Full text of Commercial and Financial Chronicle : August 12, 1948, Vol. 168, No. 4724

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>3 US.

ADM.

ftUG 13

LIBRARY,

1948

ESTABLISHED 1S39

Tk e

Financial
Reg. U. S. Pat. Office

i Volume 168

New

Number 4724

Competition
Maintaining

competition

sential to progress,

points

i's

out

is

es¬

Mr. Babson

value

Ohio Senator and

stimu¬

as

of

most

good things

we

ing rivalry and competition in the
article

The

schoolroom.

tion to

competition among his pupils is
"sowing the seeds of war in the
classrooms."
a

lot of
i

Va

y

&I&

v«

-

c a

r

lieve

and

are

we

The

text

of

(1)

roads

"

that

ffrom

time"' the

the

President
called

competi-

a

spe¬

session of

cial

Congress at 2

They are

cross

the

country, the

mills, the towering
grain elevators — all these have
grown up out of keen competition.
I got to thinking about an inci¬
dent that happened a dozen years
(Continued on page 33)

Senator

Barkley had predicted
Convention that

before the

sion

of

Congress

conventions
"with

after

the

be

taken

would

sulted

session.

the

about

study

to

and

a

in the midst cf

}.

c

&

:

■/

v-

'f.v

■.

;.;'v■<•'.

' •:

<

r

■

Teletype NY* 1-210

Cleveland

Geneva

y-'vf;V-ni-V 'VI:
[

J

l

*

>

V

V

I

-

' t

.■

London

64 Wall

/

Housing has obviously become

conjur^ with,

or at

least

V

•

^

,

1

I

^

"

*.£#.,(&• -V "•*!
V '7
\ \ ' S

in

i

most of them

appear to believe.
listed by the Presi¬
dent as a matter of great urgency when he sent his major
message to the special session of Coiigress now again rer
turned to the political battle at home. It was one of the sub¬
jects which Congress believed it wise, apparently, not quite

so

was

to

ignore before it adjourned. Like transit fares in New York
City and the price of electricity for use in. the home and on
the farm (to mention only two of them) housing has of late

become sq bedeviled with professional reform, daydreaming, and politics, that it is more than ordinarily diffi¬
cult to obtain any calm, dispassionate consideration for it or,
years

for that matter, even to be certain what the facts of the sit¬
uation

really

are.

.

day

my

on

Troy

»•••. .-. /•/,"

these

(Continued

almost prec

i

s

the

e1y

level

of

a

good V Ph.D.',
oral examina¬

tion.

At

the

time,

same

Arthur R.

Upgren

despite the
enjoyable experience of exchang¬
ing views with such m^n, I would
not be speaking my mind if I did
(Continued on page 26)
.

*Address by Dr. Upgren at the
Bankers Association

Alabama

Conference, Tuscaloosa, Ala., Aug.
10, 1948.

28)

on page

Slate and

K*r.:yt

Bonds

4;v>v -;i

1927
•

■

Syracuse

-.VScranton

Harrisburg

Wilkes^Barre.

52 WILLIAM ST.i N. Y. 5

OF NEW YORK

7j

Banks,

Brokers

NY 1-708

and

New York

Established

Toronto

NATIONAL BANK
OF

THE

Municipal

New

BONDS & STOCKS
i.*r-.-.;,•

.•

.•<

<

■

•

..

y■ '*'• ;r ••v..V*

Bougbt---Sold---Quoted

Company

H

Dominion Securities

1899

CLEVELAND
Chicago
Denver
Columbus Toledo Buffalo

Est.

1896

GRPOEATIOTI

ira haupt & co.
Members New York Stock

and
Members New York Stock Exchange

120. Broadway, New York
Telephone REctor 2-7340

England

•»

SUTR0 BROS. & CO.
■?.

CITY OF NEW YORK

Northern

CANADIAN

New York

Cincinnati

Connect

DOLLAR BONDS

fid

(Incorporated)

Wires

Montreal

Dealers

,

H

OTIS & CO.

Street, New York 4, N. Y.

'Bell-Teletype" NY 1-395

;J<

Private

Bond Dept. Teletype:

THE CHASE

HAnover 2-0980

'

.

Washington, D. C.

Underwriters and

•,.,x

HART SMITH & CO.

Springfield

a

-V:

•'-v-;

Bond Department

Corporate Securities

Tel. WHitehall 3-2840 Tele. NY 1-809

at

hearings

can, of course, be no doubt that housing
far from as plentiful or as good as could
be desired. It appears to be true enough: that a good

PHILADELPHIA

Distributors of

INSTITUTIONAL INVESTMENTS

con¬

campus,

ducted

^

■*v■■

Buffalo

Albany

Bought—Sold—Quoted

Gordon Graves & Co.

a

the

are

THE NATIONAL CITY BANK

-'/ ,*

-

of

ana

There

V

facilities

FOREIGN
;

r>

.

;

word for politicians to

a

Along with the high cost of living, it

For




.»

Example

as an

Tennessee Gas & Trans.

30 Broad

W'A; •>•%:r-■1
1 ^

student

Housing

Street, New York 5

Woonsocket

(Representative)

Kerr McGee Oil

1

3

V

V-,

ey

SECURITIES

BOSTON

4, N.Y.

n

Joh

Snarkman,

political
28)

Exchange

other Exchanges

Chicago.

O'M aho

•

■

INVESTMENT

HAnover 2-0600

a

on page

Established

Hirsch & Co.

that

fact

Senators Taft,

R. H. Johnson & Co.
■■•V:"-.'

and

•^>the

Municipal
•

25 Broad St., New York

\'

-

'

Lithographing Go.

Stock

is

It

carry

constructive legislative

(Continued

Havana,

York

up

tory." He apparently was not con¬

through

New

two

political bickering and po¬
political ora¬

program

Members

ses¬

a

litical legislation and

impossible

Ki'::--v ' ' .V?

there

and

worse

"VV^V'' V V

,

very

EDITORIAL

■

'

Japan—:

immense steel

matters

—

It w a s

obvious

among
a.m.
in
the
depending
Robert A. Taft
midst
of
the
upon their labor leaders to "save
Democratic
them
from
competition."
The
National Convention that it was
same
is true of many another
called entirely for his supposed
city and many another product of
political advantage.
land and sea. Yet the great rail¬
themselves.

make

<£"

statement

■follows:

tion

y

JT

to be-"

financial plans for city rebuilding.

pleasant opportunity of testifying be¬
fore the Joint Committee on the Economic Report, of which Senator
Taft is Chairman.
First I should say, as one teaching and guid¬
ing thglwork of graduate students, that I had great admiration for
I had the

this state

the

—competition
Babsen

Last year

and

e

of

Canada

K from'

Roger

of highway building and sound

price level."

p etition.
They fear
competition

from

would

m Q II

some

a
stabilized

c o m

Vj

«

Says

reaching

in

afraid

OPA

arg

Gloucester
who

m

the

reasons

with

here

men

t

of

fisher¬

some

w^'

restoration

of. investment and speculation activity in recent past

there is present danger

of excessive capital investment
lines are already experiencing
over-production and "we would do well to run at a little slower
pace." Recommends as means of offsetting depression huge program

Taft, Senate Republican leader, issued a state¬
ment on Aug. 9, in which he summarized the work of the special
session of
Congress and, at same time, took pccasion to repeat
that

waves

warns

and industrial production.

approaching price stabilization.

sees

was

talking

and

Senator Robert A.

other

The

v

Upgren, asserting critical task for maintaining high industrial
activity and preventing depressions lies with bankers, calls atten¬

aided housing and says easy housing credit fosters inflation. Fore¬

implies

bosh.

Associate Editorial Editor, The Minneapolis "Star"

Dr.

that the educator who encourages

This is

V Professor of Economics, University of Minnesota

low interest rates and excessive government spending, and, at same
time, try to prevent high prices by calling the police. Decries police
state methods of 0PA and holds new price curbs would again lead
to black markets and decreased production.
Holds Congress has

1 recently read an article in an
educational journal which takes
businessmen to task for encourag¬

Banking

By ARTHUR R. UPGREN*

Republican Congressional spokesman reiterates

gain political advantage and asserts it is useless to go on with
Administration's policies which create inflation, such as artificially

have today we owe to competition and inventors.

Copy

a

arid Business?

claim President has been given enough power to curb inflation but
has failed to exercise it. Accuses President of calling session to

lating and inspiring human effort.
Holds

What's Ahead for

Runaway Inflation 01 Depression
Unlikely, Says Senator Tall

By ROGER W. BABSON

Price 30 Cents

York, N. Y., Thursday, August 12, 1948

40 Exchange Place, New York 5, N.Y.

5

111

System Teletype NY 1-702-3

Boston

Exchange
Principal Exchanges

Broadway, N. Y. 6

WOrth 4-6000
Bell

,

other

Teletype NY 1-2708

Telephone: Enterprise 1820

By HENRY ANSBACHER

Bird & Son, Inc.?

Polaroid Corp.

funds dip into

New York Hanseatic

cash

Teletype NY 1-583

BArclay 7-5660

in this survey

showed

'v;

'

.

'.

v

'

>

;

•

--/.i'tri<

v'

-v

••'•>'''V.

V;4'?L"

X''!/•"*

V

A,

-Members

the

common

stock

type

-

Henry A. Long

trated

a

on

Most

portfolio.

the

en

*

reserves

but concen¬
few issues to strength¬

scattered,

not

were

group used up
some
of their
cash

selecting the

York Curb Exchange

BROADWAY, NEW YORK 5

the

of

4 oils

1.3

while the railroads were

groups,
added

Joseph McManus & Co.
v,'V-'&•'/,? *«

•

•

the

dustries

most

and

one

promising

its

increased

fund

new

Steiner, Rouse & Co.

New York 6

Yete NYTM610

Giant Portland Cement
Stock & Warrants

of

Troster, Curries Summers

cash

Mobile, Ala.
Direct

wires

to

branch offices

our

Winters &

Crampton Corp.

re¬

'

.

during the quarterly period
Under date of Aug. 3, Mr. Nesbett

Bought

••

'

•

Sold

—

Quoted

—

Established

1

.35

American

Viscose

sion

Utility bond
3 miscellaneous

.3

of

liberal'

H. Hentz & Co.
Members

Bolstered by
excellent earning"'
and
continued
good

N. Y.

Cola,

NEW

such
and

Chesapeake

An
volume

selling can be rioted from total

50%
than during the previous
The number of buying

transactions exceeded sales,

Teletype—NY 1-376-377-378

of

over-all

quarter of the year,
purchases -were almost ported

Co.

noted

a

Debentures

during

Bought and Sold

JE BANKERS BOND m
Incorporated
Floor, Kentucky Home Life Bldg.
KENTUCKY

LOUISVILLE 2,

Bell Tele. LS 186

managements
Dow."
this

It

GENEVA, SWITZERLAND

'

Silver Creek

,

in

next

popularity

the

among

metals, seven companies adding

is

is

sup¬

earnings,

and

pur¬

Shortages

are

automobiles,

in

of
equipment. The prosperity

widely

diffused among

indus¬

actions
in

an

Manufacturers

of

Hessiou'

ihc

Mierosol Machine—(One Billion

insecticidal bullets per

second)--

:k

Data git request,.

HEIMERDINGER & STRAUS
Members

Security

York

New

Dealers

Assn.

50 Broad St., New York 4, N. Y.

it

Te*.: NY 1-1872

Tel.: DIgby 8-0460

BUY

SAVINGS

S.

U.

BONDS

Phelps Dodge resulted

in

buying and a like .number

trusts

Among gold min-^

making sales.

ing stocks two funds

posed of

Homestake.

divided

on

of INDIA, LIMITED
Bankers

to

oils

commitment
still

were

in

the

Government

in

26, Bishopsgata,
London, E. C.

Office:

Head

Branches

In

Colony,

tended
scattered and, as noted,

favor,' purchases

India,

Burma,

Kerlcho,
and

.

Kenya,

Ceylon, Kenya
and Aden

Zanzibar

,

not

of

survey

are"

defend,

to

on

rift

over-all

spendable

Lehman Corporation,

purchase

of

strong.

com¬

balance,

still Gulf of Penn¬
sylvania and Phillips. Ten trusts
in sight.
The trend
bought the former and seven the
production and Of
latter.
20,550 shares, of Conti¬

apparent to

serious

A summary

the few closed-end

to

Subscribed Capital

all, there is no

,

couplings,
is

Company

fittings and valves,

in

position

to

benefit

incomes

is

still

very

Accordingly; it must be

assumed that a

substantial invest-

the year, were

£4,000,000

Reserve

£2,500,000

Fund

conducts every
description
banking and exchange business

The

Bank

We Maintain

continued on page 24)

Active Markets in U. S. FUNDS for
DIRECT

.

"T

CANADIAN INDUSTRIALS

from

expanded

aircraft

Book
Net

value

current

Current

Price

about

per

FRANCISCO ond LOS ANGELES

I CANADIAN. UTILITIES

(6-30-47) $9.60

$8.00

NEW YORK, SAN

CANADIAN MINES-

(6-30-47) $19.44

assets

WIRES

PRIVATE
BETWEEN

CANADIAN BANKS ;

program.

Kaiser & Co.

share

'

MEMBERS

dii Pont, Homsey Co.
31

Milk

HAncock
N. Y.

St., Boston 9, Mass.

6-8200

Telephone

Teletype BS 424
CAnal 6-8100




\

III® Goodbody & Principal Exchanges
Co.
Members N. I\,Slock'

Exchange (ind Other

20

PINE

NEW

YORK

FRANCISCO STOCK

SAN

STREET

LOS

5

BROADWAY

Telephone BArclay 7-0100

®§®: f

,

NEW YORK 6, N. Y.
Teletype NY 1-672
■ri

EXCHANGE

ANGELES STOCK EXCHANGE

TEE. WH 3-901:

115

j"--

oi

V...

Trusteeships and Executorships
also undertaken
.

nental Oil were'added to the port-

-

Importantly

>

£2,000,000

Capital

Paid-Up

Common Stock

cision

]■

Kenya Colony and Uganda

Gold Dredging.

Although
marked

NATIONAL BANK

but one man¬

Dome,

agement made a new
in Bulolo

Mcln-!
j
Opinion was j
sold

two more clis-

tyre Porcupine and

Appliance Company
Manufacturing complete line of pre¬

;

evenly divided opinion, five

to be more

analyze and explain man¬

how the

panies

■

:

Precision! C orp oration

that trial producers and farming areas
profit-taking was increasing. The
"chasing the and, while the dangers inherent
favorites, as in the first quarter of
the function of in further wage-price advances

agement transactions.

The Parker

PITTSBURGH!

were

quarterly

but to

of

Y.

9-8420

have levelled the charge

year,

one

power.

unrelieved

sold on bal¬ heavy

during the early part of the

ance

.

steel, building and: marjy types

period under review

by companies which

high

employment

having chasing
still

is

good
and the prospect of well-

sustained

preponderance of buying

the

present. market

by

yields,

sales.

individuals,

many

Edmund Brown,

is of interest.

Criticism is at times fashionable
and

President,

its

"The

heavier than

50%

Stock

Bought and Sold

"

"
"

during

how¬ Jr., relative to the present market,

ing the first

Ashland Oil & Refining Co.

N.

4,

Green

DETROIT

CHICAGO

'

Bldg.

,

whereas, dur¬

by only 30%;

ever,

YORK

Bowling

to portfolios.
Three managements
the period.
In
contrast to the
other open-end acquired new holdings of U. S.
Smelting while a fourth added tf
stock funds it did not dip into its
a ' block'
already
held.
Eagle
cash reserve to invest an addi¬
Picher Co. was also well liked by
tional IV2 million dollars in equi¬
three funds.' There was little ac¬
ties.
For this reason, the state¬
tivity in Anaconda, but 10 trans¬
ment in the semi-annual report

balance,

portfolio turnover which was

period.

Exchange

Cotton Exchange

yields,

statements

oil

Stock

New York

and other leading exchangee

aggrar

Congress.

1856

30%,

unpopular,

noticeably

Pepsi

greater

Members

Security Dealers Ass'n

Distance 238-9

Metals

-

.25

Ohio and American Tobacco.
indication of the increased

»ong

-

1

NY 1-1557

HAnover 2-0700

vated by the adverse news of the
Berlin crisis and the Special Ses¬

industry, was
Fundamental Investors was an¬
scattered throughout the list. Cer¬
other fund to make purchases on
tain
individual issues, however,
were

Request

Ashland Oil & Refining

Exchange

York 4, N. Y.

serves

which became acute when

lines

2 pipe

construction

and

as

Common

Stock

New Orleans. La.-Birmlngham, Ala.

whereas in the

Primary Markets in

York

York

Members New

25 Broad Stf New

se¬

During the quarter Massachu¬ business, the recuperative period
We look for a
setts Investment Trust made addi¬ should be brief.
preceding quarter
to repur¬
tions to its portfolio holdings of favorable opportunity
the
buying was
approximately
chase common stocks in the very
5 million dollars, after reducing
twice
as
heavy as the selling.
■near future."
its cash reserves by 2 millions.
Ir
Buyers also favored both the auto
its. semi-annual report the trustee?
and aUto parts and also the, elec¬
Favorite Issues
state that "the trust has added
trical equipment industries.
Among
the
stocks
that
the
substantially to its' holdings in
There was an increased amount
preferred
during
many, companies whose securities managements
of
general
selling
to
take
were
already represented in the the period, Kennecott Copper war
profits and strengthen portfolios
portfolio." Increases were made easily the favorite, 10 funds, add¬
through switch 1 ng operations.
to 30
issues representing, more ing to shares already held, -and'
Such selling was not concentrated
than 25% of the number of indi¬ two making new commitments. A
in any one group and, other than
vidual securities included in the total of 46,700 shares was pur¬
a slight disfavor for the building
chased.
International Nickel war
total portfolio.

stocks exceeded sales by only

Chicago Stock Exchange

on

of

Purchases

strength.

Exchange

Exchange

Prospectus

was

will continue if the market shows

Netv York Curb

39 Broadway,

.4

noticeable, par¬
ticularly in the oils, a trend which

•' ;X/

New York Slock

DIgby 4-3122

.4

favorites.

trust

among

Profit-taking

Members

1st

I-,

Bo ught—S old—Q uoted

-

New

.1«,

favored in¬

more

"Your
management conr
securities bought, other than the states:
adding equities to their port¬
tinues to believe-that we are wit¬
folios, approximately one-half of metals, were new commitments.
nessing merely an interruption in
the 58 companies in the survey This is an approximate break¬
the basic upward trend of stock
increased their net holdings
Oi down of issues added:
prices. The extent of the previous
cash and governments.
Millions
rise and the over-supply of underPreference
persisted
for
the
of
•
writings had given all security
stocks of companies in both the
Dollars
markets
a
case
of
indigestion
non-ferrous metal and petroleum

Tel. REctor 2-781S

®

',y *.,,>,**

v-

in

York Stock Exchange

New

120

pre¬

though

HC PONNELL & fto.
New

a

ponderance of
purchases. Al-

Prospectus on Request
*

red

e

v

of

For certain companies
company's fiscal curities.
the problem of adequate capital
year
ends on June 30, capital
to meet the requirements of high
gains dividends were paid during
volumes and high prices is quite
that month, along with the divi¬
The situation calls for d'sr
dend from regular income, total¬ acute.
crimination and a preference for
ing 5 million dollars. In addition,
the /trust < made
purchases
of enterprises with ample treasury
resources."
approximately 3, million, dollars
Another interesting observation
and sales of 2 millions, giving a
is made in a letter to stockholders
purchase balance of 1 million for
the quarterly period.
Purchases by John Nesbett, whose relatively

such -l; funds
co

the warranted; and the problem is

during

reserves

As the

appraisal.

of

60%

only

cash

its

of

period
will indicate how such
analysis - aids
in
management

uni-

i t y of
: and

o r m

action

Bou gh t—Sold—Quoted

balance during the secpnd

on

.

there

.

no

was

f

Lonsdale Company

stocks

quarter of the year and, as during the first three months of 1948, partiality for the purchase
side of the market was, with few exceptions, among the managers of the open-end funds.
Even
among
■ *1 [
w.
ment
in common stocks is still
expended .5 to 6 million dollars
the
openenders

York 5

120 Broadway, New

v

®j, ',1

•

Louisiana Securities

of oil, non-ferrous metai and railroad companies.

to buy shares

reserves

.

Corporation

4

Alabama &

sales during second quarter made principally by the open-end units. Stock-type

companies continued to purchase

Investment

■':i';"

v®'

,

Balance

on

LONG

Memo on request

:V
t j" '/ -V': rivV 'V BOUGHT—SOLD—QUOTED

'

Thursday, August 12, 1948

»'

Purchasesinexcess of

*

Buying

Trusts Continue

Air Products, Inc.

CHRONICLE

FINANCIAL

&

COMMERCIAL

THE

(598)

2

'

J

RUSS BUILDING

1500
SAN

FRANCISCO 4

TEL. DO 2-0773

r

Volume 168 ""Number 4724

THE. COMMERCIAL &

P NDEX
Articles and News

FINANCIAL CHRONICLE

(599)

Essentials for Economic Health

Pace
,v.i

Trusts Continue Buying

on

Cover

.

Competition—Roger W. Babson__________.

h- Chief, Division of Agricultural "Economics,
University of
I

__________Cover

Balance—Henry A. Long

Essentials for Economic Health—O. B. Jesness

3

_______

x-—Joseph M,. Dodge_

,

_

Monkey

;

4

r _ __.

Is No Mystery—Thomas I. Parkinson.:

The Problem of the Cross-Rates of Exchange
.

■

■

i.;—nreociarn

Vv

* t?

•'

,v

'

•

1

•

-V

V:.

6
6

—-—

-v.'-' '

'

''v.'

/*

oiir

own

CoAcludes

welfare' by improving world-wide

at

it is worth while to take

7
•'

*

-

"

»•

'

.

The Problems of Fiscal Policy in Inflation—William H. Stead

8

Half-Year Monetary and

'

9

TIME
No, we're not away at the seashore---'
We're simply
swimming in those ob¬
solete

99

high 'levels

,4

The

—Lie. Praxedes Reina Hermosillo-.^
-.iv"

...

.

Our Role fn

11

('■ "•

•

Wprld Affairs-f-Jamds

i

A Balanced Economy—Labor's View—Kermit
If I Were

Retail

a

Runaway. Inflation

'

'

•;

.

'

.<

P. Wgrburg__-_-L___r-_' 1?
Eby

economic

Texas Gas Trans.

Illinois Bankers Association-Protests Increased Reserves.—i

.

10

Banking Syndicate Markets $134,9004)00 Pennsylvania
Turnpike Commission Bonds.

Federal Water & Gas Corp.

re-

and

those

Treasury Increases Interest Rate

Certificates and Notes__

on

12

purposes

*

A,

0. Dietz Warns Federal Reserve Board Against lihtmsition
of Restrictive Consumer
Credit-Controls-___'_____r12,

Canada Completes Sale of $150,000,000 Bonds to United
States Insurance Companies

i

which

tive ;

Dr.

O.

B.

ihd .how- the results
how

Jesness

are

fully and well
satisfied.. This is

14

Let's Get This Straight (Boxed)

18

Secretary Snyder Reports

19

An

BLS Raises Estimate of New Construction_____________

i

depehdehce

19

^

anlopg

for his feeders.

Reports Suit Against Dutch Government for Return of
American Securities Taken from Nationals..——___— 29
Sigurd R. Wendin Warns

-

turn,

Savings and Loan Executives

corn

to

Review Investment Program.

and the: ranch for their

21

livestock.

-—Cover

—

~

and Insurance Stocks

Business

_

Man's

Canadian

-

*

14

__.

Bookshelf—

Securities

20

—

Coming Events in the Investment Field.

'___

Dealer-Broker—Investment Recommendations

I Einzig—"British Inflation and Deflation

—

8

___

Fears"—

4

| From Washington Ahead of the News—Carlisle Bargeron—
Indications

:

of

Business

7

Activity.

37

Mutual Funds

I NSTA Notes

16
—

-

suffer in

News About Banks and Bankers

-

'

Observations—A. Wilfred

Reporter's Report——

29

.____

4 Prospective Security Offerings

lies

f Public Utility Securities.
Railroad

19

Securities

1_1_

i

f The State of Trade and Industry—
| Tomorrow's Markets (Walter Whyte

of

answer,

to

because
our

in

Says)

he is

income

because

price to one is cost to
Rising Prices do not add

ducer

in

its

true

earnings

T

of

$2,20

amount to
Circular

per

$6^

share

36y2 %.

on

request

George Birkins Company
40 Exchange Place, New York 5
WHitehall 4-8957

Tele. NY lr1404

light.

seeks

the

on

alert to up

rates

of pay.
complains about
or

The
costs

Trading Specialists

his
but

All

UPSTATE

in

higher prices for
Most of us
are more aware of price
changes
tliah of; oth^r effects of inflation.
Rising prices make debts easier
to pgy and many view this as besurcease

in

pro¬

I NEW YORK

SECURITIES

in'g desirable. The creditor usually
is" seen as Jan opulent individual
,

the

debtor

advantage

as

but

one

at

a

most

dis¬

people are
to
some
Fourth National Forum of Labor, creditors
degree.
The
Agriculture and Industry, Univer-' holder of" a life insurance policy
sity of Wyoming, Laramie, Wyo., and the dependent widow, who is
Aug,. 2, 1948.
(Continued on page 27)
{ '
4"
address

At current offering price of

his. goods and services.

their share in the distri,crea-

inflation

ever

prices

and
:;:An

Capital Stock

altering the distribution

The consumer, to be sure, grouses
about the high cost of living but

health.

they do in their part in the

34
44

—

is

praise

it

bution of the national income than

Refineries, Inc. I

place.

national

the

what

quest for

cern oyer

Leonard

which price

in

way

take

another.

By and large, groups' and indi¬
viduals display much more con¬

5

!___

You—

and

the,

not

fprqes' in.

power
welfare

40

^

the

Changes in
prices consequently become potent

buying

12

Securities Now in Registration—

J Washington

to- overlook

the

economic

20

| Securities Salesman's Corner.....^.
I

afford

42

_

as

as a

changes

outstanding
essential
for
good health in our economy is a
high level of productive activity.
This is a point which we -cannot

42

._

J Our Reporter on Governments

7

is

An

*

~

Our

supply of

consequence.

21

May

far

whole is concerned. If
changed together at the
same rate, a rise in prices would
be without effect.
However, this

ment is out of order the rest will

17

—

as

aud, heripe, the- economic
to the incomes of all. In
fact, they
of all, in turn, is dependent upon
do not add to real income unless
the income which is derived from
they add to the sum total of pro¬
productive activity and employ-; duction.
Rising prices take from
menb One- oOhe essentials cpn- one to give to another.
sdquently is fhat all of fhe parts
The emphasis placed on money
of our economy must be in good
incomes rather than on real in¬
health. "If
any
important seg¬ comes leads to a failure to ao-

12

~

*

nation

DIgby 4-2727

income rather

in real income

all prices

farm

Services of transporta¬

and the consumers'

18

—

in' money

creases

•

; As We See It (Editorial)—

SUGAR
Exports—Imports—Futures

than

tion; fihancing,. storage t and sellf
ing call upon many others. No
line of activity is self-sufficient.
All lines are dependent
.upon the
consumer eventually for a market

Regular Features

Bank

the

•

Raw-^Refined—Liquid

total; those brought abou
through price rises represent in¬

packers to take care of processing
distribution. The packers, in
on

STREET

the

Both look to the

dependent

WALL

NEW YORK S. N. Y.

services for which there is dehiand represeht real' increases in

belt feeder looks to the range

are

#9

the production of more goods and

and

_ _ _.

■i

is the interijts differerit

The rancher on the range
the feed ldt$
fhe corn
belt to provide a finish on his cat¬
tle on the road to market. The

Jewelry ,Makers "Optimistic oh §ales Optlook.______
20
World Bank Makes Loan to R. tch Shippiug Companies.— 20

"

L AMBORN &
CO.,Inc.

.

looks' to

20

System Teletype N. Y. 1-714

pleasure the consequence of
rise in ■■ prices.
Additions to the
Rational income which result from

parts.

Panama Bonds Drawn for Redemption.13
Australian Economist Hits at Dollar Restrictions.

\

Bell

income is not altogether the result
pf increased output, of goods and
services, but is in considerable

outstanding characteristic of

modern economy

REctor 2-4500—120 Broadway

this property is illusory in part
because the high level pf money

we

our

Establishefl 1908
Members N. Y. Security Dealers Assn.

our

money inpome and
apparent prosperity. The term ap¬
parent is used advisedly because

elementary. Perhaps that is why
find it so easy Jo: overlook it
in "Gur quest for improved levels
of living.

are

of

use

J.K.Rice,Jr.&Co.

period of high
used,
divided

are

man's wants

Foreign Financial Aid

■

'resources, It is,
iberefore,; :'in • i prderi Jqi examine
conditions affecting such use.
At
the present time, this use is at a
high level and the nation is in a

re¬

12

on

Economic' Health

Economic health depends upon
maintaining a high level of effec¬

William G. Lightbowne Says Lack of Free Competition'
Threatens Free Enterprise__________^J_____________j____

J

Com. & Pfd.

p. S. Finishing .Com. & Pf d.

to yield nn in-

,

the
for
they

determine

B^sis^

J:r

employed, how; they

are

......

cpme is not nearly as marked.

have
been placed at
man's disposal
sources,

Dorset Fabrics

United Piece Dye Works

which prices and wage rates must

Sources

10

Corp.

Tennessee Gas Trans. Co.

.

b$ applied in order

man.

Certain

Cover

4-6551

ana

hours of work and production to

and

jwants of

Depression Unlikely, Says Senator

Taft

.

ac¬

needs

smart

office.

our

WALL STREET, NEW YORK

pricea and. wage rates. The em¬
phasis on volume of^ output: or

f

future

or

which

,

tivity I is to
•satisfy current

15

Salesman—Henry T. Vance____l—_____ 16
or

0

with

flooding

stock to

basic

'objective;

keep

Telephone: WHitehall

.

The Securities Market in Mexico

securities

investors

see what adjustments and
steps
necessary to keep, our economic ;hodjr in a -healthy condition
op*
erating - at * a
*
high level of
tion of-, that Income. The result is
efficiency.:
that attention tends to center on
.

Credit Qutlook—J. Brooke Willis—

"HAVING A
WONDERFUL

serve

productivity.

are

'

best

Can

we

The present is a good time for
appraising, factors in our economic
health. Production, employment and income

:

../

economy,

and asserts best solution of agricultural difficulties lies in
economic

health of non-agricultural sections.

-

The World Requires a Sound United States Economy'
r—Alf M. Landon
L___
—i
..•v»v>vV"'V.

arbitrary farm price support furnishes basis of healthy

;1

'

_■—__L

jLurruiii

|

5

_________

Our Economic Foreign Policy—Winthrop G. Brpwn_____-_t

because i| results from high level of mopey income rather than
increased output. Say$ this puts economy out of balance, and
group pressures seeking advantages add to instability.
Denies

I

Fallacies and Dangers in New Credit Curbs

AND COMPANY

Mi 11 uesota

Holding economic health depends upon maintaining most effective
tlse of our resources, Dr. Jesness says present prosperity is illusory

j
!

2

icHTfnsTtin

B. S.

By O. B. JESNESS*
What's Ahead for Ranking and Business?
—Artnur R.

by Dr. Jesness at

GRODY & CO.
Members Natl. Assn. of Securities

Dealers, Inc.

.

*

'

-

Not available this week.

Published Twice

Weekly

L

Drapers'

and,

The

COMMERCIAL and

c/o

WILLIAM ,B.

4

25

?ark

1

U.' S.

'

DANA

SEIBERT,

4.'"v
.;

'

v.

•.

'«

*

Manager.
"
'
**

"

:

i

•','

Tele. NY 1-2698

■•

under

the

Act

We

are

At-- New
of ' March

interested in offerings of

Winters &

High Grade Public Utility and Industrial

r

7 PREFERRED STOCKS

7

of
in

Miles Shoes, Inc.

;

year.

Other. Publications

Rank

§25.00
i

and

per

Monthly

$25.00

per

Quota tion Record—Monthly,
{Foreign postage extra )

Spencer 'Trask & Go.

'

year.
•

Earnings-

year.

Record

(Foreign

Monthly,.

postage

extra.)'

Members'Nerti
•

Note—On account of-the fluctuations-in
rate

Tel.:

M?mQeri ffetp' York Curp Eicharige

HAnover

135 S. La Salle

2-4300

St., Chicago 3

Tel.J FlNancial 2330'

'

of

exchange, remittances for for¬
eign subscriptions and advertisements must
be made in New York funds. "

York Stock Exchange

23 Brpaid Street; New Y^rk 4
•

the

Crampton Corp.

S;

,r

135
S.
La
Salle
St.,
(Telephone: State 0613);




•

.

f

state and city hews, etc.).
111.

Dlgby 4-3280

"

theUpostv office

fiubScriptiofis .in Uhited States, !!.
Possessions, Territories and Members'
13an-American Union. $35.00 per year:

,

Offices:'

Eng-

second-class matter Febru¬

0

Dominion of Canada, $38.00 per
.Other Countries, $42.00' per year.

Every Thursday* (general news and ad¬
vertising issue) and every Monday {com¬
plete statistical issue — market quotation
records, corporation news, bank clearings,

3,*

C.,

4'
Subscription Rates

Thursday, August 12,.1948,-._..-„"

Other
Chicago

E.

Smith.

•„.

C :

President

WILLIAM D, RIGGS, Business
*-'>

1,11879.

-

HERBERT D. SEIBERT, Editor & Publisher

as

ary -25,.1942,,
ifork.,. N. Y.,

DANA COMPANY, Publishers

REctor 2-9570 to 95.76

WILLIAM

London,

4'Company]

Reentqred

Patent Office "

Place,^Nqw.Yorlc.- 5,: N, Y.

&

Exchange Place, New York 5

Copyright 1948 by William B.-Dana
-

FINANCIAL CHRONICLE
Reg,

Gardens,

Edwards

40

Teletype—NY 1-5

Aih^rjT;

;

Falls

•

- *■■■.

.

SchenectadV/

.

•

•

WotfiaRter

Analyses available

C. E.

request

Untcrberg & Co.

Members N.

61

on

Y. Security Dealers Ass'n

Broadway, New York 6, N. Y.

Telephone BOwling Green 9-3565
Teletype NY 1-1666
e ^

THE

(600)

4

COMMERCIAL

Fallacies and Dangers in New

Credit Curbs

British Inflation and§

j

By JOSEPH M. DODGE*

Deflation lleai&iSSI

President, American Bankers Association

-

'

President, The Detroit Bank

By PAUL EINZIG

1

,

i'

,-

•

ABA spokesman tells Congressional Committees of success ol Voluntary credit controls, and antiinflation action of banks, and, while making no objection to consumer credit curbs, criticizes impo¬
sition of increase in. bank reserve requirements. Says such increase &s provided in new legislation
will immobilize $10 to $11 billion of bank assets

and

may

be

I.kely to harm than, help the

more

Thursday* August 12, 1948

FINANCIAL CHRONICLE

&

Holds Federal Reserve and Treasury shave had ample powers to regulate credit, and warns,
if business activity is to continue at 3 present rate, there will be heed for more credit. Denies overexpansion of bank credit.

.«' v*:' {*\.

r);

-

In S.

2910

7062 which is before you

and H. R.

for consideration there are two pro¬

Title I and the<^

the

is

other

of

increase

lation

of

in

banks

to

to

referred

I in¬

Title II.
tend

to

direct

restriction in the

selection end

I;

We urged the $14 billion total of consumer cred¬
That
$3^
billion includes
scrutinize credit care¬ it.

savings.

fully, to restrict its use to loans
that stimulate immediate produc¬

comments tion, to avoid increasing the pres¬
sures on consumption, to restrict

to; these.
The

Amer¬

ican

Bankers

As s

ociation

has

long rec¬
ognized
the
dangers of the
present

infla¬

situa¬
and the

tionary
Joseph M. Dodge

tion •

importance of

its

use

to

purposes,
and in

tions

the

and

sound

.to

avbid

.

necessary

speculation,

general to hold the obliga¬
of borrowers well within

capacities to

their

banks

to

use

pay.
every

We asked
effort to

the public to invest in
Treasury Savings Bonds and to
increase savings deposit accounts.
encourage

We

less

represents

emphasized the need for these

FHA Title I loans,

which

are gov¬

ernment-sponsored credit*
It should also be* pointed
that if

sales

but

credit instalment

consumer

restricted

by the pro¬
manufacturers
or
distributors may finance such
sales by the use of regular com¬
are

regulation,

posed

credit

consumer

the

crease

A contraction of

credit.

mercial

thus

may

in¬

of regular commer¬

use

cial credit.

Most

durable

consumer

goods,

with the notable exception of au¬

actions in our meetings, through tomobiles, are now in relatively
excessive expansion
adequate supply. The reimposiThe Association's speeches, and in other forms of
publicity. This was a reversal of tion of regulations on consumer
program of voluntary credit con¬
the program that we had been credit would have a tendency to
trol and anti-inflation action was
engaged in, and I emphasize it be¬ give preference to those who can
designed to meet those dangers.
meet the larger down payments
cause we took the voluntary meth¬
The program was presented and
The less fortunate in¬
od of cooperative action to meet required.
put into effect on January 5 of
a national problem.
This program dividual, whose need is as great
this year—seven months ago.
It demonstrated a
and who is worthy of credit, may
type of flexibility
began with a series of 13 pilot
deprived
of the
article he
much
more
appropriate to the be
meetings in the key cities of the
American philosophy than arbi¬ wants.
•country.
At these meetings the
The oanks of th$, country now
trary controls of any nature.
program was presented to repre¬

avoiding

an

bank credit.

of

4'.

s

of
Voluntary Control Effective
pilot meetings
It is evident that the voluntary
were
supplemented by hundreds
credit control program has been
of
additional meetings held
by
effective and successful. The in¬
the bankers' associations of every
crease in bank
loans in the first
state, whose officers accepted the
six months of 1948 was largely in
iresponsibility of carrying the mes¬
the consumer credit and mortgage
sage to the individual banks. The
fields. Commercial, industrial and
activity was of tremendous scope.
agricultural loans actually were
On my part it involved six months
reduced about $300,000,000 as com¬
: of time arid 35,000 miles of almost
pared with the end of 1947. In
continuous travel, all for the pur¬
the last six months of 1947, loans
pose of carrying out this program
increased at a rate of about $10
and emphasizing its importance to
billion a year. In the first six
; the bankers of the country.
months of 1948 it was at a' rate
I can testify to the acceptance
of about $3.4 billions a year, or
and cooperation of the state bank¬
roughly one-thir^ of the rate pre¬
ers' associations and the thousands
vailing in the last half of 1947.
sentative bankers of each area
the

of

The

country.

individual member banks. The

of

evidence

their

cooperation

is

I apparent in the results in the
| first six months of this year.
|
Since the normal spring and
early

summer

meeting period of

the state bankers' associations has

to

come

close,

a

mented this

have supple¬

we

activity with

a

com¬

munication addressed to the chair¬
man

of the board and to the presi¬

dent of each

bank, under date of
July 29. The communication fur¬
ther emphasizes the need aggres¬

sively to continue the anti-infla¬
tion program. You have already
received
copies of this folder,
which reproduces a

| ter from

myself

directors

and

banks

of

the

Association,

a

covering let-

to

of

the officers
the

member

American

Bankers

letter dated July 2

from Secretary Snyder to me, and
-

my

reply

think

that

this

before
i

bill,
out

material

the

as a
our

it dated July 7.
I
important to mention

to

is

it

was

prepared

introduction

of

this

further step in carrying

anti-inflation policy.

Immediately after the end of
i the war we engaged in a program
to provide the credit necessary
for

reconversion

and

for

the

stimulation of peace-time produc¬
tion;; However, when it became

apparent

that

the

largely the result of
of

policy
The

easy

a

government
credit.

mortgage

the

approximate

ulation

A

W.<

will

W

tion

return' to

result

not

Regula¬
in terms

appreciably different than

those

being used by the banks. For

now

that

reason

have

we

objection to

this

serious

no

/'V

.•

.

ing costs of rearmament.

inflation and deflation at the
of

free

of

flation

country

a

liquidation of the excesses

mere

de¬

or

is

ever

<§>-

in¬

of the boom.

Although immedi¬
ately after the war it was widely
believed that Britain
might be

flation. It also
y

able to isolate herself

happens dur¬
ing periods of
C o m p arative
stability
that
at any given
moment

Seldom if

time.

same

fears

either

in

trends

ness

the

busi¬

from

United

States

such hopes have now been aban¬
doned.
t

Finally, there is

widespread

a

inflation

feeling that the Government's an¬
ti-inflationary £ drive
might
be
carried too far, and would .more'
than offset the trends in the oppo¬

while

site

one

section

opinion

of

fears
the

at

another

sec¬

tion is equally

Dr. Paul Elnzlf

apprehensive
of deflation.

The

reason

why the

present situation is unusual is that
same
people are afraid of

the

both inflation and deflation at the
same

time.

It is easy

direction.

curtailment

moment

same

to make almost

any¬

body's flesh creep by marshalling
up the impressive array of facts

pointing towards inflation in the
near future.
In spite of Sir Staff o r d
Cripp's
anti-inflationary

News

of

about

the

spending by - the
public is pouring in from every
side.
Even though there is he
evidence of any contraction of
purchasing power, most people are
inclined to be more cautious, and
refuse
to
pay
the
top
prices
reached as a result of buying pres¬
sure during recent years.
There
are now large unsold surpluses of
manufactures
accumulating
in
:■

lines. The partial failure of
export drive has resulted in

many

the

the release for domestic consump¬

of

tion

quantities of goods
intended for export;
goods
have
come
to
be
large

policy wages are still rising, and
so
are
profits in many respects.

primarily

Most labor unions have not aban¬

known

their

doned

claims

for

higher

for the simple reason that
they did the union officials

wages,

if

woufld

lose

their

influence

over

the rank and file of members who
would then

prefer to listen tof the
"shop-stewards" agi¬
tating for wages increases.
It is
true, there is now unemployment
in certain
branches of activity,
but such is the scarcity of labor
Communist

such
trated

under the

name

exports."

lower
prices,
possibilities of

for
the

spiral.*

of

"frus¬

All this makes
a

and
carries
deflationary

:->w

•

speaking,
inflation
fears
outweigh deflation fears.
For one thing, after years oL Up¬
ward trend a certain amount" of
Generally

deflation would

be

actually wel¬

it remains within
moderate limits..
Besides, owing
come, so

long

as

if

the

in other branches that the unem¬

to internal as well as internation-

en¬

ployed

easily be absorbed in
a very short time.
So there is no
real
decline
in the
purchasing

al

proposal

credit

loose

Whatever

type there may be
outside

the

of

is

of

this

extended

banks.

As

was

pointed out earlier, the proposal
is

limited

25%

to

effect

an

what

of

is

on

about

commonly

consumer

as

re¬

credit.

tion act, it should cover the whole

field of

consumer

credit.

Use of Bank Credit Not

Inflationary
lieve

furnished.

mitted,

deposits have not been
increasing. They have been de¬
clining. -Bank deposits have de¬
clined about $4 billion since Jan¬
uary
1. That of itself tends to
restrain lending activity. The ef¬
fect has been to induce still an¬
other element of caution in bank

use

Bank

v-

;

,,,

Congress believes it should be
acted.

goods goes along with increasing
production and new construction.
New homes must be equipped and

no

of

no evidence, and I be¬
testimony, has been sub¬

which
oank

indicates that the

credit

has

though
they are now more cautions in ex¬
ercising it than they were until a
few months ago. There is a budget
power

been

an

important factor in creating the
present inflationary situation or
that there is any current exces¬

of

consumers

even

surplus, but if, as now seems
probable, Britain should have to
embark
on
large-scale national
defense expenditure this surplus
would soon give way to a deficit.
Above all, there is much uneasi¬
ness
about
the
possibility
of
Britain being forced into inflation
through
the
continued upward
trend

There is

can

in

the

United

The

States.

considerations

political

considered

is

tion

than deflation.-

more

From

an.

.

infla¬
likely

internal

political point, of view the, Gov¬
could ill afford

ernment

a

defla¬

tionary depression shortly before
the next general election, and it is

expected that reflationary meas¬
ures
would be adopted if there
should be a risk of excessive de¬
From
an v international
political point of view, the tension

flation.

with the Soviet Union is expected
to remain more or less

and

rearmament

permanent,
is considered a

This alone, it is be¬

necessity.

lieved, would be sufficient to nip
bud

the

excessive defla¬

efforts to check inflation there are

in

followed with much interest from

tion.

As unfortunately the pros¬

pects

are

this side,

it is assumed that if
should fail Britain
would be unable to isolate herself
those

from

as

efforts

the

American

inflationary

tension

any

that

will

the

international

increase in the

rearmament
increase likewise.
run,

long

is expected to
This is consid¬

ered by many people to be the
basic fact of the situation, so that

trend.

At the same time, there is equal
The pro¬
even if there should be deflation
posals and the discussions of' the uneasiness about the possibility of
It is now confidently in the near future a resumption of
problem of curtailing credit have deflation.
inflation is considered almost cer¬
been based on a possible infla¬ expected that the harvest will be
tain in the more distant future*.
tionary increase in the use of very good, and even though this
lending.
The increase in total
bank credit arid assumptions about is very good news the possibility
loans has been offset by an even
L. O. Thomas Forms Co*
what could happen, not on the of a big crop resulting in a slump
greater decline in investments.
of prices is causing much concern.
(Special to The Financial Chronicle)
facts as they are today.
Thus there has been no increase
In Britain itself a fall of grain
ATLANTIC
CITY,
N.
J.—
To meet these assumptions about
in total bank credit outstanding,
prices would not in itself cause an Luther O. Thomas has formed
what could happen, the proposal
but an actual decrease.
all-around fall of prices, for the L. O. Thomas & Co. with offices
is made in Title II that the Fed¬
A comparison of the increase in
simple reason that it would mere¬ in the Boardwalk Bank Building
eral Reserve Board be given au¬
total bank loans, using the pre¬
ly lead to a reduction of the to engage in the securities busithority to increase reserves against
war
year 1940 as a base, shows
amount the Government has to ess.
He was formerly local man-/
demand deposits of. member banks
that the ratio of increase in total
spend on food subsidies; On the age? for Fitzgerald & Co., Inc.*;
loans is less than that of the rise by 10% thereof, and time deposits .other hand, it * is feared that the
and prior thereto conducted his
4% thereof.
I am not sure
in the cost of living, wholesale by
purchasing power of the agricul¬ own investment firm in Atlantic
commodity prices, or the gross everyone understands exactly what tural countries might be seriously
City.
this means. I have seen references

^ationl income.

subject of regulating
consumer credit, which is referred
to in Title I of the bill, it should
be observed that instalment sales
credit only would be, controlled.
This proposal apparently attacks
only 25% of the problem. Instal¬




which

prevailed under Reg¬

ment credit for durable consumer

situation was not well in hand we

House, Aug. 4, 1948.

ciation,

terms which

increase in consumer instal¬

voluntarily embarked on this pro¬
gram to emphasize the need for
^Statement by Mr, Dodge pre¬
to the Banking and Cur¬
Committees of Senate and

terms, suph as those suggested
the American Bankers Asso¬

It
Mortgage loans, backed by gov¬
ernment guarantees, contributed is our view that if it is intended
substantially to the loan increase to use this regulatory approach to
which has taken place.
This is consumer credit as ah anti-infla¬

Regulating Consumer Credit

sented

it

by

conservative instalment cred¬

ferred to

inflationary

rency

use

•'r

LONDON* ENGLAND.—-British experts and the intelligent sec¬
tion of the British public are in a curious and probably unprece¬
dented position. They are seriously worried by the possibility of both

and the stimu¬ than $3% billion of the present frequ entl

extension of credit

reserves

bank

my

i

credit

saies

ment

,

mingled fears of. both inflation and defla-1,
tion in Britain, and both may occur in different segments of the
economy at the same time. < Holds, however, inflation featsare
uppermost, because of international tension and resulting impend-

economy.

posals which are of particular interest to the banking business and to the members of the
American Bankers Association. One is' the regulation of consumer credit referred to in

J >'

London observer reports

On

the

sive expansion of loans.

to

an

increase of 10% and further

this means an
increase of 10% "in existing re¬
serves.
This percentage refers to
deposits, and means an increase
assumptions

in

reserves

mand

that

of

10%

deposits.

of

total de¬

It should be em¬

affected by lower produce prices,
and this again would accentuate

the trend towards a buyer's mar¬

With Merrill, Lynch

ket/

Pierce Co.

Fears are also entertained
the

possibility of

United States as a

phasized and clearly understood present
(Continued

on page

17)

_up ward

about

slump in the
reaction to the

a

trend,

slump

which may not be confined to

the

(Special to

The

Financial Chronicle) /

GA. —Eugenia L.'
Wilburn has joined the staff of
Merrill Lynch, Pierce, Fenner &
Beane, 23 North Pryor Street."**^
ATLANTA,

Volume 168

COMMERCIAL

THE

Number 4724

m

'V

The

>

r,!

State of Trade

^

Business Failures

i

.

v

analyzes composition of U. S. money and ascribes
increase in supply since war to gold purchases and expanding bank
deposits* Lays - power of banks to meet reserve requirements to
Treasury's price support of government bonds, which enables them
to

;

t j Industrial production for the country as a whole held to a very
high level the past week. Some minor strikes were reported m scatr

^ invert

tered sections of the nation and they were to a degree counter¬
balanced by the ability of industry to obtain more readily some raw
materials that were heretofore in very short supply. Employment and

payrolls, too, continued at very high levels, though some increase for
the week in unemployment claims was reported in limited areas.

;

was

with

$190,300,000,000

the

for

most

which

of

the

available this week.

not

was

to

lion

pay
a

bank

of

deposits. What

Under existing law nobody but
the Government can own gold in

is there about

in

which

is

ernment

its central bank.

or

much gold we

way

any

.ts purchasing value in the future.

hourly earnings from April to May, it revealed, was 0.7%, or the
largest monthly rise since September, 1947.

However, the Board reported, there was a considerable drop in
total: hours worked, and as a result, average weekly earnings of pro^
duction workers dropped to $56.86 in May. This was a decline of 24
cents from the April average; ^
v
z-■-1.

■

k-

.

z!//;s

!/ ;#/ >'.Tl-ll'S■

:///M

> r:

■■

</. 1

••/

mysterious?
mystery about our

any

except what will be

our

no

now

we

continue to increase

Wires

Vow York;:

1-395

,

Connect

Montreal

•

„

Y

(

,Toronto!

How

and

1946

we

to

increased

have

or

paper money

circulation.

,

true

we

coins

1940,

.

.

but

Saturday evening last, following 13 days of political bickering. The
extra session produced four bills chief among which were the Re¬

hoimMnnrnoooH

trio

'XfrnTimAV

be

gaged by used car prices so steel demand can be measured by

time makes a book entry indicating that the FederalV
Reserve
Bank is entitled to a gold certifi¬
TI

Bank

_

the

pur¬

price. Upon this entry the
federal Reserve; Bank restores to

gray

Royal Bank of Scotland
Incorporated.by Royal Charter 1727

the Government's account with it

the

amount

of

the

check in payment for

Treasury's
the gold;

HEAD OFFICE—-Edinburgh
Branches

It all amounts to

this, that the
Treasury gets the gold for nothing
except its book entry, and the
seller of the gold has; a bank de¬
posit upon which he can draw and
which when '■ drawn upon enters
into the general money supply of

"throughout: Scotland.

?LON0ON> OFFICESMn
3,

.

Bishopsgate, - E. ,C. 2

8 West

49

Smithfield, E. C. 1

Charing Cross, S. W. 1

Burlington Qardertst WvXi
64 New Bond Street,

the country.

W, 1

Since the beginning of this year

have bought !$800 million of
thereby immediately vinr;
creasing our money supply by that
amount, and in addition; providing
the banks with the means of fur¬
ther increases to the, extent of
$3 billion. All this is presently!un¬

TOTAL ASSETS

We

gold,

controlled

tion

Of

banks.

of

'
other

The

£153,656,759

,

Williams

banks

is by

make

Mills

&

Deacon's

Co.

Bank, Ltd.

gold and the
V!"'v

method

deposits

creased

Associated Banks:
Glyn

by which
currently in¬
bank loans or
bank purchases of assets, princi¬
pally (bonds.
The
commercial
bank

f

lies in the discre¬

and

sellers

are

new

such

loans

or

TIME, Inc.

such

purchases by giving the borrower
or seller a bank deposit, for the
amount of the loan

so

of

amount

chase

.

deposits which! form

the

J

ji

.

in

cate

or

the pur¬

Stock

chase

price. That means that the
market quotations, "The Iron Age,!' national metal- large a part of the modern money
bank simply creates new bank de¬
working weekly, states in its current review! of ihe steel trade, y
supply are increased in two imposits which add to the money
The f.o.b. mill pricing system forced upon steel companies makes
supply.
their job of policing their business infinitely more difficult than ever.
*A release by, Mr, Parkinson
The reason that such additions
this trade authority points out. Previously the steel producer quoted
Continental Press to the money supply are of impor! a delivered price. He routed the shipment and was responsible for it through / the
(Continued on page 39);
until it was delivered, but under the present system the buyer can Syndicate, Brightwaters, N. Y.
current

Broadway, New York

same

money ^since 1940, but Yiot
since 1946. The r^al increase in

.

165

Fort Knox for storage, but at the

nt
of

publican-sponsored housing and credit control measures. Despite the Our money supply has been vin
opinions of Senators Hatch, of New Mexico, and Lucas, of Illinois, bank deposits, a, •
:
c
Chairman of the Democratic Campaign Speakers' Committee and ; ;
We: were fold that;when^ expan¬
assistant Democratic leader, respectively, that the bills were inade
sion of Government debt ended
quate to meet the situation, they urged the President to sign.them, with the war and the Government
since they represented some slight improvement "over what we now
began paying; off some of its debt,
have."
■■■■;/
'.he result would Jt>e a* reduction
In addition to the four billsthe special session'sent along to Mr. in bank-held bonds in bank depos ¬
Truman for his signature-^-the housing and :anti-infJatiom measures
its and; in that portion, of our
the UN loan and the housing-autos-for-veterans-appropnation—the monjey supply which is in the
lawmakers enacted a fifth that requires no presidential approval.: It form of bank deposits. But the
appropriated the money to pay the Senators and Representatives lOtf simple fact is that though the
a mile for their trip baek to Washington and home again.
The amoun. Government has been issuing no
came to $171,000 for the House and $51,000 for the Senate.
new bonds eligible for bank hold¬
ings and though the Government
Consumer resistance to increased prices was reflected in slightly has.since Jan. lj 1946, reduced that
reduced unit volume of retail sales in some lines during;the past portion of its debt eligible for
week. Dollar volume was slightly 'above that M thfr W
bank holding by some $35 billion,
and compared favorably with that of the corresponding week a year the money supply, and especially
that portion of it which is in the
ago. Interest in some types of soft goods declined slightly for the
form of bank deposits, has in¬
week; yyy
13S[ew order voliime remained without much change from the pre- creased from approximately $150
vious week, but total wholesale dollar volume was slightly above that billion at the beginning of 1946
of the corresponding week of 1947. Buyer interest in Fall merchan¬
to near $170 billion at the present
dise increased moderately in some localities, the demand for Summer time.
Certainly
those
figures
merchandise dropped considerably. Total food volume was fraction¬ would indicate that something has
been at work which was not ex¬
ally less than in the preceding week.
pected, or that someone has not
STEEL INGOT CAPACITY SCHEDULED AT SLIGHT INCREASE
been at work who was expected
FOR CURRENT WEEK
to formulate isound fiscal policies;
Gray marketeers have been given a new lease on life by the steel
Increasing Bank Deposits
industry's switch to f o.b. mill, sales. And just as motor car demand
can

„

Bank, which receives from

serve

paper

.

,,

COMPANY,

Inc.

.

not

• volume ^

the

HODSON &

The gold is turned over to the
Government by the Federal Re-

since
It is likewise true that we

have- increased

de¬
pur¬

the Treasury a check for the. price,
It is | The Treasury sends the gold to
_

have mcreased our silver

since

procedure for i pur¬
gold receives

the volume of

volume of coins
in

on

Under

us.

,

it

That
in the

$170 billion.

increase did not take place

present

but

ours

immediately increases bank
posits by the amount of the
chase price.
,

our money

We increased it from 1940
to 1946 from $60 billion to $150

billion

policy of

bank deposit in payment at the
fixed price of $35 an ounce. That

supply.

since

fixed

how much sellers offer

depends principally on how
much money we have and whether

1946.

The special session of the Eightieth Congress came to an end on

•

HAnover 2-0980

Teletype. NY

a

,

There is

'

Y

Bell

Private

•/

chase the seller of

That

-

.

"

52 WILLIAM 8T., N. Y. 5

buy depends hot oh

money

'/

-'

HART SMITH A CO.

this country except a foreign gov¬

that
I. Parkinson

Paper Co.

Corporation

St. Lawrence Paper Mill Co.

portant ways. One is by gold pur¬
chase, not because of the purchase
leg al tender or because of the price paid, - but
dollar, and we because of the method of pur¬
have $140 bil¬ chase.

for this increase, say Commerce Department officials,
the absence of "major labor-management dispute^, the effects

The survey showed higher hourly average earnings in May in
21 manufacturing industries. In four—the boot and shoe, northern
cotton, silk and meat packing industries—there were declines.

:

St. Lawrence

Govern-

whatever is

reasons

The hourly average was slightly more than $1.43 tot the 28 con¬
secutive monthly advance, the Board stated. The increase in average

■

Abitibi Power &

of

Conference Board.

•

-

a

While the average hourly earnings of production workers in 2E
manufacturing industries climbed to a new high record in May, aver¬
age 'weekly earnings declined,-according to the National Industrial

'

body & Co.

A. Wilfred May's article

the

are

•,'ment

•*>,*,

T.

;

He

previously with Kidder, Pea-

was

pa-

promises
i

of third-round wage increases in some of the durable-goods indus¬
tries and higher prices received by farmers for livestock products."

:

Go.,

Third National Bank Building.

''OBSERVATIONS"

.unsecured

$208,-

corresponding

for seasonal variation.

were

-

$26

Sper money

a record of $211,900,000,000 in June,
This, rate compares with, the previous
high pf $209,400,000,000 in January of this year. Figures are adjusted

The

them$

of

/silver,

from $207,200,000,000 in May;

.

Reavey has become affili¬

We have $2 billion of coins,

recognized and understood by anyone.

1 ?»The annual rate advanced to

^

Chronicle)

changed current boom would be interrupted.

reported by the Department of Commerce this

100,000,000 compared
period of 1947.

Financial

There, is really no mystery about money. There might have been
one when we were on the gold standard, but all that has long since
been abandoned. What we use for money in this country can be

week in personal income in the United States for the first six months
of 1948. It disclosed that such income was running at an annual rate
of about $18,000,000,000 higher than the first half of 1947, or

The

-

billion

sharp rise

to

these obligations into cash. Concludes if this procedure

were

«

A

bert A.

Mr. Parkinson

-Auto Production

and| Industry |

(Special

SPRINGFIELD, MASS. —Lam¬
ated with J. Arthur Warner &

Food Price Index

^

J. Arthur Warner Co. Adds

President, The Equitable Life Assurance Society of the;U. S.

Retail Trade

Commodity Price Index

5

(601)

By THOMAS I. PARKINSON*

-

Carloadings

■

FINANCIAL: CHRONICLE

Money Is Noi Mystery

Steel Production
Electric Output

;

&

;

•

•

f

•

-!

y

;

(Continued

on page

Time Inc.

1

one

man

and

can

increase

your

enced

man

extra"

ment,
resume

of
of

with

to

a

qualified.

Advance
Furnish

arrange¬

on request

condensed

White,Weld&Co.
Members New York Stock

FREDERIC H. HATCH & CO., INC.
Established
MEMBERS

Station^ New York 8> N. Y., Desk 36-M.




in

this stock.

Bought—Sold—Quoted

background for-appointment.'"■? Address Box 226,

Church Street

read

us

McGraw (F. H.) & Co.

production records who will appreciate
to 'those

to

Copy supplied

American Maize Products Co.

high calibered, aggressive,' experi¬

profit situations .and backing;
course,

reference

to

by

clientele

earnings here with leads and assigned accounts.

This is addressed

our

You

circular prepared

Kingan & Co.

with firm offering better than usual

cooperation and facilities.

a

31)

Securities Salesman
Opening for

You should be interested

63 Wall

N.

Y.

SECURITY

Street, New Yorl? 5, N. Y.

1888

40 Wall

Street, New York 5

Boston Chicago.

DEALERS ASSOCIATION

Bell Teletype NY 1-897

London

Exchange

Philadelphia. Providence

Amsterdam

Buenos Aires

6

THE

(602)

COMMERCIAL

FINANCIAL

&

Thursday, August 12, 1948

CHRONICLE

Our | Economic ll^reignllloIicpli:! The Problem oi the Cross-Rates
By WINTHROP G. BROWN*
Director, Office of

j

International-Trade Policy, Department of State

Stressing importance of firm and stable econdmic for elgn policy, State Department spokesman points out
America's stake in promoting free and multilateral international trade. Cites actions takeii Such as par¬

Oi Exchange•

ticipation in World Batik and International Mors tary Fund and organizat en of ITO. Says ITO Char¬
ter reflects policy eaclr nation should give to others, equal treatment in international commerce, whether

i

v

I

Chairman of Banco cli Roma

for Reconstruction

Executive Director, International Bank
v
land Development

,

having private enterprise or state trading* but admits it is no panacea for world economic ills.

l

Italian banker explains existence of unbalance between "crossrates? and parity rates of exchange and contends they arise from
vast network of bilateral exchange and trade agreements.
Points '

x

INTRODUCl'lON
Some weeks ago, in

testifying before a Committee of Congress, Secretary Marshal}
said, "It i3 the economic factors which I think will large determine the great issues iA
the international field in times of peace and will make a pattern for peace or fof
•

possible war."

in

ber

Com¬

of

he

merce,

stressed
vital
tance

of

the
con¬

system.

our

States

eponomic for¬
eign policy if

It proposed that United
citizens might trade With

out paying any higher "duties or
imposts in the ports, havens, roads,;
countries,
cities
or
towns"
of
leadership
in
world
affairs... Winthrop G. Brown France than French subjects paid.
It proposed that American citizens
I therefore, ■'
particularly welcome the oppor¬ should have the sarhe "rights, lib¬
erties artd privileges" in France
tunity to discuss, with so repre¬
It
sentative a group as this, certain that French citizens enjoyed.
aspects of the economic foreign proposed also that exports from
policy of' the United States—to the. French West indies should pay
outline to you some of the major no higher export duties when go¬
problems which we face, to tell ing to the United States than when
' J
you some of the things we have going to France.
maintain

our

to meet them, and to

done to try

Here,

for

of basic

to

commend

you

a

program

future action.

lie

our

pol¬ today. The founders Of the Re¬
icy has its roots deep in the basic public khew that international;
philosophy of the founders Of this trade was of vital importance to
3nation.^I|; is, predicatedAipMi fhe this country,. that an open-door
twin concepts of; equal opportu¬ policy between; countries whs es¬
nity in foreign trade and the ne¬ sential for .trade to expand; and.
cessity for expanding the produc¬ that certain' principles or rules
tion and interchange of goods and were necessary for an orderly and
services.
It asserts in the 20th full development of imefnational
century, as it did in the 18th, that trade. Experience and political in¬
told them that economic
there are still great areas for that sight
expansion. And its essential ob¬ foreign policy cannot be. dissoci¬
jective is now, as it was at the ated from political foreign1 policy.
birth' of our nation* limitation' lor Peace and trade are the two sides
of

restrictions

that

expansion and upon
equality • of opportunity.

upon

that

conditions

today

make

the attainment of these ends more

difficult.
of

World trade is badly out

balance.

Many nations do not

believe in free competition
do.

Nationalism

is

as

we

rampant

in

quarters of the world. SUch
require adaptation of
our
principles to accommodate
differing problems and opinions
of other nations with which we

many

conditions

trade.
But they do, trot alter
the fundamental philosophy with
which

we

of the

same

coin.

Stake

approach the problem.

International

From the vdfy beginning of but
national
existence, international

the

weakened

instability

democratic -middle

classes in many countries.. Politif
cal

new ten!
We did not' like What we

instability created

sions.

Qr should

We

this path.
take bold and

cooperative steps td try to reverse

and

the trend towards bilateralism

control, to help friendly nation)?
• to
fKeir feet and tn^stari

back

There was

course

was

no

doubt

more

the Plan and

as to

which
with

consonant

spirit of 1776.-'

Action

ex¬

574

in

and

the

Milan

dollars

A's

to one unit of B's
that, at the exchange of 2a0
units of A's currency for one unit
of C's, there is a similar equilib¬

3.24

Instead the
of the

Costantino

currency and
B's currency

Bresciani

from

Inter¬

national

Monetary

dollars.

;

Fund

at' 4.03

trade

from

riving

be¬

relations

:

tween B and C.

This difference between the of¬

ficial

parity

of

and

currency

a

its

cross-rates, established
countries T where there is

j

II

in

Let

the
free

a

us

change

now

that

suppose

a

in the situation first
The three
currencies

occurs

described.

market, is undoubtedly a sign of
the lack of balance of exchange

Taken

the, quotation for C's
the quotation for
(250:5) is different
the exchange rate of 7 de¬

between

sterling

the

position

to see that the cposjresult;ng in A from the ratio
easy

rate

parity

has been fixed

by

is

C. This being the

and

it

between

relations

trade

in

A

sterling.
official

currency

rium

the

to

7

*

and

in

is

of

that the, equilibriiM;; of
A's; trade balance with B estab¬
lishes an exchange of 50 units of

ling at Lire
1,861. Conse¬
quently, the
dollar-sterling
Milan

exchange

*

suppose

ster¬

cross-rate

equilibrium

fin

units of B's currency to one/unit
of C's currency. Further, let us

is

quoted at Lire

„

be converted into one another
and
arbitrage is possible. What

may

rates. This discrepancy is symp¬
tomatic
of .the
present
inter¬ happens then, for instance, is that
national trade situation, which is if A needs to buy some of BJs
formed the' United Nations, the
International Bank and the In¬ vefly- far from 'that state of many- currency to pay for imports fropi
sided 'exchanges V^hich/ it' was B, it will find more advantageous
ternational Monetary Fund, and
the Food -and: Agriculture /Or¬ hoped,< would
be re-established to purchase C's currency and buy
the end of the second World
B's currency with it in C. This
ganization. And the United States
means that the value of C's cur¬
initiated
action
on
a
further War.

So we and other nations chose

;

the

of

course

common

action.

threefold front; to reach
ment

on

way
of

We

agree¬

rules which would

clear

for' the sound develop¬
international

trade;

tb
begin the actual reduction of trade
barriers; to help put Europe oh

In order to explain

the

connec¬

tion between this lack of balance

the

of

exchange

existence

of

rates and the
network of

vast

a

rency will
the
value

up in A, whereas
B's currency will

go
of

drop; in C. changes of an oooosite
nature will occur. The arbitrage

transactions occurring not only in
agreements. I shall give
A, but also in the other two coun¬
example. Let us take
three Countries, A. B, and C, each tries* vvill continue, ^modifying the
more
than a thousandfold Jshf^e
First,' in''December, 1945, thje of-which trades with the other two rates of exchange previously es¬
the beginhl hgs 'of * thO Republic. United States invited a number of
on
the basis of bilateral trans¬ tablished by bilateral trade ex¬
We are now the world's principal important and representative na¬
actions. Now let us suppose that changes until a general balance
foreign trading country.. Our ex¬ tions to negotiate with it and witp all three I countries have a Cur¬ of exchange ' rates is reached,
ports are larger than those of any- each other for 'the reduction (Jf
rency system consisting of . paper namely until the ratio between theother country.
value of C's currency and that of
Our imports are tariffs and the regulation and
money not convertible into gold
second only to those of -the United limitation
B's' is
of
the
use
of
other
everywhere
the
same,
and, further, that they have Tall
whether it results directly from
Kingdom. Our total foreign trade trade barriers.
The
invitations
achieved a certain level of home
in 1947 was $20 billion.
were
trade exchanges between C and. B
accepted.
The. negotiations
indimKly -from auotations of
Such are the origins of our pbl- took
place at Geneva
in the prices unperturbed by inflation or
deflation and that both the quan¬ C's and B's currencies in A's cur¬
spring and summer of 1947. They
icy, and such' the magnitude
bilateral
a

has expanded its feet.

simple

pf

the

matters

with

What

which' we

are

some

are

of the

Our Economic Foreign problems which we face today?
Policy

-

Economic

developed.

For instance, at the present moment

22,

dollar

port
.

tradb
depression

Economic

of the country considered.

(April
194g). the

international

Nations,

of

declined.

the

in

•Our foreign -trade

dealing:
Origin of

rency

EuropeancOuntriesfestrictedimjpOrts
by
qucftas.; The United

ment
America's

Trade

1

World

expression "cross-rate" is often used now to indicate the
exchange rate between two foreign cun encies resulting in any giVen
country froih the/direct quotations of each currency in the cur¬

trading nations moving' ag&Ur'Tn
then, are. the beginnings the direction of
open, multilateral
conceptions which under¬
international trade?
economic foreign policy

American economic foreign

elimination

these conditions.
The

(or other countries) with¬ States declined jto join the League

France

to

are

w e

:

.

impor¬

tinuity in

..a.

countries), free, of.the arbitrary World War I. The United States
restrictions imposed upon the col¬ raised its tariffs successsively ih
onies by England to divert co¬ 1921 j 1922 and! 1930, the British
lonial trade to
or
through the Ehipire followed suit by raising
and
instituting Empire
mother country in an early ver¬ tariffs
sion
of the
Empife preference preferences,^

Cham¬

:

because of deformation of trade currents caused
by bilateral agreements* and criticizes Bretton Woods international 7
monetary system for attempting to maintain exchange parities under /
and parity rates,

designed to gain immediate indi¬
might be called multilateralisih. vidual advantages at the expense
It
contemplated that Americans of other nations?
We
followed this path after
would trade with France (or other

United

States

-

impracticability of establishing balance between "cross-rates"

out

policy that, in today *s .language,

speaking to

the

-

I $-

k

And,
a
few
days earlier,

'

By C.BRESCIANI TURRONI

'

j

The Choice After World War II

resulted in the General Agreement
on

Tariffs

and

Trade—the

mokt

and

type

ported or

of the goods im¬

exported and the ex¬

comprehensive tariff agreement in
history—which has been: put intjo change rates for the various cur¬
effect by 22 out of the 23 coun¬ rencies are the result of trans¬

The most destructive War in his¬ tries
sets

involved.

This

agreement actions

the

•

markets.
-

In

effected
,

view

positions,

.

of

the

.

on
.

^

the

I

the foregoing sup¬

there

cpmmuniclpatirig
AC and

freely
•/

.

are

three

rharkets:

nan-

AB,

BC, on each of which, if

bilateral

trade is free, there

For instance, the following

rency.

situation will arise: in country A»
one unit of B's currency and one
unit

of C's

.

tariff treatment for ovhr
played a major role; in tory left in its wake. • economic
half of
our
economic development.
jiOn conditions that were chaotic in the wOrld. the. trade of the entire
June 12, 1776, three weeks before extreme. Not only, was there tre¬
Second, in December, 1945; the
the Declaration of Independence, mendous physical destruction of
the Continental Congress created facilities for production, .transpor¬ JJnited States proposed for tlie
Consideration of the jpeoples M
a
special committee to study in¬ tation and comrntimcatiphs, but
ternational trade in relation; to there was also destruction of in¬ the world "certain rule's'to govern
trade has

tity

45

A's
C

currency

equal to

are

27Q units respectively of
curfehcy; in countries B ahd

and

one

eoual

unit

of

C's

currency

to 6 units 6f B's

is

currency.

Obviously this shifting ofr ex¬
change/rates cannot fai| to affect
trade transactions among the three
countries. In: fact,
relations

between

if, in previqus
B

and

the

C

balance

of

foreign policy. The Continen¬ tangibles, such as liquidation • of the conduct of internatiohaT ffa'de
wilL come into being a balanced
tal Congress must have been very foreign investments and. breaking and^ $iigg6Stedr that hatipns hieM
\
exchange of the various Curren¬
busy^ in thathistoricSiirrfftier ( of of business channels. Shortage's 4o consider arid adopt them.
This action also found a reacjy cies, that is to say the exchange
1776, but the importance of inter¬ of food, shelter, clothing, fertilizer,
national trade was so great that raw materials and machinery, are responses
One of fhe^first? acts at which the bilateral tfade bal¬
it assigned no less eminent men still the rule. And during the war, of the Economic and Social Coun¬

equilibrium

than

ports to B, namely B will have" a

our

-

ances are in equilibrium. Let us
John shortages of essentials and the cil of the United Nations early in
necessity for total mobilization 1946 was to appoint a committee suppose, for instance, that trade
to ithfe
|
brought techniques for the control Of 18 nations to prepare for a relations between B and C form
Nations
Conference
on
The committee prepared a proj¬ of trade by governments to a high United
Trade
and -Employment.
This
'"Reprinted from the "Review of
ect, known to history, as the Plan degree of perfection. In almost
country imports and ex¬ committee adopted as the basis' the Economic Conditions in Italy,",
of 1776, that was adopted by the every
for its deliberation -the "Suggested published by the Banco di Roma;
Continental Congress in the fail ports are being controlled by. gov¬
quantity source Charter for an International Trade May, 1948. In this article the -au¬
of that year and that served ■ as ernment as to
and
destination.
International Organization," published in Sep¬ thor expresses his own personal
a guide for Our ddfnmercial trea¬
1946,
by
the
United opinons,
which
have
nothing
ties for many years to come. This trade has been turning towards tember,'.
States.
At London in the fall of whatsoever to do with his posi¬
bilateralism and control. /
Plan proposed an open-doOr trade
194-3, at Geneva in the'spring and tion as Executive Director of the
We ahd other nations had Then

Benjamin
Franklin,
Adams, .and Robert Morris
committee/ 7 1

*An address by Mr. Brown be¬
fore

the: Fourth

National Forum

to

choose between two

action.

courses

Should each nation

row

of

its

of Labor, Agriculture and Indusr own boat without regard to what
try, University of Wyoming, Lara¬ others were doing and adopt un¬
coordinated short-term measures
mie, Wyo., Aug. 2, 1948.




summer

of

1947 and at Havana in

part
study by

World Bank. The theoretical

the

of

trade established an exchange rale
of

7,

now

that this rate of ex¬

change has become 6, C's imports
from B will be

iower

than C's

deficit in its trade balance

ex¬

wijth

C. On the other hand, at an

ex¬

change of 45 units of.A's currency
for one unit

of 50

as

of B's

before)

money

(instead

exports from B

to A will be stimulated, While

M's

imports from A will be reduced,

namely there will be a credit bal-.
ance

in B's favor. At an

exchange

(instead of 250) units
succeeding fall and winter, the of tne article sums un a
of A's currency for one unit, of
Charter has been debated and re-j the author published by the Milan
fined and improved.
At Havana,' University in 1943 ("I carnbi esteri C's currency, A will export to C
; ; 7
(Continued on page 36)
in regime di carta-moneta").
(Continued on page 30),
the

rate

of 270

Volume 168'

Number 4724

From

THE

COMMERCIAL

.........S.By CARLISLE BARGERON 1

For

the

past

"

Ex-Governor Lanclon

perhaps

longer, ever since it has beer,
apparent that politically Mr. Truman was a dead duck, it has been
a common
experience of Washington newspaper correspondents to be
year,

asked: "But don't
r

think he will &et

you

;

„

or

into

us

war

to

This■'writer$————1——
had

has

the

New

question asked
by people of
all

shades

of

course

ion.

Truman

Manifest¬

this

of

They

w

h

a

Roose-

t

did

velt

appeasement which Mr.

justify

among
Carlisle

Bargeron

q u e s

dared

admit

this;

that

prevailed

istration

probably

to

Stalin.

It

to

to themselves.

asking this question, in such
bers, militated against Mr.
country went into

Tru-

If the

rightly

war

or

wrongly against any such prevail¬
ing cynical attitude then his de¬
feat would

than

is

those

undoubtedly be worse
fairly generally ex¬

now

effort

with

us

a

in

war

to

be

that

captious.

I

am,

.

the whole

is

obviously
not trying

The

Ihave

reactionary
thought - that

-

Russian military men¬

grew out of our

government's
pride. Obviously, it has been truly
embarrassing to our global states¬
men
who led us through World
War II, to find at the end that a
more monstrous fiend than Hitler,
ace

:

apparently

are

everything

goes

then

in
the
ensuing Four
Conference, more impor¬
tant concessions will be made to

Stalin

in

tration

t|hat

regard

the adminis¬

to

of

Germany and of Con¬
Europe as a whole.
On
is inconceivable that we

tinental

it

not

out

come

on

the

short end of the stick.

very

; "

At least, this will be the

case
and temporarily.
I have
l/vn^fbelieved, ard more recent in¬
i
on

.

dications support me, that in due
time the sundry little dictators of
Eastern

Europe, of whom every
little country over there breeds a
lot, will take

care

of Stalin.

They

do not look upon him as the great

builder,

the

great

atomic

great

great

the

expert,
giant
that

the

bomb

military

Americans

scientist,

have

been

we

taught

io

.

said

would be.

it

it

So

be¬

boys, to
keep
the
so-called isolationists
from .saying "I told you so," to
shake angry fists at .Russia and

back

-r

ri t j
plenty

has

j

ojf

power, -unj]er. existing
aw,
to bring

credit

The trouble is

Alt M.

with-

•.

■,

.

dictators

I

live

closer

and

know

about the Rrussians than

rnore

do

should

think,

itures

Truman

his

and

have

.advisers,

such statements

does it matter if Russia does take
over

the European

difference

does

!has Berlin?"

continent; what

it make

Stalin

if

"

am not defending the logic of
these statements.
They are, how¬

,

,

-1

ever,

coming

more

reflect the public's

Mr.

Truman

we.

and

his

harassed
■

Truman will

critics, in effect:
you want—war?".

say

to

any

"Well, what do

at
,•

war,

the

think
should

who

are

not

and all govern¬
construction that can be

ment

of

that'

nevertheless

be

some

events

but

who

1hose who led

of

FEPC

so we can

think

impress
really

we

institutions, if

our

should
neces¬

to convince them of this. It

is

so

the

least

Americans

have

reached

I

fully

tion

,

f State

a

na¬

stable economy

a

in the most positive terms

is going to use

that henceforth he

influence

want

to

The

Financial

LOUIS,

^ea^ey is

now

Chronicle)

MO. — John
V.
.with G. H. Walker

nolds & Co.

''

'

Joins Alex. Brown Staff
Financial

CF»onic!E»

WINSTON-SALEM, N. C. —
lames 33, Holmes/ Jr., is now with
;

Alex.

Brown

&

Sons,

O'Hanlon

Bldg..
He was formerly WinstonSalem
representative
for
First
Securities Corp.

If America is able to maintain
sound economy for another dec¬

the

Therefore

'

acres

chance

a

surplus

that

our

goods ami

create

we

for

the.

goods of others, will permit some¬
thing like a world" recovery and
restoration of

ance'.

some sort of bal¬
If we f Ail to do so there will

be

general

a

a!

collapse,

with the

Gommiinists endeavoring to'.take

(Continued

42)

on page

Atlantic

City Electric

Kearney & Trecker

company,

well-located

on

/Parker Appliance

owners

Cripple

from

mines

with

ranging

supervision

if

Joe Bandy
315 Colorado

we are

political

and

economic

is
our

markets

Bayton Malleable Iron

two

Stromberg-Carlson
Warner

to

production
$4,000,000.00.

Co.

i

f

past
to

References exchanged.

desired.

H. All.

Engineering

Stock Exchange Bldg., Phila. 2

Mining Company
Bldg.

Byllesby & Company

PHILADELPHIA OFFICE

Writif.

Telephone

Denver 2, Colo.

Teletype

RIttenhouse 6-3717

.

PH 73

,

today is the center of

to

an

an

long pull
Trading Markets

I return

army-camp,

old theme when I say that,

strongest

the

as

iiiiiiiiiiiiiiiiiiiiniiiiiiiiiiiiiiiiiiiiii

freedom.

in

American Furniture Co.

the

in

nation

avoid

a

"bust"—or

as

Ecclfes put it a

States

United

can
we
Marriner

America

free

when

every

busi¬

farm—every individ¬

labor.

decided

at

They
once.

cannot

Henry

R.

]

all

Decisions

World

Affairs
Conference

Institute.

OLIVE

.

STREET
«;

..

.

•'

Members St. Louis Stock

LD

'

St. Louis l.Mo#
Exchange

33

SPOKANE, WASH.
NORTHWEST MINING

SECURITIES
For

Maryland Drydock
(Reports on Request)

or

■

of

Kent-Moore Organization,

must

Ground,
Estes Park, Colo., Aug. 8, 1948.
-

509

be

* An address byMr.Landon be-

fore

INVESTMENT SECURITIES

Puget Sound Power & Light Co.

(Prospectus

Immediate Execution

Exchange

from
Std.

Pac.

10:45

Time:

Private

WHitehall 3-7253

Wir-e System between

Philadelphia, New

York and Los Angeles

Sp-82

at

CORPORATION
Members Standard Stock

New York 5

Floor
11:30

STANDARD SECURITIES

44 Wall Street

Philadelphia 2
PEnnypacker 5-5976

Orders

on

to

other hours.

CORPORATION
1420 Walnut St.

of

Quotes call TWX Sp-43

A.M.,

Inc.

Available)

BUCKLEY SECURITIES

question that must
constantly
decided
by
the

Y. M. C. A.

"t

PHILADELPHIA

v,

—

" w'

illlllllllllllllillllllllllillllilllllKIIIIIk

(Special to The Financial/Chronicle)

MASS.

>.

Lynchburg, Va.

That is the
be

V*.

—

Tele. LY 83

family and business life..

in

..4.

Scott, Horner &
.Mason, Inc.

ual.] There are many daily ques¬
tions of expenditures of money
and

i' "j.

V.

spending

j Government is like
ness— ever.y

w

^

of
public funds at home is denounced
as a! "reactionary/^.
/ - y /
the

.V// ?•>.

Dan River Mills

Anyone, attempting- to use reason
in the free
spending of public
funds internationally, is hysteri¬
cally denounced as an "isolation¬
in

~

sound

a•

"deflation"—in the
of

Stix & Co.

Bassett Furniture Ind.

v.

to peace unless we can be
economically.
A
stable

economy is essential to
government.
But how

ST. LOUIS

LYNCHBURG

gravity and the for¬
We must pre¬

world's

of life

/TTXIIXXXXXXXXXXXXXXXXl

^reached
regarding
priority.
This is always a .difficult , choice

Ripley & Co,
BOSTON,

leases

forty

be

With Harriman

•

v

properties, will grant long-

term

years
of superficial
propaganda people still
they can eat their cake

America

!

reason

THE

several

Creek

16

ist" and anyone attempting to use

to

of

New! Deal

believe

First

LEASE

Long-established

program

records

and have it too.

the

Gisholt Machine

riot dor itself.
After

from

mines

FOR

-

& Co., 503 Locust Street,, mem¬
bers, of the New Yprk and St,
boms Stock Exchanges.
In the
past Mr. Readey was with Rey¬

iftneHnl

recovered

never

World. War, not to speak of the
devastation done by the Second.

creek

cold

that kind. Every group
flation for the other fellows but;

sound

G/H.(Walker & Co. Adds
(Special

no longer a ma*
jbr factor in the world. /Franco

Botany Mills Com. & Pfds.

of
wants de¬

painful

a

is,_tem~

economy

American La France

cripple

program
no
need * worry about
high
business profits.
All of
vyhich is pretty meaningless be¬
cause the
country basically does

not

sound

a

1IIIIIIIIIXIIXIIIIXXXX7I

tp reduce government, support of
wages
and government support,
of food prices.
i With that kind of deflationary

the day

ST.

The British

DENVER

possible

way

every

all social

on

pjorBrily at least,

ade, there
influence,

that' there -art

strong and sound

other than

depends

without
weakening the whole structure.
Our decisions today are based on
the
unhappy prospect of being
compelled to live, for a time at
least, in an armed camp.

»

his

final analysis,

able and essential at once,

we.

limit.

that

;

groups within a people—those na¬
tions have crumbled.

a

and

do

can

realize

factors to

world, we can hardly hope to lead

thing they do.

us into World War
Flanders has been added to the
II only to get into this mess, there
staff of Harriman Ripley & Co.,
is the consolation that the whole '
incorporated, 30 Federal Street.




dol¬

lars—without ruining ourselves
inflation. There is a limit to what
even

blood

have' lim¬

nations

ited opportunities to a few chosen

disaster

important what they think of
lis—except of course, that thinking

there" !

punishment

of billions of

cost

postponed./'
■
• ;
•■
*
!
(4)Use the power of his office
a
comprehensive
eduriationa
tp make clear to the public that
inflation has gone 'just as far as pjro^am — d'efent racial relations
—national
health programs—gov
it is going to be permitted to go.

surprised

turn

additional

lutely necessary

the

.

..On the part oi' those who do not
want

is

advisers

likely it will be just that. But the

ery—the rebuilding of Europe's
military establishments — the re¬
building of our own military se¬
curity—the rebuilding of the Phil¬

,,

inviting'

that we
poll tax and

and more to
attitude, or so

].;(think.■.
;
" ' ' T -< '■ T
So
they are moving toward
peace.
It may be at the price of
'appeasement,
of
unblushjngly
giving in to the Soviets.
Very
r

change

"What the hell

as

.

proceeds to pay off bank held
public debt. V
' - '
(3) Order cessation of all .gov¬
ernment buying that is not abso¬

ourselves for the

seemingly become convinced that
regardless of the merits or de¬
merits of World War II, the people
don't want World War III.
They
are coming to hear more and more

,

and use the

pare

Mr.

as

.

bone

the

to

though,

abolish

set up an

sary,

recently,, however,

More

,

.

.

mit you to undo

/

wealthy and

as

tightening interest rates and
it doesn't have the courage to ippines—and at the sahib time dmbark on an expanding field of
take that step.
'(2) Cut government expend¬ government spending at home with
out

of

what we have so
intend to finish

Landon

that it cannot
that

powerful,

circulat¬

entire

arid stable national economy. We ;
cannot do all that is both desir¬

productive as the United States of
America is, we simply cannot fi¬
nance
European economic recov¬

halt.

a

Cannot Finance European

'.! As

expan¬

to

sion

opportunities

When

In the

Economy

the

we

a

stream.

legislation

tress

started."

-vy*w

policies—that will keep

ing throughout the

following.

aut l\o

these pohunks that we are

we

taxpayer

country

is the policy we are

democratic./ I

what

our

j'funny money economy." Yet this

and say, "We don't intend to per¬

greatly done;

American

the

of

ruin

and

isks greater

paper

they had crusaded against, Relieve he is. u They look upon
11pm and his great army of indus¬
now
lay astride Europe.
It was
trialists, scientists and fighting
embarrassing to these statesmen
men as the semi-civilized, ineffi¬
but not to the despised so-called
cient people they are.
These little
isolationists.
It was just as they
had

economic

many

—

Shall

whom

hooved the global-minded

p a n s

...

If

Power

an

am

in the

so,

the

but

time. This is the way the Rus¬
sian -negotiations are moving."

government

we

humili¬

as

Administration hopes, the
blockade" of Berlin will be lifted

our

1?Our

he is.

menace

about to have.
as

to

backtracking and I

destiny who

our

It is going to be just
perhaps doubly

experience

get reelected, it is be¬
coming increasingly plain that he
hopes to present us with a peace
—maybe one of those peaces in

'

guiders of

with

ernment

things to be done that
if we at tempt to do too many of
them at once we will break the
are so

—forVw hi c h
the
President

do

|

However this may be. this is to
report that instead of Mr. Truman

confronting

with

was

ating,

pected.
/

humiliation

made him the

num¬

nian doing any such thing.

Admin¬

tough"

was

but * the

My unvarying answer has been
that the very reason people were

the

upon

"get

humiliating trying
"understand" him, of course,

they would not have admitted it

V

_Vaiidehberg

in the forefront of the forces

that

not

Senator

President and the Congress. There

on

credit

ion.
rhe
Federal;
Reserve Board
x

the Republican politi-

their

was

oners

t i

my

would

;

have

ats

c r

the passage

tldlUjJ

brakes

sank

,

they had better proceed very cautiously, in¬
deed. Because it may be recalled

The

term.

Demo

i»octl'U

;he

to' 'does-are concerned,

third

a

bring the cost of living under control he could do
of a single line of new legislation. If his purpose is really to stop
inflation, the program to be adopted immediately would be: (1) Have the Federal Reserve

may

as

Administra¬

If the President really wants to

seems

Insofar

accuses

bungling in foreign affairs.

it without

populace today is not one of belli¬
cosity in the least.
11" 1

is

Pai'ty Candidate for President

President TrumanV domestic and foreign policies and

re¬

_

]

:

—

.

of being

scores

Says President can halt inflation without additional legislation and
criticizes low interest rate
Points out as remedies: (1) frugal government spending; (2) overhauling of monetary policy; (3) restraint on international.spending; and (4) consumer credit controls.'
Asserts agricultural price support program keeps up prices.

1

to be moving into.
be mistaken for war¬
mongers when the attitude of the

they were
(thinking,. subconscio u s ly
ly,

that,

~

pudiated.
Those of this attitude
riiay defeat their ends if they be¬
come too jeering at the new

political opin¬

•

•<

Deal is by way

tion of

himself?"

save

1

By ALF M. LANDON *
Former Republican

" ' '

.

(603)

II The |World Requires! a | Sound
| United! States Economy lllllfi

Washington
Aheadt of
the News

....

FINANCIAL CHRONICLE

&

of
.

'

Brokers

-

Exchange

Spokane

Dealers

-

Underwriters

Peyton Building, Spokane
Branches

at

Kellogg, Idaho and Yakima, Wn.

»

THE

(604)

S

Thursday, August 12, 1948

CHRONICLE;;

& FINANCIAL

COMMERCIAL

Policy

The Problems of Fiscal
In Inflation
Vi

By WILLIAM II. STEAD*

Vice-President, Federal Reserve Bank of

St. Louis

•

of fiscal policy as they affect money supply
and inflation. Holds tools in fiscal policy for fighting inflation are: (1) increased personal and corpo¬
rate taxes;
(2) restrained and restricted goverment expenditures; and (3) proper utilization of
Treasury surplus in debt management. Holds inflationary pressures are likely to rise further because
of increasing governmental expenditures for foreign assistance and expanded defense program.
Calls
for greater understanding of impacts of fiscal policy and criticizes recent Federal tax reductions.

Mid-West Reserve Bank official analyzes various aspects

Industry- Corp., 231 South La Street, Chi¬

Conditioning

Air

Study particularly covering York
Corporation, Carrier Corporation,
Frick Company, Thrane Company,
and United States Air Condition¬
ing Corporation—Bache & Co.,
Wall Street, New

cago 4, 111.
Curtis Companies,

36

3, 111.

York 5, N. Y.

be defined as those governmental decisions

fiscal policy today can

term

ing to revenue, expenditures and the
activity and employment and

business
local

revenue,

payments and
obligations;
but
dom

used

so

because

taken

separately
their
budgets
lack sufficient,
size
f 1

to

in-

u e n c e

whole
omy.

case

for

fiscal

policy

can

the

econ¬

line with the

There¬
unless

available capacity to

demand

total

the

goods

for

and

high level of services, whichever is needed.
William H. Stead
For example: in. a depression
employment, prices will rise, dis¬
o t h e r w ise
locations in cost-price relation¬ when current savings exceed in¬
indicated,
the fiscal policy referred to will ships will creep in and, in general, vestment expenditures, the total
be that of the Federal Govern¬ the self-reinforcing factors of the expenditures fail to equal total
business cycle will be brought into incomes and demand will shrink
ment.
play and inflation will begin.
A markets will become insufficient
II.
major objective of fiscal policy in to sustain the income level, and
How does fiscal policy operate? its
pursuit of economic stability is, production will decline until, at a
Primarily it works through three
then, to secure and to maintain a lower level of income and employ¬
sufficiently high, but not exces¬ ment, total outlays on consump¬
*An address by Mr. Stead be¬
sive, level of expenditures in the tion and investment will again
fore the Fourth National Forum
economy—both public and pri¬ equal current income. Whenever
on Labor, Agriculture and Indus¬
vate—to clear the market at high private current income and outtry, University of Wyoming, Lara¬
(Continued on page 32)
levels of production.
* ;
•/'
fore,

Dn

219

for

tistics

Review—Charts

Bond

each—$4

of

Analysis

issue—

per

Graphic Economics, 60 East 42nd

_

sel¬

is

The

major

their

to

debt with regard to the effect they have on total
price levels. It most certainly includes state and

Co., Inc.—

Outlook—Peter P.
7 averages, 27 foreign bonds, McDermott & Co., 44 Wall Street,
domestic bonds, and basic sta¬ New York 5, N. Y.

Graphic

Allen B. DuMont Laboratories,
implements,
government
Inc.—Study—J. Roy Prosser &
Street, New York 17, N. Y.
be stated in this way:
spending, taxation and debt man¬
Co., 52 William Street, New York
(1) The thesis that production
agement, to affect the level of
Growth Factor in Airline Pas¬ 5, N. Y.
demand in the economy.
Very creates its own markets is erron¬ senger Traffic—Analysis—John H.
eous.
•
Glidden Co.—Memorandum—A.
briefly: production and employ¬
Lewis & Co., 63 Wall Street, New
(2) Income, once received, may
G. Becker & Co., 120 South La
ment, and thus income, depend
York 5, N.Y.
or
may not be returned to the
Salle Street, Chicago 3, 111.
upon the markets for the goods
produced. Without such effective expenditure stream.
Insurance Stocks—Discussion of
(3) The
expenditures stream anomalous
demand in sufficient volume to
R. Hoe & Co., Inc.—Analysis—
position of stocks in
leave a profit, production will not can be swollen beyond current in¬ current issue of "Bank and Insur¬ Adams & Co., 105 West Adama
come by present use of - past sav¬
be forthcoming and both human
Street, Chicago 3, 111.
ance Stock Digests"—Geyer & Co.,
and
material resources will be ings or newly created bank credit
Inc., 67 Wall Street, New York 5,
(4) Fiscal policies may be N. Y.
Imperial Oil—International Pe¬
unemployed.
Conversely, unless
Oil of New
such effective demand remains in adopted which curtail or increase
In the same issue are data on troleum—Standard

govern-

nents' policies
as

relat

Raynolds

&

Devoe

The

Inc.—Memo¬

randum—Swift, Henke & Co., 135
South La
Salle Street, Chicagcf

produce, assuming a

,

r

-

mie, Wyo., Aug. 4, 1948,

Great

Newark,

of

Firemen's

American, American Alliance In¬

National

Co.,

surance

Casualty

Jersey

Canada.

:■'/

Leonard Refineries,
Market

Survey
&

Abraham
New York
the

survey

Co.,

Analysis —
120 Broadway,
—

are

Exchange Place, New York 5,

Contained in

5, N. Y.

mid, Thompson Products, Inc., U.
S. Industrial Chemicals, and Car¬

231

obligations,

Government

States

United

on

randum—A. M.
Wall Street,

utility
and municipal

Railroad

let—Vilas

New York 5, N.

Y.

Railroad

Central

Maine

—

De¬

scriptive Analysis—A. G. Woglom
& Co., Inc., 53 State Street, Boston

Leaf¬
49
Wall

Developments
&

Hickey,

Railroad Income Bonds—Analy¬

sis—Goodbody & Co., 115 Broad¬
way,

New York 6, ,N. Y.

Also

is

available

Security and Industry Survey—

each September 1, 1949 to 1958,

inclusive

guaranteed as to payment of par value and dividends
by The Chesapeake and Ohio Railway Company

August issue of quarterly analyti¬
cal guide
for investors—Merrill
Lynch, Pierce, Fenner & Beane,
70 Pine Street, New York 5, N. Y.

by endorsement

descriptive

are

analysis of United States Finish¬
ing and Buffalo Bolt Co.
Trust Co.—Bul¬

Manufacturers

letin—Laird, Bissell & Meeds,

12(1

York 5, N. Y.

Broadway, New

detailed

a

analysis of the current situation
and outlook for Pepsi-Cola Co.

Equipment Trust Certificates

available

Also

—

(Philadelphia Plan)

To be unconditionally

New York 5, N. Y.

public

Street, New York 5, N. Y.

Chesapeake and Ohio Railway
Sixth Equipment Trust of 1948
on

Company—Memo¬
Kidder & Co., I

9, Mass.

$3,600,000

$360,000

Lorillard

P.

Quotations—Leaflets

100 Broadway,

mature

4, 111.

rier Corporation.

bonds.—First Boston Corporation,

To

Lumber Company—
analysis—Comstock & Co.,
South La Salle Street, Chi¬

cago

American

4(1
N. Y.

Long Bell

brief remarks on

New

Corp.,

Inc.—Circu¬

lar—George Birkins Company,

Cyana-

United

preferred
stocks,
bond^, and State

2%% Serial

& Sons,

Street, Winnipeg, Man.,

Main

367

Company, Employers Group Asso¬
ciates.

Exchange

Alternative

—

Plans—James Richardson

Figures—Me¬
morandum
containing
data
on
Paramount Pictures, Copperweld

approximately $3,690,692.

Service

plain preferreds—Analysis—
Ira Haupt & Co., Ill Broadway,
New York 6, N. Y.
New York, New

Haven & Hart¬

ford—Memorandum
Neal

&

Co.,

York 6,

Certificates are to be issued under an Agreement to be dated September 1,
1948, which will provide for the issuance of $3,600,000 aggregate par value of Certifi¬
cates to be secured by new standard-gauge railroad equipment estimated to cost

Public

England

New
Co.

—

Price,

Mc-

165 Broadway, New

N. Y.

Broad Street, New York 4, N. Y,
Also available is a memoran¬

These

1949

1.65%

1952

2.35%

1956

2.70%

2.00

1953

2.45

1957

2.725

1950
1951

2.20

1954

2.55

1958

2.75

1955

2.65

of these Certificates are subject to authorization by the Interstate Commerce Commission•
Offering Circular may be obtained in any State in which this announcement is circulated from only
such of the undersigned and other dealers as may lawfully offer these securities in such State.

Issuance and sale

Facts

and

Steel, Rayonier—Stern

& Co., 25

Parker

circular

Appliance

Company—

du Pont, Homsey Co.,

—

31 Milk Street,

Boston 9, Masa.

Philip Carey Manufacturing Co*
—Analysis—William A. Fuller &
Co., 209 South La Salle Street,
Aberdeen Petroleum Corpora¬ Chicago 4, II.
tion—Special Report—Bonner &
Pickering Lumber Co.—Memo¬
B,onner, Inc., 120 Broadway, New
randum—Russ & Co., Alamo Na¬
York 5, N. Y.
tional Building, San Antonio 5,
Associated Transport, Inc.—Cir¬ :Texas;#-B^^

dum

MATURITIES AND YIELDS

The

Stern

on

British Securities.

cular—Homer

O'Connell

Inc., 25 Broad Street, New
N. Y.

&

Co.,

York 4,

Plomb

randum

Tool

—

Company—Memo¬

Maxwell,

&

Marshall

Spring Street, Los
Atlantic Coast Line Railroad— Angeles 14, Calif.
Analysis—Eastman, Dillon & Co.,
15 Broad Street, New York 5, N. Y.
Republic National Bank of Dallas
Co., 647 South

HALSEY, STUART A CO. Inc.
GREGORY A SON

A. G. BECKER A CO.

;i

INCORPORATED

FREEMAN &, COMPANY
WM. E. POLLOCK A

HIRSCH A CO.

1948. Par value and

City. Defini' ive Certificates in

CORPORATION

McMASTER HUTCHINSON A




analysis of

Company
leaflet of Railroad News.
Regis

Paper

Bird & Son,
INCORPORATED

and a

—

Memorandum

Son.

Kirby

—

Dallas Rupe &

Building,

1,

Dallas

Texas.

semi-annual dividends (March 1 and September 1)

the denomination of $1,000,

Inc.—Memorandum
Corp., 120

Broadway, New York 5, N.

payable in New York

rejnsterable as to par value. Not redeemable prior to

maturity.

be delivered
has been

offered when, as and if received by us. Certificates in temporary or definitive form will
at the office of Halsey, Stuart & Co. Inc., 35 Wall Street, New York 5, N. Y. The information contained herein
carefully compiled from sources considered reliable and, while not guaranteed as to completeness or accuracy, we
it to be correct as of this date.

f

Also available is an

St.

—New York Hanseatic

F. S. YANTIS A CO.

These Certificates are

August 11, 1948

CO.

MULLANEY, WELLS A COMPANY

CO., INC.

ALFRED O'GARA & CO.

To be dated September 1,

FIRST OF MICHIGAN

INCORPORATED

believe

Y.

Black, Sivalls & Bryson, Inc.—

Analysis—Lentz, Newton &
Co., Alamo National Building, San
Antonio 5, Texas.

New

Consolidated Gas Utilities Corp.

•
—

Memorandum

•*-

Lee Higginson

Rulane
& Co.,

Gas

Co.—R. S. Dickson

30 Broad Street, New

York

4, N. Y.
Silver Creek Precision

Corpora¬

Analysis—Heimerdinger &
Straus, 50 Broad Street, New York

tion

—

4, N. Y.
Inc. — Circular — White,
(Continued on page 39)
v

Time,

,

Volume 168

Number 4724

THE

COMMERCIAL

&

FINANCIAL

CHRONICLE

further

crease

Half-Year

Monetary and Credit Outlook
By J. BROOKE WILLIS

Associate Professor

of

Banking, Columbia University

'

increased

rates

and

The

$1,500

changes

oc¬

curred mainly

sufficiently

great

to

the
first quarter
of

necessitate

upward trend.

during
the

year

when

the

heavy

tax

drain

exer¬

cised continu¬
ous

pressure

Recently commercial loans have

shown evidence of

(2) .The
mand

of

increases

resuming their

the

in

the

Treasury

bank

to

offset
which

istiiiy yield
for

may result from: (a) further pur¬
chases of government obligations

the

six

positions

in

member

bank

seasonal

rise

of money

in

consideration

is

circulation.
The

primary

The prospect whether the authorities will have
months is that

adequate. means by which to off¬

will

reserves

cash

in¬

increases

set

in

bank

System's

operating surplus to

.

of

Treasury

1948

tions

to

indicate

This announcement is under

ties.

In

no

nullify probable addi¬

member

bank

may

cial

sales

net

"F"

of

and

between

ment

Board

of

the

Treasury

Governors of-the

Loan accounts
These
Of this

sum

total

$4 billion.
nearly $1 billion may

(Continued

reserves

the 30th of June.

on

amounts

on

page

as an
offering of these bonds for sale or as a solicitation of an offer to bin/ any of these bonds, and is published
behalf of only such of the underwriters, including the undersigned, as may legally offer lliesc bonds in such state.
:
i '
'.*!& .£,»<
The offer of these bonds is made
only by means of the Official Statement.
,

Commonwealth of Pennsylvania

and
Fed¬

.Turnpike Revenue Refunding and Extension Bonds

to

appropriate interest rate policy.
It had been widely assumed that
with the passing of the heavy tax

Payable solely from'the Revenues of the Turnpike System
Dated June 1, 1948

inflow in March, the program of
raising yields on short-term gov¬
ernment securities,

which

was

June 1

be¬

All the serial bonds,

an

in

increase

its

until

decided

and

action

further

some

of

this

bor-

the Board,

on

Interest exempt, in

that the

recession

in

tions to and extensions of the present

Turnpike, including the Eastern Extension, of which the major portion thereof (herein called the
Philadelphia Extension) will be financed out of the proceeds of the bonds included in this financing, the maintenance and
operation of
the Turnpike System, the conservation and
application of all funds, the security for moneys on hand or on deposit, the reserves for
replacements, and the setting aside of funds for the refunding and for the construction of the

Philadelphia Extension.

bonds arc offered when, as and if issued and received by us and
subject to approval of legality bv Mitchell and Pershing, New York, N. Y., Townscnd
Elliott & Munson, Philadelphia, Pa., Reed, Smith, Shaw &
McClay, Pittsburgh, Pa., and Jo'hn'D. Faller, Esq., general counsel for the Commission.
It is expected that
delivery of the bonds in temporary form will be made on or about August 17, 1918.

These

com¬

and not wait upon a
expansion. Opinions

renewed loan

also differed

$47,000,000

regarding the effec¬

Principal

higher interest rates
in restraining both the demand
for bank credit and the willing-

ness

Yield to

June 1

Maturity

1952

1.70%

$1,500,000

2H% Serial Bonds

Principal

Due

Amount

June 1

Principal

Due

Price

Amount

June i

$2,800,000

1958

100%

$3,000,000

Price

1963

2,000,000

2,800,000

1959

99j/£

3,100,000

1964

1.90

2,800,000/

1900

99

3,200,000

1965

97M

1955

2.00

2,900,000

98*/2

3,300,000

1966

97K

2,600,000

1956

2.10

3,000,000

98

3,300,000

1967

97M

2,700,000

such expenditures would

1.80

1954

2,400,000

loath to incur higher interest
costs on the debt even though,

was

1953

2,200,000

of bankers to extend accom¬

modation. In addition, the Treasury

in part,

Due

Amount

of

tiveness

exempt by statute from taxation

arc issued under and secured
by a Trust Indenture between the Pennsylvania Turnpike Commission and
FidelityPhiladelphia Trust Company, as Trustee, which provides for the issuance of the bonds and of additional bonds under the limitations
therein set forth and fully defines the duties and
responsibilities of all parties with respect to the refunding, the construction of addi¬

ant?-inflationary action should

anticipate

are

The bonds

temporary and

loans was

profit made on the sale thereof
Pennsylvania.

any

Eligible by statute, to the same extent as obligations of the Commonwealth, for investment for Savings Hanks and Trust Funds
in Pennsylvania and
for deposit as security for public funds in such Commonwealth.

imposed on the 27th of February.*
Opponents of a rate increase
pointed to the fact that commer¬
cial
loans, until recently, were
declining and support purchases
of the Reserve System had dimin¬
ished,
On the other hand, the
proponents of a rate increase be¬
lieved

therefrom, including

within the Commonwealth of

Chicago banks, an earlier increase
of the same amount having been

mercial

the opinion of counsel for the Commission, from present Federal income taxes under existing statutes and decisions.

June 11, increased

by two percentage points the re¬
quired reserves of New York and

that

all the term bonds,

The bonds, their transfer and the income

In the wake of this discord

time."

or

resist

to

character

"appropriate

more

at

earlier than June 1,1951, but not

rowing rate on certificates of in-?
debtedness

set forth below

or both, may btfredeemed at the
option of the Commission, on any dateliot earlier than June 1, 1951, from any funds
The serial bonds are redeemable in part, in the inverse order of their maturities, from moneys in the
Sinking Fund, on any interest date not
prior to the opening of the Philadelphia Extension for traffic. The term bonds are redeemable in part, by lot, also from
moneys in the
Sinking Fund, on any interest date not earlier than June 1,1951, but not until all of the serial bonds shall have theretofore been retired or shall
simultaneously there¬
with be called for redemption. Such redemption shall be made at the
redemption prices set forth in the Official Statement, upon at least .10 days prior notice. The
minimum Sinking Fund payments
required to be made in the Indenture are sufficient to retire all serial and term bonds by their respective maturities.

or

incur

as

available for that purpose.

July 1 refundings. How¬
ever; the Treasury was reluctant
to

Due

Principal and semi-annual interest (June 1 and December 1) payable at Fidelity-Philadelphia Trust Company, Philadelphia, or at the option of the holder
J. P. Morgan & Co., Incorporated, New York
City. Coupon bonds in $1,000 denomination, registcrable as to principal alone,
and also as to both principal and interest, rcconverliblc into
coupon bonds.

gun in the middle of 1947, would
be
resumed
preparatory to the

1957

2.20

3,400,000

1968

»7'4

-

1

'

1961
1962

be recovered from the earnings of

wy2

the Reserve banks and from gen¬

$87,000,000

eral taxation.

whether
monetary authorities will per¬

\\Vi% Term Bonds due June 1, 1988

It is impossible to say
the

mit?

an

in

increase

the

short-term government

rate

Price

on

delivery to be added in each

case.

obligations
For

information relating to the Pennsylvania Turnpike Commission and to these bonds,'reference is made to the
Official Statement of the
Pennsylvania 1 urnpike Commission, dated August 9, UUfti, which should be read prior to
any purchase of these bonds. The Official Statement
be obtained in any stale from only such of the underwriters, including the
undersigned, as may legally offer these bonds in such state.

before the end of the year. What¬
ever
decision is reached will be
based

101%

Accrued interest from June 1, 1918 to date of

on

two underlying

may

consid¬

erations:2
-

(1)

occurring in

increase

The

the total

demand

for

credit

Drexel & Co.

and

B. J. Van Ingen & Co. Inc.

Blytii & Co., Inc.

The First Boston Corporation

whether this increase, in the

opin¬
ion of the monetary authorities, is

IIarriman Ripley & Co.

is

entirely possible that

final

increase of

a

further

A. C. Allyn

2

percentage points
be made in reserve requirements of
York
City
and
Chicago
banks.
However, this action would be abortive,
serving merely to penalize the earning
power of
this class of banks by neces¬
sitating sales of securities to the Reserve
System.
2 The
Treasury decided on Aug. 9,
after this article was written, to increase
may

>

New

4

the rate

gations

on

short-term

from

1 V» %

government

to. ;1




and

Company

-r;

Blair & Co., Inc.

E. H. Rollins & Sons

INCORPORATED

r

>r".%

-

*'

Equitable Securities Corporation

'•*

.A'

'v*

,*

;

*

Paine, Webber, Jackson & Curtis
August 10, 1943

obli¬
J

11

I

• »v;

-'-L ./*

A*

\

<>

-

'<J

Smith, Barney & Co.

Union Securities Corporation

Yarnall & Co.

>

INCORPORATED

Eastman, Dillon & Co.
/ "A

Leiiman Brothers

INCORPORATED

-

1 It

and

Kidder, Peabody & Co.

*•

'•

*

bonds

Treasury had an additional $1,800
million on deposit in the War

$134,000,000

eral Reserve System with regard

"G"

between July 1 and July 15 pro¬
duced about $1,200 million and the

NEW ISSUE

the

reserves,

conjectural. The Treas¬
casn operating
surplus
approacn $1 billion. The spe¬

ury's

second

quarter, investments
showed
no
pronounced change
while loans gave evidence of re¬
newed expansion.
The temporary interruption in
the upward trend of bank credit
provided the basis for disagree¬

the

but this is

circumstances to be construed

in any state on

uidate govern¬
ment
securi¬

that

have sufficient cash

may

member

J. Brooke Willis

held

Estimates covering the last six

months

of

banks, causing
them
to
liq¬

sup¬

maturing securities
by the Reserve banks.

resources to

usual

arising

reserves

redeem

imports in the next six
may
add
an
additional
million to
bank
reserves

the reserve

on

bank

Reserve

port pui chases of government se¬
curities by using the Treasury's
current

curve.

next

the

by

Gold

to purchase in¬
creasing amounts of government
obligations to maintain the ex-

com¬

reserves

million

in

creases

from

total

may

months

has been obliged
at

resources

investors

$750
by the Reserve System in support (about the same amount as in the
first six months of the year) al¬
of the present yield curve;
(b)
gold imports and other factors. though this factor will be offset
Recently the
Reserve System to a considerable extent by the

restrictive action.
>'

mortgages,

July 29 before the Senate Banking
and Currency Committee.

was

These<$>

of

the; last six
months of 1948, according to the
testimony of Chairman MeCabe on

temporarily arrested during the first half
of 1948. Total loans and investments of the weekly reporting member banks decreased
by
$2,178 million, or by 3.4% and demand deposits adjusted declined by $2,265 million, or by
4.7%.

private credit de¬

private loan placements. Sales

non-bank

resources

postwar expansion in bank credit

monetary authorities have con¬
sciously endeavored to offset in¬

meet

of U. S. Government securities

to nullify; additions to bank reserves. Says conservative policy dictated
government short-term obligations to enable Reserve Banks to shift part of their
holdings to commercial banks and other investors.

on

to

issues of corporate securities

new

Dr. Willis points out though there was a lull in bank credit expansion in first half of 1948, the remain¬
der of year may see renewal of increased credit demand, but that the expansion may be hampered by

Treasury using cash

During the last nine months the

mands in the form

1

,

institutional in¬

as

sell

to

order

.

9

government obliga¬
the;; Reserve System in

vestors

tions

(605)

Merrill Lynch, Pierce, Fenner & Beane

£

Stone & Webster Securities Corporation

/'''"V

29)

COMMERCIAL

THE

(606)

lft

&

Thursday, August 12, 1943

CHRONICLE

FINANCIAL

<■

i

Hall Co.

Joins Morton,
(Special to

t.
Jr. has become affiliated

LEWISTON, MAINE—George
Colder,

Morton, Hall & Rounds, Inc.,

with

226 Main Street.

5

;

With A. E. Weltner & Co.
(Special

to

underwriting group headed by A. G. Becker & Co., Inc., last
Tuesday publicly offered 350,000 shares of Ashland Oil & Refining
Co. $1.20 cumulative convertible preferred stock at $24 per share,
viz: 250,000 shares for account of the Ashland company, the proceeds
of which are to provide additional^offering of 15,000* shares
of
working funds to be available for
its

expansion

4%%

development;

and

MO.-KPHP O. jand 100,000 shares for the account
with A. E. Weltner of two individual stockholders.
Earlier this month, Allied Oil Co.,
Co., Inc., Corby Building.
Inc., of Cleveland was merged into
Ashland through an exchange of
♦

Lumber Company

or -

serves

indicate

more

Re¬

before

stock

liberal dividend

$10) at $10.75 per
the basis of one new
shares held.

upon

request.

ing Illinois investment

COMSTOCK & CO.
CHICAGO 4, ILL.

to he added to
*
•

5x/z—-1952

due

Chicago, North Shore &

Railway

Co.

101%

at

1978,

and

Inc.

on

accrued

been
awarded the bonds at competitive
its bid of 101.319. The net

on

proceeds will be used for the pur¬
chase

construction

or

*pf new fa¬

cilities, and the betterment of ex¬

Brailsfortl & Co.

isting facilities.
On July

208 S. La Salle Street

State

CG 95

9868

a

banking syndi¬

cate, headed by Halsey, Stuart
& Co. Inc., and which included,

CHICAGO 4
Tel.

14

The

Philip Carey

Manufacturing Company
Common Stock

(Analysis Available)

In

Burns

William A. Fuller & Co.

&

Members of Chicago

Stock Exchange

209 S. La Salle Street'Chicago 4
Tel. Dearborn 5600

Tele. CG 146

Power

on

pants

was

B.

Serving Investment Dealers
We

specialize

exclusively

in

under¬

writing and distribution of securities,

providing investment dealers with at¬
tractive issues for their clients.

taining
own,

retail

no

dealers,

but

Main¬

department

compete

we

serve

in

no

them

of

way

our

with

exclusively.

Correspondence invited.

FLOYD D. CEttF CO.

E.

1978

*

*

Henderson,

16

announced

his

that

company

sold

$25,000,000 of 3% sink¬
ing fund debentures due 1964 to
The Equitable Life Assurance So¬
ciety of the United States,and
New

Life

York

Co.

Insurance

(one-half to each) at 100 plus ac¬
crued interest from July 1, 1948.
The proceeds were used to pre¬
pay a like amount of short-term
bank loans.
*

value to 2,000,000
shares, par $5 each.
At April 30,
1948
there
were
9$5,107 shares
outstanding. The sale of the com¬
pany's 100% stock interest in the
Central Barge Co., for a cash con¬
sideration of $1,500,000, was also

28

and

syndicate headed

offered
General Ply¬

publicly

accrued

and

share)

per

Central

Becker & Co.,
Co.

Republic

An

underwriting group of 90

banking

investment

firms

B.

DuMont

at par

dends.

Laboratories,

Straus &
Blosser, First Securities Co. of
Chicago, Dempsey & Co., W. C.
Gibson & -Co., Holley, Dayton &
Gernon, and Mason, Moran &
Co. The net proceeds are to be
used to increase working capital,
to defray in whole or in part
the cost of additional facilities
and for other general corporate
participated:

as

required

Mont's expanding

(Continued

by

on page

BRITISH

BONDS-SHARES

Common

Bought

Exchange
Chicago Stock Exchange

Member New

South

Sold

—

Quoted

Common

Members New York Stock

Tel.

York

ANDover

Curb

La Salle St., Chicago 3, 111.
5700
Tele. CG 650-651




v •£*

-

-' t'-.vi

ZIPPIN

&

COMPANY

Specialists in Foreign Securities
208 S. La Salle St., Chicago 4,
Telephone Randolph 4696

•.

objecting
Secretary

j

an

.action"against

,

inflation,
di- [the inflationary effects that have
thefol-, been demonstrated during the past
lowing
letter
air
mail
on

August

Mc¬

and

Millen,
bers

mem¬

Il¬

from

the

of

linois

ary

"This morn-

C.

Harry

Hausman

I

lOf'Please

newspapers

:are

appreciate your
of those 'experts'
who

committee

before

come

supporting

this

proposal.

"Hog prices ar;e now around
$31 per hundredweight. In what
way
are
the legal reserves of

rather insistent that the Congress

legislation on the Presi¬
recommendation
to
in¬

;

banks

requirements
non-member

responsible for this price?

"Prime

will pass
dent's

any

'authorities'

or

your

proposal to increase re¬
serve
requirements
10%.
Am
writing you at length air mail.'
and

greatly

putting to

oppose

"Radio

may,

would

as

you

lows:

shown on

of condition. If

I will put our objections
in the form of questions which I

wired

'

and the reserves

banks' statements

mittee:

I

reserves

serves

and -Cur¬
rency
Com¬

ing

and

curtailed

are

increased. The gen¬
eral public is, too, confused as to
just what' this all means. It does
not distinguish between legal re¬
legal

ing

•

credits

bank

Bank¬

House

acceleration of the inflation¬
spiral in the future unless

any

to

2

for

decade and will be responsible

Strat-

Messrs.

$31

steers

are

well

above

all other live animals,

are

as

proportionately,

which

' de¬
While
banks
of
the
Federal
Reserve these food animals are going up,
System, by 10% and to provide each week grain futures, includ¬
for some controls over bank cred¬
ing ail cereals, are going down.
What effect, if any, has legal bank
it, including instalment loans.
crease

of

the

reserve

including

banks,

"In behalf of the banks

livered to

in Illi¬

want, to explain to you
opposition particularly to the

our

we

proposal to "increase the reserves.
The general public is not any too
well informed about about this
and.

it

has been made

them

to

the

that

some way or

to
banks

appear
are

in

animals

are

stock yards.

either

reserves

in

our

or

on

increases

the

the

in

decreases

all, what we are
mostly interested in is how much
grains?

it costs
and

After

you

and

buy food

to

me

other necessities for

our

liv¬

ing.
"Recently several of the auto-

(Continued

other responsible for

on page

39)

Banking Syndicate Makes Public Offering of
$134,000,000 Pennsylvania Turnpike Bonds
Proceeds of New Issue Will Be Used for
tion of

Refunding and Construc¬

Philadelphia extension

Marking the largest revenue bond financing operation ever una nationwide investment banking group jointly headed by "
Co.; B. J. Van Ingen & Co. Inc.; Blyth & Co., Inc., and The
First Boston Corporation, is offering to the public two issues totaling '
#

dertaken,

Drexel &

42)

,

yield 1.70% for the 1952 maturity
to a dollar price of 97!/4 for the
1968 maturity. The offering price
of the term bonds is 101 and ac¬
crued

interest.

The bonds
revenue

are

payable from the

of the Turnpike System.

Proceeds

serial

of

bonds

the

will

$.47,000,000
be

used

to

of
re¬

from

save

trip

is

It

two

to

six

•

Illinois
Teletype CG 451

hours

per

the Turnpike.

on

the

ultimate

intention of

the Pennsylvania Turnpike Com¬
mission to develop the Turnpike

System

as a single operating unit
extending fromjthe eastern to the

western

vania.

boundaries

of

Pennsyl¬

Construction of the Phila¬

delphia Extension is scheduled to
start this year with completion
expected by the end of 1950. The
sale of the $87,000,000 of term Philadelphia Extension is a logi¬
bonds will be used principally to cal step, according to the prospec¬
finance
the
construction
of the tus, in view of the inadequacy of

$45,086,000 Turnpike reve¬
refunding bonds callable 1951,
while the funcis derived from the
deem

:

nue

orojected eastern extension of the

Turnpike System to the outlying
area

of

Philadelphia. The present
now extends from Mid¬

existing highways to handle the
heavy Philadelphia-Harrisburg
traffic.
For

Turnpike

dlesex, Pa., near Harrisburg to
Irwin, Pa., 15 miles east of Pitts¬
burgh.
.

a super-highway, financed by the
Commonwealth, from the eastern
end of the Philadelphia extension

provide direct access road in
put of' downfovyn Philadel¬

.

'

vehicles

using the existing

Turnpike, tolls range from $1 and

$1.50 for motorcycles and pas¬
senger cars to $10 for full trailer
heayy trucks. After completion of

the] Philadelphia

Extension

the

chafges will

range from $1.60 and
$2.50 for motorcycles and passen¬
ger bars to
$16 for heavy trailer
trucks.

Operating income of the Turn-'
nike

for
the fiscal year ended
May 3J, 1948, \yas $5,182,179 andafter maintenance and operating
phia.
" • •
net
operating income
The existing Turnpike, in oper¬ expenses
ation since T940; is for much 6f its amounted to $3,996,241. - In the
160-mile length a four lane (di¬ preceding fiscal year operating
income
was
$4,120,020 and net
vided highway of the most modern
construction. Various features of operating income $3,120,960. Ve-;
its
construction, including tun¬ jhicles Rising the Turnpike in the
nels, bridges and structures and [latest f 1 sea 1 y ear numbered
to

Disintegrating

STRAUS & BLOSSER
Members

—

v ?

1

,

and

Common

Associate

Association, in

Department wili j im¬
mediately plan for construction of

Portsmouth Steel

135

Du-

business.

SOUTH AFRICAN

,

('

>v»

-

Highway

Detroit Harvester

•

\ -1

1

.

According to Governor James
H. Duff of Pennsylvania the State

Texas Eastern Transmission

Metals

Inc.,

($20 per share) and divi¬
The
following Illinois

hankers

Winters & Crampton

Common

on

offered 150,000
shares of 5% cumulative con¬
vertible preferred stock of Allen
Aug. 6 publicly

(Inc.) participated in the public

Common

<

$134^000,000
Commonwealth
of ♦
—
—— >
Pennsylvania Turnpike Revenue steep grades made the Turnpike an
all-weather
highway, which
Refunding and Extension bonds.
Danly Machine Specialities, Inc.
The offering comprises $47,000,- motor vehicles may travel with a
placed privately through Doven- 000 of 2%% serial bonds due maximum
degree
of
safety at ♦
muehle, Inc., $1,750,000 first mort¬ June
1, 1952 to 1968, and $87,000,- higher speed at reduced fuel, tire
gage
4 V>% sinking fund bonds, 000 of
and maintenance costs.
It is cal- »
3%% term'bonds, due 1988.
due July 1, 1958.
The serial bonds
are
priced to culated that drivers are able to

purposes

On July 22, A. G.

Inc.

1,000,000

*

*

120 South La Salle Street

Chicago

President of
July

Household Finance Corp., on
had

authorized

shares of no par

($20

at 100.99
Among the partici¬
Mullaney, Wells & Co.
*

proved a change in the
stock
from

July

*

rected

nois,

of
TruaxJuly 29 ap¬

common

banking

'

dividends.

July 22 publicly

due

on

J

5% cumulative con¬
vertible preferred stock at par

$11^000,000 New England
Co. first mortgage bonds,

series B, 3%
and interest.

'n

wood Corp.

addition, Halsey Stuart & Co.

offered

Co.

Coal

Traer

100,000 shares of

Inc. headed an underwriting syn¬

dicate which

stockholders

The

on

Corbett,
Inc., Alfred O'Gara ,& Co. arid
Patterson, Copeland & Kendall,
Inc., publicly offered $55,000,000 New Jersey Bell Telephone
Co.
40-year
3%% debentures
due 1988 at 103 % and interest.
Martin,

Co.,

i#

si:

*

A

Bacon,
Whipple & Co.,
Mullaney, Wells & Co., F. S.
Yantis & Co., Inc., Dempsey &

—

-

by F. S. Yantis & >Co„ Inc., and
and II. M. Byllesby & Co. (Inc.)

Inc.,
TRADING MARKETS

Steak-.

of

stock

ratified.

Co., Inc., H. M. Byllesby & Co.,

—

in

Inc., Bloomington, pt
$2.50 per share, the net proceeds
going to selling stockholders,

G. Becker &

others, A.

among

Bloomington,

of

common

had

firm

This

interest.

sale

Stock

Common

&

Jackson &

L. B.

Shake,

*

Stuart

Halsey,

and

Inc.,

Co.,

working capital.
Si«

Co., Chicago, and
St. Louis (Mo.),

July offered to the public 160,000 shares of 50-cent par value

July 9 publicly offered $6,000,000
New Jersey Power & Light Co.
first mortgage bonds, 3% series

Corp.

Milwaukee

Chicago,

Chapman & Co. and Julien Col¬
lins & Co.
The net proceeds are

CG 955

ip

annum,

per

together with Alfred O'Gara &
Co. and Straus & Blosser, also of

Co., The Illinois Co., Farwell,

&

Dearborn 1501

Central Public Utility

bankers:

&

Forgan

Co.,

&

White

Co., Harris,
Hall & Co. (Inc.), Kebbon, McCormick & Co., Bacon, Whipple
Glore,

Income

Dempsey &

associates,.including the fol ow¬

Approximate Price 19^4

Teletype

3%%

term of 15 years,

a

*'

.

effort to forestall an ap¬
parent temporizing concession to ;the President's demand for "positive

of

underwritten by Harriman, Rip¬

ley & Co., Inc., New York, and

231 So. LaSalle St..

of

rate

the

&

-

ton

President

Calvin,

ji

of the Illinois Bankers

•

and pro¬
vided additional working capital
for expansion of sales volume.

employees. The offering is

and

available

information

detailed

at

is for

•

i

.

In Keeping with the declared policy of Illinois bankers
to more centralized Federal controls, Harry C. Hausman,

purposes

allocation.

i

to. of America. The loan;

surance

shares of unsubscribed
stock will be offered to officers

period.

Full

common

175,000

share $3.31 compares with $3.00

for the 1947

corporate

V.

Paul

aggregate of approximately

An

■ v

Motorola, Inc.* radio and television
manufacturing firm, on July 15
announced, completion of ,a loan
agreement in the amount of $2,000,000 with the Prudential In¬

(par

share on

1,948, net

months ended June 30,

per

of

shares

share for each ten

payments.
Six

3

Aug.

subscribing on
Aug. 17, for 1$4,809

Additional
and Timber

Earnings

record

,V■ '1

,f>-

'

and will be available for

general

1

1

Harry & Hausman, Secretary of Illinois Bankers Association) releases letter sent Illinois Congressmen Stratton and McMillen giving
reasons for opposition to higher bank reserve requirements.„

Wis., at par ($100

pending; specific

the privilege of

COMMON STOCK
Increased

♦

of

stockholders

Chartered in 1884)

(A Missouri Corporation

-v'' 1 I *

T

share) and dividends. The
net -proceeds will be added to
the general funds of .the com¬

Air Lines, Inc., Chi¬
offering its common

is

cago,

#

i.

per

pany

United

preferred

Schuster & Co., Inc.

of Milwaukee,

stock,

Long-Bell

cumulative

.

stock of Ed.

now

The

.

An

JOSEPH,

ST.

Wright is
&

Chronicle)

Financial

The

'

*

Illinois Bankers Proles! Increased Reserves

Illinois Brevities

Financial Chronicle)

The

'

.

_

.

the ^absence

M sharp

curves

and 8,143,450.
'

-

'

,r.

Volume 168

Number 4724

•

The

Securities

Executive of

&

Market in

FINANCIAL

Mexican

financing

in

agenc}/,

I

surveying securitie^ markets in

Mexican Government to
promote

CHRONICLE

Mexico, stresses effort8 of

•

Prior to the §>■

Second World

to totaled 116—61 head offices and

War, the Mex¬

55

had

taken

al¬

under¬

policy
of capital for¬
a

mation

whose

i ri

m a

has

fices and 344 brahches."

result

been

.

% Referring

the

resources /of

to . the

/The public debt

curities

issued

crease r

national

the
and

In 1938 the total resources were

capita in¬
come and the

per

the securities market we will try
to point out the most
important.

(3) several credit institutions that
operate in the market, for exam-

the

Federal

savings.

logically supposed the largest ex?

Capitalization apd trust cpnjpanies;
pansion took place since 1940 due |4) • : insurance' apd, surety * cqmto the inflationary impact of the panies; ^ (5)
hbn-commefcihl ojct
Secohd Wprld War On the Mexf jganizations,
charity*/ fbuhdatiphs

j

Notwithstanding the combined
Of the financial resources pro¬
vided by ipdneta'r^ expahsibh
genuine savings, Mexico has needr
ed, as most countries that go
use

•

through

r

such

stage

a

in

The

theij:

vestment

possibilities of nations
with huge savings, to prevent the
disturbances
and
overcome
the
limitations resulting from

-

financ?

ing

-

exclusively

domestic

on

re¬

Since

1925,

when

the

Central

de Mexico, S^/A.—
established, and particularly
since 1936, year in which it started
to operate as a money and credit
Regulating institution, the Mexican

.

s

financial

markets

have

shown

a

money

cultural activities.

Regarding this
point, it js interesting to note that
agriculture contributes less than
20% of the national income, While

market that has

played an important role in stim¬
ulating domestic and international

,

industry, that employs only about

commercial transactions and oper¬
ations connected with the public

•

one-sixth

the

-

cally

private securities market.

With the Banco de

I

private

Mexico, S. A.,

credit

active
than

institutions

accomplished other
tasks
spreading credit in the
country and introducing practices
such

as

unknown or unemployed before;
besides, they have financed many

.

,

activities that

•

have

strengthened

the national economy.

•

The

;

the

credit

private

those

-

has
in

in

no

an

ures:
•

government

has

grown

manner,

1938

number
we

—

*A

paper

by

of

are

credit

referring

Reina Hermosillo presented at the
31st Annual Meeting of the Na¬
tional- Association

Administrators,

of

Securities

Portland,

Ore.,

July 21, 1948.

Besides

j

Phil R.v Manning|Opens
fSpecit(,r, to tHB Financial

,

f LOS

,

principally

by
highway
bonds,
public works and electric industry

VManning is engaging in

J

•

•

»v...

/

structural

are

j «v,

jfSjpeclal to, Jhe l Financial

U

OAKLAND,

Coffelt has beconie

.

;

'

•'

charac¬

adequate to develop the
curities market.

Although the state's revenue
has grown in the last years—from
777.4

millions of pesos to 2,632.5
millions of pesos from 1939 to 1947
—the

government

This

30,

-

(Thousands of dollars)
Credits

Disposed
Credits

■

...

;

i

of by the
Borrower

Granted

Highways

'36,000

Altos Hornos de Mexico
(steel)
Petroleos Mexicanos (oil
industry)
Com. Fed. de Electricidad

7,500'*

9,950
^

20,000
-

Nueva Cia. Electrica de

36,000

8,000
10,000

Railroads

Chapala, S. A.______

26,000
3,500

9,000 7
23,290

5,000
1,000

Planta Sulfato de Amonio__

6,000

Total

.

has

utilizied

damental

to

its

been

contracted

according to its

paying

capacity.

The credits ob¬

tained

inside

and

have

been

country

On

scrupulously comply

with

advertisement is neither

obligations, which have

offer to sell

an

The
NEW

outside

t

the

dedicated

of

this subject,

tjie

Beteta,

Treasury,

recently

the Secretary
Mr.

offering

is

nor a

•

(2)

sidered

to

as

the normal

(Continued

on

solicitation of an offer to

buy

any

ISSUE

to

the

securities

market

$1.20 Cumulative Convertible Preferred Stock

be¬

they are not organized
stock companies.

Without Par Value

as

Convertible into Common Stock prior

(3) The holders of savings have
a
Certain
preference to¬
wards the purchase and
develop¬
shown

ment

of real estate

and

on

to

July 15, 1958

other

occasions towards activities proper
to the
money market,
that are

usually followed by high yields.

Price $24 per share

j

Finally, it has been in the

Plus accrued dividends froth
July

few

15, 1948

years when
most
ad¬
have been obtained in the

In

V

-

>>;

:

spite of the

obstacles

creasing

?

t h

e

.an

as may

any state

from such of the several Underwriters,

lawfully offer the securities in

such state.

seeri
.

in?

A*

importance; ip/ the, na¬

7;. /

'

ft is difficult to distinctly .ppipt
r the
pntitieS; and. prganisms

out

Supply funds 7iii

&♦ Becker
Incorporated

Institutional ^spects-~^ltiioqgh

or

be obtained in

' securities

has acquired

"• •that .demand

may

including the .undersigned,

begijining fheir

Mbxico, as' will bb

on,

Copies of the Prospectus

men¬

to'the

A ugusi

jp, J?0:

& Co*

that
con¬

means

page

oj these securities.

made only by the Prospectus,

se¬

Many industrial and com¬
enterprises have no ae-i

Ramon

declared

"private investments must be

350,000 Shares

mercial

tional economy.

H.

-affiiiatj^W^

term securities that form the
pub¬
lic securities market.
•

economy

most

furtiier

jFrank Krio^Jton !& Co./' Batik oi




will estimate the

June

to

EXPORT IMPORT 3AN1& CREDITS

bFganiz&tion' of the' financial sys¬

Ph^on ici.k)'

'America Bldg.

mentioned-

follows:

.

tem.

do.

CAL.—Theron

standing

was as

factors that

many

industrialization,

>.

whose

(1) The financing methods of
industry were not, for a time, the

R.

■?77

V-

on we

the

reached

granted by the
Bank of Washing¬

mentioned:

jmarket ih

A

above

national

a

With F* Krio\vltonJ&

ton

<j>1948,

relative importance of each of the

supplies

the

of

sechrj? tioned, before, common
tiej .business from, offices at" TC6 countries that are
South Broadway.

debt

pesos.

the

Export-Import

institutional; diwesfops; Sugar Mills
Canning
fed7(8)Slndiyiduat investors.
;;

development of the
securities market. Among the mostimportant the following can be

vances

Chronicle)

ANGELES, CAL.—Phil

Besides

1942

1947,

debts the government has
guaran¬
teed some credits

condition the

last
•

the

ings, there

(4)

;

population,
40%

cause

;; ■';
Praxedes

Senor

economi¬

that limit the level of productivity
and therefore the income and sav¬

cess

the

total

teristics of the Mexican

as

in the following fig¬

5

In

/
•

the

participation,
seen

by

institutions,'that is,

which

institutions that
i

formed

extraordinary

be

can

system

1,029,251,000.00

partment.
'On the same date the funded in¬
ternal public debt was constituted

31,

income.

have

-

the

of

more

and
■:

public

fed other

Further

population is employed in agri¬

v

; tion of

Dec.

.

a

Thet Central Bank has been a
decisive factor in the structuriza-

.

-

Market

To

-

continuous growth.

.

1946.

.

was

•

De¬

.

Bank—Banco

■

and

external

v

sources.

'7

Huerta-Lamont—and those of

115,500
90,740
securities'Tharket in Mexlco, irid|^ -above mentioned grpups in the
eating" its significance and princi¬ securities market.
Summing up, excluding; the in-^*
pal characteristics, the securities 7 Securities
productive enterprises ana to the
Outstanding in the direct VObligqtions^to^^ Tthe ;
that circulate in it, the terms un¬
works
$he governfeent;; fhe Bank, it may he said that tp Dec; construction of
Whose
der which it is regulated and the banks and
31, ;1947, ; .the. Natiphal c debt yields shall be the creditors* best
industry, exerting—as
we poiiited out
measures takfe. to develop it.'?
amopntedto approximately 2,775,- guaranty/
.befpre—the .prin¬
7
Concerning the policy followed
jgignific^bce/-^,yiie Mexican se4 cipal. demand for funds Jn the 000,000 pesos.
market' are,^ the ^ame "time/ the
curities ' market
by the government toward foreign
does
not, / of
Qovernmeht's Policy Toward Its
ones that have th^
investments, the convenience of
course, have the relative impor¬
largest amount
Debt aild Eoreign lnVestmeiits
relying on other countries' savings
tance that it -presents in am econ- of securities outstanding.
At this stage of our review of
as
complementary support to the
bipy like-; the pnei * bf '"ibb'-tteltid
States, ^exico is a Country whose part of its needs are financed the securities market it is conven¬ national development has been
ient topoint out the principles admitted. This
not only refers to
population continues to dedicate through the issuing of securities.
the
government's
itself mostly to agricultural activ¬ We are not referring to the Treas¬ ruling
policy the loans made by international
towards its
debt.
The Mexican institutions but also to those made
ities; it is calculated that almost ury certificates negotiated in the
65% of the Ccpiibmically fetive money market but to the
by private investors.
■
Government has considered fun¬
long-

tary foreign financial assistance,
trying to use the credit and inr

,

Securities

We will present a sketch of the

development, to seek complemen.

"

'

•

pesos.

arrangements made in relation to
this debt are those of 1922—De la

.

i'ca'n economy.

internal

to Decem¬

The external debt is also di¬
vided in funded and
floating debt.
The most important international

.

productive

Hermosillo

District

floating

ber, 1947, to 195,785,000

the Federal Government and
$48,219,000.00 to the local government
to

The

public debt amounted

The. internal public debt is the
most important. To Dec.
31, 1947,
it totaled
$1,220,269,000.00

and

to nearly
remaining

the

{Mortgage flanks).

canalization of

Reina

portance.

$1,162,050,000.00 corresponding to

estimated a little above 600 mir- ; On fthe side ;of the supply of
lidh/ peSosi "-while; lri Decentber capital - %he ; fojlowihg investors
1947 they totaled about four thou¬ must be included: (1) Commercial
sand million pesos.
(2)'. savings banks;
As can be banks;
(3)

increasingly

by

internal
public; debt ahd the external Pub¬
lic •debt.--"'—-;v:; 77 / " 7'7\ '
the

groups:;

the'- private bank.ipg system, the: jie,the5''SociedadesFinancieras''
following figures, are plainly il¬ (Investmenf Companies) and Solustrative: ■>.'<
"
: •.
Jiedades de cRedito Hipotecario
*

in¬

of

se¬

che government and is
divided in
two large

•

constant

comprises
guaranteed

or

debt;

bonds,

(
•

amounted

the

was

libras"

pesos;

the country.

branches; in 1940, the number
of these banking institutions was
On the side of the demand for
128; in 1942, : 457, and at the end capital the following have an out¬
of 1944, two years
later, there standing position: (1) The governwere 838 and 727 in
December, rtient and its.. political sub-divi¬
1947, distributed in;383 bead of¬ sions; (2) industrial
corporations;

Govern¬

ment

the state.

that

of

11

distributed in irrigation
railroad
bonds, "puertos
(free ports) internal debt
and other less
important items.
The internal public debt is di¬
vided in funded and floating debt,
the first one being of greater im¬

attend¬
by private investors because of
tbeir high cpst, their Jow
yields
br simply for
being a function of
ed

;

Exchange and Mexico's National Securities Commission.

veloping the financial markets and especially the capital markets of

ready

10%

.•

Government in the last years* towards speeding the na¬
development through industrialization, has made cleaf the
necessity of de¬

ican

90%

sential to the' economic
progress of

thebbqntry, haye not been

The policy of the Mexican

:

tional economic

bonds,

many

-/'■

v

.

development of a capital market.! Says Mexico realizes benefits it
derives froip
us^ pf foreign capital and offers to foreign investors that adjust themselves t<r national i
laivs a just treatment and legal protection. Outlinisfunctions and operations
o^ Nacional Financiera, .
a Mexican
agency that purchases and distributes industrial Securities/ and gives description of Mexico •'
Stock

(607)

the issuing of securities to finance
public works that, being es¬

Mexicoj

Asst. General Manager, Nacional Financiera, Mexico

;

s

COMMERCIAL

By LIC. PRAXEPES REIN A HERMOSILLO*

\
;

.

r

THE

22)

.

to

THE

(608)

12

COMMERCIAL

&

CHRONICLE

FINANCIAL

Warns Federal Reserve

Treasury Increases

Securities Salesman 9s Corner

Secretary Snyder announces pro¬
posed increase on short-term gov¬
ernment certificates from 1%%
to
1*4% as
anti-inflationary
move.
Long-term rates remain

To those who came into the investment securities business after

1930 it may seem to them that we have had a few fairly active year's
out of many that have been mighty drab and drear. But to those of
us

who

old enough to remember the days before the New Deal

are

wiped out the American investor's incentive to assume normal risks,
the kind of bus'ness we have known in the security markets of this

unchanged.

country since 1933 has been pathetic in its impotence.
We are not making any brief for unlicensed and unbridled specu¬
that the interest rate on shortlation, nor manipulative practices that have been rightfully curbed.
term government securities, which
We are also not approving misrepresentation in the issuance of securi¬
since Jan. 1
ties. All these things have been condemned and treated in the man¬
has

they so well deserve by every responsible- segment of the finan¬
industry of this country. But in the efforts to reform, great
powers were handed over to bureaucracy which has taken updn itself
the attitude that it is beyond criticism; and by its actions has placed
such a background of fear behind all phases of legitimate investment
activity that courageous, normal progress is stifled.
^
There was also a time when the American people found it desir?

bee

n

ner

l1/8%,
would
increased

cial

Npw you may not like the word Gamble. You
a risk," or, "venture your capital," or "speculate,"
wish to call it, the urge to "lay your money on the
line and get a good run for it," was-the very thing that created the
high standard of living we enjoy today in this country. Since the
Securities viExchange Commission arrived with its sacrosanct purr
poses of protect'ng the investor there has been a rush to the storm
cellar and we have been cowering there ever since. Everyone has
been looking for something that doesn't exist in this world, that
something we call security. But our forefathers did not look for it
when they bought their first few shares of A.T.&T., or General Mo¬
tors,, when these companies were struggling promotions. In the
twenties the volume of trading we know today on our stock ex¬
changes would have been considered a joke. So much for what the
SEC and New Deal taxes have done for the investment business.
But if a few thousand people who are in the investment business
were all that haj been hurt during the past 16 years this would be
of little consequence except to those who are in that business. But
this country now has a serious deficiency of capital equipment be¬
cause the financing of new industry has been crippled ever since
1933. When the people stopped gambling on the future this country's
forward progress died. We have been making up for a lack of inves¬
tor confidence by deficit financing on the part of the Federal Govern¬
ment.
This cannot go on forever. The present price inflation is a
direct resuft of too much government fiat money, and too LITTLE
OF THE SAVINGS OF THE PEOPLE GOING BACK INTO INDUS¬
TRY.
The banks, insurance companies, and the »U.-S. Treasury
able

sales) have p'led up billions upon billions of these
NOT GOING INTO THE TOOLS AND
MACHINERY WE NFED AS THE NATION'S POPULATION CON¬
We need about

$5,000,000,000

for the next ten years

f 1

in¬

would

Treasury;
certificates

per year

in

in this country if we

be

re-

funded into

John w Snyder
W.

Jl/4%

certificate

securities business; nor usurp the powers of Congress
and make law such as it has been doing uninterruptedly for 15 years,
and a complete definition of its powers and the scope and limitations
jf its activities are imperative legislative acts before this nation can

of

indebtedness,'

Treasury notes, maturing on
Siept;- 15, will be refunded into
1%%
Treasury* notes,
matur¬

appointment of Duncan J.
Morgan, well-known in the manu¬
facturing, management and invest¬
ment fields, as director of human
relations for ATF Incorporated,
Elizabeth.
N. J.,
has been an¬
nounced by Thomas Roy Jones,
President. He succeeds B. F. Me-

(Special

to

The

Financial

Niven,

3510

Street.

He

North

Chronicle)

Pennsylvania
with

formerly

was

Maxson Securities Co.

Clancy,
manager

in the

Pittsburgh; associate
private investment manage¬

ment

firm

Morgan,
Pittsburgh; and with Cromwell &
Cabot,
Inc.,
Boston
investment
counsel, and Estabrook & Co.,

post of Administrative Assist¬
ant to the President
of Illinois

the

Tool Works,

With First Securities
(Special

to

The

DURHAM,

Financial

ministration

for

Booz,

Allen

&

manager of the auto¬
division and manager of

engineers;
mobile

market analysis

for Crosley Cor-

Maine Central R.R.
Preferred and

Common

United States Finishing
Preferred and

In

nt
Investment

lUUBHHHN

Aug. 27, 1948

(Denver, Colo.)

Club

Bond

of

Denver-Rock:

Mt. Group of IBA joint Annua
Party at Park Hill Country Club

Sept. 10, 1948 (New York City)

Security Traders Association o:
York
Summer
Outing (a1

N.

C.—Anthony

R.

Club of Chicago
Luncheon for members of NSTA

of First

Street.

garet
R.

MASS. —Mrs.

Mar¬

15-18, 1948

way

(Dallas, Tex.)

Dec. 5-10, 1948

Goodwin, Inc., 30 Federal Street.

(Hollywood, Fla.

Investment Bankers Associatioi
1948 convention at the

Holly woor

Beach Hotel.

term

in

that the
1

u

MARKETS

CRESSON CONS. GOLD M. & M. CO.

KTJTZ CANON OIL & GAS CO.

request

the

Incorporated

53 State St., Boston 9, Mass.

LAfayette

3-8344..

^

...

Tel. BS 189




Simpson & Company

California Building, Dpnver
-

,

I

is

intended

mandate to

a

as

not

terms

re-

as

those

That

same

the

from

companies
be

will

sale

mainly to repay drawings of
$140,000,000 made so far by the
Canadian
government
on
the
$300,000,000 credit extended by;
the Export-Import Bank. The re¬
mainder

will

increase

to

serve

Canada's exchange reserves.

regulation was a wartime meas¬
ure
adopted
primarily for the

--

—

2, Colorado
•

~

Bell Teletype DN 157

curtailing

of

purpose

to

needed

buy

automobiles

other necessities in the dur¬

substantial

depletion

This also would

of

mean

savings.

that many

potential

purchasers of automo¬
biles would be required to forego
purchases

because

result

in

the

ment

he

that

the

from the

a

the

credit

Export-Import Bank

was

departure from

our

normal

prac¬

tice of securing necessary United
States dollar financing by the sale
of

of

at

At that time," he said, "I ex¬
plained that this credit represents

other

diversion

Fall

short-term

arranged.

bur¬

in

last

made

time

turn,

of

which,

terms

our

obligations to banks or
private
investors in
the

United States and that in the near

purchasing power into the soft future I proposed to investigate
goods markets and a consequent the practicability of replacing this
increase in current serious infla¬ temporary financing with a long¬
er-term loan arranged in the nor¬
tionary pressures in that field.
mal way through private chan¬
"Instalment credit terms today
are

longer than they

no

the

fore

which

automobiles
most

were

be¬

particularly

war,

nels.
"I

for

constitute

the

important single item in the

list of commodities generally sold

happy to be able to

am

the

nounce

successful

an¬

conclusion

of negotiations to this end.
The
purchase on such favorable terms

time.
From all that we can of this substantial issue of Cana¬
observe, there are no indications dian bonds by these three large
that these terms are getting out of insurance companies in the United
on

It is also true, as shown by
statistics

of

the

Federal

Re¬

States

is

tribute

a

to

the

credit standing of Canada

high
in the

Board,, that the percentage United States market."
sales to total sales

of

instalment

is

substantially
level

ratio

and,

below the pre¬
further, that the

instalment debt

of

to

With Herrick, Waddell

con¬

(Special

disposable income, notably

to

The

BEVERLY

Financial

Chronicle)

HILLS,

CALIF.

—

that part of it
the time sales

which arises from George H. Schlatter has been
of automobiles, is added to
the
staff
of
Herrick,
well within the prewar figure.
Waddell & Reed, Inc., 8943 Wil"The
shire Boulevard.
foregoing considerations
merit

the

Federal

careful

Reserve

study

of

the

Board since dis¬

With C. E. Abbett & Co.

proportionate limitations upon in¬
stalment selling terms may have a
drastic deflationary effect.
The
Reserve

Board

has

.(Special

LOS

to. Tub Financm,

ANGELES,

Chronicle )

••

CALIF.—Mrs.

a

Edith Hirschfield has joined the
great responsibility in this matter staff of C. E. Abbett & Company,
and an opportunity to do a con¬ 3277 Wilshire Boulevard. She
was
structive service to the economy previously with Carter H. Corbrey
in

formulating regulations which

will help to

it

&

Co.

'*

possible
other

and

to

the

durable

v

auto¬
goods

for

my

continue

high-level

and

employment.

In

opinion, the Federal Reserve

Board

is

'

„v.

With Bateman Eichler
(Special to The

LOS
nard

J.

well

aware

Johnson

the

&

Co., 453

staff

CALIF.—Ber¬

has

been

added

of

Bateman, Eichler
South Spring Street,

members of the Los Angeles Stock

of the far- Exchange. v" He

reaching effect upon the economy

Financial' Chronicle)

ANGELES,

to

production

•>

,

forestall an inflation¬

spiral and at the same time

make

industries

Telephone KEystone 3101

completed today, Aug. 12;

used

contained in Regulation W.

Established 1929

B. E.

Dietz

the

by Congress

motive

A. G.Woglom & Co.

O.

au¬

o n

life

Proceeds

reso-

A.

t i

insurance

States

will be

this

ction

c o n n e

ary
on

perfectly

clear

Federal

PRIMARY TRADING

MACKINNIE OIL & DRILLING COMPANY
Descriptive analyses

on

ciation Convention.

P.

Cooke, of Watch Hill,
I., is connected with Bond &

Negotiations started in July by
sell $150,000,000 long3% bonds to three United

Canada to

is

war

National Security Traders Asso¬

BOSTON,

fix¬

It

sumer

Nov.

With Bond & Goodwin, Inc.

the

which

in

serve

(Chicago, 111.)

to the Convention.

coran

.

de¬

ing instalment
selling terms.

the

passing through Chicago

Securities Corp., Ill Cor¬

\

„•

the board will

line.

KINNEY-COASTAL OIL COMPANY

Common

1

Field

Common

Buffalo Bolt Co.

I

EVENTS

Fretz has been added to the staff

management

Chicago

action

would

|

Bond Traders

he had been manager of staff ad¬

Hamilton,

analysis
pend on

their

COM IN G

Nov. 13, 1948

Chronicle)

sound one."

economy

New

Previously

Chicago.

proach to this problem will be a

the

will in the last

Travers Island.

who has become general
of the Associated Indus¬

Morgan goes to ATF from

&

Curry

Boston investment bankers.

tries, Cleveland.
Mr.

of

therefore I believe that their ap¬

on

legislation

densome

Cincinnati; manager of

Service Co.,

of

the

of

able goods field would result in a
great increase in sales by holders
of government bonds and in the

INDIANAPOLIS, IND.—Herbert
MacKenzie
is
now
with
Hugh

when it talks about freeing the people from totalitarian New
government, then tax revision and a rewriting of the Securities
first orders of business.

The

and

controls

restrictive

too

the

effect

cash

With Hugh Niven

Acts will be one of the

poration,

<§>-

Board,

and

it says

market research for American Gas

proposes

Last
July when it was an¬
nounced that negotiations for the
production loan were under way ("Chronicle"
for civilian use, of automobiles
Juiy 15 page 234) Finance Min¬
ing April 1, 1950.
The interest
and other durable goods.
To re- ister Douglas Abbott stated:
rate on
Treasury savings notes
impose terms of the same severity
"The bonds, which have a term
will be likewise adjusted, details
today would, in my opinion, be of fifteen
to be announced later.
years, have been sold at
Treasury
entirely unnecessary and would
par. They will be dated Aug. 1,
savings notes with the higher in¬
have a result just the opposite
terest
rates are
1948, and will mature on Aug. 1,
expected to be
from that which this legislation
1963.
The bonds were sold to the
available Sept.
1.
The existing
is intended to achieve.
By this, I Prudential
Insurance
Co.,
of
2%% rate on government longmean that if the requirements as
term issues is presumably to re¬
America, the Equitable Life As¬
to down payments are to go be¬
surance
main unchanged.
Society of the United
yond those specified in Regulation
States, and Metropolitan Life In¬
As a result of the higher rate
W or, particularly, if the number
surance Co. The negotiations were
set
for
shor^-term government of months within which instal¬
handled through Morgan Stanley
obligations, (it is expected that ment! payments may be made is
& Co., New York City."
banks will make a proportionate
limited as drastically as under the
Mr. Abbott referred to the state¬
increase in the interest charge on wartime
regulation, the amount of

and

get back on the track once again toward progress and real prosperity.
If we have a new Administration this fall, and if it means what

Morgan With ATF

Congress

Reserve

a, impose

one_

O. Dietz, President
10: "In view of the
to delegate to the Federal

consumer instalment credit controls, A.
of C. I. T. Financial Corporation, stated on Aug.

credit

will

,

ing for

thorizing

•

•:

the resolution just passed by Congress provid¬

on

and notes ma- Federal Reserve Board to
control"
turlng Oct. 1, instalment

,

stock financing
are going to avert that

custom in the

Duncan

of

common

Communists are always tell¬
ing us is around the corner. A change in the tax laws so as to make
risk taking desirable again, plus a complete revision of the Securities
Acts so that the Commiss'on can no longer change trade practice and

industries.
Commenting

indebtedness

year

of C. I. T. Financial Corporation, holds drastic
will have adverse effect on auto and durable goods

restrictions

take

be applied as
follows:

great bust-up the New Dealers and the

Deal

a-

meas¬

business loans.

EXPAND.

TO

TINUES

n

crease-

an

as

The

ure.

prefer, ""Take

(through bond

t i-i

a n

but -whatever you

fiat dollars, BUT THEY ARE

114%

tionary

to GAMBLE.

may

be
to

A. 0. Dietz, President

broad authority which

Secretary of the Treasury, John
W. Snyder, announced on Aug. 9,

Against Imposition of

Consumer Credit Controls

Restrictive

Short-Term Rates

By JOHN DUTTON

Thursday, August 12, 1948

~

was

J previously

with Leo Schoenbrun.1

-

Volume 168

COMMERCIAL

THE

Number 4724

FINANCIAL

&

CHRONICLE
spirit,

Our Role in World Affairs

of

been

for

Our Present Role

:

Seen through the eyes of the non-communist world, the present
role .of ithe United States in world sjifairs is that of a well-meaning
but

dangerously clumsy and wholly unpredictable giant.
To

put this statement in proper context, let me

non-communist world

same

purposeful

sees

My effort

power, whose
intentions are

variously

Soviet
in

There

,of

my

neces¬

to

sary

jamti P. Warburg

the

re¬

two

that

things:

As

or

proceed
with this self-examination, I musi
ask you to bear in mind that our
purpose
is to find facts rather
than to assess responsibility or to
make
comparisons.
Specifically,
we
are
not inquiring into how

the

member

communism.

of

assignme n t,
except insofar
it is

of the Soviet Union

defense

a

af¬

of

scope

is, among some Ameri¬
growing tendency toward

self-righteousness—a tendency to
assume that
any self-criticism is

out¬

side

a

cans,

the

world

ruthlessly

a

'

Union

fairs lies

as

remedying actual short¬
comings or merely one of correct¬
ing an erroneous impression.

re-

of

Union

blame

for

we

the

present

un¬

Soviet

happy state of world affairs should
affects the behavior of be apportioned as between our¬
the United States; and that Soviet selves and Russia.
We are con¬
propaganda exaggerates our fail¬ cerned here solely with finding
ings and arouses or magnifies out, if we can, what our present
behavior

doubt and distrust of our inten¬
tions. (The same two factors oper¬

role

ate to

tribution

some

extent in' reverse.)

In spite of Soviet propaganda,
few people in the non-communis¬
tic world today question the good

influence.

is, how it is

what

we

1.

regarded and

do to make

can

more

our

con¬

effective.

Are We Without

duced the so-called Truman

negative policy
with the
sole aim
of \ stopping
Soviet or
communist expansion.
The original version of the Tru¬

the plan
unhappily
part of his legacy. But the

a

who

out

was

succeeded

the

to

the

belief that

We agreed to an¬

contemporary

dangerously
that

To get the Red Army

desires

of

the

ideas.

the

task

irresponsible,
of leadership

and

of

ting

Ever since the autumn of 1945

■ \,-

have

been

We

pose.

that the genius

transformed

have been drifting.

have

had

We have

and

Stated

goal,

world weakened

and

the world somehow still had faith

death

until

States-r-even
of

the

At

of the

present,

tween

two

the

policies.

President

Roosevelt—

horns of

events

August

of

after

and

We
a

we

are

dis¬

are

impaled

foreign
on

the

dilemma created by two

contradictory theories of what the
world crisis is about.

taking out
the

tune

in

of

an

of'
ef¬

and then

effort by

own

war-risk

are

out

on

peace,

our

we

cents

dollar

the

ap¬

second.

the

terms,

15

taxpayer's

betting against

caught be¬

conflicting

other

about

fort to build

organized b,y war, a world ordei
compromised by wartime conces¬
the sad fact of the matter is that sions to Soviet ambition, and a
with the death of
Franklin D. Soviet regime fully conscious oi
its purposes and ruthlessly deter¬
Roosevelt the
spark of genius
to
accomplish them, we
which might have wrested peace mined
out of the shambles of victory, have vacillated between accepting
a
divided world and pursuing a
sputtered out; and—once victory
steadfast
course
toward healing
was
achieved—the spirit of the
the division. We have had plans,
American people changed.
In spite of all the compromises but no plan. We have had ideas,
of expediency, people throughout but no vision.

United

in

each

a

to

that

times

negative

embodied

spending

with

victory—had that leadership
the
wartime
spirit of the
American people continued.
But

year

a

the

proach

and

ultimate purposes

an¬

approach

three

upon

stones along the

for

the

almost 1

amount

clearly

no

$6,000,000,000

constructive

mate

into

equally great leadership toward
peace—in spite of the price paid

in

version,

peace embodied in the first theory,

no planned steppingroad to an ulti¬
destination, and no consist¬
ently calculated procedure. Faced
seen

about
the

on

great leadership in war might

not

later

March 17 of this year,

on

At the present time, we are bet¬

was

lost the inspiratioh of a high pur¬

say

The

nounced

to change rather than cater to if.

we

can

the

upon

.

Czechoslovakia.
one

rested

could contain Soviet

we

unequal to the

were

moving against Japan in Manchu¬
ria, we paid the price of letting
it
conquer
^Berlin and Tiber ate
No

Doctrine

man

un¬

envisages the use of our own
the courage to see that, the con¬ armed
force, if dollars and blufi
temporary mood of the people was fail to accomplish the objective.

pledged in the At-

,

Doc¬

trine—apurely

American people, but they lacked
the wisdom, the conviction and

September, 1945.
But their faith
was
shaken
by
the
Potsdam

Plan?

a

work

which

,

nexation of territory and the divi¬

of

one

g a r d e d as
enigmatic o r
definitely evil.
However, the
role

the Soviet

just peace
lantic Charter.

our

expansion by arming and other¬
challenge.
oi wise financially assisting any na¬
They were men
good will, but they lacked vision. tions, or groups within nations,
They were sincere executors of hostile to Russia or to communist

sion of the world into spheres oi

that the

say

❖
job in hand is one of substance
or public relations—whether it is

-

1 i thic

m o n o

as

'"the

to

finished task

challenging assignment will be divided into two parts: firstj-an attempt to pic¬
role we are playing at present; and' second, a brief discussion of the part we could
play if we realized our potential.
I.

able

peace

men

to-meet this
ture the

Yalta.

preservation of that faith in

not

to discuss the role of the United States in world affairs.

overboard
at Union's ruthless pursuit of its own
Given the selfish ends. Tnis
theory has pro-'

gone

and

purposes, which President Roose-t
velt had inspired, we might have

effective and advocates building it into world government.
me

the world crisis arises solely from the
unwillingness of the boviet Union
principles no cooperate in tne making of a*
honorable peace, just peace and from the Soviet

and

had

Teheran

Warburg, in maintaining nation is planless and bungling in its foreign relations, asserts we are
caught between two conflicting foreign policies, cne which arises from theory that world t crisis: is
due to widespread economic distress and maladjust ment and the other that it is due solely to unwilling¬
ness of Soviet Union to cooperate in world peace be cause of selfish aims.
Proposes withdrawal of all
troops from Europe and elimination of Europe as bone of contention.
Scores United Nations as in¬
You have asked

of

Charter—the

just

a

which

Mr.

.

not the letter,

great principles laid down in the
Atlantic

By JAMES P. WARBURG*

\

if

13

(609)

insurance to

something

45

like

cents out of each taxpayer's dollar.

This

in

itself
is
fairly con- v'
proof that we are plan¬
less in spite of our power.
But r

elusive

that

is

We

all.

not

are

also planless in dealing

with the various individual prob¬
lems

which

tlement*.

is

peace

set¬

For example:

We have
which

the

into

combine

major problem of the

no

the

plan for Germany,
problem of

central

Europe. For three years we have
been vacillating between the de¬
sire to destroy Germany's indus¬
trial capacity in order to eliminate
its war potential, and the desire
to
build
up
German industrial
capacity
in
order
to
promote
European recovery.
For the past
12 months, we have not known

One
theory—put forward
by
Secretary Marshall—is that the
primarily from
the widespread distress caused by
Certainly we were not planless events, plus the helter-skelter dethe intentions of our government so long as the war lasted. No one mobil iation of our armed forces economic maladjustment and dis¬
location.
This theory recognized
and of the power groups which knows this better than the man and the
irresponsible termination
that we have emerged from the whether we were more afraid of
are, rightly or wrongly, thought who is now President of this great of rationing and price
controls,
a unified Germany in which Rus¬
war in possession of the sole sur¬
to exercise their influence upon
University.
Until
presented the world with a new
victory
was
sia would have a voice, or a di¬
its policies.
plus production out of which the
Strange as it may achieved we had an aim, a series picture Of
the United
States:
vided Germany in which Russia
seem
to us, a European is quite of
A faithful and effective wartime rest of the world can be helped
objectives
leading
to
the
would
completely control oneIt
likely to draw a distinction be¬ achievement of that aim, and a ally had suddenly turned into a to get back upon its own feet.
half and we, the other.
tween the American people and
planned procedure leading to the nation disinterested In the world, recognizes that, in our own selfits- government, rather like " the attainment of each
We have no plan for Palestine,
objective. The concerned primarily with its own interest, we must aid the world
distinction which are in the habit aim was the unconditional sur¬ comforts and possessed of a secret to regain its health. It sees "hun¬ which is the central problem of
of making between The Kremlin render of the Axis Powers.
poverty,
desperation
and the Twiddle East. We are for par¬
The weapon which revolutionized all ger,
and the Russian people. The dis¬
objectives were the step-by-step preyious,concepts of warfare and qhaos" as the causes of com-. tition- at one moment and against munism and as the causes of the it the next.
tinction may or may not be valid, liberation of the conquered ter¬ security."f
We favor trustee¬
I
but it is drawn just the same.
present threat to world peace. ship today and oppose it tomor¬
ritories and the ultimate invasion
A Wendell Willkie might have
This
theory has
produced the row. Our zig-zag course in the
Similarly, few people of the of Italy, Germany and Japan. To resisted the
turning tide of public
non-communist world doubt the accomplish these
Middle
East
is
dictated
by a
objectives almost opinion, at least enough to pre¬ European Recovery Program. If
vast resources which are at the all other considerations were
put serve the faith of the world in
The other theory—put forward strange mixture of outworn strate¬
Until our single aim of the United
disposal of the American people aside.
States—and, with it by President Truman and his bi¬ gic concepts, commercial interests,
to.carry out its good intentions. victory was achieved, we had and the
opportunity to recapture the partisan advisors — is that the
(Continued on page 34)
Yet an increasing number ques¬
consistently pursued a definite
tion- whether, in the end, these
plan.
resources will be so employed or
Whether or not
our
plan of

intentions of the American people,
but a growing number - question

Agreement, b/ the bomb that fell

First, then, is it true that we
are planless in spite of our power?
>

Hiroshima and by the summary
cutting off of Lend-Lease. These
on

world crisis arises

'

.

.

diverted to other purposes.
The
us

action during the

most

puzzling thing about
in the eyes of our friends ap¬
be that

to

pears

we

seem

plan¬

less in spite of our power, fright¬
ened in spite of our relative se¬
curity and bungling in spite of

war

was

plan is another matter.

military

point

of

view

be hard to find fault

however,
witz

one

axiom

a

wise

This announcement appears for purposes of record only. These

From the

it

through the undersigned, and have not been and

would

with it.

not

securities

were

placed privately
:'d:

being offered to the public.

■Is

If,

accepts the Clause-

that

"war

is the

NEW ISSUE

ex-

tention of

policy by other means'5
our recognized efficiency.
—that a war must be fought not
merely to deny victory to the
.Even if there were no justifi¬
cation
for
this
impression,
it enemy but to gain a positive epd
would still be wise for us to try —then our plan of action during
to find out why it exists, because the war can be criticized as being
the fact that we are so regarded— & plan shaped too exclusively by
whether justly or unjustly—pro¬ military expediency.
The conse¬
foundly affects our whole future quences of the pursuit of military
expediency are evident today in
and that of the entire world.
Let us try, then, to examine as Europe, in Asia and in practically
every part of the world.
objectively as we can whether
Our war plan was a plan to
there is any justification for the
belief that, in spite of our great prevent world conquest by the

w

$20,000,000

„

Inland Steel
First

S'-f'il:-:

Company
Due

August 1, 1978

we

%

and

know-how

as

nation among

a

in

our

For each military step along the

behavior

other nations.
Let us, in other words, try to
make up our minds whether the

"

address

by Mr. Warburg
before the faculty and students
of .Columbia University, New York
City, July 20, 1948.

PRICE

101% AND ACCRUED INTEREST

.".it

If1

road to victory we paid a

price.
with

political
We paid for North Africa

Darlan and the

survival

.

of

in Spain.
We paid for
Italy in similar coin. We paid for
Russian help in the war against
Japan by agreeing to an old-1 ;
fashioned victor's peace instead.,of t*

Kuhn, Loeb & Co.
?"* if --

S'/B'

-

'«■

V'V, *■;v'f-l &

v •.

V;-

'

August 6,1948.

■

'

Si

,v'.v2:.ainasSsfc'.t-

«*'wvs.;*,

„s?s;v



,

.

...

,

....

,

f't':r I

<■&

fascism

■MC

♦An

I

Mortgage 3% Bonds, Series H

Dated August 1, 1948

have no clear plan of Axis Powers and to subdue them
the
quickest and
cheapest
action; that, in spite of our rela¬
eans.
In carrying out this plan
tive security, we are unreason¬
we
achieved
yictory,
but
no*,
ably motivated by fear; and that,
In .spite of our pragmatic efficiency peace. Actually, we bought quick
victory at the expense of peace.
as a people, we seem to lack skill
power,

are

wvr

v

*

* -4

Wv:

14

(610)

THE

COMMERCIAL

\

&

FINANCIAL

CHRONICLE

Experiences of the individual companies-

vary greatly, as will be
by a little study of the figures in the tables. On average, howfever, the net operating-tesiiits of the second five.-year. period were

falling

approximately 17% below those of the first five-year period, while
1947 results were approximately 16.5% above those of the second
five-year period, and only 3.5% below those of the first period. In
View of the terrifically high 1947 fire losses which were 2.5 times the

stead

-

seen

Bank arid Insurance Stocks
By E. A. VAN DEUSEN

This Week

Insurance Stocks

—

Average

of the, five-year period 1937-1941, the recovery of 1947 earn¬
surprising. A simple table brings the picture out quite
plainly, also the relationship of current dividends to earnings:
ings

;
Iri the July 29 issue of the
fire insurance
companies in 1947

"Chronicle" Earnings of 25 leading
were

compared with their five-year

five-year period 1937-1941.
Two tables

sults,

rates.

5-Yr. Averages 1937-1941 Incl.

Amer ican

Fed.

Tot. Net

Net

Net Inv.

Fed.

Inc.

Taxes

Oper.

Und.

Inc.

Taxes

Oper.

$1.13

$2.51

$3.64

$1.20

$2.88

$0.47

$3.61

2.25

Insurance

Agricultural

Netlnv.

Und.
*Aetna

5-Yr. Averages 1942-1946 Incl.

Net

4.12

6.37

0.34

4.80

0.78

4.3,6

Jnsur.__

Equita ble_

—0.06

.

8

Association

3.13

0.98

3.56

2.44

?':ii

'1.'86

3.12

0.99

3.99

4.00

2.68

3.44

3.27

0.29

1.55

2.00

Fire

National

No.

2.37

^National

Union

1.30

Insurance—

1.99

& Mar.

2.02

2.43

Insurance—

0.84
1.43

1.64

2.46

♦Security

"Springfield

F.

2.61

2.35

1.12

1.82

0.42

2.09

1.71

0.24

1.45

6.70

4.30

3.17

profits in 1947 than they averaged in the 1937-41 period. Tliis is
12

out

of

the

25,

1.62

0.59

3.54

4.77

1.73

Equitable, Continental,
Fidelity-Pheriix, Fire Association, Fireman's Fund, Glens Falls, Great
American, Hartford, Home, Insurance of North America, Phoenix, and
St. Paul Fire & .Marine.

3.22

.0.08

&

M."

(

only for change of par and increased shares in 1942.
* Adjusted only fot
In 1947. 5 Adjusted for 5 for 1 split in 1944. " Adjusted only for 2Vi for 1
split in 1947.
♦Capital .'increased as shown in list; no adjustments made in table.
rNo longer exists; merged with Home.

0.28

2.99

Lack of Free

In

3.96

0.54

4.12

time

2.94

—0.83
0.28

2.26
2.55

0.15

2.68

4.10

0.96

2.66

0.48

3.14

split,

Vim, G. Lightbowne writes "Chronicle," citing curtailed output
of cotton textile manufacturers, as interference with law of
supply

;

1.28

0.15

and

increased

When demand

assured

are

level.

But

exceeds supply,

high

;That's

,

Boston

t Franklin

♦Glens

Great

in Table I,

II

Year

Current

1947

Div. Rate

$3.61

$2.13

$1.80

4.36

—4.52

3.00

1.35

0.13

1.59

1.00

3.99

5.86

2.20

5.42

-•2.50

6.67

11.59

3.00

enterprise"

0.86

1.24

1.00

becomes

3.84

4.44

1.60

2.34

2.09

2.89

1.20

-

What

1

becomes
of

repeatable

of

system
the

law

the

of

What

and

un¬

"supply

1.46

1.45

1.54

1.20

8.53

7.83

11.87

2.50

compete?

2.24

1.66

3.48

1.30

6.10

6.58

7.71

3.00
2.00

___

>

Fire

4.45

-1.91

—2.14

Union

3.69

2.99

2.12

1.00

2.63

1.78

1.72

2.00

1.60

1.20

1.52

1.00'

Insurance

4.12

5.51

I

6.03

3.00

3.12

Washington
&

-

Marine

-

_

_

_

2.61

1.71

1.40

4.45

5.31

9.07

2.00

2.94

_______

1.28

3.79

Marine

Fire

4.10

1.39

2.68

„„3.14

1.40

2.55
'-i

-

1.90

3:98

2.00

Please

page

Goldman, Sachs & Go.

is to keep production in

tion."
are

almost

any

quotation.

arr

to

due
been

let

the fact

that

prices have
that families have

high
their supplies
so

their

curtailed

production

about 20%."
v

i

,/

Now there

ton mills in

did

are

.

New England..

their

all

Sent On

Request

by
.

hundreds of cot¬

owners

How

reach

in

cottoxi goods,

why

this

seems

Members New York

120

Stock

BROADWAY, NEW
Telephone:

Exchange

YORK 5, N. Y.

BArclay

7-3500

>■

Bell Teletype—NY 1-1248-49
(L. A. Glbbs, Manager
Trading Dept.)




it s

ne^e

But -this
evident: that if the policies

said.)

manufacturers become

ge™^al i

lines, nothing under the sun
prevent us from having an¬
other depression in due couise of
all

will

dent'

thing seems evi¬

another

Our Communist friends are

sitting back waiting for just that
tn happen, because their Prophet
them that

Karl Marx, has taught

capitalist

the

system

cannot

be

without boom-and-bust.

nnerated

"natural

latvs"

Of

aside by collusibn?
is

in

fact

economics sej

months.

communists will ever overthrow
the government of a prosperous
America
But
if
businessmen
themselves continue to undermine

tS

enterprise system

free

own

rigging prices and refusing to
then the system they

bv

Phmnete

SieveIn but do not
bp doomed.
Aug.
133

8, 1948
W.

practice may

LIGHTBOWNE.

^

_

Grove- St.

Bogota, New Jersey.

,

William H. Jones Go.
1

The Financial Chronicle*

(Special- to

And H that

! LOS ANGELlES,
CALIF.—Ed¬
what of this "free ward H. Dunk has become asso¬
we
hear
so
much ciated with William H. Jones &

so,

enterprise"
V.
(po., 215 West Sixth Street, mem¬
ishing point, waiting for the day
Again we read: "Third quarter
bers of the Los Angeles Stock
DALLAS, TEX. — Goldman, when, they hoped, prices would cpttdn goods production
will
Exchange. Mr. Dunk in. the past
Sachs & Co., members of the New fall
and
they could afford to show the effect of curtailed oper¬ was a
principal of Dunk-Harbi¬
York Stock Exchange and other renew their supplies.
ations, which has been adopted
son Go. and did business in Lbs
But now, we are told by this generally throughout the industry
leading exchanges, has opened a
Angeles as an individual dealer,
article in the "Times":
to avoid building up unsold in¬
branch office in the First National
ventories. It is expected ihht the
"With textile orders indicating
Bank Building under the direc¬
that lessened consumer demand cut in production will keep prices
Bartling & Co. Adds
tion of Rudolph Rubert. The firm has been felt at the mill level stable,
although
it
has' befer
(Special to The Financial Ch-onicle!
'
LOS ANGELES, CALIF.—Bar¬
New England cotton goods manu¬ argued ... that a price shaker
has offices in- 14 states

Opening Dallas Branch

of

household

linens dwindle almost to the

van¬

about?

.

.

••

Laird, Bissell & Meeds

not

or

(At least thats what

George

apparently adopted by the

riidjn't

prices'are fixed,, and production
controlled—in other words, the

.

Bulletin

free

Not all the machinations of the

For

ihstance, it says: "New England
cotton
manufacturers last week

ket"

other

Henry

several things to no¬

this

about

.

than

cycle

tried.

been

matter of

,

There

tice

prompted they

of

nom'c

system

balance, taking into account that The Communists are so sure that
pipelines were well filled and that he was fightdhat they are stak¬
movement
of
goods
must
be ing everything on the certainty of
assured at all levels of distribu¬
ahother American depression m a

compete with each other,
by an article in today's New each fighting for a share of a
York "Times" on the textile situ¬ declining market?
I§ it because
ation. .Textiles, particularly cot? there is in
jja'ct ;nfe "free; market"
ton goods', as any housewife cfe'h but, an association of some sort
tell you, have increased in price through which
policy is made,
more

the

would

work
without violent swings oi the: ecoenterprise"

And

prices to the bone. A good

now

made.

are

I don't know whether

that without

[.% simultaneous decision to curtail
Henry Hazlitt—he oiutput?
If there is a "free mar¬

necessity, and there is £
tremendous
backlog of demand

Trust Co.

said

of

*

may know the answer.
These questions are

ticle

Manufacturers

men

unsold
inventories
there would be no great necess'tv

"free

then?

sacred

and
demand" if businessmen-refuse to

'

S.

they can
"balancing"

-n

,

1.84

♦Security Insurance
«Springfield Fire &
U.

•

,

.

41

.

pressure

production

2.68

4.00

Company of North America

Fire

decide

sales?

River

Paul

they

2.40

Hampshire

Phoenix

Suppose

make more money by

2.00'

5.83

.

lem

Suppose, the various pro¬
units refuse to compete,
instead get together and de¬
cide to hold up prices
by restrict¬

3.97

4.11

.

"Textile

ducing

5.50

'.

Insurance

♦Providence
5St.

is not

3.13

Fire

North

market

!

to cut

well.,.,

the

3.56

American

National

hands

4.54

:

thev

basic demand is still in existence,
it was pointed out, and the prob¬

3.66

Fire

keep

proof.

3.72

Fire

Hanover

New

off and all will be

-

and, demand
at ail
agreed price level than by cut¬
ting prices in order to stimulate

Falls

'National

government

But suppose

sales.

.

Fund

♦Insurance

the

is

ing production?

1942-46

.

]

[ "Third-quarter

automatic and
fool

Let

sumers' market.

•That's the way depressions come

free

but

6.37

Insurance

Hartford
Home

Lightbowno

still further to reduce the
working force and the total of
earnings to be spent in the con

about—they don't just happen—

free?
as

Operating Profits Per Share

Association

Fireman's

G.

laid off makes it neces¬

man

opera¬

—

$3.64

Fidelit-y-Phenix
2Fire
8

the

lot?1

a

shorter

a

cotton goods
production, textile men said, w.il
enterprise show the effect of curtailed oper¬
system.
Free ation,": which has
been adopted
com petition
generally throughout the industry
in
a
free to avoid building up unsold in¬
m
a r k e t—
ventories.
It is expected that the
that's
all we cut in production will keep prices
need.
No stable,
although
it
has
been
price - fixing, argued by both distributors ana
no
retailers that a price shakedown
regula¬
tion
the would • result" in
stepped-up

,

Insurance

Continental

on

de¬ work week, reduced their
the tions to four days. ,

ply and
mand,"

Wm.

off

lay

sary

producers who went

sup¬

system

1937-41

1

each

,

of

has
the

/nd= .decrease con¬
demand

.

"law

.

;

Five-Year Average

told, prices rise, and we

for the present high price

we are

production, and eventually sup¬
Then, we are assured, prices will fall.
the<§>
—

ply catches up with demand.

very

by the amount oE
their former earmngs. Thus the
situation
is
worsened,
because

stimulate

prices

the

at

a

people

sumer

that that is the main reason

words,

other

manufacturers

Editor, Commercial and Financial Chronicle:

of

from

they
That

thousands of workmen laid

that

work

and demand.

heart and soul

America, in which instances the comparisons suffer

Equitable

week.

falling demand
been felt "at the miUievcl.

2.61

■

♦American

output,

four-day

commodities.

5.31

Insurance.

curtail

a

or

0.70

In Table II the same
adjustments have been made
indicated by the footnotes.
;

Agricultural

to

on

1.78

3.79

no¬

put on short time, thu
reducing their earnings and de¬
creasing the total demand for
off

1.20

1.31

•

xang^Qi

point' deserves

other

means

0.16

0.33

_

wider

When the cotton "industry

tice:

decided

.-c

Insurance.

abOne

0.24

majority of cases the capital increases occurred in 1947,
thus the per share figures in the two five-year periods can be com¬
pared directly,.except with Security, American Equitable and Insur¬

♦Aetna

a

consumers, they have agreed
"balance" production and

1U7

1.97

TABLE

a

within reach of

2.86

2.10

Total Net

of

went

LETTER TO THE EDITOR

1947—Glens Falls, from 500,000 to 650,000 shares.
1947—Providence Washington, from 300,000 to 400,000 shares.
1947—Springfield Fire & Marine,
for 1 split and increased
from 500,000 to 700,000 shares.

•'

,nf
in

and

Adjusted

220,000 to 400,000 shares.

as

asl(?e the

economics,

competing. with., each
share of the declining
market
and seeking to increase
sales
by putting their products

2.40

3.22

-

of

has

mfustry

to set

way

othefe for

0.41

0.97

1

a

stead

0.27

3.40

for

will be

But it seems

a price
cotton

laws"

ural

0.46

4.45

■

the

1.60

2.36

distortion.

equated at

5.51

4

demand,

falling

of

be reached at

nally

2.63

_>

face

demand

4 for 1 split

1947—Aetna, from 750,000 to 1,000,000 shares.
1947—Fireman's Fund, from 508,000 to 528,000 shares.

Co. of North

the

3.69

_t

3.12

Union.

in

competition will become keener,
ferices will.drop, and a level n,

1

:,i

1,500,000 shares.

1947—National

laws" of economics presume that,

On the other hand, exceptionally poor 1947 results were expeH- at an agreed price level by re
Agricultural, and National .Firfc, winch- reported losses. The striding production
&
footnotes applying to Table I and Table II are as follows:
Again I ask, what of this free
Adjusted for 10 for 1 split in 1945.
enterprise"
we
hear so
much
Adjusted for 20% stock dividend in 1945

1942—Fireman's Fund, changed from 300,000 ($25) shares
to 505,000 ($10). shares*
1943—Security, from 200,000 to 250,000 shares.
1944—American Equitable, from 200,000 to 300,000 shares.
1945—Insurance Company of North
America, from 1,200,000

ance

/

:

demand^ by
n_atu|U

The

lowering, prices.

;

1.91

and for which no true adjustment is
possible. Adjustments have been
made, however, for stock split-ups, stock dividends, etc., as indicated
by footnotes. In chronological order capital changes were as follows:

some

:

in-

Cnced by

6.58

—1.23

approximate comparison of the components can be made. Other
difficulties include capital changes in "cdmpanies marked with
(*'),

tl

true

American

follows:

as

1.66

an

In

>

and perhaps not widely realized, is
achieved higher total net operating

companies

P^sant
has ae

production
of stimulating

found
,

7.83

0.63

It will be observed that strict
comparison of underwriting profits
and investment income is not
possible because in the 1937-1941 period
federal taxes were not segregated (except in three
cases). However,

f

59.7
51.2

the

at

curtail

to

that

1

S.' Fire

to

interest,

of

of

49.4%

3.84

0.69
—0.02

6.10

1.84

Paul Fire

number

a

'

3.52

1.28

83.0

demand

level, the "industry

cided

duction and consumption

0.86

2.24

1.11

River—r_——

Phoenix

6.67

0.20

8.53

2.15

Hampshire

*Prov.

2.21

1.43

'

2.39

0.48

0.49

0.49

4.67

4.45

0.44

3.56

Washington—..

New

North,

3.65

4.21
—0.37

1.46

3.73

0.89

Fire

—0.48

3.66

•1.66

$276,000,000
427,000,000
693,000,000

■price

-

2.34
•

3.28

0.53

Amer.

0~28

1.44

5.69

Insurance

0.13

1.84

1.56

0.02

1.76

5.83

$0.26

1.94

0.78

Fire

Hartford

U.

0.19

2.74

2.82

*Ins. Co. of

r'St.

3.33

1.80

0.56

American

Hanover

Home

—0.01

Fund

Falls—

Great

—1.63

4.54

3.72

Fire____

Fireman's

TFranklin

«Glens

1.35

3.16
2.25

1.67

Insur«—

Fldelity-Phenix
vFire

1.41

1.38

1.47

Boston .Insurance.—
Continental

Tot. Net

% of Earnings

,96.5

—

Another, item

;,

that

of

TABLE I

1

I

Dividends,

Fire Losses

100.0

Year, 1947

{

Average Annual

Years, 1937-1941
Years, 1942-1946

5

Table I shows net underwriting re¬
federal income taxes and total net

Operating profits; Table II shows final net operating
profits alone,
for the two five-year
periods and for 1947, also current dividend

*

5

i

•index of

Earnings

>

...

,

are

presented.
investment income,

net

seems

!

average earnings for the period 1942-1946. This week the
comparison
is extended to include
average earnings of the prewar and previous

1948

Thursday, August 12,

and

new

Dallas branch marks its

try into Texas.

this
en¬

facturers last week curtailed theii
output by about 20%. Fine goods'
mills, taking a cue from Southern

down

would

sales."

In

•

other

result in stepped-up

tling

& Co.,

/

I•'

650

South

" •:.'C.

-i.

i

Spring

Street, have added Carter E. Gil-

words, in the face oi leland to their staff.

i.

V.;,

Volume 168

u,.:.
...

"V;

■

•

Number 4724

COMMERCIAL

THE

FINANCIAL

&

t1'

A'i'

In
•

.

'

&X rn 'It *2/

'a

Director of
.

CIO spokesman'

Education and Research,
Congress of Industrial Organizations

.

;

r

;

;

'"-*

V

'w

,,

^

CHRONICLE

;

organizatiort's basic principle "intelligent social controls to guide economy within framework of traditional American democracy."
Lays previous depressions to business
greed a'tfd asserts individual profit ihotive, if Ond's urbed, does no! serve best interests of greatest riunt"
ber.
Lauds "New DeaF but says it came to an end with European! wa'r.
Proposes among postwar re¬
adjustments, curbing of monopoly and corporate pyWer.
Warns;, of another depression if "nature is

the

steel

mills, auto shops and

rubber

and

textile

plants of
the nation, the legions of the CIO
were
organizing.
The National
Labor Relations Act protected this

right from employer interference
and, for the first time, collective
bargaining was being practised at

announces as

the heart of

J5

(611)

tion, and flood control to* enrich
the life of a. seven-State region.
By KERMIT EBY*

•

mass

production

en¬

Even the best efforts of the 801.U

Congress has failed to besmirch
their record.'

' 1

,

.

-

This time the profit was to £><•'
taken out of war
at least it
.

was

.

.

intended that way

Yet, with

powerful anti-administration
spokesmen denying the likelihood
of

even while the lowlands
being overrun, business was
complacent in the face of 1940
war,

were

terprise, The CIO Was a revolt
against starvation wages, insecure

profits which were higher than
any time since 1929.
The now
unreasonable foremen and favorable rules of supply and de¬
allowed to take its course."
v
tne speed-up.
workers wanted iu mand were only relinquished by
be treated like people; not as parts
I deeply appreciate this opportunity to
industry in exchange for total con¬
appear before the Fourth Annual Forum of
of a
machine.
But even more version after
Congress had pledged
Labor, Agriculture, and' Industry to discuss from a labor point of view, the subject "A Bal¬ j
mportant, as Americans believing "guaranteed" wartime profits and
anced Economy in the Readjustment Period."
The Congress of Industrial' Organizations, in democracy, they wanted some other considerations, including a
which I have;,
'.
■
share in the decisions that shaped five-year amortization allowance
,—1"^".i-.".'-"-;..-'1:^v'->1:"."■ ■".■
the
honor
to
for new capital investments.
pay, wiped out wartime savings, ration process and frightened in¬ their lives.
represent
a s and:
undermined the
ability of dustrial tycoons, with their em¬
The New Deal gave new hope
Agriculture, remembering the
Director
of
wage earners to buy the products pires tottering, made no
Born in an atmos¬ tragic
outcry to the nation.
price collapse in
1921.
Education and of farms
and factories. Ultimately then about government interfer¬
phere of crisis* it often worked sought and obtained guaranteed
Research, is supply surpassed effective demand ence Witli
private enterprise.
In with improvised plans and Im¬ price support, extending beyond
probably more' and the postwar boom gave way
foot, Herbert Hoover heard their petuous planners. Enthusiastically the end of hostilities. Labor re¬
e o n c e r n e d
to
the
depression
of
1921.
Its plea for help and acted in 1932. supported by lkbor" and agricuP ceived no war and
postwar guar¬
with the probsharpness was intensified by the He established RFC, the Recon- ture. and, though grudgingly, by antees
beyond promises of price
: lem
we
are
price boom which preceded it.
structibn Fihahce: Corporation, to large segments of business and the stabilization
and
cost-of-living
consider! n g
The
period of
the
so-calfed hail1 put With the taxpayers' bil¬ well-to-do—the New Deal1 sought
wage adjustments, should they bo
{than any other "prosperous"' 'twenties was
sup¬ lions the banks, railroads, and in¬ to mesh the interests of all
group# required,
CIO gave a no-strike
g; r o u p
o f
ported by the prop of an export dustries that no longer enjoyed into a pattern of greater national
pledge, and it kept it. Labor's
Americans.
surplus, expansion in the auto, oil the way nature was taking its welfare. Despite today's reaction-" chief wartime benefit was job se¬
It was the and electrical
industries, and a course.
cry carpers, it made a record in curity; and. the
overtime work,
mass
tragedy
American history which will grow with its increased
housing boom. Yet,; at its base it
earnings, which
The New Deal continued RFC
of
the
fast' was subsidized
by the low income
even
was urged upon it.
greater as time gives per
Kermit Eby
•
great
depres¬ of the nation's farmers who failed and saved scores of enterprises
The New Deal, in six
that now finance NAM's propa¬ Fpeetive.
Never in history had the worldsion that gave 10
emerge
from the depression
years, did not bring the economy seen such an
birth to the movement we how
ganda against government "inter¬
outpouring of goods
after
1921.
Nor
did
American
1o a stale of boom. While it saved'
know as the CIO. Today our six
ference and control." Big Business
from farms and factories. Between
workers, still deprived of unions
countless private enterprises from
million members, most of whom
1939 and' 1945 the gl'oss national
by the ruthless opposition of the then, as now, had no harsh words bankruptcy
and returned them! product of
work in mass production indus¬
against Washington when steps
America, the total value
corporations, the courts, and the
into profitable ventures, it gave
were
taken to help those at the
of the
tries, are fearful of. the "bust"
goods and services pro¬
police, share in the good times.
workers and farmers new protec¬
which they have always seen fol¬
duced by the nation, catapulted
But the New Deal went,fur¬
Consider these facts: Between 1924 top.
tion and dignity, and attempted
low a "booih," and
from $90 billion to $213 billion.
they know that and 1929, iive years of the "pros¬ ther. It stated that prosperity is
to preserve and restore the naW
also dependent-on the well-being
industrial workers are the first to
From
where
did
the
money
perous" 'twenties, production in
tional resources of the country.;
of the masses at the bottom, that
walk the streets when it comes.
come?
It came from the Federal
manufacturing
rose
27%
and
Above all, it supplanted the legend!
"While depression brings losses and
spending money in the pockets of
treasury which between 1940 and
profits increased 72%. But wages
of laissez-faire
the
jobs,

,

,

.

frustration to the nation's
fanners,

were

they, at least for

absence

tinue

a

the pattern

can con¬

The

stockholders

of

raised

by

industry,

collective

of

in

the

bargaining,

farmers

and

workers

prerequisite to

is

arid

also

prosperous Amer¬

a

ica. And it set out to do something
precisely 5%. The United States
about it.
Steel
Corporation, for example,
doubled its take-home profits dur¬
In
the, cities the unem
ing this period without granting Were taken from relief lines to
a
single wage increase to its un¬ the WPA, while fWA provide1
organized workers.
Neither far¬ further employment and industry
riers nor workers,
indirect
the bulk of received
stimulous
Americans, earned sufficient wages through a national program of
to buy back the expanding pro¬
public works.
Low-cost housing

of. their normal

work-a-day lives.
and

time;

.

managers

corporations

.

.

often

enjoy the protection of the

cushion

which corporate reserves
undistributed profits provide.
Although .the entire population
and

ultimately is caught in the chain
reaction effect of the downbeat of
the
economic
cycle,
industrial
workers

their

and

its impact

families

duction".

feei

again,

once

there

Your

and

those

who

echo

the

thought when they urge
nature take its

us

same

to "let

.

.

.

income

hyessmn.

|

billion

encompass
world's worst

the

of

in¬

in

National income
Million Platitudes
1932.

the
de-

fell
?
from

the National Association of Manu¬
facturers

course."

came

memories

events

are

those who whisper that "a. little
depression might be a good thing"

crash

evitably.

immediately and tragi¬

cally.

Today,

A

Wall

and

Street

If

history

the

has

lessons

the past!
nomic history

period

after

conclusions

value,

that

from

can

it

be

is

in

learned

Certainly the

eco¬

of the readjustment
1917

of

supports

the

the

CIO, which

1

have stated.
From

until

the

1933,

end
we

us

of World
saw

its course—with

a

War

nature

I

take

Let

vengeance.

the

high and the low
unhappy, period.of
American economic history.
scan

points

of

an

After World

forces,

as

War I

now,

There had been

and,

inflationary

were
no

in

motion.

price controls

after

soared.

of business had

men

be'obtained for all.

the Armistice,. prices
Labor could not then be

the

scapegoat because, soon after
hostilities ended, unions in

steelt

meatpacking, and other

mass

pro¬

duction industries were
ruthlessly
destroyed. Without collective bar¬
gaining to protect real wages, in¬
flation quickly reduced take-home

America, and they
ground.
the

statesmanship.
cost

:

*An address by.Mr. Eby.at the
National

Conference

of

Agriculture,- Labor afnd? Industry,
University of Wyoming, Laramie
Wyo., Aug. 2, 1948.




Their

restored

to

order' and* their

posits insured.
vened to

The HOLC inter¬

while

NYA helped thousands
youths tc remain at school.
In

the

countryside soil

of

conser¬

vation and price support programs
gave

new

hope

to

the

farmer,

lU'ral
electrification was widely
extended, and cooperative buying
and
marketing was encouraged.

TVA
a

was

whole

tricity,

established

river

to

harness

16

provide elec¬
navigation, soil conserva¬

All

boom

Americans

gave

a

in

and!

1945

paid out $360 billion to

derwrite

the

in

gently

their

.

power

ler ended the New Deal in Amer¬
ica.

Defense

created

a

preparation and

new

era;

total

war

mobili¬

Was

diverted back to the Federal

treasury surplus profit,
and luxury taxes.
But

fessors
nomic

had

it

raised

by

consumer
credit and
democratic institutions. with on
wages,
exception of England, organ¬ living costs were held in check.
Through the stabilization program
ized itself more completely or ef¬
fectively in order to produce. And billions were saved by the govern¬
the management of the war econ¬ ment which inflation would have

der

the

omy,

due in great

much
New

derided

Deal,

measure

"planners"

was

highly

as

an

solicitation

to the

of

the

effective.

added to the cost of war.
sons

(Continued

190,000 Shares

1921

could

"readjustment"

after

which

to new

now-

The Detroit Edison

the
be

or

depres¬

Company

Capital Stock

discussed

$20 Par Value

"recession?

"laissex-faire"> went

prosperity the dcctrin6
With the

became untenable.

prostrate
and
.dying:.
"Natbfal Economic Law" rio longer
economy

could

be

made

to

"prove"

Price $20,625 per

that

share

individuals motivated by the

profit
motive,'if undisturbed, would best
serve the interests of the greatest
number.
What

the

New

New

Deal

Deal
wrote

Did
a

&

new

chapter. It did not try to destroy
the capitalist system: if tried to
revitalize it by social planning ancl
action.. Government was the only
agency that could start the resto¬

August 12; 1948.

Co., Inc.

The les¬

of economic planning learned
on

page

appears as a matter of record only and is tinder
offering of these Shares for sale, or as an offer to buy,•
of an ofcr to buy, any of such Shares.

the college pro¬
rewrite new eco¬

textbooks.If-

sion- of
as a

borrowing.

With half of our production go¬
deciding what should
be produced and by whom, allo¬ ing
to war a terrific inflation
cating materials and, above all, would have engulfed us but for
price controls enforced by
underwriting
the
costs
of
the the
goods and services it comman¬ OPA. Coupled with a vast War
deered.
No nation operating un¬ Savings program and restrictions

even

to

so

enterprise,

the

After 1929

income,
even

the government gave out $200 bil¬
lion more than it took in.
This

was

bankruptcy

un¬

Arsenal

the

control

unem¬

economic

the

of
Democracy,
Where did the
to intelli¬
money got It reached every segeconomic en-;
ment of the public, although often,
vironment in which they live.
inequitably, as profits, rents, in¬
terest fees, wages salaries or farm
End of New Deal
income. Part of the golden stream
The invasion of Poland by Hit¬

belief

circumstances to be construed
or as a

costs of

new

of these Shares having been sold, this advertisement

country $290 billion in
lost production; in hurrtan misery
the cost was incalculable-

on

de¬

stop sheriffs' foreclosures

running

million
their

of

and

bust,

belief

of

it into the

ran

nation in chaos

a

measure

The

Fourth

Fifteen

ployed and

been

inevitability

projects, unemployment and social zation of the nation required a
security,
and
minimum" swages totally planned economy. The Fed¬
were
eral Government ran the national
inaugurated.
Banks
were

about

Around the Corner"
CIO's Basic Principles
notwithstanding, nature did take
For a decade private
The CIO is convinced of two its course.
had been
completely
basic economic propositions. First, enterprise
"free."
It ruled industry and its
to let nature take its course
means,
friends i uled in Washington. Labor
in fact, to allow the
greedy and
powerful an unlimited opportunity was impotent and ineffective with
less than four million organized,
to
enrich
themselves
and
ulti¬
mately destroy us all. Second, we mostly in the construction-print¬
in
believe that with intelligent social ing and service trades, and
transportation. There had been no
controls
guiding
our
economy,
no
New Deal, no "social
within the framework of our tra¬ CIO,
ditional American democracy, wid¬ planning" or "dreamers" to serve
as whippingboys.
The "practical"
ening security and abundance can
"Prosperity

the

'
*

no

38)

-

(612)

16

THE

COMMERCIAL

Thursday, August

FINANCIAL CHRONICLE

&

l2, 1948

With Patten, Arnold & Co.
PORTLAND, MAINE—John P.
Ayer is now with Patten, Arnold
& Co., 477

If I Were

Mutual Funds

Congress Street.

Retail Salesman

a

(Seventh of

Series)

a

By HENRY T. VANCE,
Senior

By IIENRY HUNT

_

IATIONAL

SECURITIES SFrftlES

If I Were
The

Retail Salesman

a

series was contributed by Henry T.
Vance, Senior Partner of Vance, Sanders & Co., the nation's largest
seventh

article in

this

underwriters of. mutual funds, which include "M. I. T."

Prospectusyour

upon

or

vestor

Boston Fund and The Bond Fund of Boston.

from

securities

with assets
F/und, The

Combined assets of these

—that

four funds exceeded $277 million as of June

30.

of ; some

request from

investment dealer,

National

Partner, Vance, Sanders & Co.

Investing wouldn't be much of a problem if all of us had
sufficient capital to purchase a broad portfolio to minimize
risk; if all of us could devote our full time to supervising
our holdings; and if all of us could afford to sustain highlytrained research staffs. The average in¬

&

$225

Investors

Massachusetts

million;

Second

The

corporation

120 BROADWAY, NEW YORK 5. N. Y.

"Big Four" of the "Hub"

largest in Boston

Custodian Funds with assets of
in

Philadelphia,

Keystone

well

as

more

adopted

as

panies.

.*•

In
which

INC.

w

of

Capital Stock

third

place

is William

Investors,

organized in 1925 and had assets on June 30, 1948 in excess
million.
"Incorporated" is the third oldest mutual fund,

"M. I. T." and "State Street" having

preceeded it by about

on

INVESTMENT MANAGER

Request

AND

UNDERWRITER

vestment Corporation with assets of

Investment Counsel

75 Federal

a

up

The

and

Howard

Boston

Balanced

Fund

Fidelity Fund

cessful

risk;

and representing equal and pro-rata
assets and earnings of the company.
power

investor

•

companies are alike with
objectives. Some invest
primarily in common stocks, some invest only in bonds, others
include both these types of securities along with preferred
stocks. An investor thus has an opportunity to choose the
type or combination of types of investment companies which

apparent to all,

best suit his individual

The trend of over-all production and

"Accordingly, it must be assumed that
stocks

is

still

vw"v

warranted;

and

a

substantial investment

the

problem

is

one

and surest means of

of

The average

achieving satisfactory investment results.

investment in the older and better known com¬

panies amounts to around three to five thousand dollars, but
investments by individuals range from a few hundred dollars
to over a million dollars.
"v.-..\v•;'.w..>y-->yTy.'■y^yyy.y

charitable organizations, associations,

Schools, colleges,
:

requirements.

Small, medium and large investors alike have found that
onen-end investment companies afford one of the soundest

of spendable incomes is still very strong.

common

open-end investment

Not all

respect to investment policies and

Shortages are still unrelieved in automobiles, steel, building
and many types of heavy equipment. The prosperity is widely dif¬
fused among industrial producers and farming areas, and while tne
are

the fund

time simply by presenting his shares for redemption.
This redemption privilege is guaranteed in the basic legal
instrument under which the company operates.

power.

serious rift in sight.

withdraw his proportionate interest in

can

These

equal voting

at any

of Fundamental Investors, in his

"The present market is supported by high earnings, good yields,
and
the
prospect of well-sustained employment and purchasing

no

stock.

interests in the

"open-end" is descriptive of the fact that the

The term

there is

continuous

(2)

company is through ownership of shares of
shares are all of one class, having full and

"Fundamental" Favors Equities

dangers inherent in further wage-price advances

effectively utilize the two
(1) diversification—to
investment supervision by

qualified investment specialists.
In most cases, participation in an open-end investment

mutual fund business.

Edmund Brown, Jr., President
latest report to shareholders states:

they have

more

primarily because they

minimize

19,041,000

of the

to

vital essentials to investment success:

Nearly half of all mutual fund assets are currently lodged in
Boston, which if no longer the hub of the nation, may truthfully be
called the hub

income

than two decades and have firmly
their value and merits. They have proved suc¬

operation for

established

ol June 30

$30,845,000
33,035,000
26.747,000

George Putnam Fund

investment

Open-end investment companies are not new;

NET ASSETS
Eaton

this

distributes

and

regular quarterly dividend payments.
In
short the investment fund does for the investor just exactly
what the investor would do himself.
been in

as

invests the

in

shareholders

in the world in

FUND

2-9550

securities

these

recent years include:

Street, Boston

TELEPHONE LIBERT?

the simple

broadly diversified
and carefully selected list of securities chosen for their in¬
vestment merit; it collects the interest and dividends paid on

premium above asset value in the "open" market.

coming

on

The investment company

aproximately $72 million. "State

Other Boston funds that have been

investment com¬

,

pooled capital of its shareholders in a

Street" is not currently offering additional shares for sale as it feels
(hat too large a fund becomes unwieldy to manage. The high regard
in .which its management is held is indicated by the fact that its

shares command

Russell, Berg & Company

"

investors enjoy.

Henry T. Vance

one year.

Second oldest and fourth in size in Boston is the State Street In¬

Prospectus

in the ownership of

of open-end

investment company is
cooperative. It oper¬
principle that a group
of investors by pooling their capital in
one large fund can obtain the same ad¬
vantages
investment-wise
that
large
financial institutions and very wealthy

Originating
home some 10

its

Parker's Incorporated

A.

that

sort of an investors'

ates

was

$75

require¬
of them

An open-end

years ago.

RUSSELL BERG FUND

any

600,000

to this problem lies

than $180 million.

Boston

these

is, as individuals.

the shares

in the nation is Keystone

as

all

meet

investors in this country
have found that one of the best solutions

Boston, the home of the New England trusteeship tradition and
Ihe birthplace of the mutual
fund, is headquarters for Massachusetts
Investors Trust, the nation's largest, with assets of some $225 million
distributed by Vance, Sanders & Co.
Second

cannot

Most

You will be interested to know
some

research

meet

cannot

ments.

churches, insurance companies and a variety of other institu¬
tional investors utilize open-end investment companies to

tM

advantage for

"| American Business

Shares, Inc.

*

Prospectus

THE LORD-ABBEII GROUP
OF INVESTMENT COMPANIES

V

!§

upon request

M'C' 'C

SS SSgS

f

a

portion or all of their investment funds. In

all, several hundred million dollars of institutional and fidu¬
ciary funds are invested in shares of open-end investment
companies. This is especially significant because such organi¬
zations usually are governed by experienced trustees or
financial advisors who investigate carefully and intelligently
before investing.
In conclusion it can be said that

;!

ownership of shares of

open-end investment company represents in one security
participation in a sound investment program administered in
accordance with the time-tested principles of successful in¬

an

Lord, Abbett & Co.

vesting and affording

INCORPORATED

Funds

New York

Chicago

—

•—■

New Orleans

mon
—

a

Los Angeles

conveniently and economically a com¬
and

method of investing with a minimum of risk

sense

maximum assurance of

satisfactory results.

Certificates of Participation in

INVESTMENT FUNDS
investing their capital

SHARES OF CAPITAL STOCK OF

selecting* the more favored industries and most promising securities.
For certain companies the problem of adequate capital to meet the
requirements of high volumes and

IN

situation calls for discrimination

BONDS

ample treasury

resources."

(Series B1-B2-BS-B4)

LendrLease Technicians

PREFERRED STOCKS
(Series K.1-K2)

high prices is quite acute. This

and a preference for enterprises with

"These

'

ments

Things

Seemed

Company, quotes

R.

International Corporation as

COMMON STOCKS

Important," issued by Selected Invest¬
W. Gifford, Chairman of Borg-Warner
follows: •
^

"America's cash loans and grants of

(Series S1-S2-S5-S4)

materials will not in them¬

self-supporting. Sections of
machine must be niodernized.
. The
European Re¬

selves suffice to make Western Europe
her industrial

Prospectus from
your

The

local investment dealer or

of Boston
50

Congress Street

Boston 9,

Massachusetts




Prospectus
your

THE

may

be obtained from1

local Investment dealer,

PARKER

or

CORPORATION

and

the

Plan has the support of most of the

desired

result—a

greater

and

more

permanent economic

stability in Western Europe—is actually on its way

plished.
crease

ONE COURT STREET. BOSTON 8, MASS.

.

and

may

Keystone Company

.

American people, but it
not continue to receive this support unless the American public
Congress are convinced the funds are being used effectively

covery

European

productivity and raise

self-sustaining

and

not only In¬

the general standard of

nations (U. S. and the European bene¬
economically strong enough under a

living, but also help make-both
ficiary)

to being accom¬

The presence of American technicians .would

Volume

168

Number 4724

THE

COMMERCIAL

&

FINANCIAL

CHRONICLE

(613)

17

system of individual business enterprise to resist the lure of Com¬
munism.'

Fallacies and

Presidential Election Years
Hugh W. Long's August "New York Letter" has the following
to say about stock prices in presidential election years:
"Do

stock

prices

election years?
we

to

enter

the

generally advance or decline in presidential
This question is raised as Congress reconvenes and
campaign period when statesmanship so often bows

political expediency.
"Stock

prices generally advance in presidential election years.
The extent of the rise appears to be influenced by whether the Re¬
publicans or the Democrats win. Substantial price gains extending
beyond the election are usually experienced in years of Republican
victories.
marizes

This

is

shown

accompanying chart which
study prepared recently by Standard & Poor's Corp.

a

by

the

sum¬

ation but also any situation which

posits means an increase of 70%
(viz. from 14% to 24%) in coun¬

time the next

Congress

convenes.

try banks, 50% (viz. 20% to 30%)
in reserve city banks and 40%
(viz. 26% to 36%) in central re¬

term rate

on

It

has

PRESIDENTIAL

120

will

AVERAGE

THAT

EACH

OF

MAJOR

YEARS

PARTY

AT

THE

if
re¬

$10

alike,

could

and

riously affect the

se¬

itself.
made

economy

The

POLLS

argument may be
while authority is given

that

ties

to

short-

government

securi¬

increased, and
discussion of

some

step. The rediscount rate
further increased. More¬

a

be

can

the

The

be further

can

and

now

regular session of

there has been

eral Reserve.

There

reserves

puts every bank

which

2%

a

cities.

of

the

reserve

central

re¬

However, it has been

said that the final 2%

New

increase

be made in the

can

requirements
serve

York

and

increase in

Chicago has not

been necessary.

used.

It

makes

it

aanks to

policies,

powers may

as

if

Under

Section 301

extra

reserve

requirements

effect

the

are

put into
when banks

time

abfe

to

the

meet

at

least

requirements.

Sound bank management
requires
anticipation of such an action. I

believe Mr. Eccles has affirmed
this by testifying that every bank

before

is

use

I

A

Ml

I

M

I

J

I

J

A

I

I

S

IQINID

high price levels, there
continuing need for a
correspondingly
large
use
of
be

We must be careful not to

•

to

were

that the

bring

aasis

"The most recent

exception

was

1940.

This

can

be accounted for

largely by the unfavorable developments in the war and the growing
realization of our involvement in the conflict. The other two ex¬

ceptions were

1920 and 1932.

they

im¬

were

Federal

Reserve

is

Reserves

for

Non-

Member Banks

were

perous year.

iug stock prices during presidential

election years."

Another
with

in

connection

proposal

to

increase

bank

reserves
is that it aoplies
only to member banks of the Fed¬
eral Reserve System.
There has

been
if

testimony to the effect that

enacted

be

Fear of Fear

point

the

made

whether

pamphlet with the title "A Republican Administration
Would Foreshadow Business and Investor Confidence," National Se¬

proposal

apply

member

to

should

all

banks,

nonmember

or

raised

In

a

new

outstanding effect of the election of a Republican Adminis¬
of a period in American history in which

"The

tration would be the ending

the pendulum swung far to the left—it
normal American habits in economic

would mark a return to more
life.

The

days

of

'trial

and

expediency as the major guide would end. The era
of belaboring capital for all woes would be closing. These are both
psychological and actual factors.
A more even balance between
capital and labor would follow and usurpation of government by
elements hostile to the American way of life should terminate.
error'

and

"It is

of

often and

correctly said that business can adapt itself to

almost any set of rules.

But the disrupting influence of the policy of

expendiency is that the rules are constantly changed. Under a Re¬
publican Administration, not only more favorable economic attitudes
should exist, but continued rule changing should cease.
With a
rtrong personality as President and a Congress dominated by the
same party, we should see an increase of confidence of the Ameri¬
can people in their government and themselves; and an increase of
international confidence in the United States.

These influences would

on business and security mar¬
nothing to fear but fear itself, yet never¬
theless fearing it, should be over.

be of

the

kets.

The time of having

strongest favorable nature

There

have

as

been

to

questions

whether

this

in¬

reserve

applied

posal is enacted the banks will be
on notice to prepare for the
full
imposition of the require¬

put

the right to refuse redis¬
privileges to member banks
under appropriate circumstances.

ments.

future has in store for

This could be made the

convinced

a

nent.

have inflation, and
seems
convinced that

of

disciplinary action.

any necessary

The

means

Federal

proposal
to

Reserve

System

We do not know what the

beginning of
Now,

If

the

make

proposal

it

apply

gardless
serve

everyone

amended

and

of

or

the

not

they

Federal
a

Re¬

step would

the

state

banks

they charter
supervise. In effect, the re¬
serve
requirements imposed by

and

state

be

law

and

nullified,

regulation

and

in

ments dictated

by

would

will

be

host to

an

this

Beautiful

governmental

a

is opposed to the

team have been donated

Blue

List

by the National Quotation Bureau, with the

donating the tournament prizes for Municipal men.




in

has

been

able

to

do

was

immi-

was

we

inflation
afford

is
to

inevitable.
take

We

action,

any

This proposal is an emergency
It is proposed before an

action.

emergency
session of Congress.
Such an action, taken in haste and

voluntary and cooperative under the emotional stresses and
is an example of what strains of the present situation,

a

have

been done

the

under

be

not

may

as

well

thought out

leadership of the Federal Reserve

as

System, had the System been will¬
ing to accept and use that prin¬
ciple rather than to ask for addi¬

We oppose the proposal to give
the Federal Reserve power to in¬

tional

powers.

We

emphasize that the Federal

Reserve

Board

and

already

have

sufficient

and that the

the

granting of

Treasury
powers

addi¬

any

tional powers, particularly powers
as
drastic
as
those
proposed,
be

given only

evidences
needed

what

of

and

now

specific

on

increases

before

are

the next

it should

be.

bank reserve

crease

because there is

it

is

of

requirements
evidence that

no

immediately

warranted;
rected

necessary

because

it

inflation;

because

or

di¬

not

is

the fundamental

at

elements

causes

includes

it

of

danger to the econ¬
because it is an emergency

omy;

action

taken

litical

under

and

unusual

emotional

stances; because it is

po¬

circum¬

action in

an

several

The second major question con¬

cerning the

the
in¬

major

ques¬

the

these

question

increased

this

as

to

reserves

connection,

certain facts
First, the
voluntary credit control program
the

American
is

Bankers

Asso¬

being

actively
con¬
already produced
results.
Second, the Federal Re¬
serve
and the Treasury already
has

have powers which

are

proposal

will

be

ef¬

banks

holding

large
amounts of government securities
and. the Federal Reserve ready to
absorb them, it is not apparent

how

increased

ments

can

reserve"

reduce

require¬

reserves

The banks

avail¬

can

acquire those

reserves.

proposal would not apply
other sources of credit or to

to

direct

indirect

and

lending

agencies.

government

The

proposal
aims to restrict only the credit
activities of member banks and
all

other

types of lenders
continue lending as they

to

doing now.
This proposal

adequate

can

be

nullified

by other inflationary acts or other
causes
of
inflation outside the

is

addi¬

all

are

unused

powers

concerned with

the

general problem of inflation and
high prices. There is no easy an^swer

or

easy

problem.
which

is

can

painless.

meet

the

single

no

correct

nothing that
many

to

way

There

will

act

it.

There

is

be done that will

have

There

been

of excessive govern¬

years

ment

spending,

icits,

and

easy

government

def¬

government-sponsored
money.
These have brought

to

our
present difficulties, v If
problem is to be corrected,
these policies must be reversed.
us

the

What

is

needed

is

a

consistent

anti-inflationary government pol¬
icy.

The basic answer to
flationary problem is to

our

so

in¬

con¬

duct our fiscal aifairs that we in¬
sure

budget

surpluses which, ap¬

propriately used,
necessary

banking system.

unnecessary

an

the

cause
adequate,
already exist.

sell ;be

are

should be pointed out.
of

it

We

With

free

requirements which
consideration.

is

reserve

not

or

fective.

tional reserve

careful

new

whether

to

regulatory powers of
governmental agency; and be¬

a

is

it

cause

tion

Requirements

This

proposal.
are

tinued and

sterling silver bowls for each member of the winning

Association

leaves

ciation

events.

new

place
require¬ government securities in order to

are
necessary,
and particularly
whether they are necessary now.

all-day tournament consisting of some 20

of

recession

which may prove to be the spark
that sets off a drastic reversal.

level

bank

enactment

laws. What the American Bankers

tions about the proposal for addi¬

In

Club

the

able for loans.

their

would be substituted the

The first

The Dallas Bond

individual

and

without

to

an encroachment on the
prin¬
ciple of dual banking, and an in¬
vasion of the rights of the states

whether

the star attraction of the day on Monday, Nov. 15.

local

re¬

be

need

Dallas Country Club will be

to control the use of credit at the

At the

us.

everyone

be

can

all- banks,

System, such

There

the beautiful links of the

power

Effects of New Reserve

is

to

whether

of

members

are

der

on

natural

of

source

1947

nonmember

clusion of non-member banks un¬

Golf

a

banks.

Association

NSTA CONVENTION—GOLF TOURNAMENT

been

already

regular session of Congress, why a
single limited area of the in¬
they are needed, and what effect flation
problem; because the pro¬
banks. Up to this time, state laws they will have on the credit struc¬
posal has such broad implications
and
the
have controlled the reserve re¬ ture
economy
of the that it needs further extensive
quirements for state nonmember country.
study as to its possible effects; be¬
creased

legally

agency in Washington.
For the foregoing reasons

NSTA Notes

has

count

should

banks.

curities and Research Corp. concludes:

this

to

produce dis¬

can

reactions.

Reference

neces¬

Board

handling

given

could

Increased

national

a

mechanism.

program

mediately fully imposed.

„

depression years. But, we are now in a very pros¬
Production and employment; are at approximately ca¬
pacity levels and it is strongly indicated that this will continue
beyond 1948. Corporations, as a group, are reporting increases in
earnings and dividend payments. Therefore, business conditions in
1948 should encourage repetition of the historical pattern of advance"These

if

as

on

made to the fact that if this pro¬

Rude

cannot

effect

Credit

delicate

a

astrous chain

more

same

con-

reversal

cure proposed does
reaction worse than

a

is

leadership, information and

only three

economic

an

freely prophes'ed and wished
for by the Soviets.
We must be

so

constitute

In
presidential election years since 1900 ments.
A study of conditions during those authorization
of
any
such
in¬
vears
throws further light on the prospects for the stock market creased reser ve requirements,
even
though only in the form of
during the balance of 1948, so far as it may be influenced by the
election background.
authority, might 'well have the

"There

a

ribute

and its 12 Federal Reserve Banks

when the market did not advance.

Its

for'it.

need

at present

will

would have to

keep itself in posi¬
reserve require¬
principle, legislative

granted.

is

the

on

f business activity is to be con¬
tinued at the present volume and

tion to meet these

F

I

J

it

based

responsibility of obtaining
sary information on
the

the

these

.

Credit has two aspects. One reto
consumption, and the

the disease.
the Fed¬

of

be

and

/,

;

ates

eral Reserve Act, the Federal Re¬
serve Board
is charged with the
use
of
credit and controlling the proper
use of credit.
With that authority,

used

It tends to
system uniregardless of varying

banking

ocal credit needs.

not

the powers actually were fully in
This is true because it is
inevitable that these powers will

effect.

formally,

sure

Its Powers

necessary

|3e used, almost

effect.

Federal Reserve Has Not Used

on

for
modify their investment
in anticipation that the

positions.

the

credit.

action

was

tionary

notice that these powers may be
i

freeze

credit

remains

taken along
this, it may not necessarily be
immediately exercised. As a mat¬ these lines in December and Jan¬
ter of fact, mere
This had a salutary, cau¬
passage of such uary.

bank

thqir individual loan and in¬

vestment

government

There

law creating the
authority to
invoke these drastic increases in

of

there is also the power to other to production. The use of
securities now credit follows prices and business
held in trust funds or by the Fed¬ volume. Someone has to ask for
sell

do

a

any elements of danger in it. The
proposal is an action which hits
member banks equally, regardless

over,

moderate increase. It

a

is a drastic proposal which if put
into effect will affect banks and

(190^-19^^)

WON

that

some

This cannot by any means

called

3e

ELECTION YEARS

THE

immobilize

$11 billion of the assets of the

Dorrowers

AN

estimated

been

put into effect these increased
serves

could arise between

such

city banks.

serve

:>anks.

IN

only the present situ¬

that the proposal for increased re¬
serves as
it affects demand de¬

or

STOCK PRICES

Dangeis in New Credit Cuibs
to meet not

(Continued from page 4)

can

provide the

anti-inflationary effect.

The powers granted in this pro¬

posal will not reduce prices

or the
living unless used so ex¬
tensively that they result in de¬
nying needed credit to productive
business, thus pulling down both
employment and production.

cost

of

The

third

whether

or

major

question

is

Joins Bowman Associates
(Special

to

The

PACIFIC

Financial

Chronicle)

PALISADES, CAL.—

Hans Klehmet II has become
nected

with

Bowman

con¬

Associates,

15316 Sunset Boulevard.

He

was

formerly with Klehmet & Co. and
not this proposal has (Gross, Van Court & Co...

<■

(614)

18

THE

COMMERCIAL

FINANCIAL

&

CHRONICLE

Thursday, August 12, 1948
for

Let's Get This

Canadian Securities
by the leading monetary authorities of the world but little
has been achieved

nation.

by

as

result of the efforts

a

In most cases the

compulsion

the

of

success

designed for their elimi¬
•'* Vf—+—:

■;

,

increasingly favorable for serious
consideration

In other

concerned

regard

exchange

situations

purely

the domestic point of

the

cases

countries

a

usually overlooked where it
would be possible to take the in¬
itiative to blaze the trail towards
to

return

currencies.

free

conversion

Canada,

as

of

wartime

a

.measure, was obliged to adopt a
strict system of exchange control,

important feature of which

an

establishment

the
one

rate of

of

was

th'an

more

exchange.

The official

market continued to be employed
for commercial purposes but the

proceeds of capital and other

non¬

commercial

con¬

vertible

operations

were

only

at the unofficial
rate of exchange quoted in New
York.
Although this permitted a
certain

of

measure

U. S. investors in

freedom

to

Canada,, the lim¬

ited nature of the so-called

"free"

dollar market and its divorcement
from any effective control by the
Canadian authorities, has been a
constant

of

cause

embarrassment

cal

alone it is logi¬

reason

fo

suppose
that the related
problem of the U. S. investment
position in Canada and the Do¬

minion's "exchange step-child" in
New York is receiving constant
in

attention

quarters.

Canadian

official

It is also reasonable to

that in the absence

assume

of the

impact on the Canadian exchange
position of the British economic

crisis, the solution of this prob> Jem would before now have been
in

the

realm of practical politics.

As matters
ion

now

appears

to

surmounted

change

reserves

-comfortable

are

level

son

of

at

now

of

mately $750 million
•

the

the

compari-

with the December low-point

million.
Of still greater
importance is the fact that as a
$460

result of the re-orientation of Ca¬
nadian

the

international

diversion

of

commerce,

exports

to

com¬

tween

this

country from soft-currency areas,
is steadily reducing the chroni¬
cally unfavorable U. S./Canadian

Consequently

ment,
would

economic

but

develop¬
development

also

of

such

provide the solution
problem of Canada's in¬

the

direct

indebtedness to this

the

With

try.

a

coun¬

of

removal

needs

ex¬

change control and the disappear¬
ance
of
the
"free"
exchange

official

minion

convertible

rate.

Thus

authorities

the

would

undue strain

inflation"

At

the

of Canadian

empha¬
position of

but

activity

re¬

Free funds

steady despite continued oferings in
connection
with
the

were

November
Stock

b

o n

prices

d

proportion expect capital
outlayiih 1949 to closely approxi¬
mate

that

small number

Carroll has

agency.
Mr. Caroll has worked in
the editorial and financial adver¬
_

departments
"Times"

and

of

the

New

special
agent for the Federal Bureau of
as

a

Following
war¬
time service as a bomber pilot, he
joined the engineering staff of
Aero
Insurance
Underwriters,
and more recently was associated
with the public relations staff of
the National Board of Fire Under¬
writers.

Definitive Netherlands

A. E. AMES & CO.
~

INCORPORATED

Bonds Now Available
The

Chase

New Yqrk
TWO WALL STREET

NEW YORK 5, N. Y.
V

/J-r.vC"'<V'.y

WORTH 4-2400

dom

NY-l-1045




of

National

announces

the

Bank

of

A

relatively

planning

are

on

10-year

form,

May
are

1,

1957,

in

definitive

available for delivery in

exchange for temporary bonds, at
its Corporate Trust Department,

in¬

program

Factors

capital expenditures after

1948 is
The

"a

are

structure

war

food

will

handicap"

on

expansion of plant fa¬

"As

square

severe

pre¬

a

result of this

which

to

now

cost

build
cost

spiral,

$3.20

per

before

use

company

$15.20 per square foot." To avoid
borrowing funds many companies
report that they are constructing
only necessary additions to their
present plant facilities.
Another
for

reason

often mentioned

this

"tapering off of capital
needs" is the completion of many
of the postwar improvement plans
which were set .up after V-J Day.
These plans, many of which ran
for three years, are reported as

of their

part

combination

a

to

meet

of

the

of

the

two

large propor¬
of their capital needs.

re¬

and

second

and
pro¬

schedules"

rather

than

a

companies

sur¬

tures.

Retained Earnings

Companies reporting that earn¬
reserves took care of much
of their capital expenditures "had
ings

made, Aug. 10, at $24
by an underwriting
group headed by A. G. Becker &
share

Co.,

Inc.

Of

the

total offering,
being sold by
the company to provide additional
working funds which are to be
250,000 shares

available

are

its expansion and
plans, and 100,000
being sold by two indi-

for

development
shares

are

divual

stockholders.

The

new

earlier this month through an ex¬
change of stock.
Ashland is one
of the principal figures in the oil
industry in the Ohio Valley, with
refineries

at

Catlettsburg,

Ky.,

well." Actually, the greater

ing

as

number
out that

of these

companies point
earnings did not pay for
50-75% of the totai

capital needs.
Most of the iron and steel

com¬

report that a relatively
high proportion of their capital
needs were met out of retained
earnings. This was also true of
panies

the

75%

business

has

Great

Depreciation

reserves

provided

for

anywhere from 6of the total capital expend¬

funds

most important source for funds is

iture for the

reporting companies.

"current depreciation." About half
of the companies surveyed rely on

The greatest

number reported that

depreciation

reserves

accounted

of

included

the

opera¬

Lakes

tankers, a
large industrial fuel oil business,
refining facilities and, in recent
years, a growing interest in pro¬
duction
The

properties.
company,

tuted

is

pendent

Oil

granted

as

of

consti¬
principal

now

of the

one

stockholders

was

American

Co.

Kuwait.
Ashland

the

Combined
and

Inde¬

which

recently
important oil

concession in the neutral

Allied

zone

of

earnings*

of

amounted

to

$4,343,000 in the last fiscal year,
and

Depreciation Reserves
for

linois basin and elsewhere. Allied's
tion

than

more

ings.

Next

was

per

pipe line facilities and producing
properties in Kentucky, the Il¬

earnings furnish the
bulk of the capital requirements
for more than three-quarters of

surveyed.

stock

extensive river transportation and

Retained

companies

An offering of 350,000 shares of
Ashland Oil & Refining Co. $1.20
cumulative convertible preferred

to resort to other means of financ¬

being completed late this year and
early. - in 1949.
In other cases, textile manufacturers, the major7
"large amounts of capital were ity of whom paid for about 05%
expended"
to
purchase
plants of their capital expenditures with
which were being leased from the retained
earnings. On the other
government during and immedi¬ hand, the majority of petroleum
ately after the war. Still another companies (all of which are com¬
cause
of large capital
expendi¬ paratively large concerns)
pay
tures was the "retooling required" for
"only about one-third of their
during the postwar period.
capital needs" from retained earn¬
Sources of Capital

"Offers Ashland Gil Pref.

veyed, about 5% of the total, fi¬ stock will be convertible into com¬
nanced "a substantial part of their mon, share for share, prior to July
capital needs" through stock or 15, 1958.
bond
issues.
A few
companies
The current financing follows
stated that they resorted to bank
closely on the merger of Allied
loans
and
insurance
company
Oil Co., Inc., of Cleveland, into
loans
to
meet
capital expendi¬ Ashland,
which
was
effected

the

a

pay

In practice,
companies report that they

most

Some

several factors.

to

capita] expenditure^.

methods

The general downward trend of

that King¬

Netherlands

3%% external sinking fund bonds
due

-

of rearmament

method

this

tion

a

Investigation.

CANADIAN STOCKS

1948.

Underlying

vail

William H. Long, Jr., President
of Doremus & Co., announces that

York

CORPORATION

for

creasing capital expenditures.

continued

joined the
public relations department of the

MUNICIPAL

expect decline in capital.outlays in 1949 and do

high construction costs which

tising

of

a

require

stepped-up

use

shifts

duction

Capital expenditures by industry in 1949 are expected to show a
trend, according to the latest monthly survey of current

attributed to

F.

will

program

"increasing

downward

an

Robert

the

;

look for increased capital needs because

generally

earlier rally led by basemetal and Western oil issues.

after

increase

The general belief is that
armament

simultaneously dumped overboard.

were

ration executives
not

"redemptions.

declined

With Doremus & Go.

PROVINCIAL

the problems
vigorous "anti-

course,

to

ties. 1

cilities.

GOVERNMENT

still

nificant

low ebb.

Rearmament

is not
capital
needs of most of the companies
surveyed. According to many of
the
cooperators,
the
expansion
which was carried on during the
last war emergency and the re¬
cent
postwar period
"has been
sufficient to take care of any ad¬
ditional production which might
be necessary in the near future."
expected

ternal and internal sections of the

During the week there was an
tendency in both the ex¬

a

of

Outlook for Capital Outlays

again

Robf. F. Carroll Is
CANADIAN BONDS

Effect

The rearmament program

easier

market

retained

finance

building costs
earnings and de¬
preciation charges were sufficient
to meet other capital needs.

business practices conducted by the National Industrial Conference
Board. A majority of the company officers cooperating in the survey
look for a decline although a sig-^

mained at

used in several

were

to

while

National Industrial Conference Board survey indicates most corpo¬

di¬

no

this unsatisfactory market.

bond

loans

cases

expansion of physical plant facili¬

obliga¬

Canadian authorities have
anomalous

mentioned
Large in¬

for funds.

present

New York in respect of which the

the

surance

in

source.

companies

sources

third

J.

tions held in this country are sold
in the "free" dollar market
in

responsibility

other

company

its works

the

time the fact that the proceeds of

redemptions

average

secured about half its

Some

a

the proceeds of new loans raised

country.

companies report¬

capital from this

commitments, I

by* this

needs

policy we could stand readily enough if
wisely pursued—providing the New Deal and all

exchange reserves these
operations could be financed with
this

this group

quite skilled in blinking and ignoring.
Such

capital

The

needs.

se¬

every

right policy."—Allan

of

are

their

A handful of

rather obvious fact is

re¬

official

in

international

our

used

ed that long-term bank loans fur¬
nish
a
portion of their capital

policy by the Reserve System—and this
one which many have grown

Do¬

on

of

of

believe that it is the

By and large, there

sponsible for the provision of the
S. dollar counterpart, and in
event of

sure

which would be encountered in any

at

be

government

{

which

method.

Sproul.

U.

the

and

cannot

market the proceeds of the re¬
demption of Canadian internal ob¬
ligations in the hands of U. S.

would/ be

a

companies

capital needs stated that they se¬
cured, on an average, about 46%

getting results we should
have to use our powers, with or without this pro¬
posed added authority to increase requirements of
member banks, without regard to interest rates and
the government security market. Our action would
have to be drastic enough to lower the money in¬
come of a
large section of the consuming public. To
accomplish this by over-all monetary or credit ac¬
tion would probably mean a serious decline in pro¬
duction and employment. In view of our domestic

only would Canada be, in a more
favorable position to attract new
U. S. capital which is indispens¬
able at the present stage of the
Dominion's

have

we

bond issues.

short-term bank financing to meet

"'wind that blows.

"In order to be

not

balance.

trade

and

or

Those

large demand liability,

a

curity market sensitive to

Allan Sproul

countries, the Do¬
minion's borrowing scope in this
country would be widened im¬

measurably.

stock

using this

boom, we now have the
complication of a govern¬
debt of $250,000,000,000,

cludes

the two

ex-

approxi¬

in

insurance

S.

high standing of Canadian credit

rect

eco¬

the

U.

em¬

con¬

which is in continuous process
of refunding,, and which
in¬

in this country, but with complete
freedom of capital movements be¬

sizes

successfully

immediate
and

to

a

ment

The recent
$150
million
Dominion by a

of

panies has fully demonstrated the

have

difficulties

nomic

loan

of

group

stand the Domin¬

its

ing

added

/'free" dollar market.
private
granted

resorting
to
capital
most
cases
large, wellrknown concerns. The typical com¬
pany in this grojup accounted for
45% of its capital needs through
secure

in

are

'tried and true' method of end¬

capital funds between the
two countries and the
concomitanj;
of* the
embarrassing

the

For this

to the difficulties of

of

abolition

holders

both sides of the border.

•on

removal

The
companies
public flotation to

traction of income. And to add

ment of

and

is

a

the

from

view

however that

case

of

becoming

are

the restrictions on the free move¬

change position in general.
one

conditions

their

blind eye is turned to the possible
effects on
the international ex¬

There is

Thus

contraction of

the

"a substantial

supply, rise in in¬

ployment and production,

mal procedure.

•

terest rates,

multiple' system has been virtually dictated

economic^

necessity and current conditions
do not yet permit a return to nor¬

;

of the money

capital

their

of

for
proportion of their
capital requirements from liberal
depletion charges."

work through credit measures
to meet existing problems in the old-fashioned
way,
however, you will really want to aim at credit con¬
traction., The steps in the process are restriction

undesirability of multiple exchange rates is fully recognized

35%

,

Many companies that ex-t¬

act natural resources, such as
mines and oil concerns, pay

"If you want to

By WILLIAM J. McKAY
The

Straight

about

outlay.

to

$5,030,000

in

the

six

months ended March 31, 1948, the

latter
more

figure
than

18

requirement
shares

of

stock to be

being equivalent to
times the
on

the

convertible

outstanding.

dividend

$450,000
preferred
f

Volume

THE

Number 4724

168

COMMERCIAL

on

Foreign Financial Aid

As Chairman of National Advisory

Council

September, 1948,
year's top figure
by almost 300,000, but will be
under the war peak of 2,577,000

financial problems of postwar period. Says more than
$18 billion of U. S. assistance was made available during first

V.

finan¬
cial problems
of
the
post¬
war
period
major

describes

and

the

b

a c

k-

ground of the
Foreign As¬
sistance
Act
1948.

of

The

report

deals

also
with

recent

developments
John W. Snyder

connection

in

with

glo-American

the

Financial

ment and credits extended

United

cies

Bank,
tions

as

the

as

well

as

An¬

Agree¬
by the

Government

States

such

agen¬

Export-Import

with considera¬

underlying the extension of

financial

assistance

to

China,

to

the German Bizone and to France,

Italy and Austria in the form of
interim aid.

A

fairs

International

of

the

tary Fund

resume

the

and

of the af¬

Mone¬

International

Bank for Reconstruction and De¬

is given

velopment

for

the

six-

month period Oct. 1, 1947 to Mar.
31, 1948.

In its review of the postwar in¬
ternational financial situation the
Council

pointed

out

that by the

middle of 1945 it had become clear
that many foreign countries

urgently

need

assistance

would
in the

reconstruction of their economies.
In

addition

to

widespread physi¬
cal damage, the war produced se¬
rious economic dislocations.

The

report cites the difficulties in con¬
nection with the balance of pay¬
ments

between

these

and the United States.
and

Dec.

in

countries
In the two

one-half year

31,

received

goods

1947,
a

period ending
foreign countries
$41,600,000,000
services from the

total of

and

Foreign aid programs
States
provided
$14,600,000,000 and the countries

200.000,000.
the

of

$5,300,000,000 of their gold

used
and

United

dollar

As

reserves.

pointed out in the report, a
of $18,200,000,000 of United

entire

period

one-half

while

the

slightly

all

of

aid

remainder

than

more

was

in loans

constituted

grants.
A

comprehensive

appendix

of

statistical tables summarizing the
United States foreign assistance

since July, 1945, is con¬
tained in the report. These
tabjps
not only shows the amounts made

program

new

bringing them would
Thus Brooklyn

Union Gas, after

reporting a def¬
icit of 670 in the first quarter this

but about 20% below the wartime

year, netted
770 in the second
high in 1942. In other words, the quarter.
'
«
^
purchasing power of the con¬
Sharp shifts in earnings are not
struction dollar has declined until
the amount of work

estimated to

confined to the manufactured gas

cost $18 billion today could have
been done
in 1939 for around

be

almost

half

billion

dollars

able to supplement gas
by Panhandle Eastern
compared on Pipe Line with gas stored during
the basis of the revised concept of the summer months in the Austin
a

ahead of last year.
1947 and 1948 are

Estimates for

public utilities construction which
now
includes certain items for¬

may

be

delivered

Field

three

(Michigan), and in two or
by gas- delivered by

years

merly considered as capital ex¬ the new pipe line being con¬
penditures
for
equipment,
as structed by the parent company,
well
as
electric
light
and American Light & Traction.
power
construction financed by
Columbia gas recently reported
the Rural Electrification Admin¬ share earnings for the 12 months

postwar

resumed

publication

tion

gold

on

of informa¬

transactions

leading countries which

with

was

dis¬

work, public construction activity
is expected to reach a total of
$4.1 billion in 1948, a 35% gain
over

1947.

continued during the war.

peak.

The current outlook for

employmentf-

revised estimate

with rate increases

"out of the red."

of them

some

maintain

total

are

now

dividend;

payments for this year at the 1947
rate of 750 (150 quarterly and 150
year-end extra).

CblumbiA Gas is the outstand¬
ing company in its field, serving a
population of 7.000,000 people in
Ohio, Pennsylvania, New York,
West

Virginia, Virginia, Kentucky

and

Maryland. The average resi¬
dential consumption per customer
is 91 mcf compared with 76 for
the

entire

natural

gas

industry;-

the average residential rate is 570

mcf compared with 630 for the
industry.

per

The company is fortunate
in
having large underground storage

The

facilities.

industry has
storing
large
gas in underground
caverns
(old
and
depleted gas
fields) during the summer when
that

found

amounts

gas

gas

by

of

are lowest, these re¬
be drawn on to meet

demands

serves

can

heavy winter demands. By 1950
Columbia
expects
to
store
an
amount of gas about equal to its
total sales in 1939, and about onehalf the 1947 sales.
The company has a heavy con¬
struction program which may re¬

additional financing over
or three years.
Cur¬
requirements
have
been
taken
care
of
by an issue of
$45 million debenture 3V4S sold
last March.
Eventually, perhaps,
some
additional common stock

quire

the next two
rent

indenture.

total

Labor, revealed that about 2.4 million workers will be em¬
ployed by construction contractors next September, when 1948 con¬

a

hard struggle because of rising fuel costs but
reversing the trend of earnings, <3>-

ended June 30 of $1.17 vs. $1.43
istration, previously excluded,
for the preceding 12 months. The
by continued
commitments ■j Given impetus
decline in net income occurred
made by the major United States expansion of peacetime programs
for educational, hospital and in¬ despite an increase of 9% in gross
Government lending agencies to
stitutional building, highway, revenues (revenues for the last
each foreign country.
With this
quarter were down slightly, how¬
sewer and water construction, and
because
of
unseasonably
report the U^S. Government has conservation
and
development ever,

struction activity is expected to be at
upon

expenditures

the

Latest estimates of the Bureau of Labor Statistics, U. S. Depart¬

of anticipated expenditures total¬

1947

try but also, in the case of ipans,

ment of

contract construction

pected

have to be offered in order to
the equity proportion of
capitalization at the 50%
level, as required by the bond

available to each recipient coun¬

Reports record of $18 billion for new construction in 1948 with
2.4 million workers by September. This compares with previous
estimate of $15.2 billion and slightly more than 2 million workers.

based

of

ume

In this department last week we pointed out some of the cross¬
currents in recent electric utility earnings. The same condition
pre¬
vails in the gas industry. Manufactured gas companies have had a

companies, however, some of the
total
companies which retail natural
States assistance was made avail¬
gas have also found the going dif¬
$8% billion.
able during the two and one-half
ficult, particularly in the past six
It is anticipated that the dollar
months. They were unable to get
year period of which all but $3,volume of new private work will as much natural
600 000,000 was utilized by the end
gas from pipe
total $13.9 billion this year, a gain line distributors as
of the period.
Despite the fact
they needed
of close to $3 billion over last to take care of old and new cus¬
that more than one-half of all
The expected $7.1 billion tomers, despite curtailments on
United States foreign aid was re¬ year.
for
privately
financed industrial consumers, new houseceived by those countries which outlay
later became participants in the residential building represent an heating business, etc.
Hence, it
increase of 35%
over
1947 and was
necessary
to
use
standby
European Recovery Program, the
accounts for nearly two-thirds of manufactured
unutilized funds as of Dec. 31,
gas plants, buy ex¬
the probable gain in all private pensive propane, etc., with result¬
1947, were barely sufficient to
work.
A 65% rise in expendi¬
meet the need for aid until the
ing disastrous effects on earnings.
tures for commercial building is Thus Michigan Consolidated Gas
start of that program.
expected to bring private non¬ for the 12 months ended March 31
During the first year of United
residential building as a whole to reported share earnings for only
States postwar aid, assistance was
$3.8 billion, despite the fact that 430 compared with 870 in the pre¬
primarily in the form of grants
such as those extended through industrial building will probably vious year, and the company has
be
16%. below
the
1947 total. asked for a rate increase to re¬
UNRRA, while in the next year
to a 6% return
and a half assistance was mostly Privately] financed public utilities store earnings
construction, at $2 % billion, will basis. Next winter the compahy
in the form of loans.
Over the

BLS Raises Estimate of New Construction

is

Columbia Gas

dollar vol¬
construction ex¬

for this year will exceed
by
slightly
over $4 billion, or 29%.
By con¬
trast, physical volume w in 1948
Mar. 31, 1948.<£
(dollar volume expressed in 1939
The
report United States while their exports
prices) probably will be only 15%
analyzes
the to this country were only $19,above
last
year's
performance,

,

,

last

in August, 1942.
The unprecedented

one-half years following war.

Secretary of Treasury, John W. Snyder, as Chairman of the Na¬
Advisory Council on International Monetary and Financial
Problems, on Aug. 4 transmitted to the President and to Congress a
report of the Council's activities during the six-month period ending
V

un¬

for

will exceed

major

tional

19

employment

construction

anticipated

tary and Financial Problems, Secretary of the Treasury

two and

and

(615)

The total amount of con¬

skilled.
tract

International Mone¬
analyzes

on

FINANCIAL; CHRONICLE

semi-skilled

million

Snyder Reports

&

ber

of

publicly

however, is

now

financed

units,

expected not to

Hatsey Stuart Offers
G, & 0. Equipment Issue
Halsey, Stuart &
associated

Co. Inc. and

underwriters

on
Aug.
$3,600,000 Ches¬
apeake and Ohio sixth equipment
trust of 1948 2%% serial equip¬
ment trust certificates, due $360,000 annually Sept. 1, 1949 to 1958,
inclusive.
The certificates, issued
under the Philadelphia plan, were

10

were

awarded

re-offered,

subject

to

Interstate

Commerce Commission authoriza¬

warm

weather).
Stuart

President

M.

Crocker,

may

keep

total

Peter

Morgan Offers »
Kentucky Oil Stock

An issue of 299,900 shares of
of utility an¬
alysts, stated: "Expenses were in¬ capital stock of Kentucky Oil &
creased not only by high labor and Distributing Corp. was offered (as
material costs, but by the neces¬ a speculation) Aug. 11 by Peter
sity of supplementing the system's Morgan & Co. The stock is priced
available gas by large quantities to the public at $1 per share.
Proceeds of the offering will be
of expensive, liquefied petroleum
and manufactured gas.
The un¬ be used by the company princi¬
precedented demand, the shortage pally for development work, re¬
of natural gas and the long pe¬ pairs and additions to refinery,
riods of cold weather during the new equipment, payments on pur¬
past winter necessitated the use, chase price of certain properties
for the first time, of large quanti¬ and equipment, and working cap¬
ties of manufactured gas and of ital.

addressing

a

group

liquefied petroleum gas, which are
normally intended to be used only
during a few very cold days of the

The company is engaged in the
production, refining, and distribu¬
tion of petroleum products, both
winter season."
crude and refined, and expects to
The company's reserves in the engage in the marketing of motor
Appalachian (eastern) fields have accessories, household appliances,
for some time been inadequate to staples, agricultural tools and kin¬
meet growing demands, and hence dred items.
Columbia
has
signed
contracts

7,500, compared with 20,tion, at price:? to yield from 1.65%
000 anticipated previously.
Ad¬
to 2.75%, according to maturity.
•the Bureau
of Labor Statistics justment of the Bureau's public
Proceeds will be used to pro¬
and the Office of Domestic Com¬ housing estimate follows the fail¬
vide for not more than 100% of
merce.
Estimates made last No¬ ure of Federal housing legislation
the
cost of the
following new with pipelines tapping the huge
vember had placed the 1948 dollar to materialize earlier in the year.
standard
reserves
in the Texas and Panama Bonds Drawn
gauge railroad equip¬ gas
volume
of
new
construction at
The
current
estimates
assume
mid-continent
fields
(Tennessee
ment estimated to cost approxi¬
$15.2 billion and peak contract that prices will continue to rise
Gas Transmission, Texas Eastern For Redemption
mately
$3,690,692.40:
12
Type
construction
employment at 2,- gradually during the balance of
Transmission, Texas Gas Trans¬
0-8-0 Switching Locomotives and
The National City Bank of New
150,000 workers.
1948, with average prices for the
and
Panhandle Eastern
Six Type 2-6-6-6 Freight Loco¬ mission
York, as fiscal agent, is notifying
year from 10 to 15% above 1947.
Upward revisions were made
Pipe Line). But the acute short¬
motives.
partly to allow for the enlarged It assumes also that no major
of
steel
pipe is* delaying holders of Republic of Panama
Associated in the offering were age
business recession
or
important
scope of the definition of public
scheduled construction program of 26-year 3%%
External Secured
A. G. Becker & Co.* Inc.; Gregory
stoppages
affecting con¬
utilities construction recently work
the pipe line companies, and re¬
& Son, Inc.; First of Michigan
Refunding Bonds, Series B, due
adopted
by the
two
agencies. struction will occur this year. In
cent deliveries have been about
But even exclusive of that adjust¬ considering the influence of de¬ Corp.; Freeman & Co., Hirsch & 7% below scheduled amounts. By March 15, 1967 that $113,000 ag¬
fense preparations on construction Co., McMaster Hutchinson & Co.,
Dec.
1
the
ment, the estimate made in No¬
deficiency
is esti¬ gregate principal amount of the
Wm. E. Pollock & Co., Inc., Mulduring
the
next
six
vember was raised by about 12%, activity
mated at 20% below the scheduled Bonds have been selected by lot
laney, Wells & Co., Alfred O'Gara
primarily
because
expenditures months, allowance was made only
figure.
for redemption on Sept. 15, 1948,
& Co. and F. S. Yantis & Co., Inc.
sums
already
appropriated
for new residential construction for
When pipe does become avail¬
at 102 Ms % of the principal amount.
and contracts authorized.
have been advancing more rap¬
able and the supply of natural gas
Holders and owners of the drawn
All but about 200,000
of the Grimm & Co. to
idly- than anticipated last fall.
increases, it is expected that net
This larger volume reflects the 2,400,000 workers expected to be
earnings will in due course follow Bonds are to present them for
Admit Haley
unexpected predominance of employed by contractors in Sep¬
the upward trend indicated by the
payment at the head office of the
higher-priced housing thus far tember will be working at the site
Sidney W. Haley will be ad¬ constantly increasing demand for fiscal
agent 55 Wall Street, New
this year over homes for moder¬ of
construction
projects.
Well mitted to partnership in Grimm & gas.
Should the anticipated in¬
ate and low-income families.
over half the site workers will be
Co., 44 Wall Street; New York crease in gross revenues fail to York, N. Y. The fiscal agent also
Remaining unchanged is the skilled mechanics. New residen¬ City, members of the New York produce a satisfactory gain in net Announces that on Aug. 4, 1948, a
Bureau's earlier estimate of 950,- tial building is expected to absorb Stock Exchange. Mr. Haley was income,
relief
may
be
sought total of $5,000 of the same issue,
000
new
permanent
nonfarm a third of all site workers, more formerly Orlando, Fla., manager through
increased
gas
service
than half a million of whom will for A. M. Kidder & Co. and Cohu rates. President Crocker indicated previously called for redemption,
dwelling units to be started with
that in his opinion the company had not been presented.
private funds in 1948. The num¬ be skilled and almost a quarter- & Torrey.
ing $18 billion for new construc¬
tion in 1948, prepared jointly by




exceed

-

20

(616)

THE

COMMERCIAL

&

FINANCIAL

CHRONICLE

Jewelry Makers Optimistic

Thursday, August 12, 1943

Sales Outlook

on

Returns of questionnaire indicate expectation of

large sales despite

higher prices.
Fall buying of jewelry with accelerated
sales in¬
winter, which should make the total 1948 billion dollar
business equal and possibly exceed 1947, was forecast
by leading ex¬

acting of the lower priced speculative rails for

time has been the

some

St.

Louis-San

Francisco common stock; In
series of merger rumors.
Some
lime ago there were active discussions
looking toward merger or con¬
solidation of this road with theE

part this has been attributable to

•Oulf, Mobile & Ohio.

The negoti¬
ations broke down but there have

recently been recurring unofficial
reports that they have been re¬
opened. Most analysts who have
followed

the

serious

express

such

situation

adversely reflected in the operat¬
portation ratio was 41.7% com¬
pared with 40.0% for the industry
as a whole, 38.0% for Rock Island
and
34.1%
for Santa
Fe with

any

A newer rumor is that the
road
be merged
with, or taken

by

power was

that

doubts

"will

over

This lack of diesel

Atchison,
Topeka
&
possibility has been
seriously discussed by

which

the

The 1947 trans¬

company's

been linked

The

Santa Fe. This

more.

•even

current year revealed no improve¬
ment in the company's status in

more

analysts since

the

Santa

Fe

was

denied authority by the Interstate
Commerce Commission to enter
St. Louis directly.
It is

this respect.
tio was 4.2

that

points

argued
entry could be secured
by merging with the St. Louisthis

San Francisco.

The latter

over

line to be acquired jointly

a

by it and Chicago, Burlington &
Quincy from Gulf, Mobile & Ohio.
Regardless of the truth behind the
that have attracted recent

rumors

speculative

interest

earlier compared with

for

Class

I

a

rise of 1.8

carriers

a

as

group.

At

was one

•of the main interests
objecting to
Santa
Fe's entry into St. Louis

Its transportation ra¬
points above a year

the

end

of

had

company

last

order

on

the

year

twelve

h.p. and twelve 4,500 h.p.
locomotives and
37
diesel
switchers.
Deliveries of the road
6,000

road

units
June

started
but

in

volume

to

even

in

early

date

only
nine have been put in service. It

com¬

portation ratio was cut to 42.1%
which was some two points below
the year earlier figure. This June
showing reduced the cumulative
year-to-year rise in the transpor¬

cisco,

the

shares

to

the

viewed

are

by

many analysts as having consider¬
able appeal on their own.

The road

was

not so

drastically

tation ratio to

2.3

western

the

still

For

above the Class I average the most
recent trend is at least favorable.

reorganized

of the other

as many

bankruptcy
properties.
instance, new fixed charges

amount to

roundly $3 million.

Paul, with

average gross revenues

St.

The

ratio

rest

is

the

of

scheduled

points.

While

considerably

road

diesels

were

makers

pieces such

lively

a

population; for the
as well

and woman,

cannot

was

the assertion

the

on

security

"If

.

which the law
ownership

in respect of

of movable

the

properties.

principle

,

peacetime

is

accepted

an Emergency
jurisdiction to

claim

naire sent to exhibitors by one of

moderate

bonds and such further securities,

the^ leading

buying for Fall and Winter."
cellent Christmas sales

Answering

an

advance question¬

refiners of precious
(Baker & Co., Inc.), 80 of
largest manufacturing jewel¬

the

induce

will

substantial

Ex¬

antici¬

are

pated.
displaying their newest crea¬
Most enthusiastic over increased
tions at the show gave optimistic
sales, new uses, public acceptance
replies regarding the outlook.
and
economies inherent in em¬
Some manufacturers, however, ployment of
palladium in jewerly
ers

estimate

the

over-all

jewelry

business for this year will show a
decrease of from 2 to 5%, com¬

with 1947, when
taled $1,447,637,629.
pared

sales

to¬

50

were

newest

manufacturers

sembled

ited in

whose

creations in that precious

platinum

metal were as¬
refiner and exhib¬

group

by a

one

booth at the show.

give

surrender

then

the

of

shares

security which the law

warrants in the matter of

ship

of

and

shares

and

owner¬

is

bonds

Shipping Cos.

Amount is $12 million in 2V2% mortgage notes, guaranteed
by
Dutch Government* $8.1 million- resold with Bank's
guarantee to
U. S. commercial and savings

banks.

The International Bank for Reconstruction and
Development an¬
nounced on Aug. 9 that it has loaned $12,000,000 to four
leading Dutch
shipping companies, for the purchase of six ships. The loans are in
the form of 2V2% one to 10-year serial
mortgage notes guaranteed
by the Kingdom of the Nether-E¬

lands.
A

purchased from the International

of

group

10

United

States

Bank all of the notes

year.

the

purchased

$8,100,000-

of

these

guaranteed as to principal
interest by the International

maturing in

the first six years and part of the
notes
maturing in the seventh

The remaining $3,900,000 of

notes will

be

retained

Bank for Reconstruction and De¬

International

velopment.

the

in

least for the present.

Bank's

portfolio, at

re¬

covered, that is unless the States
General should consider it incum¬
bent upon them to pass a bill pro¬

viding
claim

for
the
surrender

jurisdiction
of

shares

to
and

bonds, but even so, it would be a
questionable point if such an Act
would have retrogressive force.
Approaching the question on this
footing it
must
be
considered
fortunate that several

World Bank Makes Loan io Dutch

and

of

with

that the "current tendency toward
cautious buying with inventories

notes,

first'half

whole
man

Act

Aug. 12.

erating performance should
the

await the de¬

we

case

for the employer and employee
that a binding judgment be given

in

charges

for

for the

saving

that

through the latter group

delivery over the
balance of the year. Thus, the op¬

Earnings

a

owner¬

It is of inestimable value

warrants

commercial and savings banks has

tinue to improve.

why
the

jewelry
ever $2.50 to
$10.
Those in the low
assembled, valued at $200,000 re¬ and moderately priced fields were
tail, will be shown at the exposi¬ most optimistic. Typical view of

diamond

the past 10 years more than
double those of Frisco, has fixed

con¬

of

and

ewer

of less than $4 million.
Rock Island was allowed
only $2.3
million of fixed charges in the

diamond

"This is

Jewelry valued at approxi¬ for $100,000 retail, watchmakers,
mately $10,000,000, including the ring manufacturers and producers
largest collection
of
palladium of silver novelties that retail from

are

for

fine

of

necklaces that sell

as

than

the

as

is notable that in June the trans¬

stock of St. Louis-San Fran¬

mon

on

Aug. 9.

Included among those surveyed

nothing less
right of

of

metals

has

name

in recent merger rufirst quarter of the

which

on a

an

ship.

interest.

Association,

in

a.o.

be

to

violation

tion which continues

passen¬

diesels and 48 diesel switch¬

ger
ers.

stood

cision

opened at the Waldorf Astoria

diesel

no

ing performance.

is in prospect,
long time to come.

a

the road had

year

previ¬
article by
legal editor, must be under¬

occasion,

ous

Jewelers'

carefully

combination

at least for

last

ready fully explained

hibitors at the 43rd Annual Jewelry Trade
Exposition, sponsored by
the
American
National
Retail^
-—;——
:

a

freight locomotives, only 3

this

claiming Amer¬

ican shares and bonds, as we al¬

our

Substantial

creases

One of the best

The Government's

private

ties

unto

have

selves

reserved

the

par¬

them¬

right to claim restitu¬

tion from the Bank of the shares
and bonds or securities of a like
nature that have been sold against
their will.
'
"The
above

action

referred

should

garded

as

to

therefore

the

be

spontaneous

a

in

re¬

protest

against the encroachment

the

on

private right which a measure of
public right is asserted to effect.
The

action

is

not

carried

on

against anybody in particular, be¬
cause as already stated
above, the
point at issue merely is the estab¬
lishment
by juridical examina¬
tion by the Dutch Judge whether
or not under the present Nether¬

ICC reorganization plan (they are

1948

considerably lower by now) al¬
though its average gross over the

This is not, however, any indica¬
tion of what may be done on an

national Bank has

past 10 years has been more than
€0% 'above that of Frisco.
This

annual basis.

antee powers and

entering its seasonally best period

has made

iairly liberal

when most of its earnings are nor¬

its Articles of

mally accrued. Coincidence of the
seasonal peak in traffic and the
start of delivery of new road die¬

dition to making direct loans, the
Bank may guarantee or partici¬

Peine to

pate in

For Tucker,

sation

has

generation

of

against the
great invest¬

any

enthusiasm

ment

senior capitali¬

new

militated

toward

Frisco's

senior obligations. This does not,
however, detract from the specu¬

lative

appeal of the

common

un¬

der present and

prospective traf¬
fic and earnings conditions.

." One

of the most favorable

.recent

trend

the

toward

Up to the

power.

sel power

to

$0.86

share.

a

The road is just now

points to the likelihood

of

sharp increases in these earn¬
ings from here on. For the year

as'a

whole estimates

$4 and $5.50

a

run

share.

between

Such

earn¬

as¬

pects of the Frisco picture is the
diesel

amounted

use

of

end of

ings

should

make

possible

the

'

e

used

its

the first ,time it

mortgage loan. Under
Agreement, in ad¬

a

loan

held

in

provide
for the purchase of two ships each
by the Rotterdam-Lloyd and the
Nederland Line, and one ship each
by the Holland-America Line and
the

United

end of the year.

tion

Company.

dustries at the expense of the ex¬

port price level.

plies of wool, and was only re¬
placing stocks used in normal
production.

sible

should

done

to

avoid

a

At

present
drifting along, be¬
high level of export prices.

Australia

hind

be

of restriction.

a

was

gage notes are:

Naviga¬

Copland expressed the
opinion that a young country like

Trust

Company, New York;
National Bank

of New York: Dime
of

New

York;

Company of New York; J. P. Mor¬
&

York; National City Bank of

'

Company

Tijd," published the
following editorial article in relation to the forced surrender of resi¬
dent Hollanders of their holdings of American securities:
"At the time when the government ordered the
public to surren¬
to the Netherlands Bank its^>—
—r
■.
j—1——
.

curities"

therefore, against their will.

does
Section
46,
give to the Crown

of

Dollar Earning Decline Expected
Federal Commerce Department
officials estimate that Australia's
income for the present fi¬
year

will

less than last year.

ported
North

that

the

America

siderable

be

$10,000,000

They have

export
was

drive

making

headway, but

that

re¬

to

brought

a

the

son's
were

wide gap that could not

immediately.

wool

exports

to

Last

vious year.

sea-*

America

$30,000,000 less than the

pre¬

Wool experts said that




Cooperatives

in

the

Petroleum

(in four parts)—Petrol¬
eum
Industry Research Founda¬
tion, Inc., 122 East 42nd Street,
New York 17,' N. Y.—paper
$3.

are

Graphic
Charts

on

Bond
seven

Review,

The—

averages, 27 for¬

informed

that

an

ac¬

tion has been

State
Bank

tiff

brought against the
respectively the Netherlands
for the return to the plain¬

of

the

bonds he

will

can

Bank

the

juris¬

considering

Co.,

120 Broadway,
New York
City, members of the New York
and

Boston

the

past

Stock

he

Exchanges. In

was

officer

an

shares

not, "foreign

are

within

28

the

diction to order private owners to

and

offer

and

to

CHICAGO,

ILL.

James

—

E.

Bennett &

Co., 141 West Jackson
Boulevard, members of the New
York

Stock

leading
Sept. 1

Exchange and other
national
exchanges, on

will

admit

J.

and

Clarence

Frank

M.

Graham

to

partnership. Mr. Galvin has been
with the firm for

some

Graham will make his
ters at the

years.

Mr.

headquar¬
York City

firm's New

office, 30 Broad Street.

se¬

lution, in

of

any

the

case,

William Maus Dies

meaning

does not, nor
sub-section 3

or

to the Bank

the jurisdiction to determine that
residents should be under the ob¬

William

H.

Maus

of

Philadel¬

phia, a former member of the
Philadelphia
Stock
Exchange,
died at the home of his daughter
in West Hartford,
Conn., at the
age

of sixty-nine.

ligation to offer these certificates
the Bank,
ownership.

"To

our

or

to transfer them

minds this

Judge for his decision
lawfulness

of

the

Garrow T.

Geer, Jr., To Be

Partner in Farr & Co.
appeal to the
as

to

the

Government's

demanding surrender to the Neth¬
erlands Bank of foreign shares
basic statistics for each—
subsequently transfer and bonds that belong to residentthe ownership of their property owners is of particular interest. It
Graphic Economies, 60 E. 42nd
of shares and bonds to this Bank. is a step that has become absolute¬
Street, New York 17, N. Y.~ The
plaintiff is reported to have ly necessary in the interest of the
further alleged that apart from
paper—$4.
security warranted by the law.

eign / bonds, 219 domestic bonds,

of

Schlater, Gardner & Co., Inc.

that

of
Royal Decree
F 222, this section 28 of the Reso¬

to

Netherlands

aforegoing,

Section

in

Bank,

become

Netherlands certificates of Ameri¬

forced to sell to the

shares

alleging that
the Foreign Exchange Decree of
March,-1948, does not confer on
the

the

and

American

was

Netherlands

con¬

drop in wool sales to America had

be closed

"We

Industry

Peine

of the municipal bond
department of Tucker, Anthony &

Galvin

On July 17, the Amsterdam
newspaper "De

serving unto themselves the right
claiming restitution of the se¬
curities they thus sold under com¬
pulsion to the Netherlands Bank,

econom¬

A.

manager

Admit Two New Partners

Bank

that holders would do well by re¬

nancial

Incorporated,

Chas.

Manage Dept.
Anthony

New York.

"Western Europe had been forced

•dollar

Trust

gan

to

itself

The
City

Savings Bank

Guaranty

property of American shares and
bonds, we warned our readers

save

the

Brooklyn; First National Bank

of

Australia should be able to incur
1;he risk of a dollar loan, which

to

of

Amsterdam paper "De Tijd" says suit is by
owner, who denies law¬
fulness of forced surrender of shares and bonds to the Netherlands

der

can

lawfully be claimed."

Bank of America National Trust

New

Netherlands

surrender of shares and bonds

&

For Return of American Securities

Professor

adopt
ically.

pur¬

J. E. Bennett & Co.

the United States had ample sup¬

policy

•

Reports Suit Against Dutch Government

Douglas B. Copland. Professor Copland said the policy was hamper¬
ing Australia's economic development. It produced the undesirable
effect of building up high-cost in- E
pos¬

lands administration of justice the

have

Dollar Restrictions

Restriction of imports from dollar areas has been criticized by
Vice-Chancellor of the Australian National University, Professor

Everything

which

Chase

agreements

initiation of dividends toward the

banks

chased the $8,100,000 serial mort¬

Savings Association, San Fran¬
cisco; Bankers Trust Company,
New York; Buffalo Savings Bank,
sell, with Buffalo; Central Hanover Bank &

loans and may
its guarantee, securities
its portfolio.
The

guar¬

The 10 participating banks have

Economist Hits At

The

This is the first time the Inter¬

Effective

Geer,
York

Jr.,

Aug.

12,

member

Garrow
of

the

T.

New

Stock

Exchange, will be¬
partner in Farr & Co., 120
Wall Street, New York
City, and
the firm will again hold member-"
come

ship

a

on

the Exchange. Mr. Geer
as an individual

has been active
stock broker.

,

Volume 168

rTHfi COMMERCIAL & FINANCIAL CHRONICLE

Number 4724

Warni Saviitg^ & Loan Executim (o
Investment Program

(617)

Commerce)

fteVi^
NEW

Bankers

and

condition of

a

an

n

to

g

Mr.

to

"Gov

er n-

fiscal

ment

policy is being
directed
wards

to¬
con¬

trols of credit
.with
of

idea

the

that

credits

con¬

tribute

flationary

in¬

to

flation
be

of

which

might

Sigurd

Wendin

R.

would

tions

Certain

However,

ac¬

pressures

in

recession

some

this

helpful in controlling the price

structure.

rate

creased

on July 28 from
$250,000
$300,000 by the sale of $50,000
Of new stock, it is learned from
the Aug. 2 Bulletin issued by the

to

Office

of

that the Commercial Trust Co.
New Jersey verified ori that

the

of

does

not

likely

appear

be¬

such action is not

politically
feasible or desirable in light of
the coming presidential campaign.

cause

"Eagle"

added

that it has made

offer

an

to

in

and

1933

directed

reorganization during
holiday
ordered
by
RooSevelt.

the

its

bank

$30,000,000

marketable

in

securities.

buy
-

listed

$24,232,000

in

re¬

Bank

board

of

Sj:

directors

National Bank

of

of

the

Evansville,

Carson

President.

as

»

*

*
,

Announcement that there would
be no public
offering of the 50,000-*
share, issue

of

stock«• of

common

the Detroit Bank of. Detroit, Mich.,
was made
on Aug. 4
by First of
Michigan Corp. and Watling, Lerr.
cheri & Co., according to the. De¬
troit "Free Press" of
Aug. 5, which
added:

,

,

"The, bank's Stockholders, In the:
20-day
period
ending
Tuesday (Aug. 3), signed subscrip¬
tion warrants for 49,501 of the
shares, it was explained. Undeiv
allotted

sources.

"Mr.

*

at Evansville,
Ind., announced on
July 28 the election of William A.

"The

1

The

Old

"News" account further said:

July

Presidency of the Union
*

the assets and business of Bayonne
Trust Co. of Bayonne, N. J.
The

faced with serious financial diffi¬
culties

understood

was

than

more

and

of Commerce in 1944."

day

the

that he
became
President whfen the institution was
business,' but
could lead to

hold

"Mr. Cox, who was 70
years of
age when he died, retired from

•

curbing

types

interest

the

in

not

$84,000,000

•

proposition, revealed by
Comptroller of the William J. Field, President of the
having the mortgage note of one Currency.
$118,000,000 Jersey ^City institu¬
*
*
#
or two year maturity and increas¬
tion, stipulates the Stockholders
ing the borrowers' equity all with
Willard B. Macintosh, President will receive
$450 a Share. The
the thought in mind that if it be¬ of the Bellport National Batik of
purchase would give Commercial
comes necessary to increase
the Heliport, L. I., N. Y„ died ori Aug. three branches in
BayOnrie in ad¬
interest rate item, tlien it will be 6.
Mr. Macihtosh Was 78 years of dition to the six in
Jersey City.
bossible. tt> more quickly adjust age:. Advices to the Brooklyn The plan will be put before a meet¬
the asset side of the operation on
Eagle" of Aug. 7 stated that he ing of Bayonne Trust stockhold¬
a nigh income basis.
had been a member of the bank's ers.
Bayonne Trust was founded
board of directors since 1924. The in 1902 and its latest statement
"Too much curbing of the in¬

Wendin:
,

is

currently
recom¬
mended.
Consideration might be
given to such factors as shorten¬
ing the maturity of the mortgage,

rates. Accord-

i

increase

item

rising interest

in
.

stockholders and
cash

CAPITALIZATIONS

Addressing the Executives Seminar of the National Savings and
Loan League at Mercersburg Academy, Mercersburg, Pa., on Aug, 5,
Sigurd R. Wendin, President of Heber-Fugin-Wendin, Inc., Detroit,
The
common
capital stock of
urged savings and loan executives to take under consideration meth- the First National Bank of Mer¬
ods of meeting
rick, Long Island, N. Y., was in¬

opened

in
borrowings, had collected about
$15,000,000 in double liability from

BRANCHES

NEW OFFICERS, ETC.

it

-

Trusft Co. had paid off

CONSOLIDATIONS

REVISED

•

"At that time the defunct Union

News About Banks

Sigttfd R. Wendin telfs National Savings and LoUlf Lfeagtie Sfctolinkr
interest rates are likely to rise, arid ulgfes shortening maturities of
loans. Sees business demand for credit continuing at high levels.

when
:

1938.

21

Field

said

it

the

is

nlan

that all present officers and

em¬

ployees would be retained.'

contradictory, much as
President
writer and other outside warrant
lor example the purchase of gov- A recession could cause a decline
The Liberty National Bank in purchases aiso were included
in
Oh Aug. 9
jefnirierit bbflds by the Federal Re¬ in the demand for credit and
pari ft. Hoffifthh was Guttenberg, N. J., has been placed the total."
elected Presideht to siicCeed Mr. in voluntary
serve which encourages inflation.
might cause a change to deficit
liquidation, having
Reference, to the proposed in¬
The demand for credit also in¬
Madihtofeh., At the same time D. C. been
absorbed
by
the HUdsOn crease in the capital of the bank
financing with a relative increase
creases
through such actions as in the
Dernafest, heretofore Cashier, was County National Bank bf Jersey appeared in our issue of July 22.
supply of credit and then
elected Executive Vice-President City, N.
the rearmament program and the in turn the
J., effective July 30.
page 321.
pressures for rising in¬
are

*

*

*

.

European recovery program.
"Long- term

indicate that

tors

we

at a

are

arid

terest rates would diminish.

market fac¬

money

re¬

Cashier

berlain
"In case of war, of
course, con¬
trols would all return, but these

was

and

•

fterman. Cham¬

named Vice-President.
❖

sis'

tjs

**

*

*

The National Bank

"Arhe

bf German-

#

y,

*

Manufacturers

National

Bank of Detroit, founded by the
late Edsel ft. Ford, observes its

town. & Trust CO. of Philadelphia

The

absorption of the Colutribiis has just started its 135th year,
Trust Chitipahy of Newark; ft. L, having opened its doors fbf busi¬ 15th
anniversary on Aug. 10.
by the United States Trust Co., ness bri Aug. i, 1814, iri U build¬ Closely associated with Mr. Ford
past, and these high levels indi¬
also of Newark, occurred on June
Und serving with him as the first
ing On the same site ds its present
cate the need for caution in any
gram
will create some wartime
26, it was noted in the July 31 structure. The Philadelphia "In¬ directors of the bank were Wesson
policy planning. While it was not effects. The cohtihued demand for
weekly release of the ftoard of quirer" indicating this in its Aug. Seyburn, John Ballantyne, Clifford
indicated that we are at the im¬
steel,
automobiles,
and
other Governors of the Federal Reserve 1
B.
issue, said:
Longley, Murray W. Sales,
mediate-end of a high level of
jbfoducts of out industrial efcohSystem, which also stated:
"On the opening day, citizens Charles
H. * Hodges,
Alex Dow,
activity, nevertheless the review ortiy appear to be continuing at
"In Connection with the absorp¬ and businessmen of Germantown George R.
Fink and Henry H\
of past events as far back as 1914
the highest levels in history and
tion the former main office of deposited total of $32,543 in the Sanger. When the bank published*
creates a sobering influence.
when superimposed on
th^ rear¬ Columbus Trust Co., as well as community's first bank. Today, as its first statement of condition 15
latively high

level

in

practically

all fields when compared with the

"In

the

discussion

on

govern¬

are

made

on

the

as-

gUmptioh that we will have peabe
even though the rearmament
pro¬

mament

program

and

the

Eu¬

the

bonds

ment

observations

question of peg¬ ropean recovery program it would
ging arid of support brought out appear reasonable to assume that
the fact that open market yields the business demands for credit
types of credit were rising would continue at high levels.
pegging operations kept
"Efforts on the part of the mon¬
Ion g-t e r m
2 V2 %
government etary authorities to restrict
credit,
bonds at par or slightly better. or in other
words to reduce the
Since one method of fighting in¬ effective
supply, would have on¬
all

on

flation would be to allow interest
rates

rise

to

able

it

change

a

may involve a
in contrast to a

Since

the

is

not inconceiv¬

Administration

in

support

program

pegging program.

attractiveness

of

gov¬

ernment bonds in relation to other

types of interest producing assets
is becoming relatively less, the
Federal Reserve is having to buy
and

more

more

conditions

those

in

behooves

loan

comparison

prevailing in
every

executive

years

savings

review

to

with

prewar

and

his

in¬

•

Fti

Group Securities

Paul R.

located in

Warwick, Jr„ formerly
Alabama, has moved to

Texas

in order to
bring closer
Group Securities, Inc. contact to

investment
Star

as

dealers

State.

work

an

Mr.

in

the

Lone

Warwick

will

associate of the resi¬

in the light of dent Vice-President for the south¬
liquidity but also pro¬ ern territory, Donald B.
Brayshaw,
spects for price stability.
who will also be
activp in the
"In talks with officials of in¬ Texas territory.
surance companies, banks, savings
only

and

loan

associations

other

and

financial institutions over the last
several

months, there has not been
one
who
was
not
thinking in
terms of higher rates on loans.
Most of the thinking has been

000,000,

The

fluenced.

While

increase

in

the

interest paid item has not yet re¬
ceived

nevertheless

in

would

conclude; that

supply

interest

loan

rather

factors

sponsible

for
rate

Since the

is still ample, one

supply

pressures

the

areas

irate has been increased.
credit

forewarned

demand-

largely

increase

item.

executives

competitive

than

were

the

in

Savings

therefore
and

have

re¬

the

an

Chicago office, 135

South La Salle Street.

'

■

should
under

eventuality even though




the

of

on

of

the

board

Columbus

of

Trust

July 24 to dissolve the

resources

deposits

of

of

more

years

$37,-

of

than

over

more

ago,

deposits of

Its statement in

July

nine months after

year showed deposits of
than $370 million and total

lion.
dent

in

resources

opening, its di¬

it showed

this

$33,000,000,
and
approximately
20,000 customers. On May 1, 1815,

of

excess

$390 mil¬

Charles A. Kanter is Presi¬
of
the Manufacturers Na¬

institution.

vices

the

to

New

from Newark

York

"Times"

July 14 said in

pa It:

Broad Street

Aug. 5.

on

observed

were

"Cash and

sets

in

an

first-grade prime
amount

equal 4o

as¬

the

deposit .liabilities assumed' by the
States Trust Co. in the

United

2:00

p.m.,

home

ing

will

be

transferred

United States Trust
The

boards

of

to

by the FDIC.

directors

both

of

banks have approved the transac¬

tion,
is

FDIC

expected

officials said,
that

the

and it
transaction

will be completed over the week¬

of July- 24.-

-

-

"In

of

the

friends

the

been

to

"Chronicle"

was

at

offering, said:

the

of 16

a

portion

additional

quarters has
this time.
It is

at

will be

completed early next year.
Louis Reekes, Assistant Vice-Pres¬
the

Richmond office

Government

back of any.

i

would

-

stand

the bank,, who has been with The

bank will

E.

Kirby

Itfeivburger,

limited

partner in Kohlrrieyer, Newburger
&

Co., died on July 30.
interest of the late Carroll Dun¬
.

ham, 3d, in Dunham
ceased

July 31.

Fletcher,

indicated,

is

to

establish

a

market value for estate valuation
purposes.
•

& Co. and Schwabacher & Co."

;

•

From the

at

same

paper we quote:

"The stock is paying dividends
the rate of $2.50 a share per

"Every depositor of Columbus Hull' Street and 2902 West Broad $6 a share. Capitalization of the
bank consists of 280,000 shares oc
will be fully protected •4-the Broad Street branch.
The

and

they will otherwise benefit

from uninterrupted banking ser¬
vice," Mr. Harl said.. He added
that it was a source of deep sat¬

office will be located at
4th and Grace Street to be occu¬

$25

pied in early 1950.

proximately $74.50

fourth

,

to FDIC to

enable

*

Co¬

lumbus Trust to work out the pro¬

tinue to be insured up to the
limit of $5,000.

legal

':" 4:
*

The

Newark

*

■"

\

.

*

*

"The

*

as

died

on

Aug.

8.

The

Cleveland

liquidated at ri

net loss Of les$
10% in the first five years,
was
named President of the

than

"News'* of Aug. 4

stated in advices from

Jersey City

a

common

book

value
a

capital
of

ap¬

share.

Hibernia

Bank

is

one

of

the oldest banking institutions in
Cox, who was named
California and one of two savings
Liquidator of the Union Trust

"Plain Dealer" of Aug. 9 stated
retained by FDIC will be that:
;
liquidated "in an orderly manner,
"By way of tribute to Mr. Cox's
with due regard to the credit con¬ stewardship
in
the
liquidation,
ditions of the community," it was which saw $120,000,000 in assets
'

value

with

Oscar L.

Assets

said.

par

stock

'

posed transaction and thus avoid Co. of Cleveland in 1933
by Jesse
the hardships and delays of a re¬
Jones, Chairmari of the Recon¬
ceivership.. All deposits will con¬ struction
Finance
Corporation,

George T. Adee, partner in Mallory, Adee & Co., died on July 31.

been

Trust Co.

Weekly Firm Changes
changes:

major stockholders. Primary
of the offering, it has

purpose

have three Rich-' year, according to the prospectus
8th arid Main, 1620 and earnings in 1947 approximated

isfaction

The New York Stock Exchange
has announced the following firm

financing

now

offices:

morid

.

new

"Blyth & Co. heads the under¬
writing syndicate, which includes
of
Brush, Slocumb & Co., Elworthy

Washington, Maple T. Harl, Bank of Virginia for seven years,
Chairman of FDIC, said that de¬ will be in
charge Of the West
positors ih the Columbus Trust are Broad Street office. He will be
assured against .loss because the assisted
by Frank T. Hyde.
The
U.., S.

in

"The

offering does not involve
but represents a
partial distribution of the holdings

open¬

expected that the entire structure

of

its account of the

a.m.

time, only

opened

ident

price

of the entire prop¬

occupancy
one

a

The San Francisco

9:00

on

the

Due to

at

at

of $58 a share.

five in the after¬
inability to ob¬

day until

erty

Bank of San Francisco

bank

from

but

to its

noon.1

absorption of the Columbus Trust tain

business

branch, was opened
Regular banking hours

New York Stock Exchange

and

consideration methods of meeting
such

ciated with the

momentum,

some

voted

-

'

nationwide

members

directors

end

Harris, Upham
Co. Admitting

CHICAGO, ILL. — Gerald V.
Hollins, Jr., will be admitted to
concerned
with
rates
on
loans partnership in Harris, Upham &
and on bonds, but it would appear Co., members of the New York
logieal to expect that eventually Stock Exchange and other leading
the liabilities side will also be in¬ Exchanges.
He has been asso¬

he

Trust Co. of Newark."

has

town

■

vestment program

not

the third oldest bank in Philadel¬

phia, National Bank of German- $36 million.

rectors declared the first dividend tional, which operates offices in
The taking over of the
—one of $1.80 a share.
Since that Detroit, Highland Park and Dear¬
Columbus Trust followed the al¬
ly minor if any effect, and it
time the bank has maintained a born; it recently announced
plans
leged defalcation of P. J. Pellechia,
would appear that prospects favor
continuous
dividend
record for the establishment of a new
Jr., Vice-President and Counsel of
higher rather than lower interest the trust
through continuous dividend rec¬ additional office in Dearborn.
company, who recently
*
*
*
rates."
ord payment of 265 consecutive
resigned as Newark Police Judge.
semi-annual dividends."
Announcement
was
made
on
Stating that Federal and State Of¬
*
*
Aug. 6 of the public offering of
ficials acted on July 14 to assure
An additional office of The Bank 34,500 shares
of $25 par value
the depositors of the Columbus
of Virginia; at Richmond, the West common
stock of The Hibernia
Trust Co. against loss, special ad¬

government bonds.

Recognizing the fundamental
forces causing changes in credit

two

branches formerly oper¬
by Columbus Trust Co. will
be operated by the United States

the

but

it

the

ated

he

new

bank

(the

Union

Bank

of

banks

in

San

established

Francisco.

in

1859

as

It
a

was

capital

stock corporation and became a
mutual savings bank in 1864. Last
December it changed • back to a

capital stock corporation.
"As of June 30, the bank re¬
ported deposits of $151;029,983 and

total

resources

Capital

of

$172,001,982.

reported at $7,000,000,
surplus at $7,000,000; and undi¬
vided
profits
and
reserves
at
was

$6,884,052."

.

COMMERCIAL

THE

(618)

22

FINANCIAL

&

CHRONICLE

different

Securi ties

The

equilibrium, for

Economic

they provide the necessary pur¬
chasing power to pay for its im¬

An abundant flow of capi¬

ports.

United States under

tal from the

the form of investments in Latin

America, that would stay and be

reinvested, would be the best
form to compensate the excessive
Latin American purchases in the
United States.

"At the

same

time, in order that

this form of investment would not

to be a cause for friction

come

is essential that the

the future, it

investors
ing

in

realize that capital, hav¬

right to a just return, must
political power in for¬

a

seek

not

countries.
As against this,
foreign capital that does not seek
special privileges must be ex¬
empt from any kind of discrimi¬
nation." (Speech addressed on the
eign

convention

annual

24th

of

the

Foreign Commerce Council of the
United States.)
Debt

Public

National

the amount of the Mexican

public

to

importance

real

the

know

of the debt and its

significance to

the Mexican economy.

-

1947 the total amount of the

In

public debt represented approxi¬
mately 13% of the National in¬
come.
On the same year tne pub¬
lic debt of the United States rep¬

about

resented

of the Na¬

125%

tional income.
and

second

Revenue—A

Government
very

useful

comparison to estimate the public
debt is the one usually made be¬
tween this debt and the budget of

in some cases, as a supporting in¬
stitution for investment compa¬

(5) to act as a consulting
for the Federal Govern¬
ment, local government, munici¬
palities, and public agencies - in
the issuing, contracting and con¬
verting of public securities.
As
shown before, the main functions
nies;

agent

result

the

.the

same

cially

Securities

sources—This is

in

Govern¬

and Their Re¬
comparison, as

a

realized, serving to
in which a
country's public debt levies the
banking system. In 1947, the in¬
vestment made by private credit
institutions in government securi¬
ties represented 4% of their total
resources. Referring to the United
States, bank investment in public
securities in the last years have
exceeded 50% of their resources.
be easily

the

degree

Commercial Banks' Investments
in

Public

Securities and Volume

of Their Deposits^—Up to Decem¬
ber, 1947, the investments amount¬
ed to 6% of the total deposits. As
the

comparisons made before,
the last years, in
the
United States it has been over

in

during
50%.

System—Indepen¬

the direct demand
government exerts by
selling securities, the credit insti¬
tutions compete in the securities
dently

from

the

market in search for funds to fi¬
nance public undertakings, indus¬

trial and commercial activities.
Besides the Central

Bank, in the
Mexican banking system there are
several institutions in which the
State

of

(2) it

pesos;

was

stated that Na¬

was

Financiera

cional

take

would

charge of everything relating to
the negotiation and * handling of
medium
and
long-term
credits
from

foreign governments and
private institutions, including the
Bank

for

Recon¬

struction and Development, when
the

granting

credits

of

the

Nacional

Between

the

and

Securities

Market—Excluding the direct in¬
vestments of Nacional Financiera
intended to comply

with its func¬
tions, to foster its development by
buying and distributing private
and public securities, to stabilize
the market, preventing manipula¬
tions,
etc.,
Nacional Financiera
maintains
market

close

contact

securities

with

the

issuing

through

securities.

and since 1943 the maturity
has been indefinite; various pre¬

its own
Two different kinds of
have
been
issued by

namely: CerParticipacion
and

de

Certificados

de

Participacion—

Participation).
They are securities that incorpo¬
rate a right of co-ownership to
the holders over a group of secu¬
of

rities that constitute the common
that

fund

been established in case the issu¬

institution

ing

should

In

spite that the certificates

is

a

participant.

These in¬

kept by Nacional
Financiera as depositary.
These
securities
were
first issued
in

the securities

when

due

are

exchange them for other

to

cer¬

The Certificates of

Participation
were orig¬

From then to now

inally conceived

a way

as

of

curities; actually, they have
be

to

efficient

an

the

finance

come

instrument

to

industrial

develop¬
ment; The funds collected by Na¬
cional Financiera through its cer¬
tificates

have

the

been

basis for

organizing or expanding enter¬
prises that operate in the steel,
textile, cinematographic, canning,
transportation and many
other
Titulos Financieros—(Collateral

bonds).

In 1937 Nacional Finan¬

floated

ciera

"titulos

first

the

financieros"

issue

national

in

in the total amount of
500,000 pesos with a 10-year ma¬
turity and 5% annual interest rate
redeemable by yearly raffles. This
issue was guaranteed 75% by pub¬
lic securities and 25% by mort¬
gage bonds and other marketable
currency

securities.
In 1941

it

placed

second issue

a

"titulos" their value being ex¬

of

This

pressed in dollars.
with

the

object

of

made

was

enabling

the

insurance companies to buy secu¬

rities

basis

the

on

of

their

re¬

against policies in foreign

serves

A.;

Credito

(4)
Banco Nacional de
Ejidal, S. A.; (5) Banco
de
Credito
Agricola,

(6)
Banco Nacional de
Fomento Cooperativo, S. A.; and
(7) Banco del Pequeno Comercio
del Districto Federal.
A.;

Referring to the amount of their
capital stock, resources and their
connection
market

the

with
most

the

securities

important

institutions

tional

credit

cional

Finaticiera, S. A.,
Nacional Hipotecario.

are




na¬

of

the

In December,

changes:

common

1941, the

formed 100% by govern¬
securities while in Decem¬

was

ber, 1947, government securities
represented 39.4% of the total and

Nacional

various

issued

bonds—in
tax

series

num

and

ketable
of

dollars

bearing

5%

a

exempt interest rate per an¬

being backed

by

The last

securities.

"titulos financieros"

was

mar¬

issue

July

of 1946.
To June

30, 1948, the volume of
financieros"
issued
by

"titulos
Nacional
million

and
or

Financiera

totaled

85

of which 40,400,000
outstanding. These se¬

pesos

are

Banco

mme

credits^were included

of the
ed

certificates,

common

as part
fund, being grant¬

principally to industrial estab¬

,

Nacional Financiera had issued

June 30, 1948, Certificates of
Participation amounting to 346
million pesos. On the same date
the
certificates
outstanding to¬
taled 305,556,256 pesos It has been
estimated that 40% of this amount
to

Na¬

is

and

29% is held by the private
credit system, 14% is an invest-

in

ors,

hands

of

individual

invest¬

Nacional

Hipotecario
constituted

was

principal functions of the
Banco Nacional Hipotecario may
be concentrated as follows: (1) to
promote and direct investments
in public works and services of
general interest; (2) to invest its
funds

as

in

stated

point

1.

of

rate

6.25%

and

6%, respectively.
During the first years in which
the Banco Hipotecario operated,
due to the limitations existing in
the market at that time this insti¬
not able to absorb

was

siderable

savings.

"C," "D" and "E"

In

were

After 1939
with the

issues

new

were

years.

made

exception of 1941.

The bonds of the Banco

and

year,

length of the

the

on

that does it

Hipote¬

interest of 6 and 8%

an

depending
a

con¬

1939 series
issued ma¬

turing within 15, 10 and 5

their services
excepting series "K"
pay

once a

fluctuate between 5 and

10 years.

Private Credit Institutions

The

ing

with the

whose

among

its

of

connection

its

opera¬

securities

of

market, is the
mortgage
bonds on

placing

depend

many

of

the activities of the bank.

The

bonds

are

backed

by the

assets of the institution that
not

is formed by the follow¬

institutions:

issue

(1)
savings

Commercial

banks;
(3)
(invest¬
ment companies);
(4) mortgage
banks; (5) capitalization banks;
(6) trust companies. Besides these

banks;

them

Besides

(2)

"sociedades

financieras"

institutions there

are

cieras"

industry

sugar

finan¬

"sociedades

the

the

mortgage

banks

are
also in close contact with the se¬

curities market.

banking

law

According to the

the

effect,

in

now

most important functions of these
institutions are the following: (1)
to operate as

mortgage banks, and
(2) to issue mortgage bonds and
to guaranty mortgage
"cedulas"
(a variety of mortgage bonds).
The mortgage bonds are securi¬
ties backed by credits granted by
the
issuing
corporation
or
by
"Cedulas" and mortgage bonds is¬
sued

institutions. The
maturity limit of
20 years and a preference over
any other obligation against the
mortgage banks. In practice, how¬
ever, the average maturity under
other

by

bonds

have

a

bonds have been is¬

which these

fluctuates

sued

8 years

between

1V2

approximately 7.7%

erages

and

while the interest rate

av¬

annu¬

various

It is interesting to note that not¬
withstanding the recent introduc¬
tion of mortgage bonds (after the
monetary and banking reform of
1931-32) the market has rapidly

absorbed them.

private banking system in

Mexico

the

ally.

year.

Respecting the maturity of these
bonds only three series are of
20 and 15 years while the rest

or¬

ganisms that according to the law
are
considered
auxiliary credit

While in 1942 the

bonds

outstanding totaled 526,000 pesos, at the end of 1944 their
par value
was
slightly over 63
millions and

in

this

1946

amount

totaled

125,000.000 pesos. In 1947
the amount outstanding was 116,000,000 pesos as a result of a
downward trend of approximately
7% in comparison to the 1946 fig¬
ures.

Such as: the stock
exchanges, clearing houses, ware¬

The mortgage bonds have not
only become a generalized invest¬
ment among credit institutions but

houses and credit unions.

have

Among the most important in¬

with

a

can¬

maturity

longer than 30 years.
Though
these securities are similar to the

had

among

stitutions because of their relation

The

a
growing acceptance
individual investors.

mortgage

banks

with the securities market through

connected with the

the

ket

issuing of

securities

are

financieras"

"sociedades
The

d

,

that

in

operate

through

the

mar¬

of

guaranty
the

from

mortgage

bonds these securities have
cific

backing and
a

various

fields

with

motion

of

years.

attending the pro¬
enterprises, their fi¬

also

are

security

"cedulas."

Differing

financieras"

"sociedades

institutions

are

the

a n

mortgage banks.

maximum

Since

a

spe¬

be issued

may

maturity of 2d
the year in

1933,

secu¬

which the "cedulas" started to be

rities and other related activities.

issued, their average maturity has
been 10 years and the average in¬

nancing, the distribution of

These corporations are similar to
the "Banques d'Affaires" of the
French

banking system and to the
investment companies, investment
trusts and trust companies of the
United

States.

tain
the

their funds mostly through
issuing of bonds (bonos gen-

erales y comerciales).
The
concentration

facilitate

to

Here
a

of

funds

instalment

sales.

as can easily be noted,
close resemblance with the sales

dling of mortgage "cedulas" has
been extremely interesting. When
these securities were introduced
the investors
and

companies of the United

States.
The "bonos

generates" started to
be issued in 1941 not having had
so far a wide acceptance by indi¬
vidual investors, their principal
market being found in the credit
institutions

rather

did not know them

besides, economic conditions
country had merely over¬

come

than

amongst

individual investors.
The interest rate of these secu¬

rities varies

slightly from one is¬
another; however, they
have yielded an average of 7.3%
and have been issued for periods
to

between seven and
eight years. (The maturity limit
according to the law is 15 years.)

the

severest

pression.
vanced
and

As

national

the

and

effects

of

de¬

the, recovery

ad¬

income

savings increased it was pos¬
a growing flow from

sible to note

institutional
vestment

and

individual

towards

the

in¬

mortgage

"cedulas."

is,

finance

sue

terest rate around 7.2%.
The experience obtained during
the last few years on the han¬

in the

through the "bonos generates" is
closely connected with the foster¬
ing of production, while the issu¬
ing
of
"bonos comerciales"
is
principally related to consump¬
tion, for they tend to obtain funds

A

few

figures

will

the

prove

above mentioned fact.

At the end

of 1938 the mortgage "cedulas'*
outstanding totaled in round fig¬
ures 19,000,000 pesos, in 1940 the
amount outstanding was 50 mil¬
lion pesos, 105 million in 1942, 111

million

in

1946 and

1944,

205

million

195

in

million pesos up ta

1947.

The mortgage "cedulas" have
fundamentally absorbed genuine
savings, especially from individ¬
uals, although banking and insur¬
institutions

ance

chased

fluctuating

have

also

pur¬

these securities.

Industry-=-We have briefly

ex¬

amined the terms under which the

circulation of the "bonos

government and the banking sys¬
tem rhlv on the securities market
to obtain funds. We will now ex¬

generales" has shown a great de¬
velopment in the last years. At

amine the direct financing of in¬
dustry. As we have already stated,

As in
ties the

Outstanding
tions, because
issuing

lishments.

City

The

own

of

Mexico

February, 1933, and is actually
an Organic Law is¬
sued in December, 1946.

No.

"A"

in

This institution

private securities 60.1%.
issue

payable

New York.

"

After

a

interest

The "sociedades financieras" ob¬

In the following years

Financiera

governed by

undergone considerable

million

5

with

currencies.

in

structure

of

and

of

close of 1945 and 250 million pesos

has

made> series "A"
pesos each
maturity of 15 and 20 years

"B"

tution

"Financieras"

is to be mentioned.

organizations.

industrial fields.

at the end of 1947,

The

tends

gage bonds were
and

activities. Among the most impor¬
tant industries developed by the

leads

In 1943 the first issues of mort¬

se¬

pesos were

fund

finan¬

towards diversifi¬
to prevent that
the loans for public works be the
only ones that guaranty the bonds.

eas¬

ing the placing of government

curities have been widely accept¬
ed by North American investors

-

by

guar¬

of Nacional Financiera

While
December, 1941, the public held
certificates
amounting to
over
seven
million pesos, in 1943 the
certificates held by the investors
totaled approximately 142 million
pesos;
217 million pesos at the
in

"sociedades

and

twice

ing has increased notably.

ment

Nacional

backing

cation

mand

before

and

bonds

by

maturity

practically on de¬
the holders rarely collect
maturity. It is also com¬

loans

or

This enlargement of the

cario bear
are

of

ciers."

repurchased

mon

kinds

securities

anteed

withdraw

the securities from the market.

is

January, 1941.

have

of "titulos financieros"—collateral

Titulos Financieros.

(Certificates

investors

the

for

miums

Nacional Financiera,

tificados

10

requires

guaranty by the Federal Gov¬
ernment; (3) it was stated that

Financiera

and

years

a

Connections

five

between

fluctuated

tificates.

Financiera

Among other reforms
the
following
are
outstanding:
(1) the corporation's capital was
increased from 20 to 100 million

are
the following:
(1) Nacional
Financiera, S. A.; (2) Banco Na¬
cional Hipotecario Urbano y de
Obras Publicas, S. A.; (3) Banco
Nacional de Comercio Exterior,

Banco

The fact that the Certificates of

1947, the Organic

Nacional

amended.

fund

S.

to

In December,
Law

stitutions—rnacionales de credito—

S.

enterprises and the rest has
bought by other investors.

the volume of securities outstand¬

The Banking

that

the securities
promotion and fienterprises.

related

damental to the national economy.

is

year

Investments

estimate

spe¬

approximately

of

is almost enough to pay the
country's debts. Making the same
comparison in United States the
result would be near 695%.

can

are

promotion and granting of
credits
by Nacional Financiera
would befall on enterprises fun¬

year

ment

Financiera

market and the

105%, that is, the budget for one

'Bank

Nacional

of

In the case of Mexico
this comparison on

country.

a

been

commer¬

1940

International

Deb t

Public

cial

and

an
Organic Law was Participation have not quoted be¬
low their par value and the great
stating among other func¬
tions the following: (1) to act as stability of Nacional Financiera
have permitted a growing accept¬
intermediary
between
persons
ance
by the investors towards
and/or domestic or foreign organ¬
Respecting the
izations willing to place capitals these securities.
rate of interest paid to the holders
in Mexico; (2) to supervise and
of certificates, since issue "G" of
regulate the securities market and
long-term credit system; (3) to June, 1943, they have maintained
a
rate of 6%
annually, exempt
promote investments in the organ¬
from taxes.
ization, transformation and merg¬
The
redemption
terms
have
ing of enterprises; (4) to operate,

In

In¬

debt with the National income so

to

industrial

public

issued

nancement of

and

started

operate in June, 1934, based on a
decree of December, 1933.

come—It is interesting to compare

as

Financiera

Nacional

return Latin America its interna¬

tional

Mexico

of

ment

Nacional Financiera, S. A.

(Continued from page 11)

in

Market

Thursday, August 12, 1948

the

case

of other securi¬

the end of 1941 their volume was

the

demand

slightly above one million pesos;
one
year later it reached nearly
24
million pesos;
in December,

banking

1943, their circulation totaled

of

76
million pesos; it rose to 117 mil¬
lions in 1944, 181 in 1945, 241 in
1946 and a little above 346
pesos

at the close of 1947.

million
-

.

-

Savings absorbed through the
mortgage bonds issued by private
institutions, they have the charac¬ "bonos generales" have served to
teristic that may be backed by develop industrial and commercial

cases

for

funds

from

system

tends

in

the

many

to fill the financial needs of

industry. Even
the

state

is

more,

made

with the purpose of

dustrial

activities.

the demand
sometimes

financing in¬
Nevertheless^

industry has also direct

access to
the securities market through the
issuance of stocks and bonds.

as

Industrial enterprises organized,
corporations utilize shares ta

in

are

strictly
speaking, financed in the securi¬
ties market. Many of them though
having legal possibilities of ob¬
taining a public financement dis¬

curities market.

not

all

corporations are,

their capital stock among
number
of individuals

tribute

small

a

that control

the

withstanding,

Not¬
growing number
enterprise.

a

of industrial societies have in

the

first

The

tioned

the

of

above

investments, the

out

ried

their

on

se¬

.

men¬

one

car¬

capital

own

1947,

funds, totaled in December
million

18

pesos.
As to the sec¬
it reached over 100 mil¬

ond one,

lion pesos.

Institutions

Credit

Other

though

Financiera

the-counter securities market and

financieras"

the stock exchange to raise their
funds. Among the most important

demand of

industrial

curities

Al¬

"sociedades

the

and

—

Nacional

considered

we

last few years relied on the over-

have

that-

branches

taken

advantage of these financial
methods,
steel,
paper,
cement,
beer, flour, soap, textile and the

electric

industry, should be

men¬

side

the

on

of

the

capital, they must also
included in the group of se¬

be

nanciera, for example, had up to
1947

investment in

an

securities that amounted in round

million

576

figures

to

tioned.

which

45.6%

Another channel through which
industry demands capital to carry
on
its expansion is found in the

the

of

vate

issuance of bonds.
It

is

estimated

bonds

outstanding

million

400

that

pesos

industrial

about
corresponding
total

aproximately to ten hundred en¬
terprises.
These bonds have an
average maturity of 10 years and
Besides

the

the

in

Mexico

raise

can

industrial

the

mechanism

industrial

market,

in

concerns

funds

through

financing

securities

credit

also

obtain

and

can

circulating capital from the

com¬

mercial banks.
A

significant figure to broadly
the development of the
industrial
credit
system
in the
country is found in the volume of
credits granted by Nacional Fiestimate

nanciera in 1947 that totaled about
900 million

pesos,

as

against sev¬

million in 1938.

en

The

operations—buying and sell¬
Nacional
Financiera

ing'—that

made with securities amounted to

examine the prin¬

now

cipal factors on the side of the
supply of capital in the securities
•market.
In foregoing pages, re¬
ferring to this subject, we men¬
tioned in the first place the com¬
mercial banks.

Banks

—

Although

principally related to the money
market commercial banks in Mex¬

ico

been

have

the

support

a

first

of the brokers and

some

to

the

market.
In
place these banks assist
securities

growing

supplying

volume

the

increase

with

them

dealers,

funds that
of

transac¬

slightly

over

mil¬

161

|

Central

Bank

should not be omitted in

pointing

the

Finally,
the

out

principal
The

market.

the

at

the

Mexico,

Banco

de

time

that

same

played

in

buyers

it

has

role of extraordinary im¬

a

Like in other

purchase with their

"seasoned," being for that reason
adequate to circulate out¬
side the stock exchange.

exchange.

Companies

—

Insur¬

as

As insurance has

a

JVIexieo

lion

are

(2) To determine the securities
that the insurance companies may
reserves.

members of
to

or

admission

the Stock

Finan¬
of

new

Exchange,

others have
been
accomplished,
other functions that
such as the cancellation of some
may be stated in regulations en¬
securities registered in the Stock
acted by the Executive Power.
Exchange, the vetoing of other
In order to facilitate the Na¬
securities submitted for registra¬
tional Securities Commission the
tion, the prevention of certain,
realization of its functions, it has

As

the

in

all

of

case

tions, the stock exchange's capital
is divided into shares, whose pay¬
ment

is

covered

who

exchange

initial and

called

others

are

with

contribute

that

determined

stock¬
stock

Besides these

brokers.
there

subscribers

the

by

really the

are

monthly fee that is

of di¬

board

the

by

rectors.

Mining securities naVe by tra¬
ones most actively

dition been the

operated with. But the importance
these

for

mortgage bonds
"bonos generates,"

"cedulas,"
comerciales," and bonds
with the guaranty of ''so¬

ciedades financieras."

of

1947

it

was

to

over

accumulate

133

million

The technical reserves of
these
companies at the end of
1947 amounted approximately to
338 million pesos and their re¬
pesos.

were

sources

million

460

over

pesos.

of

Other

Buyers of Securities—To

complete

our

general sketch about

by individual investors,
savings are principally in¬
vested in banking and industrial
shares, certificates of participa¬

operations

account

on

and

of

the

the

to

securities

various

market

although

market,

recently they
have been increasingly interested
in operating through the
Stock
Exchange of Mexico.
fact that most transactions

carried' out

institutions invest in
must be consid¬
ered as organizations stimulating
the development of the market.
Up to December 1947 the capital¬
ization companies had an invest¬
ment in securities amounting to

are

•SO million pesos.

stock exchange
(the amount of
operations carried out outside the
stock exchange in Mexico, in 1947,

Companies

—

Trust com¬

are of importance to the
market for two main reasons; in

panies

they purchase se¬
their capital stock
funds.
In
second

the first place,

curities
and

with

reserve

through what is
over-the-counter mar7
ket is not at all exceptional. What
the

called

happens in Mexico occurs in many
other
countries, particularly in
United
ations

States, where most
are

totaled

oper¬

carried out outside the

more

than

12,000 million

pesos).
Among the most important rea¬
explaining the concentration

sons

place they concentrate, through
fiduciary businesses, funds com¬

of

ing from individual savings or
from' those
of enterprises that

find the




•/

activities

that the National Securities Corahas

mission

undertaken,

many

require

may

information

datja and

any

it

that

deem

may

sales and

some

activities directed,

towards the formation of the Na¬

tional Securities

Registry.

also order the
Summary
inspection on accounting records,
The general review of the se¬
offices or agencies of persons and
curities
market
in
Mexico ex^-corporations
that
have
issued,
pressed in the foregoing pages
guaranteed or participated in any
may be summarized in the follow¬
form in the issuance or sale of
ing terms:

it

necessary;

can

the

of

the securities

of business in

mar¬

ket, the government has been in¬
in

terested

change
order

a

making the stock ex¬
active center in

more

stimulate

to

securities

and

investments in

attain

to

greater

a

"shiftability" and sta¬
bility for the securities outstand¬
ing.
of

degree

The

Trust

the

And

been established that the Commis¬
sion

of

Besides the legislative

(7) To keep a national registry
approved securities.
(8)

corpora¬

rates

of

issuance

or

Regulation

of

the

Securities

Market

The

securities

market

in

Mex¬

ico is

principally governed by the
following legal regulations:
(1)

thorization of the National Securi¬
Commission

offered

be

to

to

the

public.
guaranteed

to

lation.

order

publicly offer se¬
curities
the
issuing institutions
must have a paid-in capital stock
of at least 200,000 pesos.
Other
In

to

important chapters of these regu¬
lations
cases

refer

to

the

penalties

of false information

or

in

data

banking law of 1941; (2) the
law of negotiable instruments and
credit transactions of 1932; (3) the
Organic Laws of the "Banco de

submitted to the Commission and

Mexico"

ties—as dealers

the

and

Finan¬

"Nacional

ciera";

(4) the regulations that
affect the functioning of the Na¬

operations

counter

ican

in

securities

the

over-the-

market

we

following: (1) The Mex¬
stock
exchange has been

The Securities Commission

established because of the

sity of having
ments
and

more proper

was

neces¬

to omissions of material facts.

Fi¬

nally, persons interested in oper¬
ating professionally with securi¬
to

the

meet

by

the

or

brokers—have

required
which are

conditions

Commission,

prevent manipulations
frauds;
to direct financial

publicity in the benefit of the in¬
vesting public, avoiding misunder¬
standing or ill-intentioned atti¬
tudes.

created

Since the Commission
it

has

the methods of

tried

to

was

improve

supervision

ket needs the participation

of re¬
middle men who will
any
disturbances but
will contribute to expanding the
public
confidence towards
the
not

on

the

securities market and to foster its

cause

market.

which

the

Commission

suing institutions.

the

popu¬

Referring to its obligations the
Government's

Mexican

attitude

has been precise,

trying to punc¬
tually comply with its obligations
and to dedicate the funds

in

the

most

obtained

productive

manner.

Mexico

has realized the
benefits that may be derived from
foreign capital, maintaining in this
respect a clear position consisting
of offering to the foreign investors
that adjust themselves to the na¬
tional laws a just treatment and
all the guarantees granted by the
(3)

law.

(4) the role of the government

securi¬
sometimes,
directly and sometimes through
official agencies, has been decisive.
This is made evident by the policy
followed by Nacional Financier®
not only in the issuing of its own
securities but in the purchase and
distribution of public and indhua*
in the development of the
ties

market,

exerted

trial securities.

years,

briefly described

in fore*

has

great help to the well functioning

Secondly, it has
advanced in its practical organi¬
of

the

market.

through

curities in the market and the is¬

on

going pages, plainly illustrate the
functioned, several important ac¬ rapid and firm development of the
The fact that
tivities have been carried on. In securities market.
the fisst place the Commission has industry has been increasingly in*
already undertaken a legislative terested in capital market meth*
work whose usefulness will be of ods of financing, and that savings
in

increasing zation.
public confidence towards the se¬
The Securities Commission has
development

impose a burden

lation.

(5) The events of the last few

During the short period of time

instru¬

to

market.

(2) The above statement is madeevident by the government's pol¬
Securities issued or
by the government, icy towards its public debt, that
credit institutions and insurance has contributed to the national
economic development father than,
companies are exempt from regu¬
ties

1946.)

they

interests

law.

auxil¬

an

as

the

These institutions usually operate
in the over-the-counter securities

these

public

sought to expand

through the supervis¬
ion of activities in which certain

issues.

surveyance.

considered

interest

minimum

and

of the investment

As

has

confidence

"bonos

government

of

is also

It

(5) To approve the public of¬
fering of securities not registered
in the Stock Exchange.
(6) To approve the maximum

anism.

securities

as

issued

only one in the coun¬
try—was established as a corpora¬
tion in 1933. Although it is a pri¬
vate organization it is subject, as
we will see later, to a certain de¬

sponsible

ings.

investors

to the issuers.

interests

February of this year. (Published
in the Official Paper of April 16,

institutions and despite
"the fact of their recent introduc¬
tion in the banking system, in a
few years they have concentrated
a.
considerable amount of sav¬

as

the

to

satisfactory

organization of the credit
system, being regulated not only
by its own statutes but also by
certain precepts of the banking

The "Bolsa de Valores de Mex¬

ico"—the

members.

some

that, generally speaking, form the
banking mechanism.

banking mech¬
Essentially they amount

attain,

reasonable margin, interest rates-

suggest to those institutions private

the exclusion of

investment

"to savings

a

may injure the
community. The
regulations of the securities mar¬
ket have covered the organization
and operation of the Stock Ex¬
change, the supervision of those,,
that under different form, take
an active part in the market and
the
inspection and approval ef
"prospectuses," related to
new

t

conviction that the securities mar¬

institutions are also a part

determination of
interest

minimum

ket

the

on

Nacional

or

body created in 1946 according to
a
decree passed by Congress in

These

and

lias declined securities.
(1) The insufficient domestic
price fluctua¬
In January, 1947 special regula¬
financial resources, being one of.
considerable
reserves
that
have tions that silver has experienced
tions concerning the public offer¬
the obstacles against industrializa¬
in
the »world
market.
permitted the purchase of a grow¬ recently
ing of securities not registered in tion in the
country, has forced the
Actually most transactions refer
ing amount of securities.
the' Stock Exchange became ef¬
In 1938 their investment was 26 to industrial stocks and mortgage
government to utilize the most
fective. This regulation states that
different expedients to accelerate
million pesos, in 1943 it amounted bonds.
the securities not registered in the
the development
to 67 million pesos and to Decem¬
of the capital
Trying to increase the volume Stock Exchange require the au¬
able

been

have

aspects

Companies—

The

securities.
maximum

well

institutions

pesos.

minimum interest rates of certain

rates is intended to

(3) To approve or veto, the
registration of securities in a stock

part

Capitalization

not

exchange;

tional Securities Commission and similar to the ones of the Stock
savings banks in
of the invest¬ tion of Nacional Financiera and the Stock Exchanges and (5) fi¬ Exchange for its members.
ment banking mechanism, there¬
nally the rules approved by the
The supervision exerted by the
mortgage bonds and "cedulas."
Securities Commission.
fore contributing to intensify the
National
Securities
Commission
The Stock Exchange
formation of capital. At the close
National Securities Commission over those that professionally in¬
<of 1947 these banks' investments
Up to now we have been re¬ —The National Securities Com¬ tervene in securities transactions
in securities amounted to 118 mil¬ ferring to the most
outstanding mission is a Federal autonomous is very important and reflects the

the

•countries,

public offerings of securi¬
registered in the stock
to the maximum ap#f.

make

ties

t*>

ciera

the

tional investors.

in

order

position occupied by the stock
exchange in the national secur¬
ities market, we will examine its
main characteristics.

an

companies have become one
most
significant institu¬

of¬

securities

in

In short, the Mexican legislatioat
that regulates the securities marr-

securities market.
Insurance

Mexican
foreign countries.

-

requirements?

the
filled

Commission

made
the
foregoing
trying to show the

Having

members

of

of

be

clarifications

fostered,
directly or
indirectly,
the development of the industrial

ance

To approve the public

must

(4) To give its opinion when re¬
quested by the National Banking

holders

whose
—

prises with a very small capital
stock; (4) finally many of the se¬
curities* represent
new
invest¬
ments
and
are
not sufficiently

portance in the consolidation of
the public securities market, it has

the position of the investors in
commercial banks
securities we must point out the
participate in the distribution of
following organizations: non-com¬
public and private securities and mercial
associations, surety com¬
finally they are institutional in¬
panies, charitable foundations and
vestors that dedicate part of their
commercial enterprises that usu¬
resources to the purchase of se¬
ally maintain part of their re¬
curities.
Up to December 1947,
serves
invested in securities.
It
for example,
the investment of
is also necessary to include the
the commercial banks amounted
group
of
growing
importance
approximately
to
266
million formed

Savings Banks

fering

more

companies;,-to
that

ing functions:
(1)

for the approval of securities
can be bought by insurance

sary

that

banking and by the government;
is, they are securities that
normally negotiated in the
so-called
over-the-counter;
(3)
Some securities come from enter¬
are

had to December 1947 invested in
securities

Associa¬

Bankers

.Yv'\/

The Commission has the follow*

that

iary

tions. Secondly,

pesos.

in

gree

ber

Commercial

tions.

few years in existence; (2)
outstanding
the
market
are
issued
by

6,150 million pesos in 1947.
The
"sociedades
financieras"

saving practice
amongst Mexicans the companies

of Capital

Supply

to

public securities and 54.4% to pri¬
securities, especially indus¬
trial bonds.
On the other hand

developed

We will

pesos,

corresponded

lion pesos.

interest rate of 7.5%.

an

and

Fi¬

Nacional

investors.

December

Mexican

very

Most of the securities

in the

part invested

raise their capital stock. However,

23

(619)

CHRONICLE

FINANCIAL

&

COMMERCIAL

THE

Number 4724

Volume 168

approved several rules about the

are

being directed toward security

investment announces a new stage,
in the national

economic develop¬

ment.

(6) Finally, the
ulation

of

the

systematic reg*

securities

market

requisites that must be filled by and" the efforts to increase the
The National Securities Com¬ the enterprises whose securities
efficiency of the Stock Exchange,
mission is formed by one repre¬ are registered in stock exchanges
sentative of each of the following so that these may be included in demonstrates the regard given in
entities:
Treasury
Department, the national registry; to the requi¬ Mexico towards activities on which
Ministry of the National Economy, sites that the stock exchanges a healthy and prosperous devel¬
Bank of Mexico, Nacional Finan¬ when applying to the Commission
opment] of the financial markets
ciera, National Banking Commis¬ for approval of the registration of
sion, Stock Exchange of Mexico securities; to the requisites neces¬ depend.

THE

(620)

24

COMMERCIAL' &

FINANCIAL

CHRONICLE

Thursday, August 12, 1948

managements,
shares

on
(Continued from page 2)
heavily sold. Socony Vacuum was
of six companies, although also liquidated. "
four
other
funds
took
profits,
Many investors will be heart¬
three
of
these
eliminating the ened by the reawakened interest
stock from their holdings.
In¬ in the rails, and if the number of
creased selectivity was to be noted trusts making new commitments
among purchases and less familiar be
any
portent, this should be
names
appeared in the reports. more than a temporary revival of
Three companies made new com¬ purchasing.
Nine trusts bought
mitments in Union Oil of Cali¬ Southern Pacific,
and of these
fornia and two more bought War¬ eight were completely new pur¬
folios

Petroleum. Anderson-Prichard

ren

chases.

Five funds made

original

baker

eliminated

from

the

portfolios of

companies and one. addi¬
tional fund lightened its holdings.
seven

Other roads to be sold
ville

and

Louis¬

were

Nashville

by five trusts
by four.

and Southern

marked

Line.

company
to
have
a
preference was
Zenith,
but only two managements made

seven

gas

sub¬

properties,

several scattered indi¬
companies were added to

portfolios.

Pure Oil and Standard

of Ohio were among

the oils most

Pacific.

ite,

12,100 shares of Canadian
The

old

Chesapeake

one-time favor¬

Ohio,

and

was

The only radio

specialty

favorite

on

new

equally

chased

Enthusiasm

Co.

were

funds

vidual

Oil

of these

Westinghouse was
as popular, seven
adding its stock to their
portfolios. Square "D" found favor
almost

although

Home

Two

commitments.

Although two
trusts
made
new
purchases of
Atchison, two more eliminated
this road from their portfolios. A
like
number of companies pur¬

sided somewhat

favor

with

two

new

Motors

in the

others.

also

in

and

there

disfavor.

in

was

the
not

enthusism

over

played

in

Houdaille-Hershey

Although interest
dicated

lightened

was

easily the

automotive

group,

trusts

purchasing a total of
23,700 shares. In contrast to this,
Chrysler was disposed of by five

still

was

general

which

was

in the first three

in¬

stocks,

Open-End Balanced Funds:

Per

months

of the year.

the

the

trusts making
commitments
of
71,100

shares.

This

has
the

also purchased Douglas, which was
also one of the companies in
pro-

Grade Bonds & Pfds.
Per Cent

Af
JLjxau

March

June

If

7,029

9.4

20.3

Axe-Houghton Fund

577

570

7.3

6.4

3.2

3.4

Axe-Houghton "B"
1

131

194

10.0

11.1

14.2

13.4

Business Shares

Commonwealth Investment

20,2

June

16.6

March

split stock of Union Car¬

new

and

der

Newport Industries were

disfavor, a few manage¬
lightening holdings in each
company. As in the previous quar¬
ter, there was almost a divisioh
of opinion on both Dow and Dupont.
Three trusts purchased a
total of 22,200 shares of Dow while
two
others sold
16,400.
Dupont
was
bought by four funds while
another
three
disposed of this
chemical.
Purchases among
the
ments

chemicals

totaled

June

is to

63.1

vious

quarter

89.5

90.2

were

one

75.8

75.5

70.4

of

stocks
groups in

few

the

Insurance stocks did not get

499

11.6

10.0

23.0

20.9

65.4

69.1

4,136

13.0

11.2

21.0

21.6

66.0

67.2

which

1,305

963

24.6

21.0

8.0

8.1

67.4

70.9

part of the

269

211

13.7

10.3

12.0

11.4

74.3

78.3

50

65

18.7

19.0

18.8

16.6

62.5

64.6

Johnston Mutual Fund

pre¬

when these

marked disfavor.

Fully Administered Shares
1

This

with the

contrasted

be

If

•

transactions

40

while sales amounted to 30.

Ui

4,306

Investors Trust.

of

bide, but three others also added
their holdings.
Hercules Pow¬

Eaton & Howard Balanced.

General

total

a

in slight

five

leading manufacturer
one of the largest
backlogs in
industry. Four managements

June

American

purchased

to

favorite,

Per Cent*

March

an¬

There was scattered light buy¬
ing in the chemical group. Three

Among the manufac¬
turers, North American was easily

TPlvi4

March

dividend

spectacular

15,900 shares of Commercial Sol¬
vents.
Five funds sold some of

Com. Stks. Plus Lower

Cent

nf

leader

market

a

companies

Invest. Bonds &

TTJnrt

its

cn

Curtiss-Wright,

of

been

all-

Preferred Stocks

Net Cash & Gov'ts

Thous. of Dollars

purchases

dis¬

Quarterly Periods March and June, 1948

Net Cash & Gov'ts

The same

nouncement.

aviation
the

sold.

more

trusts made

and sales of Eastern. No purcnases

fresh

commitments.

General

portfolios

Balance Between Gash and Investments of 54 Investment Companies
of

of

number

Electric.

lantic

Coast

also

was

nies—Anglo-Canadian Oil, Cal¬
gary and Edmonton Corp. and the

preferred. North¬

also found favor with

6,225

has

with three funds.

Pacific

of

made

while the same
number added the equities of At¬

ern

managements

total

were

four managements,

55,100
bought

more

while three

four

which

tion's
investment
of
%-million
dollars in three Canadian compa¬

five

and

Great Northern

of

found

commitments.

Among the parts manufacturers,
Borg Warner topped the list and

two

first

holdings. Both Boeing and Sperry
were in disfavor, five trusts sell¬
ing stock of the latter company.
Opinion was fairly well divided
on the transport companies. Three
funds
bought
United
Airlines

new

two

in marked favor.

the

three companies adding it to their

tric Auto-Lite was eliminated from

were

during

Lockheed was also liked,

purchased a
shares. ■ Thompson

were

Products

favor

bounced

quarter.

managements purchased a
total of 54,300 shares of General

Eight

shares

Pennsylvania
total

a

which

companies

The search for good and less wellknown properties is evidenced by
State Street Investment Corpora¬

in

for

liked,
three
purchases, two of

making

companies and Eaton Manu¬
facturing with three others. Elec¬

commitments

Railroad

better

was

trusts

Continuing a trend in evidence
during the preceding quarter, the
two
large
electrical
equipment

acquiring a following, two
companies purchasing its common.

was

but
only
6,100
liquidated.
Stude-

were

attention

still

from

Three trusts

.

total of

a

American

earlier

but interest was

year

apparent.

chased

the

in

shown

was

the

managements

10.300

Insurance

pun-

shares of

of

Newark.

National Securities—Income

487

501

4.3

4.1

17.2

13.7

78.5

82.2

Nation-Wide Securities

897

1,471

8.3

12.7

30.9

32.3

60.8

55.0

were

32

79

8.3

18.6

18.0

18.5

73.7

62.9

insurance,

23.5

23.2

11.7

10.5

64.3

66.3

47.0

25.5

15.6

129

37.4

61.6

National
Life (Minnesota), Springfield Fire

Nesbett Fund

George Putnam Fund
Russell

5,661

Berg Fund

,

3,520

t

14.0

T

21.1

7

64.9

and

7,791

9.7

13.5

34.0

33.3

56.3

53.2

dent.

Aetna

nated

from

J.

32

18

7.3

3.9

38.2

41.6

54.5

54.5

1,111

Co

589

53.9

31.3

10.1

5.0

36.0

63.7

Affiliated Fund

Buyers
finance

If

1,379

2.5

1.9

None

None

97.5

98.1

being

67

15.3

10.7

None

None

84.7

89.3

C.

978

Investing

Bullock Fund

419

5.6

2.3

791

507

8,082

6,918

85

135

4.6

784

14.1

None

6.5

2,308

Dividend Shares

4.1

None

94.4

97.7

Fidelity Fund
First Mutual Trust Fund

13.5

7.8

1.0

None

85.5

125

10.8

0.6

0.3

85.6

88.9

5.7

89.3

87.8

None

85.9

95.9

6.1

None

81

3.5

2.1

8.1

10.6

88.4

87.3

5.5

5.0

None

None

94.5

95.0

604

614

5.8

5.5

1.8

1.7

92.4

92.8

3.7

None

None

95.0

96.3

96.8

Corp

Incorporators Investors

3,355

Institutional—Hare's

2,781

5.0

for

in

four

3.2

None

None

96.1

None

None

85.8

77.3

362

517

3.8

4.9

0.4

None

95.8

95.1

112

737

1.4

9.2

None

None

98.6

90.3

sold

Loomis-Sayles Mutual Fund

694

1,064

16.0

21.0

7.5

4.0

76.5

75.0

was

1,576

1,755

18.0

20.0

8.0

4.0

74.0

76.0

9,458

7,437

4.7

3.3

None

None

95.3

96.7

17

23

2.5

3.2

4.3

4.1

93.2

92.7

419

5.6

2.3

None

None

94.4

97.7

New England Fund

716

513

25.3

17.1

5.6

5.5

69.1

77.4

Republic Investors

148

84

14.5

7.3

4.1

None

81.4

92.7

3,335

1,844

21.7

11.0

0.1

None

78.2

89.0

Sovereign Investors

.

179

46

35.5

9.0

7.6

5.0

56.9

86.0

12,464
Wall Street

11,761

19.4

16.4

None

None

80.6

83.6

203

239

19.9

21.5

None

None

80.1

78.5

Investing Corp..

shares.

Capital Administration

5,737

16.3

17.6

3.3

3.1

80.4

79.3

84.8

±8.4

$10.5

6.8

7.6

15.0

21.4

0.4

0.4

84.6

390

332

8.5

6.7

None

None

91.5

1,396

$6.1

$8.0

7.7

9.8

86.2

82.2

20,136

14,739

21.3

15.0

2.7

2.9

76.0

Illinois

by

2,000

funds

while
on

there

Owens

Glass.

No

uniformity was apparent in
appraisal of the shares of machin¬
ery
and
industrial ' equipment
companies. Three companies made
purchases of Allis Chalmers and
two

bought Worthington Pump,
adding to holdings of the new
split issue of the latter company.
one

A newcomer, which has not ap¬
peared in portfolios previously, is

Halliburton
It is

Oil Well Cementing
interesting to note which

make

additions

their portfolios of such
prosperous

to

less well-

companies.

82.1

National Bond & Share

2,223

New commitments of 1.000 share's
78.2
each

sin

1,684

$22.7

$16.2

6.6

5.6

70.7

2,009

$4.2

$7.3

9.2

10.9

86.6

2,419

$4.7

$7.0

6.6

8.9

88.7

84.1

1,176

1,568

3.5

4.2

None

None

96.5

95.8

2,751

U. S. & International Securities

Investment

81.8

1,634

§U. S. & Foreign Securities

made by the two Axe-

Co.

Four

trusts

78.2

2,543

7.6

'

Corp.

were

Houghton Funds and the Wiscon¬

made sales of American Machine

1,349

Selected Industries

and

None

6.3

None

92.4

93 7

or

stockholders

on

this date.

associated companies.

^Percent gross cash and governments as reported by company.
flDollar amount not reported on this date, i March quarter figures

office

equipment

com¬

panies found particular favor with
the

to

Foundry and three sold Joy

Manufacturing.
Two

Moody's Aaa through Ba for bonds; Fitch's AAA through BB and approximate equivalents

:




four

93.3

1,081

General Public Service

j

holdings

split in opinion

known, but

630

8,513

Can

were

81.9

506

5,446

General American Investors.

revised.

their

managements

4,863

stock

to

Crown Cork and Seal was

by
a

Co.-

Closed-End Companies:,

Tri-Continental

shares

creased

978

made

Continental

investment

companies;
purchased.
American Can, however, was liked
by
only two trusts which
in¬
12,300

22.7

Selected American Shares

totaling 6,000. Only pref¬
among
the
commercial
institutions was shown

were

3.9

National Investors

bought by
shares pur¬

the

by

14.2

Mutual Investment Fund

trusts

was

managements,

Additions

82

Massachusetts Investors Trust

major

additions to portfolios.

Financial

already held

1,350

Management Fund

portfolios.
the two
companies.
Five

First National of Boston,
companies adding a total of
3,800 shares to holdings.

89

Investors

two

two

776

Investment Co. of America

Acci¬
elimi¬

was

banking

Knickerbocker Fund

I

Standard

and

Insurance

favored

new

T.

erence

1,688

-

I.

three

92.2

13.8

1,563

Fundamental Investors

In¬

a

chased

•

Eaton & Howard Stock

American

total of 20.600 shares of
Commercial Credit, two of these

85

Bowling Green Fund

General Capital

Marine

bought

Rev-

Insurance

Northwestern

t

Open-End Stock Funds:

i Broad Street

Great

Newark,

surance,

5,051

Fund

Investment

of

Fireman's

CO CO o

Scudder Stevens & Clark.

Wisconsin

6,228

in American

also made

614

Wellington Fund
Whitehall

..

Scattered individual commitments

trust

managements.

Three

original purchases and three ad¬

,

ditions
were

to

made

blocks

already

held

in the shares of Na-

Volume

168

Number 4724

THE

tional Cash Register. 14.300 shares

of

transactions

graph

were

and

the

on

value

on

sell

the

of

the buy
side, al¬

latter

was

greater.
International

Paper was liked
by six trusts, but only one of these
made

a

new

stock

of

the

commitment

in

the

manufacturer.
particu¬

paper

It should also be noted in

that

terest

there

in

was

shares

Transactions

Paramount.

and

three

blocks

were

new

additions to portfolios.

Dur¬

of

these

ing the period, four other trusts
sold 29,900 shares, two being com¬
plete eliminations of holdings.

of

scattered
ferent

No. of

No. of

No. of

Shares

Shares

Trusts

Trusts

Shares

Shsr6s
Continental Oil

2,800

5(2)

6(1)
10(3)
2(2)

20,550

25,500

8,225
25,400

Gulf

6,200

Agricultural Equipment:
3

11,000
6,225

2(1)
7(2)

23,700

3(2)

8,800
7,200
3,900
13,000

2(2)
2
3

2(1)

3(1)

over

a

There

but

most

28 in¬

were

companies

traded

as

Favorite issue

erated

Fed¬

Stores,

Department

trusts

was

four

5(5)

making

new commitments
making an addition
portfolio holdings. Grand Union
was bought by four managements

while

Butler

Brothers

and

Mc-

Crory Stores were each added to
the holdings of two
companies.
Buyers slightly favored both Ward
and Sears.

in

was

Stores,

Only marked liquida¬
the

shares

Allied

of

three

funds
eliminating
the issue and two others lighten¬
ing portfolio holdings.
United

vorite

spite

States

of

the

Steel

its

among

was

fa¬

a

and,

group

unsettlement

in

caused

the

basing
point
decision,
buyers also showed a disposition
to
pick up securities of other
companies in the industry. Sharon
Steel gamed in favor as two trusts
made

commitments and two

new

others

increased

holdings.

managements

also

Youngstown
Bethlehem

and
Tube.
was
the
only

Steel

which

company

purchased

particular

found

disfavor, three funds selling 10,700

4

1(1)

None

Timken

Roller

Chrysler

None

Bearing

Corp.

2,300

2(2)

None

Douglas Aircraft
Lockheed Aircraft
North American Aviation.
Boeing Airplane
Sperry Corp.
—_

500

300

concentrated

buying

5(1)

Canada

None

Nehi

Corp.

900

None

None

Pepsi Cola

83,700

Building Construction and Equipment:
3(1)
1,000
Celotex Corp.
2(2)
1 900
Glidden Co.

2,500
46,750
10,400

10,900

Ginger Ale__

Dry

1,200

5(3)

6,300
2,490

None
1

300

American Stove

3,500

2(2)

Armstrong Cork

3,800
600

Minneapolis-Honeywell

None

Trane

None

U. S. Pipe & Foundry

None

None

None

United States Plywood
Yale & Towne

Co.

Texas

2(1)

12,200

3(2)

4,400

2(1)

None

None

None

None

None

Newport

Industries

6,200

2(1)

8,700

5(1)

12,300
3,700

Continental
Crown

15,300

1,900

issue

new

time

to

in

the

for

appear

several

None

Can

Cork

&

500

Seal

2,000

purchased

24,150 shares.
damental

Buyers

Investors

total of

a

Fun¬

were

Investors

and

Management Fund, U. S. and For¬
eign Securities and U. S. and In¬

2(2)

Financial, Banking and Insurance:
3(1)
10,300
American Insurance
3(1)

5(2)
2

Securities,

extensively

as

quarterly

preceding

portfolios

and

their

2(1)
2

13,500
3,600

during the

1

7,000

was

from

holdings.

Six
their

light¬

others

two

Pepsi

Cola

2(2)

3,000

2(1)

400
1 300

managements disposing of a total

2(1)

600

of 83,700

marked

shares.
be

to

Other beverage

sold

Canada

were

,-Only indication of group selling,
noted

building

previously,
shares

issues.

this

was

over many

However,

neapolis-Honeywell
six

in the

was

but

large part scattered
dividual

managements,

Min¬

sold

was

three

in
in¬

portfolios.

16,300

shares

Purchases

com¬

of

were

Five

and

National

Celotex

Financial

Commercial
Nat.

None

(Newark).

500

Corp

1,700
Norte

(Boston)

(Conn.)__.

2,200

General
United

Halliburton

None

Oil

Well

Sundstrand

Machine

Worthington

Pump

Johns-Manville.
concentrated

Gypsum,

and

5(2)

10,350

3(2)
12(2)

2,800

46,700

6(4)

9,500

4(3)

12,900

None

None

None

None

None
1
3

2(2)

14,300
23,000

in

National

Sherwin-Wil¬

liams.




Northern

Northern

2

9,200

3

200

.

1

None

Ry

Louisville

Y.

Southern

__

.

Nashville
St.

_

Louis

1(1)
2(1)
8(7)
5(2)

2,937V2

.

2(1)

5,600

.

Ry.

None

5,000
1,500
11,400
17,100'

Ohio

&

2(1)

None

-

&

None

3,500

_

___

&

Chi.

None

None

RR.

Pacific

Chesapeake
N.

pfd._

Pacific

Southern

4(1)

-

4(1)

Butler

Brothers

None

Union

Grand

Sears

Western

None

None

3(2)

4,200
3,000

_

Supply
.

2(1)
1(1)
5(3)

16,700

Rubber and Tires:

6(1)

11,200

Goodrich

None

Goodyear

12,700

4(1)

15,900

___

4(2)

Steels:
General

1,700
6,900

Sharon

Refractories
Steel

None
___

United States Steel__

15,300
3,400

4(1)

9,100

5,000

Bethlehem

__

None

None

_

Corp.__

None
2

1,100

_

Wheeling Steel
Youngstown Sht. & Tube

None

None

None

4,800

_

_

Allied Stores

Auto

None

None

-

Roebuck

None

None

Ward

Montgomery

None

None

None

Co

1

Tool

4(1)

None

__

Kennedy's
McCrory Stores

4,000

None

(new)

16,500

.

2,700

4(2)

None

None
None

.

Federated Dept. Stores

13,100
1,140

3(2)
3(2)

3

1(1)

None
None

Pullman

--

4,600

2(1)

None

2,500

2(1)

10,700

Steel

3(1)

21,100
4,800

4(2)
3

3(3)

2,700

2(1)

American Viscose

8,400

Colonial

24,150

None

_

None

None

_

Industrial Rayon
Celanese Corp. of

4,900
6,100

1

1

2,500

—

Mills

None

__

America

27,100

6(1)

12,900

.

8(6)
4(1)

Tobaccos:

American

Smelting

Eagle Picher Co
Kennecott Copper

&

100

Refining
1

St. Joseph Lead
Uv S. Smelt., Refin. & Mining..
Hudson Bay Mining & Smelting
Mclntyre Porcupine

None

1

3

4,500

American

None

2(2)

6,000

Reynolds

5,900

4(1)

1,000

1

1,800
-

3(2)

1,300

2(2)
2(1)

1,600

20,500

None

4,600

1

12,800

Tobacco

__

Tobacco "B"

3,700

Miscellaneous:

3(1)

None

1

Includes

Gillette

in

great

None

Bank

part

Note

2%%

stock

None

4,500

Safety Razor

American

2(1)

dividend

in

company's

stock.
2

Burroughs Adding Machine
National Cash Register

Received

3

Received

2

as

as

dividend

.partial

on

Public Service of Indiana.

liquidating dividend

from

North

Amer-

ican Co.

Paper and Printing:
2(1)
1,400
Crown

6(1)
1

10,900

4,000

*

None

Textiles:

4(2)
3(3)

Office Equipment:

6(3)

4(2)

1,700

.

Line

Pacific

Pennsylvania

700

None

Cement¬

Co

4(2)

29,900

_

Superheater
Westinghouse Air Brake

2

own

3(2)

Great

34,900

2

2

Arnerican Machine & Foundry.

Joy Manufacturing
Wayne Pump

Pictures

1,800

7(3)

Company

2

11,675

Retail Trade:

None

1,100

2(2)
7(6)

9,000

Power

1,030

None

17,200

25,100
10,727

Power

1
4(2)
2(1)
3(1)

Railroad Equipment:

6(3)

None

Dairy Products
Fruit

None

4,827
117,850
1,100
21,000

Chicago, R. I. & Pacific4

1,600

None

Foods

National

None

None

Transmission

Coast

None

Aetna Insurance Co.

None

None

Broadcasting "A"

Canadian

None

5(2)

Credit

Bank

None

trusts sold

shares of United States Gypsum

Lead,

1,500

None

1

None

4(2)

2

by

pletely eliminating the stock from
their

1

9(8)
2

Metals and Mining:

Dry and Nehi.

as

T.

ing

2(1)

in

5(5)

None

None

Machinery and Industrial Equipment:
3(1)
12,800
Allis Chalmers

disfavor, six

was

I.

First

None

4(3)

2(F)4(1)

Food Products:

period.

it

eliminated

20.600

sold

Tobacco

C.

the

and

Johnston Mutual Fund.
American

6 000

3,800

None
ternational

1,700

Atlantic

1,300

5,400

ment counsel

Columbia

14,200
7,800

None

None

None

Brunswick-Balke-Collender

23,900
5,800
55,100
8,300
6,300
3,500

2(1)

Westinghouse Electric
Zenith Radio

None

None

Co

Electric

Paramount

2,300

5(4)

Square "D" Co

None

None

Corp

Gas

None

None

Service

Electric

Virginia

5,800
12,100

2(2)
2(1)

3

5,000
15,920

7

West

Tennessee

None

None

None

Electrical Equipment:

3(1)

invest¬

4(2)

None

Two management groups and one

Electric

None

Railroads:

None

2,300

Public

None

None

Radio and Amusement:

None

General Electric

Paso

Potomac

1,800

None

54,300

by

2

1

American Home Products

Sharp & Dohme

8(2)

sponsored

None

3

portfolios.

fund

24,900

2(1)

American Can

Drug Products:
3

Middle

5(1)
None

2(1)

1,800

(new)

8,000
2,900

2

Solvents

Union Carbide

9,600
26,200

International Tel. & Tel

None

Central 111.

300

5

2

El

None

None

2

KD

8,000

dustrial Rayon. Colonial Mills was

None

None

2(1)

6(3)

Powder

three others bought shares of In¬

None

None

2

None

Hercules

14,350

Vacuum

Standard Oil of Ohio
Sunray Oil
Texas Pacific Coal & Oil

Commonwealth & Southern
Electric Bond & Share
Electric Power & Light
Illinois Power Co
Indiana Gas & Water2_—
Indianapolis Power & Light
North American Light & Power
Public Service of Indiana
Western Union Telegraph "A"__
Wisconsin Electric Powers

41,450

15,900
2;500

3

800

32,400

None

2

None

Sulphur

Gulf

1,600

Petroleum

15(7)

2

2(1)

2,200

Commercial

Co.

44,000
4,200
23,900
19,000
1,375
10,300
10,000
8,000
1,600
41,276

3(1)

5(2)

3,100

5,730
None

Public Utilities:
2

8(3)

Chemicals:

None

None

Oil

Oil

Socony
1

5(2)

5,500

None

1

None

None

Pure

11,000
18,300

11,200

__

Alex. Smith & Sons

None

2(1)

Mid-Continent

3(2)

None

__

100

500

Lone Star Cement

None

3

None

1

6,300
12,900

Oil__

None

16.300

Johns-Manville

Union

Barnsdall

2

Crane Co.

Shell

None

1

None

Standard Oil of New Jersey*,...,.
Union Oil of California

3(3)

3

None

2

stocks

1

None

1,200

4

ened

2(1)
3(1)

None

None

2,500

None

5,200

None

2

None

2(1)

None

20,000

None

None

Gypsum.___
Weyerhaeuser Timber

3,900

2(1)

6(3)
None

1,400

__________

None

None

2

None

United States

2

3

4(1)

None

Masbnite Corp.
National Gypsum
National Lead
Sherwin-Williams

Texas, v.t.c

Shamrock Oil & Gas_

None

2(2)

7~

of

21.250

1

12,900

None

Oil

Phillips Petroleum

KD
3(2)

None

in a few individual
companies.
Four
funds
purchased American Viscose and

evidence

textile

also

None

4,000

None

4(1)

3(1)

5(5 )

2,000

trusts

5(1)

Beverages:

4(2)

3

Oil

Houston

13,500
4,612
10,000
7,512V2

None

8,300
1,600

2

rather

None

None

was

new

None

4(2)

None

4(2)

7(1)

18

Containers and Glass:

Some

first

——

3,700

None

shares.

a

5,100

1,000

71,100
1,000

Four

Sheet

General Motors

None

6,100
7,000

1(1)

and one more
to

None

1,

Aviation:

compared with 17 in the previous

quarter.

200

Borg Warner

700

4(1)

the

Deere and Co

Auto and Auto Parts:
4

part
wide list of dif¬

issues.

dividual

No. of

Trusts

pref¬

for

—Bought-

No. of

com¬

was

in

heavily
completely

more

or

No. of

well liked

were

erence

Sold

—Bought—

merchandising

panies

by

which

No. of

None

Merchandise Issues Liked

Shares

.

in

buyers exceed sellers—or sellers exceed buyers—by two or more management groups.
Issues
sold are in italics.
Numerals in parentheses indicate number of managements making entirely new purchases of an
issue,
eliminating the stock from their portfolios.

in¬

revived

a

of

Eight investment companies pur¬
chased a total of 41.450 shares,

tion

! 25

(621)

u

much

lar

CHRONICLE

(March 31-June 30, 1948)

Addresso-

split, two

three

though

in

FINANCIAL

Changes in Common Stock Holdings of 41 Investment Management Groups

Burroughs /Adding > Mdchiiie>
also bought by three funds.

-

were

Five

COMMERCIAL &

4

Zellerbach

International Paper
Union Bag & Paper

None

Includes stock received in exchange for other securities.

*j|

None

1,200

1

5,400

4(1)

NOTE—This survey covers 58 trusts but purchases or sales of
sponsored by one management group are treated as a unit.
For example, the several trusts sponsored by Calvin Bullock are con¬
sidered as having the weight of one manager. American
European,
trusts

Petroleum and Natural Gas:

3(1)

7,600

Amerada

None

None

2(2)

2,100

Anderson-Prichard Oil Corp

None

None

American

General, First York Corp. and Overseas Securities
included in addition to companies listed in companion tables.

are

COMMERCIAL

What's Ahead for Banking and
with

(Continued from first page)
tell

not

that I

you

greatly

was

disappointed that the problem of
learning
how
and .formulating
plans to cope with another great
depression are not items of major
interest

to

law

our

makers

at

The

for

reason

It

this, I think, is
developing fine

that

is

plans for averting what might be
a very serious depression in 1952
has very little to do with the fore¬
mast
business
of
a
politician,
which today is the job of getting
1948. Because of that

reelected in
immediate

interested

to4 be
stopping too

he

task,

only

tends

in

much inflation between

and

now

i

November 7 of this year.

So I have been revolving in the
last

in my mind just who
should be responsible for devel¬
oping a widespread national in¬
terest in the problem of learning
how to keep in our great country
year

high productive employment and
•averting depressions. I hope yOu
Will be interested to know that I

small

the

that

primary

task,

critical task, for success must be

by bankers for reasons that
later in this paper I shall, I hope,
have made abudantly clear.
But first let

take

us

backward

a

glance, as I used to do when hunt-r
ing quail in this state, to know
from where I had come, and then
take

glance as to
where
we
are,
economically
speaking, right now, and let us
attempt
here
this
evening
to
probe into what is likely to come
us

ahead

good

a

what

and

should

we

do

about it.

First, I would like to ask you
economic

at the

to look with

me

world of

country after World

our

War I. At the end of that
of the

one

war

most

strikingly noticeable
things was the way succeeding
waves
of business activity were
created and moved alcng, flowing
a high tide for a good many years
after the war; in fact, until 1929.
What

these

were

ment?

Perhaps

waves

a

of invest¬

review of them

will help us

in the more difficult
disentangling economic
developments as they are occur¬
ring today to permit us to make
a
diagnosis and suggestions for
improved stability in our eco¬
process of

after

five distinct

waves

there

activity
ment. In fact,

of investment.

with full employ¬
a Republican Presi¬

dent of that time

interpreted the
seas on
which he was trying to
guide the economic ship of state
as
"normal."* They were indeed

far from normal.
tide

We had

high

a

of

activity created in the
postwar period that was destined
not

at

all

to

continue

in

any

normal way.

First, after World WTar I we had
a very rapid investment in inven¬
tories, as in that period too we
emptied
and

the

filled

military
them

pipelines

with

needed

civilian goods. The inventory ac¬
cumulation of that day was im¬
mense

even

standards

judged

now

that

by
we

the

was

ex¬

machinery and equipment. That
rose to high levels and was accel¬
erated by the rise of that ex¬
tremely new devastating phenom¬
enon— the American automobile.
At

the

rise

time

same

in

these

had had a

we

exports—how familiar all

terms

today

are

as

—

we

enjoy

a

more

than $200 billion in contrast with
net national income of only

about

55%

general average.

a

as

decline had ended in

After the

1921, the next wave of investment
upon the community. That
the immense expansion of the

broke

home building

industry, which by
1923-25 was producing more than
900,000 houses a year, a record
which since has not been equalled
but which may be equalled in this
very year, 1948.

was

accelera¬

serve

.after

that

inventory accumulation

World

War

I

reached

the

coiossally large figure of eight and
a

third billion dollars and that the

price level reached an extremely
high level in May, 1920 caused in
considerable part by this very ac¬
cumulation of inventories.

May I

here

add

that

in the

past month

the

price level in the past four
weeks passed the all-time high
record of May, 1920.
After the collapse in
1920-21,




that

exerted

structure

yield

must

evidence

of

the

high
plateaus. What
are
they?
First, we had at the end of this
war
an
immense
inventory ac¬

some
tax

cumulation.

repressive

a

on

dealt

we

community.

the

the

with

taxes

a

material resources?

the immense

one-fifth such

is

ago.

•

vestment

f

'

--

The fifth

last

and

.

of in¬

wave

the expenditure by
for huge amounts of

was

consumers

goods culminating in
the purchase and manufacture of
5,328,-000
automobiles
in
1929.
Only in two years since that date,
last year and 1941, iiave we even
come
close to making 5,000,000
consumers

automobiles
This last

a

year.

of investment by

wave

the

in

consumers

—

new

the

consumer

automobile,

the electric icebox,
appliances
generally,
last wave of high
economic investment we experi¬
radio,

the

etc.—was

enced before the storm.

What
like

in next

came

call

to

"an

upside

down

wave." That kind of wave, you

all
know, is "recession." Apparently
we got recession in all the waves
at once (this has been the subject
of
careful
investigation
by
a
noted but now disappeared Rus¬

no further contribution,
in
somenrelaxing, has come from
the
side
of
inventory demands
and net export demands.

Moreover,
now
that
we
are
"catching
up"
on
our
aid
to
Europe and in many soft goods
lines for domestic demands, there

balanced at

is

1933

Then

much

for

But

turn

struggled hard to

to

stability. In the various
attempts we made, I ask you to
consider
only one such effort.
the effort of the Treas¬

was

ury,

did

that

until
the

steadily

in

the

1930's

by 1937 the cash budget of

Federal Government

was

al¬

most within close

sight of balanc¬
ing. What do you think about that
kind of strengthening of the tax
structure when it
the

base of

an

was

done upon

weak
to have

economy so

at

that very

10

million of its members

ployed

in

dammed-up,

moment

farms

when
late

in

war

unem¬

cities
and
to
have
hidden unemploy¬

ment of 5 million
can

as

(as

the
that

more on

was

early

Ameri¬

demonstrated
years

number

of

of

the

people

Capital Investment

third

our

giant

a

dustry

of

wave

effort

of

in¬

American

business

and

activity

It is the

indeed.

one,

to

become

geared with big enough factories
and

enough machines to produce
the goods that the American
people are scrambling to buy with
their large incomes buttressed as
they now are by huge amounts of
liquid assets.
all

A

year

or

so

ago

a

banker in

Milwaukee observed to me that he

thought,

a

industry in Mil¬
attempting to lift its

every

ductive

waukee

duce

output by 60%.

was

far

(2) But that is not all. In addi¬
tion, during the war the Ameri¬
can people and businesses accum¬

exactly right. We were much too
busy trying to build too many
things too fast.
The proof could

ulated

$225 billion worth

of ad¬

a

can

tion
now

demands that their

buy,

the

Thus we are seeing an im¬
"period of gestation" of all
our productive
machines that will give the Amer¬
ican people the happy opportunity
they are seeking of "all learning
how to keep up with the Joneses."
an

ductive

plant

every

grave

on

every

sea

is

lion

in
comparison with peaks
averaged $80 billion in the
precious high years of 1929 and
1940-41) and with gigantic liquid
assets ($225 billion), and a rapa¬
cious demand: What new kind of

that

economic stew will be brewed out

of these ingredients?
No

more

progressive,
omy

dynamic, productive,
and generous econ¬

gross

national product

which is the best

measure

—

of our

for

handsome

and

on

A curve,
additions to

the

the

measures

money

incomes that flow from ex¬

penditures for capital investment
by industry. While those expendi¬
tures are being made—remember
today's rate is $36 billion yearly—

those fac¬
tories, but the expenditures swell
the total money income of the
community. That makes purchas¬
ing power, or to the economists,
money
demand, very high and
strong.
But observe that the B
no

goods

curve

come

moves

from

upward much later—

the period of gestation
which is as long as three years
now in many cases.
That means
later

by

our

two

and

curve

B

curve

which rises one

three years

that

measures

later is the
the goods to

pour
forth from the new com¬
pleted factories and many of them
are
going to get completed al¬

activity — has risen to a most "all at once" in a year or so
yearly rate of $246 billion in the from now. Business last February
first-half of 1948. Net additional said its nlant expansions for a
total

Well, last
duction

year

"total

our

pro¬

of

capital goods"—what
pour in -at
the spigot—was
measured at more than $60 billion.
The

amounts

drain—this

off

drawn

is

total

at

the

called

"capi¬
tal
consumption
allowances"—
were only about $12 billion.
We
hardly have yet an economy of
that stability which will permit us
to add to the total capital plant
have

we

in

rapid

so

the

after

good

many

States at

United

rate

a

year

fact,

In

year.

reasons,

it

maintain

and

for

are

we

a

now

working ourselves out of jobs.
First, all the new factory and
equipment gives us a more effici¬
ent plant so that our improved
productivity "idles" perhaps 400,000 workers a year.
Then the
natural growth of our labor force
is at a rate of about 700,000 a

make
jobs a
year just to hold our own in the
fight
against
unemployment.
When it is recalled, too, that many
of these plant expansions are al¬
most
completed,
will
soon
be
completed so that money incomes
Thus

year.

than

more

will

tend

million

new

shrink

to

to

have

we

a

that

as

ex¬

penditure declines, and when it is
further recalled that the

will

tories

fac¬

new

forth many new
goods as soon as done, some idea
of
the price pressure that lies
ahead of

your

is obtained.

us

When will that pressure

mate¬

rialize? Well, we have seen

it al¬
happen in some lines, no¬
ticeably
many
textile
items,
radios, and several other gadgets,
and it is probably very likely on
its way in the case of food, sub¬
ject, of course, to our national
price support policy.
ready

could

we

all

make

ad¬

our

to which
our
friends at the National City
Bank have applied the term "ro¬

justments in this

tational"

manner

would

we

indeed.

But

fortunate

be

the

plain fact is
plant expansion is so out of size
to

other elements in this "ro¬

all

tation", it is

so

large that

we can

make more of these rota¬
adjustments to secure sta¬
bility if we learn how to bring
in "new "investment components"
to take the place of the old to sus¬
tain the economic tide, and if we
only

tional

learn how to do

so

in time and in

adequate amounts.

this is best ex¬

simple in stating that an
and its people ride high

very

that

has the world ever seen.

Our

reason

which

i

now

with

economy

continent.
are

fraught

is

plained by what I like to call the
A and B theorem.
This theorem

and on

fortified with a
gigantic income (which has fur¬
ther increased to above $200 bil¬
We

effort to enlarge pro¬

danger for the future.

The

workers, and raw ma¬
produce the weight of
were soon to throw at

enemies

plant and

additions to

those

But such

our

so

investment by Ameri¬
industry, and total construc¬
expenditures combined, are
at the rate of $36 billion a

since the

to

un¬

and

mines.

If

amount of

total

pened

we

pour

you

mense

use

income.

metal

it

year.

of some
of these liquid assets would easily
cover
any gap from the side of
not

the

or

doing

were

inventory

super-rich

now-two-times-increased incomes
could

we

The

with such assets in addition
hugely increased incomes. Thus,
there any

if

tant repercussions will be
employment, idle factories

direction.

way

to

observation

his

that

rapidly that our equilibrium in
prices and wages was being dis¬
turbed
violently in an upward

began, by the time of its end they
in

had calculated that was

we

either

fact

Thus, if the American people and
industry were at all short of cash
and liquid assets when the war
endowed

as

be

assets. Individuals
retained $150 billion of this in¬
crease and businesses $75 billion.
ditional liquid

were

into the
bathtub at the spigot much faster
than is drawn off at the drain,
trouble is going to come either in

I told him that as

these immense demands.

terials
re¬

indexes

inventory and

and Expansion

immense

factory and pro¬
adequate to pro¬
goods enough to meet all of

quite without
plant

of

exports.

.

is

economic

our

sides

Excessive

everyone

of further up-

likelihood
to

the

(1) The United States Govern¬

factories,

(1926 equals 100).

we

little

thrusts

net

so

averaged less
figure, or $4.2

has
that

tion,

(3) The third thing which hap¬
during the war was that
government, to fight the
had a need of the new
sian
economist
named
Kondra- war,
precious metals, the civilian popu¬
tieff) because our level of indus¬
No new
trial production fell from a figure lation "went without."
of over 100 to the low level of automobiles were assembled, no
plain
54
(1923-25 equals 100). new electric iceboxes were built,
electrical
appliances
and
Wholesale prices which, as the re¬ few
sult of improved technical effi¬ many other goods were fabricated
ciency, had fallen a little to 95 in during the war. The government
1929, fell to just plain 60 in 1932 had to commandeer the relevant
and

of

So you see, when we list
causes
of the current infla¬

tory of World War II are striking¬
ly alike. Three immensely impor¬
tant things happened:

were

what I

was

half

phenomena in the economic his¬

had

to

for the first half of this

rate

from

ment

interested

be

fact

sad

a

that
the

the

level.

a

theorem

That

theorem.

that

says

we

than

and economists the

bankers

To

never

net

our

billion.

$40

were

will

year

billion level in
comparison with budgets that in
the 1930's

You

know

us

the

of

amount

exports,
which
reached
their
highest level of an annual rate of
$13.7 billion a year ago last May.
Last year this rate was $8.7 bil¬

World War II

around

ac¬

bathtub

in

economist

two ago. But even today it an overflow of the tub or the
continuing, but it has receded spigot will be shut off with violent
by more than two-thirds.
repercussions back at the source
The next wave of activity was of our
production and the resul¬

What Happened During

let

that

American

is

lion.

Now

of

rate

One

year or

less

heavy hand so that those lesser
rates, given the more buoyant em¬
ployment and output, would .have
produced a balance in the budget
and promoted a drive toward ful¬
ler utilization of our human and

The

cumulation approached an annual
rate of $10 billion at its peak a

Would
economic activity not have been
more
buoyant in the 1930's had
hand

to do and the bankers of the na¬
thing to record, for
tion took over the task to see that
a great nation such as ours with a
all the government demands were
population growth, in the inter¬
financed, with the result that the
vening 25 years, of more than 25
net national income earned by the
millions and, because our families
people
of
the
United
States
are smaller, with a rate of family
doubled in the war period. That
formation that has even grown
meant the American people would
faster, that we have not got our
embark
on
their
postwar eco¬
house-building industry back to
nomic
careers
with
an
income
the standards—they really should
twice as large as any they had
be thought of as low—of 25 years
ever known or enjoyed before but
It

to use its own words, "to
strengthen the tax structure." It

then

but,

this

Clearly
kind

was

That

by rising prices, but it is in¬
teresting in this connection to ob¬

such

bringing Arthur Spiethofl's ter¬
minology of the vessel theorem
up to date has converted my sim¬
ple A and B theorem into the

a $218 billion annual
Obviously we must be hav¬
ing some gigantic waves of in¬
vestment that are thus thrusting
levels of economic activity up to

.

one-third
of that figure imme¬
diately after 1918. The inventory
ted

completed at the end of this year.

jump
ahead to
World War II. This present war
one
that
cost us in four
you will all recall, in many raw, was
materials
such
as
cotton,
we months more than the total cost of
moved forward again. Prices then World War II. It was a war whose
still
at the wholesale level generally costs
outweigh
everything
fell a full 40% and the prices of else in our present Federal budget
agricultural raw materials fell by which is now over-balanced at

the

accumulation

50% rise in output would be 85%

rate.

despite the
fact, those remaining on farms
produced 30% larger output with
that 16% smaller labor force)?
farms

our

aided

too,

Thursday, August 12, 1943

Business?

left

Europe in her
recovery as we are doing once
again. After the decline of 192021, which was mostly a price de¬
cline
and extremely serious, as
then,

today's

total net national income of

I

War

electrical

were

These gave us rather abiding high
level

a

investment

of

wave

World

the

Five Waves of Investment
After World War I

next

conveniences

nomic health in the future.

for

needed

penditure of producers for plant

or

done

let

amount

steadily growing population pro¬
ducing
increasing
amounts
of
goods.

have recently come to the conclu¬
sion

inventory

liquida¬
tion on a great scale, inventory
accumulation fell to the relatively

The

Washington.
clear.

distress

FINANCIAL

&

CHRONICLE
income is at

THE

(622)

26

first

But

entire

may

I observe, in

an

agreement with Paul Hoff¬

that we have had over-in¬
activity since the War ended.

man,
tense

An economist friend of mine with

General

Motors

"Oh!

we

If

recently put it,
only get back

could

just to full employment."
would

We

little

do

slower

could
cline

well

pace.

have, without
of

duction,

15%
as

in

to

at

run

Perhaps

harm,

total

gross

a

a

we

de¬
pro¬

Paul Hoffman has sug¬

gested, in the sum total of activity.
But in light of the bathtub theo¬
rem, we shall certainly need some
new
investment
components to
close a gap that could come to

quite
lars

a

in

few tens of billions of dol¬
capital formation alone,
magni¬

not to mention almost like
tudes

of decline

that

in

the

consumption

of

the

economy

could

come

components

about

which

I

have not spoken.

Next, after allowing for the re¬
of such an illustrative

siliency

15% decline in total activity, what
would
way

of

we

be able to bring in the

-new

investment activity to \

sustain total employment and out-

Volume

put

at levels high
radicalism—po¬

incomes

and

enough

avoid

to

THE

Number 4724

168

litical and economic—in bur

coun¬

try?

who

who

I would like to suggest two

activity

I

think

problem
Taft

should add.

we

should

we

building,

of

lines
First,
the

master

Senator

as

has

urged, a million and a
quarter houses for each of 10 or
15 years.

We need the houses and
great country like ours should

be able

them.

afford

to

But

we

have not learned how to put that

industry
be

anything that could
"a
mass-production

on

called

basis."

Then in addition

to learn how to rebuild

They

have

cities.

our

blight

rot,

dry

slums around

need

we

and

central hard

a

core.

want

inadequate.

are,
take

can

Those
longer time may

a

trip, but not those of
in a hurry and yet

manage the
us

of

a

highways

COMMERCIAL

are

safety.

Here

is

form of

a

could amount to

activity that

$15 billion

a

pro¬

two, three or four years
depression and help to create
many as two million "on-site"

gram for

of

a

as

and

million "off-site" jobs.

one

to

maintain

thus

is to be the de¬
formulating plans

in

one

total

avoid

investment

depression?

and

That

group, as I wrote much earlier in
this paper, I have come to the firm
conclusion

is

group—the

your

bankers of the United States. En¬

gineers

plan,

can

without

and

Those

much difficulty; businessmen can

greatly

encourage; economists can discuss
and plan, too, as we have done in

blighted
areas
decline
in value so that no tax
return can keep our cities out of
financial difficulty. The only way
we

to rebuild

is

that

do

can

cities

restore

and

values

our

the

higher

that fair tax
rates will cover municipal budg,ets.
I think that is the greatest
single task ahead and once we
property

so

learn the art of it
here

useful

a

should have

we

investment

cushion the
than $5

that would
cycle to the tune of
ponent
to

com¬

more

$10 billion extra year in addi¬
to ordinary expenditures for

tion

similar purposes.

somewhat

Next,

think,

I

fine

need

we

all

have
the

the

them.

new

this

country
highways. We

automobiles

on

and we need good
which to drive
when
planning
a

now

way

highways

in

new

upon

Back

after the

automobiles

to
we

But

upon

new

shall have the

soon we

Then

cars.

comes

the problem

of

highways.
For

example,

would like

I

drive to the Gulf Coast

That

question is: Suppose we
in having a fairly high

succeed

return of activity for a few years

ahead, and then

Winter and should be able
easily to do so from Minneapolis.
In my work of teaching we fre¬
quent! y have 2 V2 weeks' vacation at
Christmas and that should be pos¬
But I

am

ther

suppose

we

fur¬

level.

Moderate

ups and
downs
dynamic economy.
The problem is not to eliminate
variations in
the
general price

natural in

are

level

but

bility
eral

There

denied the privi¬

lege of visiting you in that season
practically
solely
because
our

in

two

are

through

solving

these

this.

to

answers

effort

good

your

problems

hard

will all have become rich first.

we

problems

be

to

leave,
I
economic

solved

future

at

meetings of the Alabama Bankers
Association

Conference

here

at

University, Alabama.

If reasonable sta¬

Fiscal

and

view

from
for

taxes
taxes

receiving

an

husband's

Every
has

foresight

of

owner

is

bond

income from her late

a

are

creditors

government

a

creditor.

who

Anyone

in the bank is to that
creditor. The position of

extent

a

creditors

such

is affected

ad¬

versely by inflation.

been

health,

like

rather

thused

to

seems

ulating
health.

complacent
inflation

over

human

if not en¬
because it

give the economy a stim¬

of

glow

activity

There may be some

and
justi¬
the

fication for such a feeling to

degree to which this condition ex¬
pands needed production for the
satisfaction of man's wants.
Un¬
•

fortunately, inflation does not stop
with that. Although we may not
realize it while the process

is un¬

decided inflation
causes the pendulum to swing too
far. The economy gets out of bal¬
ance
and the subsequent adjustder

.

way,

ment

any

required to restore a balance

-is by no means either painless or
costless. The only escape from the
•

morning-after headache of defla¬
tion is to avoid the night-before
excesses
of inflation. The situa¬

this

tion

If we persist
in sowing to the winds we must
expect to reap to the whirlwinds.
Conditions

Contributing

to

Stability

of stability
condition for a

A reasonable degree
is

a

necessary

healthy economy over a period of




discussion.

for

that

as

Stabilization

polite designa¬

a

scheme

some

of

raising

This is

level.

not

the

sense

in which the term stability

is used
in this discussion.
Stability here
refers to productive activity and
output as well as price. As far as
production and employment are
concerned, a high level is impor¬
because

tant

such

a

condition

basic to human welfare.
does

not

mean

an

is

Stability

absence

of

heed to the essential contribution
of many government

tend

to

be

Provision must be left
changes needed to keep the
economy in balance. In a dynamic
world we have constant change.
We cannot have progress without
changes. We consequently want
changes which are in the direction
of progress but we want to hold
other changes to a minimum.
It may be well to distinguish
between stability in the economy
generally and stability in individ¬
lines

or

industries.

Pressures

the government come from

and that group

tion

and

ticular

this
to provide protec¬

measures

aid.

Such

for their

par¬

pressures

fre¬

quently do not seem to be unduly
concerned about the consequences
of granting their demands as far
as the rest of the economy is con¬
cerned.
sures

If

we

we

are

We

services.

enthusiastic

more

in

demanding services from the gov¬
ernment than in paying their costs
Federal

taxes

largely for

in

do

sense

a

go

not directly
satisfying our nor¬
mal daily wants. This arises from
purposes

concerned with

that

fact

the Federal Budget
weighted with pay¬
ments for past wars and prepara¬

is

heavily

tion for

kind

reaches

will

Until

wars.

level of

the

without

intelli¬
destruc¬

to

resort

of war, the costs involved
have to be met.
One of the

unfortunate features of

which

not

is

made

less

so

by the demands and pressures of
groups and individuals for pro¬
grams which they think will serve

experience

countries

other

immediate

or

of

shows

some

tfye chaos

which results from loss of confi¬
the

in

dence

system.

monetary

The

integrity of the dollar must
be safeguarded if we are to enjoy
stability.
Role of Credit

and

outlets

is that

commonly

seem

to be

in

We

perfectly willing to en¬
inflationary borrowing

saner

even

moments

though in
realize

we

during the recent
had

fact that

faced

wars

war,

but

realistically the

are

destructive and

call for sacrifices rather than

cre¬

ate

prosperity, we would have
paid even heavier taxes. As soon
active

fighting stopped, pres¬
sures
began for lowering taxes
even though a large share
of the
money costs of the war had not
as

been

rather

during

met.

supplies

financial

the

In

major share of

a

of

lifeblood

our

respects credit

some

because it commonly
is easier to get credit when times
are
booming and more difficult

instability

when the
not

is

Credit

going gets tough.

automatic stabilizer but

an

policies to tighten up on credit can
help reduce the boom and more
credit can help speed up recovery
in depression. This applies to both
private and public operations.
While credit is essential to pro¬
duction

of

expansion

an

not

does

always

credit

a

politician may gain votes
by promising to cut taxes by firing
the bureaucrats in Washington. It
may be true that not every em¬
ploye on a government payroll is
absolutely essential. However, the
facts are that any major reduction
in
outlays will involve cuts in
services regarded as essential; in
benefits to veterans; in allotments
to armed services, or in debt re¬

add

perform¬

Taxes will need to remain
for

the

ever,
as

indefinite

it is

a

future.

high

How¬

mistake to view taxes

amounts taken from the income

Taxes redistribute funds,
they do not make them vanish.
stream.

Tax

It

takes

resources

well

as

to

credit

as

adjust to

changed conditions.

economic good health in which
ac-y
tive
non-agricultural production!-

provides
farm

purchasing

products

attention to problems of
maintaining a healthy economy
and less to the seeking of special

pay more

aids.
communication

Modern

for easy credit terms for
housing apparently rest on the be¬
lief
that
if
we
provide ample
credit more housing w-ill soon be
available.
built

houses

But

without

cannot

brick,

lumber,

be
ce¬

steel, labor and other re¬
quirements. In a period when de¬

ment,

far

mand

available

outruns

re¬

credit may have as
major effect that of increas¬
easy

sources,

dent than
the

ever

of

rest

peace,

raised to
public controls over conditions af¬
fecting the availability of credit
on the grounds that they interfere
with
private
enterprise.
Some
Objections

are

be

may

such

that

contend

controls

step in the direction of so¬
Without defending all

a

cialization.

controls, it is rather clear that cer¬
controls

tain

are

for

necessary

stability in this field.

In

connec¬

tion with controls, it may be

well
lay¬

to note a distinction between

ing down and enforcing the rules
of the game and participating in
the game las a player.
The eco¬
nomic
game
cannot be played
without rules.
Regulation of re¬

of discount rates, of open
transactions

market

provide

a

the

which

and

like

within
business¬

decisions.

These

influence the de¬
of private enterprise but
usurp the right of private

regulations
cisions
do

framework
bankers

make their

men

the

and

not

may

enterprise to make decisions inso¬
as they relate to the business

far

concern

or

the situation in

live

tion

of

wants

the individual.

the

actually

quirements

tial

economic

to

is

quently

conditions

live
the

world

clouds

which

under

trade

and

and farm

organizations are
essential part of the eco¬
Economic health
measure

on

taxes

remain, we
effort to de¬
velop a tax system which will not
be an unnecessarily heavy drag on
productive activity or on con¬
sumption.
It also needs to be

remain

sion.

Management

borne in mind that if

share

towards

have

make

to

every

a

serious de¬

pression

occurs government inev¬
itably will have to step to alle¬
viate
suffering.
If - government
fiscal policy is to aid stability we

must

build

good
times to help carry us through the
bad.
Taxes can be employed to
up

reserves

yield to such pres¬
likely to create in-/ slow down booms

on

the

in

up

side

indefinitely

on

a

high

level unless private endeavor does
its best to keep it there. Investors
must be
sume

willing to continue to

with

without

constantly

as¬

do

its

achieving constant
gains in effeciency and in main¬
taining peace through good labor
relations.
Labor leadership and

members
better than

some

pronouncements
that

for

to

need

everyone

*

of their present

to indicate

cannot have

producing less.

rest

of

having warthe horizon.

on

connection that

as

tion in the world

the leading na¬
we

are

affected

the rest of the world
lives and produces.
We can best
by the

serve

way

our

welfare

own

utmost

our

to

by doing

produc¬

improve

tivity the world

over.

The above does not exhaust the

possibilities

of

ramifications
well

of

the

subject.

such

are

it

that

Its
is",

nigh inexhaustible.
By way
we might return to
the outset. The

summary

the point made at
state

of

our

economic health

de¬

what and how much
we
produce, how efficiently we
produce it and how we distribute
pends

and

upon

This nation

the results.

use

has been generously provided
Their

natural

and

human

is up to us.

use

with

resources.

which
a

more

Shortening of

no

a

The main¬

responsibility

individual

monopoly.

It is

or

citizens in

a

group

responsi¬
The gov¬

a

bility of every citizen.

servant of all of the

carrying out these re-'

sponsibilities.

It

should

not

be

expected to serve or be permitted!
to
yield
to
special
interests
whether of agriculture, industry
or
labor
when results will be
contrary to the general good. The
problem of maintaining good'
health in
as

ours

one

an

is

economy as

far from

which

thought

and

complex

simple.

deserves

study of

It is

the

best

all of us.

Allan McLane Dead
Allan McLane,

understand

seem

of
can

we

the

We will do well to realize in this

risks and to provide expan¬

must

conse¬

tenance of conditions favorable to

group
and individual behavior
and attitudes. Production will not

will

health

development

the

ernment is

small

peacetime re¬
consequently

and

lowering in our levels of
A very important essen¬

a

ened individual will contend that

no

for the satis¬

uses

normal

on

depends in

productive

divert

from

of

has

an

associated

activities

Large-scale organization has be¬
characteristic of many lines
business
enterprise.
Under
modern circumstances no enlight¬

nomic structure.

military
extinction.

military preparedness may
a
semblance of prosperity

come

not

to

protection against
with

satisfac¬

the

from

human

While

constant
di-.'

in

and will need to

resources

economic health is

labor

Without"

living.

become unfortunate.

may

depen¬

more

world.

will

war

vert

materials and construction

to

is

on

the

we

dread of

give
they

so as

our

consequence,

reasonable prospects for enduring

resources

drive up

In

welfare

ing demand for existing housing,

the

and

transportation have shrunk the
physical world to a fraction of its J
economic

pressures

for ^

power

employment

and

outlets ifor farm people not needed
on the land.
It might be well to

former size.

Housing is a case
Some of the current

point.

|

The best solution to the price dif-J
ficulties
of
agriculture lies in

for production.

policy may contribute im¬
portantly to stability. While high
should

»

leadership
insists
on
arbitrary$
price supports or other forms of
government aids to avoid having ^

of

duction. Promise is easy;
is difficult.

ance

distress

to

depressions.
But
best health will not be enjoyed by.
the
economy
if
agricultural,

corre¬

mean

sponding expansion in output.

serves,

The

than

serious

:

Credit

even

eventually must be
Taxes were raised to record

we

viate

lead to

financed.

are

Farmers, by the nature of their ^
business, maintain output better*,
many others and help alle*-«

than

prices and increase costs.
long-run effects in terms of

be¬

high*

a

level.

burdensome debt and foreclosures

also

have^

to

are

we

stability of production at

The

but

if

involved

one

on our pro¬

of the way in which modern

cause
wars

have the best attention of every¬

It does this

only by its effect

duction

war

cre¬

but in
costs.,

profits,

on

pro¬

cases

some

conditions of abnor-,^
may
create unem-. ^
ploy ment
and
thereby
reduce. K
want-satisfying power. The task:,
of finding the balancing point is ;
not simple but is one which must ;

faction

creates instability.

not

man¬

required for settling differ¬

ences

tions

future

squeeze

in

in the form of taxes.

change.

for

on

present.

so

some arbitrary level and
keeping them from falling below

.ahead will be affected by our

at

sense

may

prices to

ual

be¬

special

a

has

be well to
indicate what is meant by stability

tion in our economy in the years

havior

in

used

often is used

health, involves avoidance of ex¬
cesses.
A common tendency is to
be

"stabilization"

term

frequently that it
in

Avoidance of Excesses

Economic

.

of the conditions

promise of contribut¬
ing to such stability.
The

as

He may be more
complacent about taxes seemingly
paid by others. Too often the pop¬
ular view fails to give sufficient

if.
some

far

as

levels

consequently in order

to examine

least

he is concerned.

paid.

which give

money

all

It is

time.

diverted

He presses

uses.

at

that the piper

3)

page

funds

as

productive

lower

our

rom

field

tends to add to rather than reduce

to

increased

by

in

may

and except in
mal
demand

economy.

policies of
government can play a significant
role in stability or its lack.
It is
probably natural for the taxpayer

earned

a

ity of credit and other monetary
are important forces in the
economy. This is a highly complex

The

Fiscal and monetary

during wartimes

(Continued i

in circu¬

ate

lation, its velocity, the availabil¬

ends.

Monetary Policies

unless

ductivity

factors

individual

They nor¬
mally will vary from the general
price level but will be related to
the latter. They will acquire sta¬
bility from stability in the general
price level. If we attempt to deal
with individual prices by govern¬
ment action, we are more likely to
create
rigidity
than
to
foster
stability.

hours and increasing rates of pay

most instances will drive up

their

levels.

own

The volume oi money

left to

be

can

'!"

"

indi¬

prices of

level,

find their

gage

Essentials for E conomic Health

of

conditions

avoid

vidual commodities

it

should
thorny

Second,
we
think,
a
few

a

be achieved in the gen¬

can

gence

First,

to

price

the

components

to keep us from falling
in the depths on the

as

down

help make this point clear. Sta¬
bility will not prevail if there are
violent swings in the general price

bringing in. new
to hold
the high tide of activity we seek
for 20 years ahead, will we not
then have an extremely
severe

in

succeed

investment

to

time

some

every

sible.

bring forward from the banking
groups in America sound finan¬
resi¬
dential rebuilding of our cities,
and huge programs of highway
building can be soundly financed
by fair combinations of private
and
public credit to the very
great advantage of all of us.
Now, in conclusion, you may
have one more question in your
minds, as did a group in Wash¬
ington with which I discussed the
same question we have been talk¬
ing about tonight.

well

as

27-

(623)

downswing.

the financial plan.

cial plans whereby immense

An

clear

depression?

the expense

autos.

drive

had, before
highways at
of not having the new
as

had to make

we

would first want

we

war

highways

new

crucial plan is

But the

That is your problem.
So I leave with you the problem
which is the hardest of all, to

activity, I said, when at

postwar

the Department of Commerce, that

such

this session this evening.

stability rather than stability.

illustration taken from prices may

boom and bust.

But what group

cisive

FINANCIAL CHRONICLE

&

who retired ten

partner in the Wall
Street brokerage firm of Redmond

years ago as a

&

Co., died at Santa Monica, Cali¬
of fifty-three.

fornia at the age

28

THE

(624)

COMMERCIAL

may

be possible for all those

it is quite impossible to be certain.
They Want More

4

thing is quite clear. Consumers generally are, for
•one reason or another, now
refusing to accept what used to
satisfy them or was at least tolerable to them. That the
"needs"

now

or

"wants"

more

than

he

did

and

Housing, therefore, affords an excellent example
taking place in our economic thinking, and
in our economic system. It is now, and has been for some
time past, affected with gn insidious disease which has

of what is

malady

gnaw at its vitals. Evidence of this internal

are

now

observable to the casual

eye

the doctors say,

and if left to

run

end have disastrous consequences.

its course will in the
Elements of the same

infirmity are now present in a number of other branches,
notably agriculture, local transit and the electric power
industry. Indeed, the nature of infirmity is such, and its
incidence is so general,.that it could scarcely fail to
affect all branches of business, directly or indirectly, in
one degree or another, but it is ordinarily more easily
recognizable in those industries providing goods or serv¬
ices which somehow come to be regarded as "inalienable
rights" of each and every man.
The Facts!

Let

take

good look at the essential current housing
facts so far as they are readily available. The number of new
diomes built in 1946, 1947 and 1948 is very large. The indus¬
try is still today going at capacity. So great has been the
us

a

-volume of construction that

were

find at

we

it not for the accumulated

this

through to its final end result,

that it is traced to

once

,

hitherto known in

peacetime, military outlays

will,
willing to produce.

apparently still without
an
adequate supply of available facilities. There cer¬
tainly has been no revival in apartment house construc¬
are

tion

comparable to that in the individual house for sale.

The

reason

is obvious enough. The return which

can

be

reasonably expected

on the millions necessary to the
large buildings is not sufficient to
attract funds. A similar reason, doubtless, accounts at
least in part for the fact that the smaller dwelling units
have been so largely constructed for sale rather than

construction of such

rent. Such
vestors

is

reluctance on the part of builders and in¬
unquestionably strengthened by income tax




sumer.

Blames Administration

How

can

which

we

not have

can

than

more

in power for 14
the responsibility for
high prices which are the results
of its policies?
has

been

years escape

results

without

corresponding
imports,
encouraging patterns of gen¬
eral wage increases on the theory
that
they
would
not
increase
prices, from the failure to use

-

to

powers

and

of

from

we

restrain

bank

(Continued from first page)

members of
of the Senate
running for re-election.

reckless

speech

Philadelphia,

at

the House and many

the President had said:

are

Republicans all pro¬
civil rights meas¬
ures.
But Congress failed to act
They had enough men to do it.
They could have had cloture; they

Congress had given full consid¬
eration

to

most
from

President's

the

sals at the

propo¬

regular session and in
the

cases

resulted

quarrel

fundamental difference in

a

government

philosophy between
the President and Congress.
The
New Deal program

President has

a

of unlimited

"But

fess

kind

of

iabor

and

materials

with

didn't

The fundamental differences with
the President

by

a

vote

of

only be settled

can

the

people

at

the

already

com¬

prehensive enough for him to deal
with those problems if he really
wanted

ations

to,

we

where

Executive

committees went

once

to

detailed

powers

consider

the

proposals.

It

work

to

at

President's

is

signifi¬

cant that the Presidential advisors

did
on

not
the

agree
causes

filibuster.

a

The President

this state¬

made

ment

knowing well that the pres¬
ent cloture rule is completely in¬
nocuous against a determined fili¬
buster by 20 Senators. We brought
up the bill. We attempted to in¬
voke cloture.

beyond
that

It became apparent

the
is

there

a

effective

no

rule in the Senate
a

of

shadow

doubt,
cloture

today and that

filibuster by 20 men on a motion

to

take

be

a

overcome

or

cannot

up

six weeks.

month

Remember that Senator Barkley
had tried three times to get a
bill

tax

through

Senate without
ent

situation

a

poll
Democratic

The pres¬
intolerable

success.

is

_

and

may at times threaten the national
security* We determined that the

cloture rule must be amended to

debate in
reasonable time ahd appointed

permit
a

closing

the

committee

a

conference to
ment

to

the

of

the

of

prepare

rule

to

Republican
an

be

amend¬
brought

at the next session of Congress.

up

This amendment itself is subject
to

filibuster, and

we may

be forced

to

spend weeks at the beginning

of

the

next session to

amendment.
to

do

We

are

secure

the

determined

so.

found various situ¬

might be somewhat enlarged and
our

have

to

ture."

in less than

November election.

were

have

They had enough people in that
Congress who would vote for clo¬

spending,

expansion
of the power of Federal bureaus
over States, cities and individuals,
and the regimentation of agricul¬
ture, labor and industry. The Con¬
gress believes that problems must
be solved within the principles of
liberty, equality and justice which
guided this country for 150 years.

for

be

among
and

themselves

cure

of infla¬

tion.

(4)

In

his

convention

speech

the President tried to blame high

prices

on

the Republicans, but he

said:

The President's only complaint
is

that

the

Republicans

ties.

will not
to fix wages, to

power

prices
This

and

ration

is like

"Farm
less

income

has

than

increased

$2,500,000,000 in
1932 to more than $18,000,000,000
in 1947. Never in the world were
the

farmers

any

kingdom

of

commodi¬

tying down the

while

furnace.

The

Paul

would

It

explosion

an

President

on

go

you

in

called

the
back

Porter

and presented a bill
rolling back prices to November,
1947, and giving him power to

reinstate

the

OPA

whose

65,000

employees cost the government at
least $150,000,000 a year.
The President himself says that
will only use selective con¬

trols, but he himself abolished
price controls on Nov. 9, 1946, and
the fact that you*
selective controls.

gave as a reason

could

not

have

He said;
"The

Price

advised

Administrator

has

that,

with so much
of the economy freed from price
controls,
clinging
to
the
rest
would, in his judgment, lead to
distortions in production and dis¬
me

tribution

to

an

weighing

Certainly

extent

benefit

any
be achieved."

far

that

cannot

you

price of wheat and

out¬

coulc$

fix

the

and other

corn

grains without fixing the price of
chickens and eggs and dairy prod*
ucts.
Our economy is so inter¬
related

that

once

we

start

on

a

of regimentation we can¬
not stop short of regulating all
major
products
and
rationing
program

of them.

many

Restoration

of

OPA

Opposed

'

is my view that the restoration of OPA, subsidies, price con¬
It

trol,

wage control and rationing,
police state methods decried
President Truman himself—»

—the

by

would

only

make

the

situation.

Worse, create black markets and
check the increase in production
which will reduce prices. The dif¬
ficulty with price control is: first*
that

it

won't

work

in

time

of

second, that no one knows
enough about the infinitely com¬
plicated economy of this country
to do the job right; and, third*
that
if prices
were
held down
arbitrarily, production is discour¬
aged and consumption increased.
peace;

We
tail

from

private

industry.

he

the

to

credit,

spending vast amounts
money for every
project, competing for

government

safety-valve

all

tre¬

from

Runaway Inflation or Depression
Unlikely, Says Senator Taft
when

the

from

the war, from the encouragement
of exports to all parts of the world

end.

campaign

Policies

administration

an

stoking the
only bring

are

powers

than in individual homes

which have to be paid by the con¬

fix
we

farmer

they can't avoid re¬
sponsibility for the high prices

give him

Do what

the

from

labor

Inflation

tre¬

are

credit

claim

and

mendous deficit before and during

mendous.

shortages due to the "lost" New Deal years and the war, sup¬
(2) When the President submit¬
ply in those areas and in those types of houses being con¬ ted a program of some 15 major
structed would long ago have far exceeded demand. As it is, proposals which would take at
current reports are that single family homes, indeed homes least six months to work out satis¬
constructed to house not more than, say, four families, are factorily, the Republican leader-?
ship determined that it would give
mow
in about normal supply. But, according to
many ob¬ no consideration at this time to
servers, there is a fly in this ointment. These houses are for long-term programs, but would
the most part built not for rent, but for sale, and the price examine in detail again the Presi¬
asked for them more often than not places them beyond the dent's suggestions on prices and
housing and determine whether
reach of the "low income" groups about which we hear so
there were any suggestions for ad¬
much. It is probably true that the home ownership idea has ditional Executive power which
•been overworked. Home ownership is commonly regarded could be immediately helpful in
those fields.
as
highly desirable, and in many circumstances such it cer¬
While we found that the Presi¬
tainly is. But there are many other considerations, too.
dent's

Meanwhile, those millions in metropolitan centers
who for one reason or another find it economically de¬
sirable, or even necessary, to live in apartments rather

to

simple fact.

one

people are demanding
more than they ever had before—not
only in terms of
money, but in goods and services—at the same time that
as many, or possibly more, are less willing, than in the
past to sustain the effort necessary to produce that
which they demand. Two factors not heretofore usually
present in the American scene render it more than ever
necessary that production be efficient and as abundant
as it is possible for it to be made.
One of these is the fact
that we are giving away large quantities of goods which
must of course come from our current production, and
the other is that compared to anything that we have

only in

spots here and there, but the disease is progressive, as

to the

farmers*

That fact is that large numbers of

formerly, or now demands better quality (or at least more
gadgets) would be wholly unobjectionable, of course, if it
were
accompanied by a correspondingly greater resolve to
obtain these better things of life in more abundance by his
own effort and initiative. The
trouble, of course, is that it is
not so accompanied. On the contrary, this enlarged demand
is accompanied by an observably reduced willingness on the
part of a great many, perhaps, the majority, to exert them¬
selves to satisfy their own wants. This state of affairs has
placed its mark upon the housing situation, and one result
is that we constantly hear -wiseacres saying that "never
■again" can the lower income groups, particularly in the
larger cities, be expected to pay their own way as respects
housing.

begun to

take all

Now

One

individual

.

.

labor what I have said

to

Difficulty

them with the amount of work these craftsmen are will¬
ing to do for those wages. It at once becomes obvious that
wages like these for production like this simply can not be
paid except at very high prices for the finished product.
If that other factor in cost—materials—is similarly studied,
and if the cause of the high prices of these materials is
ferreted out, it is soon found that building materials are high
for the self-same reason that houses are high.

find accommodations. All this is
clear enough, but precisely how bad the current situa¬
tion really is in comparison with other periods of shortages

try have increased from $29,000,000,000 in 1933 to more than $128,000,000,000 in 1947
and I say

part of such

a

pare

for that purpose may

J

large

they are the most un¬
Now, precisely what is at the root of these difficulties? grateful people in the world if
It is commonly and correctly said that the trouble is found they pass the Democratic party
by this year."
in the high cost of construction. But
why is construction so
■Of course you can't have high
expensive? The answer to this question is easy enough to farm prices and high wages with¬
find. One has merely to study the wage rates of carpenters, out high consumers' prices and
bricklayers, masons, electricians, and the rest, and to com¬ if the Democratic party is going

who wish to rent and have funds in reasonable amounts

;

Thursday, August 12, 1948

.

The Real

deal of crowding still exists at some places at all events.
Obviously prices of individual homes are high by al¬
most any standard. Comparatively speaking, rents are
low, but, of course, returns obtainable upon rental hous¬
ing facilities are not such as to bring in an adequate
enlargement of supply. The result is that low rents
arbitrarily enforced by government defer rather than

day when it

CHRONICLE

income

(Continued from first page)

the

FINANCIAL

laws which tend to take away so
as is earned.

As We See It

hasten

&

prove
ber

would

and

the

the

have

a
bear by the
to let go or im¬
situation. We remem¬

no

way

black

markets

after

the-

the inability to buy the com¬
monest articles of clothing or food,
except, perhaps, in the black mar¬
ket.
Eighty percent of the meat
was
in the
black
market, and'
legitimate slaughter had so de¬
war,

republic or
other coun¬
try as prosperous as the farmers
(3) While waiting for the com¬ of the United States; and if they
mittees to report, we attempted don't do their duty by the Demo¬ creased that there were neither
to pass the bill outlawing the poll cratic party, they are the most enough hides for shoes nor enough
There
is:
tax, which had not been taken up ungrateful people in the world. insulin for diabetics.
at the regular session.
In his Wages and salaries in this coun¬ hardly a country in the world usThe

Anti-Poll

Tax

Failure

any

or any

Volume

168

THE

Number 4724

COMMERCIAL

largely
concerned
with
ing controls which is producing is ever accepted in time of peace, been
enough goods for its own people, li¬ it will mean the end of economic cleaning up the war and starting
the country on a peace basis.
lt is perfectly useless to go on freedom in the United States.
with the policies which create in¬
A
constructive
program
in
Have Aided Housing
flation and then try to prevent
other fields covered by the Re¬
their results by calling in the po¬
(5) With regard to housing, publican platform will be under¬
lice.
The President can check much already has been done to taken with the cooperation of a
these
causes
by
reducing the solve the problem. The President's Republican President.
With Mr.
amount of government spending economic
report submitted last Truman there has been a constant
which in many fields is still with¬ week, says that more than a mil¬ conflict and no cooperation what¬
in his control, by tightening up lion new residential units will ever. The; attitude of . the Presi¬
on housing credit for higher-cost
probably be added to the residen¬ dent toward Congress is a sad con¬
houses and requiring strict ap¬ tial supply during 1948. He says: trast to the cooperation which he
"This volume of residential con¬ has received in the whole field of
praisals, by limiting exports from
the United States, the excess this struction is already straining the foreign policy. We have done our
amounting to about $8,000,000,000, only part of, it to Europe;
He can, through the Treasury and
Federal Reserve Board, limit the
expansion of bank credit and the
year

of

creation

more

currency.

capacities of the construction in¬
dustry in many areas and of pro¬
ducers of some construction ma¬

best

assist him,

to

Our

Reporter

the

direct

can

buying

of

v

■

.

to encourage in¬
price.
He can direct
the Department of Agriculture to
encourage
production instead of
way

not

as

in

creases

attempting, as they did in July, to
reduce' the number of breeding

The

.

timing of the announcement

and sacrificed

by 500,000 when our meat
supply is as short as it is today.

The truth is that the moment any

price

threatens

even

to decrease, the government rushes
to bolster it up by purchases and

propaganda. They are really more
concerned

deflation

about

again

was

than

The program was a com¬

started.

.

went

abolished
Wilson

dismissed
turned

more

the

number

the

below

while

their
'be

the

banks

"governments,"
in

used

other

can

can

powers

I

probably
with

connection

We also granted

'unload

100.

More

than

units

of

.

.

Short-

.

intermediate-term

and

the

have described.
the Board power

to limit instalment credit for con¬

This is not

sumers.

but

did

represent

large item,

a

about

$2,000,-

'000,000 of increased credit last
year.
Credit control has been a
traditional power of the govern¬
ment and it is probably the most
important single power to check
inflation.
In fact, it must be care¬
fully used not to go too far.
I
venture to predict that the Board
will never use all the powers the
law now gives it.
.

Sees No Likelihood of Extreme
Inflation

The present

situation, while se¬
is not likely
to produce either an extreme in¬
flation or a depression.
Whole¬
rious

sale

millions,

for

prices

are

now

higher than

in 1920, but they are
only 2% higher than they were
in January,
1948.
Furthermore,
the weekly earnings of factory
workers in 1920 were only $26.61,
and they are now $52.81 a week.
There are many reasons to believe
that we are reaching a stabilized
they

were

price level.- Wheat and corn have
already dropped close to the sup¬
port prices and will probably be
followed gradually by many other
;foods. Even in the price of meat,
where

prices are most outrageous¬
ly high, the President in his mes¬
sage to
Congress indicated that
there was no need for rationing.
He said:

"On the basis of present facts,
and unless further

this

authority

not have
:

The

shortages occur,
(to ration) might

to be used at all."

President

now

has

power to prevent

every

inflation, except
price control, and if price control




bonds

.

gave

.

for

to

strongly

and

subject of major contro¬

a

versy

income

lowest

between House and Senate,
House of Repre¬
the position

the present

sentatives has taken

that it is not needed at this time

.

support prices

old

the

on

the eligibles

or

...

On the other hand, a

optional

meet

to

re¬

demptions of maturing marketable
securities by private investors and

$700, million

possibly

(tax) notes unless

their terms of issue are made more

attractive.

Op this

basis $2,300

million would remain available to

obligations held
by the Reserve banks.
retire government

distress selling does not develop.

sum

six

next

total

would

rate.

for

large market ^support pur¬
by the Reserve System
Even
though
this
sum
might
chases

adequate, conservative pol¬
would dictate an increase in
on
short-term government

prove

icy

indicates that only
eligibles

rates

.

.

Whether

.

along with a general increase

borrowing, will result from the higher Certificate
reserves will be upped appreciably will probably

what takes place in loans. ... (It is assumed that Pres¬
will sign the anti-inflation bill.) . . . Some believe,

upon

Truman

however, that reserve requirements in districts that have been
ing a strong loan trend will be increased at once. ...
authority to increase reserve requirements

The

demand and

114%

enough

agers

on

power

short-term

would create a demand
obligations and would

gations

by 4% on

.

•

•

JITTERS

Monetary experts, economists and politicians have been

having a

the net result of all these proposals and
proposals is more and more confusion and uncertainty,
which to say the least has not been helpful to the,-government
market.
Money in itself is easily scared, which means that it will
seek the safest haven possible, and under existing circumstances that
is either cash or the shortest Treasury obligations.
.
Because of the
field day for themselves and
counter

.

.

.

.

An increase in rates
government obli¬

obligations.
on

show¬
•

time deposits, should give the money man¬
to frighten the money markets from tjmd

time, in addition to mildly restricting the credit base.

to

become too strong and necessitate
very

.

ident

the

credit does not

cost of all

.

depend

seem

months,- provided

demand

.

An increase in the rediscount rate,
in the

adequate
to
offset factors tending to in¬
crease
bank reserves during the
This

curve

COLLATERAL RESULTS

be

may

needed to cover net cash redemp¬

tions of saving

1*4% yield

price adjustments will have to be made in the

and these may be the new support levels. * . , It could be that
there will be a "free market" in the bank issues, as long as

(Continued from page 9)
needed

be

.

imponderables, fault cannot be found with investors if they
continue to stay on the sidelines and do nothing until some of the

many

clouds have lifted.

.

.

.

such

for

It maybe that

enable the Reserve banks to shift

part

some

of

cbmmercial

were

not be

ily

banks

and

other

this

its

own

is

in¬

that

done, the Treasury would
compelled to draw so heav¬

upon

erable extent

to

holdings

the. extent

To

vestors.

their

cash resources

to redeem maturing debt held by
only divert materials
•the
Reserve banks
in order to
private housing now be¬
offset the effect of support pur¬
ing constructed.
chases. Consequently, the possible
With much regret, I agreed to
necessity of depleting the War
postpone
consideration
of
this Loan accounts might be avoided.
question until January and do all Although an increase in shortthe other things Which might be term rates
is, in the words of
helpful in the housing situation. Chairman McCabe, "a necessary
I
shall
re-introduce
the
public and
desirable
step"
from
the
housing bill in January and press standpoint of money market man¬
for
its
prompt consideration. agement, such action may not be
There was, in my opinion, no pos¬
taken if other considerations such
sibility of passing it at this ses¬ as the November elections and the
sion of Congress.
international situation are given

and

held

be

the

minor

built under

While
I
believe very
in this program, it has

groups.
been

the

whether

know

.

.

not, have thrown another element of uncertainty
picture.
It might be that advantage will be taken of
recent developments to lower "pegs" on bank issues. . .

twice
being

are

market

into

re¬

subsidies

built this year as were

ernment

Ihe

would

controls,

Wyatt, and
the

of

Treasury.

the

ident.

President Truman

plete failure.
himself

Wyatt.
Housing credit is one of the
Attacks Artifically Low Interest elements adding to inflation. We
did find, however, that too much
\
Rates
of
the government-insured
con¬
The traditional methods of pre¬
struction was going into housing
venting inflation are within the
costing more than the average
power of the government today
citizen could pay arid that there
The Federal Reserve Board can
was
practically no rental hous¬
force an increase in the rate of
short-term government bonds and ing being built under the pro¬
can raise the rediscount rate.
It gram. We therefore amended the
law to encourage the construction
has been discouraged from doing
of the cheapest types of housing
so by the attitude of the Treasury.
and also to encourage the con¬
We cannot hope to prevent in¬
struction
of
more
rental
units
flation with an artificially low
Our idea is not to increase* the
interest rate.
In examining the
amount of money going into hous¬
powers of the Board, we decided
ing, but rather to direct the flow
that they
could effectively use
of that money into moreVTsmal
the power to increase bank re¬
houses and rental housing where
serves
above present limits and
it is so badly needed.
we
authorized them to increase
The President's only complaint
the reserves 4%
more
over the
is that we did not' include a pub¬
present percentages, amounting to
lic low-rent housing program, de¬
a possible increase in the reserves
signed to add about 100,000 units
of about $3,500,000,000.
a year, in which the rentals would
This power, while useless in it¬ be subsidized
by the Federal Gov¬
self

mild surprise, and the

pushed

.

about inllation.

:

was a

around, following a minor
recovery that had been going on in the longer eligibles when
it
became evident that the Congress would tone down the authority
of the Federal Reserve Board to increase reserve requirements.
.
All sections of the list were affected
as
the longest Certificates
market

government

many of our ow views so that; it
up a few thirty-seconds, with the longer eligibles down about, a
might not appear to the world that
terials and is unquestionably com¬ America spoke with two voices. quarter of a point and the partially-exempts again all over the lot.
Volume was light and the market largely professional because
peting with other primary national Yet now, the President is trying
the authorities were not inclined to do any substantial amount of
needs."
to make political capital of the
The ineligibles continued at
This increase is due to legis¬ policy made possible by Republic supporting of the bank obligations.
lation enacted by the Republican can and
Congressional coopera¬ "pegged" prices.
Congress. Several years ago we tion, while he vilifies the Con¬ AT WHAT LEVEL?
granted unlimited emergency pow¬ gress.
""7; '
There is considerable question as to where support prices are
ers to the Truman Administration
( ■ The only reasonable way to on the eligible bonds, especially in the intermediate maturities. . . .
and hundreds of millions of dol¬ work out- a
Republican program The longer maturities held slightly above previous "pegged" levels,
lars of subsidy funds, to remove in detailed
legislation is in co¬ but it v/as purely a quoted market because investors and dealers alike
bottlenecks and get construction
operation with a Republican Pres¬ are too confused to make real bids.,, *. The authorities, by not letting

cattle

agricultural

■

:

Higher interest rates became a reality, when' Secretary of the
Treasury Snyder announced on Aug. 9 that the fall refunding would
be taken care of with VA% Certificates and 1%% (18% month) Notes.

.

a

Governments

on

■"

By JOHN T. CHIPPENDALE, JR.

.

.

He

goods for European relief in such

29

(625)

CHRONICLE

FINANCIAL

&

would

from the

on

our

doubt about the

no

monetary policies are based to a consid¬

uncertainties, and if this is the case, then there
success

Mouth Operations" on a
'

in Washington,

was

one

that has been achieved.

.

.

.

"Open

grandiose scale, such as that just put cm
of the best shows yet, from the stand¬

point of creating confusion.

...

^

-I

INVIOLATE

Despite all the uncertainty that appears to exist over the main¬
of support levels for government obligations, there is not
much likelihood that the 2%% rate on long Treasury obligations win
tenance

be

altered

definite

by the

stand

and

present Administration. . . . They have taken- a
there is no reason to believe they will not con¬

tinue to defend their

realize

that

If
group

position

on

dynamite and they want no

there

should be

a

They also full well
prices to go below 190, >s
part of it. . . .

this matter.

allowing government bond

loaded with

...

change in Administration, the present

would have only about six more months

in which they

governments at "pegged" prices." . . . There is
ability to do that. .
This would mean
Administration which has been doing so much

would have to buy
no

about

doubt

that

the

new

the

.

talking about dropping the "pegs," would

.

then be in a position

to practice what they have been preaching. ...
the
only primary emphasis.
measures which could possible be
WAIT AND SEE
regarded as emergencies after a
This raises the question as to whether a new Administration in,
With Walston, Hoffman
careful study of the President's
Washington is likely to lower support prices on governments despite
(Special to The Financial Chronicle)
program,
we
adjourned.
The
all the advice that has been handed out on that point. ... It is easy
President himself at Philadelphia,
SAN FRANCISCO, CAL.—A. L.
to tell people what to do when one is on the outside looking in, and
suggested 15 days as the time that Hoogs is now connected
with
does not have to pay the. con sequences for what might take place. . ..
we might take at this time to con¬
Walston,- Hoffman & 7 Goodwin,
It is an entirely different matter when the shoe is on the other foot,
sider legislation.
265 Montgomery Street, members
and that those who dance have to pay the fiddler. ... A sharp de¬

(6)

Having

passed

of

Defends Work of 80th Congress

The President

(7)

calls

various matters

tion

to

the

Eightieth

act.

The President does not

tion the
which

Congress

hundreds

we

did act.

of

on

the New

Yorl^ and" San Fran¬

cisco Stock Exchanges.

did

not

men¬

matters

on

In this day and

Calder With A. M. Kidder
(Special

to

The

Financial

Chronicle)

JACKSONVILLE, FLA.—Hugh
C. Calder, Jr., has become asso¬

Federal Government is ciated with A. M. Kidder & Co.,
in
practically
every 122 West Forsyth Street.
He was
problem that exists. The policies formerly with Allen C. Ewing &
age,

the

involved

of hundreds of bureaus are under

legislative scrutiny and are deter¬
mined by legislation. Legislation
should

deliberative process,
it does establish perma¬

be

because

a

Co.

v-

r

to recapture.

...

alf that has been said by the outs, about pulling
Treasuries, they will no doubt do soms very serious
thinking about what might happen, before they act, in event
they become the ins. ... A soundly worked out refunding pro¬
gram could be the answer to many
of the problems that are
facing the government bond market. . . .
Despite

"pegs"

on

NEARING THE MARK

With J. Barth & Co.
(Special

to

The

Financial

Chronicle)

SAN FRANCISCO, CAL.—Eu¬
policies. Only a fraction of
entire field can be properly gene H. Gray has become asso¬
studied and handled in any one ciated with J. Barth & Co., 482

the

The Eightieth Congress has

in

.

nent

year.

prices of government obligations below 100 might have a
business in general, to say nothing about what
might happen to demand obligations, such as savings bonds.^ . . .
Confidence is a very elusive thing and once lost is extremely difficult

cline

serious effect upon

atten¬
which

California Street.

Purchases of

government bonds*, by the Federal Reserve

Banks

during the past week amounted to $402,264,000, Of which $398,524,009
were due in
more than five years.
...
It won't take many rrsere
weekly purchases like this one for the

Central Banks to reach the
half of 1948, by Chairman

figure of $1,500,000,000 forecast for the last
McCabe of the Federal Reserve Board.

(626)

30

THE

COMMERCIAL

Foreign Policy

(Continued from page 6)
thorize other members to withhold
representatives of 53 nations from Country X the lower tariff
4.1

^

_

„

agreed upon a text for submission
to their respective legislatures for
their approval.

This text will be
considered by our Congress early

next year.

Third, the United States initi¬
ated the European Recovery Pro¬
gram.
You are familiar from your
daily papers with the progress of
this mighty enterprise; '
The efforts to reduce trade bar¬
riers and to put Europe on its feet
have been well begun.

They are

indispensable steps towards world
But the economic gains
trading improvements which
they promise to bring about can

recovery.

and

grating them into
trade

world

only by inte¬
framework of

a

that

will

permit a
broad and sustained expansion of

af body of international law in
economic field by the case

up

mehod.

Charter

than

such

treatment.

a

does

Republic

unequal
The

and

examine

this

—

trade—to

would

good

do

this

and

see

what

it

of

the

recognized this in their

adopted

Constitution

Charter
world

unfair

founders

wise old Plan of 1776

therefore

restrict trade arid

to maintain higher-than-competitive prices.
Members may bring

the

when they

principle

discrimination

its

as

of

first

non¬

article,

for

and in 1778 incorporated it in our

what

it

holds

for

first commercial treaty.
And so, throughout the Charter

ill for the United States.

the

runs

country

to

take

remedial

action

and to recommend what that

tion

Havana

Fundamentals of the Charter
us

ducing

should

be.

Charter

The

reflects the comments of different
American groups, given in public

in

seyeh cities of the
It

harmonization, in

represents the

preferences

within

Empire

and

United

States

here

even

those
and

the

British

between the
Cuba.
But

preferences

not

must

be increased and there is

an

obli¬

series of inter¬
national discussions, of the diverse gation to negotiate them down¬
wards.
views of first three, then
18, then
In a few special cases, such as
23, and, finally, of 53 countries.
These

countries

a

represent

stage

every

ment

the

philosophy.

That

reached is

was

skill

of

the

a

tribute to

negotiators and

the good will of the
countries.

the formation of

a

customs union

the

development of an under¬
developed country, a new prefer¬
ence may be allowed, but
only in
agree¬

of
economic
development
and almost every
variety of eco¬
nomic

or

under the

The requirement that

that it is essential to develop the
resources of underdeveloped areas

vidual

and to make the fullest use of the

income

limited

of

must

The Charter

Charter

x p e n

.

would

bors

will be

The Charter

reflects

that

excessive

or

the

arbitrary

belief

bar¬

riers to trade must be reduced, so
that trade may be large and may

better

live

taking

tation
through an international
organization when interests come

into conflict.
If I have

bors raise

a

garden and my neigh¬

chickens,

we may follow

the

law
of
the
jungle:
their
chickens eat my
vegetables and I
shoot their chickens—and all of
us lose.
Or, we may consult with

an

ITO

undertake to

negotiate with

each other for the substantial
duction of the general level

re¬

of

tariffs, and to abandon the quota,
the most effective of all barriers
to trade, as a protective device.
For 14 years the United States has

followed

the

sound

a

These

basic
which

we

that

so

illustrate

examples

want

our

to

have

obiective

is

the

prevail,
clearly

agreed, and to allow for

necessary

deviations

of

in

the

tions, limited in

defined,

and

form

excep¬

extent, precisely

clearly

understood

to be exceptions.
Multilateral

Trade

The undertakings of the Charter

equality
of

taken

further

of treatment and

artificial

trade

together,

bar¬

reflect

fundamental

belief

the
that

vides
for

discussion

and

resolution

bilateral;

that traders should be able to buy
and

sell

where

changing

they

goods

please,

for

money

bers

agree to sit on
before they shoot.

mem¬

it and talk

money for goods,

rather than hav¬
ing sales confined to buyers who
agree to deliver equivalent values

cause wear

and tear

goods.

permits

Multi¬

the

maxi¬

interchange of goods.

lateralism

barter

and

limit

Bi¬
the

capacity of the

weaker partner.

members

of

disputes

machinery.
measures

It

through

to

settle

the

ITO

recommend
for the settlement of dis¬
can

putes, but it cannot order any
member to take any action.
Nev¬

ertheless, it is not powerless.
if the

create

rules

should

be

provided

for

reaching intergovernmental agree¬
ments to govern temporarily the
production and rtiarketihg of such
commodities when they
any
are
in
than the back pdrch is the formalities and makes regulations burdensome
world surplus.- >

dertaking
their

can

very foundations of a cooperative
world economy.
Machinery and

city government.
It derives its more uniform as between mem¬
authority from the voluntary un¬ bers, It is the most comprehen¬

ITO finds that

a

For

member,

Country X, is not living
"
■

up
L

Charter

may

"

'

,

.

commitments, it




to its
au-(

sive

international

this

field

which

To

vides

agreement
in
has
yet
been

.

To this end, also, members agree
to prevent public or private com¬
mercial enterprises from engaging

tition, divide markets, fix prices,
foster

monopolies.
For trade
ui
uauc
not always imposed

are

would

the

of

measures

others,

private

international

recognize the

need

advancement

t

and

to

economV-

for

less

of

to

public

and
investment

encourage

oped

stim¬

difficulties

create

economies

well-devel¬

areas.

Finally, and

very important, the
reelects the belief that

end,

the

countries

Charter
may,

circumstances,

pro¬

under

rules that

commit¬

definite

were

that

ments

specific—some¬

were

thing that would work, not just
in some future Utopia, but in the
world today.
That is why the
Charter is complex.
;
Its

though nations,

may

choose to

use

That
has

is.

Exceptions

also, why the Charter

exceptions.

We

would

that

rules

wanted

long term: rules that
would set the directioh of our ef¬
work for the

forts towards

expanding interna¬
to come.
not overlook the
fact that the realities of today's

tional trade in the years
But

could

we

world

demand

meet

to

measures

today.
So the
Charter contains transitional rules
today's

problems

(call them exceptions if you like)
to meet the immediate extraordi¬

situation

nary

well

as

long-

as

different systems of trading, it is
possible for them to work in har¬

term rules for the long-term

mony.

the other would

.In the United States we believe
in
private enterprise
and
free
competition in our domestic and
in

foreign trade.

Our con¬
stant objective is the preservation
and strengthening of the private
enterprise system.
This was the
purpose
of our negotiators who
our

worked

on

the Charter.

And

believe that the Charter will

this

we

serve

Yet nowhere does

purpose.

all

by private

Nowhere

does

it

en¬

con¬

This

strange to
ever, that

we

are

in

blush

seem

The fact is, how¬

you.

belief

our

first

at

may

lonely in
enterprise
believe tha+

very

private

a

number

of

ourselves

cases

that
seek

a

current

sometimes from

different
sure you

be

from

a

basic

lems by common

But

I

am

will agree that it would

oiiir
convictions about individual

liberty and national

sovereignty

for us or any nation to
dictate to other nations the
which

thev must

conduct

of

their

try

to

means

employ for the
trade.

organization

could

join; to
prob¬

common

action. We copld
that

fact

the

overlook

not

these

nations had many,
different^inter¬
ests 'and many different points, of
We remembered the words

view.

in commenting

Federalist,

the

of

upon our own

Constitution:

"The result of the deliberations

of all collective bodies

essarily be
errors

in

which

compacts

distinct states,

embrace 13

to
a

nec¬

and wisdom of the
whom
they are

The

composed.
are

must

compound as well of
and prejudices, as .of

a

the good sense
individuals
of

bond of amity and

common

union, must as necessarily be a
compromise of as many dissimilar
interests and inclinations."
_

What
states

true

was

of

is

true

1778

in

distinct

13

of

dis¬

53

tinct states in 1948.
The

Question for the

1

United States

The

philosophy

ours.

wholly inconsistent with

own

solution of

situation

shortage

nations

manv

This belief of other nations arises
sometimes from the exigencies of
the

imperil the over¬

objective.

We also wanted an

the

demn state trading.

pat¬

Either set of rules without

tern.

it require that international trade

is

whether

ratified
It
as

which

question

countries must

other

can

we

and

and

we

now

decide

this Charter shall
the

be

ITO established.

be improved by amendment
work with it.
It must by

its terms be entirely reviewed

five years.

The

in

But it cannot be re¬

negotiated now.

Nations,

Charter

•

is

no

panacea

,j

for

like

It has
individuals, are entitled to the world's economic ills.
own opinion as to what is manv
imperfections.
It
is
hot
the best way to handle their af¬ wholly satisfactory to any country
fairs so long as what they do does because it reflects the views and
not injure others.
recognizes the problems of ma^v
But, never before I in
What the Charter does* there¬ countries.
fore. is to provide a framework the history of the world have so
their

within which

our system of pri¬
enterprise
can
have
the
maximum opportunity to develop
and to demonstrate its effective¬

vate

ness;

a

framework in which pri¬

vate and state enterprise can work

many
over

in

nations reached agreement
wide a range of principle

so

their

economic relations.

The

deepest need of the world today
is agreement and a sense of direc¬
tion.

Nations

can

no

longer solve

National
together; a framework in which their problems alone.
boundaries have long since ceased
however, carefully defined. state enterprise, hitherto free to
Agreements are limited tr> primary do entirely as it wished, is made to confine either depression or
In a troubled world,
commodities
lu;uiuuuilies
v ycLL liuuiai ly
wncu
(particularly when subject to certain rules of the prosperity.
there are many small producers); game designed, so far as possible, ravaged by storms of controversy
.

in practices which restrain compe¬

barriers

that

make
?
commodity agreement to regulate
the production, export, import or
price of a primary product.
The
Conditions under which" such
agreements
are
permitted v are,

.

or

this

certain

achieved.

tradeM avoiding

which

to

means

in

mum

trade

Decisions in the ITO, as on the trade, time and human nerves, and
back porch, are, except in certain are often as effective barriers to
special cases, by majority vote. trade as tariffs or even quotas
The
Charter simplifies customs
The ITO is not a super state
more

a

transactions to the

lateral

specified

widespread hardship and unem¬
ployment and thus undermine the

on

ulating
for

as

number, size and kind of business

other

ago,

sights

higher than a "sonorous nothing"
of broad generalities.
We wanted

under¬

Many other nations
the conduct, of certain asoects of
their trade, sometimes all of it.
can best be conducted, or at least
should be controlled, by the State
In fact, we engage in state trading

in

commodities

countries,

borders

own

ex¬

and

best

designed to
maintain productive employment
and buying power within their

terprise.

than

policy

formalities. - Businessmen
know that the red tape of hun¬
dreds of separate customs
require¬
ments, each different for different

members

tilateral

rather

one's

sonorous

In the Charter we set our

measures

must be conducted

Agreements

international back porch toms

an

the

of trade differences and the

end,

international trade should be mul¬

under the
The Charter reflects the belief
Act, just re¬ that progressive trade
policies
each other: we may sit on
newed by the Congress, of nego¬
my
must be supported bv consistent
back porch, talk' over our
tiating for tariff reductions.
In
gardenpolicies for stabilization in the
chicken problem—and try to reach joining the ITO, other nations
field of certain primary commodi¬
a reasonably
satisfactory solution. would undertake to do likewise. ties. Prolonged and drastic fluc¬
What is true of neighbors
To this end/ members agree to tuations
applies
in
world
markets
for
also to countries.
The ITO pro¬ lower the "invisible tariff" of cus¬
these
Trade

this

To

take to take

Charter

approach
of the
Charter
is ;Jt© establish
the
rule

which

be

to

"a

markets.

industry in

new

underdeveloped country.

riers,

place
in if nations, instead' of
unilateral action without flow to the maximum extent pos¬
regard to the interests of others, sible according to the drive of
will
adopt and follow common market forces.
principles and enter into consul¬ ; To this end, members of the
to

a

develoo

out

turn

said
a
century
nothing."

Metternich

reflects the belief

Increased5
d i t u r e s
The resources of all areas.
and
increased
con¬
permit quotas to production
accomplish this
rationing.
But sumption lead the way hand in
the country must abide by certain hand to increased prosperity and
rules in their use and abandon one's most highly developed neigh¬
limit his e

reduction

Private

,,

and

today, must of necessity,
ration its imports, just as an indi¬
are

about

and

Obligation to Consult

world

Q;.':

->

Charter

The Complexity of the

these standards.

tries

supervision of the Or¬

participating ganization.

This Charter reflects, first of
all, belief in the simple truth that
the

operate.

countries

ruinous prices to producers.

accord with defined standards and

Reduction of Barriers—Public
M The

must

rules

enterprise

private

which

under

the

with

consistent

be

to

velopment and operation of the
Because international drade >, is
agreement; they must be limited complex and the problems of na¬
to a duration of five years or less tions are diverse, the Charter, is

_

hearings

consuming

example, a country which is short
of foreign exchange, as most coun¬

.

United States.

and

must have equal voice in the de¬

ac¬

theme, to quote its lan¬
them when its exchange difficul¬
The Charter does two things. guage, that:
"Any advantages, favor, privi¬ ties are over.
It sets up an International Trade
Or a country em¬
Organization.
It sets forth rules lege or immunity granted by any ploying a domestic crop control
which the members of the Ograni- member to any product shall be program to stabilize its agricul¬
zation will agree to follow in the accorded immediately ahd uticbri- tural economy may use quotas to
ditionally to the like product orig¬ restrict imports of the crop in
conduct
of
their international
trade.
It
if uncontrolled,
is
a
comprehensive inating in or destined for all other questioft which,
member countries,"
document of 106 articles and
might jeopardise the program.
30,As in many other cases in the But such
000 words.
It is the result of over
quotas may hot limit
Charter, this rule could not under imports more, proportionately,
two years of international
nego¬
present-day circumstances be ap¬ than the domestic control program
tiation, preceded by more years of
Ex¬ limits domestic production.
And,
preparatory work within the plied without qualification.
had to be made, for in some cases,
United States, Government and ceptions
if certain strict
preliminary consultation with the example, for important existing standards are met and the ITO
preferential systems, such as the approves, quotas may be used to
United Kingdom and Canada.
It
or

ex¬

lives, or even some insurance poli¬
producing cies and mortgages.
It would have been possible to
consuming
countries have
represents the first attempt in his¬ equal voice in making commodity draft a
general declaration of
Equal Opportunity for All
tory to obtain international action agreements is especially impor¬ principles and to have set uo an
The Charter reflects the belief for
curbing international cartels. tant in the interests of economic international discussion and study
that each
country should give
Here again, however, there are stability and fairness.
If limited group.
This would have . been
equal treatment to the commerce exceptions to the general rules to to producer countries (as in the easy—and it would have had little
of all other nations.
old tin cartel), the result might
take account of the current des¬
impact on world economic prob¬
Nothing is more irksome to an perate shortages of goods ahjt; ex¬ be unduly high prices to con¬ lems. General declarations, with¬
individual, or provokes more un¬ change in many countries and of sumers.
If limited to consuming out
specific commitments and ^im¬
friendly feeling between nations, certain special
result might be plementing action, are as Brince
situations.
For countries, the

the

provide

framework.

Let

or

decision, it may withdraw complaints to ITO that enterprises (although renewable) and they long, complicated and difficult;to
in other countries are indulging in must be accompanied by a defnite understand.
organization.
Yet, complicated as
By this process of consultation cartel activities inj urious to their program for solving the basic mal¬ it is, I doubt if it is much less
and decision we can avoid uni¬ trade.
The ITO is empowered to adjustments in the field. The ITO easily intelligible than our own
lateral
action by
the
one
country investigate
right
to
determine income tax laws or other laws
such
complaints,
to has
which will hurt others and build request
the offending
member whether proposed agrements meet under which we conduct our daily

to

designed

by governments.
They are also
imposed by private or public business concerns to

existing

an

pected burdensome surplus which
would cause serious injury;
pro¬

a

The

commerce.

is

other privileges which

members in good standing enjoy.
If Country X is dissatisfied with
such

Thursday, August 12, 1948

from the

-

be made permanent

rates and

CHRONICLE

there must be

Our Economic
eo

FINANCIAL

&

,

,v:-vv;•,1

•

■..

THE

Number 4724

Volume 168

urichanged

and disagreement,, representatives
of. the
gfje^t

the State of Trade and Industry

,m^jgrity;(»pf the: ha-

tio.hs. 61 the woHld1 have
gether in agreement

basic economic importance.

have

laid

foundation

a

to¬

come

matters of

on

They

tike title

which

on

of

ring true.

We have taken the basic ideas

the

statesmen

1776

of

•"

.

:77;

.

77

7,

Ail of this gray market

the

as

destination, and critics of the industry who

cpntend that steel companies should police their sales against gray
marketeers, Vvili now have a difficult tiihe making their arguments

Is it not the part of wisdom to
take this foundation and build on

it?.

steel at the mill. .Should he, choose to divert it, the

to hia

mill has no check on its

build.

we can

other

this constitution for world trade—•

Though sheets have given way to pipe as the prime gray market
item their prices are still terrific. Prices on prime quality gray marcet. sheets are running at least three times mill quotations. Hot-rolled

remember

what

statesmen

said;

own

our

given uneven steel supply as one reason

has

and beans.

WHOLESALE COMMODITY PRICE INDEX

Wholesale price

pickled and oiled sheets pre quoted;in the Midwest at prices up to
a ton witn cdia-rolled at $340.
Between the extremes there are a
variety of other prices.
;
Some mills have not opened their books for the fourth quarter
in; John
Jay's ^address
to the Dfecause they are uncertain of the precise tonnages that will be si¬
People of New York in
1778
phoned off under "must'- programs,; but most steel users might as
about the adoption of our Con¬ Well
prepare if they can for a 3^2% to 5% cut in their fourth quarter
stitution,
saying
just
what
I qhotas—that much is virtually certain. Twice as mucn steel is how
wanted to say to you in words moving on government' orders as moved last Spring, and the fourth
that could have been written to¬
quarter will bring cutbacks for the average consumer goods pro¬
day:
ducer, "The Iron Age" adds.
j
;i
I

movements were irregular last week, with con¬
cotton outweighing advances in live¬

tinued weakness in grains and

The daily wholesale commodity price index, com¬

stock and metals.

by Dun & Bradstreet, Inc., finished at 280.84 on

Aug. 3, down

trying to write
the conclusion of this speech, I
found it already written for me
was

recorded a

year ago.

Leading grains showed further marked weakness for
general wave of liquidation hit all markets.

as a

Constitution of the United States?

For when

fcONTINUES

RECESSION OF PRECEDING WEEKS

slightly from 281.45 a week ago, but still above the 269.03

ooosting prices, this trade paper notes.

these

of

some

about

automaker

the

moving upward dhring the week included sugar,

Commodities

for piled

eign policy for today. Should we
not, in considering this Charter—

the; previous lbveL This compares with $6.57 on
a year ago, or an advance of 9.3%.

milk; cottonseed oil, raisins, prunes, steers, hogs and lambs. On the
down side were flour, wheat, corn, rye, oats, barley, beef, hams, lard

'

activity dashes cold water on those who

supply by now. Detroit reports two big plants
:losed this week for lack of hot and cold-rolled sheet steel. And an¬

looked for easier steel

cornerstones of Our economic for¬

irom

31

corresponding date

(Continued from page 5)

.

(627)

COMMERCIAL & FINANCIAL CHRONICLE

the period

of heavy marketings
unavailable. ; :

Wheat declined sharply under pressure
of

new

wheat for which storage space was

wheat option fell to around $2.23 per bushel, or 6 cents
government loan figure. Corn fluctuated irregularly
sharply lower, reflecting the prospect that this year's corn
crop will be the largest on record. Flour prices were easier in sym¬
pathy with the drop in wheat. Export demand for flour was restricted
to Latin-American countries.while domestic bookings quieted down
following the expanded activity of previous weeks. Spot cocoa prices
remained steady although, the demand for actuals was slow and spotty.
The May
than the

less

and closed

R,aw sugar prices firmed up linder the impetus of a record
privately pleased with July freight car
movement of refined into consumer channels and a heavy world
are
Americans, who had long de¬ production of 8,706 cars, about. 1,000 ijtiore than well informed observ¬
demand.
served
and
enjoyed our confi¬ ers had hoped for. A relatively poor month was anticipated because
Livestock markets were firmer. Hog prices at Chicago rose to a
dence, and who are as much about 90% of the freight car shops either had vacations or staggered
interested in having good govern¬ operations during the month. One of the major builders which, ae- new all-time high of $31.10 per hundredweight, reflecting a seasonal
ment as
any of us are or can counted for 1,20U 6f the 10,381 card delivered in June was out of falling off in receipts in the face of continued heavy demand. Cash
action from July 2 to 19, and, concludes this trade authority, industry lard was firm but all future deliveries except the September contract
be.
fell to new seasonal lows under heavy liquidation that continued
observers look for 10,000 or more cars for August.
"The
.

<'The men who formed this plan

Steel

i

executives

„

.

.

were

...

impossibility of agreeing
plan, that would exactly
quadrate with the local policy arid

The American Iron and Steel Institute announced on

upon any

objects

,

state, soon be¬
came
evident; and they wisely
thought it better mutually to co¬
of

every

incide and accommodate, and in
that way to fashion their system

90-8%.

as'much

steel

Y77.7:

„

ingots

castings

and

cumstances and wishes of the dif¬

1,636,600 tons

ferent

capacity one year ago and
1940, highest prewar year.

than, by pertinaci¬
ously • adhering each to his own
ideas, oblige-the Convention to
rise without doing anything. They

,-7., .7 77.„.t, ' 7,77,,,.

'

ihis week's operating rate is equivalent to 1,710,500

by the cir*

possible

as

Alonday

operating rate of steel companies having 94% of
the steel-making capacity of the industry will be 94.9% of capac¬
ity for the week beginning Aug. 9; 1948, aii increase of 0.7 points,
or 0.7%, from last week.
A month ago the indicated rate Was

throughout most of the week.
After

of this week the

states,

month ago,

a

tons of

against 1,697,900 tons last week,
1,630,900 tons, or 93.20% of the old

as

1,281,210 tons for the average

Week in

rising

slightly in the early part of the week,

cotton

prices again moved downward.
The NeW York spot
down 85

quotation closed at 33.05 cents per

points for the week and comparing

pound,

with 35.20 on the corre¬

sponding date a year ago. Activity in the ten spot markets increased
slightly to 59,100 bales during the latest week, from 55,700 a week
earlier, and 53,500 in the same week a year ago. Early strength re¬
sulted from short covering by professional traders who bought the

staple in the hope that early foreign fixations were about to start
Bearish influences in the latter part of the week included the con¬

ECA program and the issu¬
government's parity report which showed no change in
parity price for cotton from mid-June to mid-July. The quotation
;
remained unchanged at 31.12 cents, whereas a rise of from 25 tp 38
* The amount of electrical energy distributed by the electric light
ing from local circumstances,
would not cease while those Cir¬ and power industry for the week ended Aug. 7, was 5,319,409,000 points had been generally expected in the trade. Print cloth prices
kwh., according to the Edison Electric Institute. This was a decrease continued to hold firm for both nearby and forward deliveries
cumstances continued to exist.
of 33,030,000 kwh. below the output in the preceding week and 445,,k "They
Business in the Boston raw wool market showed little activity
tell us, very honestly,
that this plan is the result of ac¬ 237,000 kwh., or 9.1% higher than the figure reported for the week last week. Seasonal slackness continued in evidence and trading con¬
ended Aug. 9, 1947.
It was also 907,692,000 kwh. in excess of the sisted mostly of scattered small lots. Activity in the Argentina mar¬
commodation.
They dornot hold
ket declined slightly from previous weeks but prices remained at a
it up as the best of all possible output reported for the corresponding period two years ago.
tinued

ELECTRIC

OUTPUT MODERATELY LOWER

THREE-WEEK

sensible that obstacles, aris¬

were

FOLLOWING

spread-out buying policy under the

oi the

ance

RISE

the

..

.

but only

ones,

.

.

the best which

as

ADVANCE

CARLOADINGS

BUT ARE
1947 AND 1946

SLIGHTLY FOR WEEK

they could unite in and agree to.

BELOW CORRESPONDING PERIODS IN

"Suppose this plan to be
jected," what measures would

Loadings of revenue freight for the week ended July 31,

obtaining

for

propose
another

be;

convention;

former

.

.

appoint

one was,

they will

.

informed

better

re¬
you

better?

a

Some will answer, 'Let us

the

than

.

which

.

very

appears

doubtful;

for although the new
might have more in¬
formation,
and
perhaps
equal
abilities, yet it does not from
thence follow that they would be
convention

of

prpbable.
"Let

.

.

tion,
and

from

risks

Let

' conven¬

delays

the

it would

their

in

above the

pre¬

1946.

AUTO PRODUCTION EASES FURTHER IN
cars

and trucks in the United States and

This

in

week's

the

output consisted of 82,000 cars and 26,948 trucks
States and 910 cars and 455 trucks made in

Canada.
agency predicts that the present total of about 50,000
plant workers idled by supplier strikes will rise
sharply the. current week with a shutdown of Chrysler's passen¬
ger car divisions likely by the middle of the week because of the
Campbell, Wyant & Cannon Foundry Co. and New Haven Foun¬

The

.

.

restrictive

dry Co. strikes.

Ward's revised figures for July output are 358,762 cars and 115,S. and 9,539 cars and 5,134 trucks in Canada

.

trucks for the U.

give

for

a

to

systems

of

reconcile their. Own
people to them, and to fence, and
guard,,and strengthen them by all
those regulations and contrivances
in'which a jealous policy is ever

total of 489,346

units in both countries.

The June figure was

458,960 units.
BUSINESS FAILURES CONTINUE TO CLIMB

commerce,

Commercial and industrial failures in the

week ending Aug. 5

& Bradstreet, Inc., re¬
ports, Concerns failing rose to 116 from 98 in the preceding week and
were almost twice as numerous as in the comparable week of last
year. Total failures were slightly less than half as numerous as in 1939.
fruitful.
Failures involviiig liabilities of $5,000 or more predominated,
''But if, for the reasons already
mentioned, and others that we numbering 97 compared with 87 a week ago and 49 a year ago. The
cannot
now
perceive, the new number, of small failures With liabilities under $5,000 increased from
li t6 19, but continued to be low in comparison with prewar years.
convention, instead of producing a
better plan,

should give

'history of
should offer us

a

be then?

were

57 this week compared with 43 in

preceding week, being higher than in any week since early
and more than twice that of the (comparable week in 1347.

vise

and

America

persuade the people of
...

to

have

confidence

in .themselves and in one apother;
and, since all cannot see with the

sajne

eyes, at least to give the
Constitution a fair trial,
and to mend it as time, occasion,
proposed

and experiehce,

may

dictate."




the

1943

Geographically, one-half of the week's total failures were con¬
centrated in two regions; the Pacific States, reported 30 casualties
and the Middle Atlantic 26. Although most other areas had heavier

"Consider, then, how weighty
anjd how many considerations ad¬ mortality than in the preceding week

or

inventories

and

in

some

lines

rose

.

further mark-downs of sea¬
prices of some staple goods sustained
retail dollar volume considerably above the level of the corre-

sonal goods and increased

Promotions of Fall

•

some

fell.slightly below those, of the corresponding week a year ago. Pro¬
motions of college and career girl fashions were well received. Dollar
volume in men's apparel decreased from both the previous week and
the

Building activity remained near peak levels a week ago,.but the
for lumber, hardware and building supplies of almost all
types was very high. Farmers continued to seek moderate quantities
of equipment and supplies. Fishing and camping goods sold well,
while demand for furniture and household goods decreased slightly.
country

the

for

in

the

period

ended

on

Wholesale order volume was almost unchanged

in many regions

Total dollar volume was moderately above that of
Many buyers remained cautious of price
developments and were hesitant to place large orders for future de¬
livery. Current re-order volume for seasonal goods continued to
decline the past week. Deliveries generally remained prompt, with a
slight rise in demand for Fall apparel in some localities.
during the week.

the like week of last year.

Department store sales on a country-wide basis, as taken from
the week ended July 31, 1948,

the Federal Reserve Board's index for

7% from the like period of last year. This compared
(revised) in the preceding week. For the four

increased by
with

an

increase of 8%

weeks ended
date by

July 31, 1948, sales increased by 5%, and for the year to

7%.
.

......

•-t

In New York the past

in the corresponding week

Following the sharp declines that occurred a week ago, the Dun
& Bradstreet wholesale food. pirice index for Aug. 3 registered $7.18,

volume

Retail

Wednesday of last week was estimated to be from 5 to 9% above
that of a year ago. Regional estimates exceeded those of a year
ago by the following percentages:. New England, 3 to 7; East,
1 to 5; South, 4 to 8; Middle West, 5 to 9; Southwest, 8 to 12;
Northwest, 6 to 10, and Pacific Coast, 2 to 6.

active

a year ago, none had as many as 20 failures.
The sharpest rises
above the 1947 figures occurred in the New England, the East North

Food price index shows steady tone following
sharp dip in previous week

corresponding week of last year.

demand

of

Central, the East South Central, and the Pacific Regions.

apparel met with increased consumer interest

parts of the country last week. There was a moderate de¬
mand for women's suits and fur-trimmed coats. Purchases of fur coats
in

at the highest .level since February, Dun

Retail failures

only
their disputes, or
one still less pleas¬
us

ing than the present, where would
we

were

merchandise

sponding week a year ago.

United

911

somewhat above that of the

Very favorable response to some

Canada

41,795 units.

made

While retail dollar volume increased

previous week, unit volume declined slightly in many lines during
the week, Dun & Bradstreet, Inc., reveals in its latest review of trade.
An increasing number of consumers restricted their purchases of

the previous

Output in the similar period a year ago was 79,452 units and, in
the like week of 1941 when model changeovers were taking place it
was

REFLECTS HIGHER DOLLAR

VOLUME FOR W EEK

higher priced
slightly.

LATEST WEEK

dropped to 110,313 units from 113,270 (revised) units
week, according to "Ward's Automotive Reports."

ex¬

other nations further time to per¬
fect

increase of 11,815 cars, or 1.3%

consider

them

ought

we

sanguine
of a bet¬

new

on

which

to

us.

whether

are

a

reflect

also

pose

who

expectations

plan

an

automotive

.

those

in; their

ter

to agree.
The
this position is most

disposed

equally

cars,

was

Production of

M'This reasoning is fair
.
but
it nevertheless takes one thing for

contrary

This

ceding week, but a decrease of 27,210 cars, or 3% below the corre¬
sponding week in 1947 and 4,010 cars, or 0.4% below the same week

eligible one.'

upon a more

granted

totaled 894,381
roads.

RETAIL AND WHOLESALE TRADE

1948,
according to the Association of American Rail¬

and consequently

be better able to make and agree

;•

high level.

and

•

.

' f1

to August promotion sales was

response

consumer

j

week retail trade continued seasonally

fairly good.

to

According

the

Reserve Board's index, department
the weekly period to July 31, 1948,
period last year.
This compared with

Federal

store sales in New York City for
increased 4%
an

to

above the same

(revised), in the preceding week. For the four
July 31, 1948, sales increased by 1% and for the year

increase pf 1%

weeks ended

date by 6%.

,..'7..

.*

'

7

.

7 .7.7

'

32

(628)

THE

COMMERCIAL

FINANCIAL

&

CHRONICLE

Thursday, August 12, 1948

to match the increase in govern¬

Problems of Fiscal
(Continued from page 8)
lays are out of balance a compepsating factor is needed. Cer¬

Policy in Inflation

spending or investment by shift¬
ing the proportion collected from
the

lower

mental

income

to

the

higher

requirements. It has been
estimated by the Treasury 'that

the composition of the total gov¬
ernment debt
at hand

as

means

a

to

maturity, has
of adding to the

tain

; p u b 1 i c
or
governmental income brackets, and vice versa. spending stream at any desired
policies may be adopted which In the main, the larger collection time and of withdrawing from the
will
curtail
or
increase
either from the low income brackets pro¬ spending stream a given amount
consumption or investment ex¬ duces a more than proportionate for a short, intermediate or long
penditures,-and thus total demand; reduction in spending on con¬ period of time as it is deemed
so as to offset the
changes in total sumption goods; the larger collec¬ best..
level of demand that result as the tion
from
the
high
income
Finally, debt management, to
sum

of

choices

the

myriad

of individual
between
consuming,

as

brackets

results

in

more

a

than

the extent that it determines the

proportionate

23 %

of

of the cost of the war—32 %

a
expenditures alone— investment,
From the record of the revenue
taxation, the remain¬
der by borrowing.
The national acts; .passed from 1933 to 1939,
debt increased by $20 billion— there was, however, no apparent
$41/2 billion held by banks, $15 Va attempt made to correlate the im¬
billion publicly held but financed pact, of taxes imposed On individ¬
in part by bank loans which ex¬ uals and corporations I with: fiscal.
panded credit as much as direct policy requirements. In 1933 the
bank purchases.
taxes imposed added to the burden

our

own

met by

was

,

.

,

Passing over the extremely in¬
teresting post-World War I years

reduction on the over-all average rate
on
the
in which the Federal Reserve was
saving
and
investing
income. amount saved and spent on cap¬
interest-bearing public debt, con¬
Government fiscal
policies can ital goods. For our purpose it is trols the total amount of income practically powerless up to No¬
compensate the sum of individual important to note that spending which is
shifted within the income vember, 1919, to counteract the
and business choices which make may be directly and immediately
stream from the whole group to inflationary forces at work ip the
up total private demand whenever affected by the existing withhold¬
the holders of the government economy, because it was commit¬
and however needed.
ted to maintain a low rate on
ing provisions of the income tax securities.
This latter power is
law and by the social security not
on
always entirely at the discre¬ borrowings of banks based
m*
their own government securities
taxes; less immediate effects re¬ tion of the
\
Treasury although its
What are the tools of fiscal pol¬ sult from changes in corporation
or their customers'
paper so se¬
degree of control is large.
The
icy and how do they work? They income taxes and excise and tariff
cured, it is important to note that
average rate on the debt outstand¬
are three in number:
Treasury policy during this time
government levies. ;;
;
ing June 30, 1948, 2.182%, sub¬
was
expenditures, taxation and debt
simply to cut expenses a:
Finally, the last tool, debt man¬ stantially over the rate for 1947,
management.
agement, although dealing only 2.107%, probably represents an rapidly as possible to a peacetime
Just as individual and Corporate
with the residual of the first two. increase not entirely at the voli¬ level, to balance the budget at
the earliest possible date, and to
spending operates to absorb part is highly important in that it is tion
of the Treasury.
'

'

•

the

of

aggregate

current

income

stream, government expenditures

not subj ect to the extraneous con¬
siderations

contribute their share toward this

taxes

balancing of total

involved

in

gathering

therefore,

ditures
come.

current expen¬
total current in¬

against
Yet, this

does not mean
government
expenditures

that

may not actually be more or less
than current government income.

Therefore," government expendi¬
tures can bo used to increase pri¬
vate

to

One of the aspects of debt man¬
agement, servicing the public debt,

operates
come

both sides of the in¬
servicing the gov¬
debt
requires a with¬

on

stream:

ernment

drawal from the income stream of

strategic po¬ stitutes a mere transfer
payment
sition to provide this balance be¬
and is unimportant as a tool of
cause, different from private or
fiscal policy.
While net interest
corporate business expenditures,
payments by government are in a
its spending is not governed
by sense transfer payments in our
immediate profit considerations
national budget, and are so han¬
provided there is entailed a socio¬
dled
in
preparing the Nation's
economic improvement for the en¬
Economic Budget,
it should be
tire c o m m u n i t y. Government
recognized that the use of the
expenditures can, of course, be
income by the recipients differs.
misused, in so far as fiscal policy
Whether interest paid on the pub¬
is concerned, either by poor tim¬
lic debt will be spent or saved
ing so that the balance between
depends in part upon the general
incomes and spending is not en¬
level of income of the receivers;
hanced but worsened, or by
being the
higher the general level of
spent on projects not having the
income the greater the disposition
desired
effects
on
community to
save; the < lower the general
spending.
level of income the greater the
The essential factor about gov¬
proportion spent.
ernmental spending as a tool of
Debt management also is ef¬
fiscal policy is that it does not
fective as a tool of fiscal policy
lend itself
readily to variation as
in channeling increases or retire¬
needed.
Budgets are fixed nearly
ments in the total debt into either
a year in advance of
a

expenditure

the 'physical task of imple¬ the banking system or into indi¬
vidual hands!
The first changes
menting a policy decision to in¬

and

expenditures

is

time-

so

It should be pointed out that ex¬
penditures on social security bene¬
fits and pensions (all types that

:i

expenditures
projects such

vast

on

capital

dams, highways,

as

buildings, parks.
;

The second implement of fiscal
policy is- the government's tax
collection.
This tool is the least
responsive, in total, to manipula¬

also

point that
policy are
the extent that
policy is seriously

monetary

fiscal

and

nonmarketable

issues

is

also

same

manner

marketable issues.

difference,

as

the

sale

of

There is this

government

issues

regardless of the fact that

the

redemption schedule, placing
tion as the factors which finally
the greatest rewards in the later
shape a revenue act are as com¬
plex as our country, itself and as years of maturity, has a tendency,
incidence of certain taxes imposed along with the preliminary re¬
is not always clearly determin- quirement of 60 days before any
redemption can be made, to dis¬
able.
'
■ '
;
rl ,,
courage the early redemption of
"i This is not the time or
place to
these nonmarketable securities.
indicate the value and limitations
in affecting individual and cor¬
Also, as a third aspect of the
porate decisions to invest or to debt management tool of fiscal
spend of the many kinds of taxes policy, consideration should be
imposed or imposable by govern¬ given to the fact that considerable
ment.
It is sufficient to indicate government trust funds today are
that the obvious use of the income available for the purchase of gov¬
tax—the principal source of Fed¬ ernment obligations in the market
eral revenue—lies in the ability and, conversely, that sums already
to

withdraw

from

spending

by

indiyiduals

a greater or lesser pro¬
portion of income by the simple

to prevent additions to

necessary

banks'

process of

raising

or

lowering the

entire range of rates, or lowering
or

raising

allowances.
inay

fiscal

the

exemptions

; Another

use

and
that

be made of the tax tool of

of

need.

in




the market in

These

case

effect,

trust

funds

can,

perform certain mone¬
control operations, supple¬

tary
menting the task of the Federal
Reserve
-

-policy is to affect private

in

System.

'

_

r

,

Debt - management,; in deciding
-

>»

a

>

i

I*, .i\'i *

1921

effect

Federal

the

that

or

interrupted,
In fact, the atti¬

program

taxes eased.

tude

of

looking

the

to

for

help

much

30, 1921, that the ".

Federal
de¬

was

not

of fiscal

for

continue

shocking rate

for the tools

policy.
We have always had a
public debt, but not always fiscal

to

nation
spend at
.

.

finances
not

are

afford

.

sound

.

.

reckless

iv.
.

is

the

history of
policy?. -It- will be of - interest , ta
recall" certain facts to demonstrate

evolution of fiscal policy to
present-day stature—one even
yet of youth and immaturity and,
like most youth, not entirely un¬
the

its

derstood.
Before the first World

Federal

tax

structure

War the
was

ex¬

.

but it

1913 and

a

tax had been in effect since

fiscal

In

of

million!!

1914

revenue

these

two

yielded—-$71

Liquor and tobacco taxes

and customs

bulk of Treasury

the war, our exports rose and our
favorable balance of trade
ex¬

gold and the return sale of Amer¬
ican securities held abroad. From
June

can¬

wasteful

or

.u

even more

load

on

those in between.

and after,

In 1935

immediate social reform;

rather than fiscal purposes
nated.
The social security

domi¬
taxes

effective in

1937, lowering some¬
disposable income of conat
the very time when
business
expenditures had been
unfavorably influenced by corpo¬
rate tax changes in 1935 and 1936,
may have been significant factors
in the 1937 recession, unbalancing
aggregate expenditures and in¬
what

sumers

come.

Nevertheless, it seems fair to
that by 1938 there existed a

say

recognition of the important part
government spending, tax poli¬
cies and debt management played
in

maintaining the balance of in¬
spending, saving and in¬
vesting in our economy. This rec¬
ognition constituted a major ad¬
come,

the

over

vance

level

of

under¬

standing that existed before and,
as wilt be indicated shortly, was
of vital

importance in subsequent

years.
In the period

of World War II,
policy was focused on the
single task of getting the job done.
No extended review of this period
fiscal

The net results in the

is needed.
of

form

$280 billion Federal
debt, at the high point of Feb¬
ruary, 1946, and in the form of
peacetime budgets of $40 billion
and over merely provide the start¬
ing point for .the - analyses »of
four-fold: a balanced budget, con¬ proper postwar iiscai policy and
tinual debt retirement, economy in do not indicate significant changes
government, and reduced taxes in either the understanding of
The long-run economic effects of fiscal policy or in the implements
fiscal policy were considered; but effectuating it.
The present-day situation does
its influence on the business cycle
was not recognized.
present this contrast with the situ¬
..This is. not to imply that the ation existing during the period
Fiscal policy
program followed was inappropri¬ from 1933 to 1941.
,

a

This basic

On • the. developed; historically as a means
probably good of fighting depression, a lack of
fiscal policy for the most part from, a high level of demand.
Today
modest corporation in¬
1922 to 1929 for the government fiscal policy is seeking to restrain

tremely simple: the personal in¬
come tax had been inaugurated in
come

regressive consump¬
in 1934 the changes add¬
to the taxes paid by
tne lowest income group, increased
slightly the taxes 011 the upper
brackets, and eased somewhat the
ed

policy did not change
during! the 'twenties. The fiscal
policy of the Republican party,
not primarily concerned with fluc¬
tuations of economic activity, was
fiscal

employment and price levels.

What

this

.

policy using the management of expenditure."
this debt to influence production;

can¬

this is no time
extravagances.
The nation's
.

of the existing,

tion taxes;

crash to the

expendi¬
tures should be increased, the debt

total

the

supply.

money

So

and

reserves

ate to the circumstances.

contrary,

it

to

make

to

income.

was

negative contribution
important aspect
is that an understanding of fiscal
policy as a contributing factor
toward
economic
stability
and
fuller

a

The

of

use

our

resources

total demand and

consumption de¬
particularly. The ability of
to operate as a sta¬
bilizing force is being emphasized.

mand

fiscal policy

V.

was

What

lacking.
With

the

coming of the Great
Depression the Federal Govern¬
ment developed, broadly, its con¬
cept of fiscal policy. The Treas¬
ury deficits which contributed to
the spending stream were resisted
strongly but ineffectually at first.
Even

Mr.

Roosevelt

in

his

cam¬

analyzing
date

is

the postwar period to
recognize the tremen¬

to

dous size of the Federal

debt, the
growth in the-5 annual servicing
cost, and the increased proportion
that

of

lican

debtedness

not

recom¬

mending increased taxes earlier,
not cutting expenditures fur¬

for

activities

Federal

represent

for

principal charac¬

teristics of this present-day situa¬
tion?
The first consideration in

paign in 1932 criticized the Repub¬
incumbent

the

are

and

all activity and

in

the

United

debt

in¬

States.

When the Federal debt was about

$1 billion and the annual expen¬
ditures $% billion, the dog wagged
his tail; today we can't find the

30, 1917,
our gold imports exceeded $1 bil¬
lion; bank reserves grew, loans
expanded $5 billion, investments
$2 billion; the money supply in¬
creased from $4 billion to $11.6

when estab¬
Mr. Roosevelt dog. Federal, State and local govworked out a concept of the gov¬ ernments' payments to and re¬
ernment's role in our economy ceipts frOm the public amounted
which differed sharply from

in

billion.

which

Gross

30,

1914

to

June

and for failing to balance

ther,
the

budget.

lished, in

Later,

office,

1939

about

to

one-sixth of the

expansion as the commercial banks
handled the demand for credit

that
guided
government
fiscal
pciicy up to that time:
namely, the adherence to the gold
standard, to the balanced budget

Product; in 1947
they approximated one-fourth. \ In
1914 the per capita Federal Gross

from

and to the belief that a vast pro¬

$1,800

tem

The Federal Reserve Sys¬

had

little

control

this

over

industry, stimulated by de¬

mands

from

abroad, without

course

to borrowing from the

tem.

Its

rediscount

rates

re¬

Sys¬
were

ineffective.

The Treasury actions
during this period were of minor
so invested,
provide a supply of importance.
government obligations which can
With the advent of World War I

be offered

the time of the

bond

redemption panded. The payment during the
spending is subject neutrality period was provided by
less control by the our future allies in the form of

government in the nonmarketable

evidence exists in pub¬
of policy about

Secretary of the Treas¬
ury Houston as unwholesome and
market menacing in his Annual Report for
requires support and thus pro¬ 1920.
Andrew Mellon, who be¬
hibits large-scale sales of securi¬ came
Secretary of the Treasury
ties
by ' the System which
are in 1921, publicly stated on April
term

however:

somewhat

debt retire¬

of

program

scribed by

for purposes of

to

statements

monetary
hampered in its actions. The long-

of

the

Nc

Government

1909.

and

a

lished

retirement

this

at

begin

ment.

merged today to

sources

,

,

support of the other.

is

the total money supply,

-

'

It

receipts provided the
receipts totaling
significance in the matter of $735 million.
The budget was
fiscal policy.
The nonmarketable practically balanced. The national
issues are composed
of savings debt was slightly over $1 billion,
go immediately, to a consumer)
bonds
sold
to
individuals
and mostly held by national banks as
will result in more immediate im¬
businesses.
Such
sales
directly backing for their note issue.
provement in the
effective delimit consumer spending power in
mand for consumer
Even before our participation in
goods than

1

?•

out the

ond

the sec¬
directly limits or adds to
consuming as to give expendi¬
consumer spending power.
Treas¬
tures little to no
flexibility in
ury policy in regard to marketable
meeting, changed
requirements.
crease

precisely this point—the

spending the funds and,
can be used more freely
join and where neither one can
make fiscal policy effective.
operate to the fullest extent with¬
or

spending on consumption or all taxpayers and an addition to
supplement it when it appears to the
income of those groups holding
be the deficient factor, or to in¬
the obligations. It might be hastily
crease
or
supplement
private assumed,
therefore, that interest
investment when it seems to lag.
paid on the government debt con¬

Government is in

It is at

debt management phase—that fis¬
cal policy and monetary policy

by. manipulation of government
expenditures and the effort was
clearly made to supplement wan¬
ing private investment with public

the demands of

sumption

could, not

be

gram of
mean

government relief would

the end of freedom and that

liberty was abandoned. In foster¬
ing the belief that the government
must take the responsibility for
the relief of involuntary unem¬

and the responsibility
for action effecting business and
agricultural recovery and main¬
taining stability and employment
thereafter, the use of fiscal policy
implements was developed. Delib¬
ployment

Debt

National

$12.00; in 1947 it

was

and

at

the

peak

in

was

1946

over
$1,900.
In the 1920s
Federal, State and local debt, to¬
taling something over $30 bil lion,'

was

was

less

than

20% of all public
debt. Today the total
State and local
debt

and private

Federal,
amounts, to
1920

about ten

times

the

figure, or $300 billion, and
comprises 60% of all debt.
Two
decades or so ago, U. S,.Govern¬
ment bonds constituted one-eighth
of
all banks'
assets: ;today
the
erate influence on consumer dis¬ proportion approximates one-half,
i Likewise, the rate of interest paid
curtailed posable income Was brought about

spending re¬
sulted in rising prices because the
economy was already going full
blast to supply the demands of
the allies
during the neutrality
period and because private con¬
war

had

•

Volume 168

COMMERCIAL &

THE

Number 4724

-

FINANCIAL

(629)

CHRONICLE

maximum permitted. ; The ques*
by the Federal Government in the tiohary pressures are likely to rise consumption expenditures " is to fion is how
great would be the
of
increasing
govern¬ allow as ah exemption on the in¬
1920s was influenced by the rate because
(More
mental expenditures for foreign come tax full credit for all cur¬ pull on current income.
on
private debt; today the rate
effective would be the reimposisaved or invested
assistance and an expanded de¬ rent income
paid by the government is a de¬
tion of consumer credit controls
and
not
fense program*
gpent on consumption
termining factor ia the cost of
goods. These .la-st two suggestions and a shortening of the term and
These, then, are the principal are
private capital. Finally, the preoffered"
without comment an increa se in the required down
Great Depression Federal debt was fUcts in regard to the present sit¬
other than the thought that tech¬ payment on instalment sales, but
a
small fraction of the annual uation as the remainder of 1943
nical problems involved
in the this lies beyond the scope of fis¬
Gross National Product; today tne unfolds and 1949 presents its un¬
administration of the income tax cal policy.)'
debt
exceeds this Product.
Be¬ solved problems.
should be the deciding factor in
VII.
cause of the growth indicated in
the decision to change the tax

The

government activity
growth in its proportion¬

and 'the

ate share of all

debt, the economic

considerations involved in manag¬
ing the debt, in spending govern¬
ment' funds, and in collecting its*

VI.

to conform to theim As
before, tax 'programs
being the hodge-podge of con¬
three tools should be used.
flicting interests that they are,
amount
of
taxes
bearing most action is not usually timely and in
heavily on consumption should be this election year is probably im¬
increased equitably.
The princi¬ possible. Nevertheless, a fair ap¬
tools

What

should

policy

fiscal

of

and

used

be

prograrp
indicated

All
The

how?

proportionately greater
than ever before.
Sound fiscal pal problem of the present situa¬
praisal of, the fiscal policy tools
policy is more important than ever tion, with production at near- to be used in the present situation
taxes

are

before.

maximum levels and not suscept¬

encouraging, then, to have a
former official spokesman for the
Treasurv indicate - fr full realiza¬
It is

of

tion

*

sumer

forces

all' debt

are

evidence

of

.

.

the

.

to
unmistakable
compelling

importance

relative

and

.

.

necessity for such (public debt)
management to be directed not
merely to the financial considera¬
tions of the government itself, as

important as they may be, but to
such management On
our enthe economy.'"
It is also
encouraging to have Mr. Snyder,

the effect of

deferring, con¬
expenditures. Inflation en¬
or

the

in

curtailment

this

cannot

in

most

inequitable way. The very es¬
sence of fiscal policy is to distrib¬

.

The

spending
minima

solute

govern¬

to ab¬

be restricted

should

ment

the

by

other-than-de-

in

with

cised

First,

for

care

there

two

reasons.

evi¬

considerable

is

dence that veterans living on pen¬

sions,

Secretary", of

numbering

social

and

security

two million, are

the

20%

lower

three million,
beneficiaries,

today comprising
of our income

.

eral, the balance in our economy
is a delicate one and prohibits the
testing of more

where general agreement
exists as to what to do, the pol¬
icies should be carried out cour¬

hand,

ageously.
'

apparent that em¬
ployment, production and general
business activity cannot be stim¬
it

Next,

President

is

in

undoubtedly

theories as to what reducing

might happen if certain fiscal pol¬
icies were adopted. On the other

-

These

.

fiscal oclicy.

It

fiscal

sound

policies at

side

arises

of

the

that

the

imbalance

on the expenditure
balance sheet. Infla-

his

message,

have

government level.

it

that

seems

business

the

Here

individual

Competition

or

dominates.
The state and local governments
follow in many cases tax policies
and spending programs that ap¬
viewpoint,

(Continued from first page)

London.
There, at the
Consulate, was Sikor¬
sky, our great plane designer. He
was en route to see his brother,/a
monk in one of the monasteries o£

the

Federal

the

1920's.

Government

during
objectives are

Their

limited to balanced budgets,

ciencies

in

wise be restricted.

effi¬

the

operations, and debt
very worthy ob¬

and

Inflation, May, 1948,
XXIII, No. 1, Pv 70.^-y"——




holy Mount Athos in Greece.

Both

retirement—all

Debt

that the market for their borrow¬

men

Russian

white

were

the ings is good. If there were some
the. leadership—not laws, leadership—
strengthened tax program and the at the Federal level to point out
curtailment of
spending,
should the proper timing, to supply the
continue to be directed at the re¬ missing objective of proper fiscal
tirement of bank-held debt, par¬ policy to the state and local gov¬
ticularly that held by the Fed¬ ernments, the next major step for¬
eral Reserve banks, as the reduc¬ ward in the development of fiscal
tion
of
Federal "Reserve
bank- policy as a
significant help in
held debt directly reduces mem¬ maintaining high levels of pro¬
ber bank reserves.
duction and employment could be

corporate

ness

of

would

There

is

function

a

of

the

level

of

in¬

of savings bonds could be

effected

4%

than at

at

rate

a

of 3J/2 %

or

who say that a well-"
is one who has
learned to take the bitter with the
sweet.

the present

rate of 2.9%. Further,
if the increase were allowed in the

issues, the avalanche
securities.
of selling of 2V2% bonds whose
with incomes under $50,000 ex¬ holders anticipated even' further
empt, the tax would not reach the declines in market prices might
vast
majority
of
corporations. disorganize the entire securities
Further, the excess-profits tax is market. Finally, the cost of serv¬
considered
primarily a wartime icing the $250 billion debt would
marketable

directed

tive.

ahead.

It. should

times

all

toward

development of our natural
resources,
our
human resources,

capital, and a high production
economy.
The goals that appear
our

before

if

us

tremendous

our

ca¬

pacity to produce is not hampered
but aided by proper fiscal policy
unbelievable.

almost

Our

growing population and our im¬
proving use of resources should
give us by 1960 four to five mil¬
students

institutions

in

of

higher learning, 15 million people
of the population—eligible
receiving old-age security
benefits, and physical capacity to

—9%

for and

produce 25% more than we have
today.
The
goals
are
indeed
worthy of our efforts.
General
or

to

at

public understanding
acceptance, is ^eeded

least

make Federal

or

state

or

jlocal

government fiscal policy effective.
It

would

could

that

seem

make

some

direction

that

at some

much

more

current income would

in

each

of

us

contribution in
our

own

com¬

second

look

at the record of the

session

of

the

80th

Con¬

to see just how great is the
for an enlightened public
understanding—as it is the only
force bringing response from the
Congress.
The
tax
reduction,

timely

action

based

diverted to savings as a result

of

greater inducements until the fiscal policy is essential, the record

suggested. that

It has also been
way: in

goods has been satisfied. Switches

another

which the tax tool of fiscal

policy

vol.

could bring

its pressure today on

into

this

would

no

form

of

doubt

savings
approach

bond
the

competition fill the ceme¬

while the

on

proper

bones of those
competition are-'

who have enjoyed

in

found

What

museums.

tures of

culture of our

Pueblo

great

Gone too

Southwest?

Where is

America?

of South

tion

the

hap¬

civiliza¬

pened to the great Inca

are

the cul¬

ancienf Athens and Rome.
others

Must

we

follow

cause

we

these

be¬

will not compete?

Competition Makes the Full Mam
What

do

York

New

would

suppose

you

to Joe Di Maggio if the

happen

ball

didn't have

club

competition? Only the compeition
which Henry Ford forced made it
possible for lots of us to own cars.
The competition between oil com¬
panies has given us cheap gaso- v'<*
line

to

these

run

with.

cars

Be¬

organization—yet—
monopolizes the electric field, we
have electric lights in our houses.
cause

one

no

city homes but the farms
electrically pow¬

have lights,

machines in

ered

electric

the

in

stoves

of the

today

enough,> where

have

teries;

Most

not

the

with

to v them,

feared

need

is

failed f ta

way

gress

policy

the

years

to those which could
meet the conditions imposed upon
them.
The bones of those who
given

too

us

be

backed-up demand for consumer

successfully

opposed

forces

Not only

subsequent

against the

have

compete

way^

brains for*

the

which

the need for the effort were clear.
Let

that

it

made

through

munities in the next six months if

subsequent year as a di¬

rect credit

God

creatures

should be borne in
policy to
be j

at

environment. A look
that your
competi¬

That's what he gave us

the

lion

short, he learns to ad¬

about you will tell you
environment is highly

fiscal

that

sound must look

are

In

Down

Finally, it

be

man

just to his

VIII.

mind

Adjustment

and

certain sensible psy-?

are

chologists
adjusted

taken.

effect of come. It. is doubtful, in other
outlays on words, that appreciably more sales

return on corporate
On the
other hand,

the

Psychology

management, with
developed
by

residual

capital goods both by absorbing a
part of corporate income ordi¬
narily available for reinvestment
and by decreasing the attractive¬

year's income.
L. M. Wiggins, "Fiscal Policy and
Management," in Proceedings
of
the Academy of Political Science, Prices,
Wages

in

ago

American

similar to those adopted by

pear

the

1 A.

Debt.
;

em¬

knowledges

the state

and local

domestic

fense

income which could be refundable

(

clear

is

today

/

always
*

.

of our eco¬
problems by the people is
the success of our

nomic

voted because there was a sur¬
"pushing the string" of
The lack of private
plus, and the bookkeeping trans¬
expedient: witness the repeal of be increased somewhat and un¬
fer of $3 billion of the 1948 sur¬
response
to pump-priming after the World War I tax on Jan. 1,
necessarily.
the Great Depression and the fail¬ 1922
plus into the 1949 budget indicate
and the repeal of the last
The interesting suggestion was
ure of monetary action in 1932 to
quite obviously a lack of full un¬
war's tax almost immediately after
made by Professor Sumner Slichsecure effective use of artificially
derstanding of proper fiscal pol¬
the close of the war.
The adop¬
ter
of
Harvard
University last icy.
increased bank reserves indicate tion of an
Worse, they indicate a re¬
excess-profits tax in
April 1, 1948 that the time has version to the 1920-29 grasp of
that
fiscal
policies
alone will
peacetime is doubtful. Some con¬
probably come for the Treasury the problem which visualized the
probably not get the machine go¬ sideration
might
be
given
to
to offer a savings bond which is Federal
budget as that of a large
ing again if it bogs too far down. raising the contributions on social
payable in a fixed amount of pur¬ private
business
ignoring
its
It is fairly certain, on the con¬ security taxes at this time pro¬
chasing power and which, to. pro¬ unique responsibilities toward the
trary, that the three implements vided a. cost-of-living exemption
tect the savings banks, should be
functioning of the entire economy.
of fiscal policy cap check aggre¬ could be simultaneously added to
limited
to
$2,000 in individual Here, then, in Congress, where
gate spending and keep it in the lowest income tax bracket in
purchases per year.
It
suffers mere acceptance of what recog¬
sight of the supply of goods avail¬
the revision of the income tax. from the same objection as that nized; leaders say is proper fiscal
able
(i.e., total income for the
to raising the rate of return di¬ policy is not enough, where just
economy). In other words, as in Suggestions have been advanced
monetary control, the string can for forced sayings tax levieson rectly, viz., it is questionable how understanding of the proper fiscal

ulated. by

be pulled.

have

Forums

phasized that ".
and
understanding

in fiscal pol¬ essential in
icy today is to secure an under¬ democracy."
standing of and the adoption of

.

.

America is simply what each qne
of us contributes to the whole."

The greatest need

before group, in contrast to marginal
farmers
and
unemployed
who
the House Ways and Means Com¬
formerly dominated this group.
mittee, May 19, 1947, with refer¬
The V/2 million individuals and
ence
to a comprehensive stud?/
7 million families of two or more
of the tax system: "I believe that
a
sound tax system should meet making up this group in 1946 re¬
Even without any residual sur¬
ceived
but
4.4%
of
the
total
the following essential tests: The
plus being developed by the first
civilian money income and have
tax system should produce ade¬
two tools of fiscal policy, the debt
already lost a considerable por¬
quate revenue. It should be equi¬
tion
of
their effective
buying management phase, or tool, should
table in its treatment of different
continue its efforts to absorb cur*
power due to the rise in prices to
rent individual and corporate in¬
groups.
It> should - interfere as date. This
group has already been
little as possible with incentives
come,
thus preventing ? the full
forced to make its contribution to
to work and to invest.
It should
amount of the incomes from re¬
the needed saving simply by being
help maintain the broad consumer
turning to the spending stream, by
Sec¬
markets
that are/' essential for priced out of the market.
promoting the sale of
savings
ondly, the tax tool should be used
bonds to individuals and business
high-level production and em¬
carefully iri restraining or de¬
concerns
other than commercial
ployment." Finally, it is encour¬
ferring income because there are
banks.
In this connection there
aging
to know that President
today soft spots appearing in the
Truman and his Council of Eco¬
has been considerable discussion
consumption picture as a result
nomic Advisers are also cognizant
of the suggestion to increase the
of the inflation that has already
of the importance of fiscal policy
sale of bonds by increasing the
taken place, and tax programs are
in today's economic situation, as
long-term rate of interest, en¬
not
usually quickly adapted to
the second annual economic report
abling the Treasury to pay higher
changed requirements.
of the President Jan. 14, 1948, so
rates ana to attract more of cur¬
With due consideration of these rent income to investment in sav¬
clearly indicates with these words:
two factors, it would seem safe
t';
the fiscal policies of the
ings bonds.
Such a suggestion
government, such as taxation and to say that income taxes should does not appear workable at this
debt management, need to be so be restored to the levels existing time. The lack of saving is due
contrived as to afford maximum before the recent cut, and pref¬ to the pent-up demand for con¬
incentives to production and to erably the restoration should be sumers goods and housing rather
improve the balance within the by the present extra session so than a lack of attractiveness of
that it can bring its pressure on investment
economic system generally."
opportunities.
Saving
the
1943 incomes.
The excess- is not so much a function of the
As
a
second consideration it
profits
tax,
requested by the rate of return paid to savers as it
should be observed that, in gen¬
his statement

from

taken

.

refugeees. Uprooted from their
expenditures.
jectives.
Yet the importance of
homes and with plans for their
Wherever
possible
outlays for the
timing of their collective ex¬
ute
this
curtailmant
equitably
lives disrupted, one brother ran.
long-term capital improvements
penditures and the impact of their
over the community.
should
be
postponed.
Govern¬ collective budget surpluses on the away from life, but the other put
One was afraid
The use qf the tax tool to ac¬ ment
guarantees
and subsidies whole economy is not always un¬ his wits to work.
of competition; the other asked for
complish this curtailment or de¬ having the effect of direct gov¬ derstood.
Today
many
excuse
it.
And we all know the result.
ferment must, howeVer, be exer¬ ernment expenditures should like¬
their expenditures on the ground

the Treasury,
emphasize the importance of fiscal
policy today in this quotation
the

of capacity

extensions

curtailing

address

The growth in

with these words:

size

of

to

importance of

great

the

policy in a public

fiscal

side-step the urgent need
for a tax to dampen consumption
the next six to 12 months, is one
expenditures.

ible

Proceed¬

the

to

ings reporting the Third National
Forum held here July 28-30, 1947
accurately and wisely states that
the ".
sum total of what
we
make of our national economy in

,

the' share of

foreword

-33

kitchens.

good things we have

to competition and

we owe

inventors.

^

Remember

early

those

the

With

"Man

in

the

we

left

days

mid-thirties when

behind

and

barns,

the

the

Hoe"

and substituted for him "Six Men
and

The

Shovel"?

a

competitive

spirit
days.

all but died .out in those
What took its place was no

credit

to the

United

States.

Cer¬

tainly as Christians we must—and
are willing to—care for those in
need. But more of the spirit of
Horatio

little effort to

Alger—a

"Strive and Succeed" is necessary
to keep America
How

to

Competition

going.

Get More

stimulating.

is

Competition is inspiring.
It gets
things done. Rivalry is American.
Whether
in

we

like it

or

not,

we

live

competitive world and a com¬
petitive age.
Whether manufac¬
a

merchants, farmers ' or
fishermen, let's prepare our children to take their rightful places
the face of continuing inflationary in the
competition they will have

indicates

pressure.

a

reduction of

Further aqd fast public

enlightenment is vital.

-

-

turers,

in

taxes

-

to

face.

Competition

make for

and rivalry

productivity.

w ""

lW,„ ,p

34

'Siowwo****-*'

i

'

(630)

THE

of embarkation for the

figures I; think

Tomorrow's
-

.t

■

*\

-

>•» »;'■/

■_

;

Vi

•

COMMERCIAL

higher

will

we

Examples

Babcock and

are

than

Some of these we've had be¬

fore; others

the

this column).

=By WALTER WHYTEs

*

sis

August with
The stocks are the follow¬
market backing and filling.
ing: Allegheny Ludlum;
Attempts to absorb overhang¬
American
Smelters;
Cater¬
ing stock will meet with early
failure. Upward penetration pillar Tractor; Armco Steel;
Babcock Wilcox; Colorado
possible end of month or later.
Fuel; Commercial ' Solvents;
u-i
; j|e
fri'.-7/ K Continental Oil; Electric Stor¬
it's about time to get back
age Battery; Ex-Cell-0; Glidto
work and
stop gassing den; Paramount; Phillips
about things that add up to Petroleum
(in fact all the oils
nothing more thaiv double look higher) and U. S. Steel.
■

-I-:

,

talk,

The special session of
Congress has come and gone,
and for all the good
|op the
harm) it did it cpp)d havei |n
the words pf the fight man¬
ager, "stood home in bed." 1

we

So

we'll

downsweep
just have to sit by and

watch.

When

the

reaction

I think it will

comes, or

come,

I'll try to

give you the specific
prices at which to buy and

quate,

that

so

must be

exaggerated

in some rriv

and

in

portion to the actual dangers.

third.

to

seem

we

fear

be

The order should, I

reversed.

The

others

At

Russia

most, communism second and

until

another

see

beginning to

now

misdirected, the most important
thing about our fears is that they
are althogether out of true pro¬
present,

placing of stops too haz¬

sis

dull

*•

points under current

ardous for comfort.

is

exploded in Yugoslavia.

Colo¬ #/^p4rtv;frdriri being
spects

Wilcox;

Thursday, August 12, 1948

.

ribw

techniques

developed or invented.

"

prices. This condition makes

(new to

are new

5

latter inyth
be

Armco;

rado Fuel and 'Commercial
meanwhile, however,
Solvents. In others it seems to
here is a partial list of stocks
be anywhere from 3 to more
that act promising enough.

Says—

■

current levels.

CHRONICLE

In the

Walter Whyte

■■

FINANCIAL

Allegheny Uudlurp;

see.

...

Markets

Expect

&

war

think,

price

of mayi^s

continued

existence upori this plaiiet fs
universal

recognition

brotherhood

of

that

is

man

the

orYeligibUs

merely ah ethical

Jthe

longer

no

con¬

pragmatic f&ci.
This
recognition
dannot
be
accom¬
plished by governments unless it
is first accomplished by peoples.
cept but

a

The techniques of adjustment' in
a world
By far the greatest danger
community, which recog¬
Aye
nizes itself as being a world com¬
is war.
Even a. victorious
war
would destroy more of the munity,- can be ■ developed.,; Thbre
things we rightly value than could can be no effective techniques' of
possibly be destroyed Without war adjustment for a world which; is
by' Russia
arid
Soviet-inspired one, but refuses to recognize ;its
communism.,
existing unity.
' • "
t
[,
.

face

We are, I think, no worse arid
the outstanding new
time, to which we are no' better—so far as bungling" is
than the world we
partially binded by the thought-— concerned
stop them.
Others
attractive tb some of our present live in.
may
be more
More next Thursday.
leaders—that, if all else fails, we skilled in that official chicanery
which goes by the polite title of
could
almost
certainly
win
a
—Walter Whvt*
intercourse.
Others
physical struggle with the Soviet diplomatic
;. [Tftt views ; expressed in5
may have structural forms of gov¬
thfs Union.
•y-cr >Vrf;'y.v.
»
sis
i'fi
sis
article do not necessarily at any
:#This.)is' what terrifies not only ernment. which lend themselves, to
time coincide with those
of the the
In some stocks the buying
Russians, but our friends faster and more 'consistent action.
But all this* is beside the
Chronicle. They are presented as
ppipt.
throughout .the, world. This Is.
point seems to be right around thpsf pf the mther only.) *
whatm^keS 'uneven to those what pampers' r^s ^ ririisl is hot pur
skill and; know-how, por
who do riot question Our good irjterifiops—a, dangerous element in yet the structural form of bur
worldsociety—an irresponsible- government. Both cou^ be im¬
godd-natured dfqrik' wandering proved without doubt. But what
really hampers' us is the fact tlfat
about in a crowded
iparket-place we have not
(Continued from page 13)
yet fully compre¬
with a loaded

equally specific

ones

where to

This

is

fact of

our

—

.

r

Onr Role in Woild Affairs

This all leads up to the
market, which in the past
t

week

to have taken; a

seems

turn

tor' the

better.

Ope

week's action, however, isn't

tommy-gun in his

varying emotional tides and
politics.

par¬

tisan

have

We
which

is

plan

no

the

central

for

China,

problem

of

ments;

but

Russia

lacks

the

means, which we possess, qfitransporting a striking jforpe across
either ocean.
As for

nir-power,
long-range

hold, a lead 'in
Secretary of State,
enough on which to pass after a careful study ori the spot, bombers; we have bases around
declared that we should discon¬ the periphery of the Soviet Uiiion;
judgment. But if that week
is considered in conjunction tinue our subsidies to the Central we have atomic bombs. Even as¬
Asia,

wre

Our

With all that

happened prior ! and maintain ofhands-off
Government a Chiang^Kai-shek
policy in
July reaction and in¬ the struggle between it and 'the
cluding it, a different picture Chinese Communists. Yet our
Congress decided to vote an addi¬
begins to take shape.

:ii' ~i.tr rcv

to the

not

going into details

about this

projected picture:

It sounds too much like crys¬
tal gazing. But I think that

between

the month

we

market

vzrt

fag

and the end of

now

will have

put

a

OI

ting this year to $500,000,000, and
the Republican candidate for the
Presidency favors
still
greater

thermore,

Our planlessness goes still fur¬
ther. Not only are
plan for making the

zig- also without

which

of

nut

market

Africa and the Middle East.

subsidies.

a

fmen

a

the peace

without

we

a

peace; we are

a plan for preserving
it is made. Our

once

government takes the position that
lhe United Nations, as at present

will develop. At
would be appro- constituted, is an instrument capapriate to pull out that old We of preserving the peace. It
chestnut, "buy selected stocks 0PP°ses any change in its strucrising trend
this point it

i

>>

rpi

i-i

r.

•

weakness." The trouble is,
are to be
selected,

on

what stocks

true,

let our governments own
pr0posal for the control of atomic

clearly

energy

implies

that

the

at what

prices, and where in present United Nations structure
is wholly inadequate and will re¬
this weakness buying is to be
main

inadequate until the United

done.-

Nations is built into

v'"'

*

I

won't leave

*

*

some

sort

of

World Government capable of en¬

in sus¬ forcing world law.
The conclusion from the forepense much longer. I'll give
you the names Of the stocks gotae seems to me inescapable,
i
"v.* v/i «, aw
The world is correct in
I

think

act

you

Fur¬

there is ho evidence
whatsoever that Russia's interests
would foe sefVed by vwar. There is
no 'evidence*, that
the Soviet re¬

haven't

determined

yet

zagging I spoke of earlier in
this column, reaches

point

a

Are We Unreasonably
Motivated by Fear?

Because

"the

—

imposition

without of total¬

or

emphasize the

we

pur?
exploitation
of

pression
of

Pacific Coast
'•

"

'

>f'V

,lr7

"J ';'

'

\

our

There

Russia,
fear

on

Pacific Coast Exchanges
•(:

1,rv v7

" "/-''

'**

fear

of

I

v

■

■

Merhbers

,

New

New

:

York

Stock

Exchange

York Curb Exchange

San

Francisco

Stock

<Associate)
Exchange

Chicago Board of Trade
14 WaJI -Street
COrtlandt
,

7-4150

;

■

"

New Y^prk 5, N. Y.
Teletype NY 1-928

Private Wires to Principal Offices
San

Francisco—Santa

Barbara

Monterey—-Oakland—Sacramento
;

-

S.*V^' FVesno

*

A"?'

—




no

by

of

war.
we

The

answer
are

doubt that

The
are

we

fear — fear

communism

afraid, or whether
well-grounded.
fears

Schwabacher & Co.

be

can

motivated

of

and

question

is

unreasonably
our

fears

are

is, I think, that our

partly

as

an aggres¬
confuses our

This

to play into
communism
It leads
us
in China to back a
regime of
corrupt and oppressive landlords
against
the
peasant
masses,
thereby
handing
the
Chinese
us

hands

of

and

Soviet

imperialism.

Communists

whether
Orders Executed

correct

fear.
are

Securities

is

nation.

the

that, in spite
relatively secure position,
unreasonably motivated by

we are

'

fear of Russia

thinking and leads

.

The second point for us to ex¬
amine is whether the world's im¬

exaggerated,

partly misdirected, and wholly out
proper
proportion.
Let
me

of

around in this

Ivan

is

The conclusion
that

;;

indicated

unreasonably

are

we

seems

moti¬

"to

change
coveries

which

have

Thus,

of

car

new

for

a

man

and

ride

a

learned
off

effect

our

is that
a

how

his

before

drive.

proudly, enjoying

and

admiration.

con¬

upon the world
who has bought

it

to

dfs-

largely
'

takes

in

own

our

so

tributed.

less

ful about how he handles it:

we liyd—that we
rind. resentful pf ; the

As

family
he

He

has

starts

new respect
he begins to

realize that he does not know how

to control

the bright new .contrap¬
tion, he becomes afraid. His fear

fear

the
Bedell man in the new streamlined road¬
ster who doesn't quite know how
fiasco—many of the im¬
itarian dictatorships."
What we promptu utterances of our Presi¬ it works.
should fear are the social
and ceo* dent are sitting ducks if one is
nomic .conditions anywhere in the
II. What Can We Do About It?
looking for targets.
So are the
world whkh make the applica¬
So much for "our present role in
actions of our Lower House in
tion of these techniques possible. passing
world affairs.
a
resolution
What

sive
2.

•

tji®

which

afraid

are

leadership in recent

communism
from- within

our

peace.

where to buy them. This will
have to wait until the
zig¬

it would be much
more
terrifying to most of thb
world if Brother Ivan, rather than
Uncle
Sam,
were: wandering
sure,

might conceivably

enough to Of the United States as a nation poseful Soviet
bear watching. You'll notice I which, in spite of its great power these conditions, and often lose
sight of the conditions themselves,
say "watching", not buying. I an(* hs desire to help make and
our fear of communism becomes
makp thk ditfinrtinn hpnamn 1 maintain the world's peace, is
maKe tnis distinction because
nevertheiess without a plan for indistihgpishably
merged
with
I

be

hended the changed nature of

world iri

transmits itself: to the passengers.
vated by fear—partly because our
When he meets a
road-hog arid,
of
Russia
is
exaggerated,
partly through his bwn lack of
partly because our fear of comact contrary to Russia's interests
skill, narrowly misses a collision,
muifism is misdirected, hut most
—is at present thinking in terms
he curses the other driver. Event¬
of all because we fear too little
of military attack
eithep upon us the danger we should fear most. ually, the entire family joins him
or upon
in screaming abuse at other ve¬
any other nation.
Yet—
3. Are We Bunglers?
oddly enough—we seem to be
hicles and even at pedestrians.
more afraid of Russia's
attacking
This brings us to the question The whole street is gripped ■ by
Western Europe than the Western
;
pf bungling. Are we, as the world panic.
Europeans themselves.
In the eyes of the world, Russia
seems
to think, lacking in skill
What about pur fear of com* and know-how in our behavior as is a selfish road-hog
driving an
munism? This, I think, Is not ex¬ a nation among nations?
ancient jalopy—or perhaps even
a
team
aggerated but misdirected. What
of horses—stolidly /arid
It would not be difficult to pre¬
we fear most are the revolution¬
ruthlessly down the middle of the
sent a damning indictment
againsj road. The
ary or subversive techniques of our
United States is the
present

gime—which

thinking

well

To

condition. Brother
likely to be goodnatured when drunk, and more
suming
that
Russia,
too,
has likely tb loose off his
weapon just
atomic bombs, there are no Soviet
to see what would happen. Never¬
bases in Mexico or Canada or
theless, it is Uncle Sam who holds
Greenland which correspond to
the weapon today and who,
every
our bases in
Japan; Britain, North now and then, seems not too care*"

tional subsidy to Chiang amount-

I'm

hands.

both

a

monopoly in ex¬
ploiting the most powerful magnet

pf political attraction. It leads
in

Germany, to

us,

socialism
and to restore to power, the rem¬
nants
of
the
old
monopolistic
clique.
It
leads
us
to
coddle
Franco in Spain, arid to deal del¬
oppose

icately with the petty potentates
of the Middle East. Here at home
it leads us into
anti-communist
.

Palestine

months.

—

Smith

inviting
sabotage
ing the Reciprocal Trade Agree?
ments Act " and in slashing the
ERP funds. All these things add
up to a far firom pleasant picture!.
The blame falls upon the Whito
House, the State Department, the
various and sundry Presidential
Franco into the ERP, in

advisors and upon both Parties in

Congress.

It falls upon the ThircJ

candidate.

P&rty

the press.
and

It falls

individuals

falls

It
upon

who

upon

all groups
have

con¬

tributed

to the confusion by los¬
ing sight of the world woods for
seeing only their particular paro¬
chial trees.
In the last analysis,

the

can

about it?

selves

How

make

the peace?

ourselves

because the picture we
present to the world as a nation
is a fairly accurate picture of the
confusion which exists in

minds.#?,
In this

our own

respect, however, I ven¬

ture to' doubt whether any of our
friends

abroad

have

the

right to

our¬

helping
we

can

effective in

more

Fully

that

aware

quick

easy,

to

it?

preserve

there

is

the

to

answer

no

world

problem, let me nevertheless sug¬
gest to you three major lines of
endeavor which, combined, might
lead toward a solution.
The first
to do with domestic
policy,

has

the

second

peace,- and

serving

with

the

1.
A

with

the
pre¬

Domestic.

»'■»>-j?

nation's

foreign policy in¬
reflects that nation's do¬

evitably
mestic
We

state

cannot

ment

derly,
We

making

third

it.

strength if

•

How

do

we

make

in

helping to build the structure

blame falls upon all of us as

citizens,

we

effective

more

to make

can

of
an

are

of

mind

be
we

order

an

are

if

element

unstable.

and

weak,
we

of

health.

element
are

an

of

ele¬

disor¬

stability If
#####;##■

The true measure of a
nation's
pal tensions of all sorts. All this, bungled? What government has strength is not to be found in the
iri made to order for those; whp pursued a consistent course? What number
of., its
planes,
atomic
Our fear of Russia, as a nation seek to
persuade the oppressed people is' less- ■confused. than*
th£ bombs,;; battleships rind infantry
—that is, our fear of Russian at¬ and
divisions. The measure of a foriunhappy peoples of the world American peopled : *
tack—is,
I
think,
exaggerated. that communism offers the only
The fact is that the whole world tiori's strength' is'to fob found in
We have no common frontier with
rpad to a better futur,e whilej at, is jivjlng jty the same glass house. the health, the ' education# the

witch-hunts

and

increases

inter-

criticize

us.

What nation has not

briefly develop each part of this

threefold assertion.

the

Soviet

Union.

We

can

reach

each other

only by air or by sea.
Q,ur Navy controls the world's
seas;
Russian submarinejs 'could
interfere with

our

seaborne

move¬

the

same

vince

the

time, they seek to con¬
ruling cliques that an

alliance

with

the

provides

the

only

"national
T V':f

Soviet

Union

guarantee of
independence^"
The
■T

T

:f 'I A 1: J>

that mankind; has housing and the full employment
point in its history at. at fair wages of its people. Put
whjch the old techniques of ad¬ it in other terms, the ultimate
justment within and among na¬ strength of a nation depends upon
tions have become wholly inade¬ the /solidarity? of its pepple, which
The

come

fact
to

a

is.'

Volume

COMMERCIAL

THE

Number 4724

168

in'turn depends upon the degree
to:;which
all
its
citizens
leel

recently, through unsoundly cqut
ceived
military
assistance.
I
themselves justly treated.
say "unsoundly conceived military
The true measure of orderli¬ assistance," first; ■ ,b .e,c;a u;s[e no

without

constantly

to

of stability is
not the maintenance of one par¬
measure

permit our foreign
policy to reflect a healthy, strong,
orderly and stable society, we
have many things to attend to
to

here at home.
We. are now spending $15 ibtL
lioni a year on rebuilding that

at the

24,

participants

ness

time, proclaimed her readi¬
to end the military occupa¬

tion

of

Germany.
Prior to that
date, the Kremlin had favored an
indefinite occupation. Almost two

substance

years ago, I put forward a sugges¬
tion for a revised American Rolicy

These

in time to stop the Red
Army's invasion; third, because
the rearmament of Western Eu¬
Europe

With

also

military strength which we so ir¬ of the Elbe \vhile we assemble a
responsibly dissipated three years great army on the opposite shore.
agn. We need to re-examine this
We
have
recently
made
an

would

withdraw

to

tends
into

to

states,

of their

more

unproductive

on

increasingly

tiue perspective, and the concen¬
tration of planned endeavor upon

the

mgjke

garrison

|ke attainment of

effort

restricting

considerations

In

or

Gold "was

belief

sians

need

that

nize

take

to

at our

look

a

price level arid to recog¬

the

row-—if there is to

short

peace

building

of

the

continuation

a

of

our

present
dearly-beloved
donothing policy will not only make
hash of all our plans for, pro¬
moting world recovery but will
also drive us into another one of
so-called cyclical

our

vp-Finally,

depressions

United

States

withdraw

from Europd

forces

all

west

ernment. :

the side of those peoples who are

idea

written

The post-war

Nations

great
10

to explore the
in

Government

in

still

was

war

I began

World

of

book

1939, when the
early stages.
a

upon

as

first

a

Once

vival.
self

the road to Worl<jl -Govern¬
ment. Unfortunately, our Govern¬
On

their

Having

treaty guaranteeing the neutrality

advance

Continent.1

present tensions and freeihe

| racial discrimination.
These

things which are

all

are

generally considered remote from
foreign policy but which never¬
theless have a direct bearing upon

J

;

J;

realize

to

ous

that

to

ment

that

stick

Here

amine

to

need

reex¬
present fears, to range

our

we

some

are

the

than

turn

drawn

any

and

policy for each of the many indiyiduaL problems of the peace

shortsighted view of
the
world. It is true that the prob¬

see

war,

rather

than

we

lems of making the peace are not

questions of structure. But the
problems of maintaining a jpeace

or

later,

the

possibility of reaching an
that will he kept—or
accept the inevitability of

else

questions of structure.

our

into

the

ments

two

in

predominant

the

as

our

contradictory

ele¬

In¬
billion a year

foreign policy.

stead of spending $6

world recovery and
peace, we
shall probably spend
considerably
more.
Instead
of
spending $15 billion a year cm
getting ready for war, we shall
probably spend considerably less.

to

promote

This

is

the

by

withdrawing
we

should not be giving up an effec¬

the presence of our hand¬

cause

ful of soldiers makes it clear that

tions,

capable

the

—

East-West

a

present

the

drift

bone of contention.

Europe

toward

to eliminate Europe as

than

is

divided

At present,

into

an

.half,

American

protection. The major
attention of the United States is
directed

^

toward

penetration

.

blocking

through

Soviet

soundly

conceived economic aid and, more




a

of preserving
if the present

even

tensions

The United

elimi¬

were

multilateral

a

Nations,

as

it

sovereign

a

shooting

is

between

treaty

nation-states.

It

can

function

Much the

war.

same

sort of psychological barrier would
be erected by the proposed treaty.

Neither

with

without

or

contingents

present
tinent

would

on

Britain

the

their

and

the

States be able to prevent

United
Red

Western

It is obvious that .this ^proposal
a radical change of di¬
rection in Germany. But the time
involves

IThe

idea

of

neutralizing

the

Conti¬

of

Europe was put forward by Mr.
F. Van Rossen Hoogendyk in a letter to
the -New York "Times'- dated May 26,
nent

In.

1948,

this

proposal

the

idea

of

helpless.

for

ing

Federalization, if it is possible at

long

time, but the
three-power
treaty does not require federalization and
could ^be made effective by itself in a
much shorter period.
all,4 will

require

idea

neutralization

of

a

by

"How

nor

to

and tech¬

geology

combined to make
the physical
giant among those nations which
carry the common heritage of the
Judaeo-Christian civilization. But

a!s yet the
position of
robs

newness

very

ability

take decisive action.
the corrupting in¬

to

is more,

What

fluence
make

of

wealth tends to

great

materialistic and unduly

us

conservative. Fear of
a

power
an<i the

vision

of' clear

us

of our

preponderant

losing

even

little of what we possess blinds
to the danger of los¬

not only

us

ing all; but to our greatest oppor¬
tunity.
The

present role of the United
in world affairs is unvvprthy of a great people. Our
potential role staggers the imag*
States

not

Whether

ination.

not we

or

ful¬

fill the mission which history has

entrusted to us depends upon cit¬

leader¬
people more
those individuals whom
than

izenship more

ship—upon

One

than upon

World," delivered before the Con¬
of the Society of Friends
three weeks ago. Copies of this

us

as

upon

a

elect to office.

we

the role

affairs.

that

I

have

also

to

not

left

ination

the

lines

office jn the ,and

s(.t

with a
feeling of discouragement or des¬
pair. I have tried not merely to
point out what seem to me the de¬
fects of our present policy but
which

along

might proceed to cure
Yet, even if you should

we

them.

think well of the tentative sugges¬

tions put forward, I

fear that you
may go away wondering by what
means
the
average
citizen can
possibly do
anything to bring
about their adoption.
The

only

answer

I

can

In makins this

, decjsj011i ke has, it seems to me,

you

indicate

ra(her than to accept nomto
the
highest political

peace

present

United States in
I hope, however,

•

world

at

teach¬

ing and preaching in the cause of

.™ake you ^eel any

rr

ia

ferred to devote himself to

said today is not

have

with

happy

sity

available to those of you
be interested.

What I

President of this Univer¬
recently said that jte pre¬

The

give is

that, in the long run, our Govern¬
ment is responsive to the will of
the people. Every one of us has
it in his or her power to learn
the facts of contemporary life, to
discuss them, to form an opinion
and to test that opinion as against
the opinion of others. Every one
of us has a right to ask questions
and demand answers from any of

us

au

an

exampie of

respon-

citizenship.

jWe

inland Steel Places
Bond Issue

Privately

Steel

Inland

Co.

on
Aug. 3,
through Kuhn,
Loeb
& Co., of New York the
sale of $20,000,000, aggregate prin¬
cipal amount of its 3% bonds se¬
ries H, dated Aug. 1, 1948, ma¬
turing Aug. 1, 1978, with interest
payable semi-annually, on Feb. 1
and Aug. 1.
The bonds were sold
at 101 plus accrued interest from
Aug. 1, 1948, to seven insurance
companies
who
purchased the

negotiated

1948,

bonds for investment.

Inland will use the proceeds of

the

bonds to

reimburse the

capital

for

pany

made since Dec.

which

includes

President, stated

the

bonds

com¬

expenditures

31,1946.

Wilfred Sykes,

that

which fails to

establish

authority over and above the
sovereign nation-states.
The only kind of peace which

reasonably be hoped for under

the present UN Charter is an Un¬

armistice, resting upon a
precarious balance of power.; In

easy

the world of today—in

a

world of

atomic energy-r- a world in which

polarized

in

only two poles of superpower

—

has

become

the search for

a

balance of power

inevitably becomes
preponderance of

struggle for
power.
Such
a

struggle necessarily becomes an

armament
An

to

outworn

States

present themselves for election to

an

a

the

have

United

office. One of the things we ordi¬

veto. The veto merely
explicit the basic defect
implicit
in
any
international

power

readiness

the

peace

the

due

the

structure

for

strength to be-

the "will to work

is it cdrable by eliminat¬

is

not

moral

Geography,
nology
the

matters

Achieve

the

irqUcs And fetishes of the past.

limited: extent
supply the an¬
in an address

To

physical

ference

nary

makes

can

so

those

time,

a

peace,
peace
and

the candidates who will this year

defect

This

veto;

a

three-power :guarpnty '.of European neu¬
trality was, - however,: combined with a
plan for the federalization of the Con¬
tinent.

only when and if therp
unanimous agreement on the

part of the great powers. |n Ihe
absence of such unanimity, it is

Con¬

East¬

completely under Soviet
domination, and a Western half
increasingly afraid of communist
penetration
or
Russian
attack,
and increasingly dependent upon

ern

Na¬

exists today, is nothing more than

■

war

peace

nated.

United

the

structure

Red Army advance would start

Army, from over-running
Europe; they would, in
either case, have to embark upon
a
war
to subjugate Russia and
tentative suggestion.
* *
once again liberate Europe from
I can think of no better Way to occupation.
X
~
arrest

that

it exists today, is not

as

a

important the

most

change we need, to make in our
overall policy. I should like, how¬
ever,
to put forward one other

submit

I

that,

forces from the Continent

dan¬
tive physical barrier to a Russian
ger, yve shall begin to change the
advance, but merely a psycho¬
present relationship between the
logical barrier, which exists hemoney and effort we are putting
Russia,

made most assuredly involve

once

Second,

we

a

the challenge which confronts

agreement

settlement.
Once

presented

With all due respect, i,submit
that this is

able to

did

P

have to believe

case

I

likely to

war.

in

any

am

swers,

who may

questions of structure."

American

reply:

First, .that, sooner

that I

paper are

"The problems today

once they were with¬
the
Channel
or

To this I would

of

to those who desire peace are not

re¬

across

shall in

proper

structure

that
the

Committee:

the Atlantic.

across

position

to*the

here,tbut

Nations is basically satis¬

Russian

easily

the

with

deal

to

is

There

constituted?

be

time

tary Marshall said in his testimony
to
the
House
Foreign
Affairs

agree¬

more

it

the

to

marching

men

Today, the price of life it¬

is

sacrifice

necessarily leaves many

view

echo

the guarantee of sur¬

was

jUeve in

questions unanswered. What pow¬
ers v should
be
delegated to a
World Government? How should

entitled

present time, our Gov¬
takes

of

factory and does not require dras¬
tic amendment. On May 5, Secre¬

Soviet

evacuated

far

British

contingents,

perspective, and
to' develop a positive program of
action in place of panic-inspired
negative and often self-defeating
counter-action. Next, we must fit
into our overall plan a specific
in

them

the temerity to
thoughts on the

made.

existing

United

troops out of
might also froint

They

could

the

to

the

the

its

keep

that

forces

helping to make the

with

do

peace.'

there

assume

Union would

out

2. Making the Peace;

.

At

ernment

Americans who will say—and not
without reason—that it is danger¬

,

*The second line of endeavor has

to

I

Europe.

it,

few

settlement is

military establishments.

prestige the blot of

national

our

from

remove

had
a

This, combined with an agreement making of the peace, let me now
to promote rather than obstruct .conclude with some .brief com¬
ments on the questiornof preserv¬
East-West trade, would yejjjeve
ing the peace, once a satisfactory
+he

need to find some European nations from the burden
state or of supporting essentially useless

we

action—to

Federal

been

have

armed

upon

strength

step

necessary

again shall

never

streets

on

into conflict.

agreement, seemed
disappointing, except if

me

of

tramp

United

based

structure

world's

tnis

in its

creation of

will be found

determined that

a

power

viewed

3. Preserving the Peace

way--wjiether through
•

will

world of

a

tomorrow—God

lifted.

of the Soviet frontier, and sign a
of the entire European

affairs

be

United Nations into a World Gov¬

themselves

world

the

armed

yesterday, it
not have been true
on the side of the

big battalions. In the world of
today and in the world of tomor¬

—

We

may

that there is no way to preserve

—

runaway

of

world

mat

army.

Moscow.

to

.

the

may

for

Now, however, the Rus¬ ment seems more and more to
have put for¬
consider that what was accom¬
seized upon
ward the suggestion. I cannot see plished in 1945 is not a first step
the light of what we can afford bur somewhat
ambiguous invita¬
that we have anything to lose by but a
to spend altogether, and also in tion to sit down and talk
finality. In taking this view,
things
being willing to discuss it. On the it lags behind the Governments of
the light of what we are invest¬
over, we backed away—probably
most
of
the
Western European
ing in the health, education and because our government was con¬ contrary, it seems to me that the
housing of the American people
nations, of many of the countries
vinced that the only thing Mos¬ opportunity now exists to break
the existing stalemate, to end the
Three
billion dollars
one-fifth cow wanted to talk about was
of Latin America and of all of the
idiotic competition for the favor nations of the British Common¬
of1 the amount we are spending another
Yalta
deal
another
of the
Germans
by their con¬ wealth.
on preparing for war—would as¬
agreement to stay opt of each
querors, and to establish the be¬
sure
Cvery American citizen of other's back .yards.
In order to develop a policy to
ginnings of an all-German Gov¬
adequate medical and dental care
Certainly our Government is ernment with which we can even¬ preserve the peace, I suggest that
add 'isend every American child
What we need most is to make up
right in rejecting any further crys¬
through high school, plus one-half tallization of the unfortunate tually sign a peace treaty.
our
minds that the present UN
of- them through two years of col¬
If such an agreement with Re¬ structure is unsatisfactory and to
soheres
of influence
created at
lege. A fraction of our expend¬ Yalta.
gard to Germany is reached as align ourselves with those who
itures dor planes and ships and
part of an overall agreement to have already declared themselves
But why should we not propose
guns
would overcome the dis¬
withdraw armed forces from Eu
in favor of converting it Into an
a different and more constructive
rope and guarantee its neutrality,
effective World Government.
graceful
shortage
of
adequate
approach? Why should we not
I low-cost housing.
the key
log in the log-jam of
This brief statement of a point
propose that Russia,f Britain and
figure in the light of what mil¬ hbortive
approach
itary strength we really need, in When the Kremlin

.clearly ,seeji

a

goal.

the

have

long time led me to the

a

to

agree

what
is going on in
th^
world, the conscious effort to sed
the various
existing dangers in
stand

is

race

"reedoms of their peoples.

believed that the Russians

one

it

that

and

proposal seemed Utopian because
no

armament

an

spending more an<d

Germany, which
an
intolerable involved; among other things, end¬
ing the period of full occupation,
already over-,
economy;
arid, finally, establishing instead a period of
observation and control, and sub¬
Decause rearmament, especially if
it includes Western Germany, is stituting for the ■ four armies of
likely to provoke the very attack occupation an international police
against which it is intended to force of highly mobile contingents,
insure.
Whatever their present strategically located and subject
intentions, the Russians are not to the call of the Allied Control
At that time, such a
lijkely to sit still on the east bank authorities.
regar.d

of

35

(631)

only because it is likely
to armed conflict.
The

lead

first

ticular state of equilibrium, but
thp maintenance of an equilibrium
rope
will place
in spite of a constant shifting of
burden upon its
the conflicting forces.
strained
In order

June

On

come.

by

Atlantic seaboard; second, because
United States aid could not reach

violence.

The true

to

not

ous

have

Europe could stop the
Army from marching to the

Red

occur

fqr such a change seems to me to
meeting of the Foreign Ministers
of the Soviet orbit, Ru$sia, ^or tthe

is not the absence of change,
but the degree to whicli change is Western
permitted

CHRONICLE

danger

amount of feasible rearmament

ness

FINANCIAL

&

race.

armament

race

is

danger¬

this

citizens might consider doing
summer

tional

"Quiz

is to

institute

Your

a

or

would have to

candidate

stand up and be counted on what¬
ever

issues

seem

capital expenditures for
company is being re¬
imbursed by the
sale of these

important to each

constituency.

ing the company's capacity to pro¬
duce cold rolled sheets, a battery
of

If this nation

effective

is

to

champion

become

the

political

of

freedom, its citizens must find
way

to

educate

themselves

new

coke

ovens

and

a new ore

carrier

capable of greater ton¬
nages and more trips per season.
Mechanization of its coal mining

properties and the construction of
a

*

This much is certain:

facilities increas¬

na¬

Congressman-'

Week, during which each incum¬
bent

the

coal cleaning plant at its

Price

Mine, Kentucky are also well un¬
der way.

a

and

"

Joins First California

each other. They must asume per¬

sonal responsibility. "Eternal

(Special

to

The

Financial

Chronicle)

vig¬
ilance"—the traditional price of
freedom—means more today than
mere alertness to danger. It means

FRANCISCO,
CAL.—
Philip D. Thompson has joined
the staff of First California Co.,

the

300

conscious

effort

to

under-

SAN

Montgomery Street.

COMMERCIAL

THE

(632)

36

The Problem of thelCross-Rafes of
currencies. If

(Continued from page 6)
it

than

more

imports

from

said

one

A: Debit balance with B, credit

balance with C
B: Credit balance with

A, debit

balance with C
~

C: Debit balance Jwith A, credit
balance with B.

Therefore, in

wants to have at

CHRONICLE

been expressed so far. The de¬
formation of trade currents is not

contrary, they are said to be the
lack of cooperation be¬

a

of

the

three bilateral trade

tween

try, makes up for the deficit in its ment of the
trade balance with another given

country, by the fact of having a
credit balance with a" third coun¬

countries together,
one obtains m-I equations, quite
sufficient to determine the m-1
m

"unknown

quantities" (this was
try (or several countries if the
proved one hundred years ago by
countries
considered
are
more
by
Cournot).
The equilibirum
than three). If the equilibrium of
rates of exchange are precisely
bilateral balances is assumed

as a

condition, a general equilibirum
of exchange rates becomes impos¬
sible, if other conditions of inter¬
national
economic
equilibrium
are to be satisfied. In other ryrords,
it is possible to imagine a Govern¬
ment, by means of controls, ob¬
taining an artificial equilibrium of
its country's bilateral balances at
rates of exchange that are not in
lceeping with the situation of the
market
(although experience

that to

disorderly

of

consequence

cross-rates. On the contrary, it is
the deformation of trade currents

the

a situation of gen¬
equilibrium of the exchange tween the currencies of these
rates and of multilateral trading
to
maintain
a
cross-rate
■ountries m-t independent rates of take
relations, the bilateral trade bal¬
exchange. On
the other hand, equivalent to the official parity
ances of the various countries are
of 4 dollars to the pound.
given the condition of the equilib¬
riot in equilibrium, but each coun¬
It seems to me that the prob¬
rium of all the balances of pay¬

eral

rates cannot be obtained by means

the

Exchange

equilib¬ result of

those at which there is a simul¬

equilibrium of the bal¬
ances of payment of all the coun¬
tries.
The coincidence
between
the number of exchange rates and
the number of conditions proves
taneous

lem should be set

as

follows: since

market wherever it has

come

int(

being and replacing its cross-rate^
by the official parity approved ty
the Fund for the various

cies?

Let

see

what

this

step

us

of

curren¬

the

conse¬

would be
object of the Fund and of the
governments must be to reestab¬ Suppose the free market quota¬
lish, as speedily as possible, cur¬ tion for the dollar in a giver
rency convertibility
and multi¬ country is 100 and for the pounc
lateral trade, will it be easier and 300, so that the cross-rate is •
dollars to the pound. Now let us
quicker to attain this object by
going on with the system of flex¬ suppose that, in order to obey the
ible
exchange rates
at present Fund's recommendation, the gov¬
adopted by a number of countries ernment of the aforesaid country
fixes the exchange rate for thf
(and if necessary by developing
it further), or
by obliging the pound at 340 and that for the dol¬
quences

the

maintain

to

governments

cross-

lar

at 85:

cross-rate

tt

4 dollars

rates at the level of the official the pound according to the offi¬
logical point of view,
cial parity fixed by the Fund. The
parity fixed by the Fund?
a general equilibrium of exchange
consequences
would
The circles connected with the immediate
rates can quite well be achieved

that, from

Thursday, August 12, 1948

,

caused by bilateral
agreements,
governments and the
that renders a general equilibrium
balances, three conditions are laid Fund. The object of the Fund is
of foreign exchange rates impossi¬
down which cannot be fulfilled to bring order into foreign ex¬
ble. That is the basic factor. The
simultaneously if the market is change rates, even int a system of
inconvertible currencies, and this international monetary system
free.,
formulated at Bretton Woods is
Let us now set the problem on cannot be done unless all coun¬
with a system of
tries do their best to maintain incompatible
more general lines. In a situation
cross-rates
at the level
of' the bilateral trade agreements.
of
general
equilibrium of ex¬
But how is the present situatior
change rates throughout the world, parity fixed by the Fund. In short, of disorder to be remedied?
By
in the case of the dollar and the
given m countries, there exist be¬
pound, all countries should under¬ doing away with the free money

rium

country. Summing up:

one

and the same time an

FINANCIAL

&

a

of

artificial

think

I

measures.

system of gen¬
eral balance of the exchange rates
impose

a

without first

having the premise,
namely multilateral trade, would
mean
travelling along a
road
which leads nowhere and there
would

be

strong opposition from

number of countries, as was

a

case

the

with France. It is worth men¬

tioning here that the French re¬
form

not

followed

by the
in inter¬
monetary and trade rela¬

was

serious

perturbations

national

tions that

anticipated when
was get¬

were

the French

Government

ting ready-to put it into
form,

effect.

the French re¬
will be remembered, was
while

Moreover,
as

severly criticized on the one hand,
the

on

other

theoretical

hand,

first

rate

and

.

out¬

economists

standing authorities of the finan¬
cial world, such as the Chairman
the

of

looked

National

Swiss

Bank,

monetary
monetary
as giving
clear understanding of

French
(and Italian
before them)

upon

measures
measures

proof of
present

a

realities and

step towards

an

operation based

the first

as

international co¬
precisely on ac¬

tual facts.

Undoubtedly, as Mr. Gutt re¬
marked, the present situation con¬
increase in exports to the
with a free market. cerning exchange rates is far from
conditions created by cross-rates sterling area and a drop in imports
satisfactory. But, in my opinion,
If instead we set the condition
differing from the Fund's official from this area, which would have the solution of the problem is not
of the equilibrium of the bilateral
grown too expensive, and, on the
quotations:,,
to be found in an intensifying of
balances of payment we shall ob¬
teaches us that enormous diffi¬
(a) doubts arise concerning the other side, a drop in exports tc controls with a view to achieving:
culties have to be overcome in viously have m
equations value of the currencies that result the -dollar area and an increase a monetary balance which, I re¬
order to do this); but in that case
depreciated in the cross-rates in in imports from said area. Total peat,
I
consider
impossible as
there will be a lack of balance in; (that is to say the number of com¬ use in
a
number of countries result: an accumulation of incon¬
things are at present. A solution
other sectors. Returning to our binations obtained combining m where there is ar free money mar¬ vertible sterling balances on the of
the monetary problem is only to
side and, on the other, a
1
ket. For instance, the fact that the one
previ ous example, for instance, j countries two by two).
be reached
through a more ex¬
In this situation, if we wish to dollar-pound cross-rates are un¬ growing scarcity of dollars. In ac¬
let us suppose that, at an exchange
tensive and intensive cooperation
rate of 45 units of A's currency | obtain a general balance of ex¬ favorable to the pound strengthens tual fact, the cross-rates which the
among the governments in order
the opinion that the pound is at Fund calls disorderly because they
for one unit of B's currency. A's
to do away with bilateral agree¬
changing rates, we have m
inhabitants are ready to purchase
present over-estimated in official result in an appreciation of the ments replacing them with com¬
dollar with regard to the pound,
gpods for the amount
of one
(m-1) = i/2 (m2 — 3m + 2) quotations;
mercial
treaties
facilitating the
are
hundred millions from B. In order equations too much.
merely the expression of V creation of a multilateral
A general
(b) disconnected cross-rates in¬
system,
scarcity of dollars — a scarcity in the
to. avoid excessive imports, AV balance of exchange rates would crease the
difficulty of reestab¬
spirit of the recent Havana
which the cross-rates, by stimulat¬
therefore be impossible. Only a
government reduces this figure to
Convention. Naturally, at the same
lishing currency convertibility in
ing imports from the sterling area
50. millions. This will give, rise to "sui generis" balance would be the
future. If the pound is worth
time, steps should be taken to en¬
and exports to the dollar area
ms^isfifd demands for B's goods possible, characterized by the ex¬ 4
sure the domestic recovery of the
dollars in one country. 3 dollars
tend partly at least to correct.*
in A, which means that excep¬ istence, no longer of m-1 exchange in another
currencies of countries that are
and 2.50 dollars in a
Fund

insist

on

the

detrimental

be:

an

—

,

tional

profits will be made by the
third country, on what basis will
rates, but of
independent
are in a position to
it be possible to fix a uniform
sell the insufficient quantities of
conversion rate between these two
rates, that is to say a number of
foreign goods at high prices.
exchange rates formed by m-1 currencies?
exchange rates, which we will
(c) cross-rates that differ from
Ill
call direct, and V2 (m2 — 3m + 2) one country to another and from
From
the preceding example
cross-rates, which do not coincide the official parity fixed by the
we'may also draw the following with the direct rates. In a free Fund lead to
monetary arbitrage
conclusions: (,a) in a situation of
market, this discrepancy between despite the ban and the punish¬
general balance of the rates of ex-i direct and crossrates derives nec¬
ments laid down by the States;
change, the exchange between the essarily from the existence of
(d) far more important, it if
rnrvoncies of any two countries
bliateral trade relations.
stated, are the consequences re¬
results not only from the trade
Importers who

>

exchanges

two!

these

between
but

con^tr'es.

the

from

of

total

IV

that an
inter¬
exchanges with all national balance of exchange rates
-other countries; (b)
in order to and bilateral trade are two op¬
establish a general equilibrium of
posing terms, each excluding the
exchange rates, it is not sufficient other. This principle is of funda¬
far the various currencies to be mental importance for the mone¬
their

i

one

tilateral

transactions

trade

another: mul¬
must

also be

possible. In fact, in the

ex¬

ample

given

ex¬

above,

one
a

unit

of

deficit in

B. If A could not

t>y

B's

the

at

change of 45 units of A's
fia^

currency

currency, A

its balance with
cover

this deficit

of an excess of exports

means

towards C, it would be impossible
for A to keep un the convertibility
of its money. The present disorder

concerning exchange rates is
doubtedly

a

consequence

un¬

of the

Inconvertibility of currencies, but
.

see

we

trade

convertible into

for

Thus

the real

reason

this situation

at the bottom of
we are still

is that

policy

tary

of

the

International

Fund.

From

the

statements

made

by

Mr.

Gutt, Chairman of the Inter¬
national
Monetary
Fund, in a
lecture he gave at Harvard Uni¬
versity last Feb. we learn that the
Fund is very much disconcerted
by the fact that in a number of
exchange rates for
the dollar and the pound have

countries the

given

rise

to

which

cross-rates

differ from the official parity es¬
tablished by the Fund. This had

already happened in the past in
several South American countries

from

far

having re-estab¬

incompatible
with
a
bilateral
trading system is the following:
ip

a

general

change
same

rates

time

as

eauilibrium

is

desired

an

of

ex¬

the

at

equilibrium

of

the bilateral trade balances of the

various countries,a set of condi¬
tions arise that cannot be simultan cousin

achieved

because

their

wm.h»r is greater than that of the

amntities (exchange rates) to be

*determined. We have
the

case

seen

how in

of three countries and

a

.general balance of exchange rates,

there

are

are

menace

to

occurrence

the

pound.

takes

on

a

different aspect when
in countries like Italy

recently, France. The
dealt extensively with

But thi s
completely
it happens
and, more
press has
the lively

discussions of the Fund concerning
the
recent
monetary reform in

France

which

the

Fund

disap¬

proved of.

01 was stated that it would be
Inexact

to

consider

the

formed in the so-called free

kets

as

rates
mar¬

expressing the real value

two rates for the three of the various currencies. On the




an

increase ir

still

threatened

by

progressive
Italy is con¬
cerned, in view of the conditions
rates
of the State budget, the time has
parity
not yet come to communicate the
would
official parity of the lira to the
whole
Fund and it is advisable, for the
adapt
present, to go on with the present
cial cross-rates. Everyone can see
system which makes it possible to
that this would mean a reduction
adapt the exchange rate to do¬
in the total volume of trade and mestic
changes
in
prices.
Of
a
perpetuation and accentuation course, it will be the strict duty of
of the bilateral system in contra¬ the Italian
Government to con¬
garding trade currents. Imports diction with all ITO's resolutions
tinue its efforts in order to bal¬
and exports follow a completely
as well as with the Fund's desire
ance the State budget as soon as
abnormal trend which is bound to
to
reestablish multilateral trade possible and to stabilize the value
change abruptly once currency
exchanges.
of the lira. Substantial progress
convertibility
is
reestablished
As I have already said, the dis¬ has been already made, during the
Further, the disorder created by
last few months, towards this aim.
cross-rates leads to arbitrage on parity of cross-rates has its draw¬
backs,
but I
think that there
goods. If, for instance, the dollar
would be still more serious con¬
is at a premium on the Paris free
Exchange Suspends Three
sequences if uniform cross-rater
market, French speculators will
were imposed before we have the
Registered Representatives
find it worth while to purchase
necessary presuppositions for thir
Charles Kass, registered repre¬
goods in Great Britain, import
uniformity which, as things are sentative
them to France and then export
for
Eisele
&
King,.
at present, would be, in a manner
them to the dollar area and sell
Libaire, Stout & Co. has been sus¬
of speaking, a foreign body intro¬
the dollar proceeds on the Paris
pended by the New York Stock
duced into a system which, owing
free market. This means a lower¬
Exchange for a period of four
to
the
prevalence of bilateral
ing of Great Britain's dollar reve¬
months; Irving Kastin, of Sar«*
logically accepts f
nue. Or there
is a marked ten¬ agreements,
torius & Co., for six months, and\
difference
in cross-rates in the
John
P.
dency to import British rau
Locke,
of
Francis
F.
various countries. 1
materials
to
France, transform
du Pont & Co., for one month, for
A general balance of exchange
them
into
manufactured
good?
violation of margin - regulations.
and export them to the United
The Exchange stressed that the
1 ItMv is a case in question.
I quote
States. On the other hand, it may
violations
had been
committed
the following passage from the Governor
be in the interest bf French im¬ of the Bank of Italy's last report: ".
.it without
the knowledge of the

would
fixing crossaccording to the officia7
set down by the Fund, H
be necessary to introduce r
control
system so as tc
\rade balances to the offi¬

result

from

inflation. As

far

as

legally

.

where

multiple exchange rates
quite common. However, since
lished
multilateral
international
these countries were only of small
trade exchanges.
importance in international trade
The logical reason why a gen¬
relations, these discrepancies had
eral balance of exchange rates is
never
been considered a serious
very

In order to avoid

this lack of balance, such as

porters
to
purchase American
goods through Great Britain, Bel¬
gium or other neighboring coun¬
tries instead of - straight from the
source.

.

'

t

;

•

All this may

be right, however
I should like to point out that if;
as
a
result of this arbitrage re¬
garding goods, the supply of dol¬
increases, while the

lars in France

is

good

remember

to

that,

if

sterling

this does not depend on the

cross-rate,
Italian

system^ but on the
present unbalanced situation of our ex¬
perts and imports in the sterling area
When, following on the agreements of
April 17, 1947, the pound could once
currency

anywhere, its quotation
on
our
market
immediately
attained
official Daritv with
the dollar, so that
the
British Empire and the dollar area
were
looked upon as one ma-ket; quota¬
more

demand for dollars grows less, the
cross-rate between the dollar and

gradually change
of the dollar
tending ultimately to approach
the official parity.

up

be

spent

tions

the

will

pound

to the disadvantage

dropped again 'when the converti¬
bility of the pound was suspended on
Aup-ust

tations,
be

20th.

orderly system of cross-rates; still
do not agree with the way ir

I

which the

problem

seems

to have

.

.

as

trade

Italian
while

is sometimes requested,

advantage

an

would

balance

more

no

one,

marked,

as

would

find

no

counterpart

in

Emoire,
sterling
a

men

represented.

—WW—

.

,

'-A

'

'

MacDonald &

Bowles Formed
(Special

LOS

to

The

Financial

ANGELES,

Chronicle)

CAL IF.

—•

James D. MacDonald and Thomas
C.

Bowles

ald &

have formed MacDon¬

Bowles with

offices

at 210-

West Seventh Street to engage

the securities business.
with

a

stimulating

exports
to
the British
this
increased
flow
of

stantial

.

was

formerly

in

Mr. Mac¬

associated!

Harris, Upham & Co.;

■

would

high
only make the lack of
to

.

Donald

,

"Bringing the quotations for sterling
to the official level with dollar quo¬

cross-rate

there is no denying
the drawbacks arising from a dis¬
However,

firms the

quotations on the Ital:an market have
often deviated
from the sterling-dollar

sub¬

,

f

C. L. Vertin Co. Adds
(Special to

The

SALINAS,

Financial

Chronicle)

CAL.—Gordon

Estes is with C. L. Vertin

^creqse jn; its expenditure for 341F3\fex|^;Btree1^, 7^715

H rf

.

,

Vt

& Co

Volume 168

THE

Number 4724

Indications of Current Business
The

are

cover

Latest
Indicated steel operations

(percent of capacity)

Equivalent to— A •
Bteel ingots and castings produced

i

Week

Aug. 15;
Aug. 15

Ago

7

1,710,500

'■••••

•''

/.

90.8

94.2

94.9

Year

Month

Previous

Week

INSTITUTE^

AMERICAN IRON AND STEEL

93.2

Crude

runs

to

stills—daily

Gasoline

output

1,636,600

•1,697,900

Slab

1,630,900

zinc

output

(bbls.)

average

July 31
July 31

;

(bbls.)

Gas oil

distillate fuel oil output
Residual fuel oil output (bbls.)
and

July 31
July 31

(bbls.)

July 31

Blocks at refineries, at bulk terminals, in trahsit and in pipe lines—
Finished and unfinished gasoline (bbls.) at_

Kerosine
Gas

(bbls.)

oil and

July 31

Residual fuel oil

56,661,000

100,641,000
20,382,000
54,756,000

July 31

65,713,000

64,556,000

99,116,000
21,051,000

July 31
July 31

(bbls.)

oil

(bbls.)

5,701,000

2,116,000
7,185,000

16,558,000
2,055,000
6,070,000

9,055,000

8,563,000

at

at

■

all

grades

(tons

of

67,497

(tons)

period

Unfilled orders at end

BUILDING

104,145,000
18,733,000
60,926,000

47,528,000

PERMIT

BRADSTREET,

(tons)

VALUATION

INC.

215

64,922

DUN

—

New

86,032,000
17,769,000
46,693,000
52,935,000

7

CITIES

AMERICAN

Revenue freight loaded

South

ENGINEERING

RECORDS:

U.

Private

(number of

cars)

.__

-

—

.

West Centrals

882,566

757,366

921,591

Total

700,970

685,161

638,621

694,120

New- York

CONSTRUCTION,

ENGINEERING

NEWS-

and

$114,276,000

$168,718,000

65,811,000

52,226,000

87,783,000
65,684,000

62,050,000
48,377,000

100,043,000
68,675.000
54,663,000

13,673,000

14,012,000

municipal-

Federal

OUTPUT

Bituminous

(U.

coal

S.

BUREAU

and

DEPARTMENT

STORE

TEM—1935-39

,v

OF

(tons)
(tons)
.

_July 31

12,410,000

July 31

1,231,000
131,800

July 31

,

.

SALES

$109,768,000
47,943,000
61,825,000
45,245,000

July:

INDEX—FEDERAL

RESERVE

AVERAGE=100

IRON

AGE

INC.

construction

Private
Public

16,580,000

State

*

12,250,000

3,700,000

1,191,000
*134,500

100,000

11,695,000
1,126,000

26,700

and

Finished

.Aug.
INDUSTRIAL)—DUN

265

220

253,321,000

265,502,000

207,255,000

74,886,000

58,247,000

48,315,000
4,365,000

53,208,000

39,882,000

*4,590,000

4,084,000

410,500

:

:

—

—

*540,500

437,100

270,917,000
194,180,000

1

76,737,000

of

(BUREAU OF MINES)—Month

July:

Bituminous

coal and lignite
(net tons)
Pennsylvania anthracite (net tons)
Beehive coke (net tons)

4,760,316

4,874,172

231

5,319,409

7

5,352,439

CONSUMER

PRICE

INDEX

FAMILIES

88

116

5

Aug.

3.76859c
$43.94
$43.16

3

Aug.

3

Aug.

3

15:

3.24473c

$43.72

$40.51

$40.91

$41.67

Fats and oils

204.8
184.9

218.0

205.0

204.6

181.3

200.5

196.6

188.3

173.0

:

244.2

205.1

$36.38

$43.16

154.6

214.9

3.17956c

157.1

190.5

171.1

194.2

:

170.5

205.9

•

bakery products

210,9

171.2

»-

;

Dairy products
Eggs
Fruits and vegetables

3.77117c

'

171.7
214.1

255.1

foods

60

PRICES:

steel

CITIES

LARGE

IN

-

Cereals and

■I
Aug.

MODERATE

FOR

of June

All items'-'—-.All

BRAD-

&

(per lb.)
Pig iron (per gross ton)
6crap steel (per gross ton)

■

: 5524,238,000

330,830,000

EN¬

Municipal

COAL OUTPUT

136,900

234

July 31

—

COMPOSITE

$596,332,000

357,495,000

—

53,147,816

Month of

1

—

construction

1935-1939=100—As

AND

$713,719,000

281,338.000

—

227,430,783

356,224,000

RECORD

305,096,193

......

INCOME

(COMMERCIAL

NEWS

/

$353,039,658
47,943,465

$280,578,599

44,196,207

SYS-

Electric output < in 000 kwh.)_

STREET,

5,115,008

39,105,247

337,666,912

City-———

Total U. S. construction————

EDISON ELECTRIC INSTITUTE}

FAILURES

30,703,903

75,605,873

MINES):

lignite

y Pennsylvania anthracite
Beehive coke (tons)

22,400,668

38,400,068
51,915,705
38,421,225
15,506,303

63,359,155

$381,863,119

——

York

New

Federal

COAL

47,664,798

86,795,445

7,881,189

City

of

GINEERING

$153,594,000

_.Aug.

construction..

State

States

United

CIVIL ENGINEERING CONSTRUCTION

%

construction

construction

Public

30.726,324

75,908,258

—

894,381

July 31
July 31

(number of cars)

22,099,000

S.

Ago

$16,121,018
75,994,025

$15,783,492

42,904,263

I

:•

Central

Outside

Total

Month

43,790,880
90,427,295

________

Ycak

Previous

RAILROADS:

Revenue freight rec'd from connections

CIVIL

Latest

22,299,254

ALlantic__„

44,955

69,345 ;

$23,549,648
75,102,332

—J—

Atlantic—

Central

East

.

Month

—

England

South

,

&

Month of June:

Mountain

OF

69,126
59,737
183,718

43,280

45,605

of period

Pacific

ASSOCIATION

?

68,372
69,345

69,822

(tons of 2,000 lbs.)_

end

at

output,

lbs.)—

5,309,000

18,041,000
i

5,087,600

Middle

at

distillate fuel

6,625,000
8,825,000

5,483,800

-v..

smelter

of 2,000

Stock

5,447,800
5,591,000
17,879,000
2,166,000

5,455,450
5,718,000
17,646,000
2,213,000
6,823,000
9,080,000

July 31

(bbls.)

Kerosine

Age

July:

•>

•

(net tons)

(bbls. of 42 gallons each)

average

Year

Month

Month

AMERICAN ZINC INSTITUTE, INC.—Month of

AMERICAN PETROLEUM INSTITUTE}
oil output—daily

Previous

Latest:

Ago

Shipments
Crude

Activity

production and other figures for the latest week or month available (dates
either for the week or month ended on that date, or, in cases of quotations, are as of that date) :

following statistical tabulations

shown in first column

37

(633)

CHRONICLE

COMMERCIAL & FINANCIAL

179.7

I

Sugar and sweets
Clothing

216.9

.

171.5

183.0

7

185.7

196.9
117.0

METAL

PRICES

Electrolytic
•

(E.

M.

&

J.

tin

(New

(New

Lead

(St.

Zinc

(East St.

21.675c
103.000c

80.000c

17.500c

15.000c

17.300c

14.800c

12.000c

10.500c

4

23.425c

21.600c

4

103.000c

103.000c

Aug.

4

19.500c

19.500c

170.1

194.8
147.5

Louis)

at

4

19.300c

19.300c

Aug.

;

;

147.5

139.1

312

*313

287

239

*289

220

526,000

448,000

290,000

21.375c

21.200c

21.226c

21.668c

21.696c

21.359c

17.808c

;

.

—■

—__

193.6

17.500c

15.000c

17.300c

14.800c

117.7
*

:

—

Miscellaneous

168.6

109.2
"

91.7.
;
^

143.0

'

.

182.6

•

Aug.

at

Housefurnishings

94.1

17.608c

21.050c

4

Aug.

at

at

Louis)

21.225c

Aug.

—

York)

York)

21.200C

Aug.

t

Export refinery at
Lead

21.200c

22.400c

i—-

—

131,8

94.2

Fuel, electricity and ice
Gas and electricityOther fuels and icel

copper—

Domestic refinery at

Btraits

i

QUOTATIONS):

116.7

132.6

—

197.5

4

15.000c

15.000c

•

•

"V,>, ':f

'W

DEPARTMENT
SERVE

■

'>■*■"'V "'

'' '

'

>'

'

(FEDERAL RE¬

SALES

STORE

Average=100)i

SYSTEM—(1935-39

Month of July:

MOODY'S
U.

S.

BOND

Govt.

Average

PRICES

DAILY

AVERAGES:
103.73

Aug. 10

a

—

corporate

100.72

100.72

100.83

Aug. 10

Bonds

111.44

111.81

112.75

117.20
122.09

116.02

116.41

117.00

114.08

Aaa

114.46

115.43

111.25

112.00

117.00

105.34

105.86

106.74

109.97

Aug. 10

107.62

107.98

108.34

112.56

Aug. 10

112.00

112.19

113.31

118.60

Aug. 10

115.24

115.63

116.41

120.63

Aug. 10
Aug. 10

Baa

Railroad
Public

Group

Utilities

P Industrials

Group

Group—

MAGNESIUM

120.22

110.88

Aug. 10

-_

% A—

Adjusted for seasonal variation
Without seasonal adjustment

OF

WROUGHT

COMMERCE)—Month of June:

Shipments

(in

pounds)
fi

METAL PRICES

ip U. S. Govt. Bondsrf; Average corporate

i

—

.

Baa

refinery
export refinery

domestic

Industrials

MOODY'S

INDEX

Silver,

3.43

3.40

3.03

2.89

2.87

2.83

431.9

424.8

Textiles—
77 ■ Metals.

—.

Building materials
Chemicals

and

244.3

243.2

222.0

7

221.6

225.1

279.8

187.8

7

270.9

276.1

275.9

259.0

7

305.4

313.0

330.4

344.4

7

222.0

230.0

242.0

257.2

7

288.1

292.4

284.9

249.9

7

233.9

233.8

231.4

7

172.0

172.7

174.9

New

York,

(per

180.1

198.6

7

184.4

181.8

166.6

158.8

—Aug.

—

machinery

Orders
7

received

Production

PAINT

OIL,

DRUG

AND

REPORTER

PRICE

38.170c

35.940c
33.000c

35.500c

33.500c

Nominal

PRICES

RECEIVED

231.9

228.0

221.3

NUMBER

156.6

156.6

157.0

149.8

TURE

138.4

138.6

136.7

128.0

DEPT.

OF

.Aug.

7

145.4

*144.4

143.8

135.0

7

143.1

343.1

140.2

127.1

228.0

226.2

206.4

227.4

7

176,753

159,210
175,182

215,857
171,583

92

91

89

Fuel

358,955

360,981

381,065

5

146.9

168.2

166.7

151.3

168.3
192.2

194.6

197.2

180.8

187.7

190.4

184.1

.168.0

189.5

188.3

174.5

Raw

148.3

148.1

148.1

—

136.8

136.5

134.1

160.9

159.4

grain—

253

317

301 '

215

364

344

344

produces

289

213

366

crops

300

284

155

213

crops—

370

172

'

—

and

251

27'8

266

—

326

286

417

animals-

109

343

390

300

291

244

234

i

221

220

RR.

EARNINGS

197.6

135.5

116.9

145.0

131.4

Total

commodities

-July 31

118.6

119.2

121.1

116.8

Total

_

176.6

157

OF

AMER.

—

CLASS

I

ROADS

RRS.)—Month

operating
operating

7^.77 7,?; 7
l

All commodities other than farm productsAll commodities other than farm products and foods.

.July 31
.July 31

183.4

184.6

184.3

165.6

152.9

154.5

154.0

164.1

163.1

160.9

146.0

162.9

162.3

159.9

144.8

.July 31

152.1

150.6

149.8

134.7

259

240

229

$838,105,949

$796,402,811
616,231,264

$697,822,483

626,079,812
74.70

77.38

78.87

$75,966,676

$72,201,217

124,979,063

90,178,066

61,249,090

94,000,000

63,700,000

44,000,000

of June:

revenues
expenses—

.

—

—_—

,

railway operating income before
Net income after charges (est.)

chargesi

550,353,240

147.2

.July 31
.July 31

223

319

(ASSOC.

Net

products

199

231

241

—

140

258
319

crops;

products
Poultry and eggs__

146.1

198.0




263

261

249

256

.—-—

Dairy

109.7

167.3

145.9

-

r

276

295

288

and hay

Fruit

132.9

•Revised. figure,

4

240

grain

Truck

146.0

products

articles

Available

Seasonally adjusted—

139.0

-July 31

materials

Manufactured

10.500c

Not

$72,690,939

.....

133.1

Semi-manufactured

12.000c

301

Dairy productsPoultry and eggs

-July 31

.

12.462c

grain

Livestock

141.3

..July 31

groups—

15.000c
20.500c

AGRICUL¬

OF

Operating ratio—per cent—
Special

15.115c

20.500c

,

Fruit

200.7

Miscellaneous

.DEPT.

$1,800

16.000c

20.500c

370

goods

allied

S.

U.

—

Oil-bearing
145.3

144.6

...July 31

products
lighting materials

and

$1,800

INDEX

—

Cotton

494,554

-July 31
-July 31

and

Chemicals

$1,775

$1800

August, 1999-July, 1914=100—As of

Feed

LABOR—1926=100:

.

Housefurnishings

$1,775

253

99

-July 31

Textile

$1,750

$1,775

173,527

189.6

products

$53,000

$1,750

•

6
INDEX—1926-36

commodities—;

Farm

FARMERS

BY

Unadjusted—
7'
All farm products

206,732

178,892

..July 31

All

Nominal

$82,154

$1,750

July 15:

Aug.

S.

PRICES—U.

Nominal

$89,154

**35.913c

Meat

WHOLESALE

$84,000

35.000c

Truck

AVERAGE=100

$76,000

38.170c

233.4

-July 31
-July 31

—.

$75,423

35.500c

7

.-July 31
-July 31

(tons)—

$35,000

35.000c

Feed

activity———
Unfilled orders (tons) at

78.900c

$35,000

(per pound)

7

Aug.

(tons);

102.400c

$35,000

—

ASSOCIATION:

77 Percentage of

80.000c

102.400c

99%

(per pound),

7

combined

PAPERBOARD

$4.0250

(per pound), bulk,

Food

NATIONAL

or

(E. & M. J.)
Laredo
in cases, Laredo
(per pound), Chinese, Spot——
refined, per ounce
tCadmium
(per pound)
tCadmium
(per pound)
§Cadmium
(per pound)—
Aluminum, 99% plus, ingot (per pound)
Magnesium, ingot (per pound)—.——
Zinc (per pound)—East St. Louis
IIAntimony
Antimony
Antimony
Antimony
Platinum,

Aug.

—Aug.

Fertilizers——

,

103.000c

220.5

7

*
—

Chinese

ounce

_„Aug.

*

38.837C

103.000c

York Straits

165.8

202.0

Aug.
Aug.
.

—

drugs

materials

groups

245.9

199.7

——

_.

Fertilizer

7

Aug.
.

—

—

U. S. price)
Quicksilver (per flask of 76 pounds)—

Aug.

—

New

Gold

432.9

63.568c

45.000c

$4.0275

74.625c

ounce)

Sterling Exchange (Check)
(per pound)—

2.62

425.1

74.625c

45.000c

$4.0275

(pence per

London

Tin

2.72

Aug.
I

commodities

Miscellaneous

All

3.26
2.99

Aug.

____—

Silver

3.17

3.28
3.05

Aug.
Aug.

4" Fuels———

Farm

3.35

3.30
3.06

Aug.

Cotton

-I

2.80

Aug.

Livestock™

;

2.64

3.06

GROUPS—1935-39=100:

BY

__________

products—.

Farm

;

2.55

2.88

3.10

COMMOD-

py? Fats and oils—.

j

2.80

2.93

3.12

Aug. 10

ASSOCIATION—WHOLESALE

FERTILIZER

ITY INDEX

y

2.83

2.95

Aug. 10

Group

Pp Foods.:

and

2.85

Aug. 10

Group

COMMODITY

NATIONAL

2.79

Aug. 10

Group-

Utilities

Public

York

New

2.25

._

(per pound)—

Sterling Exchange—
Silver, New York (per ounce)

Aug. 10

Railroad

2.44

3;02

QUOTATIONS)—

Aug. 10
Aug. 10

.-

A.

2.45
3.07

J.

Aug. 10

Aaa

Aa
i;t

2.45
3.09

_Aug. 10
Aug. 10

M.

pound)—

(per

Electrolytic,
Lead

YIELD DAILY AVERAGES:

&

for month of July:

Average

Copper

(E.

Electrolytic,
MOODY'S BOND

(.DEPT.

PRODUCTS

"

——

tBased on the producers' quotation.
tBased on the average
platers' quotations.
§Based on platers' quotations.
(IDomestic,
lot, packed in cases, f. o. b. New York.
7
Colborne, N. S.
'
'< - '
'
,

^Revised figure.
of the producers' and
five tons

or

'-**F.O.B.

more

Port

but less than carload

„

„

(634)

38

THE

COMMERCIAL

FINANCIAL

&

CHRONICLE

price increase of $5 per inance of the free enterprises
y/; /
//%/. // ■%/ % over our political and Economic
1948 as repayment for life has already put me postwar
only a 13-cent-an-hour wage in¬ economy tragically out of adjust¬
crease,
the steel industry now ment. As our inflation is break¬
gives itself an increase of $9.34 ing through to an all-time peak,
per
ton.
And,
where demand let us examine some of the conse¬

industry

ABalanced Economy—Labor's View
(Continued from page 15)
since

served

1933

well

us

) savings

during

owned

World War II.

When the atomic cloud billowed

inequitably disof our families
60% of the nation's savings

in

1945

10%

while

40%

shared

only

try was cutting the take-home pay

on

homes

of the workers in basic industr.es

continues

and

in

the

1%.

have reckoned the terrible respon¬

and

sibility which victory had piaced
upon us.
There were two alter¬

great backlog of demand for

Should

we

natives ahead. We

could abandon

the world in a search for

our

own

prosperity content with the pro¬
tection our sole possession of the
atomic bomb would afford.
could

assume

effort

an

perity

of

rest

to

build

based

world

a

world

a

on

allies in

our

without atomic bombs.

pros¬

order,

We accep-

ed the second alternative not

because it

because

only

morally right but

was

could

reason

other choice iri

we

partnership inter¬

a

with the

est

Or

an

dictate

no

However,
farms

sumers'

Never

goods

Our

Even

and

shared

local

in

this

gov¬
well

being. With public construction
delayed and relief needs, at a
minimum,
debts
of
depression
days were liquidated
and
sur¬
pluses piled up. But the Federal
.

Government did

pie. It

wartime

our

not share

in the

the pump that primed

was

prosperity,

1946 its debt exceeded

and by
$260 billion.

CIO's View of Postwar

Adjustments
the CIO

As

for

diate

viewed

20%.

of

excess

In

most

mass

reduced to 40 hours from

or

Led

to

made

was

catastrophic
workers

prevent

to

loss

and

wage

a

..{Savings

asked.

loss,
to

a

The

statistics

Federal

the

of

Board

clearly

was

tion

industry

for

measure

biggest business

our

en¬

terprises.

In 1945, our 47 largest
steel companies earned $188 mil¬

of

live

to

forced

under

steadily

a

,

lowering standard of living. This
is
exactly what an
intelligent

the profits 'of unrestrained infla¬

have

should

plan

postwar

On

vented.

other

the

pre¬

hand,

people in the upper income groups
not

only have been able to main¬
but to increase their stand¬

tain

ards of

living.

lion in

profits after taxes. In 1946,
they rose to $283 million, in 1947
to $435 million and 1948 earnings

(2) Postwar inflation is. robbing
our low income groups of the
abil-v

wage
increase
ity to save while the rising costs'
are
easily expected to exceed a
prices.'
Strikes
of day-to-day living are rapidly
occurred
in the steel, auto* and; half billion dollars.
liquidating the wartime accumu¬
In
electrical industry only after CIO'
automobile
manufacturing lations. In 1945, individuals earn->

try

absorb

to

without

a

raising

had offered to arbitrate the issues

imme¬

the

two years.

Reserve

overtime
pay and excess profits taxes,
in
addition' tothe
highest profit
levels in history, permitted indus¬
elimination

through

quences:

add

Corporation Profits

the nation's
increase, to

the

offset

partially

such

supply,

will

steel

of

(1) In
postwar
America our
plusages and continue the wage and salary earners and the
of extortionate profit of fixed income groups have been

effort

an

outdistance

pattern

48

following the last

immediately
by CIO

more,

to

fabricators

their

production plants the work week
was

VJ-Day.

state

our

ernments

atomic age,,

commitments

postwar

up.

the American people

were

Clashing Economic Systems
•

con¬

built

was

a

solvent.....

more
•

debts
paid

were

//
But in

off

then

Hiroshima,

over

a

ton.

While Congress was enriching
corporate enterprise at the ex¬
pense of the U. S. Treasury, indus¬

were

I tributed;

Thursday, August 12, 1948

offers

those

and

had

been

the

pattern

last

rein¬

is

postwar

repeated.

In

1945,

year,

the

prof ts

ing less than $3,000 annually held
15% of the total savings.
How¬

readjustment pe- jected.
The now famous first: for 15 companies were $243 mil¬
ever,
with mounting prices the
and, subsequently, the; riod four economic facts were round of wage increases was won lion; by 1947, they had reached total savings held by this group
and neither the economic necessity
Plan, were costly and paramount.
f$416 million; for 1948, they are fell to 3% in 1946/ In the same
inevitable. They were part of the j
First, even with the end of hos- for them, nor the strikes which \exbected also to exceed a half period individuals earning more
war's cost just as payments on! tilities,
the expenditure of the were forced on labor to obbaift1 ibillion dollars.
than $7,500 increased their share
•;ii
have justified the vilified
the national debt and rehabilita-! Federal Government would con- them
xhe shabbv charge that Indus- of the savings from 25% to 48%.
tion
of
our
returning veterans tinue high. Interest on the public tion heaped on us in this period try is unwillingly forced to inBy June, 1947, more than onewould be a continuing charge on! debt
alone exceeds $5 billion, and subsequently.
crease prices because of the pres¬
half of the Series E Bonds in the
the
American
conscience" and more than the total Federal exEarly in 1946 the OPA, weak¬ sure of wage increases is clearly lower denominations had been re-,
treasury.
Unforeseen were the penditure for any year from 1922 ened and disspirited by open and revealed in all its falsity by the deemed. At
present, according to
added responsibilities of a world to 1934. Continuing charges for continuous attack
by employer in¬ price and profit picture in the oil the Federal Reserve Board, one
soon to be torn in two by clash- I veterans'
benefits, European oc- terests, yielded a $5 per ton price industry.
Here no increases in¬ out
of
every
four families is;
ing -political and economic doc- cupation and relief, and the mili- increase to the steel industry fol¬ creased costs of operation.
Yet, spending more than it receives
trines. Russian aggression against I tary would be tremendous. In 1939,
lowing the I8V2C per hour wage according
to
the
New
York and, in
1948, 3,000,000 families
Western democracy is both physi- our total Federal outlay was less raise which it had
granted. Other "Times" of July 25, the price of will liquidate the last of their
cal and ideological. The first has than $9 billion.
In each of three industries obtained similar price crude oil at
the
wellsT in the War Bonds.
The hope of a sus¬
extended our foreign occupation postwar years it is exceeding $40 "relief."
Yet,
this
was
not United States has been mcrease^ tained postwar prosoerity aided,
costs and led to the allocation of billion.
Postwar tax policies were
enough; OPA—all. of it must go. from $1.20 a barrel in April, 1946. by the wartime savings of mil¬
new billions to rebuild our miliThe Nationai Association of Man¬ to $2.65 today.
j needed to fit the facts,
At the present lions of American families are
tary might. The second is a more j
Second, inflationary pressures ufacturers led the nationwide rate of consumption the increase fading as wealth becomes increas¬
subtle challenge to America—a would not abate with the end of
drive
with
promises
of lower in the price alone over the last ingly concentrated in fewer hands.
charge that our "decadent capi- war.
In 1945, the demand for prices under free operation
of two years amounts roughly to
(3) In addition to the depriva-'
talist democracy"
cannot main- | goods by industry and consumers
supply and demand within six $2% billion annually.
Such a tions suffered by the U. S. Treas¬
tain its inner stability and pros- and for European aid was manv
months.
With
the
pressure
of sum, says the "Times," is larger
perity,
and
failing
that,
will times greater than followed World every vested interest convering on than the total value at the farm ury due to reduced taxes, the in¬
flation is multiplying the costs of
renege on its commitments to the War Ir Without continuing antiWashington, a
responsive Con¬ of this year's near record whoat all of the
goods and services the
distressed world.
I inflation controls, the price situagress
did their bidding.
When crop.
The price increases, plus
government must buy. In the cur¬
Communist
doctrine
has
us
tion would become explosive and
OPA died it was not long before the unprecedented demand, have
rent fiscal year, as all national
marked for the inevitable "bust" completelv destructive,
essential allocation and credit con¬ brought the earnings of the oil
income records are being shat-.
to which, nature taking its own
Third
^
.
in the iiving trols were ripped off the statute companies to levels never dreamed
tered, the Treasury faces a prob¬
course, has foredoomed .us.
It is standards of the American
Last week, able deficit.
people books.' The wartime stabilization of a few years ago.
This
is the time
inconceivable to the Russian mind
which were set in motion j
^33 program was dead; inflation won the Standard Oil Company of New when a provident nation should
that conflicting interests working couid
not be relinquished.
With the day.
Jersey,
the
"Times"
continues, be
storing up a surplus to reduce
within our American democracy
the tremendous wartime expanWith an unlimited and continu¬ estimated its net earnings in the the national debt and hold infla¬
can harness their energies for so¬
sion in our productive resources,
first half of this year at $210 mil¬
ing demand for American produc¬
tionary forces in check.
cial purposes. Reaction and greed
a
higher standard of living for all tion, the vicious sniral of increas¬ lion, up 50% over the $140 million
(4) Inflated prices in America
ing profits and prices and lagging in the similar period of 1947. This
relief

under

rehabilitation

and

postwar

UNRRA

Marshall

hnwirtnn

vi

TUAIII

+

Avrfi AA

nA

AM

£on misery, and class wt^and
..ion, miser%hanbdindasS° war and

stupidity, they say, will
bring national disunity and chaos.
our

own

America celebrated V-J Day in
a
spirit of confidence and com¬
placency. Unscathed by a single
bomb our industrial plant had ex¬
panded 50% during five war years.

These

k)

the most modern and

were

efficient

in

the

world, already
owned and paid for by private
corporations or soon to be bought
from

the

government at

cut-rate

prices.
•

Nor did

we

too

ruthlessly take

the

profits out of war.
Despite
stringent excess profits taxes, the
wartime profits of all American
corporations more than doubled.
From
of

the

1936-39

base

average

$4 billion annually, after taxes,

they rose to an average of $9.6
.billion, after taxes, for 1941 to
1945, inclusive.
For each of the
five
of

war

1929

years

profits

the
was

boom

level

outdistanced.

By the end of 1945 the net work¬
ing

capital

had

increased

of

our

almost

corporations
$25 billion.

/■// Agriculture, too, could tangibly
measure

its wartime gains.

Total

net income of farm operators

risen from

$4.6 billion in

had

1939 to

than $12 billion in 1945. an
increase
of
more
than
160%.

more

*■

.

C?m-e into si«ht'
0£ mcome and

command
must

savings

be

real

wages

As the

widely distributed.

more

into

1947

postwar economic props of relief
and
rehabilitation
expenditures,
industrial

'investment

for

ex¬

continued
is

and

from

1946

threatening

us

with chaos in mid-1948.

The

profit figures reveal the
cynicism of industry's claim to

panded plant and inventory, and restraint in its
pricing policy. The
consumer demand
backed up by
pious pronouncement that price
wartime savings would begin to
increases only would compensate
subside,
continuously
adequate -for wage increases falls flat on its
buying power in the pockets of face. Profits
after taxes of Amer¬
the masses of the American people
ican corporations were $8.9 bil¬
must make us safe against another
lion in 1945; $12.5 billion in 19^6depression.
$17.8 billion in 1947; and, on the
Fourth,
America's
long-range basis of half-year estimates, they
commitment

the rehabilitation

will

exceed

of her land and her people would

Not

every

have
and

to

be met.

to

Slum

clearance

housing must be undertaken
education, health
extended social security must

be

answered.

neglected in

Natural

resources,

needed to be

war,

re¬

stored

through further soil con¬
servation, reforestation and water

in

1948.

enterprise is sharing
equally, but most are enjoying the
profits of inflation. -

and the needs of

and

billion

$20

The
ators

income

ret

also

rose

of

on

farm

the

oner-

crest

of

inflation, increasing one-third be¬
tween

1945

1947.

and

The

real

is

industrial

of

rate,

a

have

for

one

Let

unions in

no

duction
World

II,

our

industries

was n°

as

the^e

mass

pro¬

the

first

after

its

postwar

On

the

try to
standards of

basis

the

of

that

assume

you

living.

record,

the

can

nredatorv

urge of

large segments of business

would

have

restraint

held

been

and

inflation

have occurred.

We

that

the

answer

with

or

without

is

in

would

selfno+

convinced

are

"No"

because

unions,

we

see

the patterns

workers

repeating nga'n

of post-World War I.

Emboldened

by

an

increasingly

fell further behind. reactionary Congress, the high
control.
A chain of TVA's must
From the beginning of 1945, the chiefs of free enterprise, not con¬
be high on the national priority
last year of war, until the be¬ tent with their demolition of the
list.
ginning of 1948, the real value of surplus profits tax. the OPA and
These were the short- and longallocation at)d credit controls have
wages desnite two rounds of in¬
range economic goals which chal¬ creases fell 15.7%.
liquidated the wartime income
tax. - By this special bonus to the
lenged America.
In three post¬
A third round has just been ob¬
war

the

have failed to meet
responsibilities that these

years we

goals have set for
The

Victory

hardly

ended

us.

•

however,

tained.

If

at

level

their

increases

celebrations had
in 1945 when the

prices
of

still

would remair
early 1948. thr

would

not

fully

the total, loss ir
real earnings since 1945.
But be¬
fore it has even made its way intr
compensate

for

well-to-do

^

ment is

the Federal
at

more

that Congress

billion

Govern¬

being deprived of several

billions

the

verv

time

has passed the $17

Marshall Plan

and

a

vast

and
expensive
Weekly earnings of workers in Congress, with indecent
program
of
re¬
haste, re¬
armament.
manufacturing industries did not pealed the excess profits tax and, workers'
nav envelopes, it is being
keep pace with rising profits or thereby, gave American
As for housing, health, educa¬
corpora¬ taken back by industry in furthei
farm income.
During the same
tion and river control, the free
tions, already enjoying boomtime price raises and profits.
period they rose 85%, in large
profits, a gift of almost $6 billion
enterprise Congress has, as yet,
Let those who are responsive tc
measure due to premium

pay

overtime work which

was

for

soon

to

operation.

The

war

had not yet officially ended

and

be ended after VJ-Day.

r-

in its first year of

our

soldiers

were

still

over¬

done

the

propaganda

that wages have

caused our inflation

consider these

During the war years the Amer¬ seas when this stupidly greedy facts:
ican people added $100 billion to and immoral act was consum¬
In 194-3, as repayment for the
their savings in banks, war bonds, mated.
Tax relief for new ven¬
first
round
of ' wage
increases
insurance, savings and loan asso¬ tures and the hard pressed was
which averaged 18 V2 cents an hour
ciation
assets ' and
government reasonable; this unearned bonanza
pensions and trust funds.




These

was

not.

-

.

a

reluctant OPA granted the

steel

nothing.

needs

of

the

The

long-range

American

land

and

its people

must not upset the in¬
centives of the real estate lobbv.
the

utility lobby and the American

Medical
to

the

Association.

We

return

of

our

they

are

being

soent

have

and

lessened the effectiveness of these
loans.

A world with

lars is

limited dol¬

finding the'r value dimin¬
America's inflation at

ished

bv

time

when

their

neel

for

a

our

commodities is imperative.

Inflation

(5)

has

made

new

housing prohibitive for all but the
wealthy.
been

Veterans,

who

have:

forced

by necessity to buy
housing, are saddled with high
cost, poor quality homes which

highly mortgaged. A collapse
housing market coupled
with unemployment would con¬
front them with catastrophe.
are

the

of

(6)

the forces of self-interest, at work
in this postwar era

value

loans to other nations even while

War.' and that labor affair

impotent, to

was

the

reduced

company

t^at there

us assume

CIO after World War
were

'

earnings

at

alone, of $420 million in 194P—?
profit after taxes in excess of a
million dollars a day.

American farmers

are

being

robbed of domestic consumers by

inflation.

According to the U. S.

Agriculture, be¬
civilian eonsumption of fruits had dropped
2%, canned vegetables 3%, milk,
3%, eggs 4%, fresh vegetables 5%.
With the exception of meat, all
Department

of

tween 1945- and 1948,

farm

commodities

are

exoerienc-

drift downward at the very
time that
domestic consumption"
should be increasing—to advance
ing

a

the nation's health and to counter¬
act

inevitable

the

decline

of

ex¬

ports to Europe and the world.
(7) Inflation, while it increases
profits in the short run, lays the
..

groundwork
ahead.

for

leaner

years

Business insists that large

profits are needed for industrial
expansion; people with savings,

they
to

say, are no longer attracted
investment in private enter¬

prise.

This rationalization of

ex¬

orbitant

profits is dangerous and
untenable.
In the first place, the

inflation

which

business

sees

re¬

normalcy of the pre-New
flected profitably in its earnings
Deal days with fantastic speed.
In three postwar years the dom¬ is inflating the costs of its own

.Volume

COMMERCIAL

THE

Number 4724

168

tained its stranglehold on price*
super¬ luring the l&sf/'depression. From
profits into expanded plants dis¬ 1929 to 1933, while farm prices
courage potential purchasers
of AM 60 %. aftdrmahuiactured goods

;; industriali' expansion.

Corporations
stock

in

Secondly.

enterprises while, Ahat

these

at the

same time, markets for their
products: are; ultimately being de¬

stroyed because workers and con¬
sumers are being forced
to bear
the cost of the capital expansion.
A high profit, low consumption
economy inevitably breeds depres¬
sion.
We need planned industrial
'growth and expansion; but, at the
'Same time, we need an expanding
purchasing power in the nation so
that-the expanded production can
"be bought by the people.

Already

industries, like agricul¬

'consumer

ture, amusements, tires, electrical
goods, woolens, shoes, and hosiery,
•which

quickly reflect lessening
purchasing power, are
^seeing inflation and lagging real
•incomes threaten their postwar
♦consumer

boom.
•

4

t*

'

.

'

i,

(8) Unrestrained inflation is the

tueub&tor

of

All.of the

the

logical factors
tion

crash.

colossal

economic and

feeds

psycho¬
which infla¬

upon

thendselves

reverse

.after the peak is passed and panic
and pandemonium break loose in

the -downward plunge -• to

5

sion.

Thus,

market

depres¬
in the free
frightful course.

nature

takes

its

,

Monopoly and Growing Corporate
Power 7

were

trolled

^/nbtV^onOpoly

fell

30%

50%,

to

increases of

somber

not

the

ments

bast'their

facts

8%

on

present

announced

the wholesale

price of automobiles.

sold by
monopoly in¬
declined only 15 to 20%.

These

manufacturers

mobile

coticom¬

Did

reserve

influence

these

or did
require¬

increases?

"The

steel companies have an¬
nounced several increases in the

to

answers

these

Snyder Reports Surplus
Exceeds SB Billion

questions will

definitely establish in

mind
the undesirability and the unfair¬
ness of this proposal and will in¬
duce you in good conscience to

vote

39

(635)

(Continued from page 10)

modities

terests

CHRONICLE

Illinois Bankers Protest Increased Reserves

plow

that

& "FINANCIAL

your

-Secretary
of
Treasury
gives
budget results for fiscal year
ended June 30,

1948.

against this proposal.

Secretary of the Treasury John
On July 26, the Federal Trade
"It will be argued that by in¬ W. Snyder announced on July 2
prices of finished steel. What ef¬ creasing the legal reserves, the that during the fiscal year 1948,
Commission warned Congress that
"no stretch of the imagination is fect; if any, has the legal reserve banks will have less funds to lend which closed on June 30, the net
of banks on these increases?
and thus the expansion of credit receipts of the United States Gov¬
required to foresee that if nothing
ernment exceeded expenditures by
"The third round of wage in¬ will be halted and
is done to check the growth in
by that action
creases »is now in the process. Do a
;''y ■
concentration, either the giant cor¬
phase of inflation will be halted, $8,419,000,000.
This
bank reserves have anything to It
$8,419,000,000 represents
is very, very doubtful if this
porations
will
ultimately
take
the actual excess of receipts over
do with that?
y/A* •'A;
would
result.
over the country or the govern¬
As
I ? mentioned
"Building costs have gone up to above, the tendency and tempta¬ expenditures in the fiscal year,
ment will'-be impelled to step in
and compares with a correspond¬
the point where an ordinary house tion would, be to
and impose some form of direct
sell 'govern¬
regulation in the public interest! has practically outpriced its mar¬ ments' and keep the loans up and ing figure on the same basis of
$754,000,000 in the fiscal year
Did
It is the opinion of the CIO that ket;
legal
bank
reserves particularly
those
loans
which
Which closed on June 30, 1947.
the former has already occurred. cause this?
j
would bring a higher rate of in¬
The excess of receipts over ex¬
In a time of unequalled peace¬ / "I could go on and ask ques¬ terest and which would in them¬
penditures in the fiscal year 1948
time profits,, production and Em¬ tions of this sort and fill several selves be inflationary.
But the
is the largest in the history of the
ployment, it affords me no pleas¬ pages and I think that you could fact of /the matter,-as. any of the
Government.
It
is
more
than
add to those that I would think
ure to play the role of a Jeremiah.
bank supervising authorities
seven times the highest previous
Yet, where is : the responsible of, but ask these questions of should know, is that the bankers
«cf«nomistthday who', honestly those who come to support this are looking very carefully into all Surplus of $1,155,000,000, which
occurred in the fiscal year 1927*«
holds hope for long and lasting idea: and see if they can give you loan
applications today, realizing
The fiscal year's operations in /
prosperity.-on the road we are any affirmative answers to them. that inventories and accounts re¬
more detail are as follows:
t
;Then ask them
what effect, if ceivable could
traveling.
Economists
dtf^h*p
take.quite a tumJ
The surplus of $8,419,000,000 is
argue the fact of another depres¬ any, have the operations of the ble, particularly if the
prices of
sion—they only vie with each Commodity Credit Corporation on farm products go off noticeably. $937,000,000 higher than estimated
in January.
Receipts were $465,other in predicting when it .will prices of the things that we buy Banks are
quite/wary today in ex¬ 000,000 below the January esti¬
come,f Joseph Stalin, too—thinks for our family and ourselves, to
tending credit and" will be from
a
depression is due and * awaits eat.. What effect, if any, has the now on until that 'bust,' which mate, reflecting irt part the loss of
revenue under the Revenue Act of
with hope the coming American Marshall Plan on the prices of Marriner
Eccles predicts is on the
1948.
Adjusting the revenue esti¬
not only the things that we eat
catastrophe.
'
way and with which probably we
mate foe this JosS. receiots were
but the clothes that we wear and will all
agree, actually makes iis
Should Nature Take Its Course
only $135,000,000, or 3/10ths of 1%
the articles we use. Ask them if appearance."
higher than the estimate. Expendi¬
The Congress of industrial Or* they are not treating legal bank
tures were $1,402,000,000 less than
ganizations gives you no finished reserves in fhe same way as we
the January estimate, due prin¬
blueprint for our economic future, would have treated them back in
cipally to the fact that there has
although the direction we believe the days of the call money marbeen some delay in expenditures
this nation must take has been ket on the stock
exchanges. Then
(Continued from page 5)
for foreign aid and for the Na¬
clearly
indicated.
We
cannot they did have something to do
tant volume currently is that the
tional Military Establishment.
;;
blindly "let, nature take
its with Inflation £s also did the re¬
banks, under the Federal support
Net receipts amounted to $44,course,"
Our economy7 is con¬ discount rates, but in the mean¬
of Government - bond prices, are
! 746,000,000, an increase of $1,487,stantly in a State of change and time, call money doesn't amount
shadows

across

the future.

.

,

Monopoly and the growing cor; porative power over all of Amer¬
ican life have

preceded the postinflation, but the war and
postwar trend have dangerously

*war

added to
'

Of

;$2

their

every

$3

;

menace.

spent in

America,

Except
for the small farmer, the profest sional, and the disappearing small
goes

to

corporations.

businessman, corporations
economic life of

our

are

the

nation.

Money Is No Mystery
'

•

,

must wisely and firmly give to an ant hill.
Margins for the
direction, using the political purchase of securities have been

we

Just

prior to the war our 200
largest non-financial corporatiohs

it

that

means

our

Constitution

af¬

increased

point
where
has been reduced to

to

the

free

to

turn

their

presently held

Government bonds into the Fed¬

eral Reserve

Banks and use

the

proceeds to make new loans or
purchase
q£. assets.
Thus
the

000,000

compared
increase of

An

with last year.

partially

offset

than

more

amount in incomo

this

taxjrpeeipts was
decline

in
extending the greatest speculation
By 1942, there were good for the greatest number.
a minimum.
^
: v
banks turn in <K1
million
mr-oivP
Proceeds of sales of surplus propWe have confidence that human
205
corporations with assets of
"Then ask them these questions:' the equivalent of cash of'
to $36,326,000,000, a decrease of
more
than
$50
millions
each. intelligence o p e r a t i rig in our If
legal reserves are increased, lion, and using that $1 million
$6,179,000,000 compared with the
They received nearly 85% of the democratic environment can direct what would
they do as responsible cash as reserve can loan or buv fiscal
economic
destinies
without
total income of all American cor- our
year 1947.
This decrease is
bank managers in the investment up to $5 million additional—this
accounted for principally by re¬
to
the
tactics
of
the
porations.
This should cause no recourse
of bank funds?
If Mr. Snyder or being the resultant addition to the
totalitarian pobce state.
ductions in. expenditures for the
surprise s'nee, between June, 1940,
The ful¬ Mr.
Eccles, for instance, were re¬ money supply.
and September, 1944, 18,000 cor- fillment of that hope rests with
National Military /Establishment
sponsible for the operation of a
These additions to our money
you
and I and every American.
(mostly armed forces leave pay¬
porations
received
$175 bilh'on
bank and out of that operation supply
resulting from bank loans
worth of war contracts from the We are conscious of the economic
ments) and those for international
had to meet the payroll, the cost and purchases are—like those refinance
government of which two-thirds and spiritual values of private of
supplies, and other operating suiting from gold purchases—now
went to the top 100 corporations. ownership
and enterprise which
expenses,
including
taxes
and uncontrolled, and their amount
Thirty-three corporations each re- moves towards social ends and is
dividends and a reasonable re¬ depends on how much the banks
ceived $1 billion or more of Con- genuinely "free."
But "where the
serve for losses
and were sud¬ please 4o lend on long-term as
i tracts and
accounted for 51% of vested interests of economic
denly confronted with the neces¬ well as short-term loans, on mort¬
cower and monopoly, masquerad¬
the value of all contracts.
sity of reducing their loans and gages, or other investments made
During the war the government ing as free enterprise and c'oinpe- investment by 10%, would they to increase the banks'
(Continued from page 8)
earnings.
|
built $17 billion worth of new tion, challenges the economic and
not first sell their 'governments'
Weld & Co., 40 Wall Street, New
human values of the nation, they
Banks and Government Debt
plant facilities; 83% of these were
in order to effect that reduction?
York 5, N.Y.
/ operated by 168 of the 250 largest must be tempered by social con¬ If
The worst of it all is that the
they did sell their 'governrnens,'
trol.
manufacturing corporations and
who would buy them?
Tracerlab, Inc. — Discussion of
Wouldn't banks now hold more than $60
In these days of great problems
they were given an option to buy
of
Government
the answer be the Federal Re¬ billion
paper organization prominent in manu- r
and perplexity the CIO seeks the
i or to lease them at the end of the
serve Banks?
If the Federal Re¬ which they are free to turn into facture of radioactive isotopes (a
war. These 250 corporations now
aid of every ally it can find who
the Federal Reserve and obtain bv-nrodnet. o* atomic energy) and
serve Banks bought these 'govern¬
control two-thirds of the manu- will join in the creative task of
which enable them to their application in science, medi- 1
ments' on the market, how would reserves
-facturing facilities of the country building a balanced and prosper¬
they pay for them? Would they multiply their additions to our cine ana industry—Coffin, Betz &
held

one-half

of the

assets of

all

fords

for

corporations.

by

a

$7mil- erty' Total expenditures amounted

•

•

•

.

•

Dealer-Broker

•

_

Recommendations

.

r

.

.

•

•

1

•

and" 68

ef* them

could

purchase,

With their liquid assets, the
smaller

•

V

manufacturing

firms.

The absorption of these smaller

; companies is occurring with iricreasing- speed. • According, to the
Federal Trade Commission,' 2,450
formerly
independent rhanufacturing and mining companies with
-

assets of

over

ous

71,000

nation and world.

We know that

not pay

the NAM is con¬
rich corporations

ey

for them out of new mon¬
print and

which they would

supply by

new loans and
results from

This

investments.

ican business.

will, reduce but not eliminate/the

125

own

short-sighted

We hope that the

would

the

not

that, therefore, inflate

currency

outstanding

and

aiming? Would, they not also be
tempted/to make Speculative loans

welLbeiiig. it is

so

comfileteiy de¬

resulting out of the idleness
of 10%J mdre of their deposits?
enue

largest ' Corporations r. have pendent.
a/a:
fought higher wages they have
In agriculture, too,
there are
"I think that you will agree that
yjustified^ exorbitant" prqfitsybe- false voices that betray the true
these are not flippant questions,
eauSd/ ojf /bapitap ^pa^
interests of the working farmer.
our

•.

that

we

have been sold

a

our

ment bonds* So long

expansion

rapid

supply which is

of

our

the real

money
source

of inflation.

The

methods

procedures
made

"profit ;has simply been used to
buy ^out competitors and increase
monopoli stic power, while provid¬

It

is

a

source

the CIO

United

by

can

fiscally

which

be

altered

sound

these
,

and

of deep concern

which has

'freedom from government control
in the name of "free competition'

land

recall

how

monopoly main¬




The
volt

history.of agricultural re¬ towards a stable and perpetually
against special interests and expanding way of life. '

There is no time to wait.
Mr.
monopoly is a part of a glorious
past.
Once again
America's Stalin is watching intently and the
farmers, with their voices and atom bomb is on the loose.

A

"

V...

.

present drift—and it is a drift—
towards
less

the

dangerous
increase

supply is halted.

inflation
in

our

un¬

money

Works—Dis¬

stocks—Security Adjustment
Corporation,
16 • Court « Street,
Brooklyn 2, N. Y.
iy
Upson Company—Memorandum
B.

&
Co., 634
Street, Los Angeles

Dunbar

South Spring

14, Calif.
available

Also
on

is

a

memoran¬

Federal Water & Gas Cor¬

poration, containing data on the
underlying companies, Southern
Natural Gas, Southern Production
Company, and
Scranton Spring
Brook Water Company.,
Winters

&

Crampton

Corp.

—

Analysis—C. E. Unterberg & Co.,
61 Broadway, New York 6, N. Y.
Also available is an analysis of
Miles Shoes, Inc.

J. C. Harris III Joins

-

It is a
mockery to hear the
apostles of big business shriek for

Dye

mon

would'and dum

bill of

Piece

cussion of the preferred and com¬

—John

should interrupt the current boom.
to
goods by fast-talking and looseHowever, the mild setback that
during the 13
thinking people who set them¬
years of
its existence supported
we might experience if
stringent
selves up as authorities on eco¬
every major legislative program nomics and
banking, and that they policies were now introduced to
ing no addition to the nation's of
agriculture to ,note how regu¬ are
hunting for a 'whipping boy' curb the increase in the money
productive
capacity.
In
1946. larly powerful
agrh&iltural grou'ps of 'scapegoat' arid that the banks
more mergers took place than in
in Congress vote against the wel¬
supply would be utterly insignifi¬
seem to be to them the most likely
any of the'previous 15 years..
fare of labor and of the nation.
cant compared to the major bust
ories to persecute and blame all of
y:
It is ironical ; that bills were Too. often we are, given cause to
that we unavoidably face if our
our difficulties on. I am sure that
before the. Congress to curtail this wonder whether
they do not more
you will agree with me that the
present inflationary trend con¬
CvU and nothing was done at the accurately represent agricultural
tinues. !
Very tirne that the anti-union and processing .monopolies than with their votes, must join with
/Taft-Hartley Act was enacted in the true interests of the family- labor, the
Nothing in President Truman's
professionals, and pro¬
the name of "anti-monopoly."
sized farm.
gressive business to move America suggested controls will stop the

^Actually^ 2 ipuch ipf : Jhis .excess

Sullivan, 123 South Broad Street,
Philadelphia 9, Pa.

so-called

monopolistic interests while "pre¬ completely reverse the process of
tending to champion all of Amer¬ anti-inflation at which they are

by

who seek their

genuine voice of small and me¬
dium enterprise will be heard and at a
higher rate in order to com¬
$5 billion have been Will, join with labor on whose
pensate them for :the loss of rev¬

yfiw&Uowed up since 1940./A While

money,

support of Govern¬
as this con¬
tinues, the additions to required
reserves suggested by Mr. Eccles

trolled

ATLANTA, GA.—Joel Chandler
Harris III has become associated
with

Inc.

Walter

In

Wyatt,

the

Neal

R.

Thomas, Athens^

past he was
& Waggoner

Bounds, Fool & Co.

,

with'
and

40

(636)

THE

Securities

FINANCIAL CHRONICLE

&

COMMERCIAL

in

Now

Registratio

~

•

•

Air Associates,

Inc., Teterboro, N. J.

.

Air
June

Commuting,

Inc., White Plains,

(letter of notification) 1,060 shares of capital
stock (no par value), of which 600 shares will be sold
publicly at $100 per share.
Underwriter — Burnham &
Co.

Proceeds—To be used to engage in limited helicop¬
ter operation over routes which the
company is presently

certificated

to

fly

work.
•

or

v/v

in limited helicopter commercial

cured loans.
All States Oil & Gas

Co., Washington, D. C.
(letter of notification) 299,000 shares (50c par)
common stock.
Price $1. To drill new wells and for
Aug. 2

general corporate

No underwriting.

purposes.

American Fidelity Fire Insurance Co., New York
July 2 (letter of notification) 20,000 shares 80c nonconvertible
share.

preferred stock (par $5).* Price—$14 per
Stockholders of record July 15 will be given the

right to subscribe to the stock on basis of one new share
of preferred for each share of preferred or four common
;

fhares held.

Rights expire Sept. 9, 1948,

insurance business.

No underwriting.

Expand fire

:

Bids—Halsey/ Stuart & Co. Inc. will
purchase of the shares at 123 South
Street, Chicago, up to ll:30'a.m. (CDT) Aug. 17.

receive bids for the
La Salle
•

Chieftain

rate purposes.

expenditures, to -defray the - cost of

construction and for other corporate purposes.

new

Expected

Aug. 24.

and $ 11.75, respectively. This stock is being sold by
James A. Walsh, President of the
Company. Underwriter
—-F. Eberstadt & Co., Inc., New York.

Armstrong Rubber Co., West Haven, Conn.
July 8 (letter of notification) 1,000 shares of 4%% cumu¬
lative convertible "preferred stock ($50 par). To be sold
at $44 each for Frederick
Machlin, Executive Vice-Presi¬
dent and Secretary of the company.
Underwriter—
F. Eberstadt & Co., Inc., New York.
Associated Telephone Co., Ltd. (8/17)
July 27 filed 85,000 shares 5% preferred stock (par $20),
of which 75,000 shares, will be offered
publicly at $21.25

share and 10,000 will be offered for subscription by
employees under a purchase plan at $20.25 per share.

per

Underwriters—Mitchum,

Tully & Co.; Paine, Webber,
Jackson & Curtis, and the Stone & Webster Securities
Corp.
Proceeds—Plant expansion and to retire bank
loans.

share of class A and
unit.

Philadelphia, Pa. (8/17)
July 23 filed 36,210 shares ($5 par) common stock. Un¬
derwriters—Stroud & Co. and Coffin, Betz & Sullivan.
^Proceeds to selling stockholders.
Expected about Aug.
17 at $25 per share.
<

,

Bolta Co.,

Lawrence, Mass.

Aug. 5 (letter of notification) 4,000 shares ($50 par)
4l/2 % cumulative preferred stock.
No underwriter.
To

Boston Insurance

Co., Boston, Mass.

Aug. 11 filed 100,000 shares ($10 par) capital stock.
Offering—To be offered for subscription by stockholders
on basis of one new share for each
^hree shares held.

.

one

be offered in units of

/ Flotill Products, Inc., Stockton,

•

Underwriter—The First Boston Corp. will purchase unv subscribed stock.
Proceeds—For additional capital funds.
■

•

For gen¬

in Units of five shares of common and 100 in face value

Western

For

•

working capital.

Colvvn

(par $5) to be, offered to stockholders. For ad¬
to a subsidiary, Indiana Die Castings, Inc., and
improve shipping and storing facilities. No underwrit¬
ing.
vances

•

paid by subscribers.

Heyden Chemical Corp., New York, N. Y.

For additional working

June 29 filed 59,579 shares of cumulative convertible,
preferred stock (no par) to be offered common stock¬

Commercial

Discount Corp., Chicago, III.
(letter of notification) 5,970 shares $3.50 prior
preferred stock, ($50 par) and 11,940 shares of Class A

holders in the ratio of one share of preferred for each 20
shares of* common stock held. Price—By amendment.

July 16

Underwriter—A.' G. Becker & CO. will acquire the un¬
subscribed shares. Proceeds—To be used in part for im¬

To be sold in units of one share of pre¬
common

for $50.25 per

Underwriter—Julien Collins & Co.

provement and expansion
Offering postponed.

Working cap¬

ital and general corporate funds.
•

Commonwealth

Investment'Co., San Francisco/

Calif.

Aug. 9 filed 460,760.390 shares of

Continental

stock-($1 par).
pffering price in •

common

Shares are to be offered at the public
effect at time of sale.
-

Motors

~

Cowles Co.,

Inc., Cayuga, N. Y.
Aug. 2 (letter of notification) 500 shares or capital stock (par $5).
Price—$35 per share.
Underwriter—Blair F.
Claybaugh Co., Syracuse, N. Y. Additional working
capital.
Eaton & Howard Balanced

Fund, Boston, Mass.
700,000 trust shares. Proposed maximum
aggregate offering price to the public: $18,158,000 based
upon the price at which shares would have been sold
as of the close on Aug. 3.

Aug. 9 filed

Emery-Hill

Stores

Co., Greenville, S. C.
Aug. 5 (letter of notification) 20,000 shares of common.

Price, $4.75 per share. Underwriters—Frank S. Smith &
Co., Inc., McAlister, Smith & Pate, Inc., and McCarley
&
Co.
For
repayment of short-term financing, for
liquidation of bank loans and for addition to working
capital.
Eureka

Corp.

Limited,

'

of

manufacturing

Illinois Power Co., Decatur, III. *
June 30r filed 690,098; shares of • common I stock (ho par
value). To provide for conversion of 345,049 shares of

outstanding 5% cumulative convertible preferred stock
(par $50) which the company intends to call for redemp¬
at $52.50 per share and. accrued:1 dividends. Each
preferred share is convertible into two common shares.
Public offering is contemplated of the common (479,890
shares) not issued in conversion.
Underwriting by
amendment.
Price—$26.25 per share. Probable under¬

Toronto,

Can.

Ontario,

shareholders at the rate of-one for each 25 held.

Under¬

writer—None is planned.

Price—135,000 units are to be
offered, consisting of five common shares and. a stock
purchase warrant for three shares, for $7.50 per, unit.
Proceeds—To de-water mine, cross-cut to the ore zone,
and for repayment of temporary loans.

.

writer:

The

First

Boston

Corp.

Proceeds—To redeem

the preferred stock and for construction.
•

'1:1/Denver/ Colo. Aug. 5 (letter of notification) 500 shares of common
stock (par $10) and 2,000 shares of 5% cumulative pre-*
ferred stock ($10 par). Price, par. No underwriter. To
purchase equipment for issuing periodical.
Indiana & Michigan Electric Co.
Underwriters—To

be

determined

by competitive

First Boston

$10,000,000 borrowed by Indiana Service Corp. and as¬
sumed by the company under a merger, and for treasury
funds. Expected about Sept. 14.
•

Interchemical

Corp., New York (8/17)
(letter of notification) 5,000 shares of common
(between $18-20 per share). Pro¬
ceeds to selling stockholders.
Special offering on New
York Stock Exchange.
•
Aug. 9
stock.

Price—Market

.

•

Johnson

Transmission Corp. of
11lirtois, Chicago
Aug. 9 (letter of notification) 7,500 shares, common vot*
Power-On

v£

UNIVERSAL WINDING COMPANY
STOCK

90<* CONVERTIBLE PREFERRED STOCK

Bought

Financing

—

Sold

—

Quoted
BROKERS

Reynolds & Co.
fe> jWiM&eks New York Stock Exchange
,

New York

Boston

Private Wires

to

-

Pittsburgh

Chicago

Offices in other Principal Cities




*

v',

/
'

and other

x

•

New Vokk Ccrb Fv.ckan<&

DEALERS

Princip'ai Fxchanofs

'

120

BROADWAY, NEW YORK

'Telephone WOrth 4-6700

5.

N.

UNDERWRITERS

Y.

Teletype N. V

1-64 5-

#.'j

bid¬

Probable bidders: Halsey, Stuart & Co. Inc.; The
Corp.; Lehman Brothers; Dillon, Read & Co.
Inc.; Harriman Ripley & Co.
Proceeds—To prepay $6,000.000 of bank notes borrowed for construction and
ding.

HI

COMMON

(9/14)

July 14 filed $25,000,000 first mortgage bonds, due 1978.

3

and Public

•*

Independent Business Publishing; Co.,

$

Corporate

facilities.

tion

Corp. $ /
N
July 19 filed 300,000 shares ($1 par) common stock.
Underwriter—Van Alstyne Noel Corp.
Proceeds—To be
applied toward the payment of $3,500,000 bank, notes.

•

The Fund receives the full amount

is net asset value.

(par $10).
Price, par.
capital. No underwriter.

unit.

Haydock Fund, Inc., Cincinnati, O.
Subscription price

Aug. 10 filed 82,500 capital shares.

Corp., Long Island City, N. Y.

stock.

.

stock

Aug. 4 (letter of notification) 20,000 shares of common

common

Hall Lamp Co., Detroit
t
..
53,770 shares of common

(C. M.)

to

companies.

stock

Co., Inc., Lockport, N. Y.

Aug. 2 (letter of notification)

Underwriters

Co., Inc.,
Shreveport, La.
July 12 (letter of notification) ,24,170 shares of Class A
common stock ($1 par). Price—$10. Underwriter—MidSouth Securities Co., Nashville, Tenn.
To purchase the
controlling interest in other corporations, particularly
•

Ford Gum & Machine

•
Fowler Farm Oil Corp., Fort Worth, Texas
Aug. 5 (letter'of notification) 100,000 shares of common
stock (par $1). Price, $1. No underwriter. For drilling
operations.
N'; k
/

Inc., Boston, Mass.
Aug. 3 (letter of notification) $100,000 5% 10-year notes
and 5,000 shares (no par) common stock.
To be offered
No underwriter.

Calif.

Aug. 5 (letter of notification) $300,000 6% corporate
notes (40 notes each not to exceed $7,500). Price, par»
Working capital.
No underwriting.
Q,

Codman & Shurtleff,

Colonial

Francisco

convertible pre¬
of common stock
(par $1).
Underwriter — Floyd D. Cerf Go.," Chicago,
Price—preferred $10; common $6.
Proceeds — Stock¬
holders will sell 260,000 preferred shares and 250,000
common
shares and company 125,000 preferred shares
and 75,000 common shares.
Company's proceeds will be
used for general corporate purposes; Effective May 5.

share of class B at $13.25 per

Underwriter—Emory S. Warren & Co.

San

March 6 filed 385,000 shares of 60 cent
ferred stock, (par $5) and 325,000 shares

one

July 7 filed 675,000 shares ($1 par) common stock and
405,000 common stock purchase warrants to be offered

increase working capital.
•

To

-

Co.,

25,380 shares and will purchase all unsub¬
Proceeds—To provide the companies of
the Fireman's Fund Group with additional capital funds,

eral business.

•

Belmont Iron Works,

•

stock.

common

Insurance

scribed shares.

Citizens Credit Corp., Wilmington, Del.
July 23 (letter of notification) 4,000 shares ($12.50 par)
class A common stock and 4,000 shares (25 cents par)
class B

Fund

underwrite

New York.

'

S)

Brooklyn,; N. ; Y.

ferred and two shares of Class A

Armstrong Rubber Co., West Haven, Conn.
June 30 (letter of notification) 1,000 shares of 4%%
Jgcumulative convertible preferred>stock, ($50 par) and
2,000 shares of class A common stock.?-To be sold at $44
;

Inc.,

to be offered in units (one common
at $2.75 per unit, the balance
15,000 shares being reserved for exercise of 15,000
warrants, purchasers of which will have the right for
four years to purchase shares at $2.75 per share.
Gen¬
eral corporate purposes.
Underwriter—Dunne & Co.,

life insurance

Arkansas Power & Light Co. (8/24)
July 23 filed $7,500,000 first mortgage bonds, due 1978.
Underwriters—Names will be determined by competitive
bididng. Probable bidders include: Halsey, Stuart & Co.
Inc.; Blyth & Co., Inc.; The First Boston Corp.; White,
Weld
Co.; Glore, Forgan & Cq. and Harriman Bipley
& Co. (jointly).
Proceeds—To reimburse treasury for
construction

Products,

of

of notes.

(Del.), Wilmington, Del.
•July 29 (letter of notification) 150,000 shares of common
"stock (par $1) ana 150,000 shares of preferred stock
(par $10). Price of preferred, par. The common shares
will be issued to Anco Electric Corp. of New Jersey in
exchange for assets. No underwriting.
General corpo¬

i

Fireman's

July 23 filed 458,544 shares of common stock ($7.50 par).
Offering—Shareholders of record Aug. 23, will be offered433,164 shares at $30 per share at rate of four hew shares; v
for each five shares held. • UnderwHtersr—Blyth & Co'.,
Inc., The First Boston Corp., and Dean Witter & Co. will

G. Becker & Co.

Anco Electric Corp.

•

Glore, Forgan & Co.; Blyth & Co., Inc.; The

First Boston Corp., and Central Republic Co. (jointly);
Lehman Brothers and Lazard Freres & Co. (jointly); A.

share and IV2 warrants)

(letter of notification) 550 shares of preferred
stock (par $100). Price, par. No underwriter. To
pur¬
chase real estate mortgages and contracts and other se¬

;

•
Eureka Williams Corp., Bloomington, lll.
Aug. 9 (letter of notification) 4,700 shares ($5 par) com-*
mon
stock.
Price—$6.25 per share. "No underwriter*
For working capital.

-

15,000 warrants

Wash.

Aug. 5

^

.(8/17),.

Aug. 3 (letter of notification) 25,000 shares of common
stock and 20,000 warrants.
Offering—10,000 shares and

..

Airway Investment Co., Airway Heights,

•

ISSUE

July 15 filed 574,087 shares ($10 par) common stock,
owned by Halsey, Stuart & Co. Inc.
Underwriters—
Names to be determined by competitive bidding.
Prob¬
able bidders:

N. Y.

17

PREVIOUS

Illinois Public Service Co.

Central

Aug. 6 (letter of notification) 18,000 shares of common
stock (par $1)
Price—$10 pet share. : General corporate
purposes.
No underwriter.

SINCE

INDICATES ADDITIONS

Thursday, August 12, 1948

and

B»swnf

&

COMMERCIAL

THE

Number 4724

Volume 168

FINANCIAL

CHRONICLE

Packaging Materials Co., St. Louis, Mo.

Midwest

>'1.!;.'.--•.I;-;--/'.¥v,V.'"*r'!f v"f'-?

;.*•*•

.V •''-V.i-

,*

r*t >-

August

•

Stifel, Nicolaus & Co.

-v.iv'V

*;

•

1948

17,

Co., Phoenix, Ariz.

(J. L.)

Mining

Belmbnt Iron Works----i^---.w-------^--Commoii
Central Illinois Public Service Co.

sary

!r

11:30

Co.—1

(CDT).

a.m.

—.-Preferred
*

Common

Interchemical Corp.

.Wisconsin Public Service Co.
11:30

a.m.

r

—Bonds

(CDT)^U™—

(no

National Battery Co.

August

1948

18,

-Bonds

8:30 a.m. (PST)

;

•

~——..Bonds

Chesapeake & Ohio Ry., noon—Equip; Trust Ctfs.
Youngstown & Southern Ry., noon

August

(EDT)

Loan

a.m.

(CDT)

Equip. Trust Ctfs.

r

September If

1948

Debentures

/

1948 O

14,

to

purchase,

common

share for each five common shares held.

Indiana & Michigan Electric Co.———..-Bonds

No underwriter.

par.

For

improvement and development expenses.
#

Kaaba Silver-Lead Mines

^

New

;

Inc., Nighthawk,

No

25c.

underwriter. For equipment and
^.

mine development.
«

Kansas Soya

Products Co., Inc., Emporia, Kan.

(letter of notification) 78,000 shares (25c par)
stock and 1,925 shares of $5 cumulative pre¬
ferred stock.
Underwriter—Kenneth Van Sickle, Inc.
For additional working capital.

Aug. 2

common

,

Kingsburg (Calif.) Cotton Oil Co., Kingsburg
July 14 (letter of notification); 20,000 shares ($1 par)
•capital stock.
Price—$4.25 per share/Underwriter—
Fewell & Co., Los Angeles.
Proceeds to selling stock¬

/

holders.
•

Manufacturing Co., Lansing,

Kold-Hold

•

;

Mich.

(letter of notification) 36,666 shares ($1 par)
stock., Shares will be issued to H. B. Johnson
and J. J. McQuaid on conversion of $55,000 of 5% con¬
vertible debenture
bonds, due 1955.
Underwriter—

Aug.

6

common

&

•

Inc., New York
July 16 (letter of notification) 49,000 shares 350 cumula¬
tive preferred stock (par $5) and 49,000 shares of com¬
mon stock
(par 100). Price—$6 per unit, consisting of
one share of each.
Working capital and other general
corporate purposes.
Underwriter — Aetna Securities
Corp., New York. Expected early in September,
Insurance

Libbey-Owens-Ford Glass Co., Toledo, 0.

Aug. 5 (letter of notification). options to 256 company
•employees to purchase 3,415 shares at $26.25 per share
under employee stock

purchase plan.

No underwriting.

Gatos

Powder River Oil Co., Denver,

Colo.

(letter of notification) 400,000 shares (100 par)

May 11

stock.

Price—25 cents.

Underwriter

—

R. L-

For working capital.

Powers Oil & Orilling, Inc., Casper, Wyo.
July 14 (letter of notification) 800,000 shares (250 par)
common stock.
Price—25 cents per share.
Underwriter
—John Cr. Perry & Co;
For drilling operations.
Service

Electric & Gas Co.

;

.

June 11 filed 200,000 shares ($100 par) cumulative pre¬
ferred stock.
Underwriters — Names to be determined

C.

writers

a

lot and to liquidate bank loans.

G.

McDonald

&

Co.

to

to accept

McVicar

Mining Co., Ltd., Vancouver, B. C.
July 14 filed 400,000 shares (par 500 Canadian funds)
•common

stock

and

1,100,000

share

common

purchase

warrants,

as
well as 1,100,000 common shares to be
reserved for issuance upon exercise of warrants. Under¬

writer—Carstairs &

Co., Philadelphia.

Price—60 cents

<U. S. funds) and 60 cents (Canadian funds) for not
than 100,000 shares to be sold in Canada; one cent
•each for the warrants.
Proceeds-—General funds and to
more

^•develop mining property.
<•

r

Matheson Co.,

Inc., East Rutherford, N. J.
Aug. 4 (letter of notification) 5,000 shares of 6% cumu¬
lative preferred stock (par $20) and 1,000 shares of comtmon stock (no par).
Offering—To be offered in units
-consisting of five shares of preferred and one common
share.
Price—$100 per unit.
Underwriter—Mohawk
"Valley Investing Co., Inc., Utica, N. Y. Replenish work¬
ing capital funds of company for payments made on
-account of purchase of

Laboratories.
«•
,

Midland

~

capital stock of Paragon Testing
'

Cooperative

*

•

Wholesale,
non-

($100 par).
Underwriting—None.
Shares
"sold at par, plus a premium of $1, $2, and $3
lor the second, third and fourth quarters, respectively,
in
which they are sold, representing an allowance for
dividends.
Proceeds for additions and improvements,
inventory and accounts receivable.
Midland Oil Co., Cheyenne, Wyo.
(letter of notification) 3,000 shares of

Aug. 5

stock ($100 par).
Price, par. No underwriter.
erations and general development, ;




.

bids

the management

declined

was

and

prepared to submit July 7. Morgan Stanley & Co.
associates bid 100.55 for $4.50 dividend stock, the
terms

same

These
•

were

as

they were prepared

to bid

on

July 7.

the only bidders at each of the sales.

common

For op¬

common

stock).

Underwriter—Kidder, Peabody &

Co. will purchase all unsubscribed debentures or stock
warrants for public
corporate purposes.

offering.

Proceeds—For

general

•

Super-Electric Products Corp., Jersey City*
New Jersey
Aug. 4 (letter of notification) 59,700 shares of common:
stock (par

$2.)

Price—$5

per

share.

Underwriter—The

First Guardian Securities Corp., New York.

Additional

working capital, expansion, etc.

Quebec Oil Development Ltd., Montreal,

Can.
Aug. 4 filed 2,000,000 shares of capital stock, ($1 par
Canadian funds).
Underwriter—Hiscox, Van Meter &
Co., Inc. Price, $1 per share (United States funds). For
each 20,000 shares of stock sold, the company will de¬
liver to the underwriter stock purchase warrants en¬
titling the holder to purchase, on or before Sept. 1, 1950,
1,000 shares of capital stock of the company at $1.50 |per
share. Proceeds—For drilling operations.
Rudd Manufacturing Co., Pittsburgh, Pa.

•

Tide Water Power Co., Wilmington, N. C. ;U.:
July 30 filed 80,000 shares (no par) common stock. Un¬
derwriters—Union Securities Corp. and W. C. Langley &
Co.
Price by amendment.
Proceeds—For construction.
Indefinitely postponed.

U. S. Airlines,
June

2

(letter of notification) 11,124 shares of common
Price—$25 per share.
Stockholders of record
Aug. 12 are given the right to subscribe at rate of one
new 'share for each bine shares held.
Rights expire

Aug. 5

No un¬

•

St. Anthony

Mines Ltd., Toronto, Can.
1,088,843 commoh shares (par $1), Price,
share. UnderyiTiterr-Old Colony Securities
of Toronto.
Proceeds for gold mining operations.

Aug. 6 filed
40 cents per
Ltd.

1

j

Sangamo Electric Co.* Springfield, 111.

June

(letter of notification) 8,500 shares (no par)
common
stock, (stated value $8 /a share).
Price —
$33,625. Underwriter — Paul H. Davis & Co., Chicago.'
Proceeds will be used to partially reimburse the treas¬
ury for expenditures in connection (frith a new $1,000,000 plant at Marion, 111.
29

stock.

171,000

Price—56 cents each.

Frances B. Law, Robert B.

shares

($1

par)

To be offered for

Law, and Theodore N. Law.

Underwriter—R. H. Johnson & Co., New York.
•

Union Finance Co., Passaic, N. J.
Aug. 5 (letter of notification) 20,000 shares of 7% cumu¬
lative preferred stock (par $10) and 20,000 shares of
common stock
(par $1).
Increase working capital.
No
underwriting.
United Utilities & Specialty Corp., Boston '
July 29 filed 41,000 shares of 5% cumulative convertible
preferred stock ($10 par). Underwriters—Herrick, Waddell & Reed, Inc., and George R. Cooley & Co., Inc.
Proceeds—For general corporate purposes.
•
Upson Co., Lockport, N. Y.
Aug. 10 (letter of notification) 1,900 shares of common
stock (par $10).
Price to public, $16.50 per share. Un¬
derwriter—Hamlin & Lunt, Buffalo, N. Y. Proceeds to
selling stockholders.

•

Western Pacific RR.

ferred

Corp.
j
(letter of notification) 8,000 shares of 6% pre¬
(par $100). Price—$4 per share. To be-

stock

offered to preferred stockholders and any not taken will
be reserved for sale in the market

tiations.

No

underwriter.

To

or

meet

by private
current

nego¬

expenses,

including cash outlays in connection with certain liti¬
gations.
/
>
•

Western World Industries,
Utah

Inc., Salt Lake City,

60,000 shares of common
non-assessable stock (20c par). Price 50 cents each. No
underwriter. For equipment and operating expenses.
Aug. 2

stock.

Expansion of business.

Inc., St. Petersburg, Fla.

(letter of notification)

common

Aug. 3

,

cumulative

......

their

A group, headed by the Union Securities
Corp. and White, Weld & Co. on Aug. 4 bid 100.90 for
stock with a $4.50 dividend, which compared with the
bid of 101.65 for $4.40 dividend stock which this group

(EDT) Aug. 26.
derwriting.

rare to be

•

submit

them.

3 p.m.

Minneapolis,Minn.
Aug. 9 filed 15,000 shares of Preferred stock D,

par

,.

Manufacturing Co., Rochester, Mich.
June 15 (letter of notification) 7,000 shares of common
stock (par $1).
Price—$5.50 per share.
Underwriter—

McAleer

due

i

through competitive bidding.
Probable bidders: Morgan
Stanley & Co.; Union Securities Corp. and White, Weld
& Co. (jointly).
Proceeds—For property additions and
improvements.
Bids—Company, Aug. 4, received t.wo
bids on the proposed issue of 200,000 shares of preferred
stock, but rejected both.
Oh July 7, last, the same issue
was put up for sale, but when the hour came for under¬

•building, to buy

income debentures,

$2,500,000 4V2%

.

Public

Telephone Co.
Aug. 4 (letter of notification) 11,550 shares common
stock ($10 par). Price, $16 per share. No underwriting.
To purchase Morgan Hill Telephone Co., to construct a
(Calif.)

filed

10

Oct. 1, 1963 (with 10-year subscription warrants attached
for initial purchase by stockholders of 80,000 shares no

June 24 filed 100,000

general purposes of issuer.
Los

Co.

.

•
Tacoma (Wash.) Drug Co.
.
shares of capital stock (par $5).
Aug. 5 (letter of notification) 2,000 shares of 5% cu-*
Price—-$15
per
share,
Underwriter—First Securities
mutative preferred stock (par $100).
Price,; par. No*
Corp., Durham, N. C.
Offerings—26,667 shares will be
underwriter. For construction ;ahd working capital;
initially offered on a "when, as and if issued" basis;
| •
Teletronics Corp., Hollywood, Calif.
^
13,333 shares will be purchased by underwriter for pub¬
'Aug. 2 (letter of notification) 480 preferred shares to be.
lic or private offerings; and the remaining 40,000 shares
offered at $100 each, 2 000 shares common class A stock
will ^e publicly offered on a; "best efforts basis" on
to be offered at 50 cents each, and 2,000 shares of com¬
completion of the subscription of the first 40,000 shares
mon class B stock to be issued in exchange for all of the
and the company's receipt of a license to do business in
assets of Teletronics Engineering Inc.
No underwriter.
North Carolina.
Proceeds—For general business pur¬
For business operations.
poses.

v

Hughes and Co., Denver.

For

.

9- (letter of notification) 790 shares of common
stock (par $100). Price, par,
Stock will be purchased

Old North State

v

Sterl5ngOil&RefiningCorp.,Houston,Texas

Aug.

Aug.

common

Buckley Securities Corp.
*

•'

Freight Lines, Inc., Riverhead,

New York

i

%

Official Films,

Aug. 2 (letter of notification) 250,000 shares of common
Price

London

Boston, Mass.

'

V

Squankum Feed Supply Co., Inc., Farmingdale*
New Jersey (9/1)
Aug. 4 (letter of. notification) $150,000 20-year 5^%
sinking' fund debentures.
Price—J02.
Working capi-.
tal, etc. Underwriter—Fidelity Securities & Investment
Co., Inc.,. Asbury Rark, N. J.
'
1

modernization of stores,.

nance

;

>

•

by H. Chester Swezey, President, Eastport, N. Y., for
investment.
Purchase of vessel, working capital.

Wash.
stock.

Price

will acquire any of the 92,783 shares remain¬
ing after the stockholder offering. Proceeds to restore
cash spent for general corporate purposes and tor fi¬

:

Price,

Aug. 30, will be
before Sept. 15, 1948, one

group that

•

fing stock (par $10).

or

on

by amendment. Underwriters—Hemphill, Noyes & Co.
and Merrill Lynch, Pierce, Fenner & Beane head a

(

Squankum Feed Supply Co., Inc

September

stock to holders of record

entitled

,

Southern California Edison Co.
(8/18)
July 28 filed $25,000,000 first mortgage bonds.
Under¬
writers—Names to be determined through competitive
bidding.
Probable bidders: Halsey, Stuart & Co. Inc.;
Blyth & Co., Inc.; The First Boston Corp. and Harris;
Hall & Co. (Inc.), jointly; Shields & Co.; Lee Higginson
Corp., and F. S. Moseley & Co. (jointly). ProceedsFinance construction program. Bids—Bids for purchase
of bonds will be received at company's office, 601 West
5th Street, Los Angeles, up to 8:30 a.m. (PDT) on Aug. 18.

Co., Chicago

—Common

Chicago Rock Island & Pacific Ry.
11:30

National Tea

•

Indefinite.

Bag & Paper Co., Inc.,

Underwriter—E. H. Rollins & Sons, Inc.

Mass.

Proceeds to Wil¬

Curtis, Boston. Price $21.15 per share.
liam A. Coolidge, selling stockholder,

Southern Advance
„

Aug. 6 filed 128,230 common shares ($10 par). Offering

1948

25,

Research Corp., Cambridge,

'

'

Aug. 9 (letter of notification) 2,350 shares ($1 par) com¬
mon but not to exceed $100,000
aggregate offering price.

Aug. 3 (letter of notification) 4,700 shares ($1 par) com¬
mon
stock.
Underwriter—Paine, Webber, Jackson and

1948

August 24,
Arkansas Power & Light Co

National

•

\

stock

common

—For general corporate purposes.

July 14 filed 65,000 shares ($50 par) convertible pre¬
ferred stocks Price and dividend, by amendment. Un¬
derwriters—Goldman, Sachs & Co., New York; Piper,
Jaffray & Hopwood, Minneapolis. Proceeds—To retire
$3,000,000 of bank loans and general corporate purposes.
Temporarily deferred.
,

Southern California Edison Co.

par), with class A

share purchase warrants
attached and 25,000 shares of common stock reserved for
warrants.
Underwriter—Lee Higginson Corp. ,< Proceeds

buildings and equipment at mining claims.

.......Common

—

Proceeds—To selling stockholder;

Shoe Corp. of America, Columbus, Or
June 28 filed 25,000 shares of cumulative preferred

Aug. 2 (letter of notification) $300,000 in par value com¬
mon stock to be sold in units of $1 per share.
No under¬
writer.
For establishment of a mill "and other neces¬

Associated Telephone

•

stock (par $2.50).
Price—At market (about $11.25 per
share). Underwriters—Walker, Austin & Wagener and

.

NEW ISSUE CALENDAR
>

Sanger Bros., Inc., Dallas, Tex.
(letter of notification) 2,000 shares of common

•v.

June 25

(letter of notification) 3,500 shares of common
stock (par $5). Price—At market.
Proceeds—To selling
stockholder.
Underwriter—Edward D. Jones & Co.
June 25

ti

41

(637)

(letter of notification)

Wisconsin Public Service Corp.

(8/17)

July 19 filed $5,250,000 first mortgage bonds, series due
Aug. 1, 1978. Underwriters—Names to be determined by
competitive bidding.
Probable bidders: Halsey, Stuart
&

/

Co.

Inc.; The First Boston Corp.; Blyth & Co., Inc.;
Goldman, Sachs & Co. and Salomon Bros. & Hutzler
(jointly); Glore, Forgan & Co. and Central Republic Co.
(jointly); Shields & Co.; Kidder, Peabody & Co.; Harris
Hall & Co. (Inc.); Harriman Ripley & Co., Inc. and

White, Weld & Co. (jointly); Merrill Lynch, Pierce, Fen¬
ner

of

& Beane.

Proceeds—For the payment of $4,600,000
construction. Bids-^.<>

short-term bank loans and for

Bids for purchase of the
pany

up

bonds will be received by com¬
at Room 1100, 231 South La Salle Street, Chicago,

to 11:30 a.m. (CDT) on Aug, 17.

(Continued

on page

42)

42

(638)

THE' COMMERCIAL

1946 (exclusive of bonds issued for
exchange for other bonds) from $60,000,000
to $157,000,000;
(2) on approving an ,increase in the
authorized
common
stock, from
825,000 tor 1,100,000
shares; also changing and reclassifying each share of
common
stock into three shares, (if the first increase
shall become effective) by authorizing a further increase
refunding

(Continued from page 41)
•

Chesapeake & Ohio Ry. (8/24)
company is inviting bids to be received at

Aug.

24

for

finance

the

Certificates

$5,500,000
purchase
will

equipment

trust

noon

certificates

dated

Sept.

1

and

to

mature

in

company

000

Co.

&

•

Co.

•

13

(Inc.).;

stock

stockholders

as

for

quick

a

re¬

additional

their reoffering terms.
winners paid the company

The

price of 100.81 for the issue,
specifying a 4.80% dividend rate.
The only other bid received, for
.the same dividend, was 100.7599.

(Continued from page 10)

a

successful

The

had

group

-originally planned reoffering at
price

a

103.22

of

to

return

an

indicated

yield

of

evidently

upon

finding the in¬
quite cool, the

vestor

But

4.65%.

investment market's first
reaction to the Treasury's move in

bankers

raising

the issue at 102 lifting the yield

as

to

response

proceeded

to

reprice

4.706%.

Peabody Coal Co., on Aug* 31,
1948, will redeem all of its out¬
standing 6 % preferred shares (par
$100 each) at j$105 per share and
accrued

plan to halt inflation
especially far-reaching.

will

be

made

at

office, 231 So.

La

the
even

was

some

adjustment in

government
market,
but
in that direction resulting

surrender

changes

hardly

were

impres¬

sive perhaps for the reason that
short-terms especially had more
or less discounted the action by

the gradual decline

of

the

last

fortnight.
The

corporate

market

did

not

be visibly disturbed be¬
yond
some
slight
shading
of
prices in the high-grade division.
For a period of some 18 months
past this particular section of the
money market has been recogniz¬
ing that the low of interest rates
under the managed money econ¬
omy of the "New Deal'' had long
appear to

since been
v.,

seen.

Unless and until the situation

becomes

decidedly more pro¬
nounced, it is not expected that
industry will clamp down too
hard
on
its
expansion plans.
Far more important from indus¬

try's point of view, with regard
to its new construction pro¬
grams, is the element of basic
costs, such
rials.

labor

as

and

mate¬

demand

ease

between

basic

Underwriting
bankers
found
something to cheer about in spite
the prevailing sluggishness in

supply
materials,

the

and

relationship
demand

industry

in

might

date

for receiving bids for their
respective issues, decided to revise

ahead.

Bankers who

acquiring

the

preferred

competitive
Northern

were

it

and

for

up

was

is

stock

shares
put

bidding

States

Power

up

by
Co.

of




partici¬

Co.,

public
28

of

and

offer¬

$50,000,000

first mortgage 3 % bonds, series
N, due 1078 of Commonwealth
Edison Co. at

100.90% and in¬

terest.
*

31/4%
ceeds

Illinois

Central

Public

Service
man

Co.

stock

the

17th

will.

:j:

*

from

the

Co. of

basis at
per

Prudential

America

on

interest

an

The

annum.

as

through on
scheduled,
while
Edison

to

Turnpike

Com¬

especially true
of the $87,000,000

was

case

314%

term

bonds,

which

were

offered

101.

That

portion

of

got

up

on

Tuesday

to

to

the

a

but

later

about

14

of

was

reported

of the
from
to a

after

that sizable

inevitable

war

on

near:

were

volume.

on

Negotiations for public sale of
with Drexel & Co.

hope and confi¬

the

project
out

can

of

i'fi

be

"in

the

of

stock

Among

the

wrote

the

Corp.
record

of

common;

subscription warrants
Aug. 3, 1948.

on

*

Admiral
months

*

ended

*;

*

Corp.

for

June

the

30,

•

-

three

1948

re¬

'net sales o£
$15,382,176, against $11,696,654 iijt
the corresponding period last
yeaf;
ports

consolidated
t

and

for

the

six

months

ended

half
of 1947. ' Consolidated net
profit, after Federal income taxes,
totaled $706,887, or 78 cents
per
share, for the second quarter of
the current year, against
or
38
cents
per
share,
same

first half- of

297,

for

the

1948 net was

$1.37

or

$1,237,-

share, compared

per

with

$854,456, or 95 cents per
share, in the first six months of
1947.
$

V

Paul

fa¬

II.

Davis

tft

&

Co.,

Dixon

Bretscher Noonan Inc.,
Kebbon,.
McCormick & Co. and Straus &
Blosser
of

were

among

investment

the group

bankers who

on

July 21 publicly offered 167,955

McCall

to

1948

$342,095;

period in 1947 while for the

under¬

shares of S. S. Kresge Co.

stockholders

20,

up;

value) at $26 per '!
Kebbon, McCormick

.

of invest¬

offering

July

Pittsburgh,

■

fact, de¬

which

common

be deter-^

par

was

expired

:'fi

group

bankers

notes.' Thd

present

shares

(no

& Co. The

company's product
i*fi

The

payments''

Bids will be received by;

additional

share,

continues to exceed its output."
#

on

interest

30, 1948 $27,386,344,; com¬
pared with $21,548,736 in. the first

of additional

view
the

in

June

#

burse the company's treasury in
part for expenditures on the ex¬
pansion program to date and also
to provide funds for construction

acquisition

4%

bidding.

accu¬

fered stock will be used to reim¬

ment

reduction

a

(EDT) Aug. 24.

noon

entirely

~—/

$1,300;000 load

at Room 1443, Olivef Building,

company

to

" (8/24)'

new

a

the proposed new note would

of

of

stock

mon

87,167

lation

the

country is

ask

whether

President

the

do not believe
in

trying to put the Re¬

is

in

maturities

still around in good
'

if

for that

(par

$10)

at

com-

$35.25

,

-

share.

per

attitude

and

next President

laration.

on

concerned

a

Americans

spot.
lest

partisan

ma¬

neuvering interfere with the weir
fare of our country,
ical hour I believe

In this crit¬
it

is

worth

making the attempt to shift from
maneuvering to a set¬
tlement of major points of dis¬

agreement.
had used
his

a

party

The

President, if he

different occasion than

convention

for

an¬

States is more

true

of

of

thinking

of

the United

important

011

infla¬

party platform dec¬
For that matter, that is
of

most

statements.

•

the

issues involved. Therefore,
party
policy, as expressed by the con¬
ventions, are generally in such
terms

tion

final

the

President

can

in¬

analysis, such legisla-'
Congress, enacts de-!

the

as

pends

the courage-—the vigor—
and the intelligence with which it'
on

is administered

by the President,

A Critical Hour

platform

This

r

"However, political party plat¬

that

terpret them as he sees fit in the
light of developing events. ^ la¬
the

Republican Congress.

The
the

same
message —
sounder position to
shift on the part of

tion than any

are

blocks

session,

a

President

it

special

the

party dn the spot—by
calling a special session—or in us
Republicans attempting to put the

point

jmm.

the.

he had not recommended both in¬

flationary and deflationary legis¬

publican

10214

;,;_...L...J Lj

obtain

mined by competitive

would be in

Maneuvering

$47,000,000, priced to yield political
1.70 %

to

convertible preferred stock

nouncing
re¬

interested

settled

and

an

Truman

quotation of 9714 for distant

series,

Ply¬

sulting.

I

offering price.

sought

and

Partisan

loan

the

premium of

rule

at.

L

outstanding obligations in that amount.
is

underwritten by a group of
investment houses.
The net pro¬
ceeds from the sale of the pre-

for

for;

used

progress

which, range from.3'%-%-"to

pro¬

(Continued from page 7)
over

in

due
1988,
publicly at
of

in

to be

and

be

The Worlct Requires a Sound
United States Economy

financing, largest

revenue
bid issue on record, for
$134,000,000 appeared to be mov¬
ing along in good fashion.

the

securities.
now

Griesedieck Western
Brewery
Co., Belleville, proposes to split-up
its present outstanding stock on a
three-for-one. basis and to create

cilities

mouth, Mich. It is estimated that

Pennsylvania Turnpike

huge

division

are

interest rate

Or-

new

will

Steel Co.

mulated earnings."

a

shares

preferred

Proceeds

to process hydro-carbon

Co.'s

$25,000,000 of new bonds will be
up
for bids the following day,

mission's

Barnes

new

retire

purpose

that

financed

mand

used, if needed, to
construction of the new

that is next Wednesday.

Pennsylvania

-ment

will be

&

(Alan)

dent expectation of the manage-

15-

rate

three

held.

Company is requesting bids, for

raise

In¬

a

net

carry

California

Southern

for

Minnesota earlier this
week, found

&

Co.

&

Halsey, Stuart & Co. Inc. which pay for
marketing 574,087 shares of manufacturing plant for the Whit¬

the
of

the

July

on

year

bids

yesterday.

aggressively

successful in

200,000

ing

Collins
in

000,000

The serials, however, were !e$3
Without Delay

pated

surance

stock of Detroit Edison Co.

ahead

•*

Corp., Chi¬
cago, has arranged to borrow $2,-

fering of 190,000 shares of com¬
mon

*

Whipple

United Drill & Tool

Accordingly American Light
& Traction Co., pushed its of¬

over

inducement to go

an

Julien

the schedule.

the

as

week

when three potential issuers, who

back

move

this

market

had heretofore set Aug. 17 as the

reasonably be expected to regard

new

issue

new

certifi¬

Break

a

of

This

and

isssue of

is the

company's

stock

of

shares

M. J. Kearins, President, stated

Salle

said

*

:

Should the tapering off of un¬
duly liberal credit curb headlong

of

basis

on

of the plant and the expense of
moving to the new plant from the
present Detroit
plant will run
about
$3,100,000, and that the
project will be completed about
July 1, 1949.

St., Chi¬
cago, 111., upon presentation and

Bacon,

the

the

cates.

Bankers Get

Wood

;

„

of

50 cents per share.
Immediate payment of tbo full
redemption price aforementioned

istration's

As might have been expected,

to

dividends for the month

of August

par

common

building of plants in which

the investment in the construction

~

Inc.

on

Youngstown & Southern Ry.

shares

common

Illinois Brevities

vision in

there

•

increasing authorized

on

vote

Aug. 5 John T. Whiting, President announced companyintends to partially finance $8,900,000
expansion through

$5,000,000. Later this year the sale of additional
bonds is planned.
Proceeds would provide funds for
company's construction program well, into 1950.

it advisable to make

not

vote

Merrily

Wertheim & Co. and G. H. Walker & Co.

preliminary

a

Industrial Chemicals,

at

10

securities

;

$3,000^00(4

chemicals derived from new synthetic
gasoline produc¬
tion.. The issue, it is expected, will be underwritten'by;
Harriman Ripley & Co.,: Inc.; Union Securities
Corp.;;

around

Step. 8 stockholders will vote (1) on increasing the ag¬
gregate principal amount of bonds issuable under mort¬

was

each

for

,

S.

holders

& Co.

step toward raising
$11,000,000 of new securities to finance expansion. Once
approval has been obtained company is expected to sell
$6,000,000 of preferred stock and offer rights to present

Co.

short-term interest rates
its contribution to the Admin¬

t

stockholders will

preferred

into stock would be offered first to stockholders.

The

Smith Barney
(preferred only).

Sachs & Co

U.

Pennsylvania Power & Light Co.tfe

Oct.

rities later this year. The type of such securities has not
yet been determined but may involve convertible de¬
bentures, Mr. Brown said. Any securities convertible
Natural Gas

(on bonds and preferred);

Goldman

Halsey, Stuart & Co. Inc.; Morgan Stanley & Co.; Harris,

company will need about $30,000,000 to carry its con¬
struction program through the first part of 1949. To
requirements, it is planned *to issue senior secu¬

Paso

h

Electric Co.

sell approximately

creating 300.000 pre-*
ferred stock (par'$50), issuable in series.
The intialj
series of 150,000 shares, which would
carry convertible
features, would be offered for subscription by stopk-4

cash

a

Hall & Co.

meet its

El

•

jSept. 1 stockholders will

tures would be dated-Oct. 15, 1948, and would
mature in
not more than 40 years.
Interest rate would be deter¬
mined by sale at competitive bidding.
Probable bidders:

Aug. 11 reported directors will give further considera¬
tion to company's financing needs at a
meeting later this
month.
Prentiss M'. Brown, Chairman said that the

•

General

Lunch, Pierce, Fenner & Beane (jointly).

•
Michigan Bell Telephone Co. <.
Michigan P. ,S. Commission has authorized company to
issue $75,000,000 debentures:
Proceeds would be used
in part to repay $57,950,000 demand notes held
by Amer¬
ican Telephone & Telegraph Co.
The proposed deben¬

Sept. 14 stockholders will vote on giving the directors
permission to sell up to 90,000 shares of common Stock
(par to be changed to $5 from no par) for cash without
requiring that such shares be first offered for subscrip¬
tion by existing' common stockholders.
Edison

(Ore.)

Stuart

capital contribution to Edison Light &
Power
Co., a subsidiary. Probable bidders: Halsey;
Stuart & Co. Inc. (bonds only); Kidder, Peabody & Co.
(alone on bonds and with group on preferred); Drexel
as

and

Detroit

Portland

'

& Co Inc.;
Harriman, Ripley & Co.; The FirstBoston Corp.; Salomon Bros. & Hutzler; Kidder
Peabody
& Co.; Equitable- Securities
Corp., and. White Weld
Co. (jointly); Blyth & Co., Lehman Bros, and

Utilities Corp., will be used for new construction, to pay
off bank loans of $550,000, and to the extent of $1,500,-

20

Peabody & Co. and Dick & Merle-Smith.

•

Corp.; Harriman Ripley & Co. and Lehman
Bros. & Hurler.

additional first mortgage bonds in the fall of the year<
Proceeds for construction.
Probable bidders:
Halsey,

Metropolitan Edison Co.

petitive bidding will determine the interest and dividend

(Inc.); Harriman Ripley & Co., Inc. and Lehman
(jointly); Salomon Bros. & Hutzler; Kidder,.

Cooper-Bessemer Co.

••

1,100,000 to 3,300,-

rates, offering prices and underwriting terms. Proceeds,
together with $1,500,000 from its parent, General Public

Brothers

•

First Boston

Halsey, Stuart & Co. Inc.; The

protbers (jointly); Salomon

has asked the SEC for authority to sell
$3,500,000 first mortgage bonds, due 1978, and 40,000
shares
($100 par)
cumulative preferred stock.
Com¬

equal semi¬
annual instalments from March
15, 1949 to Sept. 15, 1968.
Probable bidders: Halsey, Stuart & Co.
Inc.; Harris, Hall
& Co.

e^rly?

Probable bidders:

Company plans to issue and

The

Chicago Rock Island & Pacific RR. (8/25)
Bids will be received up to 11.30 a.m. (CDT) Aug. 25 at
company's office at 1136 La Salle St., Chicago, for the
purchase of $3,420,000 equipment trust ctfs. series B.
be

9 reported company may be in market
October for sale of $10,000,000 equipment trust
certify

icates.

•

serially in equal annual instalments from Sept. 15, 1949
to Sept. 15, 1958, both inclusive.
Probable bidders: Halsey, Stuart & Co. Inc.; Harris, Hall & Co. (Inc.).

To

stock from

common

Pennsylvania RR.

Aug.

000 shares.

of

equipment costing $5,519,806.
dated Sept. 15, 1948, and mature

be

•

or

in the authorized

to

Thursday, August 12, 1948

dated June 1,

gage

Prospective Offerings
The

FINANCIAL : CHRONICLE

&

foreign
a

state

is

critical

a

situation

hour.

The

;

is very much in

of

flux, particularly as
are
not as meaningless as
regards European affairs.
We1
frequently supposed. ' In the first
have, not had a consistent and coplace, it must be borne in mind
that it is extremely difficult, in a Jhesivq foreign, policy-^-bi-partisan,
country of our size with our va¬ or otherwise. It is evident that the.
forms

rietyof interests, to write.3. plat** Western Powers, and particularly ;
form; representing fairly all of the

France,-

are

-

leery about forcing3

Volume

COMMERCIAL

THE

Number 4724

168

down over the Berlin affecting other countries, includ¬
French, in effect, ing Britain—to Molotov, and nei¬
saying that the Allied position ther our Ambassador to England'
is untenable in Berlin and they nor Foreign Minister Bevin, knew
don't see any reason for taking anything about it untl the' press
apy risks of starting a .war over dispatches were laid before them.
Germany.
The British are less Naturally
Ambassador
Douglas
outspoken on that, but they too was indignant almost to the point
apparently feel that Truman and of resignation.
The
Western
Marshall haven't been too smart
Democracies of
show

any

situation.

The

are

-

adroit

or

.

/

.f tion;

V

Even

/'

handling the situa-

in

the

on

'■ v.

,

of the pub¬

basis

that

lished notes and statements
•

have .been

issued by the Admin-*
Aisfratlon the last couple of weeks,
,"we have been doing a
ing and filling.
/

First,

say

we

lot of back„

,

won't nego¬

we

If
anything happens it will happen

Europe

the front lines.

are on

to them first and it is natural that

they should hesitate to

back up
Administration that is repeat¬

an

fumbling

edly
is

It

around like ours.
right for President Tru¬

all

and

man

Secretary Marshall to
talk tough, but those people over
there want to know just where
.

tiate
'

with' the

Russians

on

the

whole German problem,

and now,
•according .to Secretary of State
.Marshall's statement on July 21,
we are prepared to do that.
Also,
? our original position in the Ber¬
lin controversy with the Russians,
Was based on
our
obligation to
feed

the

Germans

in

zone.

our

Now the Russia os come along and

they will feed everybody in
Berlin, which certainly left the
J American people up in the air a
say

few

weeks

heads

the

on

The

ago.

German
zones, in

Western

effect, supported the Russian po¬
sition
in * refusing
to go along
with

plan for

our

in

ernment

Now

is

it

separate govWestern
Germany.
a

that

announced

Germans in the Western

some

zone

are

t

•'

All of this adds up to just one
thing: That the Administration is
constantly acting without sound
ground under its feet. It is con¬
stantly taking stands and initiat¬
ing projects without having the
people it must depend upon to put
these things through, fully lined
up in favor of them.
To me, R
just doesn't make sense.
A

general just doesn't start off
an
operation without being

on

that

sure

'

he's got the troops aiiicl

supplies, to execute the operation.
that's

But

what

Administra¬

the

tion is

doing, both on its domestic
foreign policies.

and

Neither the Western Powers

the

going to lead before they

commit
We

themselves.

Americans

demand
lay

that

nor

'

bungling and stupidity.
! ably a case of both.
?

Foreign

Policy

It's prob-

Mishandled

Marshall is plainly inadequate

; as Secretary of State.
We
aren't employing diplomacy
more.

ing

just
any

Our foreign affairs are be¬

like

run

an

army.

We don't deal with people; we
i issue orders.
And that just can't
done

mestic

i/
1

in

or

fiasco is
There

an

is

relation

politics, whether doforeign.
The Panama
illustration.

direct

a

and

intimate

very distinct difference between
the two functions.
Neither Tru-

a

j
'

i

'

and

lot

a

Marshall,

nor

•

ous
1

than

The

way our
run

tor

ever

lack

fe

babble.
Our

intelligence system is a
joke.
Hanson Baldwin, an emi¬
nent military expert of the New
York "Times" is taking it apart
currently. He makes it very plain
that our whole intelligence struc¬

confidence

the

is

far

a
as

very

are being
important fac¬

the Western

of their

own.

we are

attempting to do
Pro¬

gram.

For

'

instance, the American Am¬
bassador to England was having
conference with the British For¬
eign Minister, when the news was
printed of the American Govern¬
ment's note—on disputed questions




people know
so-called by-

partisan foreign policy on prices.
The big grain crops of this year
begin leveling off the rise
in the cost of living and put a
damper on further wage and
price rises, if it were not for the
give-away
policy
of
pouring
would

foodstuffs into Europe at the very

time Europe's crops i are good.

dent

continue

cannot

agricultural

one

after

another

to

price

If

means

expect

the Congress—would do all it can
in establishing beyond any ques¬
tions
of
doubt,
a
permanent,

sound,

sensible

tariff

our

money over
we
will be

that

them

in

economics
morale

few

a

of

are

so
a

places

many

pushover- for

years, when our
shattered and -the

people is wobbly.
If the American foreign policy
is to succeed it.jmust not only be

into

of

the

security

as

and men.

tionary
in

demerits
add

we

pressure.

is as vital to
planes, tanks, guns,
>
' 1

sound

a

dend of 75 cents per

Frugal

BACHMAN G. BEDICHEK,

Dividend No. 7

today declared a divi¬
shillings nine pence per share
the Company pay¬

J'he Board of Directors
dend

of

three

the Ordinary Shares of
able on September 9, 1948

on

of

record
at

to the holders of
Shares of the Company
1948.

Ordinary

the close of business August 20,

The

the distribution

authorized

Directors

of

the .said dividend on the same date to the
holders of American Shares issued under the

of

terms

the

Deposit Agreement dated June

REEVES BROTHERS, me.

24, 1946. The net distribution, after deduction
South African non-resident sharehold¬

of the

will amount to 69% cents

tax,

ers

per

H.

E.

A quarterly

share and

DODGE, Secretary.

New York, N. Y., August.5, 1948.

per

ab'e

October

business

highest

are

—

on

Notice

spend¬

J. M. REEVES, Treasurer

clared

we

regular quarterly divi¬

a

dend

of

share

(30$)

Thirty cents
the

on

ROBERTSHAW-FIJLTON

a

Capital Stock, of

CONTROLS COMPANY

this Corporation, payable Sep¬

Young wood, Pa.

of record at the close of business

COMMON STOCK
PREFERRED STOCK

hereby

is

A

August 4, 1948

given

on

that

share

a

per

mon

have

Stock of Atlas Corporation, pay¬

September 20, 1948, to holders

Walter A.

in

to

Peterson, Treasurer

The

S A LEAL

transfer

MASSACHUS ET T S

which

fantastic.
it

was

1947—in

In

The argument in support of that

policy is that unless
continued

are

at

money

an

rates

artificially

low level

got itself straightened out
what it is doing to prices. It
comes with
ill grace for an ad¬

THE ATLANTIC REFINING CO.

over

stock

and

20

per

share

was

declared

Stock of the
tember

on

the Common

Company, payable Sep¬

Secretary

senior

investment firm

is available as manager of
Individual or Institutional port¬
Splendid background of accomplish¬
ments.
Knowledge of all phases of' the
securities business.

-MFG. CO.

Highest

references.

Currently

personal

affiliated.

Commercial & Financial

Place,

New York 8,

and

COMMON-

OiyiOENDv NO, 97

Box

P 812,

N. Y.

record

at

the

close

a

books

will

not

of

1

of Pequot

sheets

and

nation's

'The

Combed

pillow

DICK

Dividend Notice

Treasurer

Sleeps

Percale
—

/

the

^

finest!

Nation

cases

on

PEQUOT SHEETS'

Dividend

(40f)

per

standing
of this

share

on

the Issued arid

stock, without

common

Company,

par

out¬

August
5,1948

Burlington Mills

pay¬

8. 1948.
NO.

8

3y*°/o

87'/j

ferred Stock, $100

pany

ber

W.

E.

HAWKINSON,
Secretary and Treasurer.

(retroactive

wages

which alone

have completely
freight rates

the

increase

application for

in

a

on

April 8th.

further increase

and appli¬
now been made to
the
Transport Commissioners
for a twenty per cent increase includ¬
ing an. interim increase, of fifteen'
cation!

share

Jute
of

per

cent

.

pending

final disposition

by the Board.
By order of the Board.

Each

dividend is payable September 1,
1948, to Stockholders of record at the close

Frederick

August 11, 1948.

V

August 5, 1948.
STEPHEN L UPSON, Secretary

Continuing

March 1st)

to

became effective

Board

COMMON STOCK ($1 par valuef
(45th Consecutive Dividend)
3714 cents per share

of business

of

in rates became imperative

be closed.

Checks will be mailed.

dividend.

interim

supplies, and heavy increases in

An

STOCK

cents per

Board

increases in the cost of materials and

which

3'/a% CONVERTIBLE SECOND
PREFERRED

the

today a dividend of
two per cent
(fifty cents per share)
on
the Ordinary Capital Stock in re¬
spect of the year 1948 was declared
payable in Canadian funds on Octo¬
ber 1, 1948, to Shareholders of record
at 3:00 p. m. on August 23rd, 1948.
~
The Directors desire to point out
that railway operations for the first
half of the current year have con¬
tributed nothing to the payment of

offset

3'/a% CUMULATIVE PREFERRED STOCK
8714 cents per shore

dividend of eighty-one and
(81V^) per share on
Cumulative Convertible Pre¬

of

held

for the previous year,

-

cents

not

reg-

4% CUMULATIVE PREFERRED STOCK
$1 per share
^

Quarterly

the.

Directors

will aggregate annually $27,200,000, or
more
than the net railway earnings

Burlington Mills

ulur dividends.

value,

has been declared,

able September 30, 1948,- to stockholders of
record; at the close of business September

one-quarter

of Directors of

Corporation has declared the following

meeting

a

this

Board

"

RAILWAY COMPANY

At
Makers

closed.

CANADIAN PACIFIC

holders

business

C

and

be

divi¬

share,

a

to

1948
President

The

A regular quarterly dividend of forty cents

business

Chronicle, 25 Park

on

Cents (50c)
August 28, 1948

CORPORATION

Mature and conservative

judgment.

at

L948 declared

Fifty

Notice

AILISCH AIMERS

record

business

1948

RICHARD ROLLINS
Augu:t 2,1948.

of

of

Naumkeag
a meeting

1948, to stockholders of
record at the close of business August
20,1948. Checks will be mailed.

Transfer books will

as

close

WALTER H. STEFFLER

15.

PREFERRED DIVIDEND

prominent

of

held August 2/ 1948, a dividend of
thirty-seven and one-half cents (37%)

folio.

with

Company

July 28,

of

of

RUDOLPH

Estate,

experience

analyst

Cotton

on

meeting of the Board of Directors

a

par value, of this Com¬
has been declared, payable Septem¬
5, 1948, to stockholders of record at
the close of business August 20, 1948.

years'

bond

Directors

August 20,

COMMON DIVIDEND

At

A

INVESTMENT MANAGER

of

payable

SITUATION WANTED

With

held
dend

,

on

Board

Steam

ATLANTIC

contrast—

begin to put on a little
deflationary pressure, but it was
mighty gentle.

the

August 9, 1948
The

by
perfectly

did

stockholders

221

July 28.

measured

peacetime standards

No.

OIVIDEND

In 1946 we had an in¬
the money supply and

credit

Stock

declared, both
1, 1948,

September 10, 1948.

President is alarmed at that very

danger.

per
Common

Preferred

been

at

of record at the close
of business August 27, 1948,

August 10, 1948.

<

204

payable October

of such stock

the

of
the

on

vertible

the Com¬

able

dividend

Stock
and
the
regular
quarterly dividend of. 2911/16per share on the
4 3A%
Cumulative
Con¬

Common Stock

share has been declared

following
while

>■

The Board of Directors has de¬

Atlas Corporation

inflationary in

degree

1948. The

Company will

August 9, 1948

55 W. 13th St., New York II. N.Y

Henri Sadacca

(2) Government overhauling its
monetary policy—or more accu¬
rately, see to it that the Federal
oolic'es which

the close of

at

September 3,

not be closed.

Electric Corporation

the

pay-

1948, to stock¬

1,

transfer books of the

.Noma

per

dividend of 25c

an extra

share have been declared,

September 15, 1948.

Dividend

stops

dividend of 25c

holders of record

DIVIDEND NOTICES

are:

System

NOTICE

DIVIDEND

share.

By order of the Board of Directors.

mooring

government

Assistant Secretary

-

Limited

calls for

regular quarterly dividend of 40#

bank

August 26, 1948,

President

The remedies

• ■

1948, to stockholders of record at the close

of business

tember 30, 1948, to stockholders

Remedies

The

share and an additional
share on the Com¬

dividend of 50 cents per

O'okiep Copper Company

post for the rest of the world to

the

The Board of Directors has declared a divi¬

DIVIDEND NOTICES

a

economy in our country

NOTICES

TEXAS GULF SULPHUR COMPANY

strength
economy
in the

tie to.

(1)
ing.

DIVIDEND

pany's capital stock, payable September 15,

infla¬

Obviously

Its

all—•

us

would spread.

pre¬

of

to

to

menace

,

,

The whole world today—that is

situation more precarious.
The reestablishment of a sound

are

strength by our failure.

influence—a

the free world—requires

more money we

or

more

together

and

A sound economy
our

through
spending—regardless

merits.

idea—the

show

to

pull

after it hits.

circulation

government

time

can

before the storm breaks as well $s

vent the economic bust that Rus¬
sia is hoping and waiting for.

Obviously, the

the

we

the cost of

on

living and would do much to

our

sound financial

a

and

monetary policy—all that,
acting together, would have a

intelligently handled but America
must be

world

sound

pump

us

adjust¬

fixed

a

is

Now

the

program

government—and
both the President and

fumble and bumble and hoping
that we will continue to scatter

14

of

our

tion.

and

our

corrective influence

period

a

Americans for the sake of our na¬

support

still

and

would

civilization.
I
believe
is the time for that co-

coveted

Furthermore, both a Republican
Congress and a Democrat Presi¬

years—the
foreign policies—of
course,
play squarely
into
the
hands of the Communists.
They
are
just sitting back and letting
over

pattern of

Euro¬

\ with the European Recovery

the

the

ments— maintain

steadily accelerat¬
ing drift to an inflationary bust

governments are concerned,
and offsets to a considerable extent what

••

let

of

—make

little empires

up

pean
"

effect

trying to build

ment

in

should

the

ture is a shambles of little groups

govern¬

before.

solution—the

honest
tion

that may mean the deluge for our

be
paralyzed.
The
Air
Corps, the Army and the Navy—
the right arm of the freedom-lov¬
that now
Operation between ,the Congress ing -peoples everywhere — would
The
$nd, the President that war itseJJET be ineffective.
Kremlin
administra¬ always crystallizes in all loyal would
be
afforded
propaganda

purchases. Its lack of an brderly
price
program
has encouraged
speculation and driven prices tc
substantially higher levels. I be¬
lieve, that in the interest of an

physical policy — balance
the budget — make a substantial
payment on the national debt —
lower taxes—tighten up on credit

apparently, policy, the interest charge

foreign affairs

now

as

of

—

that

.

i

of

through Federal Reserve
on the
haVe any comprehension of that public debt will be increased. If
basic and fundamental fact. Sec- there ever was a case of
being
retary Marshall is just a regular penny wise and pound foolish,
army soldier Who doesn't know that certainly is it.
In order to
any different.
In thev meantime, save some dollars on the carrying
we and the rest of the world are
charges of our public debt, we
being wracked and hazed in a are endangering the price struc¬
welter of war scares and chaotic ture
of
the
whole
nation
and
muddling. Actually, it's, nothing thereby undermining the value—
new. -That has been going on now
the real valuie-^of ?thef entire sav¬
for several years.
The only'dif- ings of our people.
y
ference is that things have finally
(3) Some restraint on give away
come to a head, and the situation
international spending.
It seems
is a lot- more sinister and hazard¬
to me it is about time the

■\ man

statesmanship of the highest order* United States of America.
With¬
both in our policies at home out it our leadership would fade
rising costs of food when the ad¬
and abroad. We watch the unfold¬ —the
contributing to that
European Recovery Plan
cost by the way it, handles its own ing / foreign and domestic crises would
disappear
world
trade

mation.

hints

43

ministration to complain about the

is

rumored

(639)

ministration is

the whole situation.
Nobody
really knows anything. All we get

terrifying aspects

of

between

foreign affairs
vi and the military, but there is also
:

That is

about.

CHRONICLE

prices to go down.
(4)
Impose
consumer
credit
controls by Presidential procla¬

crease

:

be

to

table and

the

on

of the most

one

Reserve

,.

entitled

Administration

tell what it is all

Germans appear to be in ac-

| cord with what we propose to do.
;j That means either poor diplomatic
work on
just plain down right

'.J.

are

the

cards

some

.

All that—our

agreeable.

.

that is

FINANCIAL

&

_

■

/v'-"*.'

Bramley,
Secretary.

Montreal, August 9, 1948.

'*

THE

(640)

44

COMMERCIAL

&

CHRONICLE

FINANCIAL

Thursday, August 12, 1943
is

Capehart

BUSINESS BUZZ

|

Interstate

the

on...

jrJF

I

retirement

clearance

holds of the

now

and slum-?.

by

selling "new used cars" at substantial premiums over the legitimate
'
" <&■
were
surprised Congress
Under Regulation W credit was

OK

of

car

cited

by

loan

instalment

the

used

the

was

approved

an

a

on

price

average

appraisal

the make and model in

book for

•question.
Auto appraisers do not
recognize the premiums received
on
"second
hand"
cars * driven
around the block and sold to the
gray market dealers after initial
purchase at the list price.
a \ .
So
credit based on premium

■

of

of

third down payment
appraised value.

the

up

the lower

higher

The

will cut a

■afone
nme

|

new cars at
miums.
So

l

terms.

of

out

of

market pre¬

gray
will

stricter

the

Otherwise the "used car"

f dealers would have
Ivtbe law by selling

to violate
on

credit

of Regulation
W. The Reserve Board believes
that few will be able to get
away
with it, for credit sales
jmore
liberal than allowed by
the regulation will be relatively
easy to detect, simply because
competitors quickly
find out
about it and snitch on. the vio¬

terms in violation

.

"

•

lator.
*

if

*

,

When Congress was

considering

authorizing

the restoration of con¬
credit controls, there was

sumer

objection from in¬
dustry.
Business men generally
■oppose the principle of regulation
more than they do its application
to instalment credit terms. Most
of the better established finance
companies
have
been
careful
about not encouraging the "dollar
down and dollar a week" business
despite the ending of the regula¬
tion last November.
Banks also
jhave generally gone along on a
little

very

more

to

strict basis.

loans

ucts

are

like

radio

welcome

manufacturers—may
the instalment credit

controls. The higher down pay¬

as

'

with the other

the Congressional bill

—if not vetoed—the
of

reinstatement

Regulation W is expected short¬

ly. There may be one important
modification with respect to auto¬
mobile credit. The motor industry
likes

18-month

the

repayment

term, instead of the 15-month pe¬
riod
used before.
The Reserve

to go along.

{Board is expected

it clear whether he will approve

the Congressional bill, however,
will

be

big "IF" about

a

entire

proposition.;

The

President's blast at Congress for

having
the

"done

and

amateur

nothing"

had

Senate

everybody
tion

in

acted,

before
gave

Administra¬
except the
House political

the

Congress
White

strategists

a

case

have a bearing next year

may

tip
to veto

advance

"

planned

Administration.

new

a

However,

decision
about
changing the pegs

any

dropping

or

business

tell

ate

subcommittee

which

selected

President

to

the

of

Secretary

Treasury

and

that
any

Truman
bill, and.




idea

about

it.

S. Capi¬

tol, Washington, D. C. The Sen¬

these

new
become his

Senator

an

hit liim,

Write to the Senator at the Sen¬

would have to be made in the first

whomever the

the

has

ate Office Building, U.

instance

by

can

has

a

staff

state

Committee

Commerce

greater significance.

a

He Is

anxious

to

business

particularly;
what

hear

small

think

concerns

about

Yet next year

W.
a

Tobey
New

of

Deal

Federal

took

the

they

effect

in

dared

merce

Wolcott

of

McCabe that

the

the

Congress

them.

t

'[

*

*

v

*

■

Teletype—NY 1-971

M. S. WlEN & Co.
ESTABLISHED
Members N.

40

1919

Y. Security Dealers Ass'n

Exchange PI., N. Y. 5

HA. 2-8780

Teletype N. Y. 1-1397

Trading Markets:
Ralston Steel Car

Oregon Portland Cement
Riverside Cement A & B

All Issues

Spokane Portland Cement

he

of the

||

P.ARL MARKS & TP- INC.

*

F.QRE1GN SECURITIES

Congressional thinking is

last

Lonsdale Co.

of which

FOREIGN SECURITIES

with

December

LERNER & CO.
Investment Securities

SPECIALISTS

now

leaning toward the idea of drop¬
ping the "voluntary allocations"
law which the Congress finally
adopted

become
Interstate

Firm Trading Markets

might be suitable.

pegs

Corp.

Finishing

un¬

that

lowering

some

the

of

Commerce Committee

HAnover 2-0050

continue

indicated

He

thought

Transmission

House

was

to

banks

Reserve

not falling. *

Congress

to try it. In open hearing Chair¬
man

Committee will handle any

Chairman

are

who

view¬

a

will

leadership,

can

receiving

Dorset Fabrics

Administration and in op¬

man

of

Hampshire,

Republican

position to that of the Republi¬

.

Incidentally, it has been agreed
privately that the Interstate Com¬

have
held
for
many months, that they would
be glad to let go the pegs if
Congress ordered them to do so,
and

*

if

ex¬

and

Senator Charles

New

sponsored

has

price

average

not

Seatex Oil

point similar to that of the Tru¬

*

spokesmen

Major4:.,

years,

are

several

U. S,

study and correlate

answers.

for

Belle Isle

-

pricing systems and what it will
do to them.

Reserve

demand

Keiter Foster Oil

arising out of the committee's
study of the basing point situation.
The advance avoidance of a juris¬
dictional squabble between com¬
mittees gives the Capehart study

Board.

and

television,

Texas Gas

tion

usually

Administration

of

1951*

until

production costs

legisla¬

clear track to handle any

the possible end of basing point

H:

backlog

sets; Will' hot come down much

a

Chairman of the Federal Reserve
*

Another

in the next; year or so because

ing to bow out, giving the Inter¬

wants {every

who

man

t.u

the

of

basing

business,

upon

•

points

effect

of

abandonment

;

legislation on this subject, which
is jurisdictionally under the Sen¬
ate Judiciary committee. The lat¬
ter committee, it is said, is will¬

subcommittee

Commerce

to

New York 4, N. Y.

50 Broad Sireei

10 Post Office

Square, Boston 9, Mass,

Telephone Hubbard 1990

AFFILIATE: CARL MARKS & CO. Inc. CHICAGO

Teletype BS 69

.

a

view to providing some answer to
Truman's

for

demand

legis¬

authorizing compulsory

ma¬

PHILADELPHIA
1st

terials controls. Under this volun¬

tary

law

industries

can

agreements for voluntary
tions

of materials and,

reach

antitrust

from

their

ELECTRIC

Refunding

Debenture

alloca¬

OK of these programs by

&

WESTING HOUSE

after the

23/%

due

COMPANY
1974

ELECTRIC

2%%

due^l971

*

,

-

-

.v.*

-i

.

.

,

,

.

.

ers

prosecution

for

Kobbe

operation. This law expires

.

The Congressional lead¬

28.

doubt

now

that they will ex¬

,

Si
Company
INCORPORATED

.

55 Liberty

Telephone
BArclay 7-2663
.

tend

its

turn in

operation when they
January.

-

Susquehanna Mills

BOUGHT—SOLD—QUOTED

Members National Association of Securities Dealers, Inc.

Feb.

Empire Steel Corp.

CORP.

the At¬

torney General, receive immunity

of the jitters.

They thought it looked like an
:

state

how this situation will

there is

stutter!"

Inter¬

an

ernment bond market and

Mr.

there

of

Indiana, chairman

interest rates down.

holding
This think¬

I

Senator Homer E. Capehart of

investigating the

lation
Until President Truman makes

tine

they'd change the name of this company—-everybody

posal was that members of Con¬
gress whose opinion counts, are
becoming more and more skeptical
of the idea of pegging the govern-

ping of the pegs or pass legis¬
lation
specifically
authorizing

*

*

v

Whatever is done

of

wish

thinks

thing brought out in the
debate within, Banking commit¬
tees over the higher reserve pro¬

likely either to order the drop¬

*

phases

the
"1

Banking committee advised Mr.

25% of the purchase.

j

color

One

if

the

met

pected

to contribute to infla¬

have
generally
heaviest where

been found to be

the buyer's

be

tion.

ing

1948.

changes in television, except for

industrial

equity was less than

which

backs,

turn¬

discourage

will

ment

equal,

not presently at such

were

of

expected to be sold

are

for the television sets will not

supporting him. Mr. Snyder told
the Senate Banking committee

volume

of

by Dec, 31. Other factors beingr

had not in ef¬

and

half

sets,

sold during the first

months

500,000

fect committed these agencies to

commercial

opera¬

..

require increased legal reserves
if the President, in his special

that

were

six

Congress

session message,

receiving

which

nor

Secretary Snyder, it
have recommend¬
that power be
vested in them at this time to
to

in

now

be between 75 and 100 operat¬

Treasury
ed

are

have

McCabe

Mr.

Neither

new¬

television:

baby,

ing. Some 500,000 persons now

loans.

position

prod¬
coming into supply—

These industries whose

'

ing stations

industrial

and

of the things

some

tion; by the year end there will

would not
contract the, volume

commercial

In part it

year.

Thirty-one television broadcast-*

is said, would

down payment
lot of the vol-

the purchasing

f

used

be

are

industrial

est

higher reserve power

prices will have to raise the dif¬
ference
between
the
appraised
value and the premium price, to
which in cash they must also put

next

reported about America's

flatly that the

prices will be out. This means that
the avid purchasers at premium

part

the postponement of the

Here

approach will be to re¬

quire such additional reserves as
may be necessary to offset factors
increasing bank reserves from this
time on.
Chairman McCabe of
the Board declared

This

in

due

tige 'since the April vote.

be

ordered, and to
what extent. It is being said here
that the

is

reflects Mr. Truman's loss of pres¬

additional re¬

when

of

would

votes

13

until

issue

Board, the Treasury, and the
generally ducked

issue

the

of

only to

Administration

serves

public housing features.

shift

Spokesmen for the Federal Re¬
serve

48 to 36 to drop

Senate voted

the

<:

*

if

Last Friday

vote of 49 to 35.

a

the

troubled to complete action.

as new

basis of value for the

The

cars.

well

the

by

approved

was

Senate last April, it was adopted

dealers'retail prices.

as

of

Banking committee.

When public housing

regulated in connection with the

of

White

Wallace

manship he

jL \Jlit

WASHINGTON, D. C.—When and if the Federal Reserve Board
reinstates the restrictions on instalment credit sales, it may as an
incident thereto deflate a substantial
volume of the business of

purchase of used

over

Com¬

Commerce

Maine, and will leave the chair¬

jljLUkM/

from the Nation1
n'sCapital

will take

the

with

mittee

Senator

BeVtrwJ-the-Scene Interpretations

subcommittee

a

chairman. Tobey

'

re¬
^ p

.

..

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