output increases.
Production per man is higher at
full capacity than at half capacity
as

about 5%
and profits de¬
clined 108% from $94.9 million to
a
loss
of
$7.7 million.
What
would these deficits have been
rose

Expose

increases crash to earth.

wage

tivity

But

increase.

to

prem¬

his

duction

44%.

conclusions

of his statistical

and

prices
declined 2% while steel ingot pro¬
declined

his

hour

Nathan.

stable

1939 at 61% of

production rather than prices."
Then he presents a table imme¬
entitled

instance,

the investor?

ratio

a

material costs is

on raw

equivalent to

brittle and unsubstantial structure

ex¬

tained

or

figures

profits
Corporate profits

the national income show for 1943

Not Justify Wage Increases

Saving

Again, the percentage of profits
to wages was 23.2% in 1923, 24.8%
in 1926, $20.0% in 1937 and $13.3%
in 1948. These figures reveal the

duced when there were rumblings
of
increased costs due to wage

ample, for the U. S. Steel Cor¬
poration, at 90% of capacity for
demands and when the raw ma¬
the years 1929 and 1948, the an¬
terial costs were fluctuating un¬ nual average increase of produc¬
certainly in an uptrend for years. tivity is 2.1%.
At 67% capacity
In a relatively stable period like
for
the
years
1930
and
1936,
1923 to 1928, the index of finished
productivity increased 2.6% per
steel prices of the "Iron Age" de¬ annum. At 72% capacity, for 1937
clined from $53.94 to $43.30 per and 1946, the increase was 3.3%.
ton.
For the period 1903 to 1912,
At
82%
capacity in the years
this
index
fell
from
$37.36 to 1940 and 1945, the increase was
$30.54 per ton. Hindsight is more 3%.
None of these annual aver¬
certain than foresight.
Suppose ages remotely confirms Mr.
Mr. Murray or Mr. Nathan were Nathan's
figure
of
50%
in a
actually operating a steel plant. decade, or 5% per annum.
Would they have acted as boldly
If Mr. Nathan had followed his
in January, 1949, when raw mate¬
same technique of comparing pro¬
rials first began to fall as they now
duction in a poor year with that

these

do

bles confirm the fact that general

corporate

Declining Raw Material Prices Do

of peacetime business
from a bottom.

show?
The wages per ton were $20.5 in
1923, $20.5 in 1926, $21.6 in 1937
and $44.0 in 1948. The profits per
ton were $4.75 in 1923, $5.10 in
1926, $4.60 in 1937 and $3.80 in
1948.
Do these figures justify a
wage increase? Who is exploited,

Mr. Nathan selects his dates to

produce

Facts

vs.

service, the farmers and

the pensioners.

year

recovery

fair

free

upon

Demands—Fantasies

Thursday, August 11, 1949

profits tax of 80%
corporation income tax

excess

raised from 24% to 40%. How
these profits be
compared

with

the

The

three

postwar

years?

of

companies, with total

$1.3

billion

steel

no

and

shares

list of the first

included

The

process

very active and price con¬
trol and excess profits taxes were

union

threats

years

of

eliminated;
profits
should
be
higher than in 1942-45 or 1939-41.
Profits

spect

not

are

to

high

with

For

wages.

re¬

example,

the'

of

fleeing

was

from

persistent.

Lehman Corporation at the end of
1936 had $103.8 million of assets
of

which

million,
1949,

the U. S. Steel Corporation shows
a ratio of net income to
employ¬
ment costs

steel

had

stocks

4.7%.

or

the

held

(wages, etc.) of 13.3%

in

(largest) 50 hold¬

ings.

1946-48

postwar

were

assets!

constituting,

amount

was

zero.

Corporation
$64.4

at

$4.9

were

On
of

June

steel

30,

stocks

Tricontinental

the

million

for 1948, 13.4% in
1946-47, 18.5%
in the prosperous
years 1936-37,

which steel stocks

and

17.8% in the normal years
1921-25. For the long
term, profits

steel

are

end

of

of

1936

assets

of

lion.

declining

with

respect

to

lion,

not

are

spect to sales.

high

with

re¬

The annual report

of the U. S. Steel

Corp. shows the
percentage of net income to sales
from 1948 back to 1902. The aver¬
ages show

a steady decline from
16.7% in 1902-10; 13.0% in 191120; 10.0% in 1921-30; 5.7% in
1936-40; 5.9% in 1946-47; and
5.2% in 1948. This ratio gives a

and

picture
income

because

These

power.

the

preceding

showed
wages

But

even

sales
dol¬

purchasing
findings confirm
figures which

ton

1948

in

same

corresponding
per

ton for

both

recorded

are

lars of about the

and

and

trends
profits

prewar

Mr. Nathan's

in
per

years.
own

ta¬

also reveal

industry

1949,
$470,000 or

the

open-end

a

State

Street

Trust

had

in

December,

million

$50

of

assets

steel

trusts

flight from the steel
by professional inves¬

The

tors.

Boston

or

On June 30,
were

of total assets of $62.6 mil¬

Similarly,

Profits

true

stocks

0.8%

wages.

3.5%.

or

$2.3 mil¬

were

shares

were

of

$2.6%

of

1936,
which

million

5.2%.

By June, 1949, of the
$62 million of assets, steel shares
The Massachusetts In¬
Trust, the largest in the
world, showed a like flight. At
were

zero.

vestment

the end of 1936 of the
lion of assets in its

shares

3.9%.

$123 mil¬

portfolio, steel
totaled
$5.0 million, or
But by June;
1949, of the

$213 million of assets, steel
shares
$1.7 million, or Q,B%. This
terrific
liquidation reflects impartial and realistic appraisal of

were

.

THE

Number 4828

170

Volume

what

the
to

labor union has
industry
which

steel

done

the

feeds it.
>

As

father

then

and

pleaded
for
clemency' on
the
grounds that he was an orphan.

Therefore,

result of such liquidation

a

his

murdered

COMMERCIAL

companies

fi¬

must

disfavor with in¬ nance expansion out of their un¬
distributed
earnings,
and
it is
vestors, steel shares have been
lagging. Although the Dow-Jones precisely these undistributed earn¬
index of industrial stocks in 1946 ings that Mr. Murray now wishes
exceeded its 1937 top and many to preempt for a wage increase.
other shares did substantially bet¬ This is a chain reaction of the
and of popular

ter; most steel stocks did not. At
present even the better large steel
stocks sell at a low price-earnings
ratio and at fantastic high yields,

averaging

10%

over

Investors

unreasonable

Cycle

Demands

of

Mr.

of

Sheet

Are

stockholders

$70

per

liquidating

by

net'current assets,

the

now

;;,4;,';*7777;/7;v 777:7;

The steel stocks have been in
market

in

relative

to

relation

Dow-Jones Average.

a

the

price of U. S. Steel
Since

group.

3937

the

trend- has been persistently down.
An unreasonable labor

steel

This is not

leadership

for

worker?

threatens

the

country

if

raised

now

and

cold

But

these

are

receiving
the
highest
in
history.
Logically,

wages

try

purchasing
workers in de¬

get

to

for

power

pressed

more

the

industries,
radio.

and

like textiles,
Or, if lack of

Insurance and pensions are mat¬

ters for uniform

islation

and

relative

But

record

an

the

for

downtrend

leaders.

explain why

by

benefits

Represent

to

consumers

It is not

work¬

a

ers'

potential bonus on top of
record high wages.
Mr. Murray
t^wks that the steel companies
tsave
"access to enormous
re
to

meet

for

the

union's

de¬

increases. Simi¬
larly Mr. Nathan thinks the com¬
panies put too much into invest¬
wage

ment and too little into

expenditures
wishes to

only

and,

few months

a

consumer

therefore,

increase wages and to
plant investment.
Yet

decrease

the

ago

CIO

'yam rocking the country and be¬
laboring Washington about the
need

for

building

plants.

1041; to
1922

earnings
constituted

from
aboui;

to

total

earnings but from

He

he

selling
His

stockholder

efficien,

more

increases

productivity,

possible to raise wage
Tates, shortens hours, lowers costs,
creates jobs and makes' for
the
country's progress. Undistributed
profits also enable companies to
weather
,

depressions,

to

.

stay

business and to continue to
ploy

workers.

Tund

for

not

the

em¬

They are a trust
long term and are

be exploited

co

gaining.

in

They

are

in wage bar

fruits of

man

sagers' caution which labor leaders
may well

If,
are

imitate right now.

as Mr.

high,

v

Murray

it

says, profits
due
to modern

is

eqripment, thanks

to

the

unpaid
plants.
The reward should go to the selfdenying stockholders and not to
dividends

reinvested

in

the workers who have
forced wages

could

storks

yielding

issues

TV

yield
have to
20%

on

this

dilemma

not dare

-

wage

sold

the

10%, how
to

.

'<

us
e

did

He
in

busi¬

erate the recession which has

now

already blighted 17 of the 20 in¬

City
August compilation of prof¬

Stockholders will continue to

frightened by all-powerful and

to justify the wage increase
demanded. His scientific reputa¬
tion

would

be

he

in

did

1945

and

did

He

of

Yet his entire calculation

profits, from which he would

take increased wages,

forecasts.

is based

on

He says: "Profits under

prospective cost-price relation¬

...

ships

high as to assure
large profits for the steel industry
after
granting substantial Wage
are

so

increases."
He

resumes

his role

prophet
resulted in the

gloom which

as a

three previous wage demands He

between

says that at 70% of capacity
steel, there will be much un¬

employment and "our system
survive."

wage

if

his

granted,

Mr.

However,

demands

thinks,

are
we

may

shall avert that

unit,

With

union

intelligence and reason¬
negotiations, our

the

earnings

are

would demand an
increase.
This is l

cycle.

It recalls the story
defendant in court who had




when

offset

to

verted

checked, it may not survive. The
important point is not the percent¬
age of capacity operations, but the
need to keep the employer out of
he

can

as

continue

possible,
to

the

the

budget is out of

corporation tax

increase

to

and

thus

can

in

help

th

TEXAS GULF SULPHUR COMPANY
Tin Board of Directors has declared

so

offer

that
jobs.

Raising

body.

capital sto k, payable September 15,
1940, to stockholders of record at the close

with

industry

cuts

prices?

is

Here

of business August 23,

Murray-Nathan

•
•

the Economy

A rise in wage will be a spur to

inflation.

It

will

increase

costs

made

leaders in
of the

war

Europe.

Since the end

they have been fight¬

ing all wage increases and urging

price decreases.
ers

have

tasted

Murray says that
is imperative to

bitter

cut

of

higher

or

.

wages and ol

O'okiep Copper Company
Limited
Dividend No.

Shares

84

Dividend No.

one

of

shilling six pence per share on the
Ordinary Shares of the Company payable
September 9, 1949 to the holders of Ordinary

Corporation
t

11

The Board of Directors today declared a divi¬
dend of

On

August 9, 1949, a dividend of SEVENTYFIVE CENTS (75c) per share was declared
on the Capital Stock of NEWMONT M INING
CORPORATION, payable September
15,
1949, to stockholders of record at the close of
business August 26, 1949.
GUS MRKVICKA, Treasurer.

record

the

at

close

of

business

August 19, 1949 subject to the withholding of
the Union of South
holders tax in
half percent

The

Africa non-resident

the amount of

seven

share¬

and

one-

(7Yzlo).

directors

authorized

the

distribution

of

the net amount of said dividend on Septem¬
ber 9, 1949 to the holders of record at the close
of business on August 19, 1949 of American

Deposit
dated June 24, 1946. The net
payable hi United States funds will be
published when ascertained.
amount

a

LAN

ELLS

E-W

By order of the Board of Directors.

wage

H. E. DODGE, Secretary.

COMPANY

supply

New York, N. Y., August 10, 1949.

purchasing
bust

power and prevent a
that the steel industry

and

NOTICE

DIVIDEND

afford to raise wages and to

can

reduce

selling prices

because

of

been

share

the

on

September 15, 1949,
of record

per

stock, payable

common

stockholders

to

August 24, 1949.

applied

at the top of
boom.
Since
1909

past

every

quarterly dividend of 40 cents

a

tistics since 1902 reveals how ab¬
surd this recommendation is if it

had

of directors has declared

The board

the high profits of the industry.
A glance at the U. S. Steel sta¬

WILLIAM

A. MILLER, Secretary-Treasurer

REEVES BROTHERS,

every year of high record produc¬
tion was invariably followed by

DIVIDEND

sharp

decline, as for example
in 1913 and 1914, 1920 and
1921,

A

1929 and

share has been

cold

1932, 1937 and 1938. The

figures cannot be argued
Yet Mr, Murray's argument

away.

would

have

required

THE DAYTON POWER AND

i s in g

r a

Mr.

Nathan

price

would

decrease

but

prefer

m "

a

a

Sep¬

of the

Company will not be closed.
J. E.

REEVES, Treasurer

August 5, 1949

Quarterly Dividend

recommends
The Board of Directors has declared

regular quarterly dividend of 45c

a

a

per

declared, payable

record at the close of business

DAYTON, OHIO

13th Consecutive

wage

not

quarterly dividend of 25c

tember 6, 1 949. The transfer books

LIGHT COMPANY

in 1913, 1920, 1929 and 1937,
just before the bust began.

ihc.

NOTICE

October 3, 1949, to stockholders of

wages

price decrease to the

share
pany,

payable

on

stockholders of

many.

a

per

the Common Stock of the Com¬

on

He thinks that prices cannot and
will not come down and that;

business

therefore,

September 1, 1949 to

record

the close

at

of

THE

August 5, 1949

should

wages

go

on

August 17, 1949.
B. C. TAYLOR, Treasurer

up.

But

he
conveniently overlooks
how in steel scrap a black market
became

Electric

gray market and then
price collapse; how in
practically all industries except
a

came

the

steel

and

COMMON DIVIDEND

automobiles, scarcities
changed to surpluses and
fancy prices, to basement bargain
prices.
Mr. Nathan asks for

for

crease

the

a

The

com¬

ELECTRIC BOAT COMPANY
445 Park

..

the

public

that

steel

raised.

would set

a

wages

Such

7

,

The

countershould

increase

More

building

would

from

this

the

lower

at

the

R.

T reasurer

em¬

"THE GREATEST NAME

To
unions

IN WOOLENS"

building
featherbedding

MIIS-CHAIMERS
MFG. CO.

Liquidation Notice

located

necticut,

at

National Bank of Moosup,
the State of Con¬

Moosup, In
is closing its

tors of the association
notified

the

to

affairs.
are

All

credi¬

therefore hereby

present claims for payment
at said bank.
/

Dated June

24,

1949

dividends
A

declared:

were

$1.00

regular quarterly dividend of
per share on the $4 Cumula¬

tive

Convertible

A

Preference

A

DIVIDEND NO.

quarterly

dividend

of

12

eighty-one and

one-quarter cents
(81
per share on
the 3%%
Cumulative Convertible Pre¬
ferred Stock, $100 par value, of this Com¬
ber

5,

has been declared, payable Septem¬
1949, to stockholders of record at

the close of business August 19, 1949.

Transfer

books

Checks will

will

not

be closed.

regular quarterly dividend of
per share on the 7% Cumula¬
Preferred

Stock

Dividend

checks

New

P.

August 4,

1949.

be

mailed

York.
F.

S. CONNETT,
T reasurer.

E. HAWKINSON,

Secretary and. Treasurer.

will

by the Guaranty Trust Company of

be mailed.
W

payable Oct.

14, 1949 to stockholders of record
Sept. 30, 1949.
A dividend of $.50 per share on
the Common Stock, payable Sept. 15,
1949 to stockholders of record Sept.
1, 1949.
Transfer books will not be closed.

to

DAWSON,
Liquidating Agent

Prior

Stock payable Sept. 15, 1949 to stock¬
holders of record Sept. 1, 1949.

$1.75

1949.

PREFERRED

,

undersigned

BENJAMIN

101

tive

tember 8,

pany

Plainfield

NO.

regular quarterly dividend of forty cents
(40<l) per share on the issued and out¬
standing common stock, without par value,
of this Company, has been declared, pay¬
able September 30, 1949, to stockholders
of record at the close of business Sep¬

;

Once steel wages and raw ma¬

DIVIDEND

A

seven years before the
Lower-priced
steel
will
possible lower-priced cars

employment.

AT the meetingAmericanBoard of
of the Woolen
Directors of
Company, held today, the following

COMMON

versus

The

MEIKLEJOHN

wages.

eliminate

more

1949.

July 28, 1949.

costs

ing-union members.
In automo¬
biles, the average car is 11 years

and

P.

'

less well paid than the build¬

make

this

'

all the restrictions on pro¬
duction which put housing beyond
the reach of those workers who

old

has

Company, 16 Wall Street, New
15, N. Y., Transfer Agent.

York

and

are

■

Directors

war.

keep the steel workers
end

of

Checks will be mailed by the Bankers

Trust

backlog and shortage of housing,
of automobiles, and other deferred
inherited

Board

close of business August 19,

pattern for other in¬

dustries with evil consequences to
the
country.
There is a great

needs

Secretary

day declared a dividend of twenty-five
cents per share on the Common Stock
of the Company, payable September 8,
1949, to stockholders of record at the

It is to the public's best

be

H. D. McDowell,

Avenue

•New York 22, N. Y.

up.

is

Electric Company has declared a
quarterly dividend on the Common Stock
Company in the amount of fortyfive cents (45tf) per share, payable on
September 30, 1949, to stockholders of
record at the close of business on Sep¬
tember 9, 1949.

of the

panies,
but
under
nation-wide
bargaining even the struggling
marginal companies will be sewed

demand?

Board of Directors of The West

Pcnn

wage in¬

high-profit

Company

(INCORPORATED)

have

These labor lead¬
the

>

Secretary

•

Shares issued under the terms of the

increase

war.

costs

ing prices

and the Public Reaction
Mr.

early in the next recession, which
is certain and inevitable though
timing may be difficult.

on

>•

test of the honesty of the MurrayNathan alternatives of lower sell¬

Conclusions

should

Adverse Effect

1949.

RICHARD T. FLEMING,

£

Agreement
The

ployed at current high

A Wage Increase Now Will Have

divi¬

pany s

Is Mr. Murray willing to

draw his wage demand if the stee

of the

wages

wages at the peak of a
boom will hurry him into the red

an

di¬

a

dend of 75 cents per share and an additional
dividend of 50 cents pec share on the Com¬

and cheaper goods for every

more

better-paid steel workers.

not

long

money

balance and when the rest of the

interest

as

new

will

country,
including
lower-paid
workers, will have to pay taxes

system can survive even if steel
operations decline below 70%. It
has. But if union leaders are not

democratic, anti-communist labor

and

time

ableness in wage

the red

put forth

and

Murray's

DIVIDEND NOTICES

historic record by management o

means that the Treasury
deprived of income at a

be

What

leaders

15%

will

fate.

But in

woulc

tax, also

now

for

Mr.

of

not

a

it would weaken Mr. Murray's de¬
mands.

to

leaders

Philip

con

by raising wages now but b.,
greater efficiency, lower cost pei

increase to his clients,
price decrease to the public
decline as
and a wage increase to the few,
1946 because

stake.

at

not wish to forecast

labor

of

not

Last but not

ness

possible ef¬
ficient production and lower sell¬
ing prices during the 1920s and
will
do
so
again.
Mr. Murray
should follow the example of the

can

investors?

stock

■

;

rise

a

material

that

*

obvious.

forecast

over

the

high and

is

profits.

and

ing prices that occurred from 1921
onward. Stable wages and stable

the market prices.
say

?

costs

and retard the reduction in sell¬

be

event,

determines

consistently

10%,
earn

forecasting

beyond what the
bear., With
steel

Traffic
ww

avoid

demand

Yet

prices,

Nathan

the
in

would

demand.

Withheld; from
p i ant s,
makes it

make

so
jittery as to with¬
buying
except
for
most
urgent necessities and thus accel¬

a

"Predictions are «ot
He repeatedly stated

says:

not

reinvested

Forecast

Contrary

1929, undistributed earn¬
ings were only about 35%. This
surplus of profits above dividends
and

Does

Despite His Denials to the

of

1947

of

Nathan

Robert

steel

more

7

Undistributed
54%

legislation.
Should not old-age
pensions be treated similarly hon¬
estly and fairly?

for

Stockholders

go

and employees.

mand

matter of State and Federal

a

that

Profits

Self-Denial

serves,"

and

presented."

Undistributed

;

would

hold

the

proving

union

of

the retired worker in the textile

darkening

ever

dismal

steel

industry.

But

round

consumers

government leg¬

not

power

John L. Lewis cannot

sta¬

not

are

and

country
as
well.

forecast but history.
a dark
fu¬

a

Nathan

substantially.

*

make its

can

Newmont Mining

raised.

be

or shoe industry or office workers
unreasoning
economic
should get so much poorer treat¬
analyst are leading the steel in¬
ment than Lewis' members.
Un¬
dustry along a' dangerous road,
employment insurance is uniform
which bodes ill for the

the

fourth

Bank

Labor

tribution to the "national welfare

should

an

past

A

dustry.

in¬

general

will pay 40% of the increase be¬
cause
of the corporation income

Charts show

in relation to the other industrials

tistics

Mr.

sincerity

interest in the "national welfare."
Let him speak!

stimulate

and

DIVIDEND NOTICES

purchasing power is a problem,
why not raise everybody's wages
and not merely the steel workers?

wages

to

the

prices

expanding economy.
least, the argument
Nathan, that the Treasury

management.

ture

experience

Murray?

compe¬

to support an

shoes

for

of

some

stabilized,

hesitate

power

nothing, plus good will and able

Mr.

present

terials become

43

tition will, as in the past, cut stee!

in the hands
of the workers.
Therefore, they
say the wages of
steel workers

purchasing

about $81,
and the government would have
a
fine modern steel plant for

and

and

war

Why does

of

now

and

Nathan

foreign

last

now.

ruthless

already

this

the
it

of

(587)

Messrs. Murray and Nathan say

Messrs. Murray and Nathan should

in

the

be

Murray

stockholders

the

Mr.

not

its.

share for their stock, or $5 above
the
market, could pay out the

bear

after

none

CHRONICLE

dustries listed in the National

Fallacies

Manipulated to Support Wage

are

building new steel
plants at present high costs, the
government could offer to Youngstown

Business

excluding

frightened.
Instead

and

policy of the unions.

wage

want

FINANCIAL

that falling demand is due to lack

dividends.

stock

unreasoning

inflation

&

August 10, 1949.

44

(533)

THE

COMMERCIAL

FINANCIAL

&

CHRONICLE

Thursday, August 11, 1949
The

BUSINESS BUZZ

bill to double RFC's

Washington...
from the Nation's

y*

»

jTjL I

Capital

JL

like

offer of

1/Cw

Federal

to

Even

in

couched

though

far

are

the

Reserve

statement

polite

and

uses,

of

parts

many

uncritical

from

is

language

customarily

the Board
even

the

though

-

Chairman's

Board

of

private financing business, Gov.
McCabe

issued

has

most

the

Board's

the

require¬

Reserve

System

this

Bank

Federal

of

proposal

a

suggested

year,

Loan

by

Home

to

Board,

create

incorporation

tual savings

for

mu¬

banks.

itself

vest

with

(This column is intended to

the

becoming

government

Hence

his

as

McCabe
to

central

his

on

particular
has

criticism

by

the

Gov.

himself

laid

and may or may not

well

as

points,

re¬

flect the "behind the scene" inter¬
pretation from the nation's Capital

patron and with residual
management decisions.
owner or

it

the

into

Reserve

consideration

no

for the government to inin business expansion,

money

the

will go over next year, but only
for lack of time. There will be

by which is meant the entire left-wing of the Truman Administration,
with his remarkable statement of<3>—1

equity financing,

resents

entrance

ease

ments

WASHINGTON, D. C.—He may never have intended it and he
may be surprised to find it out, but Gov. Tom McCabe has put him¬
self out in the forefront of opponents of the "Economic Expanders,"

on

child

a

candy.

The
bid

last weekend

was

chance to get more discretion and
money,

A

lending

remove

maturity limits
suggested by the
White House, and the RFC doesn't
need it, but probably resents a
loans

on

Behind-the-Scene Interpretations

and

power

"Chronicle's"

coincide with

views.)

own

open

"Economic

the

"

sweeping indictment of Federal
and the drift of Federal

policy

to

policy

ever

high

official

from

come

of

a very

government

within recent years.

the

Marriner Eccles, another
of the Board, has been
forthright in criticisms of

Only

member
more

Administration

Truman

and

Administration

Roosevelt

policy.
has been

Gov. Eccles, however,
particular rather than general in

his

criticism.

consistent

A

com¬

spender, he was one
first to speak up during

pensatory
of

the

Roosevelt's
he

Administration

was no further
financing. Also
consistent, when he was proposing
vast new reserve
requirements,
as an anti-inflationary
device, he
publicly castigated the pet scheme

deficit

for

of the Truman Administration
make

it

easier

finance

to

to

and

of

surtax

brackets,

upper

forward

carry

tax

suggested,

approval

lowered

"double

in

the

liberal

more

back

carry

elimination

taxation"

of

of

corporate

rapid depreciation

more

allowances,

or

ideas

the

rates

and

provisions,

income,

insurance companies

to

into

go

equity financing, and along with
these, some removal of tax ex¬
emption
;

the

from

be

state

On the

picture,

he

liberal

more

local

and

other

of

side

that

suggested

dividends

might

helpful to stimulating inter¬

est in equity financing, and that

perhaps those in the private

curity

business

a

to

described, but did not
"new

the

rich"

of

the

farming and labor union classes.
He

also

suggested

that

and small

new

or

medium-sized business.
Where

Gov.

the

nomic
when

McCabe

gauntlet

Expanders,
he

saw

has gone," a

"That

as

to

threw

the

Eco¬

however, was
the challenge,

and

frontier.

new

frontier

better

sources

is

and the

these
the

goods
know

we

with

the

re¬

available

are

technology of distributing

goods

on

a

basis

mass

for

constant

improvement of the
living of all.

standard of

is

leading

the

Truman- left-

lie

the

the

in

might

back

chief

significance

McCabe

report

on

equity

financing.
It
has little
other practical significance. The

Robert Johnson Talks It Over—

Brochure based

occasion for the report was an ap¬

what

state

improve

should

tween management

11

McCabe

before

argue for

the

wick, N. J.—Paper.

appeared

committee

Motor

to

sociations,

require¬

reserve

"But who WANTS

ments law.

only

views."

why

McCabe's

It

it

is

to

easy

personal

is

In public

poses

the

cles, who has

the

large following

a

Gov. Ec¬

financing.

by

as

admit

that

that

entertain

United

another,
undertake

way

or

of

from Britain

is

in

his

speech of

California, the real problem

is to get more purchasing power
into the hands of the people.

or

*

her colonies.
*

broad

they
1%,

held

to

For

maturity,

million

than

more

sponding period

in

thing,

they

in

deal

great

a

of

"exemption

the

sibility,

it

is

sales

year

will

the

issue,

regular

weekly

the

finance
mated

at

the

from

to

$5

of

of

the

Advisers,

to

hostile

be

get

that

until

government

to

money

for

the

subcommittee, in¬




and

more

Stores

of

Business

vard

Celler,

also

harped

of

Limited

in

1948

—

Administration, Har¬

Soldiers Field,
63, Mass.—Paper—$2.00. "

University,

Boston

being

another

committee
leftish

as

the

of

as

Finally,

industry

spokesmen

contingent

appreciable

top

subcommittee.

alarmed at the absence of

were

any

committee

full

anti-trust

the

business

were

a

These

but

only

experience

for

a

some

to

kind
will get

the

they

questioning

from

that
pleasant

businessmen

subject themselves to
of

a

representatives feel

thoiugh it is not

even

industry next fall
and in force,
before the subcommittee to tell
its

to

to ten

appear,

House
to

line at a time:
Committee
hearing to Point
a

Banking

give

a

proposition that there will be

guarantees

of

U.

S.

private

vestment abroad—if so,
a

to

in¬

the

.

World Economic Report

C

3

1948—

Nations Publication

A United

1949)—Columbia

the

Export

guarantee,

limitations,

HAnover 2-0050

-.

Import

without

rules

or

Press, Morningside Heights, N. Y.

—Paper—$3.00.

Trading Markets:

Oregon Portland Cement

Riverside Cement A & B

Spokane Portland Cement
•Latest

Figures Available

LERNER & CO.
Investment

10 Post Office

any

Securities

Square, Boston 9, Mast.
Teletype BS S»

definitions.

pective

Teletype—NY 1-971
Firm Trading

pros¬

Markets

Hill, Thompson & Co., Inc.
NEW

YORK 5

fore¬

deficit

cast within

a

cannot

billion

be

or

so.

v

However,

what

|

FOREIGN SECURITIES
■

if
of security for
now

upon

and
interest,
delay the decision

that

until

STREET

(-AM. marks & r.o. INC,

or
FOREIGN

un¬

50 Broad Street
can

WALL

Tel. WHitehali 4-4540

SECURITIES

SPECIALISTS

you

Executive A l/nderioriting Offices

70

count

Congress dis-

Trading Department

120

*

thing which
is

All Issues

and,

terms

*

One

(II

University

there will

because the bill merely

row

empowers

Bank

in

Ralston Steel Car

WASHINGTON,

IV's

trends

copies, free; over ten copies,

10c each.

*

means

and

the United
States, including final figures on
operations during
the calendar
year
of 1948—American Transit
Association, 292 Madison Avenue,
New York 17, N. Y.—Paper—Up

story.

The

data

members of the sub¬

committee,
ought

basic

local transit industry of

of

There
few.

witnesses.

few,

Transit Fact Book—Information
on

Telephone HUbbard 2-199#

Mr.

—_

spend

is

full

the

from

both

man

be

thing, the left-wing

Congress

gets away, the size of the

left-wing, the problem
more

to

"exemption statutes."

til fall.

to

of

Results

Variety

Esther M. Love—Graduate School

plan¬

said.

is

some

President's

Economic

appeared

cluding

of this

is

whether to

«■"

'

might

in what form

With the

:

financing.

which

postponement

a

repeal of

members of the

billion

for

December

good

a

Likewise, John D. Clark,

For another

might be

time

reason

decision

the

to

year,

until

the

Another

suggest

$3

current

character

that

Hep. Emmanuel Celler, the Chair¬

with recommenda¬

up

the

member

also

deficit variously esti¬

a

come

uncil

bill

how

of

Robinson-Pat-

and

a

increase

Treasury

question

a

tha

notes and

so,

with

and

interest

Price

committee will

prospect that the subcommittee

these.

assuring a steady
adequate flow of savings into
equity ownership," Gov. McCabe

concerned

to

the

statutes,"

There is said to be

man.

corre¬

financing

need

of

Miller-Tydings, Webb-

Pomerene,

ago.

suggested,

of these

less

or

as

tions for

a

deficit

we

sus¬

report

subcommittee

the

such

It is within the realm of pos

ning

three

_

days of August,
sales of these savings notes
aggre¬
gated
$1,447 million, or $1,300

for

one

the

plays

1.40%; if held for a year,
for six months, 0.8%.

the first few

in

with

up

Judiciary Committee, which is
conducting the hearings, dis¬

During the last few days of July

with

the anti¬

The hearings
adjourned until October.

that

pay
or

come

on

conclusions.

have

corporations to accumulate
against th/r tax liabilities and to
earn
a
little something * at the
If

laws

trust
a

sold to

time.

of

far

,

Those who have followed close¬

sharp interest
Treasury savings notes, eligible
for payment of
taxes, and usually

same

far the full

and

*

can

along with approving legisla¬

go

is

ly the Celler hearings
There has been

Sixteenth

1424

bigness just because it is bigness

question, for

to

.

in

these members

say,,the subcommittee

everything from
loan

taken

next year will come up with rec¬
ommendations which will hit at

other

equity

its

expansion,

potential

covers

is
as

their

have

tion

This

It

far

so

business bigness
for granted

upon

such.

How

April '8
before the Commonwealth club

stated

that

In Gov. Eccles' opinion,

be

tained

our

States

the idea of an¬
England, which is
most unlikely, down to the idea
of some special deal to buy more

earnings,

money.

Inc.,

Operating

Ad¬

the hands of Britain.

position is that if business plows
back

Fi¬

Street, N. W., Washington 6, D. C.

my

—Paper.

constantly

the

will

the

one

in

will

House

that

aid bill,

arms

one

directly or indirectly,
anything which will have the ef¬
fect of putting more dollars into

stated

His

no

who

White
idea

should

the Board, derided the idea
there
is
a
shortage
of

on

be

the

statements Jan. 3 and
year,

will

ministration

Board.

April 8 of this

of the foreign

there

surmise

rather than

official views of

the

Equipment

repre¬

week may

realize

place of

"personal

the
Treasury
next
decide whether to plan

"To

machine to take the

a

secretary?"
Then, too, the report
sents

Carrier

nancing—American Trucking As¬

the continuance of the

supplementary

and employees
Bruns¬

—Johnson & Johnson, New

to

status of equity fi¬
Maybank made this re¬

when

May

done

designed

bring about
mutual
under-;
standing and communication be¬

the

nancing.
quest

be

talks

on

to

parently casual request of Chair¬
man
Maybank
of
the
Senate
Banking Committee that McCabe

postponed

technology—
technology of producing more

the

This
seen

more

that "the geographic frontier

now

else

or

the

high

a

McCabe

down.

better

devices be created to get equity

financing for

down

wing,

is

Gov.

himself

of

and

do

those he

call,

should

se¬

job of merchandising

better

find

opponent

ex¬

thesis,

his

easing of the

some

capital gains tax, permission for

securities.

challenge

Hence

equity

*

•:

McCabe

inferred
of

*

*

Gov.

official.

be

may

that

build houses.
•/"

to

They

particularly since he

when

thought there

need

pected

may

Officially the Federal Reserve
Board is an agency of Congress
and to a large extent independent
of politics. Officially the Board is
not part of the "Truman Admin¬
istration." Unofficially it has acted
as
though it were part of the
"government team," and at least
iriferentially
has
acknowledged
{

Expanders."

New York 4, N. Y.

AFFILIATE: CARL MARKS & CO. Inc. CHICAGO

Tel.

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