Full text of Commercial and Financial Chronicle : August 3, 1950, Vol. 172, No. 4930

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ESTABLISHED IS39
BUS. ADM.

"ft* Commercial

UBRAR

f

an

j

Chronicle

Financial

Reg. U. 8. Pat. Office

Volume 172

Number 4930

New York, N.

Price

Y., Thursday, August 3, 1950

Cents

30

Copy

a

EDITORIAL

Investment

Ameiican

Economy Now
And Its Growth Capacity

As We See It
The

most

few weeks
in

the

disconcerting events of the past
are not to he found in Korea, but

Lamont

mounting evidence here at home of

Word

confusion and conflict of counsel
appear to continue even unto this day.

can

economy over

Discusses such

Washington early this week
by the President to improve the func¬
tioning of the National Security Council. Appar¬
ently, it is now more or less tacitly admitted that
in the national capital the left hand has regular¬
ly been in ignorance of (or perhaps did not care)
what the right hand was doing. At all events,
Korea has made it clear beyond doubt that inter¬
nal consistency was not an element of our over¬
all foreign policy. It is far from clear even at this
moment
what
our
irreducible
political com¬
mitments, responsibilities, or obligations are be¬

problems

future business

as

It may

economy

keep

ments

existed

it may

be that

a

what

and

will

it

be eradicated.

page

Rockland Light
and Power

Franklin

of

ods

and

to

the

business during the last

It

whether

the

Slichter

at

of

a

R.

Continued

FINANCING

POSTPONED—This

includes

39,

week's

on

decision

Prof.
Stan¬

♦An

versity

page

has

been

"New Issue

reached

call

to

address

military sup¬

a

halt to

aggression

by Mr. Lambourne before the Ninth Stanford Uni¬
Conference, Palo Alto, Calif., July 27, 1950.

Business

Continued

on

page

22

Calendar," which

have been
Korean war.

State and

Municipal

Custodian

600 Branches

inc.

across

COMMON STOCK FUND

Bonds

Canada

Monthly Commercial Letter
upon request

Bond Department

BOND FUND

UTILITIES FUND

White,Weld&Co.

INCOME

Chicago

FRANKLIN

THE NATIONAL CITY BANK

(BALANCED) FUND

Prospectus on

New York 5

Boston

or

plies to nations in danger of Soviet
domination. We must assume that a

17

a

PREFERRED STOCK FUND
Prospectus on request

rea¬

against free countries wherever and whenever it appears.

of the gov-

of

Lambourne

W.

ford, Calif., July 24 to 28, 1950 inclusive.

page

is

point

economic assistance

important changes in
and' methods of doing

half century the following stand

series

reaction

initial

position

five addresses delivered by
the ninth Stanford University Business Conference,

outline

Korea

as

in the international
of the United States. It is
longer just a matter of extending

turning

as

♦An

caught the
Washington, by
remains
to
be seen
in

well

as

sonably correct.
Active participation in the Korean
war
should be viewed as a major

the

institutions

I think it is fair to say that

outbreak

surprise.

Doing Business; (2) Changes
Conditions; and
(3)

Among

econ¬

greater preparation

or

war

markets,

no

Slichter

of

for war.

Changes in Ideas.

Prof. S. H.

attempt

discount the impact on the

omy

Meth¬

A Mutual Fund

yield 4.65%

40 Wall Street,

decline in prices is clearly an

Economic

in

20

Funds,

4.65%

Price 100
to

major exchanges in addition to wide losses in thou¬
sands of over-the-counter issues. The

Company

Cumulative Preferred Stock,
Series A,

on

(1) Changes

Institutions

Economic

in

dominated by devel¬

The securities markets today are

likely to continue is the first step in
attempting to encourage the trends
that one likes and to discourage the
trends that one dislikes. Changes fall

particularly important.
(1) The growth in the economic activities

on

substantial rise in interest rates.

opments emanating from Korea. In the past month bil¬
lions of market value have been taken off stocks listed

list of the larger corporate issues which
temporarily postponed due to unsettled market conditions resulting from the
appears

no

present institutions, policies, and
And recognition that cer¬
tain trends are under way and are

out

CORPORATE

there'll be

gives one deeper insight

into three main groups:

with sacrifices from all
Recommends investment in

common

conditions.

That it still exists is
on

economy.

into

lies, it is impera¬

Continued

not

of the United States
generation or more hence?

term trends

Must Be Eradicated

tive that it

a

the

inflation hedge, and sees no ground for
stocks. Contends price level has
yet reflected increase in money supply, and concludes

liquidating

change, such as the present, much more
is happening to the economy than can be seen and recog¬
nized. Examination of apparent long-

representative qualified for the task.

or

like

in Korea not Lkely to be settled soon,

sound equities as

In times of rapid

no one

lay

be

of

sectors

What is happening to the economy

rumored repeatedly, that disagree¬
within the President's household;

But wherever the fault

war

Says

a

and looks for higher tax rates

The Present Position of the American Economy

took the trouble to integrate
all the various aspects of foreign policy, and hence
to come to a realizing sense of the possible con¬
sequences of failure to be certain that the foreign
program as a whole made sense. But after all, it
is the duty of the Chief Executive to attend to
such matters as these, either personally or
through

Holds it is

with production

up

a

utes recent

will be effective demand
pace.
Foresees
increasing public operation of some industries.

for goods to

on

West Coast security analyst attrib¬
stock market decline largely to Korean epi¬

sode.

new

tends most important question

But it is evident that such commit¬

as

Holding business prospects have been favorable
peacetime basis,

unlikely growth of
will be retarded by lack of capital, and con¬

are

be,

well as some prob¬
foreseeable future.

difficulties in starting

as

concerns.

recognized and widely publicized
are in no
way matched by readiness to meet them.
For this state of affairs, it seems to us the
President must himself accept full responsibility.
ments

as

Cox, Investment Managers

&

President, The Security Analysts of San Francisco

enterprises; availablility of investment funds, and size of

of efforts

lieved to be.

last generation

able characteristics of the economy in

from

came

By RICHARD W. LAMBOURNE*

Partner, Dodge

University Professor, Harvard University

Harvard economist reviews changes and trends in Ameri¬

incredible
which

Current Conditions

SUMNER H. SLICHTER*

By

Policy Under

OF NEW YORK

request

^Canadian Bank
<$@omm&ice
Head Office: Toronto

DISTRIBUTORS, Inc.

64 Wall Street,

New York 5

Bond Dept.

Teletype: NY 1-708

New York
Seattle

CANADIAN

AAodtmi Srwid

Underwriters and

STOCKS AND

Distributors of Municipal
and

THE

CHASE

NATIONAL BANK
OF

THE CITY OF

NEW YORK

Agency: 20 Exchange PL

Portland, Ore. San Francisco

Los Angeles

CANADIAN

MILES

bonds & stocks

SHOES

BONDS

COMMON

Corporate Securities
Prospectus from

authorized dealers or

VANCE, SANDERS &
Ill

CO.

Goodbody & CO.

OTIS & CO.

ESTABLISHED 189!

(Incorporated)

Devonshire Street

Established

1899

MEMBERS NEW YORK

BOSTON
Los

Angeles




Grpokatioti
40 Exchange

115 BROADWAY

New York

Chicago

Denver

Cincinnati

Columbus

Toledo

Buffalo

105 W.

Dallas
NEW YORK

'

IRA HAUPT & CO.
Members New
and

Place, New York 5, N.Y.

ADAMS ST.

CHICAGO

111

Broadway, N. Y. 6

WOrth 4-6000

Teletype NY 1-702-3

WHitehall 4-8161

York Stock Exchango

other Principal Exchanges

STOCK EXCH,

CLEVELAND

Chicago

New York

PoMnnwi Securities

Boston

Teletype NY 1-2708

Telephone:

Enterprise 1820

2

(430)

The Commercial and Financial Chronicle

TRADING

MARKETS

The Security I Lihe Best

IN

Central Public

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

Utility 5Va/52

Interstate Pr. 6% Deb. Esc. Ctf.
Transcon. Gas

RUPERT H. JOHNSON

Pipe Line 6% Nts

New York Hanseatic

(Texas

Corporation

My

1920

Established

favorite
is

moment

120 Broadway, New York 5

Texas

Utilities

stock.

having
ulation

Specialists in

one

of

This

by

the

com¬

In

1949,

of

of

the

represents about 33%

State.

1

Since 1917

a

Dal-

known

Falls,

around

s o

York

New

120

Exchange

Curb

Odessa,

n,

Exchange

Ternpie

BROADWAY, NEW YORK 5

Rupert

Corsicana.

'

served

area

The

company

best

Common

Capital Stock

is

all

in

Common

growth

serves

of

one

territories

addition

Texas

the

in

which

the

Incorporated

Floor, Kentucky Home Life Bldg.

large scale.

a

there

In

oil. and

are

7.3%

gas

and

tional

by Texas Utilities

Bell Tele. LS 186

utility industry

V

This

increased 64%

as

*

Sales,

in

terms

compared to 103%
try as a whole.
Added

★

Y.

:

Telephone

or

r

an¬

Central

shares

of

had

than

May

on

out¬

31,

1950,

were

indicate that divi¬
will keep pace

At current price of 23, the
yields 5.56%.

erty.
stock

.

'

Texas

Y.

I

•

am

Texas

think

Com¬

Central-Michigan

going to select
to

seems

for

Service

more

some

have

is

a

very

Central

The western section of the

pany's^ properties

!

Mexican

serve

com¬

large

a

part of the Permian Basin v/nich

bond that

New

Railways

constitutes
nation's

BONDS

about one-fifth of the

oil

reserves.

With

are

17

value

of

a

Analysis

growjng dynaniicr territory, the in¬

miles

dustrial

Bought—So I d—Quoted

New

load

should

New domestic

grow.
on

continue
users

to

will be

these

bonds

added, and old
their

ZIPPIN & COMPANY




on

1,430

load

users

demand.
should

The

also

will increase
commercial

continue

to

in¬

crease.
r

The

population

of

this

section

is growing three times as fast

as

(2)

be

the

a

perhaps

*

*

its stock

on

own.

Central-

Plywood Inc.

Douglas & Lomason

*Copeland Refriger'n

as*

Information

on

request

been

Over

completely

the

AETNA SECURITIES

for

next

will have:

you

ten

Corporation
111

Broadway, New York 5
4-6400

Tele. N. Y.

1-2494

-

Central's

will

mortgage
because

of

New« York
also

absorption

as

case.

collateral

listed

are

Stock

on

Exchange

approximately nine
Michigan Central stock

N. Q. B.
OVER-THE-COUNTER
INDUSTRIAL STOCK INDEX
11-Year Performance of
35 Industrial Stocks

traded over-the-counter..

They constitute, in
desirable

Michigan*

Central

and

"

only

common

the

on

bonds of 1998

the

Arthur Marx

be

BOOKLET

my

investment

opinion,
for

or'

individual

ON

REQUEST

a

either

tors.

of

Winters & Crampton

or

institutions

shares

PH 771

*Lea Fabrics
*

could,

These collateral bonds wiLU

tant, they are collaterally secured
by
deposit with the Guaranty
of

Bell System Teletype

City Tel.: BOwling Green 9-4818

TRADING MARKETS

ratios, 13

collateral

as

Michigan

Trust

Co.

York

WOrth

Michigan
3172%

addition

impor-

and

in the Lake Shore

,

York

to t h i s, a n d
most

New

Exchange

that the:

has

seems

Central

Central Sys¬
In

it

(1)

and

tem.

request

208 South La Salle
St., Chicago 4
Tele. RAndolph 6-4696
Tel. CC, 451 '

on

Stock

St., Phila. 9, Pa.

PEnnypaclcer 5-2857

was

me

deposited

-

second mort¬

gage

Broad

the

Michigan

the

stock

stock,

on

new

industries constantly entering this

these

Central

It would appear to

t

They

miles

Phila.-Balto.

South

Phila. Telephone

(rev¬

of

-in -1948

on

$50

capitalization

first

a

mortgage

Members

123

-

3%s of 1998,
selling
at
about 60.

Henry 8. Warner & Co., Inc.

Michigan Cen¬

it operating on its

Stock

Company.

Dan River Mills Common

dense

most

$100 per share

as

were

overlooked.

collateral

un¬

Central-Mich¬

and

least

at

earn

years

Light

they did the

the

of

Based

tral

Power •&

Purolator Products Common

or

Central
By 1952 this would

Michigan

York Central-

Dallas

Penna. Power & Light Common
Philadelphia Transportation Co.

day New

some

as

York

11.55%

was

Michigan Cen¬

of

Equitable Gas Common
Allan Wood Steel Com. & Pfd.

New York Central system in 1949

'

overlooked

attractive.

Philadelphia Electric Common

1952 maturity.

nonrevenues)

pany1, Texas Power &'Light Com¬
pany, and 91.27% of tiie common

WHitehall 4-2530 Teletype NY 1-3568

be

Company Common

will wish to absorb

one

and

figure

and tell you why I

years

it

been

Warner

over

enues

stock.

142

Enterprise 6800

amount

tral's share of net ton miles

on

Collateral 3y2s of 1998)

Company owns
the outstanding common stock
Electric

20%

on

1950,

Tele. BS

the Michigan

on

been

high
(N.

of

Street, New York 5

May 31,

on

President, Wilson and Marx, Inc.,
New York City

ali

VOGELL & CO., Inc.

will

the

time.

10.78%.

,

Utilities

there

governments

lines in the U. S.

stock

Ine.

Enterprise 2904

traffic arteries of all the railroad

ARTHUR MARX

share and this

with the increasing earnings which
can
be expected from this
prop¬

Tidewater Power

increase

common

Dealers

West Penn Power Common

1,100 miles, the best
the line from Kensington,
Illinois, to Detroit, Mich., which
has

However, there

Securities

Hartford, Conn.

being

more

an

of

approximately $18 million.
Michigan Central's operations

cover

the

increase of

or

25%.

rate from $1.12 per

to

seem

funds

York Central.

pay

New

at that

an¬

dend1 declarations

Michigan

above the

Central

existing
be

Assn.

Open End Phone to New York Canal 6-16 IT

the

igan Central collats and give them
a
mortgage subject to the: ones

woiild have earned $2.67

outstanding

an

would

to

and

to

der the

which the earnings were $2.23, or

whole.

National Gas & Oil

million

Michigan'Central

shares of

Nat'l

HUbbard 2-5500

purchased

depreciation
New

It is possible that
York

*

Portland, Me.

they

reduce

are

probability
$5

over

needed

'

been

Tel.

$18 million.

over

accrues

from

all

when

will

slightly

with cash that

that

i.

4,000,000

were

share,

per,

as a

per

which

to

cash

»

$10,075,000

probably take the stock from

company

'

Northern Indiana Pub. Serv.

37 Walt

mature,

These governments

in

the electrical

nual dividend

is

bonds

in¬

4,800,000 shares of

share, to $1.28

the

In

operating revenues which com¬
pares with about 18V2
cents lor

Central Vermont Pub. Serv.

31,
1949,
$30,274,000*
$18,736,400.

Lake Shore and at that time will

standing

32%, in¬

The company increased the

of

There

off

debt

Quoted

75 Federal St., Boston 10, Mass.

Dec.

stock

—

*

$12,000,000 of bonds mature

1952.

pay

Sold

—

J. B. Maguire & Co., Inc.

Members

Central's

of

received from

increase

indicates

selling at

Michigan

as

for

an

$115
stock

was

funded debt of

a

stock.

was

share of

short-term governments and cash
which no doubt will be used to

Residen¬

provided 40 %

utility industry

exchange
each

common

$3 to

$2,229,413

There

reduces fuel costs of the
company
to about eight cents per dollar of

4-5000

Arizona Edison

and

.

This

of
for

$105.

shows

The

gross

Bought

exchanged in

were

through to net.

22%t and others 6%. This

Teletype BS 259
WOrth

the

are

selling

Michigan Central

statement

this favorable growth

to

of 1949 gross, commercial
dustrial

St., Boston 9, Mass.

ratio

bonds

about

common stock outstanding on
May
factor, is Texas Utilities' accessi¬
bility to low cost natural gas. All 31, 1949 on which the company
major units burn natural gas, but earned $2.12 per share during the
can use oil, while Texas Power &
preceding
year.
If
the
same
Light has a unit convertible to

Request

tial and rural load

CA. 7-0125

in

bond

24% of gross earnings was carried

for the indus¬

company-owned lignite.

N.

in

$6,525,544,

$8,460,170.
of

.net

amount

Tel.

a

Net income, after income taxes,
for these periods was $10,689,583

kilowatt

of

of

of 11%%.

crease

"

hours, also had a large increase,
namely, 145% in the same period,

CONTROL

w

as

Spinning
Associates

of about $9,000

dollar

which at that time

this

increase

an

year

and

148 State

The

average.

is

the

whole, grew

a

35%.

U. S. THERMO

for

in

property is
higher than the na¬

is

branch offices

our

tv

1898

in

on

value

These bonds

About

rate of return

or

thousand

per

conscious of

restrictions

NY 1-1557

Berkshire Fine:

This

quoted

$1,000
better bid, which sets

collateral

a

burdensome

between 1940 and 1948, while cus¬
tomers
served
by the electrical

★

are

►

Birmingham, Ala.
Mobile, Ala.

Direct wires to

for $600.

municipalities,

regulation

Texas,

currently

share

per

new

ticipated in regard to rates.

The number of customers served

LOUISVILLE 2, KENTUCKY

★

of

is

stock

1952

recognizes 8%

control

State

•

Senior

$1,000 bond outstanding.

per

.

law

Exchange

Partner, Westheirrer & Co., Cincinnati, Ohio.
'(Page 30)

wells, and numerous manufactur¬
For the 12 months ended
May
ing enterprises making textiles,
31, 1950, gross earnings were $62,ceramics, lumber products, avia¬
746.230 compared to $56,220,686 for
tion, iron and steel, etc.
the 12 months ended May 31, 1949.

"1 BANKERS BOND E-

on

heimer,

Curb

HAnover 2-0700

.

Fort

satisfactory..

York

St., New York 4, N. Y.

New Orleans, La. -

Procter & Gamble—Irvin F. West-

their growth potentials so that no

cattle raising on

Analysis

City (Page 30)

financing should be

fair return and the

Members New

25 Broad

Belt

and

from

result of this

Agriculture is important in this
area, and includes the raising of
cotton, wheat, corn and, of course,

Consider H. Willett

.

:

9 I***'

York Stock Exchange

in

Waxy

Waco

Daiicp

Members New

Lawrence
Corporation,
Ltd.
—Richard C. Noel, Partner, Van
Alstyne, Noel & Co., New York

financing but the final results ac¬
cruing to the common stock as a

country.

Churchill-Downs Inc.

Long Distance 238-9

Johnson

Texas, the company has asked the
SEC for exemption from the Puolic Utility Holding Company Act.

American Air Filter Co.

1st

H.

Cv-mirn

OTEINERy HOUSE & IfO.

area

1949
to
This will involve

inclusive.

and

City

St.

construction program, aggregating

and

the

Black

Dallas,

$141,000,000

Since

Tel. REctor 2-7815

the

as

Bought—Sold—Quoted

Central

3^4s of 1998—Arthur

President,
Wilson
Inc.,
New
York
(Page 2)

equity

land

Central-Michigan

Marx,
Marx,

The company has an aggressive

Midland,
Sweetwater,
Tyler, Paris,

Members
York Stock

area

of capitali¬

best farm

Y.

Collateral

Worth.

chita

New

Tne

the State of Texas lies in the

Wi¬

Waco, Deni-

McpONNELL&fO.

stock

common

of the

Some

Fort

s,

Worth,

N.

zation.

served

include

The

Louisiana Securities

(Page 2)

net

gross

ratio.

Company—Rupert

Partner,
R.
H.
Co., New York City.

Johnson &

earnings were
$60,155,465.86.
Funded debt was
$121,500,000.
The funded
debt,
therefore, is about twice the gross
earnings which is a conservative

2,-

Alabama &

Johnson,

quality security.

a

pOfc/ULation

Cities

Utilities

H.

would

company

ine

Rights & Scrip

Texas

to indicate that Texas Utili¬

ties stock is

being

third

-

Com¬

pop¬

a

500,000,

served
seem

(all in Texas)

pany serves an area

in

growth characteristics of the

this

at

earnings,

gross

earnings, and in dividends.

Company)

security

common

pany

Teletype NY 1-583

BArclay 7-5660

Utilities

in

crease

Participants and

Their Selections

the remainder of the country as a
whole.
This all spells large in¬

Partner, it. H. Johnson & Co.,New York City

Thursday, August 3, 1950

This Week's
Forum

A continuous forum in

Paget Sound Power & Light

...

inves¬

National Quotation Bureau
Incorporated

Continued

46 Front Street
on

page

30

New York 4,

N. Y.

Number 4930

Volume 172

.The Commercial and Financial Chronicle

.

T"1

INDEX

Economics of "Little Pearl
Harbor"—Short-Term Outlook

—Richard

it

—Sumner

in 1941, Dr. Palyi foresees permanent Garrison State.
Federal Budget above $55 billion, and holds in-

was

creased
taxes.

.

State

"Police

.

Action,"

the

He did

first.

it

called

American

to

send

to

the South, nor

With

Permanence

in

ground

planes

troops

Korea.

match

of

question
e

t

in

and

of

To

quote

our

to

article

our

Chronicle"

of

indications

are

on

have

to- face.

colossal,
those

of

tracted

.with
to

World

over

by

a

not

"All

what

we

will

costs

be

comparable to

War

II,

but

It stands

...

the

'progress'

of

will

more

or

be accompanied
less continuous, if

rapidly accelerating inflation

of the national debt."

The magnitude of

.

first thing to be
of the
;

the job is the

visualized. If half

$10.5 billion the President

requests is for Korean campaign,

-that is

probably

France has

than what

more

spent in

120

years on

conquering
and
policing North
""and Central Africa, Madagascar
-

It is

simply fantastic that with
the gigantic volume of war equip¬
ment

left

from

over

World

War

and with nearly $80 billion
spent since then on the military
establishment, the U. S. should
find itself totally unprepared to

II,

cope
with
the
"well-prepared"
ten

front-line

local

North Koreans,
their five to

divisions

(if

that

is
deeply shocked, while the Amer'ican people seem to take it all in
apathetic stride.
-

If

is

it

true

that

have

a

single full-fledged armed division

against 40 such Soviet divisions in
readiness, it will take far more
than $5 billion to make up for
the

five

years

wasted

on

__;

of

bribe

will

Southeast
11

trooos;

of

Archie

T.

global

The Best Excess Profits

of

Economic

into

"called off." The
befall many open
"pork barrel" pro¬

has been
may

concealed

and

jects, public works, federal health
and education programs, etc. In¬
asmuch as most farm prices are
likely

to stay

at or

above statu¬

will be
point
in
supporting
them.
Some
spending
on
the
unem¬
ployed and the indigent might be
superseded
by
military
pay
tory support levels, there
no

The total thus saved may

checks.

billions

several

into

go

will

while the

military will proceed fast, and has
and

more

plans

bigger

up

its

sleeve. It would be a near-miracle

current budget can

if the
at

billion,

$55

or

the

over

so

before July

Power &

one

9

Program

(Editorial)

Bank and Insurance

..Cover

Stocks

—

Sold

—

Quoted

J.F.Reilly&Co.

13

Incorporated

_J

Business Man's Bookshelf
Canadian

14

Securities

17

8

___J

Einzig—"The Outlook for Gold"_____^

Mutual

Business

13

AIRCRAFT

News—Carlisle Bargeron

7

Activity

Funds

16

___■

News About Banks and Bankers-„

Observations—A.
Our

Reporter's

Our Reporter

Wilfred

May

14

,

40

Singer, Bean !

19

-

Securities

Securities

Corner

24

1

Registration_L___

Securities Now in

Mackie, inc.;;

&

21

Salesman's

>

Eng.,

Lear Inc.

43

Governments

Utility Securities

Railroad

Engineering & Mfg.

Continental Aviation &

*

Prospective Security Offerings-..
Public

Liberty Products
Texas

20

Report

on

Foote Bros. Gear & Machine

12

:____

EQUIPMENT

MANUFACTURERS

37
1

Notes

Teletype NY 1-3370

BO 9-5133

8

Dealer-Broker Investment Recommendations

From Washington Ahead of the

Broadway, New York 6

61

Coming Events in the Investment Field

The Security I

HAnover 2-0270

40

Exchange PL, N. Y. 5

}

Teletype NY 1-1825 & NY 1-1826

38

Like Best

2

.__

The State of Trade and Industry.

tomorrow's Markets

5

(Walter Whyte

Says)

BUY

16

Washington and You

44

*See article

on

5.

page

r

S.

U.

be kept
■"

.

SAVINGS

BONDS
•

1st.

GOING TO NSTA CONVENTION?

i

i

■=r'

Financing the Deficit
The

sound

time"

$3

or

$4

already—is, of
is

But

it

the
of the "peace¬

to finance

way

deficit—on top

new

The Annual Convention of the National

billion

at

likely that the

Beach.

As \ in
"CHRONICLE" will publish

pending

by

course,

Traders Association will be held

taxes.

pay-as-

Virginia

which

Issue

proposed by the Joint
Congressional Committee should
be enforced? The answer is, prob¬

you-go war

will

include

Committee reports,

Security

Pnampt fa/ite S&uuce-

September 26-30

former years, the
a special Convention
of

texts

addresses

FOR BROKERS AND

DEALERS

To Western markets in

and

ANGELES

LOS

candid shots of
this important yearly event.

also

those in attendance at

numerous

DENVER

•

SALT

•

SPOKANE
LAKE CITY

ably, NO (unless—a Korean Dun¬
kirk or outright war with China,

Continued

on

page

27

Twice

Published

1

Weekly

COMMERCIAL

Drapers'

Reentered

Industrial

WILLIAM
25

B.

U.

Park

Patent

S.

Office

New York

Place,

I

COMPANY, Publishers

DANA

2-9570

to

8, N. Y.

ary

Spencer Trask & Co.
York Stock Exchange

4

Members New York Curb Exchange-

1950 by William
Company

50 Congress Street, Boston 8
Hubbard 2-8200

2-4300

Teletype—NY

Glens Falls

|

1-5
-

-

Worcester

3,

at- the

Y„

under

N.

and

Other

city news,
Offices:

Chicago 3,

111.

news,

the

office
Act

United

in

Territories

Pan-American

Union,

Dominion

Canada,

of.

at

of

New

March

States,

U.

8.

Members

and

$35.00

of

per

$38.00

year;

per

J. A. HOGLE & CO,

in

ESTABLISHED

year.

Countries, $42.00 per year.

Bank

South La Salle St.,
(Telephone: State 2-0613);

and

Note—On

the

rate

of

Record

—

Monthly,

made In

of

exchange,
New

'■

*

50

Broadway, New York 5

(Foreign postage extra.)

account

the

fluctuations

In

remittances for for¬

eign subscriptions and advertisements must
be

Stock Exchange

and other Principal Exchanges

Publications

Quotation

$25.00 per year.

1915

Members
New York

Other

bank clearings,

etc.).

135

post

1950

Thursday (general news and adrertising issue) and every Monday (com¬
plete statistical issue — market quotation
corporation

B. Dana

Subscription Rates

Every

-ecords,

Eng*

1879.

Other

state

Schenectady

SEIBERT, President

August

C.,

second-class matter Febru¬

as

Subscriptions

& Publisher

RIGGS, Business Manager

Thursday,

E.

Smith.

&

1942,

25,

York,
8,

9576

OERBERT D. SEIBERT, Editor

London,

Gardens,

Edwards

c/o

and

CHRONICLE

FINANCIAL

WILLIAM D.




Bought

Regular Feature*
As We See It

Possessions,

-

Toledo Edison

22

WILLIAM DANA

Chicago

Remington Arms

Advisers

21

REctor

-

Light

5

Eccles Offers Anti-Inflation

$12 billion
contemplated

preferred stocks

Albany

Puget Sound

14

*

Purchasing Agents Decry Immediate Controls

mere

a

*

year.

a

such economies

However,

be slow in materializing,

High Grade Public Utility and

HAnover

Liberty Products

21

NSTA

fate

Tax—Philip Cortney

But What Is the Real Remedy? (Boxed)

Reg.

Broad Street, New York

8
11

Copyright

25

Dumont

Laboratories "A"

Strength With Flexibility First Need of Economy, Says Council

interested in offerings of

New

6

.

_

Exchange

Forecasts Only Limited Rise in Food Prices

The

Members

•

_

Investment—George F. James

*

True,
there
should be some
"savings"—at the expense of the
Welfare State. Public housing al¬
ready

1

STREET, NEW YORK

5

T

6

land

are

WALL

Telephone: WHitehall 4-65S1

Advertisers—Roger W. Babson.

Indications of

welfarism.

We

99

'

Tighe__

Venture Capital in Overseas

democracy.

same

of

cash!

4

_

the New York Stock

on

the

Asia

of

plenty

but

use

we

and

masses"

of

always give

we
.

lot

peace

I

Round-Lot Trading

equipping,

the

.

.

YOUR

a

financial

your

words

are

training,
continuously
providing an army of up to one
million men (together with aux¬
iliary formations), plus the pop¬
ulations in front and behind them,
implies tremendous costs—to say
nothing of the policy line of the
Fair
Deal
(paraphrasing
its
fairest-haired wonder boy, Har¬
vard's
A.
Schlesinger, Jr.)
"to

Europe

we

Even

foreign

as

appalling.

be

and

burden

policing

Asia.

transporting

many) may be. The incompetence,
waste
and
corruption
involved
must

date

to

In addition, we

start

to

South

and

Indo-China.

and

and material,

pro¬

indefinite period,

an

that

reason

1949:

is

end in sight.

no

armaments

;

The

well

too,

the

preparedness

scale

colossal

a

8,

that

in

Financial

and

Dec.

few surprises to face.

a

Communists

have

permanent garrison.

/'Commercial

We still

reason.

send troops

ulars left off.

difference,

a

Locke.^

make

could

this office

At

few

"SELL

words

using Formosa

West,

us.
Later on, the guer¬
rillas will take up where the reg¬

however; this
time, the country will be turned
into

Chinese

a

matching

the
most signi¬

a

we

the

rearm-

1941;

Garrison State. With
ficant

As

of this

ing

were

the

have

may

friends, at our
bring us back to

will

we

meantime

the

the immediate

as

us

country,

expense,

in

against

large-

partial

where

Russians could
And what

the

rearm-

in g

Palyl

field;

appease¬

scale

Dr. Melchior

the

" volunteer" army
arrives, too? Indications are that
Moscow is driving China into War

(no

1

should

Korea

—'Theron W.

to

(communist)

the

hope),

North

ours?

new

compromise

ment,

least outgun the

at

imind.

4

—George F. Shaskan, Jr., and A. Wilfred May
j | i »
i" I
Intangible Factors in Public Utility Analysis

supply them profusely.

with Russia is

more

will

in

if
a

difference

Analysis of Wartime Behavior of the Securities Market

capable of putting 500,000 men

war.

the most of it.

out

they

force,

be

And he makes

Since

arrive

the Yanks

in

or

assume

But has he no reserves to

enemy.

Now,

he calls it

soon

front

outnumber

the
of

over

North,

as

as

the

at

to

little

3

OBSOLETES"

3

.

you

optimism,

appears

LITTLE WORDS
The

more

inexhaustible

that

President

Cover

Peace Stocks in War Markets—Walter L. Gutman

Washington

not intend

THREE

Slichter

H.

My European Trip in 1950—Robert H. Otto

inflationary momentum.
Garrison

Cover

—Melchior Palyi

outlays cannot be offset with additional
Contends Welfare State will have to give way to Gar¬
armament

State, and holds, despite controls, there will be

rison

AND COMPANY

Lambourne.j

Economics of "Little Pearl Harbor"—Short-Term Outlook

Looks for

•

W.

The American Economy Now and Its
Capacity for Growth

Asserting large scale rearming will bring nation back to where
.

Page

Investment Policy Under Current Conditions

By MELCHIOR PALYI

,

llCHTMSlfin

B. S.

Article* and New*

York

funds.

Telephone WHitehall 3-6700
Teletype NY 1-1856
■

•

4

The Commercial and Financial Chronicle

(432)

.

.

Thursday, August 3, 1950

.

European Businessman More

And

all Western

impressions of

recent trip throughout

a

the

in Europe and
Says European
Payments Union is aiding in bringing solution of convertible
currency problem, and black markets have been largely elimi¬
nated. Finds general lack of war fear among people and grow¬
ing confidence on part of businessmen. Sees opportunity to
promote American advertising methods in Europe.
Europe.

Reports general

recovery

is

temerity

human
how

on

It

businessmen.
of

live, how tiiey
feel, what
they are buy¬

the

outlook is.

ambassador,

One

ject interest¬

ing

Robert

of

ail

to

In

H. Octo

country

Denmark—a

coffee,

rations

other items,

which

and

sugar

many

but particularly but¬

even

in

ject
by

80-year-old
restaurant. I doubt if this can be
s

k

Davidsen's

e r

en

I

A l'ew

asked

,

,

ket declines have discounted unfavorable
prospects.
corporations

days

in

them

My

integrate

felt

central

that

from

thing

that

the

the East,

sensible

The

of

do

would

be

to

the most
France could

all eating
well but I would not say cheaply,
are

in

terest

life, for just before

we

the

ceilings were taken
off restaurant prices. It was amaz¬
ing how quickly imported cheese,
and

meat

peared
is

on

other

their

menus.

in

great contrast

a

countries.

tween
courses

$1.50.

ap¬

There still
prices be¬

meal

A

of

four

might

Sweden

in

items

scarce

cost

equally good one in
Brussels—$4 to $5. But let's cover
living costs as we discuss indi¬
An

war

talk.

remain

next

day,

high time to forget old hales

build their economy westernwise.
They appreciated the gesture on the part of France.
The

specifically brought up
Admittedly, there was an

by

Otto

Mr.

before

Export
Advertising
Association,
York City, July 27, 1950.

the'

New

implication

As

The

I

men

would

being
talked
know, it has be-

you

fact

a

be

since

I

talked

left

to

of

one

and
over

are

and

build¬

the

that

did

year.

Europeans

can

more

dom and taste some of its desserts.

There

be

worked

be

'

J

Korean

.„

Thn

Pavmontc

2p1v
hi

TTra-r.

confident-

Ac

it

k"

n

k

nn

°£e businessman
oenmarK:
it s

in

playing tennis alone—batting
just

where

works

it

up

teaches

will

fine

a

bounce.

sweat

but

you

"

their inferior

merchandise in

market.

clearly shown by the

This

countries

a

buy

ton
3)0
S5

ior
for

a

fair

a

S

rails

buying to

Private Wires

•

Home Officer Atlanta




fundamental philosophical arguments. What is the real value
of any inventory, how much of it
can
anybody physically count,
what is an expense, what is a

has to be

•

business

booming

are

in

as

the

associates in

our

doing the biggest vol-

histories

of

go_back 100 years!,

,.

being

;

them
..

.

publication
available
until

■

producer,

the
has tno

January,

Continued

on

,,,

Sweden,

voluntarily

Holland

^

of

as

great paper

Ip

history—

two

•J?. b?arkets such
is a

space
is
tioned.

most

evidenced

of business in their

Which

Phone LD-159

be

not

am

accounting

arguments

periodicals

accounting

on

powerful minded accounting
who can argue with the

a

in

many

cases,

seem

;ra-

largest
space

T

worth

~

u

i_

,

j

porate
nates

Professional foot-

stuff compared to cor-

What

accounting.

me

hidden

fasci-

about many stocks is the

which

score

there.

But

even

on

I

know

is

the simplified

reports it is obvious that corpora-

tions do not do too badly during
Total cash flow of U. S. Steel

war.

in

1941

million

$234

was

and

in

1942 rt was $221 million. But reported after all charges it was $116
million in 1941 and dropped to $72
million in 1942.
Survival of Weil-Run Corporations

,

Having the faith that I have in

~

ch^a™ l££eadJ£g
cftase 0 ,?f
S-t*

for

"two"
u

the

ability of well-run corpora¬
tions to survive war, I cannot get

O) *be difference be- frightened (as an investor) when
tween so called war and peace war comes, and this is probably a
stocks is often much less than big mistake. Even if I am fundathe market has thought. Suppose mentally correct (and there is alcivilian automotive production is ways the haunting possibility of
reasons-

cut

five

to

million

this is

year,

economists
added

of

is

automotive

been

forecasting
this

of

top

wartime

Declines

next

which

had

On

anyway.

vehicles

high level and

a

about the level

will

be

production.

(2)

'

have

25%

to

40%

...

0n

stocks attractive
long-term
basis.
It
has

a

ably

near

term

back to

the

areas

central

Monsanto

or

or respect-

of their long-

tendencies.
Dow

at

Buying
55, Radio at

15? Commercial Credit at 45 could
not

be

else

it may prove to have been.

.

called

reckless

whatever

error)

security values can be deperiods of time
by
people
who
are
incorrect,
Eventually if you are right, you
come
out
all right,
but having
run
cross
country when I was
young I have a somewhat dubi¬
termined for long

ous

toward that phrase
long run."
However I don't
any other solution than to run

attitude

"the
see

with

those

legs

have

you

been

given.
One
no

factor

we

experience

none

of

us

has

America

war.

Americans have

with, and which
faced, is losing a
has always been

taxes vktori'oV.s'7nlhe"7nd,"and"stitis-

We haV/ a" been

great degree,

unfortunately because figuring taxes is tedius work and it can

tically speaking, that is not a good
thing

Fnsland

Fven

has

lost

^ they Tost al taportlnt

onfe

easily prove useless under the against Us in 1783
Everyone can
swift circumstances of war.
My now see that there has been ah
experience in war is that it is
amazing amount of mismanageenormously stimulating to busi- ment in the Korean affair. The
so

ness activity and that someone
Sets the money. While the large

corporations
interested in
„

nlarpd t

we

in Wall Street

are

are

not particularly

benefit immediate!v

Jel1 Placed to benefit immediately
from war, they

are sure

large share of the

1951. ^ taxes; do'

page

government and persuade it to ac-

because of their in-

me

h^hlfin I say
r°
be able to

and
and

meal

by the fact that
Europe

,.

$1.50,

beautiful ceramic for $1.50.

Consumer

and

In

able

TnPnfh!r/°v 3 $2'5° COt~

countries is

ume

be

may

a wonderful dinner for

sh.Yt

buy

you

is

uneven ratio

between costs of certain items.
some

one

are

ball is kid

oils,

_

competitive

a

knows, and
usually for-

never

cept his views.

W?i ^ ?er.tainly be hard put to brought them
sell
a

of

unsophisti-

gets,

made many peace

Many local manufacturers today

BONDS, STOCKS, COMMODITIES

investor

The

Revenue

out

were

Peace Stocks Commended

*■

R

mnnpv

them

the sophisticated

that

the minions of

Internal

nickel.

suddenly and decisively changed,
I
still have a good
investment,

~

tor trade and

arm

lvIxn^Tonn+^2}

tition

^VESTMENT stchklTlfSs &

cated

of

officer

doubt

no

dollar earnings in Western
Europe.

+

OF

our

talking

plugged

stock. I want to feel that if
pattern of the war becomes

have been and still do

to play tennis
because you have no real
compe-

DISTRIBUTORS

in

is

,

will

war

shot in the

a

This

UNDERWRITERS AND

have

the

European Payments Union.

The

ing

Exchange and Other Leading Exchanges

of

Bureau

a war

to¬

also talk of converti-

was

rnu

never

BANKERS

officers

deeply the
of the financial
large companies

energy

no

can

Currency Convertibility

expressed

INVESTMENT

ability and

This is because

even more

com-

know from experience that I

multilateral

a

easily

have

sig-

ward.

Europe

physi¬

earnings.

as

I appreciate

Steels,

now

the

cally feel the advantages of free¬

show

In taking action in the seecurity
a period of excepone

I

investment?
If
these
guided either by a sense of humil- capital
the ity or a sense of genius. Since I problems were simple there would

most

basis is the next essential that

like

BROKERS OF

win

was preva-

war.

than I had then

faith

more

in the ability of large corporations
to collect cash, whatever they may

swiftly,

won

quite

tionally swift change

it

the ball against a wall and know¬

!

won,

not

down

bring back
sophisticated analysis of

genius I am inclined to be published every month.
The best accountants gravitate
cautious and buy only those stocks
1 will be glad to own if I have to. to the large corporations. The
quantitative Suppose I buy (or advise buying) higher taxes go the more valuable

of

on

he

settles

during the last

even

conquered

trinsic values. The war has spotto be blown to bits tomorrow or
lighted for more people those valnext year.
uable qualities of earnings and
It is
my
impression that the course, would be the freeing of dividend
paying power which
reaction to the Korean invasion the pound sterling, which could
many °f us have been talking
happen faster than anticipated be- at>out for years. In this respect
has brightened Europe's outlook
cause of: (1) American
prosperity, the war is yielding a mild bybecause it has shown that the U.
(2) increased purchasing of raw Product of positive value. It is not
S. is willing to back up some of material in the
sterling area at a g°od thin£ to have large masses
favorable prices, (3) sustained re- of securities sell well under their
its promises with action.
Conditions have improved rap¬ covery abroad and (4) success of economic value.
of

really

war

more

lent

war

bility——that it might become a
realty in Belgium at any time. The
biggest step in this direction, of

throughout most

the

income accounts which

markets during

Europe,

felt

the

removal

restrictions '

}

.

the

Pletely- The Napoleonic wars
ful1 of swift changes.

continually

about.
come

for

Members New York Stock

of

Hitler

swift.

leon, when he
but

European Payments Union

was

nesses,

idly

the

often finds that
longer than he

out

conquered the whole of the effective Mediterranean World in a
few years. This was an example
of successful swift warfare. Napo-

German

and

those countries next door

ing homes, investing their own
capital,
rebuilding
their
busi¬

this
address

and

in Corporate

and strings out it will

the

was

mentioned
business conferences,

that Mrs. Otto talked with and

vidual countries.
♦An

turns

remarkably
war.

Strength

If

the

brokerage house partner,

aggressor

war

tern

businessmen frankly stated that it

working on a long-term
with possibly one or two excep¬ basis—something they would not
do if they felt they were all going
tions. Even England has new in¬
arrived

of

Increases

'

'

and the tough job

the

.

small fingernail.

Potential

of

weeks—

period

do

any

most'

five

will

during the

even

Germany,
thereby
naturally France in a few months but the
strengthening their economies.
entire
pattern
and
implication
It was interesting to hear the changed a year later when he atsame
opinion expressed by the tacked Russia. One can cite many
other side.
When we arrived in examples — Alexander the Great

an

if you

Europeans today

well

thought, but the changes in pat-

with

cooperate

in

vacation

companies

the

Commu-

conquered

Korea
the

average

Eu-

because

pressure

wartime

The

swift.

be

have

about

it concerned the future of their nificant steps yet taken
by
equalled anywhere in the States. children. In fact, we would need European Marshall Plan Council
One amusing item
is a shrimp a Children's Home if we had on the road to a freer, more rasandwich consisting of 55, 100 or brought back all the children our tionally integrated European marfriends
tried
to
wish ket. Of course, it is only a step,
150 shrimps.
This may sound as many

your

is to

War

nists

South

to

toward

and post¬

used to.

to get

us

Frankfurt

spoke with

would need a loaf of bread upon us.
but as many of you know, their
We felt a confidence
little shrimps are no larger than above mere talk. People

attitude

were

They

contrast between prewar

,

paid to do

Germans,

Maintains
large share of increased money

seemingly is too fantastic for

war

markets is based partly on
All, thought that the intention of

plan.

never

the

to get

sure

what
4

the

are

supply in time. Concludes

Paris

^

of

with

concrete

by

ter, yet Denmark is the largest
underlying feeling of fear about
producer of butter in Europe!
Strangely
enough,
this
Take a look at this menu. There Russia.
are
172 sandwiches available in was expressed rather by the wom¬
O

in

isolation¬

lunch

who said it

rope.

was

me.

re¬

only enthusiastic, but thought
was a bright light;
something

not

this

the "big bear," unless the sub¬

to

had

,

business

composite

little

Market analyst advocates purchase of peace stocks since
many
companies' cuts in civilian production will be more than made
up for by armament orders; and their already-registered mar¬

with the exception of one French-

as

very

I

,,

man,

war was never

in any of our

Let's start

us.

with

fact,

heard

examples:

thought

Little War Talk

sub¬

a

this

hand

Co.,

Members, New York Stock Exchange

he

war,

that
goes

diminishing

Two

.,

is

food,

significant

Americans.

measure!

to

on

By WALTER K. GUTMAN
Market Letter Writer, Goodbody &

Belgian, six Frenchmen and two

a

and

even

the

since

optimism

proposed,

well as other gov¬
officials, just for good

ernment

safest

start

We

of

with nine*business executives; one

distributors,
by storekeepers, newspaper edi¬
tors, salesmen, taxi drivers and
managers

your

waiters.

ground

a

time

all

after the Schumann plan had been

expressed

viewpoints

ing and main¬
ly, what their
The

This is

think

with

ism.

homes while I interviewed

and in

side,

people

is

hand

part

my

first

newed

As I indicated, these will be our
of
talking to you about Europe is impressions of the people who
tremendous,
especially when
so make up your market. These im¬
have
been
gathered
many of you
have been abroad pressions
through two pairs of eyes. As sec¬
recently.
But
I
retary and travel companion, my
would
like
wife talked with people in stores
to discuss the

The

I

showing confidence.

growing opiinnsm, with exception of Spain.

a

other

are

reassuring
you who
recently visited Europe, were im¬
pressed by the change in attitude
of the European businessman. For

President, Robert Otto & Co., Inc., International Advertising
s

there

trends.

By ROBERT II. OTTO*

Mr. Otto recounts h

Peace Stocks in Wai Markets

Confident

My European Trip in 1950

money

to get a
in time,

not put ah absolute
33 ceiling on" earnings a good many

questions

are:

(1)

will

we

learn

lessons, and (2) does the hand-

writing

on

the wall threaten

a

real

tragedy, or just a sobering experLi
ence for us if we do not learn? 1 do
nQt thihk

wg

wm lea-rn the lesson#

Individuals will, by the thousands,
but not the people at the controls,

ft will not be possible for the
'

*

Continued

on

page

16

Volume 172

Number 4930

.

The Commercial and Financial Chronicle

.

.

Forecasts

Only Limited

Steel Production

The

Rise in Food Prices

Electric Output

Analysis of Waitime Behavior
Of the Securities Maiket

Carloadings
Retail Trade

State of Trade

The

of Business

Food Price Index

and

Auto Production

Industry

J
the return of

plants to capacity operation sched¬
ules last week, total industrial production for the nation reflected
some slight increase.
While total output remained greatly above
more

the

level for the 1949 comparable week, initial and continued
claims for unemployment insurance turned
slightly downward.
Steel

ingot production

past week

as

practically without

was

result of vacations with

a

change

the

slight recession

some

By GEORGE F. SHASKAN, Jr., and A. WILFRED MAY

New

Business Failures

L.
With

current

"Monthly Review
Conditions," published
by the Federal Reserve Bank of

Commodity Price Index

as

York, analyzes the com¬
modity
price
situation of
the
Korean crisis, and while noting
that

there

has

been

PART IV

Study of securities price action during Korean crisis shows out¬
break of hostilities followed by sharp and widespread drop in
common stocks.
Fixed-interest and preferred issues, particularly high-grades, resisted much better than equities. Partial
recovery noted.
Comparison with post-Pearl Harbor market
movements shows interesting similarities and disparities, and
again illustrates difficulty of uncritically using past performance
as
pattern for current investment programming.

substantial

rises, particularly in food prices,
since

the

outbreak

of

hostilities,
it is argued that in view of heavy
farm
surpluses
and
carryovers
there is no ground for a pro¬
increase

nounced

prices

in

in

basic

immediate

the

food

future.

According to the article:

.

well in automotive output. On the other hand electric
production
the past week attained a new historical high record for the in¬

"Farm products, which are gen¬
erally very responsive to changes

dustry.

in

In

i

the

da.vs

ahead

just

the

steel

industry

will

be

pressed

further to meet the extraordinary demands now being made upon
its present capacity and ability to produce steel.
The nation's railroads last Friday adopted a drastic carbuild-

ing

they believe is required to prevent a serious trans¬
portation bottleneck. It's big enough to drain steel from other in¬
program

dustries.
At

special

meeting called in Chicago by the Association
Railroads, presidents and other top officials repre¬
senting nearly all the country's 132 major lines agreed to a pro¬
a

of American

gram

calling for construction of about 122,000

new

freight

cars.

supply and demand conditions,
undoubtedly would
have
risen
further

large

had

it

stocks

been

not

of

most

for

basic

the

farm

products, which preclude the de¬
velopment of any shortages in the
near future.
This is true despite
the fact that the outlook generally
is for smaller production this year
in

wheat

of

reductions

i

•

•

.

(This

-i

'

is

articles

and

because

number

of

cars

would

*

Intensified

before

efforts

of

require nearly 2,500,000 tons of

$670,000,000.

build

to

consumers

allocations apply
national metalworking

inventories

steel

getting them nowhere,
says "Steel,"
magazine this week. The
mills jammed with orders, are turning away tonnage left to right.
They are moving slowly on future commitments pending clarifi¬
cation of defense program plans. Some producers' order accept¬
ances
do not go beyond October, a month that largely will be
given over to handling third quarter carryover. Others are not
booking even that far ahead. And the few mills that have set
up schedules
over
remainder of the year on certain products
warn revisions in quotas and deliveries may be necessary
before
autumn is far advanced.
Special clauses are being inserted in
contracts permitting cancellations and shipment delays in event
national emergency priorities make such necessary.
government

are

these

be

CCC-held

made

beginning to trickle through but it will be weeks before military
releases come out in volume, this trade magazine asserts.
Steelmakers
demands.

All

pushing facilities to the limit to meet current

are

signs

now

point to record-breaking production this

probably in excess of 95
likely averaging close to 100%.
year,

*

Consumer

quickening
Such
on

June
It

was

*

of

million

$550

during the

$3,503 million higher than a year ago.

CCC

cannot

agricultural

new

to

$3,761

million,

or

gain of $161 million in June and $1,262

a

million above June 30,

Business

failures in

*

*

June declined

17%

to

725, reaching the

They remained below prewar totals,
failing were only two-thirds as numerous as in

lowest level since July, 1949.

however; concerns

than

comparable month of 1939 and 1940. Dun's Failure Index,
which projects the monthly failure rate to an annual b^sis and
adjusts for seasonal fluctuations, declined to 32 failures per 10,000
concerns in business as against 36 in June a year ago and 70 in

the

the similar month in 1939.
Liabilities involved in June casualties totalled

$18,072,000, the
$10,000,000 below
1949's corresponding month.
Despite this decline, they bulked
larger than in any prewar June since 1936.
smallest volume in nearly two years and some

5%

Totaling 8,861, new business incorporations during the month
of June were above the level of the preceding year for the ninth
consecutive month. They compared with 7,260 in June last year,

showed a drop of 3.9% from the 9,216
Eight of the 48 states reported a smaller num-

increase of 22.1%, but

recorded in May.

stor-

above

the

current

commodities

sup¬

a

by the

commodity
plus a reasonable carrying charge.'
The market prices for most of the
owned

.

Continued

on

page

27

! ' "f* ■ I '■

I

>

<

'

'

or

more,

than

more

Only

are

shown

shipbuilding,

in Table'

and

sugar,

woolen—enjoyed
a
during
this
three -

rise
wetK

interval.

Nine other groups

showed

price

resistance,

but did not rise.

These lat¬

included

ter

coal, leather,
meat-packing,
nonferrous

metals, rails, rail equip¬
A. Wilfred May
ment, shipping, shoes and
soap. Security groups suf¬
fering the sharpest declines—more than half of the securities in
the group falling by over 20%—were
building materials, motors,
gold mining and radio-electronics.
Geo. F. Shaskan, Jr.

except cotton, are still
the
minimum
levels
at

below

seen

in the variations in

that

have

individual

price

taken

place

foodstuffs.

Price

increases for the major grains, of
which large surpluses are held in

have

storage,

been

relatively

Winter wheat has risen 5%

since June 23, corn and rye have
advanced 3%, while barley

each

movement

Many Securities Recovered Rapidly
Despite the severity of this initial sell-off which carried the
Dow, Jones Industrials from 224 on June 23 to 197 three weeks
later—a decline of
to

restraining influence that
the large farm surpluses are hav¬
ing on price rises can more readily
increases

sharp downward

following the initiation of
hostilities reflected the traditional mad scramble to get into cash
in a period of
confusion; disregarding the potential increase in
inflation, industrial activity and even possibly of increasing prof¬
its which a full-scale rearmament program might
bring to certain
industries. Thus even expected "war babies" such as air trans¬
port, petroleum and steels, sold off sharply in this early period.

his

recover

month

"The

be

This

Gov¬

ernment,

after

some

12%—it did not take long for the investor

"wartime

the

Korean

sea-legs."

By

outbreak,

the

July

26,

Dow,

about

or

one

Jones

Industrial
average had recovered to 202 and as this article goes to press
had further climbed to 212, thus gaining back more than half of
the ground lost.
Fifteen of 52 industry groups exceeded their
pre-Korean levels by July 26 and 11 others were off only very
slightly by this date. Aircraft, coal, railroads, shipbuilding and
woolen showed a net gain of more than 10% in this first month
of hostilities.

,

Many securities, of course, did not share in this comeback.
Building materials, finance and gold mining companies were down
approximately 25% after one month of shooting, and five other
groups—confectionery, drugs, household furnishings, utilities and

and oats are down 1% and 8%,
respectively. This year's harvest
of wheat, plus the amount avail¬
able from previous crops (a third

Continued

on

14

page

above

the
1949
carryover), are
twice the annual domestic
consumption of 700 million bush¬

about

to

meet

from

more

than

WE ARE PLEASED TO

enough

estimated

season,

225

million

to

year

than
to

last

NOW

ASSOCIATED

OUR

WITH

FIRM

greater

and

IS

million

are

appear

both

meet

be

250

bushels. Rye supplies
sufficient

to

ANNOUNCE THAT

MR. LOUIS H. RAND

export demands for the

present

this

*

*

1.

or an

basic

or

commodity at less

els and will be

*

any

port price for such

small.

1949.
*

'sell

commodity

nonbasic

for

Instalment-type credit increased by $395 million in June to a
total of $12,063 million. Amounts owed on automobiles climbed

•

~

legal restrictions on sales
changed by Congress. The

present law.

*

increase

an

can

market

which they can be sold under the

credit outstanding rose to a record $19,627 million

This

was

operations

in June according to the Federal Reserve Board.

pace

30.

with

tons,

loans to purchase retail goods were extended at a

consumer

month.

million

the

to

unless
are

aoie

Impact of new military demands is not expected to be notice¬
ably heavier until fall.
Armament and munitions orders are

commodities

available

{ 1 '

l

Of 52 industry groups,
only five—aircraft, cotton,

year's domestic consumption and
exports. However, substantial
quantities of these stocks are held

price increases, espe¬
cially for wheat and corn, before

»

.

I.)

conditions.
Carryovers
previous crops will help
provide more than ample supplies

further

-

down

ments

from

for

.

31
stocks
moved upward during this
period. (These price move¬

unfavorable

by the Commodity Credit Corpo¬
ration
in
its
price-support in¬
ventories, and there is still room

.

off 11%

21%.

of most commodities to meet this

*

*

l ■

oo9

and

acreage

of

'

148

wun

cotton, because
ordered
by the Department of Agriculture
in

«

•

the fourth instalment in a series of
the facts and significance of the

on

performance of security prices during wartime)

in

and

k

'

Following the military outbreak in Korea, common stock
prices, as we know, suffered a widespread and sharp decline. The
record shows that by July
13, or three weeks after the shooting
began, 907 of 960 issues listed on the "Big Board" were lower—

weather
That

steel and would cost around

5

(433)

domestic

and

export needs. The corn crop
(as it now appears) is expected

to exceed 3 billion

bushels, which
is
about
21%
larger than the
amount recommended by the De¬
partment of Agriculture prior to

Cowen

&

Company

MEMBERS NEW YORK STOCK EXCHANGE AND OTHER

EXCHANGES;

NEW YORK 5r

54 PINE STREET

N. Y.

the current emergency,

-TT

under an
allotment program aimed
at cutting down the existing sur¬
plus. This will probably be the
sixth largest corn crop of record
and, taken in conjunction with the
already
large
carryover
(10%
more
than
last
year's
record
high), would indicate that ade¬
quate supplies will be available
acreage

Announcing

a

Direct Open Wire to

AKIN-LAMBERT CO., INC.
Los Angeles 14, California

639 South Spring Street,

Teletypes LA 23, LA 24

Telephone Vandike 1071

feed

as

G. A. Saxton & Co., Inc.
NY 1-609

Teletype

70 PINE STREET, NEW
Other

YORK 5
Private Wires

PHILADELPHIA

Hetidrieks

&

Eastwood,




WHitehall 4-4970
'

•

SAN

Inc.

<

.

for

Co.,

Inc.

projected

are

pleased to

announce

that

Mr. Bernard Weissman
has been admitted

as a

general partner..

high

level of livestock

population. This
year's oat crop should also prove
to be a better-than-average crop
and will further supplement feed

The

supplies.
FRANCISCO

McAndrew it

the

We

on
;

I

amount

is only

hand
'

•

of barley
four-fifths r of the
■"!
!•'.

r *,

Continued

•

on

■

page

43

SI EG EL
39
■4

;•

Broadway*-*

&

*

Hn,DIgby 4-2370

CO.
York 6, N1. Y.
-

mm

6

(434)

The Commercial and Financial Chronicle

offering possibilities of expansion,
a
utility can grow and grow and
continue to grow and expand its

Intangible Factors in

services,

Public Utility Analysis
BY THERON W.

where

.

those

able,

Utility Analyst, Goodhody & Co.
Members, New York Stock Exchanje

hard

If

istics

the

in

Compare

day

curity—in fact, I will go
to say that I believe they

you,

namely,

as

seriously,

what

factors

other

date

m

e

sheets
be

t

n

Why does

should

is it

analysis

tomary

t

rep o r

Theron

W.

Locke

earnings and
changes in balance sheet ratios of
a

to see how much

company

im¬

provement is being indicated, and
then it is customary to make com¬
parisons between companies. Of¬
ten

will

we

make up a list of ten

twenty

or

companies

their

pare

earnings

balance sheet

think

that I

be

may

parisons
;

and

talk before

my

my

belief

comparative
method
is not sufficient as a basis

of comparative
it

com¬

this

alone

analysis.

of

In fact,

show you that
to make com¬

can

unwise

earnings

heet ratios

without

balance

or

at

the

same

time

giving some explanation con¬
cerning other factors affecting in¬
dividual

companies

which

may
have to be considered before
you
pass judgment as to the relative

attractiveness of

one

company

as

compared with another.
I

believe that the so-called in¬

tangible

factors

♦A lecture
i»»

a

series

given

of

17

which

on
on

I

am

to

July 19th, the fifth
Securities Analysis

.sponsored
<

urities

jointly by the New York SeIndustry and the University of

Vermont's

balance

sheet

and

value

from

alone, how simple it would

and have a book value
$30 a share and good balance
sheet
ratios,
why
aren't
they
of

worth

the

Department of Commerce and

Economics.

You

have

the

earnings, dividend, and book
value, but why do they sell far
apart in price?
This is the prob¬
lem of analysis.
It is one that
everybody
has
been
trying
to
same

solve

for

good

a

many

years.

There isn't any easy answer. There

only the problem of gradually
understanding
the
factors ;that
make

SECURITIES

higher

than

the

It is my belief that in the an¬
alysis of public utilities the in¬
tangible factors play a greater
part than earnings trends or pub¬
lished reports or published
fig¬

These

ures.

number

intangible

about

five.

In

factors
order

ritory

first.

Regulation

the

and

Regulatory Climate second. Third
would be the Federal

competition
served.

municipal

or

the

territory

Fourth, Revenue charac¬

teristics,
from

in

How

large

industrial

are revenues

customers?

earnings derived?

are

would

be

management is

it

How

The

Management.

fifth

I

place

because

management fifth

while

extremely impor¬

has

to work
factors
which

with

these
there.

are

Taking the territory, the regula¬
tory climate, Federal or municipal
competition, and revenue charac¬
teristics, what can management do
with them?
In addition to these I would in¬

503 OLIVE

STREET

clude

sometpertinent financial

tios, and

St. Louis LMo.

some

intangible,

ra¬

special factors not

generally used,

which

partly

are

partly

published

in¬

Now, as to the first factor, the
territory, that is the beginning and
end

TELEPHONE:

GARFIELD

TELETYPE:

0514

SL-80

of

it has

a

public utility.

to work

with.

somewhere else like
tors and establish

doesn't

do

well

a

new

of

erts

99

WALL

STREET

NEW YORK 5, N. Y.

the

—

Refined

—

Liquid

des¬

like

York.

The

or

New

a

limiting factor, but: A

company can make a
little to start with in a

poor

and

it

tions.
has

a

do

may

territory

tory with




the

doesn't

it

serves.

tions than it

DIgby 4-2727

It

this territory, and all that it does
has to be done in the area which

tory,

Exports—Imports—Futures

if

is.

utility is here; it has to operate in
territory. Its franchise is for

That is

SUGAR

in

it

this

it

Raw

Arizona

climate

all

plant if it

where

can't go to California

LAMBORN & CO., Inc.

It is

It can't go
General Mo¬

with

can

in

lot

with

quite
in

good
a

If management

in

a

condi¬

good terri¬

less satisfactory

condi¬

is alert and

^good regulatory climate to

work in and if the

territory is

Among the topics relating to round lot trading on the New York
Stock Exchange covered by Mr.
Tighe are: (1) making and
reporting quotations; (2) long and short transactions and SEC
regulations affecting short sales; (3) types of customers'
orders to

I

one

buy and sell; (4) types of exchange members and
functions, and (5) round lot trading rules. Illustrates

as

we

think,

do

Consumer

ideal utility terri¬
which contains a fairly

large

city or a few good-sized
cities coupled with a large small
town

and

rural

area

suburban

or

Commonwealth Edison

area.

those

characteristics.

It

has

Chi¬

has

cago, plus an area of 5,000 square

miles in

will

market

procedures

fan-shaped

first

talk

as

about quota¬

tions: what they are and how they
how

and

are

they

changed in

are

auction market.

an

plain

the

one

We

all

brought

Company.

tory is

auction

terri¬

don't have

like

company

their

Next, we'll

ex¬

briefly

the

terms

"1

o n

g"

"s

h

outside

gas

system

both

Chicago

in

throughout its territory plus

extremely

an

capable

manage¬

t

r

o

As

have

I

said, territory is the
and end of a utility,

beginning
and

should

you

have

under¬

an

standing of the characteristics of
a
territory. For instance, down
South, there is another factor to
which
I
imagine
you
haven't
given much thought. For years
the South was a cotton-growing
Its

area.

wealth

indices

20

years

among
the lowest in
the U. S. In the depression of the
ago

were

30s, the wealth indices

were

ex¬

tremely low — the income taxes
paid per thousand of population,
the

number

thousand,
indices

of

that

all

well

those

measure

lay such

below

stress

the U.

S.

on

aver¬

age.

Naturally
showed

Rates

use.

high

local

the

utilities

low-customer

a

had

tendency to

a

naturally

power

be

ities have done
in

some

tion

better

where

area

has

result the util¬
there than

the

popula¬

increased

tremendously,
indicating that you do not have

to have

for

the

SEC's

better

in

You

company.

a

can

of

d

o r

the

effect

through

in

standard

the

an

of

the

short

living

in the

territory.

the

floor

other

necessary

population
treble

the

that

was

to

ward

load

to

of

necessary

this

give

area

economic
done

served

a

to double the
double

utility.

a

way

All

in the South

so-called

wealth.

or

to

back¬

develop

That

has

its

been

in part

through crop diver¬
by
teaching
cotton

sification,

that

growers

crop.

Also

tries

have

been

The

area.

wasn't

cotton

only

many

new

the

indus¬

brought into the

local

utilities

have

helped greatly in this work. The
utility analyst must keep up to
date

on

relative

changes

in

the

territories served by various util¬
ity companies as territorial im¬
provement

can

result

in

a

much

Stock

change

Now

to

as

Archie

Ex¬

national

Then

we'll

T.

Tigae

exchange.

discuss

the

various

more

detailed

per

and

GM

Next,

we'll

briefly the route of
account

an

executive

out-of-town
firm

until

office

it

is

review

order from

an

given by

client to

a

in,

of

say,

an

member

a

executed

the

on

Exchange floor and reported back
client.

to the

This

will

lead

into

us

types of floor brokers
York

the

six

the New

Stock

rules.

on

This will

Exchange. Then we
will explain the round-lot trading

highlight priority
of bids and offers, the "clearing"
of the floor as each

transaction

is

completed,

and the "matching"
competing brokers to win

among

Regulation

differs

in

every

state

in the Union.
four

states

mission
late

There are, I think,
without a state com¬

with
of

rates

the

power

to

regu¬

electric

companies,
namely, Iowa, Mississippi, Florida
and Texas.

Also

some

Continued

states have

page

25

who

want

to

sell

GM

at

or

customers want

more

share. It is possible that there
orders

these

at

sale

floor

to

low

the stock

cause

after

buy

40! Potential buyers
levels won't buy, of

as

until supply and

course,

forces

the

on

low

as

sale

demand

to

decline,

these

to

levels, if
they ever will. Similarly, potential
sellers at prices above 79%, say as
high as 120 dollars per share,
won't sell their stock until market

prices,

fluctuating

with demand
those
rent

in

and

accordance

supply, rises to

price levels above the
market

cur¬

price.

Anyone wanting to know the
current market picture—the pre¬
vailing quotation—in GM, would
not

need

to

know

all

of

the

bid

pos¬

prices from 79% down to 40. Nor

sible execution of their customers'

would he want to know all of the

lose in sales

orders.

We

involving the

will

auction

illustrate

market

customers to obtain
tion

these

procedures

better

execu¬

time their orders
And

for

now

entered.

were

highest

Quotations

the

the

lowest

ing at the time
as

last

the

sale

is

quote

We'll

79 %—a

was

prevail¬

General

use

example.

an

offer

re¬

l^tors
the

assume

transaction

to

up

120.

quote, that is, the
the bids and the

all

the offers

tells

him

practical

story

quickly

and

speedily. The

quote

79%-%

tells

that 100 shares of GM

anyone

be

bought at 79%
79%.

Note

or

that

in

can

be sold

can

voicing

or

quote, it is not necessary
repeat the full figure on the
a

offer side, 79%-%

Quotations consist of the highest
and

of

lowest of all

to

bid

prices from 79%

writing

first topic.

our

offer

The prevailing

at

prices than prevailed at the

means

price

the

is

79%.

If

the offer

offer

were

80% however, the quote would be
expressed or written 79%-80%.
Now
are

let's

the

ways,

how

see

changed.

There

first

of

quotations
are

which

is

three

by

a

100 shares effected by two

higher

brokers, one representing a
buyer, the other a seller. Imme¬

higher

diately after sale took place, let's
the highest bid is 79% and the

buy 100 GM at 79%. On the Ex-

of say

floor

say

lowest
100

offer

is

79%.

Each

is

bid

illustrate

or

offer.

change created

a

bid,

structed

lower

a

his

To

by

client

assume

a

account

a

in¬

executive

to

for

shares, the unit of trading in
1,100 of the 1,460-odd stocks

over

listed

the

on

New

York

means

that

ber firm
of

GM

a

customer of

wants

at

no

to

a

than

mem¬

79%

H. Hentz & Co.

dol¬
Members

lars per share. The offer price of
means that another custom¬
wants

less

to

than

be

sell

100

79%

shares

at,

share.

per

New

no

The

able

to

execute
a

them

*A

lecture

fourth

in

a

given

series

Chicago

at

New

seller is will¬

July 17, 1950, the

on

of

Markets

17

and

on

the

their

New

York

Operation

sponsored jointly by the New York Securit'e«=

,nd -°.'rv

and

the

Department

t-oujioin.es.

University of Ver¬
of
Commerce
&

York

Y.

Exchange
Exchange

Exchange,

Board

ol

Inc.
Trade

Orleans Cotton Exchange
And

N.

Exchange

Curb

Cotton

Commodity

ing to meet the buyer's 79% bid
price, or a buyer is willing to meet

Securities

Stock

York

New

holding these orders will

these prices until

York

New

79%
er

1856

79%

buy 100 shares

more

Established

Stock

Exchange. The bid price of

mont's

on

who

one

are

the time it is

clients

buy GM at 79
others at 79 Vs,
at 79, and perhaps at every y% or
y4 point down to 70 or 60 dollars

classifica¬

two

on

price.

firm

buy GM but at prices be¬

to

tions, time-in-force in the market,

explanations

member

prices higher than the prevailing
offer of 79%. Discussing the buy
side first, it is not at all unlikely
that

securities

types of orders with

not

Regulation of Rates.

quota¬

the

clients

or any

brokers

higher level of earnings.-

how

prevailing highest bid
price of 79%. Also, there are other

of

quested. Let's

It isn't

discuss

we

trading post on the exchange
Quite naturally, there are

low

on

same

improvement

to

the

are

want to

to

e r s

sell

public utility
get

prices
able

until

floor.

tremendous change

a

is

or

fers in this stock at its section of

the

on

increase in the popula¬

an

tion to have

offer

other

order

emphasis
short selling
rule and
its

through blackboard examples.
Finally, we will explain an im¬
portant facility, "stopping stock",
which often permits member firm

a

and

the

or

his

Both
their

particularly
"short,"
with

losing

wealth indices. As

bid

one

Before

or

some population, has had
tremendous improvement in its

until

tions

,"

the use
was low.
The area was regarded
by some as a backward region.
However, the South, even while
a

because

respective

price.

voicing

changed, let's illustrate
the complete picture in General
Motors, that is, other bids and of¬

per

wealth

people who

municipalities
were

automobiles

and

continue

quote changes.

the New York

ment.

brokers

and

and west of the

electric

the seller's 79% offer

execute

area south
city. It has natural, application in
Chicago plus a fine the execution

a

followed in executing orders.

number of

a

close to home

as

a

Power

a

good terri¬
better

or

prospects

was

formation.
MEMBERS
MIDWEST STOCK EXCHANGE

excellent

we

of

importance, I would put the Ter¬

other

Stix & Co

sell

one

other.

tant,

INVESTMENT

same?

that

favorable

and

is

today is to indicate

that

I

and

figures

ratios.

The purpose of
you

just take the

market

by

large

storage fields

regions where

and pay $2

d

e

the

Why doesn't it work that way?
If two companies each
earn
$3

com¬

parisons based
on

and

much

so

than

be!

today

make

value

If you could

determine
these

commands

market

earnings

securities.

one

one

in

other?

As you know,
f t is quite cus¬
to

as

for

that

more

of Public Util¬

ity

sell

stock

considered

in the

far

untility common
eight times earn¬
ings and another at sixteen? Why

s

balance

gas

the

are even

important than the pub¬
lished figures in the analysis of an
individual company's securities.

income

and

se¬

more

than the pub¬

lished

utility
so

its

a

tory with Nevada

a

served

with

storage capacity of 50 bil¬
lion cubic feet.

discuss today play a large part in

which

that

-

Merrill Lynch, Pierce, Fenner & Beane
Members of New York Stock Exchange

have

diversified small town
region in Michigan plus

large natural

with

I
appreciate
the
opportunity
given me to discuss with you to¬

subject

like
Power

V

By ARCHIE T. TIGHE*

Director, Executive Training School

territory that is

a

outside of Detroit and

areas

that great

Describes financial ratios in analysis of utilities.

analysis of

region

a

Consumers

rural

by proportion of industrial and domesticrevenues; and (5) quality of management.
Foresees further'
tremendous expansion of utilities, particularly in electric
power.

a.

much

ferent problem than it would

measured

tudents should consider

work
less

can

all
desert
or
part desert and
mountains, it has an entirely dif¬

and farm

final

unfavor¬

are

make

and

utility has

a

Contending intangible factors in analysis of public utility
securities are more important than published
figures of opera¬
tions, Mr. Locke lists among these factors: (1) territory in
which utility operates; (2) regulatory climate in such territory;
(3) Federal or municipal competition; (4) revenue character¬

the

factors

Thursday, August 3, 1950

..

Round-lot Trading on the
New York Stock Exchange

area

an

progress.

Public

as

in

management

a

very

LOCKE*

whereas

.

other

Cotton

Exchanges

Exchange Bldg.

NEW YORK 4, N. Y.
CHICAGO

DETROIT

GENEVA,

PITTSBURGH

SWITZERLAND

Number 4930

Volume 172

.

The Commercial and Financial Chronicle

.

.

all

change floor, this order would be,
voiced ab a *9% bid. The previous

sell

to

GM at

100

vious

From

Ahead

79%. The pre¬

79%-% would im¬
mediately be changed to 79%-%.
second

other bid
the sale price.

curs, no
at

trations in the

given,

just

would

offer remains

or

Using the illus¬

separate examples

the

have

buyer

seller

sold

his

at

stock

If you want to know what

senatorial campaign.
main

claim

to the

original 79%-%. The

would

bt

offered

-i

if

ue

first,

the

making

oner

had

quote

quote back to- the original 79%%.
The
nuote
would
not
be

changed

by

mained

ot.ner

whose

bidders

orders

the

at

sale

this, let's

if

sale

a

there

were

sells

of them.

one

mains

and the quote

third

Carlisle

in the

method

by which a
quote is changed is by the cancel¬
lation (withdrawal) of the exist¬
highest bid or lowest offer.
Using the 79%-% quote in this
example,
the
quote
would
be

that

asked what would

never

as

Why

as

vote-

a

to be

seem

shouldn't he

Ferguson, do

Taft; do

much of

have

a

been

you

you

think

think
you

are

as

make

a way

gullible public to get it and notwithstanding that the loss

of Taft in the Senate would be a distinct loss to the

people of the

country, Jumping Joe is in the race very confident he will win.

ing

•

if

changed

either

offerer

the

had

bidder

cancelled

assuming, of
der

the

his

order,

cancelled, the quote would
be changed to 79%-%. (These new

that there

assume

was

other buy and sell orders

any

would
in

revealed

or

until,

manner

any

tions

be voiced

not

quota¬

as

changed, each in turn

were

aspiring to the Presidency of

it

his

is

of

you

are,

for

the

course,

Jack

as

of the late

directions

he

power

were

the

seeks,

betterment

sort

same

of

of

power

the

which

likely

humility at least to wait until the

have the

then he will have

a

sense

of

inadequacy.

people

their

any

as

jealousies

thinks he

Not

can

so

other

aside

of about as selfish, self-centered and
group

to admire

under the sun.
a

But they

Barrymore; no

one

lay

of them

take her place.

with

the

politicians.

knock

man

becomes

big

so

or

so

him

off

the

for

privilege of serving

in his place.

If

Jumping Joe should by chance come to Washington, it matters
not to

bringing of "order out of chaos," this "stabilization,", was done by
was an accomplishment that brought Hill¬
man to be an associate of Roosevelt the
Great, of Felix Frankfurter,
Frances Perkins and the like and to place him in a position of life
or
death over American industry during World War II.
Kroll
aspires to take up where he left off. Undoubtedly when we get
Donald Nelson, Henry Kaiser and the rest of them back in Wash-,
ington as it appears we are about to do, Kroll expects to have the.
high place held by Sidney.

gangster outrages but it

think that the people of Ohio would, take offense

You would

at

man

a

Kroll's

of

exactly what they

him that he wouldn't have

type

may

meddling

in their affairs

the slightest idea of what it is

this

and

is

do.

Taft

expects to formally launch his campaign for reelection
He will not be able to put in the work he had planned to
do because of the Korean situation but he is a hound for punish-'

Aug. 14.

and he will get in more campaigning than his opponents
hope he will be able to. The smear artists are already busy on
ment

him, trying to pin responsibility for the Korean mess upon him.
This shows the amazing confidence which they have in their power
of propaganda.

Wasn't

it

Taft, they ask, who

Navy to make

ed to protect it.

there

would

stomach for

we

The facts

as

be

few months ago wanted the

the

Korean

course,

prove

we

Taft

has

very

the world,

military aid, to "contain" Communism.

But when

over

To this

he

end

advocated

that

him, said neither Formosa

our

in

that could.

strategic area.

and

This

Navy would protect Formosa.

was an

well

as

(it should be made

our

hooted at

little

his opposition, he could see no

ministration

in

intend¬

had

mess.

pouring out billions of dollars all

why Communism should not be "contained" in Asia

elsewhere.

word

that

that had this been done

over

not
our

of

are,

became committed to that

reason

a

showing around Formosa to

a

known in advance that

No

important to his country, that a mediocre man would not hesitate
to

"order out of chaos" out of the teeming mass with which they
work, "stabilized" the garment industry, much to the admiration
of many businessmen who don't like disorder of any kind.
This

in economic and

The theatre is made up

vain

It should be very offensive to decent people that a man of this
stripe should become so vocal in their affairs. Kroll's rise to power
has, like that of Sidney's, been through the browbeating of the
garment workers centered in lower Manhattan, where the English
language is honored more in the breach and where American tra¬
ditions are something not yet attained. Hillman and Kroll brought

a

a

buy order in the market at 79%
and a sell order at 79%.)
These
or

man

occupant dies or retires and even

or

were-

quotes

A

cupant will

79%

If the offer

79%-%.

will find this sort of attitude prevalent in

you

corporation but realizing that he is not as competent as the oc¬

Thus, if the 79% bids were
the
quote
would be
to

that

other walk of life.

any

cancelled,
changed

doubt

other bid¬

stock

offerer had been offering stock at

79%.

I

at

course, no

wanted

or

labor, for instance,

as

'

this about him

successor

whether

as

you

can

contribution to the country as he?"

He wants the job, thinks he has enough of

slightest.

with the

a

Undoubtedly this has never occurred to
Jumping Joe, but it is the characteristic of a
politician that it would not have deterred him

Bargeron

re¬

unchanged at 79%-%.

The

and

was

"Mr.

The other bidder

bid

ms

renews

family

large

question.

able

two

now

successful pol¬

asked:

illustrate

bidders at <9%. A seller
to

was

executed

there

assume

a

after

fair

offerers

or

To

price.

he

re¬

not

were

it takes to make

in Washington several weeks ago
giving several interviews to the
newspapermen to the effect that he could beat
Bob Taft
lying down, he suggested to the
Democratic
publicity men that they photo¬
graph him sitting in Taft's seat in the Senate,
"to show that I can hold it," he explained.
It is strange, or maybe the innate cour¬
tesy of the Washington correspondents, that

changing the

pnce,

his

He

79%-%, the buyer then buying at
79l/2

is

and

same

the

say

man

a

the

country'

getter he has tew equals.

the

seller

you

such

as

him

They call him Jumping Joe Ferguson, whose

fame

to

The quote would be changed back

the

of the News

itician you should give study to Bob Taft's opponent in the Ohio

79%
to

voting

his predecessor gained.

<9% in the quote 79%-%.

at

who

By CARLISLE BARGERON

quote

'

would just go along

saying it
Kroll, the Russian born immigrant,
Sidney Hillman is the leader of
the organized labor movement to
get rid of Taft. He, of course,
would tell Jumping Joe how to vote and it is not a
question with
about

method by which a

is changed is by a sale
(transaction; it, after the sale oc¬

He

When

Washington

quote,

The

about.

wants him to vote.

quote, 79%-% would ii\mediately
be changed to 79%-%. To illus¬
trate a change by a lower offer,
assume the client's instruction was

7

(435)

nor

The Ad¬

Korea

invitation for anybody to

was

move

When the Russians took the Administration at it*

moved

in

Korea, it

changed face overnight and de¬

cided to fight.

the highest of all bids or

became

the lowest of all

the offers.

Long and Short
.

Long

simple.
It
position

relatively

is

describes

This announcement is neither

customer's

a

immediately

his

after

an

offer to sell nor a solicitation of an offer to buy any of these

Debentures. The

offer is made only by the Prospectus.

to

order

In one of
our illustrations of quotations, we
said a client had given an order
buy stock is executed.

buy 100 GM at 79%.
As soon
his order was executed, this

to
as

described
be

order

an

until he

"even"

be

could

said

"even"

was

stock.

he
long

nor

after

again

3% Debentures, Series B Due 1975

before he

Dated

Interest

long stock.
another

If

client,

"even"

in

he

order

count executive to enter an

sell,

100 shares at the mar¬
When his order is ex¬

say,

ket short.

the

ecuted,

must

shares

100

Price 102.308% and accrued interest

:

be

someone

make delivery of the

1

in order

stock to

from

borrowed
to

payable February 1 and August 1 in New York City

a

stock, decides to sell it
would instruct his ac¬

given
short,
to

Due August 1, 1975

August 1, 1050

his

sold

he

System, Inc.

was

bought it, was long during the pe¬
riod
he
held
it,
and
became
"even"

The Columbia Gas

entered

long

GM—neither

in

He

short.

this

sell

to

it

Then

be
And, it would

long.

as

described

so

$90,000,000

in GM would

client's position

the

bought it.
This
definite obligation on
who

buyer

creates

a

seller to
his short
stock some day, in order to return
the stock he borrowed when he
the

back

buy

the

of

part

short

"cover"

or

\

Copies of the Prospectus may be obtained from only such of the undersigned as may legally offer
these Debentures in compliance with
securities laws of the respective States.
the

sold short.
Let

give you a practical ex¬

me

ample

long

of

short

and

both

make

share.

per

XYZ
shares.

decided

has

100

buy

to

to

enter

order

an

to

100 XYZ at the market.
At
the floor post, the broker "takes"
the 100 shares offered at 50. The
Buy

customer's

BLYTH & CO., INC.

position

is

Continued

now

on




long

page

30

GOLDMAN, SACHS & CO.

SALOMON BROS. &

HUTZLER

UNION SECURITIES CORPORATION

August 2, 1950.

HARRIMAN RIPLEY &

CO.

Incorporated

MERRILL LYNCH, PIERCE, FENNER &

KIDDER, PEABODY & CO.

instructs his account

He

executive

:

terms

The prevailing
quote is 49%-50. Illustrating long
first, let's say a client "even" in

$50

NAGROM.
STANLEY & CO.

which

easier tounderstand.
We'll use XYZ as
the stock and assume it's selling at
will

BEANE

SMITH, BARNEY & CO.
WERTHEIM & CO.

8

(436)

The Commercial and Financial Chronicle

to

work.

We have

Dealer-Broker Investment

marketing operation
Japan to New
Zealand across to Cape Town and

Overseas Investment

a

which extends from

By GEORGE F. JAMES*

around

Treasurer, Standard-Vacuum Oil Co.

Persian

back

just

south

of

Recommendations and Literature

the

It is understood that the

Gulf, including India and
Asia, and in happier

Holding considerations in investing abroad are not generically
at home, Mr. James finds American
foreign investment impeded by: (1) war and civil commotion,
along with instabil.ty of governments; (2) inconvertibility of
currencies; and (3) nationalistic xenophobic pressures. Says
excessive taxes and tax discriminations are problems as well

times, China. We also have sub¬
production in Indonesia,
and a big refinery in Palembang,

Cites

of

movements

Sumatra.
You

we

capital and devaluation risks.

IV

Point

has much value.

program

Advocates im¬

The

foreign investment profits.

on

topic, "considerations when

venture

capital looks at overseas
opportunities" is short but you
could
to

spend

good

a

many

may

Industry

is

been

not

do

with

extent

hour

if

half,

a

you

coveries

questions too.

Arabia,

The

about

looking

George F. James

at
op¬

factors

tive

which

investor

proposed

of

under

any

prospec¬

considers

investment:

on

any

prospective

profit and probable risk, and

the

weighed against the other.
Generically there is no difference.

to

to

which

marketing
in Japan and

gone

spend

to

only

was

get

back

Also
and

our

You

which

of

was

some

established

an

the

if

it

does

involve

large
going

com¬

pany,

of

committing those funds and
making the capital outlays neces¬

If, before the
already had a concession

Well, the first thing that had to
considered

be

outlook.

there,

will

you

mendous

amount

spend
to

a

tre¬

out

go

develop it again.
cipal

We did go back into China.

prin¬

that the oil industry
making substantial, post¬
foreign investments is a mat¬
reason

properties.

our

We rebuilt the big in¬

stallation at.

Shanghai and at Hong
laid out a number

Kong, and

vestors have weighed the possible

war

profits

ter

of

against
usual

an

the

venture

overseas

possible
is

answer

risks, the
they don't

that

make the investment. Department
of Commerce figures show that
for

1947

the

American
am

talking

ments

net

about
a

direct

portfolio

not investors

who

of

all

investment—I

about

not

foreign
foreign

increase

overseas

buy stock in

company

bonds

or

government

—

of

a

only

was

$666,000,000, and

a

1947

was

banner year compared with 1945

or

1946.
billion

a

like

seem

quite

.money,
but
beside
from
Marshall aid

other

dollars

lot

a

the

various

government-to-government

drop in

a

the Government

seen

1948.

on

somewhat

rea¬

extremely small
large bucket.

very

I have not

a

of

capital

and

financial measures, you will
lize that it is an

figures

It

was

better

probably
It

year.

is

estimated that the gross increase
American foreign investment
that year was in the
in

neighborhood

Of

$1%

would

the

continuity.
before

They
the

had

billion.
be

net

Of

some

there

course,

liquidation,

increase

was

substantially greater

but

probably

than

in

the

Certificates.

Comparative
in

table

of

and

war,

hoped to get back to a relatively
peaceful
world
again.
Because

able

the loss of market
position is hard
to regain, some risk is

there

justified to

keting

production

have

you

either

have

to

and

You

where

the

crude oil is found

or refine where
the markets are, and if the oil is
produced
in
foreign territories,

and not

considered
going to be

in

business,

should

we

or

back

go

Effect

War

lon

Profits

Excess

of

Leading

on

a

keep the business for

while.

What

did

we

imported into the United

usually do
decision—spent

what

was

in that sort of

you

than

more

a

the

minimum but less than the maxi¬
mum
we

would

we

if

we

were

going back into

were

tory with
One

Companies

sure

terri¬

a

sound political future.

a

factor that made

that

pic¬

but sold in foreign terri¬
ture look as if it was worthwhile
tories, it will be refined abroad,
was the fact that traditionally the
place or the other.
marketing profit of that area is
Despite all those factors which
high and is subject to low local
have
impelled the oil industry taxes, and so to the extent that the
into postwar
foreign investment, operation
proved
successful,
it
it

is

still

true

that

the

amount

has been spent in
foreign
ventures by the oil
industry since
the war is very

might
than

produce

the

profit

Stocks

mon

favored

table

a

invest¬

ment would receive in the United

by internal

financial

forecasting

planning

for

tation and

during

postwar

to United States taxes.
I

rehabili¬

expansion.

will

develop that tax point

little bit in

the

We had

lem

in

a

oil

previous.

Even

the

larger

figure

would

indicate that in comparison
the total investment
unds

able,

or

in

potential

comparison

American

The

nearest

tion is the oil
said

about

capital

is

of

the

not

thing to

an

excep¬

industry.

net

$666

American

that, and
gross

of

was

increase
1947. The

$454

the

increase

mil¬

estimate
in

1949

something around 80% came from
the oil industry. For some
reason,

therefore, that industry is invest¬
*A lecture *iven

fourth

in

Analysis
York

a

series

sponsored

on

of

July 17, 1950, the
17
on
Securities
by the New

jointly

Securities

Industry and the Uni¬
versity of Vermont's Department of Com¬
merce

Retarded

The

and Economics.




is

Indonesia

are three:
civil commotion and

or

noncontinuity
second

funds

wrecked.

principal factors
war

same

with

an

Study

semi-war economy, and

a

or

is

of

government;

a

In Indonesia

addi¬

we

had

Our

little bit

own

again, but planes

or

to

actual

ex¬

propriation.
I

should like to expand a little
of; those
in connection
with the background of

on

<each

my

com¬

can

illus¬

problems

more

pany, because I think I
trate

the

general

nesian

Republic

Dutch.

regulation

Despite the risks, the nec¬
investment was made to

essary

protect
sions.
that

Kirby

Railroad—An¬

Wall

49

Steel

for

Corporation—

dealers

only

L.

—

H.

Wall Street,

5, N. Y.

analysis of five stocks which

an

firm

the

considers

holding in

attractive

growing

a

war

Pennsylvania

for

Railroad

Analysis—Hayden,

econ¬

25

omy.

Broad

Stone

Street.

New

Co.

&

Co.,

York

4,

bulletin

on

N. Y.
Market

Reversal?—Analysis

of

Also

market developments with recom¬

available

Revere

Copper

is

a

and

Brass

Incor¬

porated.

Pennsylvania
Co.—Bulletin

Water

Power

&

Boenning & Co.,
Walnut Street, Philadelphia

1606

—

3, Pa.
Rayonier

Municipal Bonds During World
War

III

Bulletin

Francis

Moroney,
Beissner & Co., 812 Rusk Avenue,
Houston 2, Tex.
—

*. I

.

New

J

.

York's
Law

—

-

Riverside

the

over-the-counter

stocks used

Wisconsin

and
We

group

exploit
don't

decision

&

Co.—N

e w

Co.,

is

brief review

a

Corporations—Book¬

let of financial

thirty

Baird

industria

in the National

&

Co.,

briefs—Robert W.

110 East

Wisconsin

Avenue, Milwaukee 1, Wis.

Quo
tation Bureau Averages, both at
to yield and market performance
over

Wall

U. S. Thermo Control—Analysis
—Raymond
&
Co.,
148
State
Street, Boston 9. Mass.

industrial stocks used in the Dow-

five

Cement

Also available

showing an up-to-date com¬
parison between the thirty listed
and

1

if the Cement Industry

Over-the-counter Index—Book¬

Averages

Co.,

10 Port
Office Square, Boston 9, Mass.

let

Jones

Memorandum—

—

Pont &

analysis—Lerner

"Prudent

Analysis—Hemphill,

—

du

•

,.

New

I.

Street, New York 5, N. Y.

Noyes, Graham, Parsons & Co., 15
Broad Street, New York 5, N. Y.

Also
dum

available

is

a

memoran¬

Cutler-Hammer.

on

eleven-year period—Na
Quotation Bureau, Inc., 4'

an

tional

Front Street. New York 4, N
Pension
Stocks

—

Plans

and

Analytical

Y

EVENTS

brochure—

Stanley & Co., 2
Street, New York 5, N. Y.
Quarterly

COMING

Common

Morgan

Wall

Comparison

In

&

Meeds,
120
York 5, N. Y.

Investment

Field

and

Analysis for 19 Leading New York
City Bank Stocks—Laird, Bissell

Broadway,

Sept. 8, 1950

(New York City)

Security Traders Association of

New

New

New

York

annual

York Athletic

outing at the
Club, Travers

Island.
Allied

Stores Corp.—Memoran-- Sept. 8-9, 1950

the

know

came

out,

Continued

on

and

14

Pacific Northwest Group of the
Co.,'
Street, New York, N. Y. Investment Bankers Association

Wall

annual
Bendix Aviation

randum—Sutro

Corp.—Memo--

Bros.

.

&

yet

Co.,

Broadway, New York 5, N. Y.

tin

Inc.

Hill

—

Recent

Richards

Bui-

&

Co., 621
South Spring Street, Los Angeles
—

14, Calif.

.

>

how

because
page

35

15, 1950

* Sept.
i

i

.

Bullock's

meeting at Gearhart Hotel,
Gearhart-by-the-Sea, Ore.

120:
(Philadelphia, Pa.)

Bond Club of

Philadelphia Field
Day at the Manufacturers Coun¬
try Club.

/

Sept. 26-30, 1956 (Virginia Beach.
Va.l

Bullock's
enseller

Spring

Inc.—Analysis—Wag-,
National Security Traders As¬
Durst, Inc., 626 South sociation Annual Convention at
Street, Los Angeles 14, the Cavalier Hotel.
&

Calif.
Also
studies

available
of

Seattle

and

Gas

detailed

are

General

Controls

Co.

Company.

Central Vermont Public Service

Co.—Analysis—Ira
Ill

Haupt

&

Co.,
Broadway, New York 6, N. Y.

the

conces¬

(Portland, Ore.)

dum—Shearson, Hammill &

came

nonconvertibility of from Ceylon and knocked it down
convertibility, again.

limited

In 1946 it was very much of a
exchange risks and currency de¬
valuation; the third is all of the wreck, calling for a big -capital
At the time a civil war
nationalistic, xenophobic pressures outlay.
ranging from discriminatory tax¬ was going on between the Indo¬
ation

Son,

Hickey,

New York

prob¬

people dyna¬
mited it when they got out. The
Japs built it up and got it going
a

&

Rothschild & Co., 52

foreign

one

million

in direct investment in
oil industry
provided
lion of

the

funds,

to any great extent.

that

the

avail¬

with

capital

venture

going abroad

I

of

use

with

Pacific

Newport

of

the

in

Missouri

alysis—Vilas

fit from

a

Memoran¬

—

Street, New York 5, N. Y.

a

ground, and we would
investment
up
something, very
by
the
oil be; giving
companies below the potential are large
and very tangible if we
much the same as those
didn'-t go back, so there was addi¬
which
have
largely
inhibited
foreign tional pressure to return there.
investment, by other American On the other hand, the nature of
investors
potentially
investing that operation would involve the
abroad.
expenditure' of
a
great
deal
more
money.
We had a big re¬
Why Foreign Investment Is
finery there that was thoroughly
kept the

Steel

Rupe &

few minutes.

exactly the

tional factor.

The factors which have

2,

Building, Dallas 1. Tex.

invest¬

for

Star

dum—Dallas

marginal Pre¬
ferred Stocks which might bene¬
ment,

higher

similar

a

profit

substantially less States, and subject in effect only

than
the
amount
which
might
have been spent* the amount indi¬
cated for reinvestment

225

Co.,

Street, Chicago 4, III.

World

list of Com¬

a

,

year

in

II—Analysis—Eastman, Dil¬
& Co., 15 Broad Street, New

Also available is

one

which

&

Milwaukee

Street.

Mexican Railways — Analysis—
Pippin & Co., 208 South La Salle

Taxes

York 5, N. Y.

in

skimming operation to
invest only as much money as was
on

mar¬

refining.

refine

we

were

we

stay

whether

a

Between

to

necessary to

that position.

preserve

Co.—

Mason

Lone

N. Y.

Man"

thing

whether

was

Manufacturing

Hamilton

Memorandum—Loewi

common

ten

industries—Dreyfus
& Co., 50 Broadway, New York 4,

we

first

The

the

States

Two-thirds of
may

of

markets

invest¬

investments,

Trust

stocks

of millions of dollars.

in¬

after

San

Comparative Equity Earnings—

We

put parties out there to locate

On th\ marketing end, the

Co.,

Street,

Montgomery

to be.

proven

and

300

Co.—Mem¬

California

First

—

Francisco 4, Calif.

East

the

was

Farrel-Birmingham
orandum

valuation

a

On

has been

that

is

political mendations on
timing of
pur¬
that, I would say, we chases and sales and selections—
exploitation contract in Su¬
probably
guessed
rather
badly current bulletin and next 4 week¬
matra, even though it might not
look from every point of view, right at the start. We had no idea
ly issues for $1—Bondex Incor¬
that things would be as bad in a
like a
conservatively sound in¬
porated,
654
Madison
Avenue,
number
of
areas
as
they have New York 21, N. Y.
vestment,
knowing
the
oil
is

one

Figures indicate

of

as

Wis.

re-establish the business.

to

sary

available

can

exactly the problem that arose,

Bonds—

appraisal

appraisal of Railroad Equip¬

ment

into

fraction of

a

total of business.

normal
see

Philadelphia
and

delphia 9, Pa.

The

having a background in the
foreign field, having the funds
available, being required to weigh
vast reservoir of
the desirability or undesirability
desert
of
Saudi

the

even

war, you

portunities is that it considers the
same

limited

and

considers

in

was

ended,

business in about

area.

again. We had a remain¬
ing marketing business in Austra¬
lia and New Zealand, India and
Ceylon, South and East Africa,

to go after that oil.

capi¬

overseas

is

an
extraordinary risk of
capital, you are certainly

say

what

venture

tal

oil

easiest

to

see

by the location of the oil.
had
made
prewar
dis¬

and leave you
some time for

thing

to

an

something
and

difficult

too

why the oil industry has

production

an

Exception

An

exception to the trend
against
foreign
investment.
In
the first place, an investor in oil

be

to

able

Oil

reasons

Nevertheless,

our

of how much money w6 were pre¬

pared

of

June 30, 1950—Stroud & Co., Inc.,
123
South
Broad
Street, Phila¬

business

It

its

we

substantial amount of money

a

abroad.

years

advantage
study.

in

ing

geographic
war

Korea, Manchuria, China, Siam,
Burma, Malaya, Singapore, and
French Indochina, and the mar¬
keting and producing and refining
were gone in Indonesia.
Right at
that point we faced the question

proved commercial treaties wLh other nations, and elimination
of U. S. taxes

out of

were

business

regulations and discrimi¬
nations, particularly in undeveloped countries, and questions
whether

irom the

can see

half of

City

Valuation

position that when the

of anti-foreign investment

cases

firms mentioned will be pleased
the following literature:

interested parties

stantial

different from investment

on

send

to

all southeast

restrictions

Thursday. August 3, 1950

.

effectively in connection with the
specific problems on which I have

Venture Capital in

as

.

.

Dewey & Almy Chemical Co.—

Memorandum—Walston, Hoffman
&

Goodwin,
265
Montgomery
San Francisco 4, Calif.

Street,

Also
dum

on

available

is

a

Grinwell Corp.

memoran¬

Oct. 12, 1950 (Dallas, Tex.)
Dallas Bond Club Annual

Fall

Meeting.
Nov.

26-Dec. 1,

1950 (Hollywood,

Fla.)
Investment Bankers Association
annual

convention

at

the

Holly-'

wood Beach Hotel.

Dec. 8, 1950
New York

(New York City)

Security Dealers As¬
Anniversary Din¬

sociation Silver
ner

at

the Waldorf Astoria Hotel

(Starlight Roof).

Number 4930

Volume 172

The Commercial and Financial Chronicle

.

.

.

man-hour over the next
.»
>.
L

put

advisers

Presidential

rigid controls

maintain

production. Advocates

ity

is the

there

of

annual

increment,

workers

new

industry

drawn

when

the

of

body

in high gear,

total

the

limits

be

the

of

more

production
effective

to

will

the

creases

will

force

labor

enough

be

"Without

unusual

an

in the labor force, or

Calling attention to the need for
public action along with private

in hours of

policy, the Advisers went on:

maximum employment
the end of 1950

work,

"But

would involve by

increase

an

total

in

output

present prices. But our poten¬
tial increase in production is con¬

the

the

more

all

k

Keyserling

John

Advisers.

nomic

members

Council

The

Leon H. Keyserling,

are

the mid-year force, for the possibility of fullJuly 24 by the Council of Eco¬ time employment of many who

the underlying theme of

is

necessary,

"Report to the President," submitted

Chairman; John D. Clark and Roy
Blough.

^

—

—

procurement will
further tightening of the
market situation in important

f^eas of the economy. There has
international
developments and heen and will be some increased
their impact upon the domestic forward buying, both by business
economy, in the forefront of pub- and by consumers.
There will be
lie attention," the Council says. a larScr demand for labor, and a
"It
is
manifestly impossible to tendency towards wage increases
predict the future sequence of °* a magnitude which would in"Very recent events have placed

these

difficult

it

This makes

developments.

the

appro-

policies

does not remove the
The fact that our fu-

necessity.
ture

programs

largely

be

may

influenced by the action of other
nations does not force us to drift

maintaining the American economy at
maximum
strength and producThe

aimlessly.

has

tivity

become

before.

than

nomic

less

no

international,

greater

even

domestic

In

affairs

for

need

eco-

in

than

be

must

we

pre-

pared
and
watchful,
retaining
enough flexibility to change our
course
q u i c k 1 v
as
conditions

change."

H°ldmg that, despite the in ationary threats, rigid controls are
av<?Ida^le'. the Cou™1 df larfc:
.

Such increased pr s ures,
superimposed upon an active
econ°my, would quickly create a

plant

capacities.

years,

we

favor-

Advisers

point

to

the

"With this output
economy

with

increased

there

"If

the Advisers.

say

nations

to

were

force

defense

into

i_

^

\

^

should commence to spiral.

also

follow

if

this

programs

If

the

be

followed

to

Korean

unmanageable

points in the world,

resulting increase in expenditures
would require even more
extensive economic controls than
"The current

our

for

increasing

while

very

full

military

sizable, does

mobilization

of

not

involve

our

military might or the placeof

ment
a

our

preparations

increasing
fense

civilian economy on

wartime footing.

full

which

must

now

But the

for debe made

substantial effeet upon the domestic economy,
even though not all of the additional appropriations will be exwill

have

pended

slack

than there was in
we

are

faced with

problems.

additional

It

is

procurement

the economy as a

the

largely

complete

will

products

areas

upon

almost

or

need

increased

special

tight, and

the utilization of existing

capacity

complete.

that the expansion of

means

production in these specific lines
must

take

precedence

expansion

of

other

involves special
utilization
cilities

influencing the composi¬

tion

the

of

demand

as

over

the

This

lines.

problems of labor

well

as

of

use

materials.

and

for

and

It

Great Northern

likely to become just as urgent as
policies to reduce the total level
of demand to counteract general
inflation.
Both types of policies
needed."

are now

Public Policy and the Korean
Situation

"Public

policy cannot be ad¬
justed simultaneously to each of
the

possible contingencies of the

future, particularly when
of

these

of

this

are

nation.

so many

control

the

beyond

effort

An

ness

of current action directed to

current

fa¬

impair the

effective¬

problems. The degree of

effectiveness demonstrated, in ad¬

justing what we do now to what
is needed now, will be the surest
token that we can adjust later to
whatever may be needed later on.

the

future

should not generate either

uncertainties

paraly¬

The

sis

action

excessive

or

of

To be

"We must maintain

tic economy
as

in

a

domes¬

our

position to serve

tower of strength for all the

a

efforts

of

the

during

an

emergency

weeks

or

which

may

months,

north

The

nation,

but

not

of
for

double shifts and overtime work
and there is still a substantial
r®?®rvf. ln the labor force. The
utilization of these reserves, plus

Korean

attack

a

to

sion

pared

against

the

tfrfaJ atl°cation, and, above all,
total demand is held in check
by strong tax and credit meas-

the

common

defense.

Continued

also

The heavier
on

page

Railway

~

very

this year.

The stepping




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.

OTIS

The Advisers

in

express

their

the

"Output per man-hour
mated to be about 11%

was

This
of

means

of

esti-

about

2.4%

F.S.MOSELEY&CO.

PHELPS.FENN & CO.

GREGORY &, SON
INCORPORATED

THE

ILLINOIS COMPANY

WEEDEN

& CO.

FIRST OF MICHIGAN CORPORATION

INCORPORATED

FREEMAN

&

COMPANY

HAYDEN, MILLER & CO.

WM. E. POLLOCK & CO., INC.

average

per

year

SWISS AMERICAN

slightly

higher
than the average rate in the prewar
decade.
With vast recent
improvements in plant, technology,
and skills, we should certainly be able to maintain at least
the recent rate of increase in out(compounded),

HORNBLOWER & WEEKS

above the

an

H EMPH ILL,NO YES,GRAHAM,PARSONS &, CO.

con-

1945 level in the first half of the

gain

BLAIR, ROLLINS &, CO.
INCORPORATED

EQUITABLE SECURITIES CORPORATION

continuance
man-hour output as follows:
fidence

year.

L. F. ROTHSCHILD & CO.

&, CO.

(INCORPORATED)

Output

JULIEN

CORPORATION

COLLINS & COMPANY

THE MILWAUKEE COMPANY
McMASTER HUTCHINSON & CO.

MULLANEY, WELLS & COMPANY
August 3, 1950.

of

to bear its share of the burden of

HALSEY, STUART &. CO. INC.

ures.

a

United States must be ready

The

yield 1.40% to 2.625%, according to maturity

^

is

possibility

Issuance and sale
The

few
years

similar aggression at other points.

tionally
guaranteed unconditionally as to payment of par value and dividends by endorsement
payment of par value and
the
~ "
by Great Northern Kail-way Company

Priced

only

warning to the world to be pre¬

$471,000 semi-annually February 1, 1951 to August 1, 1965, inclusive

~

a

be many in number.

Equipment Trust Certificates

'

the

in

present.

(Philadelphia Plan)
mature

do

to

would

Equipment Trust of 1950
To

public

Discussing the range of
policy, the Council states:

pro-

2%%

the

and

distribution of these products, are

$14,130,000

curement even more rapidly than
has thus far been proposed. But

Increased

request for an addi-

billion

armed forces and our

outlays,

less

require the stepping

military efforts

of

thus far proposed."

$10

much

relatively

be

This

by

the

tional

so

policies directed toward the
expansion of specific lines, and

than the increased

upon

And

these

This

that

would then need to

were

fort at many

those

sub¬

to

use

It follows

use.

further

s?me necessary capacity expanshould coyer military needs
on the present scale without a
a situation of heightened and procomplete set of controls, if pro¬
longed tension requiring that we Auction is effectively channeled
be fully prepared for military ef- !n^9 essential areas through maeconomy

established.

be

situation

of

Nor does the fact

is

1939 mean that

that

potential, the

programs

will

uses,

greater

demands

into military and

where supply is already

is in good shape to deal

stantial scope.

true

Shape

essential

the most essential

com-

comparable to those of war, a full
war

Good

in

Economy

r

country

related

converge

if neither of these contingencies
develops, price, wage, and manplete disruption of the increas- power controls should be avoidingly favorable trend.
able.
There is some margin of
"We cannot vet iudce the exunused capacity in most industent or duration of this new turn tries even apart from the use of
during

other

items entering

whole.

annually."

steel, and other

need for

creased

for

outlook, will

concentrated

much

version from less

the year's first half,

mg

the

of events,"

succeeding

In

expand about 3%

can

^ect controls, if advance buying
^ J5,11 s 1 n e s ®
consumers
should approach the proportions
«* »>°ardH»ff°L{™![/"wages

ation should

able economic developments exist-

existing

of

use

rapidly enough to
necessity of some di¬

the

sufficiently serious inflationary
situation to require the whole
Sa™ut <*. comprehensive and di-

up

highly

the

full

changes in the international situ¬

International

Developments

citing

the

for

in the economy

..

..

...

employed only part-time,

now

and

that

Inflationary Pressures and
.onT

would

The Impact of

After

.

But the

should now be followed.

difficulty

the costs of production and
a(*d to the pressure on prices.
crease

which

discern

to

economic

priate

are

of military

up

cause

find ourselves, and

we now

im¬
strains upon
some lines of supply much greater
than the average strains upon the
economy
as a
whole.
The in¬

ployment by 1 to 2 million, for
possible enlargement of the labor

Roy Blough

Clark

D.

not

immediate

pose

siderably
greater,
allowing for
the further reduction of unem¬
H.

be

itself

The kind of situation in

which

at

Leon

in

will

enough:

billion

$8

about

avoid

this

the increase of total pro¬

duction

annual rate of

our

of

can

Production Increase Insufficient

increase

cannot proceed

The

economy."

large

permit
sizable
in¬
in civilian employment.
to

that, in special lines, ex¬
pansion of total output probably
means

produce, the more fully

we

supply the most essential
of men will be drawn into the^ purposes without diversions which
would impair other sectors of the
armed forces, it seems clear that*
we

While substantial numbers

time.

i

general

make.

can

we

up

resources

our

most

that

effort

international political crisis has made economic unemployed workers, and among
policy-making particularly difficult, they are now those who now work only part-

so

so

of

crease

the

and

are

flexible, and its
varied, that the in¬

is

economy
demands

is

>

toward
we

however, we must exert every ef¬
fort to produce even more.
Our

million

3.4

from low
continue
the

economy

high,"

"Now that

working at high speed. Additional
labor power is also available in
current

an

Council.

into

economy

time-consuming process

gear

because many

are

the

shifting
into

certainty

labor force.
The
labor force, in fact, is likely to
increase more rapidly than is in¬
dicated by the size of the normal

pres¬

problems can be
more
expeditiously

with

than

productiv¬

inflationary

and

But these

sures.

growing

a

the

Although

scarcity

the

dealt

this

with

trend,

of

public policy: (1) a quick increase in production; (2) estab¬
lishing priority for defense and essential civilian needs; and
(3) protection against inflation.

prediction

cited

period of

a

boom, create greater problems of

growth of the labor force,

"Coupled

main immediate aims of

as

further

coming in

programs,

follows:

as

holding they would not interfere with maintenance of

maximum

Council

The

despite inflationary threats and armament needs fostered by
Korean situation. Advocate "a prompt and drastic" increase
in taxes,

years."

assured

avoidable,

are

per

few

Strength With Flexibility First
Need of Economy, Council Says

9

(437)

*

28

10

The Commercial and Financial Chronicle

(438)

Bernard Weissman Is

Siegel Go. Partner

Pennsylvania Brevities
sales

preferred
Com-

Warner

of

of central-mix
concrete, building materials, lime
producers

pany,

lime

and

products,

to

rose

first

the

for

239,476

six

$9,-

months

of

1950, compared with $8,409,842
for the like period of 1949.
Per
share

earnings on
the 474,329
of
outstanding common
$2.83 as against $2.55. Char-

shares
were

acteristically, larger earnings
in

realized

to $6 per

run

Weissman

Last

He has been
Siegel
& Co. for the past eight years as
Manager of the real estate and
a

general partner.

associated with the firm of

or

April, the quarterly divi-

pated

that

year-end extra dis-

a

il'coSt'T

cSirow'mLlfnhLif nrioHtv
dered to fall in the high priority
class and little if any

L. H. Rand Joins

Co wen

"
near

I

Company

&

Co., 54 Pine Street,
New York City, members of the
New York
Stock Exchange and
other exchanges, announce that
Louis H. Rand has become
ciated

with

the firm.

Mr.

asso¬

Rand

formerly

conducted
a
general
brokerage business under the firm

name

of L. H. Rand & Co.

Hayward Admits Partner
BELLINGHAM, Wash.—Francis
C. Hayward has admitted Roland
B, Boettrer to partnership and is
continuing
ness

under

Francis

C.

his

investment

the

firm

Hayward

the

of

& Co. from

offices in the Bellingham National
Bank Building.

Co.

curtailmen

Riverside Metal

A. B.

Pulley

Farquhar

Houdry Process
General Manifold & Printing

HERBERT H. BLIZZARD & CO.
1421

CHESTNUT

STREET

LOcust 7-6619




P^Pal medi«™

the

change

I*t,r,n« Philadelphia Company
«% preferred The $5 preference
stock w°u'd be ret,red for, ca?h

SJSEZf
the' same^ttme'^uquesne ' would
sel1 $12 000,000 additional first
mortg*ge b^nds

Duquesne 5%

on

Carnegie-Illinois Steel
preferred) repay short.term conplant to be located on
he struction loans and
provide for

s

River

Delaware

Momsville

at

Warner Company s chemical

Pa.

lime

has

which

business,

many

Fares Raised in Pittsburgh

applications in essential industry,
is operating at capacity.

HARRISBURG— Generally

of

higher trolley and bus fares for
Pittsburgh
Railways
Co. 1 were
tween six and seven million dol- approved
by
the
Pennsylvania
lars
for
plant
and
equipment Public Utility Commission last
improvements.
The program has week.
The new schedules, which
reduced operating cost ratios and. will become effective Aug. 4, are
increased productive capacities at expected to increase revenues aphas

company

be-

expended

needed points.

T.

*

*

*

P.

from

the

*

Pennsylvania Railroad reported
in June of $80,-

815,470, the largest fcr

The company estimates that

on

the basis of existing fares opera¬
tions for the full year 1950 will

produce no taxable income. On
the other hand; no provision has
tax credit which

from

carrying

for-

st"P? of t'cke?s.J*1" bee,a^llaKe
.e
e °
to r $ 1.50 On
^tain cross-town bus routes
thrf tokens wlU be sold for 50
,

,

cents.

taxes paid m

pected to

1946

wiU

■

be

possible

is

ex-

recorded

In addition

$479,823, set

up

income

a

take

to
tax

as

reserve

care

of

/

income in 1950.
stocks

of P.

mitted

to

delphia
change.

T.

C.

trading

and

the

on

Baltimore

-

preferred

have been

*

ad-

Phila-

Stock

Ex-

For the ,12 months ended June

wipe out

the

deficit of $3,077,521

recorded

for

the

Company,
principal.subsidiary of Standard Gas
& Electric Co., has filed an application with
the
SEC
designed
to bring about the retirement of
its issues of 6% non-callable preferred (par $50) and $5 cumulative

preference stocks.

preference

000,000

was

stock,

The $6

of which

Sto^Ss'pe^coSoLharron
the

3j32(U97

al-

standing

year
come

first

of

half-

of $4,398,000 brought net in¬
for the six months to $6,-

slightly

only

174,521,

figure

comparable

the

below

for

first

the

Earnings

half of 1949.

share

per

47 cents.

were

*

a

step;

DU-

subsidiary of

of the New York Stock

and profits
Dental Mfg. Co.

the first half were

has

become

firm

in

the

second

of
in

quarter

and

remainder of the
bright,
according
to
Fred E. Steen, President, as re¬
ported in the "Philadelphia In¬
quirer."
six

first

the

Domestic sales were
year,
but foreign
devaluations
and
re-

year ago.

ahead

He

currency

Strjr+>nns

on

in

been

Technique,"

spent
"Air-

new

which

pre¬

cavities for filling by forc¬

against the tooth under
pounds of pressure of

powder
60

70

to

cust

heat,

dioxide

away

The

gas.

Clark is

Davies

&

the

R. F.

Co.

Cooley Rejoins

Thomson & MeKinnon
to The

CHICAGO,

Financial Chronicle)

—
Richard R.
Cooley has rejoined Thomson &

MeKinnon,
Street.

111.

231

South

La

Salle

Mr.

Cooley has recently
been with the Chicago office of
Reynolds & Co. as manager of the
trading department.

Demon¬

practice

general

Mejia, H. R. Baker &

Co. and Bankamerica

Perry Wit^ Douglass Co.
(Special

to most dental schools and will be^
to

associated with First

now

Central Corporation of California.
Mr.
Clark
was
formerly
with

stration units have been supplied

available

'

RICHMOND, Calif.—Sydney S.

without

pain.

or

Corp.

process

enamel

tooth

vibration

a

.?

First Gmbal

(Special

has

$500,000

brasivc

for¬

for

(Special to The Financial Chronicle)

shipments tended to

development of the

pares

was

Co.

Sidney Clark With

curtail results.
Over

Shields

with

last

of

the

Re¬

months

$9,717,000 aga^st $9,833,304

were

a

Stalker

with

&

pros¬

the

for

J.

associated

charge of the Dealer

irv

slightly below

are

Sales

Exchange,

merly

sharp upturn was marked

a

Albert

lations Department.

results for the first six months of
1949.

that

announces

Mfg. Co.

sales

White

S.

red J. Stalker

*

S. White Dental

S.

Although

AM

Kidder, Peabody & Co., 17 W,all
Street, New York City, members

number of years.

*

S.

the

revision

the

early next year.

to The

Financial Chronicle)

BEVERLY

ciated

with

Robertson

was

Preston Holt Joins

Calif.—

HILLS,

James A. Perry has become asso¬
North

and

Walston, Hoffman Go.
Financial

Douglass

&

Co.,

Boulevard.

133
He

formerly with Morgan & Co.
prior

thereto

was

Assistant

Co.

Chronicle)

American
Holt

was

Hoppe,

prior

Bank

Building.

formerly with

Stewart

thereto

.

was

an

Walnut

officer

ANGELES.

LOS
S.

Wesp

has

Francis
South

I.

Calif.—Walter

joined

du

Railroad

son

the staff of

Pont

Spring Street.

&

He

Co.,

722

was pre¬

& Curtis.

Appraisals

Equipment Trust Certificates

City of Philadelphia Bonds
as

Our

current

of June 30,

1950

publications will be sent

Please mention which group—or

on

request.

both.

*

Armstrong Cork Allocates '
— Distribution
of
tile: produced by Arm¬
Cork Co. has been re-

LANCASTER
strong

to

an

caoacitv

STROUD & COMPANY

allocation basis, ac-

Incorporated

H- ^Stewart,
Manager of the Floor
Although

of

all

four

productive

of

Arm-

strong's tile plants have been in¬

,

:

,

PHILADELPHIA 9
ALLENTOWN

•

PITTSBURGH

,.

of viously with Paine, Webber, Jack¬

Valuations and

,

*

(Special to The Financial Chronicle)

,

The

Streets.

j

*

and

Francis 1. du Pont Adds

J-.

letter building is being C0/P*'
pletejy modernized, including the
installation of high-speed ele<Xato.rs a"ft c£mpiele llr'c0n^
ponmg: The Stock Exchange has
^a?®£ J, nl
par^
eighth floorsand will move at the
exPirahon of its present .lease.*
\

Balfour

&

Walnut

and

Mr.

Russell,

Holt, Robbins & Co.

Street, the Philadelphia - Baltimore Stock Exchange and the Stock Clearing
CorP- of Philadelphia are plannin§ to mov® to the adjoining
Central-Penn Bank Building at
1411

^ Division.

.

Light Co.,

for

of

*

*
t

sClnl 7dif
be. borrowed from Assistant

intermediate

per

out-

Stock Exchange to Move

turned

quesne

accruals

tax

PHILADELPHIA — After
37
years in its present location at

asphalt

an

currently

,une 30, l949.

on

#

ing to the proposed plan, Philadelphia
Company will be left

As.

shares

outstanding,
against
$2.26
shar
„„
2(911(8gs shares

ready been called for redemption.
When and if consummated accordi-

banks.

^c,rf«?sed Fom

J*et

$10,-

outstanding, hf|s

$17,500,000 to

downward

A

year.

months

five

first

CSDfcial to The

Broad

*

Philadelphia

^

x

assessments

tations and will also be added to

common

was

than sufficient to

$®> Pennsylvania Power & Light
PORTLAND, Oreg. — Preston
*'Co-.reported gross income of $73,561>504, compared with $68,516,- Holt has become associated with
^ T°r ^he similar previous pe- Walston, Hoffman & Goodwin,

of

for years prior to 1946, has been
released under the statute of limi-

The

$5,216,406 for the month

of

more

Vice-President of First California

„

be received and, when

received,

t

Pennsylvania Power & Light Co.

ward the 1949 operating loss.

on

month

any

Net income

carbon

.

606

January, 1949.

cents^for transfers which will be
ISSU,
without charge to the 15?ent ctasb fare riders
Present
15"cenf bus fares will be inereased to 20 cents, although

Although revenues were up about 6%
in 1950,
the greater part of the gain was
attributable to the 10-day strike
which -suspended all service in
February, 1949.
*
'

a

is raised

*

gross, revenues

year.

although

Minerva

ing finely ground aluminum oxide

the

result

cents,

and

present fare through the purchase
bve tokens for 60 cents. Token
buyers> however, will pay three

corresponding
period, resulting in a net
profit of $236,980 compared with
a
loss of $1,314,497 in the first

might

15

Columbia

its

an

price

ri<*ers may continue to pay the

for the first
six months of 1950 increased $2.-

been made for

to

announce

Operating

—

Transportation1 Co.
over

12

Sons

Philadelphia

PHILADELPHIA

of y

per

The basic trolley fare

C. Earnings Improve

revenues

$2,500,000

proximately

&

Yea, Pennsylvania!

Since the end of World War II,

the

Kidder, PeibodyCo.

Increased

hand-knitting yarns, effective im¬
mediately.

year

#

#

^

Lees

pects -for

the 195Q construction pr0gram.

JU. Stalker With

*

advance of about 10% in the

competitive
ais0

at

new

half of last year.

American

constitute

would

s

♦ul

James

bldctlng and later wouid sen

1949

E. & G. Brooke Iron

pre-

^xt yefr's bisine * competitive bidding, $7,500,000
u?, additional preferred stock. Funds
i 1° of construction of so realizecl would defray the callftIf
beginning
future

072,352

We solicit inquiries in

Light

Duquesne

new

premium

the

busi¬

name

The

ferred, purchased by Philadelphia

Thursday, August 3, 1950

..

PHILADELPHIA—Due entirely
to the rising cost of raw wool,

since

funds-

h=ent will he made in De- £
s

mortgage statistical department.

Cowen &

from 25

cents, and it is antici-

to 40

,

Philadelphia Company would
obtain funds for the purchase
from the bank borrowing noted
* e aPProx,,yately
$$>000,000 remaining from the recen* saI®
Equitable Gas Light
®°mm°n stock and from general
000

Company,

better.

rate was increased

dend

Siegel & Co., 39 Broadway, New
cents
York City, announces that Ber¬
;

as

share,

selling to Philadel-

by

p^a Company a new issue of
J®w®r dividend-rate preferred in
JJj® PI/IS *1 am°unt of $27,500,-

half of the

latter

the

are

and estimates for all of 1950

year

5%

#

Prices

Yarn

Warner Company

nard Weissman has been admitted

*:•

Corporate News and Notes
Gross

Bernard

creased, operations are at capacity
under the stimulus of peak sales.

.

NEW YORK

SCRANTON

*

LANCASTER

•

Volume 172

Number 4930

.

The Commercial and Financial Chronicle

..

(439)
offered

today.

Yes,

am

opti-

those

jwho will stick to it "rain or
j shine." Sensible;; continuous. adJ

By ROGER W. BABSON

vertising

Mr.

Babson, asserting public relies

merchants and others not to curtail

Says

tising.

of best

one

is allowance of

advertisements, advises

on

cut

or

k'J

or

are

making
only do all

Says North Koreans will get such a beating as to make
impossible for many years for Russia to induce another
satellite to embark

-

just been reading
interesting
advertisement
great steel company.
constitutes

most

a

of

vertise

military venture.

when

in

its

of

steel

plates

ships,

for

bombs,

and other

This

company

has

nothing

whatever

to

the

to

pub¬
it

general
lic,

only

tainly

owes

papers
are

a

debt

whether

"for"

to

all

"agin"

or

ministration.

chance of
back

on

manufacturers

paid
now

tunities

to

of

the

advertise

the

with

years,

♦

best

Co.

public

of

and

Then

very

instead

freely

2

$30,000,000

Gas

accrued

to keep

a

five-

This would do much

business

on

we

an

even

keel

especially need

Columbia
its

butes

and

retail

in

more

than

of

the

Gas

operating

tomers.
gas

sale

at

redeemed

on

They ard

*

for

the sinking
ranging
from

System

through

subsidiaries

sells

natural

distri-.

at
communities
to
million residential^
gas

11,218
one

commercial

issues of 3%

and

industrial

cus¬

The corporation also

wholesale

to

other

sell^

public

debentures due

Pennsylvania

1974, totalling $33,000,000 princi¬
pal amount.
be added
the

corporation.

that
be

to the general

its

general

is

It

funds

new

and

town,

the System.

The

Virginia,

Md.,

a

number of

including Bal¬

Charlottesville

Roanoke, Va.; Harrisburg,

storage program of

gas

communities

timore,

then

adequate for the 1950 construc¬

tion

West

serving at wholesale

funds of
estimated
will

and

During 1950 the System will begin

The balance of the proceeds will

-

•

-

proceeds

prices

the

Aug. 1.

on

if

1974.*

to the principal amount;

de¬

Inc.,

1,

The principal
corporation will redeem on or .utilities for resale.
about Sept. 9, 1950, $45,000,000 of
territory served by the System at
3y4% debentures due 1973 and
•retail includes large areas in
Ohio^
two

good

appropri¬

the

at

at
interest

System,

.plus

Aug.

,102.20%

a

decreasing to thd

amount

the

of

little left for lean

advertising

prices

redeemable

fund

of¬

Aug.
3%

on

also

59

firms

competitive bidding
From

policy would

spending

period.

today.

are

but

the

issue

102.308%

to avoid

ways

bust"

which is what

oppor¬

which

or

the

year

to

&

investment

Columbia

at

ations would be spent over

publicity with no
getting their money

advantage

of

years,

sales.;! hope more local firms will
take

ad¬

attention

more

Stanley

bentures, series B due 1975 of

advertise.

"boom

are

through immediate increased

who

at

after

or

competing merchants to yield'
approximately 2.87% to
advertising. :Now is tne "maturity. This issue was awarded

merchants

most sensible cam¬

a

get

expenditures.

Ad¬

1.

Successful

carrying
paign of

those

fered

Not "new
need

five-year contracts for advertising

they

the

but

now

be for Congress to allow a
special
tax reduction as an incentive for

news¬

editorially

Morgan
associated

their

to

One

the

merchants

now

not

time

war

materials.

sell

Our papers

local newspapers. Washington cer¬

produc¬

tion

not

realize.

we

com¬

has made

pany

than

prog-

this

ress

ing

give us the news each
day but the growth of our cities
depend upon the prosperity of our

a

In effect, it

report of the

a

;

.

a

1

time

great mistake.

a

sales,

more

are

I have

11

on

Columbia Gas Z% Debs

-

tising appropriations at this

after

principal

Merchants who cut down adver¬

tise."
it

Offers $90,000,000 of

.

investment
^

ject to redemption at 106% if re^
deemed during the 12 months be^
ginning Aug. 1, 1950 and there¬

Morgan Stanley Group

Advertising and Taxes

bust" policy,

on five-year contracts
Holds "now is the time to adver¬

for advertising expenditures.

best

i

down their adver¬

to avoid "boom

ways

is the
there is.

jthat

•

special tax reduction

a

I

jmistic for advertising for

Advertisers

1)

and

Allen-!

Reading, «Lancaster

and

Bethlehem, Pa.; and Poughkeepsie*
debentures

new

are

sub¬

Kingston and Newburgh, N. Y.

'

chooses to buy

considerable
n e w s

Roger W. Babson

p a per

give

to

space

the people some most encouraging
facts.
The
upon

public has come to rely
advertisements. In countless

instances
tice to

people make it

read

the

stories

news

prac¬

a

first

ads

the

and

second.

Naturally,
there is some waste in advertising;
but 90% of it is to the good. The
merchant who pays a bill for ad¬
vertising expects his ad to "pay
its
way."
The
return
in mer¬
chandise sales per dollar spent for

is carefully watched.

space

In certain

types of copy featur¬
ing the sale of shoes, dresses, and
various

store

whether
is

a

for

He fools himself by

success.

factor

on
one
daily
advertisement will be

in

period of

Statistics show

spent

money

newspaper
a

after

business

the* advertisement

trying to do this.
that

con¬

thinks

hour

an

opens

not

or

of

merchant

a

determine

can

his

articles

.ether

goods,

sumer

he

increasing sales for

a

months ahead.

some

Don't Worry About Korea

Many

believe

that

the

con¬

goods industries must

sumers

fall off and

tising.

now

curtailing adver¬

are

Our 12,000

'

employees

I cannot necessarily agree

with this

position.

Whatever hap¬

pens in Korea, the vast machinery
of manufacturing and distributing

which

makes

up

$45,568,148
(11.5%)

great retail

our

trade
must
be
kept
running;
Newspaper advertising is the best

of

means

making

Besides, I

more

am

the .international

I

have been for

Koreans

ment

will

that

before

this possible.
optimistic on

situation

some

get such

it may

Russia

be

gets

than

The

years. ■

punish¬

a

many

years

other

some

satellite to try the same stunt.
Too

readers accept their
newspapers as a matter of course.
many

Newspapers

are,

however,

as

For taxes
■f

$10,568,126

V' >.:<

(2.7%)

f'M

••

*•

"•*,/

✓
^

'

"V

VvX^.

*

'
r

v
_

y

v.vi'<>».

'*•

'

fa &
XvX-.-.*

/

*

.

3/1
*.*,•

••••

im¬

portant

to their communities as
municipal conveniences and

are

other services.

Probably

item would

missed

our

be

daily

Our 13,500
stockholders

buy

in

the

world.

$6,807,969

(1.6%)

from

more

For future
development

$6,443,249

single

lives than our local
A newspaper is the

newspaper.

greatest

no

(1.7%)

All

s

For

wear

and tear

$2,791,053
(.7%)
•

v

regardless of size, are
highly educational. Unlike other
newspapers,

*great

institutions
however, they are

and

Naturally,
going

learning,
endowed

self-supporting.

what -keeps

its

is

Everyone
a

be

must

of
not

a

advertising

paper

revenue.

~y

During General Mills' 22nd

on

this

as

civic duty.

Dividends

sales

upon

activities.

social

free
We

of

our

All kinds

organizations

notices

all have

stake in the business of




of

more

their
of

a

advertis-

illustrated annual

apolis 1, Minnesota.

merely increasing sales.
rely

copy

report;

$11,654,036 for the previous

versus

and

a

earnings totalled $13,251,218, compared

^Newspapers
are
vastly
more
important to retailers, manufac¬
turers, and the city itself than
civic

write for

with

should help

Service Rendered By Newspapers

«of

year,

amounted

$5,934,019 the

to

year

year.

Address-General Mills, Minne¬

$6,443,249,

.

were

$395,834,706. If

like the full story

of

our

i

<

before. Total
you

last fiscal

would
year,

General Mills

i

i

>•

i

12

The Commercial and Financial Chronicle

(440)

Wisconsin

Fund

Prospectus

from

request

upon

investment dealer, or from

your

An

investment

National
research

&

securities

corporation

120 MOADWAY, NEW YORK 5. N. Y.

their

are

program,

ac¬

exhaustive study of

an

Trend

"Investment

ment

Retire¬

in

by

completed

Plans," just
Rawson Lloyd.
Mr.

in

shares

company

investment

cording to
the

number of re¬
using suitable

increasing

tirement funds

Use

They have grown

rapidly since 1942, when the In¬
ternal

Bullock Fund
Dividend Shares

Nation-Wide

Securities

allowed

Act

Revenue

porations to deduct contributions
under I such
plans
as
expense.
Only about 1500 companies had
plans then. Today there are ap¬

The

of

executive

the

this

had

to

say

of pension funds.
Some five million more employees
Investment
Dealers

growth

be expected

can

or

to be covered in

the next three years.

Annual

con¬

tributions to retirement funds are
about

now

rise

CALVIN BULLOCK

to

and

may

$2 billion a year in three

time.

years

billion

$1.2

if the

instance,

For

automobile industry adopts a pro¬

Established 1894

similar to

gram

tributions
alone

million

Z?.

be

may

total

steel,

these

to

much

as

con¬

ment

is

plans

use,

increasing

of

because

rising living costs, increased lon¬
gevity and lower income from
best grade securities.
"To offset the rise in pension
costs,"
Mr. "Lloyd pointed out,

STOCK FUND
OF

Group Securities, inc.

"more
are

and

in

trusteed

stock of the

common

diversified

end

Growth

new

mutual

Companies,

bonds

as

pension funds to boost income
provide

further

against

hedge

some

inflation

and

higher

request

be

made

inclusion

from your investment

dealer

of all classes

retirement

and

period.
vary

with

Net assets of the fund

sist of

a

A

a

majority

(53%)

hold

common

$9

or

The

Federal

of

free in

The

Pennsylvania.

fund, according to the
prospectus,
will invest for the
most

12

The

endowment

in

part

companies

stocks

common

believed

by

of

di¬

the

been

organized,

the

prospectus

with "

colleges totaling about
million have an average of

about 45%

bonds,

Keystone

of

of their investment in

in

13%

preferred

stocks

and 42% in common stocks.

Mr.

Lloyd further

that last year U.

Custodian

companies
tions

vestment

Funds

creased

in

over

legal

limita¬

company

various

their

Finally,
of

INVESTMENT FUNDS

pointed out

in¬
in¬

states)
purchases of com¬

stocks by
more
than 40%
1949 from $49 to $69 million.

mon

Certificates of Participation in

(within

insurance

on

his

citing

own

the

experience

investment

Roger Adams,

company,

President of

the American Association

for

Zay Jeffries, until recently
the

IN

(Series B1-B2-B3-B4)

.

Company

in

charge

the

Chemical

Department

past

President

of

the

Society for Metals;
Bayard D. Kunkle,
the

board

of

tions,

partnerships and insurance
companies, are third. Many em¬
ployee funds,
hospitals, invest¬

ment

companies, universities, col¬
leges and schools also appear on

the list of large shareholders.
Of
all
individual
holders

Manhattan

Fund,

Inc.,

of
on

FUND

Of
BOSTON

\jt
A BALANCED FOND
Prospectus on request
from your investment dealer

rapid changes to adjust to varying
but
the
management
actually did make major ones, ac¬
cording to a table it prepared. As
may be seen from the adjustments
in the following groups an addi¬
tional 30%, approximately, of the
portfolio was placed in those in¬

or

Louis h. Whitehead Co.

conditions

LEXINGTON

dustries which would benefit from
armament and

inflation, the Fund

TRUST FUND

pointed out.
%

Industry—

of Tot. Fund

Mar 31,

Aircraft

Jun 30,
1950
4.1

•

;Z—

Foods

Oils

2.8

13.3

3.9
_________

Mining
Nat.

8.2

12.9

Gas__

3.6

8.5

5.7

__

and

10.9

of

3.5

Utilities

10.3

and

American

Foresees

Defensive
a

member

General

a

Bond

MUTUAL

Motors

foods,

Devaluation

securities

retail

trade

Prospectus

such

former

Vice-

and

fuels,

obtained

be

utilities

from the

were

and

Fund's

financial

lar and it says that

and past -President of the
American Institute Of Mining and

been

Metallurgical Engineers;

Office

retained

Net

Net

as

Assets

assets

a

York

from

New
and

111

York

other

Curb

ft CO.

Exchange
exchanges

principal

Broadway, New York 6, N. Y.

m

Increased

»

Invest¬

ment

Company totaled $2,263,599
30, 1950, compared with
$2,205,900 three months earlier and
at

or

HAUPT

IRA

this group has
hedge against

of Wisconsin

New

Members New York Stock Exchange

this eventuality.

.

may

as

completely eliminated. Bank
holdings were de¬
President of that company;
creased.
As a long-term
policy,
Clyde E. Williams, the Director however, the company's position
of
Battelle
Memorial
Institute, in gold mining
securities
was
America's largest endowed organ¬ maintained.
The, Fund believes
ization for theoretical and applied that inflation may, eventually re-*
research on metals, ceramics and suit in the devaluation of the dol¬
and

that

Manhat¬

Fund, Inc., are institu¬
tions, corporations, partnerships or
with aggregate hold¬
ings of more than 360,000 shares,
representing one out of every 12
shares outstanding. Estates, guar¬
dians and trustees are by far the
largest holders in this group, fol¬
lowed
by churches, church and
charitable organizations. Business
organizations, including corpora¬

."

Retail Trade

Electric

of

General

Templeton, President of
Wellington Fund, of which he is
vice-president and director of re¬ Templeton, Dobbrow and Vance,
search, Mr. Lloyd said: "More Inc., Investment Counselors;
than
1000
institutions, corpora¬
Harry J. Haas, past President of
tions, estates and fiduciaries, in¬ the American Bankers Association,

BONDS

.

Not only does Wisconsin Invest¬
ment
claim to be able to make

John E.

investing their capital

trends.

Machinery

ical Society;
of

revealed

fiduciaries

It

President of the American Chem¬

Vice-President

also

survey

700 shareholders

Bond

considered

Chemicals

Dr.

mutual

the

Advancement of Science and past

of

The

non-

1950

Dr.

Corporation

S. life insurance

„

Manhat¬

a

Fund.

as

were

ex¬

Its board of directors includes:

re¬

eastern

$600

com¬

judgment.

pension

stocks

of

investing only in bonds, ac¬
a survey published by
Hugh W. Long and Company, New

armament

and

than

more

Inc.,

cording to

new

technology

funds

the

.

.

considered

these

investment

limited amount

stocks for its

common

fund.

a

Bank

by

move

in

occurred

Fund,

fund

wise, under the
circumstances, to somewhat read¬
just the company's portfolio to

$256,500

perienced

funds

the

Reserve

cently purchased

#

of

some

partly indicative of the trends.

Shares of the fund

share.

a

tax

are

balance of

has

surance

con¬

industrial

preferred stocks.

or

spring,

a

Manhattan

shareholders

lag¬
gard action of the utilities and in¬

was

cash

the

of

groups as compared with the

change in net asset

any

value.

of

corporations
by
the
Cleveland
Electric Illuminating Co. showed

Street, New York 5, N. Y.

which

Thereafter the price will

en¬

dowment funds. A survey of trus¬
teed pension funds of 114 large

Distributors Group, Incorporated
63 Wall

in

that with the

and

worse

of

rela¬
growing

our

are

ferrous metals, oil

during this 24-hour

bining
the
best
available
ex¬
perience in scientific research and

securities

that

Russia

.

states, with the objective of

toward
on

their

and

war

of the
organizers include four
considered as a probability.,
country's
outstanding scientists,
Those present were of the opinion
was made
yesterday (August 2),
that one should be prepared for an
by Growth Companies Manage¬
international incident at any time
ment Corporation, sponsor of the
which could bring this country to
fund, with principal offices in
the brink of war.
The recent ac¬
Philadelphia.
tion of the stock market was con¬
The
shares are
being offered
sidered
as
reflecting intensified
initially at $9.84 a share and this
armament
and
preparedness for
price is to remain unchanged for
war
with their natural inflation¬
24
hours
following
the
initial
ary implications.
The stimulation
offering, as the sponsor company

Mr, Lloyd cited several ex¬
amples to.show there is a trend
prospectus

the

Russia in Europe or Asia could be

prices."

a

}

the investment policy.

on

with

arrival

whose

of

international situation

recognized

was

steadily

fund,

Inc.,

nary
possibilities
for
growth.
Primary object of the fund. is
described as capital gain.
Growth
Companies, Inc.,
has

well

as

It

tions

open-

rectors to possess more than ordi¬

stocks

bearing

portion

danger of

$3.23

York, national underwriters of the

devoted to a discus¬

was

the

and

Public offering of 300,000 shares

of

plans

more

substantial

sion of the

Companies

Offers 300,000 Shares

including preferred and

now

common

and

"A

and

represent

Bond

tan

meeting

Growth

half
tan

over

benefit fund."

has announced that no investment

the study
illustrates how the cost of pension

THE COMMON

and

own

will

in

now

shares
its

31

Constitute

Women

May 8:

Fund
government bonds in

$3.46

30, 1949.

Half

directly from the minutes of the
Investment Committee meeting of

Wellington

uses

by the Fund.

The following quotation is taken

retirement

group's

adjust it to that
according to a state¬

made

ment

retire¬

of Growth Companies, Inc., monies

an

plans

program

for its

Iowa

shooting in

Korea but made courageous moves

The Wellington Fund

trust.

$400

as

analysis of the prin¬
features of several retire¬

cipal

in

company
ment

weeks

in the portfolio to

possibility,

March

at

Women

Wisconsin

seven

before the start of the

a pension fund of a Texas manu¬
facturing company
and
an
in¬
vestment of a casualty insurance

funds

two

each year.

Against

"include
a
$50,000
in¬
in Wellington Fund by

incident

assets, equaled

share at June

Economy
of

Net

share at June 30, against $3.71 a

share

It

War

management

ternational

Thursday, August 3, 1950

.

$1,698,638 a year earlier, the quar¬
terly report to stockholders dis¬

Investment Company not only had
the foresight to anticipate an in¬

cor¬

proximately 13,000 qualified plans
and the number is growing. These
funds total about $5 billion cov¬
ering 7.2 million employees.
Prospectuses
available
from

tinued,

management

Lloyd gives this picture of

pension funds.

cluding trustees of pension funds,
own over $8,500,000 of Wellington
Fund. Recent examples," he con¬
vestment

Claims

Foresaw

.

closed.

fund.

new

The

Increase

Invest¬

Gross,

a

By ROBERT R. RICH

Funds

Retirement

H.

Counselor, who is President

the

of

Mutual Funds

John

Dr.

and
ment

.

June

Knickerbocker

PREFERRED STOCKS
(Series K1-K2) : J

ATTENTION,

COMMON STOCKS

Prospectus

for the

Diversification, Supervision and

s ond

Investors/

be obtained from

may

(m anltatian

Bond

(Series S1-S2-S3-S4)

Snc.

Safe-keeping of Investments
Prospectus may be obtained from

Tke
>*;.

vl /Write to
ypur local

Keystone Company

"■» ">';i

( T> It.j "•*'*

..

»

-'N.

.

'iW.Hi-noI -Dosto-q
:

.

:

•

5Q

Congress Street

.

'

'*

""t

J

&

,i

.and

j St.,

.

Boston 9, Massachusetts
'» '

dealer

.

r

.

:

•

or

to

Hugh W, Long'

ing price and terms of offering.

Company,- lne£ 48< Wall!
New!/York'5r,fd( the offi-;

,cia| prospectus"

an^

KNICKERBOCKER
20

a

other de-

*




your investment dealer describing
the company and its shares, includ¬

investment

scriptive material about

Registered

'company

prospectus from

investment

investing only

iff

: your

-:i "!

investment dmohf
or

—

v

v

*

in bonds

^

PHILADELPHIA

% FA,

Exchange Place

SHARES

INC

v

Volume 172

July

1,

than

more

.

the

half

remainder

owning

women

The Commercial and Financial Chronicle

.

.

shares

and

joint

as

net

of the

assets

June 30,

on

B1 and the

Bond

Fund

day.

The

costs.

June

on

30

was

a

ENG.—One of the consequences of the Korean
sharp recovery in the unofficial price of gold in

a

$198,612,500 at the close

of 1949.

Aeronautical Price Takes Off

It was followed, however, by a reaction, creating
feeling of uncertainty about the prospects of the price of gold.
At the same time, there was a noteworthy
depreciation in the prices of gold mining
shares on all Stock Exchanges.
It would be

interesting, therefore, to re-examine the pros¬
pects of gold in the light of the international
political situation.
Although tension between the USSR and

Aeronautical

Securities, Incor¬
porated, on June 30 had net assets
equivalent to $5.94 per share of

outstanding
pared

capital

with

$4.38

earlier,

an

mately

36%,

stock

increase

of

the Western Democracies has been almost con¬

com¬

share

a

a

tinuous since the

year

according

public

six

report for
the
months ended June 30, 1950.

how
lull
into

"The past six months have been

by a sharp increase in ex¬
penditures for armaments for our¬
associated

der the North

has

company

substantially
tion

in

fully invested

of

was

ing stocks

aircraft

an

21.08%

in

be

air¬

it

stocks

in

49,528,035

share

on

a

Investments

assets

as

ments

in

ot

net

which

group

total

net

oil-and

assets, followed
gas

by tne

representing

group,

12.07%; automotive and

accessory

6.68%;
building,
6.52%;
6.01%; and non-fer¬

group,

retail

utility-'

17%; of

comprised

trade,

Total net assets of- Nation-Wide

Securities Company, Inc.* on June

30, last;

at the highest level

were

for the end of any

fiscal period in

the

history of the company, Hugh
Bullock, president, stated in.the
semi-annual
June

report

the

pany..for
30,

six

1950.

The

said,

assets,; he
increase

in

of

the

months

growth

reflects

the

com^

ended

both

number

of

in
an
the

corporation's shares purchased by
investors and
value of
Net

gain in the market

a

investment holdings.

assets

amounted

on

to

June

30,

$14,507,852,

pared with $11,566,388

on

1,037,742
year

equal to $12.40

net
a

share

,




prices.

as

share

shares.
were

932,400

on

'

•

far

as

gold

mining

In particular there is no reason for

the

absence

of

devaluation

a

the

rearmament

race

will

increase in world

by f$r the best in the history of the insurance industry,
are still, favorable measured by any of the usual
'
-

was

operating results
standards.

summary of
issued reports

have

the results for two of the companies which
is presented below.

in

The Continental Insurance Company, the largest company
America Fore Group, reported
premium underwritings

the

of

1950. This was a
from the 534,625,203 written in
the corresponding period of 1949. As a result the increase in the
unearned premium reserve was much smaller then in the earlier
period amounting to only $319,880 as compared with the $3,366,371
of a year ago.
Premiums earned showed only a minor change
amounting to $31,047,509 for the current period as against $31,258,$31,367,390 for the six months ended June 30,

decline of approximately $3,250,000

832 in

1949.

Losses for the period showed an unfavorable trend and were

higher partly in reflection of the increased fire losses experienced
so far this year.
For the six month period losses for the Conti¬
nental totaled $14,838,034 compared with $13,942,662 a year earlier.
Expenses were lower as a result of the smaller volume of business

governments will accept the new situation and

It is indeed inconceiv¬

most

of

run

their

that gold producers should be compelled to

output

on

the

basis of

The combination of

per

of the

cent.
new

hundreds

Unless the official price is adjusted to the realities

situation,

or

producers

are

in

these various factors resulted

a

statu¬

tory underwriting profit of $3,277,323 for the period as compared
with the $4,092,537 reported in 1949.
Investment

results

showed

improvement

considerable

and

higher by 12.4%. Net investment income amounted to $3,667,as against the $3,262,910 reported for the first half of 1949.

were

924

underwriting

Federal income taxes reflected the lower

ings and totaled $1,755,464 as compared with the
shown in the
United

same

period of

earn¬

$1,824,456 liability

a year ago.

States

Fidelity & Guaranty Co. has also released a
report covering the first six months of operations.
Net premium
writings for the first half of 1950 were the largest ever written
by the company in any similar period.
They totaled $53,191,772
and represented an increase of approximately 2% over the $51,-,
925,987 reported for the first six months of 1949.
an increase in unearned premium reserves'
premiums were higher by $3,237,710 and|
amounted to $49,4-35,153 as compared with $46,227,442 during thei

After

of

allowing for

$3,726,620,

earned

first half of 1949.
Losses and expenses were

that
the

considerably higher with the result-

underwriting profits were-down substantially from those of
earlier period.
The results for the six months showed an,

Investment earnings

additional

shares

to

premium volume.
this year and

.

part of which

stockholders

totaled

for the same

and

$1,897,227

as.

for the six months ended

June 30,,

the $1,624,147

reported

compared

period of 1949.,

,

to

•

-

ONALBANK

NA1

ol INDIA L MITED

and

INSURANCE

Bankers

to

Head

Oifi~e-

in

Colony,

India.

Stock Exchange
Curb Exchange

BROADWAY, NEW YORK 5, N. Y,
Telephone:
Bell

(L.

A.

BArclay 7-3500

Teletype—NY

and

Subscribed

B'shopsgate,

Paid-tip

Burma,

j

Ceylon. Kenyp

and Aden

Zanzibar

Capital

——£2,000,000

Bank conducts every description
banking and exchange business

also

allowed to benefit by the
tn'ttt'r

t

—£2,500,000

Trusteeships and

,

i

,

Capital-—_£4,000,000

Reserve Fund
The

1-1248-49

Gibbs, Manager Trading Dept.!

Specialists in Bank Stochs

)

in

and Uganda

Kericlio, Kenya,

Laird, Bissell & Meeds
York

Government

26,

London, E. C.
Branches

Members New York

the

Kenya Colony

STOCKS

New

Increase in

from the

contributed to the gain.

BANK

120

from the sale of'

came

part

Also dividends from equities have been higher

The investment earnings

1950,

sharply higher, reflecting a larger!

were

of funds invested,

the $3,029,779

with

underwriting profit of $1,303,981 icompared
reported for the comparable period of 1949.

1939 prices when the

prices of all other mining products have risen by several

in the first

handled and declined to $12,932,153 from $13,223,634
half of 1949.
.

Members

of

actually declining. Even though the results for the
equal the very excellent showing of last year

not

may

it is probable that sooner or later the United States Gov¬

ernment and other

sell

to have been uniformly better with all companies
considerable improvement in income for the period/

and losses were

volume

long

assets

shares them outstanding.

different

able in the

outstanding

earlier

totally

are

concerned.

com¬

a

a

Many of the fire companies have been faced with increasing
operating expenses, higher losses and lower volume. This is in
experience of a year ago when volume was rising

not they will eventually
that the world will

or

June 30,

equal to $13.98

A

-

of

phases

contrast to the

is certain

the gold parities accordingly.

net

on

it

will adjust

1949.' The

assets

but

June 30,

on

1950,

were

prospects
are

an

money,

1950

war.

prices, resulting in an increase in the
costs of gold production.
Unless the producers are allowed to
cover this increase by selling a large proportion of their output
in the unofficial markets, the higher cost would reduce their profit
margins, and would render the working of low-grade seams un¬
profitable. At the same time there would be a shortage of labor
and of new equipment, as there was during the last war.
Gold
mining companies are likely to have a lean time in case of another
war, and even in case of a prolonged rearmament race.
This
explains the paradox of a fSll in gold mining equities simul¬
taneously with a rise in the unofficial price of gold.
Taking a long view, however, it seems safe to assume that
the price of both gold and of gold mining equities will be higher.
If a third world war or a prolonged rearmament race should re¬
sult in a further substantial decline in the purchasing power of
mean

Nation-Wide Up

>

world

supposing that the official American buying price of gold would
be raised. This would only be conceivable as a result of a pro¬
longed unilateral American rearmament which might reverse the
economic balance of power through a marked deterioration of the
balance of payments of the United States. Although the fact that
at the time of writing Britain and other countries are not inclined
to follow the American example of large-scale rearmament seems
to point in that direction, it seems probable that the realization of
the full extent of the danger of a major war will induce all these
countries before long to join in the rearmament race to the ex¬
In

v

a

treme limit of their resources.

metals, 5.69%.

rous

in

increase in the official

30, last; invest¬

in the public

was

be settled, it seems prob"

the not too distant future.

The extent, to which most gold mining
companies would be in a position to benefit by the rise in the
unofficial price of gold is relatively small, as in South Africa
and in most other gold producing countries the producers have
to sell most of their output at the official prices.. And there is no
reason for assuming that a third
world war would result in an

bonds, 9.87%; and cash,
etc., 3.37%.
The largest common stock com¬

mitment

of

The

in

June

in

lasting upward trend, especially if the war should
long duration.
<

equities

stocks

off total

certain

in

variation

results appear

showing

marked and

be

shares

common

86.76%

represented

occur

vicinity of the official parities. From time to time there is bound
be a sharp rise through hoarding and speculative buying.
Should fears of a third world war materialize there is bound to be

on

on
the 46,303,180
outstanding.

will

to

the

share

crises

comparatively frequent major war scares. For this
there is no likelihood of a fall in the price of gold to the

reason

that date; and with $60,824,300 on
June 30, 1949, equivalent to $1.31
then

emergency.

an

be exposed to

31,

outstanding

shares

in

impossible to foretell whether

culminate

a

a

similar

that

is

It

considerarble

the

Even if the Korean conflict should

on June 30, totaled
$77,743,380. equal to $1.57 a share
on
49,653,714 outstanding shares.
These compared with total net as¬

MaiCxi

depreciation of

(if there should be one)
curing the first and second world wars, and during

was

easily be hidden or removed

that net assets

on

a

previous wars of any substantial magnitude. In the East
West, many people would prefer in time of war to
bank balances or securities
which might depreciate, or to possess any form of property which
is more liable to destruction than gold and which could not so

Shares Reports

$78,084,552
1950, equal to $1.58

of

hoard gold rather than to hold notes,

Dividend Shares, Inc., a mutual
investment company, announced

of

buy gold in the free markets, leading to a sharp
official prices. This was due to the
fears.
Since time immemorial wars always meant

many

was

able

sets

war

is

there

A

Korea made

otherwise during the third world war

accessory stocks versus 21.66%.

Dividend

to

increased demand for gold, partly for fear

than

35.44%; 18.41% in aircraft

versus

of Southern

currencies, partly, because gold is a convenient form
of wealth in troubled times. There is no reason why this should

manufactur¬

airline

invasion

the

of

reports

the national

pared with 42.83%
1949;

While

underwriting operations for the companies that- have reported so
far with some showing gains and others declines,
investment

realize the dangers of the international situation there

rush

a

revival of

June 30, 1950 com¬
at the end ol

on

closely the interna¬

increase of the premium over

as

in

the

a

posi¬

Hence, 59.83% of net assets

the price

falling, which was an indication
basence of any fear of war or even of
was

This Week—Insurance Stocks

which

the public

craft."

invested

the

the

a

When

military

Korea

't

Operating results of a number of the major fire and casualty
insurance companies for the first half of the current year have
been published during the past few weeks.

Exchanges, especially the rise in government loans.

past
six
months,
but
recently
greater emphasis has been placed
on
the stocks of the principal

manufacturers

Southern

of

summer.

was

stocks during the

common

invasion

By H. E. JOHNSON
Ml

question of time, and that it was bound to flare up during
On that assumption the slump in the price of gold
entirely unjustified, and so was the rise of prices on the Stock

only

re¬

maintained

concerned will refuse

the governments

Bank and Insurance Stocks

period

this

undoubtedly re¬
great acceleration in the

"In view of these circumstances
your

that

are

sell more in the free markets. Thus while
the short view may be unfavorable to a rise in gold mining equi-i?
ties it is distinctly favorable to a rise in the unofficial price of •
gold. Taking a long view, the possession of gold in any form, %
whether as metal or as part-ownership of gold mines, is a reason- \
able hedge against the secular trend of currency depreciation.;

tional situation it must have been obvious that an acute crisis was

munist aggressions in other parts

of this rearmament," the
port said.

any

Yet to anyone who had followed

scares.

war

of the world will
a

gold

The

pace

of

Stock Exchanges were very firm and
of

Einzig

Paul

Dr.

un¬

Atlantic Pact.

absence

the

o

nations

present critical situation in Korea
and the threat of further Com¬

sult in

by surprise.

the

before

marked

selves and

the
It is indeed remarkable
acute conflict could
the peoples in the democratic countries
a
false feeling of security.
For months

the

to

of the war, the sudden

end

the crisis in Korea took

development of

approxi¬

semi-annual

the chances

allow producers to

to

all free markets.

last

oi

hoarding, but contends it will

more

Holds, however, long view outlook is for higher prices
for gold and gold company shares.

LONDON,
conflict

with

compares

Looks for

the

to

benefit gold mining equities because of higher production

Fund

K2, made public to¬
total

$165,657,500
year and

For

Appreciation Preferred

Stock

'

high cost of production their output should decline this
would be a further reason for a rise in the unofficial price of gold.

not

$198,489,100, it is disclosed
by the semi-annual reports of the
Investment

price of gold is realized. Meanwhile gold producers
burden of high production costs. If owing

will have to bear the

official price.

ten

1950

were

Keystone

in the official

Dr. Einzig, in commenting on rise of price of gold in free mar¬
kets since Korean outbreak, foresees no immediate advance in

Keystone Reports
Keystone Funds

high

By PAUL EINZIG

tenants.

Combined

however, before the need for an increase
unofficial prices, there would be a decline in the output
which would necessitate measures to remedy the situation,
It may take years,

The Outlook for Gold

men,

men

13

(441)

were

approximately 25%

women,

and

Number 4930

jit-'

of

Executorships

undertaken

$

14

(442)

The Commercial and Financial Chronicle

With Francis I. du Pont
1

Special

to

The

CHICAGO,
lich

has

Francis
La

du

&

&

Street. He

Co. 208

J.

S.

Bache

Co.

Intercontinental Credit
(Special

been

40 Wall

Credit

formed

with

Corp.

offices

at

Street, New York City to
in a securities business.

engage

Officers

Gabriel

Neumann,
President; John Ziegler, Treas¬
urer; Thomas G. Newman, Secletary; and Katherine Farrell, As¬
sistant Secretary.
•

are

Now Sole
(Special

to The

G.

Baron

=

are
selling government bonds in quite
put it mildly, in order to keep prices of the
ineligibles from advancing. Mote investors are putting funds into
the restricted issues because
they believe yields on these secu¬
rities will eventually go lower.
This is real investment buying

to

going away. On the other hand, there has also
been
some
position building among the trading fraternity in
these securities.
According to reports, the Vies and the earlier
eligible taps have been the most sought-after securities in this
group.

obligations continue to

out

move

of

the

market, with
a bit more of the play at this
time.
The shorts,
are
not
being neglected.
The
partially-exempts are still in the limelight, although not too many
of them are changing hands at
Advancing prices. Switches from
the long eligibles into the Vies seemed to have
gained some mo¬
the

mid-terms

and

longs getting
nonetheless,

There is

behind

tions,

is

doubt that the great¬

lying

is

the danger

With Cayne & Co.

that

—

be

put

on

tracts

and

manufacturing

O-

labor

big

incapable

backlog

no

increases

and

advisable.

(b)

The

However,, if
is

centuate

upon,

constant

consumers'

such

the time

the

to
in

con¬

and

costs

therefore, their profit
anything but enviable.

may prove

and

automobiles

A great number of

of passing

the

sumer

big

companies

companies which had

An

con¬

between

of demand were most of

profits

necessary

urions

into

durable goods.

a

basis.

constantly pushed up¬

entered

labor

pa y-a s-w e-

go

automo¬

picture

is

in

increase

demand.

tax

credit operated to

ac¬

it is vital that

satement

Berdis has been added to the staff
*

mainly because

our

decided

in

rates

periods of heavy

to

as

the

amply

Carl G.

were

ward

budget should

large increase in supply of bonds, through war financing and the
inability of the Federal Reserve or the Treasury to stabilize in¬

disproved

that

CLEVELAND, Ohio

costs

it

terest

(Special to The Financial Chronicle)

ac¬

inflation.

of

to

the

of

power

attracted

was

biles, durable goods and home
buildir.g. On the other hand, their

hidden

essential

excess

Higher Interest Rates Likely?

in wait,

present events and

our

purchasing

public

no

da. ger

est

the

of

Chronicle:

tax

The impression in some quarters is that
"higher interest rates
in the offing."
This conclusion is based upon the probable

are

nor

Editor, Commercial and Financial

Therefore,

Bank

excess

existing distortions

are

Are

proprietor of Baron G. Helbig &
Co,, 60 Broad Street, New York
City.

profits taxation should neither
create new ones, and should
prevent profiteering without destroying initiative, Philip Corlney
offers formula based on both 1936-39 and 1946 49 periods.

Banks

sizable amounts,

sole

now

Warning that renewed

By JOHN T. CHIPPENDALE, JR.

Central

Pinancial Chronicle)

is

The Best Excess Profits Tax

Governments

on

mentum last week.

Proprietor

Helbig

Thursday, August 3, 1950

.

EDITOR:

THE

accentuate
The

and the bonds

to The Financial Chronicle)

Intercontinental
has

Reporter

So.

formerly

was

with

was

Our

Ulwith

Goldman, Sachs & Co. and

the past

m

H.

associated

Pont

TO

LETTER

.

Chronicle)

111.—Alvin

become

I.

Salle

with

Pinancial

.

stabilized

is

deficits. The latter part of the
higher interest rates is more than

for

reason

the

by

records, because if there is one thing
with large deficits it is the cost of
borrowing.

World War II is proof of that.

Why

f Cayne & Co., Union Commerce

should

increase

an

in

debt

by

Federal

interest

raise

it

a

should

the effect of backlogs of

A

not
If

accentuate the

existing

dis¬

tortions

and

an

stituted

should not create

new

It is easy to agree, I

with

erations

ones.

profits tax should

advisable, it should be in¬

prove

Philip Cortney

Formula

excess

in

the

above

mind.

A

consid¬

formula

for

the

basis

advance

think, that
the objectives to be attained in
levying
an
excess
profits
tax

ment?

should be:

cess

profits tax calculated in the

rates when private borrowings

Building.

in

case

a

semi-war

or

war

will be sharply curtailed as is the
period?
Why should interest rates

with other economic controls available to the
govern¬
Then again during the postwar
period, why have interest
rates been advancing? They have
gone up purely because Federal
has pushed them up.
If it were not for

selling

by the Central

Banks,

government securities would have gone to considerably
yields. This would have taken place despite very heavy
purchases of non-Treasury obligations. Also considerable funds
have gone into the financing of consumers'
goods.
lower

Where Will Investment
With
over

Audits

Certified Public Ac¬

by

countants:

Their Nature

nificance—American

Accountants,
nue,

270

and

Sig¬

Institute

of

MadisonAve¬

New York 16,

N. Y.—Paper

50c.
i

.

for

Framework

Long-Range

Agricultural Policy, A—Oscar HeHne and Donald Kaldor—National

Planning Association, 800 Twentyfirst Street, N. W.,
D. C.—Paper—50c.

Pension

Washington 6,

Common

and

Street, New York 5, N. Y.

—paper.

Survey of Banking Participation

f

timer

Broad

the demand that is

and

Trust

Chestnut

will

with controls

come

ment.

Do

such

What

over

conditions

Philadelphia 2, Pa.—paper.

with

even

the whole economy
by the govern¬
for higher interest rates?

in

line?

Also

that there will

the

had

have generally

revenues

most

an

before

It is

in

no

penditures.

its

history, arid despite

This will not have

War

Financing of a
truce, whatever one
country

With

the

has to
needed

terest rates

underestimated

an

can

or

at

has been
from

★

★

★
now

may

do.

call it, is

It

is

not

ex¬

the deficit.

upon

one

done

program

CERTIFICATES
NOTES

of the easiest

with

an

things that

rising interest

rates.

controls, and they will be there this time, in¬
monetary authorities may

be set at any level the

not, and the only

a

reason

Federal

seller of government securities is
to keep interest rates

war or no
war, and where will they find the needed securities to
put their monies into? The trend toward more and
larger pensions
indicates (in the future) a
growing shortage of investments rather
than an
oversupply. Such conditions do not make for higher in¬

terest rates.

BONDS

Reason for Present Rate Rise
increase

in

can

and will most

important

a

one

in the
economy could

& Co.

out

affecting

about

lower

While
45 Milk Street

15 Broad Street

NEW
,

YORK 5

WHitehMl 3-1200

,

BOSTON 9
HAncock 6-6463




bulk,

and

at that.

retard

money rates.

Controls

or

over

the other elements

stop the inflationary trend with¬

In the past direct controls have brought

interest rates.

some

INCORPORATED
?

been

very

unequal

backlog
or

demand

of

two years.

had

no

in

very

a

at

all,

Ore

more

demand

and

as

greater

a

of

as

such.

think

course,

of

equitable and take into account the
distortions from World War ii.
PHILIP

were

competitive market, the

so

can,

other formulas, but I believe that
the one just suggested would be

no

The industries which

backlog of

of the '36 to '39

excess

profits and taxed

filled the backlog within one

some

compared with the
to
1939.
All

1936

period multiplied by this national
average will be considered excess

between

had

as

from

profits in

mainly for the

following two reasons:
(a)
Many
industries

Continued

New York

percentage

CORTNEY.

City 19, N. Y.

Aug. 2, 1950.

that

from

page

5

Analysis oi Wartime Behavior
01 the Securities Market
variety stores—continued to decline during this "recovery" period.
(See Table II.)
and

Preferreds Resisted Better Than
Common Stocks

In

contrast

to

the

sharp decline in common stock prices in
high-grade bonds and preferred
stocks held exceptionally well.
Of 88 listed high-grade bonds,
only one showed any substantial loss. Similarly, only 17 of 216
listed high-grade preferred issues were down by more than 5%.
the

initial

period

of hostilities,

Convertible bonds and preferreds of course acted like the common
stocks of their issuers, and we find 46 of 96 convertible preferreds
down

by

more than 5%, and 11 of 12 convertible bonds also off
than 5%. Secondary bonds and preferred stocks acted

by

more

grades.

securities will
means

by

far

no

doubt be sold to the

the

far

banks, the

largest part of the securities

during the coming period of conflict, will be
sold outside of the
banking system. This will be done in part to
limit the money supply, to meet the non-bank
demand, and to

are

as

well

as

high-

shown in Table I.)

better

showing of bonds and preferred issues un¬
doubtedly reflects the fact that such securities are not as vulner¬
able to the effects of controls and, particularly in the case of bonds,
increased taxes, as are equities. Equally important to the sta¬

to

bility of such issues, however/ was the general belief that our
engagement in hostilities would ensure the continuation of "cheap
money" policies.

Market Pattern

The general sharp
of

our

stantial

Similar

to

Post-Pearl

Harbor

initial market decline following the shock

entry into the Korean hostilities and its subsequent sub¬
recovery were on an overall basis quite similar to what

occurred

following Pearl Harbor. In each conflict the decline in
was approximately 10%, a good part of which
during the following two or three weeks. In both

the first three weeks
made up

was

periods, moreover, many of the individual security groups acted
very much alike.
Thus, such expected "war babies" as explo¬
sives, petroleum, and steels again surprised by selling off initially
with the others. Some industries acted quite well price-wise in the
first month

following hostilities, including cottons, leather, meat¬
packing, nonferrous metals, rails, rail equipment, shoes, soap and
sugars.

War-to-War similarities included substantial declines

the motors, finance, gold mining and

sold by the Treasury

keep interest rates from declining.

(These price movements

The

move.

not too

Aubrey G. Lanston

have

different industries,

1949,

period

re¬

a

the conditions of
activity and competition

Overall

likely be reversed when conditions warrant
Interest rates should not be confused with
the other
economic forces which are the real
inflationary ones. There can
still be low interest
rates, without adding or detracting from the
strength of the inflation. Interest rates are
only one force and
a

as

of the war,

interest

rates, which has been in evidence
recently, is due entirely to the policy of the
monetary authorities
such

doubt that

considerably better than equities, but not quite

What about pension funds and the
securities they will absorb
and in the future?
The growth of these funds will

and

no

armed

going lower.

The

is still strug¬
result of World War II.

as a

There is

Bonds
or

continue,

BILLS

1946 to

gling

usual"

as

fit to agree upon. With our
high debt, is it logical to assume
that rates are going to advance?
Would there be higher interest
rates if the Central Banks should
stop selling Treasury obliga¬
tions? To be sure, there would

TREASURY

the average increase of profits pf
all corporations in the period from

our economy

High Cost?

rearmament

a

"politics

adverse effect

Financed

war

some

trimming of non-essential

see

u. s.

perpetuate distortions with which

very

doubt be considerable

Is

a

been

likely be

some leeway from this side of
well realized this time that the nation
uncertain period with a much
larger debt than it ever

equation.

enters

manner:

The government will determine

about

taxes, and this most likely means considerably
higher taxes, if there is to be a prolonged conflict? Will this not
do something about
keeping revenues and expenditures much
so

to

make

Co.,

Streets,

grow

rearmament program?
IJow are insurance companies, sav¬
ings banks, trust accounts and pension funds going to put their
resources to work at
higher rates with less mortgages and non¬
government obligations? Also state and municipal
obligations will
not be as plentiful as in the
past, because of restrictions which

Industry and Con-

Credit—Girard

growing and will continue to

the

there will

in the Finance

semi-war

a

assessment,

part of

economic

economy
and its accompanying controls
mortgage financing and consumers' borrowings, where will
be investments other than
governments available to meet

more

Plans

Stocks—Morgan Stanley & Co., 2
Wall

there

following

ing without destroying incentive.
(2) It should not accentuate and

sult

Money Go?

be
equitable, could be the following:
All companies shall pay an ex¬

It should prevent profiteer¬

(1)

of

Investor

Could

Not

Pearl Harbor
Despite the
ence

would

many

have

mail order companies.

Uncritically

in

t

Follow

Experience

similarities, however, Pearl Harbor experi¬

misled the

investor in

many

cases.

This again

,

Volume 172

Number 4930

.

The Commercial and Financial Chronicle

..

illustrates

a
basic point which we have made in the preceding
namely that planning an investment program solely
according to experience may be just as dangerous as militarily
preparing for a previous war. Many of the groups which did
relatively well in the first month after Pearl Harbor—such as

the leaders

articles,

which

building materials, drugs, household furnishings and printing—
have fared most poorly in this conflict.
Others—sucn as oepartment stores, petroleum, shipping, rubber and
tires, woolen, and
air transport—which acted poorly after Pearl
Harbor, are among

continued

TABLE

I—THE

INITIAL

Price Changes of Securities Listed

gold mining, finance and utilities
come-back from their sharp
December, 1941, have shown no recovery powers so
far at the present time. As a matter of
fact, 11 industry groups
which enjoyed some measure of recovery in
January, 1942, have
sell-offs

of

after the

Tot»l

in Group

Industry Group—

9

Agricultural

15

Aircraft

10

Air

Higher

Machinery.

r

ll%-

21%-

of

Korea

reached

is

in

the

first

Conversely, two of the industry
break, have
security price

shown

in

no

come

back

20%

30%

30%

War

appreciably now.
following Pearl

r

in

offers the basis for

uiese periods

number of

a

it is perhaps surprising that the overall move¬
periods were so spnilar. Many observers undoubt¬
irst,

0

1.17

0

0

9

Manufacture

6

0

0

0

0

edly expected the decline following Korea to be greater and the
recovery less than in the earlier conflict.
Such expectations were
the fact that at the outbreak of hostilities last June the

Oj

2

7

0

0

based

Manufacture

1

ll

1

0

6

0

market stood at its second

Arto

45

1

^ Wo

9

Equipment

0

4:

8

21

10

2

0

0'

1

10

0

0

0

0

3

0

0

average up
by more
whereas, contrastingly, Pearl Harbor found stock prices follow¬
ing a two-year bear market with the averages down almost 20%

0

1

3

0

0

0

from their 1939 highs.

surprise to most people, the Pearl Harbor attack oc¬
more than two years of a world-wide conflagration
into which it was apparent that we would eventually be drawn.

Transport

2

Biscuit

4

Err a1

_______

Eanks

3

____

34

Manufacture
Manufacture

Euilding Materials

0

0

4

10

17

0

0

0

1

1

0

1

4

18

5

1

13

-

0

29

highest historical level, with the stock
than 40%, over the previous 12 months;

3

Camera Supplies
Chemicals

2

1

Coal

0

5

6

2

0

Communications

0

2

2

2

2

Confectionery

0

1

0

4

0

0

Containers

0

0,1

5

Ccsmetics

0

0

1

1

differences in market • group movements as did occur
partly explained by these contrasts in the antecedent ele¬
ments.
Thus, the better showing of such groups as building

0

3

0

after

Such
be

can

4,0

2

10

materials, finance and house furnishing companies in 1942 can be
explained by the fact that security prices in these groups had
already suffered'a sharp decline by the time of Pearl Harbor.
Similarly, the poorer showing of expected "war babies" such as

Ea:ry

0

0

0

3

0

0

31

T epartment Stores

1

1

6

19

4

0-

13

Distillery and Brewing..

0

3

1

8

1

0

aircraft

0

1

5

8

3

0

fact

17

"

Drugs
Electrical

7

3

Equipment
Engines and Motors
Explosives

2

Feed

2

Fertilizers

7

Finance

4

26

Focd

0

point out again that past performance cannot be uncritically used
for current investment programming.

3
0

0

1

0

1

0

0

0

1

0

0

0

0

2

5

:
*

Machinery

Motion

'4

7

0

0

2*4

0

which

5

1

0

Harbor levels.

17

7

2

cial

/1

1

0/

5

1

1110

0

15

3

4

6
0

2

15

8
1

,

10

0

"lows" it took many months to recover to

Chronicle," July 20, 1950.) ; It will be interesting to note
present broad stock market pattern will continue to

<5

11

3

Comparison
■"

2

7

2

0

7

0

0

(Prices Dec. 3, '41—100)
Dec. 24

Dec. 3

2

0

1941

1941

7

0

0

100

92

101

15

Paper

0

2

2

11

0

0

100

93

97

Aircraft

44

Petroleum

0

6

6

29

3

0

100

74

84

Air

0

1

3

2

10

100

89

91

Apparel

0

0

1

2

6

9

100

82

90

Auto

1

20

29

17

4

0;

100

93

100

Printing

Publishing

and

71

Railroads

20

Railroad

-

Restaurants
Rubber

and

Shipbuilding
Shipping

7

Shoe

;

Manufacture

100

91

L__I_______'

105
96

type
"B"

1

0

1

100

95

96

Chemicals

12

5'

2

0

100

90

99

Coal

100

96

112

2
2

1

0

0

100

85

90

Communications

100

92

93

3

0

0

0

100

86

93

Confectionery

4

2

1

0

0

100

93

96

Containers

100

84

86

96

99

Cotton

100

102

0

100

0

100

0

0

110

0

88

98

80

88

100

94

93

100

Textiles—

95

100

'

*

_1

4-

93

85

steel

switching locomotives for use at
Vancouver, British Columbia.
'

Richard

Paine, Webber, Jackson & Cur¬
25 Broad Street, New York
City, members of principal stock
and
commodity exchanges, an¬

tis,

New

York office of A. C. Allyn
Co., Inc. Prior thereto he was

&

manager

of

partment

for

fice

1

2

0

1

100

78

85

10

0

0

100

94

102

Finance

___

100

77

73

Food Chains

100

87

91

r

100

81

93

Gold Mining

100

77

73

100

85

96

Household Furnishings-_

Trucks

and

Buses

0

3

3

3

0

0

100

90

108

Leather

100
100

87
99

Machinery

100

93
89

2

13

49

6

3

100

92

101

0

1

10

5

0

0

100

85

88

0

2

1

0

0

0

95

0

0

110

0

rect

129

231

124

„

-Lower by-

No

More

Appre-

-i

Companies

1J%-

21%-

20%

30%

194

11

5

4

.65

24

25

2

1

3

47

23

19

4

0

12

306

58

49

7

1

1

Fisher

Mail Order

—

'

106

Meat Packers

100

97

99

109

Metal Fabricating
Motion Pictures

100

95

100

100

93

of

100

99

109

Nonferrous Metals

100

99

97
105

91

93

Office Equipment

86

96

Paper

100
100

85
88

83
96

90

86

Petroleum

100

93

99

——

Higher

Printing

100

88

88

Railroads

100

96

111

R.

95

105

100
Rayon
100
Shipbuilding* —_—100

97
88
108

109
£0
122

Stukel

100

98

101

100

97

95

ton

100

97

98

with

100

87

95

100

99

105

Grade

2

Railroad

100

86

91

97

106

100

92

93

96

106
112

Sugar

100

Equipment —1

Steel

99

Publishing

and

Shipping

___•

Shoes

Soap

-----

_

100

92

101

100

—

103
90

74

Tires and Rubber

100

21%-

than

100

90

101

Tobacco

100

94

30%

30%

100

86

95

Utilities

100

85

84

85

0

0

100

90

98

Variety Stores

0

0

100

85

93

Woolens

0

0

100

90

95

STANDARD

0

100

91

98

DOW-JONES

Secondary

2

25

7

2

Convertible

0

9

7

4

4

119

14

0

-

100
______

&

with

TOTAL—All




Bonds

'

t

W.

|

J.

Co., Rand Tower.

Lynch i
—

Dale

Catherine

E.

associated

become

Lynch, Pierce, Fen-j
Rand Tower. Mr.'

Beane,

Wikman
&

and

have

Merrill
&

ner

was

formerly with Day¬

Gernon.

Miss

Stukel

J. M. Dain & Co. and

was

Piper,

Jaffray & Hopwood.

100

93
-

91

121

Joins Kalman Co.
(Special to The

Financial

Chronicle)

120

ST.

PAUL,

Spindler

POOR'S

416-Stock Compos. Ind.
144

&

Wikman

93

20%

20

with

100

'90

93

with

Industrials

100

89

92

cott

has

Kalman

Building.

Minn.'— Peter
become
&

Co.,

G,

affiliated
Inc.,

f

have

Thiel

A.

MINNEAPOLIS, Minn.

99

70

11%-

0

j 1

104

10%

1

>

«

j. <

(Special to The Financial Chronicle)

104

(?%-

36

G.

and

Two With Merrill

103

Chg.

More

di¬

a

Goldsbury

associated

Loewi

90

liable

Appre-

,

Companies

of

Akin-Lambert

MINNEAPOLIS, Minn. — Rich-j
C. Olson has joined the Staff

87

100
by

to

ard

97

100
Lower

No

installation

wire

70
an¬

Loewi Adds to Staff

90

.

100

Part III—Listed Bonds

Inc.,

(Special to The Financial Chronicle)

87

100

0

1

Co.,

MINNEAPOLIS, Minn.—Robert

100

30%

5

Total

High

j

,

100

than

10%

Chg.

the

open

100

G%-

ciabJe

Higher

&

Two With

100

24

Saxon

Street, New York City,

(Special to The Financial Chronicle)

100

421

Part II—Listed Preferred Stocks
TotM

88

,

Co., Inc., 639 South Spring Street,
Angeles, Calif.

100

31

Industry Group—

of¬

Goodwin, Inc.

Los

100

100
*

A.

nounces

90

0

Variety Chains

in Group

&

Akin-Lambert Co.

98

100

Utilities

16

Number of

Bond

de¬

York

G. A. Saxton Wire to

82
105

'•

TOTAL—All Pfd. Stocks

municipal
New

the

Goldsbury & Co., Twin City Fed¬
eral Building.
Mr. Fischer was
previously with Strauss & Blosser. j

Fertilizers

0

..

of

the

become

Electrical Equipment

100

0

433

.

Mr.

E.

104

96

73

.

' |
Shanley was formerly in
trading department of the

partment.

90

94

100

1

.

<

92

100

0

0

—

the

de¬

91

0

5

-------T

Shanley
with

bond

municipal

87

0

10

7

Convertible

its

100

3

6

8

Secondary

in

T.

associated

85

3

96

Richard

86

1

121

that

become

100
100

3

—

Shanley Withj

Drugs

0

Grade

"J

Paine, Webber Co.!

95

0

High

various

96

Taxi

216

of

cars

101

and

,

passenger

94

Transit

Industry Group—

"B"

94

5

0

90

Tobacco

in Group

type

100
100

1

10

100

11

Number of

locomotive

100

__—

0

TOTAL—All Com. Stocks

type
Diesel-

6

Distillers

Dairy
T—
Department Stores

15

0

-

17

960

units;

109

0

2

Cable

Diesel-

3

locomotive

types; and 3 Diesel- electric

Pine

2

0

and

units;

units; 3 all steel 48 seat,
air
conditioned
coaches; 38 all
steel,
air
conditioned
sleeping4
cars;
1 all steel, air conditioned
observation-sleeping car; 36 all

88

1

0

Wire

lead

booster

86

Building Materials

16

Vegetable Oils

locomotives;
10
freight locomotive

freight

passenger

100

99

0

2

stand¬

new

electric passenger locomotive type
"A" lead
units; 2 Diesel-electric

G.

98

87

11

3

the
pro¬

Diesel-electric

booster

78

89

100

6

9

"A"

electric

82

100

0

10

:__

of
to

equipment,
approximately

cost

Diesel-electric

100

0

Sugar
Sulphur

Woolen

to

$17,688,000; 23
road-switching

84

1

11110

Rayon

estimated

89
90

0

5

______

following

83

1

1

Cotton

sale

used

railroad

87
90

4

0

Apparel

the
be

ard-gauge

100
100

5

Steel and Iron

-

will

vide for the

Auto

0

Soap and Cleaners

—

from

certificates

100

Manufacture

0

16

2

93

11

35

4

100

Transport

0

!__

Commission, at prices
yield from 1.40% to 2.625%. ;

Proceeds

115

Equipment
Baking

100

9

100

3
1

Tires

__.

6

13

Manufacture—

0

__!

2

94

0

Equipment

5

4

1950

89
103

0

,

Razors

6

1050

100

Agricultural

0

—

2

10

-

1950

Machinery-

Industry Groups—•

1942

9

1

Radio and Electronics

*

'

Jan. 7

16

1

to

the

6

7

Commerce

firm

,

Security Prices
Follow...g
incident
<Prices June 21, '50—HMD
June 21 July 12 July 26

Following Pearl Harbor

0

18

"

II

Security Price Movements—by Groups—in
following Our Entry into Shooting Wars

of

1

Metals

Plan, the

are being
offered, sub¬
ject to approval of the Interstate

nounce

Security Prices

0

0

the Philadelphia

certificates

the First Month

0

0

under

has

0

Nonl'errous

8

their pre-Pearl

(See Part II of this series, "Commercial & Finan¬

0

0

and

trust certificates
maturing
semi-annually from Feb. 1, 1951
to Aug. 1, 1965, inclusive. Issued

security markets.

TABLE

1
•

Inc.

are

offering $14,130,000
Great Northern Ry. 2%%
equip¬

By the second
month after Pearl Harbor almost all securities turned sharply
downward and continued to decline for several months; from

10

15

0-

of this War's

course

Office Equipment

34

observing

after

series

resemble that of the earlier conflict.,

0

Gas

Perhaps the

1939.

make, however, is to

whether the

15

\

the further

0;

0

Pictures

Natural

8

1

0

Products

can

this

continue

to

2

0
—

intend

11

0

—

authors

3

0

Parts

Meat Packers

The

4'

0

and

Mailorder-

7

important observation the authors

associates

»»

0

0

of activity as a result of the outbreak of war in

0

Companies—

3

7

0

110

Machine Tools

Metal

1

0

Leather

11

0

0

Furnishing—

Investment

20

1
0

.Insurance

34

0

10

0

__

:

Household

10

0

4

0

Hosiery

3

most

1

1

0

7

2

0

2

;

Beverage

Gold Mining

28

4-0

0

0

Food Chains

27

1

0-0

0
0

9

shipbuilding in 1941 than now is explained by the
previously been enjoying a high rate

0

-

8

and

that these groups had

0

'

——

and

Also, while the shooting in Korea certainly

a

as

curred

0

5

came

0

8

on

Halsey, Stuart & Co.

ment

Outbreaks

following the present and last conflicts, the comparison of

ments in both

Ry. Equip. Trust Ctfs.

groups—

Table II.)

at

Offers Great Northern

immediately

recovery

movements

Halsey, Stuart Group

shock

While it is not the purpose of this article to explore the rea¬
for the similarities and dissimilarities in.
security price move¬

ooservauons.

th*n

10%

levels

Pearl Harbor

price movemeriLS

More

Chg.

the

Differences

Lower by

6%-

strong

a

from

hostilities.

comparison

ments

Apprecable

decline

13, 1950

No

Number of

make

Stock

Stocks

Companies

to

Korean

sons

Common

to

in

Harbor and

the New York

Exchange between June 23, 1950 and July
Grouped by Industries and Classes
Part I—Listed

able

distillers and petroleum—which showed

IMPACT

on

Securities of

now.

were

(This
*

15

(443)
J*

„

Endi-

16

The Commercial and Financial

(444)

Chronicle

but it's too blamed
through all of them.

Tomorrow's

*

wish I

I

Markets

*

had

Walter

from

here

in

on

work.

depends

a

sys¬

tem.

These

*

The

distinguished gentlemen need

around

now

about

are

Both

*

industrial

is

average

206-207; the rails

no

elaborate introduction

their local

served

&

organizations

many years.

present is a national officer and John F. Egan of First California

Francisco is

Company, San

a

industrials confirm to

the

until

member of the Executive Council

61.

228.38

by going through the

I

stopped.

levels, fol¬

cline.

There's

chance that

by another upsurge
bad
higher ground. There are

On

an

o u

sudden

a

down

that level

ts i d

Orders Executed

on

the

Pacific Coast Exchanges

be

Schwabacher & Co.

than two

more

present

industrials

can

retreat to

200-205, the rails

John

Stock

driven back to around

York

Curb

Exchange

Francisco

55

(Assoc'ate)

such

Exchange

Chicago Board of

Trade

New York 5, N. Y.

7-4150

San Francisco—.Santa

Fresno—Santa

100 S'wes

@ 16%6

tee.

We

are

indeed

and

it

Cen. Motors

$250.03

mos..

337.5)

mos..

8% 6

mos..

137.5)

V/2 Ho\. 6

325.00

.

6

45 \9)

6

425At

6

387.5)

237.5)

.

87.53

.

^ale oi

350.00

p

<fr

St

Calls
Assn.

Br »k»*>

*

Im

$-*47*

The

the

June

comparable

26

important

kind

in

of

inflation

we

'if™.
I

your

of

stocks will

to

over

letter

a

to

secure

a

views
do

not

coincide

expressed

some

investing
now

to
or

be

King

with

those

may

h^ve in that

from there.

as

current

and

4

ritt
the

convince the most skeptic.

May

will unite to make 1950

we

doing

.

IIMHfi:




and

<

Co.,

with

Inc.,

22

King Merritt Staff
—

M. W. An¬

is

&

representing King Mer¬
Co., Inc., with offices in

Northern

(Special

to The

BEVERLY

4

away,

a

primary

much to assist

most successful year

a

National

Bank

Lynch Co.

Financial

Chronicle)

HILLS, Calif.—Don¬
Caminsky is now;/"affiliated
with Merrill Lynch,
Pierce, Fen¬
ner &
Beane, 454 North Camden
ald

Drive.

doing.

are

we

clients

to

we

advertisingly.

City.

that
out

That is because

have

Enormous

been

War

of

aspect

is that it is very creative.
damn

so

liberate

create

to

so

war

If war

exciting,
much

so

many

people

or

otherwise

which

sober

very

Opportunities

unfortunate

for young

York

will

about securities.

minded

An

feel
turn

I

dreams.

markets

Americans

cir¬

the

whole, despite

a

for stocks.

and

New

As

somber

war

good

men¬

a

under

best

seems

cumstances.

the

be

can

position
quickly in whatever di¬

move

rection

that

us

Advertising Committee

Broadway,

advising a
the part of our

am

on

that

so

didn't

120

I

trading attitude

wasn't

if

it

energy

opportunities
organizations,

would

have

had

MERRILL LYNCH, BEATS I. T. A. OF PHILA. AT SOFT BALL

the treadmill of pa¬
tience and precedence, we might

Pitching softball for the team representing the Philadelphia

has said the problem is to release

stay

not

office

of

Merrill

Chandler's

Lynch, Pierce, Fenner & Beane, Miss Charlotte
failed

curves

to

dazzle

the

batting

of

eyes

her

op¬

ponents, members of the Investment Traders Association of Phila¬

delphia, in

twilight

a

nine to three.

the

Traders

played

game

last week.

The

"mob"

Joe Dorsey caught for Miss Chandler.

was

Carl

Cook, First Boston

Corp.,

wiches

were

served

to

won,

Battery for

the mound,

on

the

Bob Dono¬

Beer and sand¬

attending fans and surviving players.

on

have

the

Sicily

The

war.

Rome

and

chimedes

to

Russell

Bertrand

wars.

creative energy of

out

the

with¬

war

war

between

stimulated Ar¬
discovery of an

essential principle in physics. The
Crusades

brought

revival

a

of

business and invention to Europe;
the

Edgar Christian, Blair-Rollins & Co., Inc., and

Blyth & Co., alternating behind the plate.

between

war

the

Spaniards

and the Saracens brought a young

to power who could under¬

queen

stand

a

when he spoke
brought about the dis¬
of the Western World. The
young man

to her and

Continued from

page

covery

4

last

war

stimulated atomic energy,

antibiotics,

liticians, could not learn.

In their

dreams they knew what the hand¬

packaging

electronics, synthetic
materials, etc.
On a

commercial,

normal

basis

;

we

might not have penicillin yet and
we might be 50 years away from
takes which come from America.
any
commercial
application
of
not
being able to grow up, to
shake itself free of the umbilical atomic energy. What this war is
tie with Europe. Before the Pales¬ going to stimulate, it is obviously
tine War an American Naval cap¬ too early to know, but it is going
tain told me thatt it would take. to create opportunities for many
500,000 marines to keep order in\ people far faster than they would

it may be me who is crazy.

Because
war
has
its
creative
they would fight with the
same ingenuity and ardor that he; aspects and also because it has.its
would fight with were he defend¬
inflationary aspects it drastically
ing Boston or Cape Cod.
This, changes the acceptable level of
turned out to be a comic error. the earnings of well run, well es¬
But if we underestimate the Rus¬
tablished
companies. The 1 earn¬

to say

I, just a security analyst,
that not only the politicians

but

large part of the nation is

on

am

a

the wrong track.

entirely

With Merrill

BONDEX—
BANNERS INVESTS *T SFRV'CE

so

a

fighting
7,000
give me the uneasy
feeling that we don't know what

have your confidence in this

we

alone.

line

If

But I
you

dispatches,

am

read

and

not

the

espe¬

cially those of Homer Bigart, you
get a feeling that there is some¬
thing wrong that is deeper than
mere

technical

mistakes.

In

Palestine.

sians and Chinese
underestimated

Koreans,

into

truly tragic

a

"Tribune"

misses

the

the

point.

I
not just Adminis¬

think, these are
tration
mistakes, these are na¬
tional mistakes. They are not the
mistakes

of

the

conscious

intelli¬

gence, they are much deeper mis¬

takes,

mistakes of the emotions,
deep prejudice, mis¬

mistakes of

have

come

otherwise.

-

we

badly

as

Jews

we

and

could be lead
error.

ings level of dozens of companies,
steels, motors, chemicals, stores,
oils, etc., are dramatically differ¬
ent than they ever were before.
The contrast between prewar

dwelled

even

realize

not

Over-Compensation

a

are

But

as

the

North

review of the foreign policy mis¬
takes of the Administration over a
.years.

could

to¬

day's "Herald-Tribune" there is

of

He

that

period

654 Madison Ave., New York 21

re¬

of the contact you

name

Sugar hoarding,
a slap¬
controls,
few divisions of

economic

Koreans

miles

HAROLD B. SMITH, Chairman

Who

Building.

Bulletin

yeekly issues.

.Publishers of

connected

now

BEMIDJI, Minn.
drews

and ro"«ive

important

is,

up

interfere

writing meant,: but they could not
possibly come -out and say so.; Of

King Merritt

Merritt

Joins

trading.

Frank
not

are

company and let Frank and Herb Seibert carry

matter and prove to those who are

front

-to

You

With such cooperation we feel certain results will

probably why the Babylonian po¬

the

comes

tally and financially in

President,

our

Should you make

security, send along the

any

of

East 40th Street.

right

can

their quotas?
from

advertising.

might have.

you

this

in

necessarily at

CLARKSTON, Mich. —Jack E.

and

by

some

personal contacts
market in

duties,

your many

signed contract but simply advise Frank of

people at the controls to learn, be¬
cause" they' will
be risking their
political lives if : they do. That is

accordingly.

Earned

SELECTIONS

n»xt

received

act

and

nnrch'»s',s

continue

Send $1

all

us

honored in

T&ZPeace Stocks in Wai Markets

think

With

recommendations

TIMING

you

Jack, in spite of

with

serve

be further

may

buy

They are presented
those of the author only.]

coliupxe/

development

gives concise
sales—and

have

quested

with

Chronicle.

Current issue of Boxdkx Weekly
Stock Bulletin discusses this

help

com¬

talked about but didn't see, is
now
in the offing.
The $10

market decline lead

reversal

a

John and

they

Burkholder, relative to corporate

course

next

opinion

put your respective affiliates
You

van,

Ume

REVERSAL?

on

of Tru¬

paratively little.

[The

llBflllll

Stock Market

to

pursuance

quest, will touch profits

article

Can

in

up

man's $10 billion request plus
his additional $4 billion re¬

line.

Broadway, N. Y. 4 Tel BO
iiwaitiiii

set

billion asked for will not

*r

THOMAS, HAAB & BOTTS
Dealers

economic barriers will be

362.53

Monsanto Ch. @ 56% Oct. 2
U. S. Steel
@ 363/4 O t. 6
Swift latl.
@ 13% Sep. 13
All. G. & W. I. @ 76
Dec. 12

Put

fortunate to have them

very

personal

my

Pershing & Company,

tions of various kinds. What¬

(5)

Subject to prior

said:

stocks, and

peace

for

NSTA

ever

@ °Sy2 0*.
tjkrysl'r Corp. @ 67% Q?t.
Mission Corp. @ "2% (Lt.

Members

is

will

move

•

@
.

sur¬

Greeks

something

caused

all

Vice-Chairmen of the National Advertising Commit¬

from here

Rosa

Plus Tax

Pac. @ 22^ 6
.

If,

question is what to do
on.
My answer is to
regard the market as in an up¬
trend subject to news reac¬

Barbara

SPECIAL CALL 0\'

West. Union

The

rush

North
are

hardly be
greeted with complacency.
a

Egan

F.

and both

The

Monterey——Oakland—Sacramento

Pepsi-Cola

John

Teletype NY 1-928

Wires to Principal Offices

.

serious damage

any

however, you're long of rails,

Exchange

Stock

Wall Street

without

Latshaw

can

,

York

Corp.

a

elsewhere.

dash

a

to the technical structure.

Members

New

Rorth'n

locks

timber

wolves, plus,
few Russian spies with

that

nized

on

Radio

from

of

whom the gods would de¬

dumping

200.

national affairs.

around

Per

rescu¬

girl

with clear thinking. This happens
frequently in the stock market; we
all experience it often enough to
know it. But it is not so well recog¬

e

different
outlook.
Having jumped to
new
highs they are now in a
vulnerable position. Whereas

Securities

•

by

bombs.

meant

you

Private

boy

from the subconscious to

piece of

around

to

by

The rails

COrtlandt

one

little

haired

without

house

a

perhaps

the

points.

Pacific Coast

14

from

go

The

Niagara, and
then, since the girl is his beautiful
mother, and the Falls represent
his
noisy
father,
he
becomes

"Those

think

a couple of more the¬
But the news, or interpreta¬
ories based on charts,
tape
and straight hunch, or what tion of it, will have to be real
bad for the averages to break

San

golden
very
falls

the

atom

to

will drive the indus¬

news

trials

probably

New

to

another.

dream in which he is

a

the

in

I think about 205

methrd downside,

lowed

✓

fantasy
to

rounded

market to back will mark the limit of any de¬

and fill at current

into

where

be

they'll

technical

the

for

210

to think of

me

any one

frightened and dreams he is alone

can

attempt

we

stroy they first make mad." They
❖

#

*

calls

another

about

figure.

Another

like the industrials

me

make

of

cal

ing

Latshaw, Kansas City, Mo. at

or

dream

has

in national affairs for

Uhlmann

of

Latshaw

have

Assuming no
reaction in a bull market in change in the news picture in
which there'll be little change the immediate future, it looks
the rails

our

else conquering
the United States.
But it is typi¬

membership.

John

have the

defend

having in South Korea it

Russia

AD LIBBING

our

reason

providing

ludicrous to

seems

to

real

not

to

integrity

are

we

and have been prominent
*

great deal on what averages

you're studying or the system
you're following.
The Dow
theory lads see a secondary

a

national

force

than

1950

no

do

we

fundamental

hell bent

in

operate
with
reasonably
good
sense.
Considering the tough time

Unfortu¬

do fuses to be reduced to

will

market

the

Notes

save

nately, I haven's got a system,
mainly because I discovered
years ago that the market re¬

By WALTER WHYTE=

What

of

lot

a

me

Says—
=

It would

tual edification.

C|"J" /L

Vy

*" " *

mu-

that

think

to

our

III

in 1949 and there is

pat system

I could set down for

War

World

for

*

a

Thursday, August 3, 1950

..

that they are more

cate

have you,
hot to go

.

Right

it

now

seems

to

over-compensating.

about

in

our

a

world

military

of

power

we

haven't

Having

don't believe it.

fantasy

tremendous,

we

are

and

is so fantastic that we
gotten
used to it, and

postwar
me

But big wars are

complex

things cannot be the
will

I

upheavals;
same

believe

again.

changing, it seems to me, not to a
world of reality but to another

Investors

dream.

gies which have been plowed into
our
companies in various ways
and
the
persistent conservatism

There

is

nothing

in

the

facts to indicate that the Russians
are

we

any

are;

more

masterminds

than

there is nothing to indi¬

benefit

from

the

immense

with which postwar
er

someday

has been valued.

earning

ener¬

pow¬

Number 4930

Volume 172

Continued

from first

.

changes

page

tudes

reflected in the atti¬

are

the

of

community towards

the economy and towards the re¬

lationship

The American

Economy Now
And Its Capacity ior Growth
all

dwarfs

ernment

other

eco¬

changes that have occurred

nomic

during the last half century. The

is steadily becoming
more important pro¬

government
and

more

a

a more

income; it is becoming
important consumer of the

output

of

coming

a

ducer

of

income, taking
of

a

be¬

redistributor of
larger proportion

incomes

personal

out

it is

the country;

major

and

paying

larger proportion to persons

a

agencies
based
the

is

on

operation

The

traditional

of

off"

the

econ¬

the

than

of

production

services. In 1948 the
government produced about 7.8%
of all goods turned out and con¬

17%

nearly

sumed

the coun¬

of

try's output.
4

important
change in the economy has been
the organization of employees into
trade
unions.
Today the trade
The

(2)

union

next

most

about four

membership is

times

large

as

unions

in

as

1929. Trade

represent the
strongest organizations of sellers
in the country. The strong pres¬
sure
of unions for higher wages
will undoubtedly accelerate tech¬
nological
progress
by
forcing
managements to work harder to
as

a

group

in

willingness of enterprises
to
borrow
at

the

individuals

short-term

banks

of

or

lend.

accounted

banks

commercial

to

rise in the demand
for labor will bring about an in¬
ever,

a

for

relative

has

line

to

which union

been

of

one

changes in
business during the last 50 years.
the

most

important

Expenditures
search

are

industrial

on

now

many

than the expenditures of

all of the

country.

the

of

universities

the

ready-made

'and
distribution

wide

and

low

start

mark-ups

new

reach

promptly
makes it

consumers

for

manu¬

can

of

at

easier

new

that

outlets

millions

to

availability of mar¬

facturers. The

keting

nation¬

cheap

manufacturers

in business.

to

They encourage

competition among suppliers and
avoid the accumulation of slow-

moving items. They make prices
more responsive to changes in de¬
mand in
periods of contracting
demand by cutting prices to con¬
sumers and
by finding manufac¬
turers who will supply goods at
prices consistent with the reduc¬
tions.

(5) The rise of the terms loan
is an important development in
It makes capital avail¬
medium-term loans out

banking.
able

for

bank-created

of

than

out

of

money

savings.

The

rather
term

particularly useful to en¬
terprises
which
are
growing
rapidly and which need to raise
capital more quickly and simply
than can be done by a bond issue.
The use of term loans helps the
loan

is

economy
crease

in

its

needed

the

obtain

money

supply

in¬
as

One of the most important
recent improvements in the econ¬
(6)

has been the collection and
publication of information about
intentions—intentions of farmers

omy

buy various classes

to

goods,

particularly

other
and

durable

houses.

automobiles,

consumer

For

the

business concerns and

of

goods,

first time
government




question of possible revision
parity of the Canadian dol¬
must again be reviewed in the

the Dominion economy from

of the

to

has

economy

The

rapidly.

change

strengthened

been

by the two world wars and is in

condition than ever be¬

stronger

po¬

institutions and the philos¬

ophy of life accepted by Ameri¬
cans
are
challenged by a great
power,
but
the
challenge
American values in the field

to
of

existed

that

case

favor of such

their

advancing

in

there

no

was

caution in

economic

trends would be sustained

indefinite

in

this direction, and
certainty that the

favorable

extremely

then

even

(3) With the exchange at par
step. Recent prece¬ the Canadian dollar will
buy more

a

dents certainly dictated

period.

over an

require¬

The

ments of the International

Mone¬

tary Fund moreover do not permit

flexibility

any

action

of

the

on

venture
the

change there can be no

(8) The development of supercapital enterprises. Since

politics is more basic than its
challenge in the field of eco¬
has never had nomics.
regular and organized ways of
Finally,
the
people
of
the
putting capital into new enter¬ United States, with their highly
prises, the super-venture capital dynamic and extraordinarily
companies
that
have
recently strong economy, are much divided
come into existence mark an im¬
with respect to the way in which

community

worthwhile.

(9)

in

the

effect

less

have

would

majority that desire a more
less government-guided econ¬

or

not agreed as to what
they wish. Even more than the
first-half of the century, the sec¬
omy

are

ond-half

upon

in¬

a

Economy in the Foresee¬

the

able Future
Most characteristics of

of the future

omy

There have also been

importance.

important

Among

them

are:

doubt.

acteristics
much

have

truly

the
have a

that

means

not

may

time

peace

economy

for

to come.
(2) The great accumulation of
individual savings in recent years.

many years

During the last 10 years individ¬
uals have saved nearly $175 bil¬

they saved in the

lion—more than

preceding 30 years.
(3) The decrease in private debt
relative to the net national prod¬
uct. Private debts are

50% larger

national
product is 2.6 times as large as in
than in 1939 but the net
1939.

great increase in the
debt. The public debt is
four times as large as in 1939 and
The

(4)

public

eight times

as

large as in 1929.

(5) The great increase in the
liquidity of the economy.
The
liquid assets of individuals are
3.5 times as large.
A great shift of power in
community represented by the
drop in the prestige and influence
of businessmen and the rise in the
influence
of the representatives

(6)

the

(7) The
States

between the United
Russia which greatly

technological

stimulates

advance

important

than

stitutions
tion

or

and

in

methods

economic

and

conditions is

has occurred in
preferences.
These

change that

ideas

relation to

thus limit the time that

have

current

meet

might

inventories. Busi¬

apparently

gained

sophistication. To the ex¬

they avoid the errors
optimism and pessimism that

of

have contributed so much to eco¬
nomic

the ups and
business will be miti¬

instability,

downs

of

would

Unemployment
compensation,
now extends to about three

which

jobs out of five, adds to stability
because it prevents unemployment

complete loss of
income. Pension plans have the
same
effect. Important improve¬

from

the

that
be

causing

a

ments have been made in the bank¬

ing system. Bank deposits are
sured up to

in¬

$5,000, and a high pro¬

portion of the assets of banks now

almost

full

have

responsibility
for

taken

be

to

would
new

any

arbitrarily fixed parity.

On June

5th last when the Canadian Min¬
ister

in the

stated

and

Trade

of

House

that the discount

on

Commerce
of

Commons

the Canadian

supply, and no longer will
repayment of these debts re¬
supply at the very
when this would do
the
harm.
Finally, government

duce the money

times
most

policy may be counted upon
be a stabilizing influence in

fiscal

to

appraise

tion

to

the

the strength of
economic situa¬

Dominion's

tion.

Subsequent events moreover

have

certainly added force to what

has been described as a

of

pression

of

opinion

personal

a

ex¬

mere

events, Canada's foreign trade

the buoyant state of

figures and

the exchange reserves already had
to

led

revaluation

upward
Sales

dollar.

the

concerning

conjecture

possible

this

to

a

of

country

during June last rose to $179,850,000 in comparison with $115,600,000

during June, 1949, the Domin¬
reserves of gold
and U. S.

ion's

dollars

on

30th

June

$1,255

were

and are still mounting.
Under the present circumstances
the

on

(2) The reliance of the economy
industrial
research
will
be

greater than today. The increase
in research is almost automatic
research

stimulates

by

one

research

enter¬
by its

to

impetus

research,

par¬

by the government. The strength
of

the

ward

trade

unions

pressure

on

Continued

and the up¬
wages
on

be

18

tend

place U. K.-Canadian trade in

better balance.

revaluation would
of speculative

Early

(4)

inflow

the

check

but would not inter¬

money,

fere with

U.

investment of the

S.

"bricks and mortar" type, or

Thus it would appear
is

that there

justification for acting
earlier rather than later, to give
every

practical recognition of the stead¬
ily appreciating trend of the Ca¬
nadian

dollar

the

vis-a-vis

U.

S.

dollar.

of exchange

is now only one rate

for the Canadian dollar as the de¬
mand for free funds is now almost

satisfied

entirely

by

recourse

the official supply at

9V8%.

mentioned

ped-up U. S. demand.

Stocks on

the

sympathy

Toronto

Board,

in

with the trend in New York, dis¬

rallying

played

a

trading

was

on

The industrials
formers

with

a

tendency

were

the best per¬

Abitibi

Paper

which

Committee

zation

meets

Monday in Ottawa is likely
to arrive at decisions which will

were

also registered by

metal and oil groups,

with

a

few

the base-

but the golds

exceptions still con*

tinued in the doldrums.

CANADIAN BONDS

next

have

a

momentous bearing on the

situation.

economic

Canadian

Government
Provincial

To

is prob¬

Municipal

Corporation

between the two countries as

ary

far

economic matters

as

be

will

cerned

con¬

are

elim¬

virtually

inated. In this event the establish¬
ment

of

dollar would

common

a

CANADIAN STOCKS

greatly facilitate the operation of
revised form of the Hyde Park

Agreement that operated so effec¬
tively during World War II.
Also
of

from

view,

upward

the Dominion's

apart from

the

point

current

the Canadian

pressure on

dollar, the following factors

are

sufficient

de¬

to

justify

an

early

A. E. Ames & Co.
incorporated
Two Wall Street
New York 5, N.

Y.

ny 1-1045

WORTH 4-2400

cision to eliminate the differential
between

the

U.

S.

and

Canadian

dollars at this time:

(1) Inflationary
of

the

border

Fifty Congress
Boston 0,

pressures

have

been

south

accen¬

no¬

tably prominent. Modest advances

As

U. S.-Canadian Industrial Mobili¬

but

moderate scale.

Joint

the

to

The

corporate-arbitrage rate at 12V4%liy4% likewise was firm on step-

will

previously

will

page

imports

of

further

should

cur¬

strong economic trend
still further accentuated.

there is little doubt that
rent

any

periods of contraction.

Britain

from
to

cheapening

During the week there was lit¬
disappear
sooner
later, the prediction tle activity in the external section
was
probably based on an opti¬ of the bond market but there was
mistic view of future prospects. a moderate demand for the in¬
Dominions
in
sympathy
On the other hand he, to a greater ternal
with the strength of free funds.
degree than any Other member of
To all intents and purposes there
the Canadian Cabinet, is in a posi¬

able that the international bound¬

the

resultant

might

No longer are

money

On the other hand the

valuation.

than

rather

all intents and purposes it

debts

goods

with
the influx of foreign funds for the
discount development of Canadian natural
immediately resources.

consist of

government securieties.
short-term business
the
principal
source
of

in this
should preclude however

eliminated. As matters stand how¬
ever

of

Difficulty

durable

present

million,

gated.

the ticularly the support of research

of opera¬

doubt

Before the recent dramatic turn

that

tent

dous

changes that have occurred in in¬

position to allow the dollar to
seek a natural level there is little
a

procuring
country
a repeti¬
tion of the "buying spree" that
occurred following the 1946 re¬
abroad.

hot

If the Canadian authorities were

in

with

operate

to

rivals. The cold war is a tremen¬

Changes in Ideas
More

early reconsideration.

given casually without reference
to any particular timing.

out of

demand

prise
III

of

question

Managements
great
progress
in

how

enterprises

because

employment.

raises

trends seem

smaller inventories in

war

and

some

past.

made

learning

much in

States

are

probable than others.

the

in

nessmen

United

that

The economy will be con¬

in condi¬

it

econ¬

far from

trends

and

more

Russia. This is the most im¬

portant of all changes
because

the

to
predominate are
in
Nevertheless, some char¬

likely

sales and

(1) The development of a great
United States

contest between the

tions

the

and

clear

are

siderably more stable than it has

changes in economic conditions of

part

dollar

Probable Characteristics of

Some

been

the

be

to

of important experiments
in the field of economic policy.

(1)

II

and

likely

seems

period

today than ever before.

comes

and

should be operated.

economy

The

An

recent

plant, intentions of business
enterprises to spend on plant and

equipment, and intentions of con¬

the

recent developments; an

upward revaluation of the Cana¬
dian dollar would tend to insulate

of its members; once com¬
mitted
to a new parity
of ex¬

to

sumers

continue

of employees.

physical output increases.

that in view of
international developments

recent

which, in all probability, will

and

litical

great

The rise of the chain store
mail order house offer

(4)
and

the
needs to
full em¬
by

supply of money. Hence a change
in
the
willingness of banks to
lend or of enterprises or individ¬
uals to borrow produced a large
effect on the supply of money.

re¬

times larger

"hands-

view

fore. American economic and

important development
years
has
been the
growth of arrangements which
members are willing to sell their
make personal income less depen¬
services. Moreover, with a large
dent upon the level of economic
proportion of employees organ¬
ized into unions, wages will be less activity. Unemployment compen¬
sensitive than ever to drops in sation, old-age pensions, and oldage assistance are the three prin¬
the demand for labor.
cipal arrangements. As a result, a
(3) The rapid growth of staff contraction in economic activity
in the price at

crease

of

replaced

been

nearly two-thirds of the country's

portant step forward in the econ¬
omy. They are staffed to investi¬
gate the kind of investment op¬
portunities that are difficult to
appraise; they are prepared to
keep down labor costs. Union
offer managerial advice; they are
strength will probably also make
to
put in
additional
necessary
a
rising price level. prepared
More
promptly and completely capital if that seems necessary and
than

economy.

tuated by

It would appear

full impact.
lar
behavior.
view that the economy
light of the new factors that now
(7) The large-scale borrowing be regulated to assure
(2) The stimulus to Canadian
have a pertinent bearing on the exports south of the border fol¬
by the government during the de¬ ployment.
situation, whereas before lowing the suspension of the "Buy
pression and during the war has
In summary, the people of the entire
changed the principal source of United States at the mid-century the Korean incident it was un¬ American Act" will offset the ef¬
the money supply. As a result, find
themselves with
a
highly likely that the Canadian authori¬ fect of the elimination of the
ties would have taken any imme¬ present discount on the Canadian
the economy is much less sensi¬
dynamic economy—an economy
action
despite the strong dollar.
tive than 20 years ago to changes which has been changing rapidly diate

Prior to 1929 short-term loans by

and

has

the

of

omy, not the past

by the government has risen far
goods

By WILLIAM J. McKAY

mistake for

a

the government to interfere with
the

behavior

view

the

of

is self-regulat¬

economy

ing and that it is

and

faster

abandonment

that the

in return. The
consumption of goods and services
who give no service

the

able to makq^ plans
statistics pertaining to

future

Canadian Securities

the government to
essential change

of

the economy. The

are

17

(445)

The Commercial and Financial Chronicle

.

.

Street

Mass.

i8

(446)

The Commercial and Financial Chronicle

Continued

from

cannot reach

17

page

definite conclusions.

Nevertheless, it is useful to

specu¬

late about these questions and to

The American Economy Now
And Its Capacity foi Growth

seek to

gain insight into the

ditions

that

trends

the

expansion

of

come

search.

of industrial
makes the development

(3) The

,

research

of

progress

industries and

new

prod¬

new

number of small- and

medium-sized businesses will con¬
tinue

be

to

large.

be

to

there

If

were

great drop in the
number of business enterprises, it
ever

a

would

when

family

car

been

have

period

families

from
to

the

the

it possible

for

shift

small

their

patronage

close

stores

remote

more

during

introduction of

made

to

hand

at

larger

stores.

Nevertheless, the number of busi¬
ness
enterprises per thousand of
population is larger today than it
before the introduction of the

was

automobile. In

manufacturing,

re¬

search will encourage the growth
of

medium-sized

establishments,
a good many
mergers in order to get the bene¬
there

and

be

may

fit of research. Small concerns

manufacturing, however,

in

will

be
fostered by large retail organiza¬
tions

who

able

are

take

to

the

entire output or most of the out¬

put of the manufacturer and thus

greatly reduce the cost of distrib¬
ution.

The

(5)

expenditures

the

of

state, local, and national govern¬
ments will be a large fraction of
the

national

product. Among the
that will increase

expenditures

substantially

are those for oldpensions, roads, national de¬

age

the

zinc,

fense, and some form of sickness
and disability insurance.
(6) The policies of the govern¬
ment
will
be
inflationary. The
.

prices that the government

sup¬

ports, such as wages, and farm
prices, will have more effect upon
the
price level than the prices

for

be

other

upon

than

materials

raw

oil, copper,
other raw ma¬

past. Lumber,

wool,
will

terials

ucts inevitable.

(4) The

in

dependent

more

countries

and

from

come

in

abroad

increasing amounts.
(11) Tne ownership of corporate
broader

it

than

is

Cor-

today.

incomes

more

r—electricity, natural

railroad

tack

should make possible a
thorough and informed at¬
on
the problem of poverty

rates, and telephone rates. More¬

than

has

been

ever

Such

made.

over,

the government will spend

attack

more

than

incomes
means
that
everything
possible will be done to raise the

it collects for

demand

great

there

is

from

the

upon

organized
groups that the government in¬
crease its expenditures for this or
that

purpose, but there is no or¬
ganized demand that the govern¬

population

of

low

of low incomes.

ment raise taxes.

problem

economic worth

a

Union
membership
will
and upward pressure on
wages will be strong.
There are

productivity

(14)

and,

The

(7)

years

of

labor

force

in

possibilities of

union

collar
in

the

of

South.

union

visory

will

to

two

out

less

em¬

higher
of three. As
members

to

and

are

changes

scales,

wage
see

non-super¬

rise

never

promptly adjusted
workers

white

retailing, and
Perhaps the ratio

wages of non-union

union

increase

non-technical

and

about

an

among

in

members

ployees
than

members

workers,

in

non-union
less

reason

for

the

past.

The

stronger

the

than

bargaining

in

power

of unions will be sufficient to per¬
mit them to raise money wages

faster than the increase
cal

output

per

sult will be
The

in physi¬
manhour. The re¬

rise in labor costs.

a

bargaining

power.

of.., the

unions would be considerably less
if the community were not in¬
sistent that a high level of unem¬

ployment be maintained.

(9)

The job of the
manager will become a

and

over)

will

in

the

increase.

larger

a

The

labor force

is

increased by the great contest be¬
tween the United States and Rus¬

sia.

more

ex¬

higher

a

long time. Manage¬

turn

and

may

higher

demand

standard

a

creased




investment-seeking
funds, and individuals much pre¬

to

of

size

almost

and

seriously

States

is

than

less

their

During the next thirty
much
150

States

But

years.

the

years

consume
as

in

the

American

are

inclined

of

as

last

manu¬

finished

sales

any

will

material

raw

facturers

the

increase

an

imports into the United States.

United

with

make

the

that

means

The solution lies in

limit

experimentation

business structures and

exports

United

seems

can

ex¬

gifts

production.

struc¬

entirely bad. It

ot

excess

large

but this system

consumption of the people of the

is'per¬

concerns

business

of

cess

kind

of the gov¬

power

the

over

of

tne

up

making

to
is
satisfactory. No country likes
depend upon gifts, and this ex¬

of

ernment
ture

to

regard

the

of

number

married

young

women

desire to work is increasing. With

reduction in working hours

more

prefer to

women

have

money and to make fewer things
in the home and to
buy more

things

from

resistance

creasing.
tion

is

stores.

retirement

Since

clear

1940

the

years

of

in¬

is

the

to

creases,

age

or

that the drop between
was

desire

crease

the

due to the

em¬

of workers.

As

longevity in¬
age • will

retirement

the proportion of the popu¬

lation in the labor force.

are

'

the

economy

important
developments

many

questions about the
of

and one-third to

year

within

little

two

mortality

that

rate
will

There is

years.

likelihood

in

vance

will

prices

develop

and

be

can

about which

one

The Capacity of the Economy to

easily

not

prevented:

the

infant

business

among

People

are

creases

in

cash.

A

led

not

large

by slow in¬
suift out of

to

prices

higher

part of

in¬

we

restrict drastically the freedom

would go to the
government in the form of taxes,

people

and

concerns

for

to

be

small

to

which

to

of
do

easier

into

grow

depend

may

to

ventures

becomes

concerns

ones

extent

it

unless

wishes

one

Whether

large

reduced

launch

No

own.

obtain

may

research.

produced

comes

thus

increase

the

It

benefit

the

Will

unions

will

be

of

their

the

the

increased

of

the

by

term

in

there

that

is

economic

extended

(1)

a

matters

considerable

intervention
to

and

evidence

A

party.

that

ticularly

concerned
would

took

its

par¬

union

get very

far

party that

a

would

issues

not

union

trade

the

countries

and

trade union party.

union leaders can see
experience
of
other

Moreover,
from

a

members

'that

leadership

would

be transferred from them to party

type
of
insurance
to
protect
people against the loss of income

leaders. The

from

Party two generations ago did not
have
this
experience
to
guide

disability and

costs of medical

to

meet

the

care.

ists

who

British

trade

union¬

the

Labor

sponsored

(3) Protection of workers
against arbitrary admission rules,

them.

burdensome

however, will be

arbitrary
tion

initiation

discipline,

fees,

and

protec¬

of

(4)
term

small

the public against
disputes.
The
facilitation
of

capital

loans

business

to

perhaps

and

emer¬

people conceive that the
economy in the past has shown a
capacity to grow rapidly enough

long-

new

by

and
some

(5)

A rise

wage

in

prices

or

a

limit

point
more

view,

of

influential.

too

completely

to

special

interests to become the leaders in

this economy.

absorb the increasing number
job seekers, but assert that the
economy is losing this capacity.
If the United States is to

keep its
and, at the
keep
itself
strong
enough to resist Russia's attempt
to
spread
Communism,
output
must increase substantially. The
needed
expansion of production
standard

of

will

depends

the

future

posi¬

the increase in the

upon

size of the labor

force. I

estimate

that the number of persons in the
labor force will increase by about
six

million

1950

to

during

1960.

that

sumes

increase

in

The

10

years

estimate
will

the

growth

could

the

This

there

be

as¬

some

of

proportion

in the labor force.

women

be

of

the

retarded

economy

lack of
but this is not likely. At

capital,

by

a

the present time industrial

worker

per

1900 it
of

was

is

about

worker

capital
$7,000. In

about $5,000

present-day

per

prices.

were

to

in terms

If

capital

increase

1 %

for the next 10 years, the
needed increase in capital would
be $50 billion, or approximately
a

year

2%

of

Some
may

the

net

people

national

fear

product.

that

savings
be inadequate because of the

stiff progressive

income tax. For
example, in 1948, persons receiv¬
ing incomes of $25,000 a year of
more

were

60%

more

numerous

than in 1928, but total incomes af¬
in

were

1928.

whole

one-sixth less than

Personal

in

1948

incomes

were

large

as

lieve

as

times

a

as

expansion

in 1928. Other people be^

may be retarded
by too much saving, but this posf
sibility also seems unlikely. More

than

be

living

time,

same

made

half of personal savings
for

the

of

are

buying
of the United States in the goods. Moreover, nearly half of in¬
economy of the world? For many vestment-seeking funds are pro¬
vided out of reinvested
years exports by the United States
corporate
tion

increases if unions raise

employee

economy is becoming laboristic. but union officials are com¬

What

to

of

ter taxes

The

mitted

form of capital banks.
to

The

Some

be

able to command the solid support

would not be

some

that

enough

on

elections

purposes;

perhaps by

not

position

a

win

these

on

are

Grow

I

labor

a

trade

winning votes and

of

Redistribution of income

and

limited

matters

to

gradually

Limiting the fluctuations in

the basis of need

in¬

Unions

foster

to

party

will

business/

(2)

per--

experi¬

objectives

unions.

of

attention

to

in

signs of

the

strength, and

the

unions

expect

vention

no

unions

and

bargaining organizations, not
political organizations. I do not

in

be

economic

methods

general
trend to reduce government inter¬

are

United

that

members

loan.
There

the

strong

doubt

of

trade

Although
I

,

difference

supplemented
use

in

deveiop

become

ence,

strength

type of union¬

fluence of unions will make much

The principal source of cap¬
will continue to be
plowed-

earnings,

new

a

for

grow

for their products.
The essential
issue is the procurement of capi¬

back

to

have

great

cause

re¬

to increases in the demand

ital

or

in

sponse

tal.

deficit

budget surplus. The

easier

concerns,

to

the

reduce

the

Reserve System might again regu¬
late the terms of consumer credit.

produc¬

upon

costs of

small

gency

Some Principal Points of Doubt
About Trends in the Economy
There

half

propor¬

ployment practices of employers,
not

a

hand, strong reasons
believing that a rapid ad¬

.

Finally,

in the labor force has risen.

more

It

the

to

males 65

of

die within

the other

vasive,

such jobs in industry. More parttime jobs would undoubtedly in¬

more

for

technology, many small enterprises

for part-time jobs will
probably increase the number of

and

on

Several studies agree that onefourth or more of new concerns

in

demand

of

losing his earned pension rights.

improvements

by

crease

fer to invest their

ism

working conditions, by reductions
in the standard work week, and
by changes in managerial methods.
About one out of five jobs in in¬
dustry is a part-time job and the

of

conduct from trade unions, from
employees, and from customers.

of

the

integration

growing

States?

rise, and rise fast enough to in¬

in

to

yet no signs of a gen¬

are as

lack

and

concerns

which

The

research. Since research of equip¬
ment makers largely determines

by customers, by em¬
ployees, by stockholders, by other
members of management and by
the; government have been »in¬
ment

there
eral

size

mere

missible.

tion are determined by industrial

work

health improves and

creasing for

easy

the

of

degree of integration of busi¬
operations and the conditions

under

in¬

to

acting one and will require more
training. The demands made on
managers

be

ness

is

desire

The

1890 and 1940

business

to

will

It

enterprises in most lines

new

this.

who

in

funds,

business, but not all. Despite
stiff, progressive income taxes,

(16

pro¬

prices

start, to
to grow

concerns?

probably continue

age

portion

rising

even

to

of

their

people in the labor force. The

for

larger

start

the

outlook

is

enterprises

investment

into

of

joining unions.
(8) The-long-run movement of
prices has been upward and the
future

in which it will be difficult

new

by

not

prac¬

of

working

age

for

need

therefore, the
recipients

of the

proportion
of

grow

great

business
and

Kept

ports

tices of business and perhaps even

regulation
of the future

nave

managers

raise output per

Regulation of pricing

the economy

one

find

(6)

Thursday, August 3, 1950

.

goods by
economy
less
progressive,
dy¬ foreigners here
as
a
need
for
adaptable, and flexible. higher duties.
savings in small namic,
Large reductions in
portions need a much broader
Some of the kinds of intervention
unincorporated enterprises than in
duties, however, have been made
that do not seem likely are ra¬
ownership of their stocks in order corporations.
and with the drastic currency de-1
to
get fair treatment from the
tioning, accumulation of agricul¬
The starting of new enterprises
valuations, a large but gradual
government. The
acquisition of
tural products whicn aie allowed
increase in the imports of finished
may be facilitated by the develop¬
millions of new stockholders will
to spoil, and drafting and enforc¬
and parPy finished goods is likely.
ment of venture capital companies
probably require that corporations
ing a central plan.
Time will be required for foreign
that are free to take any risk that
issue new types of security. Types
Will
the
slowly rising price sellers to find out about Ameri¬
seems to be worth taking. Unless
of participating
level continue indefinitely or will
preferred stock
can
markets
and
for
venture
American
capital
companies
are
could be developed in order to in¬
it be halted by union wage policy
buyers to find out about foreign
willing to invest in new large
terest
preferred stockholders in
or
direct controls? There is no
goods. Tf the United States were
concerns,
the starting of them
the growth and success of the con¬
reason
to expect trade unions to to double its
imports, over 90%
may be much more difficult, be¬
cern.
adopt a national wage policy that of the
cause small investors usually
great American
market
put
(12) The economy will continue
would impose restraints upon in¬
would
still be supplied
money into new concerns which
by do¬
to increase the collection of statis¬
dividual unions. Even in Britain mestic
offer a job as well as income on
producers, but the influ¬
tics and to provide itself with a
where executive officers of unions ence of tne
United States through¬
capital.
It may become increas¬
more
complete picture of eco¬
hold office for life a policy of out the
world
would
be enor¬
ingly difficult to presuade wellnomic
business
conditions
and
qualified persons to go into busi¬ wage restraint was operated by mously enhanced. If the United
trends.
Statistical information on ness for themselves for such the unions until recently only States does refuse to raise its
intentions to buy, on the size and
with
great difficulty.
Nor is it duties or check
people are usually already em¬
imports by admin¬
distribution of income, and on the
ployed by well-established con¬ probable that the government will istrative devices as more and more
kind of people who are in the
use either controls over wages or
cerns
which
offer
excellent
goods come in, it will be because
different
income
brackets
are
chances
for
promotion.
They prices. Price controls would meet the intense and bitter contest with
likely to be extended and im¬ might be persuaded
with
opposition
from
well-or¬ Russia
forces
by a change
Congress
not
to
proved. Statistics sooner or later in the
corporate income tax to ganized groups to almost the same yield to the pleas from the multi¬
will
become
available
on
the
extent as would wage controls.
tude of pressure groups that the
permit losses to be carried for¬
money
flows in the community ward for five
If people expect prices to move country be surrounded
years, instead of
by an in¬
and
on
the ownership of
bink two; by elimination of the so- upward, they will convert bank surmountable tariff wall.
deposits.
In the near future the called "notch rate"
deposits and bonds inlo stocks,
There are two ways in which
by which cor¬
country ought to be able to pub¬ porations earning more than $25,- commodities, and real estate and foreign
investment
might help
lish
an
annual
balance
sheet 000 but less than
$50,000 pay an drive prices farther upward. The solve the problem of the export
showing its principal assets and income tax at a higher rate than danger of a disorderly rise in ac¬
surplus—by creating a demand
liabilities-and showing the owner¬ concerns
earning less than $25,000 centuated by (1) the maturing of abroad for machinery and equip¬
ship of the assets and the cate¬ or more than $50,000, and by
over $33 billion of E-bonds before
ment,
and
pro¬
by
providing
new
gories of persons and organiza¬ vision that the costs of private
1960;
(2)
by the government's sources of imports into the United
tions responsible for the various
pension plans shall be deductible policy not to permit prices of States. Investment abroad may be
liabilities.
under the corporation income tax
Federal bonds to drop below par;
;
J
a
wa.y
of
combining
superior
(13) The statistical information only if an employee may leave the and (3) by the development of American
managerial skill with
that is becoming available on low service of the
enterprise without easy consumer credit. There are, cheaper foreign labor.

industry will become considerably

which the government holds down
gas,

what

the

.

other countries

develop.

Will

(10) The United States will be¬

re¬

determine

than

manhour.

con¬

'

for

stimulate

will

faster

wages

and engineers can

.

purpose

Volume 172

Number 4930

.

profits. A drop in investment
portunities
tions

to

would

The Commercial and Financial Chronicle

.

.

op¬

human beings. Nineteenth
century

decisions.

corpora¬

lead

Socialism, that, is, government
ownership and operation of most
industries, does not seem likely
to develop
although it is quite

saving.
The
most
important question
about the capacity of the economy
to grow relates to the expansion
of the effective demand for goods.
If output increases, effective de¬
mand

increase

must

the

to

,

extent

in

order

crease

in

unemployment.

in

total

the

to

avoid

volume

same

in¬

an

rise
expendi¬

of

A

some

of

oper¬

industries

under

government
operation
may spread to urban transporta¬

tion,

steam

railroad

transporta¬

tion, and electric power plants,
particularly in connection with

the increase in the supply of goods

technological

Spending
some people
least

bit

income

tinue

to

income. To
over

the

is

con¬

amount

One

person's
person's

another

increase

their

others

same

income.

expenditure

than

more

while

spend

their

{unless

grow

willing to spend at

are

little

a

recent

of

cannot

expenditures

incomes people might
idle balances, a likely

recent

draw

on

possibility. Of the country's total
money
supply
of $170
billion,
more than 60% is owned by indi¬
viduals. These people might be
willing to invest *n unincorpo¬
rated
rate

business enterprises, corpo¬

securities,

in housing. Each

or

Is some sort of

planned

econ¬

likely to develop? A planned
economy of the
budget type is
quite unlikely, for at high levels
of production rationing would be
required and citizens will not tol¬
erate

rationing in time of

Nor

is

the

planned

peace.

development
of

economy

of

the

type—one in which
ernment
provides
indirect
centives

and

consists

in

in

which

a

non-

budget

in¬

jectives such
full

and

tives

in

come

But

conflict

of

many

these

objec¬
the

with

particular

groups.

This

goods.

obtain

the

banks

to

that

buy

money.

The seller of the bond would have
to

more

and

spend

no

else

one

would

have
less to
spend.
Al¬
though there has only been a slow
tendency for non-bank corpora¬
tions

to

convert their

holdings of
securities into goods,
expect over the long run

government
one

may

that

this

Individuals

prises

lend

them

It

is

continue.

business

or

enter¬

from

borrow

may

that

will

tendency

newly

banks

created

quite

probable that
expenditures will be increased for
money.

time

some

debts

borrowing.

by

of individuals

enterprises

The

business

and

likely to rise be¬
cause
at
present they
are
ab¬
normally low. Debts of state and
local

are

governments

rise

because

schools,
pitals.

are

of

the

to

need

bridges

roads,

likely

for

hos¬

and

Although
will

in

stable

much

also

an

dangerous?
stand

can

a

unstable economy.

an

sensible,
debt

long-run

should

not

faster

than the national income. The

lationship
tional

how

between

income

which

debt and
in

debt

The greater

the

nanced

also

depends

increase

an

nanced.

increase

It

that

rule

rise

is

debt

is

on

fi¬

fi¬

na¬

tional

incomes, expressed in cur¬
rent dollars, will rise as rapidly
as

the increase in debt.
debts

because

cause

prob¬

repayments
may
contraction in the

sharp

a

of

form

create

income

available

to

buy

The country may be con¬
fronted with this problem because
goods.

there is the

due

probability that total

credit

consumer

the

at

billion

a

will
of

rate

be
at

coming
least

$9

year.

more

rapid increase in private debt in
the last four years—far more than
one

can

also

expect to be maintained
national
product has

net

of

debt

to

product has not

greatly changed.
Future

of

the

Economy
One

should

not

be

any

ultimate and permanent economic

system,

because

notions

on

an

ultimate state simply overlook the

great

important

more

inherent

creativeness




economy

than

the

in

past, although I do not think that
they will dominate the economy;
(2) the intervention by the gov¬
ernment in

the

The

times.

problems which will absorb

in importance.

grow

will

ment

development of the

economy.

One

The rise of government

decision¬

decision-making
not mean a re¬
versal of the trend toward giving
and

making

by

more

of

does

groups

individuals.

opportunity to

The educational system is

mand

the

of

kind

the

out

people

opportunity.
of

success

turning!

who

de¬

Furthermore,

the

community in

late their interest in

opportunity.

The fact that security is

them

tention

other things.

is

to

much

pretty

conditions

an

neces¬

is

the

chance

do

to

different

The govern¬

under

to try out

things, to experiment,

objectives

pressure

will

clash

one's hunches and ideas. Give men

to

with

special

interests; (3) individual
decision-making will continue to
play a big role in the economy
because the more educated they

The

public policies:

pursuit

interest

During the

be

can

relied

of

revolt

The

against

Although in

the

world

the

to

been

mixture

a

struggle

preference
of

some

interests

the

self-interest
upon

of

the

in

idea
can

ideas

has

the

with

associated

Manager

of

the
Gott

Mr.

them

was

as

depart¬

trading

tourist

to

45% residential, 42% commer¬

further industrial

As

associated

commercial

The

seasonal

is
the
winter season in February is about 12% higher than in July, the
summer tourist volume is now growing faster percentagewise than
the winter industry.

ironed

out

somewhat;

users.

while

the

sales

peak

peak

of

The increase in population and prosperity has been outstand¬

During 1940-49 the population of Florida gained 31%, retail

ing.
sales

224%, bank resources 253%, individual income
electric power sales 228%. In 1949 the company's kwh
16%

207%, and
sales were

1948 and three and one-half times those of the decade

over

The population of Miami has gained 87% since 1940, it

previous.

being the fastest growing metropolitan area east of the Rockies.
It has lead all eastern cities in private residential building—$230
per

capita in 1949 compared

with $148 for Washington, $82 for

Detroit, $61 for New York City.
While Florida has not been known
the fact that it has

taxes, as well as

a

as

a

manufacturing State,

State income tax nor duplicating inheritance

no

negligible burden of State and local taxes on

business, has resulted in much greater gains in value of manu¬
factured products than for the country as a whole. In the decade
ended 1948 manufacturing employment increased 227%, against
44% for the country as a whole.
Florida

agriculture consists largely of cattle-raising and the

Improvements in technique have greatly

growing of citrus fruits.

expanded both industries in recent years. The rapid development
of frozen concentrates for citrus juice has sharply improved prices
for fruit "on the tree."
Cattle raising has benefitted by the

wiping

out of the tick, the upbreeding of Florida herds with
bulls, the development of rich mineral grasses seeded by

airplanes, and the conversion of orange and grapefruit pulp and
skins into food material for cattle.
Florida

is

becoming

foreign

a

air

trade

center,

with the

Airport ranking first in the number of in¬

Miami International

ternational passengers and overseas cargoes.

Last year 38% of all

in and out of the country passed through this airport.
In the first half of 1949 overseas air cargoes of 17 million pounds
were more than double the total for the LaGuardia and Interna¬
passengers

tional

Airports in New York.

The airport's annual payroll is over

$56 million and other expenditures
Florida Power & Light's

nearly equal this figure.

earnings of $2.17 in 1949 were after

ad-?

for amortization of plant acquisition

are

be

formerly

thereto

he

was

Co., Inc. Prior
with Cruttenden

the

idea

that

unduly restrict the

4% last year as com¬
(the previous year
lower rates, reflect¬

for lower fuel and commodity costs

reduced, it is understood.

balance for

quarter of 1950

(excluding taxes and
The
kwh

depreciation).

company's average residential

was

2,070 kwh compared
estimated

return.

6%

WASHINGTON,
C.

Cook

has

D.

been

to

of

man

the

Securities

,

the
Ex¬

and

Mr. Cook be¬
member of the Commis¬

change Commission.
came

a

sion last November.
was

the

The

new

post

established since members of

Commission

decided

a

with the national figure of 1,684

kwh.

approximated $143
net operating revenues of $9,322,000 approximated a
There is no statewide regulatory commission in
rate

base

at the end of 1949

Florida.

C.—Donald

elected

rate in 1949 was 3.41c per
residential usage

national average of 2.95c;

compared with

million, and

To New SEC Post

The

principally due to an increase of 13% in revenues as
contrasted with an increase of only 7% in operating expenses
gain was

Co.

Donald Cook Named

earnings showed a sharp gain, the

stock increasing 36% over last year.

common

The

&

newly created post of Vice-Chair¬

important

company's revenues gained only

In the June

Florida Power &

the

planning is not likely, because
fast

ond

being

now

the Chicago

office of Geyer &

and

Acceptance of the idea

can

that Mr. Earle C. Gott has

become

be

in the second half of the twentieth

hold

nounce

that

advance

may

were

miscellaneous.

5%

growth takes place, earnings should become less dependent upon

rate will be

CHICAGO, 111. —Goodbody &
Co,. 105 West Adams Street, an¬

ment.

community

to

the idea of the class struggle
their way out.

men

Gott

Resident Manager of

on

What

C.

the
the

cooperation

cooperation

Both

individual

depended

of

Earle

not

people's own
control the amount

or

important.

the heavy charges for
1949 gained 20%.
The company established a reserve for hurricane damages
in 1947 and this was built up to $2.2 million at the end of 1949,
the accrual amounting to $1.1 million in 1949 and $900,000 in 1948.
When the balance sheet reserve reaches $3 million, the accrual

and

can

conflict

population

a

Despite the small increase in revenues and
storm damage and reserves, net income in

the

revolt

against the class struggle has
even
started, opposition to
idea
developed recently in
Western Hemisphere. History
and

have

(oil declined 90c a barrel to 31%, but kw production per barrel
was up 6% due to improved generating equipment; thus, despite a
13% increase in electric output, total fuel costs were down 26%).

com¬

ceptions, as in the case of monop¬
olies, and gradually the idea that
government
ought
to
assume
planning
for
economic
activity
of

industrial and

ing automatic adjustments

era of great individual freedom at
first took the form of making ex¬

advanced.

8%

is

in 1949

revenues

10

derived

pared with an increase of 16% in kwh sales
revenues had jumped 34%).
This was due to

essential relationship between per¬
sons
is
explained by the Class

parts

cial,

The

last

upon

advance the interests of the

struggle.

tourist trade

(only

size

96% electric and 4% gas. Over half
from the greater Miami area,

are

are

justments equivalent to 19c a share.

(1) the idea that
individual self-

of

the

Electric

in

small

Revenues
revenues

There was also a charge

hundred years two principal ideas
have had tremendous impact upon
the

where

of history is largely

guided by ideas.

electric

proximated $3 per share. Actual storm damages from the August
hurricane approximated 37c a share after tax savings, and in
addition 45c per share was accrued to the balance sheet reserve for
storm damages (which amount was not offset by tax savings).

Goodbody in Chicago

initiative.

course

10,000).

over

special maintenance charges attributable to storm damages totaling
82c a share, so that ignoring this factor earnings would have ap¬

Earle Gott With

become, the more likely they are
to have ideas of their own and to
exercise

the east coast of Florida, but also serves por¬
and northern parts of the State.
The total
one million.
The territory includes 335

on

western

communities, mostly
the

Op¬

portunity, however, is life itself—
it

of the

Brahman

to

order to enjoy life.

in

at¬

Security

means

a

end—one of the
sary

provided

to turn their

stimulates

principally

tions

population served is about

giving people security will stimu¬

security and their interest in op¬
stability, expansion and portunity is bound to be enhanced.
but the promotion
of

promote

security,
these

be

ates

will influence the

men's attention

economic matters will

continue and will probably slowly

planning

envisage

consistent

undoubtedly be an extreme
one. Three principal features will
characterize the economy of the
future: (1) organized groups will

century?

Organization

is

would

of
The

future

contradictory and
principles. Indeed an

conflicting
orderly and

increased rapidly so that the

ratio

the

less

or

community.

Although there has been a very

—the

of

economy

likely to be "messy" just as it is
today — reflecting a mixture of

was

Short-term
lems

of

munity; and (2) the idea that the
na¬

by commercial banks, the

greater is the likelihood that

slowly, but it seems plain that it
dying.
The
idea
that policy
can
be
guided by facts and information
will
gain
in
importance,
for
people are discovering that sta¬
tistics
are
slowly
but
surely
changing the intellectual temper

re¬

the extent to

in

The

raise

living, is not

debt

economy

than

a

the

and

higher ratio of debt to in¬

come

is

of

standard

increase
A

of goods

output

crease

the

the increase in debt
stimulating and will in¬

be

means
that in a democracy
making of public policy con¬
sists of a series of compromises.

Florida Power & Light
Florida Power & Light, the largest utility in that State, oper¬

is

economic stability

as

to

interests

time increase the total demand for

consistencies

employment.

proposals

form

newly created

cure-alls

problems
will
likely
win
acceptance. Faith in cure-alls dies

tionship between organized groups
and the community.

same

securities

no

for

expected. It is true that there is
general agreement on certain ob¬

a

them out of

viction that there are

lationship
between
government
and industry; another, the rela¬

the

Utility Securities
By OWEN ELY

sufficient oppor¬

not

are

tunities, the community, acting
through the government, ought
to do something about it. The con¬

gov¬

planning

there

policies designed to achieve gen¬
erally accepted objectives—to be

these

sell

Public

com¬

problem will be the "proper" re¬

saving and would at the

Another, way to increase ex¬
penditures would be for people to

for

good

of

of

represents

a

con¬

omy

of

ways

is

It is quite certain

if

ation

government

trol.

by

and

petition.

public authorities will spread. For

that

river development and flood

possible

minorities

example,

probable

the increase in the labor force and

progress.

Decentralized decision¬

that men will
agree that there must at all times
be opportunities for all would-be
workers to find employment, and

tures each year will be necessary
in order for the country to absorb

made

19.

making gives great opportunity to

their

cut

(447)

Vice-

Light has been selling

around ^48 recently

the $1.20 dividend; the 1950 range ap¬
proximates 22V2-17. Capital structure is about 60% debt, 8% pre¬
ferred stock and 28% common stock equity
(after eliminating
to

yield 6.7%, based on

plant acquisition

adjustments).
With King

Minneapolis Assoc. Add
(Special to The Financial

(Special

Chronicle)

Merritt

to The Financial

Chronicle)

ST. CLOUD, Minn.—Marvel W.
Minn.—Woodtolerable freedom. They Chairman had been needed to as¬
Andrews, Fred D. Hutchinson, and
will
regard decision-making
as sist with the administrative duties row F. Wilson and Oscar J. WoolisJohn A. Hollenhorst have joined
experimental and, consequently, of the agency and the recent gov¬ croft have been added to the staff
Minneapolis Associates, Inc., the staff of King Merritt & Co.,
there are important advantages in ernment reorganization plan en¬ of
area

MINNEAPOLIS,

of

Tnr*

having

a

great many people make

abled

its

creation.

Rand

Tower.

1 fil fi

St

Germain Street.

20

The Commercial and Financial Chronicle

(448)

previously

he

President

of

had

been

Dallas

the

Vice-

Continued from

first

Thursday, August 3, 1950

...

page

National

Bank.

News About Banks
CONSOLIDATIONS

County National Bank of
in

-"Times

at

special

a

Co.

of

York

New

meeting

Aug.

on

1

voted to approve the acquisition
of the company's deposit liability

certain

and

division
Co.

assets

by

the

of New

trustees

of

York.

to

banking
Trust

By this action,

officers

and

Guarantee & Trust
ized

its

Bankers

Title

the

of

author¬

were

the agreement
of July 6 under which the Bank¬
Trust

ers

would

commercial
and

banking
other

and

functions,

the

premises,

deposit

contingent

transfer

assets.

TG&T's

assume

banking

trust

upon

out

carry

of

certain

facilities

The

and

for

date

the

who

several

speaks

to

Secretary

Mr.

who

&

will

title

Trust.

&

tp function
head

of

offices
will

by
eight

Mr.

Secretary,

1921,

former

trustee

continue

previously and the
the

of

company will
Broadway. After
Barnard Townsend,

meeting,

the

of

Title

Guarantee

& Trust Co., .issued a statement
saying in part: "The action taken
today confirms the judgment of

the

board

of

trustees

tinued operation of

that

our

interests

of

the

company

in

or,

turn, of its stockholders. We plan
to devote

our undivided energies
continuing development of

to the

title insurance which has been

our

item

previous

-foregoing
issue

our

proposals
of

*

regarding
in

appeared

July 13,
*

page

171.

of

New

York

held

Aug. 1 Charles F. Piedmonte

appointed

formerly

was

was

Assistant

an

He

Vice-

President.
jJJ

the

directors
the

which

her

meeting of the

a

News"

Wells

Mr.

has

com¬

since 1941.
ft

election

Co.

of

John

Phillipsburg,

of

noted

has

of

the

in

been

&

J.,

N.

Newark

"Eve¬

Mr. Cline,

director

a

the

Bank

ning News" of July 16.
who

Cline

B.

is

of

the

E.

Peters,

who died July 9!' Harold J. Curry,
Cashier for three years and asso¬
with

the

bank

since

1923,

Mr.

succeeded

Peters

as

a

director.
*

*

Miners

*

National

Wilkes-Barre,

Pa.,

Bank

of

the

announces

election of Frank W. Anderson

as

sj:

it

Co.

rently in the windows of Colonial

Street, New
York. The display, arranged as a
special tribute to the bank's cor¬

respondents in Denmark, is spon¬
sored
jointly by the Consulate
General of Denmark in New York
and
by the Danish Information

Office. Arthur S. Kleeman, Presi¬
announces that in conjunc¬

Bank

of Cincinnati,

Savings

&

Ohio, has been

absorbed

by The Atlas National
Bank
of
Cincinnati, it
is
an¬
nounced by the Board of Gover¬
nors

48th

Peoples

the Federal Reserve

of

tem.

In

connection

absorption,
fice

of

the

The

with

former

Peoples

Company, and
operated
by
it,
have
of

The

the

main
Bank

Savings

branches

Sys¬
of¬
and

branch

a

*

*

Bank

of

National
from

Farm

1934

Loan

until

tion with the exhibit the banking

served in the Navy dur¬
ing the recent war, it is stated. He
resigned to become Vice-President
bank March

of this year.

1

*

of

Governors

of

System

serve

the

in

But however that may

Federal

reports
the

graphs, "World Recovery through
Imports." This set, entitled "Trade
with Denmark," calls attention to
the economic
necessity for main¬

taining
from

United

States

Denmark

at

California

level.
mono¬

graphs
eral

are

visits

Kleeman

the outgrowth of
to
Denmark
by
and

sev¬

Mr.

Mario
Diez,
charge of the
bank's International Division.

acquired,

locations

well

as

the

of

these

of

reported

was

Press
San

advices

of

that

*

June

on

President

it

and

would

He

former

Transamerica

67

was

invited

Mr.

on

old.

years

Bacigalupi

to

organize the trust department of
the Bank

the

of

Bank

of

America.

He

made its Vice-President the

and,

came

President.

ident

of

in

New

York

*

«

received

Bank

the

of

approval

Banking Department
July 11 of plans to reduce its
capital stock from $535,000, con¬
sisting of 53,500 shares, par $10
on

to

of par

$302,500
$5 each.
*

William

L.

in

York

60,500

shares

*

DeBost,

October,

same

1924,

be¬

He became Pres¬

Transamerica

1931; he retired in

Corp.

in

1931/

that

bank

Savings Bank

announced

Marcel

for

42

years.




Granbery, Marache

Chicago, 111., in¬
of June

as

30

Mr.

determined to do all

we are

something approaching

almost unavoidable.
tion

stock

it

of

tional

capital
Bank

*

$250,000

we

the

of

First

Temple,

was

raised

to

some

was
new

the

Charles E. Klein

Granbery,

Marache

it

s[i

from

Bank
on

the

Dallas,

July 18, it is
Dallas

Herald," which stated
Humphreys had been

Tucci, Mercantile National

of

for

"Times

Co.,

Broadway, New York City,

change,

■

of J. Ollie Humph¬
Vice-President of the Mer¬

learned

now

as

to

announce

52

mem¬

Stock

Ex¬

that Charles E.

a

them

as

manager

department.

Mr.

of

the

Klein

trading

was

for¬

merly trading manager for Stanley

Mr.

Heller & Co. and prior thereto

are

is far more resistant to shock than it
after World War I. It is better prepared to deal with

with

the

with

and

Hoit,

Rose

Holsapple & Co.

&

Troster

or

deflationary dangers.

.

.

.

for further improvement, but we can
build confidently upon what we have thus far achieved.
The domestic situation makes this desirable; the world

.

.

.

situation makes it imperative.

such

"The healthiest and safest condition for an economy
as ours is maximum utilization
of our productive re¬

sources.

.

.

.

During the inflation of 1948, there

who said that

was

years;

number

Here

"There is need

Klein has become associated with

that

10

years.

of them:

inflationary
&

bers of the New York

Texas, occurred

decision

"Our economy
was

from

brought about by the sale of

National

some

things "learned" from the postwar

Na¬

Texas,

stock.

cantile

But

intend to do must be

dent's Council of Economic Advisers sets forth
of

$500,000, while
increase of $500,000

reys,

ques¬

such commitments on our part are
wise. They would seem to us to be precisely

Confusion at Home, Too

increased from $300,000
$1,000,000, effective June 30;
through a stock dividend of $200,-

further

appears

to serious

*

of

000, the amount

footing

reached, so it would seem
to us, before
coming to any fixed and final conclusion
about what is essential to meet current military require¬
ments.
It would be one thing if we laid no burdens upon
ourselves other than
those necessary
in winning the
Korean war and for enlarged assistance to Europe—and
generally to strengthen ourselves as a sort of contingency
reserve; it would be quite another to prepare for such
worldwide commitments as would be involved in applying
Korean principles to the remainder of the world.

to

$300,000

the face of Europe,

war

Possibly not the same differences of view, but cer¬
tainly the same lack of full understanding prevails in cur¬
rent notions about the basic
principles of a sound and
effective economic system. The latest report of the Presi¬

Little Rock, Ark., as of June 30,
from $1,000,000 to $1,250,000.
Hi

full

Of course, it is open

necessary, or
what the Kremlin wants.
what

a

this, and in addition be

across

>:=

dividend

has served to increase the capital
of the Union
National Bank
of

The

mainland of

to whether any

as

was

Charles Klein Joins

The death

Chairman

on July
Tucci, Assistant
Secretary of the bank, would re¬
tire on Aug. 1, after
serving the

20

#

A

it
*

of the Union Dime
of New

of

capital

then

has been

Industrial

of the State

each

its

If

prepared to meet Russia itself

Italy, predecessor of

year

then under

we

the

relatively large forces apparently necessary to reach
objectives in Korea, what if then trouble breaks out
around Formosa, and develops more power than we have
been supposing possible? What about Indo-China? Iran?
Yugoslavia? Must we "save face" by defending all these
despite the fact that the Kremlin is not under the necessity
of committing a single Russian soldier, and not very sig¬
nificant amounts of Russian equipment?

26.

ica, died at San Jose, Calif.,
27.

Are

on

the

Corporation and the Bank of Italy,
predecessor of the Bank of Amer¬

July

have to evacuate?

such

*

the

way,

starting point? And once that is accomplished, what
Must we remain indefinitely in that unfortunate
land to prevent a return of such a campaign as we have
been fighting there? Many of these questions will rise to
plague us even if we never evacuate. If we must commit

Bank of America

Bacigalupi,

of

the

then?

23

announced

*

A.

on

Asia in sufficient force to drive the Communists back to

transac¬

branches, effective June
James

we

obligations to reestablish ourselves

22 California banks
as

inevitably be

would suppose, quickly become un¬

What Should We Do Then?
But what if

Associated

Transamerica

one

their

in

America

had acquired

would,

two

early in July from

Francisco

Bank

final "show-down" there, in that

important, and indeed untenable.

tions is in litigation.)"
It

a

as

Savings Bank of Pasa¬

(Status

It is this: Pre¬

should the Kremlin decide, and this appears un¬

and Korea

branches of the Bank of Newman
and the two branches of the First
dena.

the President himself.

World War III would almost

case

locations of the banks whose
was

to

likely, that it wishes

latter bank established branches at

the

even

from $600,000 to $900,000.

in

*

Royal

Commerce

by

Vice-President

The

of

course,

business
acquired
by Bank of
America, N. T. & S. A., San Fran¬
cisco, Calif. On June 26, 1950, the

business

be, it seems evident to us that
which all such decisions must
today largely unknown. We suspect it is far
upon

cisely what do we regard to be our "responsibilities"
throughout the world? What must we really do to pro¬
tect ourselves from totalitarian aggression?
Obviously,
our
commitment in Korea requires that we drive the
Communists back to their original position above the 38th parallel regardless of the cost of such an undertaking. Of

"Bank of Beaumont,
Beaumont,
Calif; Bank of Newman, Newman,
Calif., and First Trust and Sav¬
ings Bank of Pasadena, Pasa¬
dena, Calif., all State members:

at

of

as

from clear

Fed¬

stock, the National Bank

creased

purchases

high

Both the exhibition and the

a

new

rest is

Re¬

follows:

as

eral Reserve District:

the

a

important factor

an

Absorptions and establishment of
branches

to take it

but

*

In its advices covering the five
weeks ending July 15, the Board

Through a stock dividend of
$150,000, and the sale of $150,000
of

on themselves to formulate
public policy)
piece of "clever" political strategy. It may be
that in this way he could succeed in obtaining all the
powers an absolutist could desire without shouldering the
political responsibility for demanding them.

is

for time

of the

interferences by government with busi¬
private citizen are essential in the circum¬
It could be, of course, as some have
suggested,

powers

seem

except

dent,

house has prepared another in its
series
of
international
mono¬

in

Association

this year,

other

the

refraining from a request for full
(thus leaving a demand for them to build up
Congress and among a number of private citizens who

war

tary-Treasurer of the Denton-Wise

National

*

stances.

thumb from current

a sore

the extent to which controls, restric¬

that the President in

Secre¬

was

and

ness

Man¬

become

Atlas

Bank.

tions and

district

According to the San Francisco
"Chronicle," in 1917, A. P. Gian-

President, effective Aug. 1.

cur¬

Decker

enough. It protrudes like

controversies about

the

date

Regional
Land

Mr.

to

that

on

Federal

Houston.

operate them

post,'Arthur

clear

Dallas, which

Antonio

irom

The

of

was

become

institution since 1926, succeeds in
new

the

of

advices

the San

Trust and

National

Phillipsburg
Trust

ft

Vice-President

Second

The

products

exhibition

an

at

South

of

diroctor of the trust

The

was

a

-South

"Evening

H:

«!»

Trust Company's Rockefeller Cen¬
ter
Office
on
Avenue
of
the

Americas

Co.,

that

states

a

pany

as

elected

the

July 25, according to

on

Newark

been

to

of

the

of

nini

and

subject of

elected

effective

ft

of

Orange, N. J., at

*

Denmark

Howard

was

Trust

Orange

on

Vice-President.

a

time

one

also

ft

Wells

T.

Vice-President

ciated

regular meeting of the
directors of City Bank Farmers
Co.

a

«

a

Trust

at

Secretary,

*

has
At

Leake,

July, 1926.

Cyril

slated
ager

he

his

principal business since 1883."
A

Son

Aug. 1; he has been with the bank
since

con¬

banking

division would not be in the best

in

the

bank.

was

Assistant

an

1.

bank

is

M.

and

the

of

Aug.

the

and

Francis

late

Leake,
an As¬

of

as

entered

Leake

the

been

Herald"

*

November,

Title

176

at

President

the

of

Trust

as

office

remain

offices

operation

All

insurance

Guarantee

the

banking

under

reopen

Bankers

Trust has

On Aug. 7

and

have

by Francis M.
recently elected

was

sistant

of

duties

Tucci's

assumed

Hammarlund

Guarantee

transferred

1927,

then, in
addition to his
former duties, had been in charge
of all work concerning estate ac¬
counts and general information.

Treasurer

been fixed for Aug. 5.

in

since

closing of its banking offices by

the

lan¬

depositors of Italian, French and
Spanish origin.
He was made an
Assistant

the

Title

foreign

entered the bank in 1908
act as interpreter for the bank's

guages,

Denton

that

noted

Trust

Vice-President

Denton, Texas, on Aug. lvwas in¬

CAPITALIZATIONS

&

Herbert

as

dicated

Stockholders of the Title Guar¬

As We See It

«

of

Denton

Bankers

and

ETC.

REVISED

antee

*

resignation

Decker

NEW BRANCHES
NEW OFFICERS,

*

■,

•,

The

a

cure

upon

a

lower level

were some

of total activity would provide

for the dangers of inflation.

But when

that lower level of fundamental

we

activity,

entered
we

felt

Volume 172

Number 4930

..

.

even more insecure and
yearned for the day when full
production might be restored.
...

"We must draw

overcome

in several areas. The work week

Bnt What Is the Real

sharp distinction between the sound

a

elements of maximum production and
ments which threaten its maintenance.
tion to

(449) *21

The Commercial and Financial Chronicle

"The Korean

the unsound ele¬
It is

...

spotlighted the weaknesses
aggression.

days of fighting, during which our
gallant forces have been all but pushed into the sea,
the United States, almost un¬
aided, supports the Free Repub¬

inflation by private and public policies
downward.

"Stability and economic strength are advanced by
private and public policies which adjust themselves to our
need and prospects for stable
growth, instead of adjusting
themselves to the
inevitability of the business cycle."

"Fifty-two

—

much

date.

but

members

of

only

Chesapeake & Ohio
leaders such

not

been

dynamic

so

forces

states

are

no

Chesapeake & Ohio has been

account

of

interest

may

In turn, this has stretched
production lead time on many
industrial items. The range of fuout

,

of

and

the

projected

factors—merger

of

rearmament

the

Pere

effort.

Due

to

a

defense

with several

of

bituminous coal.

for this most

for

coal

secure

little

question but that this recent change in senti¬
fully justified. In the first place, it is doubtful that such
abject pessimism as prevailed just a few months ago was ever
warranted.
Secondly, military operations and the step-up in
armament production will unquestionably mean much heavier
shipments and consumption of coal. Even now coal has a price
advantage over oil. This may well widen. The military situation
points to the strong possibility of the development of oil short¬

this is not being overlooked by

to switch from

well

may

one

consumers in a position
Finally, material shortages
additional
natural
gas
pipeline

fuel to the other.

seriously

restrict

construction.
At the

same

time that the traffic outlook of C. & O. has been

The

sees

*

construction materials,

containers, cornstarch, electrical
supplies, food products, fuel oil,
gasoline, glass, lead, lumber, ma¬
chine tools, paper platinum, rags,
rosin, rubber, soap, soda ash, styrene,
textiles, tin, tires, wood

doubtful if he

appears

screws.

Immediate Controls
Robert C. Swanton, reporting opinion of Business Survey Com-

mittee of National Association of Purchasing Agents, holds

.

signs of public buying hysteria
A composite opinion of purchas¬
ing agents who comprise the Na¬
tional Association of Purchasing
Agents Business Survey Commit¬
tee, whose

C.

Swanton,

Di¬

pany,

imposition
trols. Ten

find
immediate
government con¬
message,

to expect

of

billion dollars for pre¬

paredness, with possibly half of
that reaching industry, is not a
our

The

sources.

up

of Olin Indus¬

"The

Division

of buying

sharp upsurge

tries, Inc., re¬
ports that "the

many

performance for the first half of the

year

distorted by the particularly poor

ported

in

ratio

was

ratio

for

February.
For the six months through June the
33.1%, a cut of more than a full point from the 34.4%
opening half of the preceding year. Year-to-year

the

comparisons should be even
In

company

This

of

each

the

three

favorable in the last half.

more

months

of

the. second

reported common share earnings in

excess

brought the cumulative total for the half

Considering
under

the

the
like

year

of $0.50

to $1.66

interim,

is

highly

satisfactory.

share.

a

share.

a

early deficits, the showing, only $0.29
1949

a

the

share

Full

year

earned

may run

around $3.50, or better.

only $1.36 on the

common.

Last

year

the

company

With such prospects most

lysts look for at least a $2.00 annual dividend basis and in

quarters an even more liberal policy is looked for.

ana¬

many

It is expected

that, ex any recurrence of serious labor troubles in the coal fields,
the

road's earning power in future prosperous years

the

1950 estimate—perhaps around $4.50 a common share.

Hartford Office for

should top

lag
general

business

ing

Walston, Hoffman Go.

Own Investment Co.
SAN

HARTFORD,

Conn. — Walston,
Goodwin, members of
New York Stock Exchange
other leading security and

ANTONIO, Tex.

—

B. Arnett has formed M. B. Arnett

the

Company with offices in the Frost
National Bank Building to deal in

and

exchanges, announce investment securities. Mr. Arnett
the opening of an office in Hart¬ was
formerly
manager
of
the
ford under the management of municipal
department of Lentz,
Newton & Co.
Harry L. Perkins.




i

was

Robert C. Swanton

the

by

Korean

blow¬

the

about

same;

new

price
structure
cheeky with the United States;
inventories up a little more; em¬
ployment increasing; buying pol¬
icy a little more on the low side.
Business is good, at the high level
of the year, and expected to con¬
tinue into the fourth quarter."
higher;

Havener, Gill Will

.

■

creating
since the
strikes.
Buying

New orders have zoomed,

heaviest

backlog

coal

arid

policy, though still considered to
be conservative, has had to ex¬
tend the range to meet lengthened
production lead time. Prices are
up all along the line, with escala¬
tion rapidly coming into the pic¬
ture.
Industrial inventories are

in many cases,
limited only by sellers' self-im¬
posed allocations. Employment is
up, to man the increased produc¬
tion schedules. Very little of the
July business increase is attributed
to direct

up

panic

—

military orders.

"There

has

buying

been

of

a

flurry

products

of

that

short during the war, most
it at retail and distributing

were

of

levels.

At

Benjar

will

become

a

New York Stock Ex¬

change,

Aug.

government price freezing. Sellers
should remember the price roll¬
back of the OPA days. Trice rul¬

month

end

there

on

date of shipment' and es¬
are again common

Broadway, New York City, mem¬

was

in

future

Forty percent report adding to in¬
dustrial stocks during July. In¬
critical

materials

"Purchasing executives, viewing
the current situation in the light

in

Walter

Admit H. T. Greene

currently

of
such

as

steel,

DAYTON, Ohio—Harry Talbot*
Greene

will become a partner ip.

Greene

&

Building,

Brock, Third

members

National

the

of

New

zinc and aluminum, is York Stock Exchange, on Aug. 10.
practically impossible, leading to He has been associated with the
copper,

unbalanced
at this

stocks which

cannot,

firm for

some

time.

time, be assured of adjust¬

On the same day Ray M. Brock
by
future commitments.
will retire from partnership am*
Purchasing Agents are aware that
hoarding
of strategic materials the firm name will be changed tpwhich may be restricted in use by Greene & Ladd.
ment

4

.

controls

government

can

prove

unprofitable.

Walston Hoffman to Admit

Employment

SAN

the heavy curtail¬
ment caused by industrial vaca¬

"Following

Aug.

FRANCISCO,

10

August M.

Calif.

—

Amend and

William L. Minick will be admit¬
the month, employ¬
ted to limited partnership in-Wal¬
with a bang and,
of the month, stood ston, Hoffman & Goodwin, 265

tions early in

ment came back

at

the

end

are

signs that this hysteria is passing.

Mr. Benjar

14.

partner

New Name Greene & Lack)

Inventories

deliveries

formerly

Greene & Brock to

delivery quotations.

"The trend of inventories is up.

creasing

on

Benjar & Co.

calator clauses

during the first half of the month,
has snapped back and is forging
ahead to meet increased demands.
the

Walter

bers of the

ing

Production, which was sagging
because
of
industrial
vacations

Melton

Hoffman &

commodity

dur¬

July

upset

creeping

M. B. Arnett Opens

duction

reported
July. Pro¬

industrial materials. Some
higher prices are believed to have
been established in anticipation of

expected
in

steel

earnings

for the United States in

partner in Havener, Gill & Co., 61

to the

up.

quarter

those

Commodity Prices

Repeating
Arms Com¬

was

divisions.

conditions

business
from

Chester

opening months when the mines
were still closed because of strikes.
In the last couple of months,
however, the transportation ratio has been running down close
to 30%. This compares with a 1950 monthly peak of 43.5% re¬

overall

The

some

little

differ

program

broad use and price controls.

during the month carried prices
highest point this year. De¬
mand
has
exceeded
supply in

on

Canada

"Canadian

capacity and re¬

announced

should be handled without setting

\

J

„

orders

■

'"9

chases, Win-

ing operations and road service

President's

reason

deep cut into

■0J

rector of Pur¬

is experiencing the cumulative
benefits of substantial sums spent in recent years on yard im¬
provements, new equipment, track installations, etc. Such savings
should be augmented b,v the trend toward dieselization of switch¬

the

of

little

passing.

are

"Everything going up—nothing
coming down—is the report for
July. Increases over-all have not
been drastic. Important items af¬
fected
were:
Aluminum, acids,
alcohol, bakelite, cotton and paper
bags, cadmium, castings, cement
corrugated

of the weaknesses

Purchasing Agents Deciy

Robert

company

some

Kremlin; it
remedy.

Chairman is

Also, the

,

Commodity Changes

Specific

J-

of the foes of the

knows the

brightening (it should also benefit from increased manufactured

is in prospect.

commitments

660 days.

trols.

defense against the common foe."
Roberts, to President Truman and Secre¬

Judge clearly

freight tonnage)

its operating performance has been on the up¬
grade. The company has made considerable progress in reducing
its passenger train deficits by reducing or eliminating branch line
service, consolidating trains, etc. More progress along this line

price escalation is

most

to

Buyers do not feel
that present conditions call fqr
government price or end use con¬

common

ment is

ages, and

attached

a

tary Acheson.

developed

important freight item has developed.

There is

the markets, as

over

—Owen J.

Considerable

has

up

reasonable proposal that we
our free neighbors the means of
building the political unity needed to create a

pessimism as to the long
in the past few years,
centering largely around the expanding use of competing fuels
such as oil and natural gas.
This pessimism communicated itself
to the stocks of the major coal
carrying roads, aggravated by the
adverse earnings influence of complete mine shutdowns and three
day work wefeks for miners. In the past few weeks a far more
sanguine attitude toward at least the intermediate term outlook
outlook

endeavoring to cover
to six months. There is ap¬
parently little, if any, price spec¬
ulation in this extended view of

J. Roberts

command to move-with

"Surely this is
explore now with

Last year even with periodic mine
closings the road received
just about half of its total freight revenues from the transporta¬

tion

Owen

a

.

Marquette

properties,
industrial growth of parts of the service
area, more intensive
solicitation of merchandise
freight, etc.—the character of the
road's traffic has
changed considerably in recent years. Never¬
theless, it is still to a major degree a coal carrier.

term

ex¬

during: May and June.
July pushed many from 30 and 60
days into the 90-day column and
moved 20%
into over .90 days,

political federation of democratic members
of the United Nations would give to that
body the
real authority it needs to halt aggression.
..

At least in part the increased buying
unquestionably be attributed to the disturbed for¬

been

had

commitment

ture

tending

"A

itself recently.

situation

number

Pacific, the common
giving a considerably better

orders

new

logs.

to

dispatch against the arch enemy; and this is possible
if they are
politically united.

rail

Illinois Central and Southern

as

stock of

eign

other

some

rise in

brisk

following the Korean outbreak
has developed a new high in back¬

'

...

united
as

deeply

cut

Buying Policy

few have sent

a

token

as

against aggression.
"Free peoples must have
has

the

"The

...

it

de¬

1

again proves that
forces voluntarily offered
by

Although

war

the

"Korea

free

power.

into
supply of male workers.

aggressor — the Security
Council has called upon all to
as

future

if

women

more

velopments

the

aid

man

f

United Nations have denounced

taught the Council, then the President
get another Council.

of »a

much

industrial

to

However, employment managers
are looking
ahead to the use- of

„

lic of Korea.

If this sort of economic twaddle is all that the
post¬

considered

not

are

threat

"After 30

which turn the whole
economy

war years have
would be wise to

has

war

being lengthened in many in¬
dustries, and would gd higher if
were immediately avail¬
able. Present draft requirements

materials

of alliance in the face of

solu¬

no

is

Remedy?

higher than at the close of June.
The

demand

overbalances

for

the

skilled
current

Montgomery

Street,

members of

labor the New York and San Francisco

supply

Stock Exchanges.

22

The Commercial and Financial Chronicle

(450)

Eccles' Anti-Inflation Program
c

*l

»l*

•

,

ii

r

.•

other things, reslnction of bank credit,

among

term interest

_•

•

vllvj

w

In

statement

a

„

,

^

ipbe investment implications are

yd) Require the RFC to stop

of the Board of Governors of

making

loans,

except when

the Federal

are

Reserve

cannot be gotten elsewhere.

Sys-

tern, outlined a
prog

r a

which

(4)

tration and mortgage insurance by
the FHA., requiring the Federal

Aid to South Korea is

tion

a

crisis

of

text

guaranteed

of

"(5)

Korean

that

top

been

of

it

supported

by money and credit
exceeds the supply. The available
supply of money and credit can
increased only

system

by the banking

making loans

to

situation

it

de-

durable

consumers

which

terms,

should

be

made

to down

as

and

maturity to curb
of the huge voloutstanding.
Require the Treasury to
short-term

permit
rise

to

interest

moderately

rates

the
government securities more
attractive to the public. It would

reduce

the

need

government

put

will

government

This

be

can

if

adopt

the

without

of

the

Federal

s ec u r

excess

i t i

which

e s

and makes
restrictive mone-

money

the

advantage that it
promptly into effect

can

a

terially
and

of

reduce

thereby

goods

would

program

civilian

increase

be

scinded to the extent needed without

requiring legislation, with the

exception of

credit reg-

consumer

and

labor

supply

available

for

the

military needs without the
necessity of putting the country

under all of the

onerous

war-time

that

the

cult

and

campaign may be diffiprolonged.
Another is
that Korea may be only one of a

States

its

and

maneuvers

allies

care-

the

on

de-

(2)
oion

World
nf

+hp

War

mntpc

that

means

she

war

The

III

TTnitpH

aggression
wants

will

decifieht

tn

if

Russia

havp

it

It

(4)

exports

world

Like-

war.

wise, it is difficult to support the
view that world

conflict is

immi-

the foreign

ex-

tell and
inflationary price rise of
].948 and lts subsequent correc-

In

recent

15%

of

4ureSj

total

expendi-

consumer

ratio which

a

is

somewhat

but not unduly excessive in terms

of historical precedence.
In passenger cars the optimum level of
nati0nal ownership may be calcujated up to 38,000,000 units com-

pared with approximately 36,000,now in use.
Some 20,000,000
cars on the road are eight
years
or
older? most of which
wouid
be
replaced within five
years,
indicating an average repiacement demand from
this
000

lh.e
in industrial proauction in 1949 was essentially a
business inventory adjustment refiecting a shift from accumulation
of inventories in 1948 of some $6.5
,

of the

billion te a reduction in 1949^ of source alone of around 4,000,000
The swing units annually. If we also take
ln invYnteries thus amounted to jn^0
consideration
the
normal

ar0Ynd $2.3 billion.
$8.8

billion

a

on

y£ar*to-year basis and considera

y.,mor£,

declSl'in
;
•

.

g

•

aA,

growth

in

number

of

family

arrive at

we can

an

estimate

°f somewhat oveJ 5,000,000 passenger cars as a demand criterion

?™SS natl0naJ pr°d~ for 1951

^.1°"?n»T"tairlT

the

un^s and 0ther determining factors,

V° D1T

,

?•

"fT

third

econ-

very

^?anjfe ^Y3^3*1011

7

a

been

jnciuding automobiles

would be foolhardy under prevail-

of

continuation of gov-

a

policies that tend to keep

without an over-all collapse, in- months national spending on coneluding (1) a sizable decline in sumer durables has been
roughly

ing tense conditions to ignore the
risk

fact has

approximately

fensive.

nent, since
Russia will

ripe

"(1) Make

no

going

and 1952, plus an annual

Produeti°n of over 1'000'0°° trudks
atu " eL°,111 an/ctlvf economy These fig"'?utg10r, ''* ,fpuras do not suggest that the auto
' n"Jg 5° ™ "Tn LT n?<T lndustry was f?clnS a decline of
Th™L °„
nmLK
sever?. Pf°P°rtlons. especially if
stable

large Post Office deficits.
."(3) close tax loopholes

pre-

n

(3)

intensified

thetime

beine

approach

,

centers

For

moJtre^Hstk
the

strong
that the United States

probability

on

rat,e f?J a proper ,s.eas0.na] factorinventnrv
rnhiiilHinff
the construction industry a
fj./-..'demand f?.r around 800.000 resiSwi-lvLsoveir-de]pressed dential units per year for the next
a'n
boominthe auto- flve years appears to be well
nf

the

rest of the Far East.

m

np~p_-arv

uu

nf

^

demand

to

^ulpment

Peri°^°f Hsing
but also*to

to Korea

capi al

el
good^

§

"

.^lnd

minor

no

Continued

tbe ,1'mlts

ProbablIlty-

itoJre

S'

and
Looofootoesldential unUs per yIII
.Was the business situation can be supported on evidence that
Wghly vulnerable "Before Korea''?

undertaking. 1
d
to subscribe to this
military expansion vievY: To the contrary, it seems to
would appear to be increasingly
that the ec?r!0.^1/
entered
necessary until there is evidence
an area of high business acthat aggression against other weak
"J,
is

adJust the recent high output

we

^rr?' 'S

we

Armament

the

,

is

in the Kremlin.

on

This

"(2) Increase second and third
class P°stal rates enough to meet

time

Unfortunately,

reduction in taxes defense of the

no

the

not privy to the deliberations

are

^ot only

this year.

when

knows

one

consider

act.

to

Is
Fiscal Program

ma-

demand

the

stage for longer-term world peace.
One weakness in this approach is

re-:

or

fiscal! program""6 m°ne'ary ^ Ulatl°nS'
"Such

successful

and

have
any

longer-

P

creates

has

about

determined

a

the national income relatively
well stable.
I
could go into a maze
sustained on many counts. A sig- of statistical details here, but I
nificant aspect is that postwar prefer to rest on a combination of
industry adjustments took place factors which appear to be of
ad seriatim and not in concen- greatest significance,
trated cyclical doses.
We have
Consider the peacetime situamanaged to weather a number of tion in consumet. durable
goods
individual economic weak spots

in

omy

conceivable

campaign could be suffciently impressive to forestall other Soviet
military plans and thus set the

and

thereby
take off the pressure for longterm interest rates to go down.
This change of policy would make

by

brought

is

It

ditions and
ernment

soft-goods production following
ear*y postwar boom, (3) a
sharp red^cte>*} *n our balance of

series of Russian

growth of

promptly

acc0rd.

a

bove

might
assuming active business con-

years

net farm income, (2) the drop in

fully designed to keep the United

"(6)

therefore, impossible the
imperative, if price inflation is to tary policy that is called for.
be controlled, to stop the overall
"The above six-point program

the Federal Reserve.

in

not

^at

capital goods in the prewar
of the 'thirties).
Since 1946, the national

Action-

by decision of the United Nations,
w^h only Russia and her satellites

a

demand for autos and homes

being given

Military

further growth

is,

loans and investments
the banking system, including

Umited

(1)

ume now

buy- Reserve supporting the market for

or

ing securities from either the government
or
the
public. In
the

present

for

payment

an

develop when
the demand for goods and services

be

effective

sufficiently restrictive

showing

to

sure

the

by giving to the Federal
Reserve control of consumer cred-

developing.

inflationary pressures for some
time, especially in the durable
goods and housing sector.
Price
inflation is

the

to

goods

on

has

mortgages

Reduce

mand

inflationary

the urgent and in-

demands

make

amount sold.

'

"Because

military needs and a
rapid stepping up of business and
civilian

to

owners

Mortgage Association to
limit its purchases of insured and

creasing

economy

home

National

Eccles'

lows:

rapidly

policy,

investment

jong-range

speculate as much as he desires
on
his personal views of military
prospects.
The portfolio manager,
however, has to consider and give
careful weight to possible alternative patterns that may emerge.

statement fol-

to

reduc-

-pbe short-run trader is entitled to

larger down payments, slowing
up the approval of mortgage guarantees by the Veterans Aclminis-

The

is

always be an impractical basis

for

the

by the

Mr.

This is due

recent

would

future

of

Korean

situation

its

de-

requiring

the

requiring

.auseu

the

rescind

to

effective

by

foreCast of

be-

situ

dangerous

the

housing

cise
ag

tion in interest rates and reduce
its
insurance coverage, thereby

car-

in flatio nary

a

Reduce

and

purposes

far_reaching but by no means conc]dSive at this juncture.
A pre-

out

cause

•
r
«
F
i
Marnner S. Eccles

military

for

FHA

im-

be

urges
ried

lor

mand

m

he

mediately

M

they

substantially

year

term trend. A more fundamental
P°int is what the so-called normal

....

AftfllllAYtC
VArllllHIWllil

r

VIIIIvHl

r,

system.

Eccles, member and former Chair-

crisis

-

far this

so

reasonable calculation of

^ssued at Salt excess reserves in the banking

Lake City on July 18, Marriner S.

man

m

p.|yf0H|

u

been

VUUVI

.

rates, reimposition of modihed excess profits tax.
,

housing starts

J

fllVACflttAll! A
POllCV UlltfPF
VilftlftlvlKl

»ll

.

,

If

.B

n

short-

rise in

Thursday, August 3, 1950

from
Ta

_

for,

..

first p^e

Continued

Member and former Chairman of Federal Reserve Board calls

.

ha^d

J^ad

^vlty

;rat^

afe,g4e9fe^red 35®™?! a-1 fgoooOO
Various other

in'riljded
tJ

P

in

an

noints

aDDraisal

construction

reduced

outlook

home building

of

well-balanced

can

of the

below

exoectaviously
recommended
by
the nations in the world is not apt to
J^e v1covfy] in capital
variouc: tvoes of Drivate and
Treasury, especially those where occur. The pace of further pre- g£ f, ?
orders early this year
>
construction
would
be
government is losing large paredness will be geared with un- should be emphasized as it is a public construction would be
essary to go ail the
because amounts of revenue.
folding developments as will the
toa
"would.kely be an atomic war
(4)a
C°^ a°lL nei
eC°n°mlC
'
1948
completed, at
lagged in ^'postwar period and
C«e The
taiwinf
;
•
The Background
for a time. There is considerable should increase in line with the
case, the following program isany earnings above 10% on the fi-st
an

direct controls, unless the Korean
situation develops into World War
III. Even then, it
may not be nec-

'way

^a
.,fr aDav,e
the Inst
evidence
I believe
that the
$5 million of invested capital and
We cannot properly discuss the
reDiacem'enf
demand
for
°n any balance, allowing a current investment situation in a
P
durable eauioment is
0 ™tid"

basic

,

urgent

necessity

carried

out

and

should

immediately,

no

be

mat-

ter what action may be called for

Requcstorganized'

"(5)

Monetary and Credit Program
"(1)

Request

agreement to

bank

every

make
to

stap'Tank credit'eZ

pansion which has been growing
rapidly
by limiting
new
loans
made

of

by

any

loans

loss

in

bank to the amount

its

or

sentia.

would

stabilize

...

general

,

credit

n

well

the

is

If

not

the

as

this

carried

Federal

Reserve

reserve

require-

.
.

should
ments

as

situation.

program

then
..

eovernmpnt

,

market,

voluntary

ac-

bank program

thp

,

securities

out,

a

increase

the

to

legal limit and

Roni.ocF

banks
ment

not

to

rl™S
l

loans and

would

the

fnr

their
tho

7

Federal

putting
Reserve

one

in

so

years ahead,

so

that

deDressison

have

seriously

under-

bonds.

They cannot be expected

to do this unless the government

the dynamic expansion in production and trade surely goes deeper,

into such factors

.

necessary

x,

action to

.

oro-

lation gain of

„

power

of the

^

(1)

as

over

19

a

popu-

millions

or

pagt

decade> (2) the
increase in family spending units

govern-

price inflation, which has already

0f

•,.

P !!
This
on

support

.

,

.

over

26%

«

(3)
v

the

rise

of

over
.

bee permltted t0 g0 t0° far' The 75% in real supernumerary invigorous credit, monetary and fis- come per capita and (4) the abilcal
program

accomplish
the

need

thereby creating

trols."

deposits and

unit labor costs down
prove

productivity.

and

im- less

Furthermore,

based

on

historical tests.

Equip-

of

above

this

outlined

purpose

will

without

imposing the object-

harness

of

direct

con-

ity

and

business
and
of

a

willingness
to

invest

of

in

American

new

plant

equipment to meet the needs

growing civilian economy (in

contrast

to

the

low

demand

than 8% of the gross national

product, which again is not ex-

the present level of around $20
billion for producers' durable mte

neld

tionable




remaining

at least the next few

highways and other
publicly financed con-

new

C^fntirom^'lliZeTwSo SSST&
has stossed^the^mperafiye need ^^^^^^rS^Rtomor

estimated the inherent vitality of ment prices in the postwar period
banking system.
American economy.
We can have certainly lagged well behind
This is also an essential re- ascribe this growth in part to the the sharp increases in hourly labor
quirement of the montary
and
impeiiing
to make up civilian costs.
It is reasonable to suppose
credit program suggested if it is
g0£ds shortages generated in that the average life of capital
to be successful. The present situ- World War II and to the huge equipment will be shortened as a
it!™
people to save wartime increase in national result of both intensive use and
their money and purchase more savings and monev suoolv
But new technological changes arising

the government securities
market,
new

es-

dynarnic

a

dollar (their money) from further

pressure

to

been

savings

V ° in^reas^
other investments.

avoid

hag

Schools,
tyP«s of

noiilibI'Ta

costs,

outslde the

slstem

banktair

ni,r„Ac.n

P

of

"Bfore Korea."
recogaizf[hat the'enHre postwa?
period

close

rate of industrial production,

fit he

is to be held to a minimum

x

,

sell

qprnritipQ

observations

some

tax

above fiscal program is

nsurai.ee tect the purcnasing

companies and the mutual

sent

oro-

annually at present l^Zestment still in such instruction are anllyTs™
adding in a moderate t.ms.ve demandtoat y^ta m^y^
the amount for ^r"}31 military reJj
,
Totaf new construe-

to pre-

takes the

get

additional powers if
necessary.
.

in-

wage

prof^s

^ate 2V2%"^ maturity' mterest

deposits by buying
Such

for

excess

g-term non-marketable bonds,

'"'The

the

selling government securities

cordingly.

while

sSni™ae.J
aub"
background I would'like

labor to

"(6) TheTreasury should offer
P™mptly to non-bank investors

or

meet

demands

no

--es

gain

paid;

btildta| "fo^eSp.^has

^^^t^n^vytatstry
^
llit

"afo nSeThat^he orin"
esting ^0 note tha the prm-

pertains to the possible drop in
the number of new family units

created m the yeais after 1955.
By teat time we may have arrived
at a point when a real replace™nt or "scrappage' market for
homes could be developed as an
important offset.
There has been

a

good deal

of

from the huge sums being ex- concern about the rise in consumer
pended on industrial research, credit over the past year. All of
From a financial standpoint, cor- us are aware that easy payments
Porate enterprise in the aggregate

on

consumer

durable

goods

have

bas had little trouble in financing been a lifting factor since Federal
large-scale programs of plant and credit controls were removed in
e(*uiPment expansion when neces- 1949. I can agree that the rate of
sary

in the postwar years.

{

judgment

the

has perhaps been on

increase

prospect

bas been that the recovery in the

months.

capital goods segment of the

total

omy

would go far to offset the

bdeCandf housing5 industries
deferred

for latter

econ-

are

demand
reduced

when

backlogs of

Ther? is

the
not

the

excessive side in the last several
of

Nevertheless, the present
instalment

debt

does

appear

to be over-extended if

relate

it

—7T~

disposable

to
r

•

net
we

national
.

°f Current BuS'neSS' March'

Volume 172

income.

Number 4930

.

The Commercial and Financial Chronicle

.

.

It is in fact

quite low in
rate of na¬
tional savings and particularly in
comparison with the huge amounts
of liquid assets held by the public,
to which I will refer again later.

Korean

Episode Not Likely to Be
Soon

relation to the present

We

also

can

take

recent

an

as

in

me

that in
should
in

crease

the

ing

be

substantial

a

is

in¬

Where

debt.

intensive

so

the

is

typically made available,
either by private sources or by
government.2
Dr. Schlichter has
of

words

some

who

by

comfort

about

worry

things,

for

this

pointing

those

of

aspect

that the
present total of net mortgage in¬
debtedness for the country as a
whole in

relation

posable income
thirds

in

the

out

is less

than

that

amount

two-

prevailed

1929.

compared with 1929.

Moreover,
the ratio of liquid assets held by
the public to private net debt has
risen

Dr.

sharply in the past decade.

Schlicher is

record

on

as

ex¬

pecting a substantial expansion of
private debt in the next 10 years
ahead.
I

that

know

gentlemen

you

are

interested at present in pros¬

more

for

pects
under
ment

earnings and

dividends

intensified

more

rearma¬

conditions, but I cannot
in

frain

this

discussion

of

re¬

of industrial production. The FRB

Index in June stood at just under
200 (1935-39=100). I believe that

again

fail

to

It

is

to

interest

of

Moody's

has

civilian

they

normal of under 175

a

give proper weight
dynamic factors at work.

the

to

lately

normal

of

165

add 10 points
production.

into fuller account

a

which

to

for cold-war
If we take

rising pop¬
estimate of

our

reasonable

a

that

note

computed

defense

ulation

and

for

will

in

war

in short

up

President

authorization

asked

has

undoubtedly
covering

get

addi¬

an

corpo¬

rations

with

income

higher

Still

to

individuals

and

I

that

feel

mature

the

for

maxe

be

pre¬

portfolio manager

majur

a

rates.

tax

would

it

faced

are

in

revision

in¬

vestment

policy at this time, pro¬
viding the portfolio is adequately
diversified

and

if

holds

it

dollar

The foreign situation is

reserves.

of

the

over-all

activity

ness

moving

(around

on

concern

process

FRB

Index).

would be if this

should generate enough

commod¬
ity price rises that would effec¬
tively cut into the demand for
goods or throw the business situa¬
tion into unbalance.
In

sum

that

the weight of evidence is

have

prospects

able

for

been

favor¬

business

activity
and
earnings in the next
two or longer on a peace¬

corporate
year or

time basis.
the

The recent decline in

stock

market

tributed

to

business

outlook.

Some

be

at¬

in

cannot

deterioration

the

correc¬

tion of stock

prices may have been
in view of the increase

necessary

in

margin indebtedness

over

the

past year and also to the elimina¬
tion of weak speculative holdings
in certain groups of stocks.

there

How¬

not large amounts

the

that

market

firm

rather

if

my

rest

may

on

ground at this junc¬

ture if all-out
and

is

It

now

war

can

military

expenditures are
sharply.
The other side of the picture is
Korea

there

could De vast repercussions.

Per¬

if

fail

we

in

haps this is what Dr. Slichter and
others have in mind when they

for many
sifies

or

have

will

we

rebuild

to

invasion

and

of

yields.

done is

earnings

average

What the market has

to shift from

considera¬

a

which

to

be invoked.

may

rather

than

or

inciease

military expenditure may

pected if the
is

be

in

ex¬

is continued in

war

One

Korea.

con¬

A gradual

sudden

a

to

higher

economic

taxes

to

over

question

can

if

re-equipment of
forces with particular

widespread

strictions

months.

without

be

up

Of

it

course

and will

can

ahead
than

be

may

earnings and dividends under

war

developments.
2 No doubt

some

types of federal home

loans, especially
for lower cost
units,
are
entirely too lenient and should be
adjusted.
However, the situation today
is

better

in

many

respects

than

the

2nd

and 3rd mortgage system of the twenties.
3 The studies of the Econometric Insti¬
tute

(New

ening

on

York) are particularly enlight¬
this subject.




is

legitimate enough

up

to

professional

well

as

point.

a

investors,

engaged

anyone

in

would

It

pressing
of

considerably

less

is to

that the most
build up the

armed

been

Even

necessary.

this

under

possible
pattern of
military expansion there

gradual

ability

1941.

mortgage loan credits for the

of

siphoning

pur¬

spending

off

and restraining inflationary

price trends. However
is

there

I

as

see

it

no

disposable national income. Mod¬
erate

commodity

levels

current

increases

price

and

credit

restrictions could displace enough
civilian demand to make room for

gradual increase in the military
budget.
Moreover
the
business

a

outlook,

that

cates

in

as

the

discussed earlier, indi¬
total personal income

government's

ending

June

1951

year

be

than

in

billion higher

$15

fiscal

could

some

fiscal

1950.

Corporate profits subject to
also be higher, possibly
by as much as $4 billion.
With
the present structure of corporate
will

tax

individual

and

tax

rates

the

in¬

in tax revenues to the gov¬

crease

ernment would be

on

the order of

$4.5 billions from these combined
sources.

I

would like to stress this point
it suggests that an abrupt

since

rise

in

50%

the

corporate

tax

rate to

supplies
While

higher.

are

the1 American

and food

enormous

are

are

available

and

in

since

50%

some

population

large and increasing.
critical

some

raw

materials

doubt be in short supply,

no

have

others

stockpiled

been

by

over-all

Our

Electric

nation.

resources

win

corporate earn¬

Manpower

working
continent

pose

or

more

reimposition

revenue

of

(and controls). Ad¬

mittedly the steady barrage of dis¬
couraging war
news
from
the
is

front

making

this

pattern

military expansion
However it is still a

of

less
pos¬

sibility

that warrants caution in
liquidating sound stocks in com¬
panies that normally do best un¬
der
sues

peacetime conditions. Most is¬
of that type have

tained

a

ment in
cases

substantial

de¬

spending posits adjusted in all banks, after
sectors deducting
all
bank
loans,
had
risen from around $12 billion to

facilities, for example, have

in

various types of consumer and

on

increased

Oil

properly be some increase
taxes together with restrictions

power

of. demand

amount

net

.

the

of

should

on

The

already

sus¬

price adjust¬

the market and

in

many

dividend payments can prob¬

ably be maintained even under
higher tax rates. The Dow-Jones

billion.
to

a

These three items add up

total expansion of the money

billion, but
this is not all. Holdings of gov¬
ings.
ernment bonds by individuals are
In
this connection we should
also up by $68 billion and there
not overlook the great productive

power

deemed

tens

waiting period in which to make
a
more
careful appraisal of the

rials

if

to

add

in

since the end of 1941.

supply

ey

operations

sacrifice from all

potential effect

appear

need

possibly
military

selling

is

It

forces, to be fol¬
lowed later by sizable procurement
demands for equipment and mate¬
size

the civilian economy.

not

billions

of

re¬

heavy

over
$36 billion, an increase of
impossible to know if we
200%. Time deposits are up ap¬
are
facing such an eventuality.
$31
billion in the
For
the
moment
I
think that, proximately
same period and currency outside
barring another act of aggression
of banks has increased almost $16
elsewhere than Korea, we have a

publicized.

likely.

to

necessary

of the economy.

develop¬
certainly
cannot predict the speed of fur¬
ther preparedness, but as an an¬
alyst I do not want to overlook
the
possibility that military
spending in the immediate months

gradual

risks

liquidation in

been

if

it.

warrant

praising

potential

has

on

I

eventually

done

ments

on

could

We

our

controls and other

manpower

military spending by $5
billions
annually, let alone $10
billions, in a matter of a few
step

tion of peacetime prospects to ap¬

the

weeks

cheaper.

back

stock

common

recent

as

go

extensively

the
government.
military prepared-

is far aread of the conditions

nets

that

prevailed

before

World

War II.

have

We

real

a

element

of

supply

of

has been

$70

over

$20 billion increase

a

in

governments held by non-financial
corporations.
It

in

to

seems

the

me

rise

the

that

general price level

during

the past decade, while substantial,
has not yet fully reflected the ex¬

the

in

pansion

Over

assets.

supply

liquid

of

the,longer

the

run

price level should tend to advance.
in another

Involvement
tains

con¬

war

prospect of adding fur¬
fuel to the fire. Fur¬

the

ther latent

should not overlook
a modern dynamic
economy unit labor costs typically
contribute to a rising price level.
thermore,

we

the fact that in

Slichter

Dr.

has

that

said

the

national capacity
gains
of
technological progress
100 million tons will
in general go to labor in the
ingot steel per year. Including form of
higher wages, not to con¬
Western Europe the U. S. and its
sumers
in
the
form
of
lower
strength in
to

produce

our

over

of

allies have available in excess of
million

150

with

pared
Russia

and

tons

annually

com¬

under 50 million for
its

dominated

by good fortune war does not
come to Western Europe for a few

The recent General Motors

prices.
labor

this

underscores

contract

shifts

of

only

prudent

portfolio

for

emphasis

It

m.

not

my

whether

debate

the

between

"peace*

unpopular

and

popular "war" issues. Many
the latter are now higher than

of

However it is my

"Before Korea."

opinion, which is fully shared by

associates, that the situation,
justify heavy, investment
in the so-called armament or warmy

does not

Most of these are of
character under longer-

baby stocks.

marginal

conditions and would there¬

range

from

excluded

fore

be

tive

investment

conserva¬

in

accounts

nor¬

the

I would question if

mal times.

purchase of certain stocks in com¬
panies that happened to be bene¬
fited during World War II will
Traders are

turn out to be sound.

inclination to
bid up issues that would normally
be
categoried as cats and dogs.
I suppose that some stocks of this
type may benefit enough to war¬
rant holding. However, I feel that
showing

strong

a

in

conditions

since

another

war

precisely the same as in
the last one, there is a risk of a
substantial
margin of error m.

cannot be

purchasing

does

that

stock

any

reasonably

have

not

good

pros¬

pects on a peacetime basis.
We should also remember that,

general, investors who pursued

in

the "war" stocks in World War

outstanding

achieve

not

did

that
be

similar

a

more

any

course

would

now

Despite

productive.

dividends

and

earnings

lower*

II

re¬

It is unlikely

sults in the long run.

it

"peace" stock group that
showed the greatest and steadiest
market price advance after 1942_
the

was

I

not want to infer that there

do

cannot be
decline
suffer

further market price

a

issues

in

now

that

may

shrinkage

marked

a

in

heavier tax load
or restrictions on civilian produc¬
tion. This could easily happen, but
earnings due to

a

it is by no means a
we

the

consider

supply
have

many

foreign

and

of

latent

the

towards

certainty when
money

it can.

influence

the

and

stocks

common

new

a

past several days the market
shown a great discrimination

the

has

habit

here

purpose

Stock

1950 high a*
against further weakness in many
industrial and utility stocks.
In.
to

Wars

is

Railroad

Dow-Jones

Average

to

view.

states.

If

is

it

the

them

buy

to

However,

and

Korea

that

ity

fare

program

of

the investor to make at least some-

There is little evidence to suggest

their abil¬

possible for the government to

extent

early

too

new

future

balance today are

on

Regardless of which pattern of
military expenditure develops out

recognition of changed conditions.
This is of course going on, as evi¬
denced by the rise this week of

armadas, step up our atomic war¬

ending

market.

stock

crises have a
eventually and

companies that may be hurt

are
an
adequate hedge
against this time around are strong enough
thus permitting those na¬
price inflation. Perhaps it is fair to survive and later continue to
tions to prepare militarily under
to say that nothing can be a 100%
grow.
The
long-term investor
our aegis, I should think that the
hedge
considering
the
taxing should be in a position to hold a
combination of population and re¬
reasonable representation in sucH
power of the government. But let
sources facing the Soviet will give
us put it this way.
The investors stocks at these levels with plana
the dictators in the Kremlin con¬
who placed his funds in common to carry them right on through
siderable grounds on which
to
stocks of good quality in 1940-41 and add to commitments if prieea
pause before taking the final step has
certainly fared much better should be further reduced in tho
to World War III.
than the investor in high-grade market.
Many of you are well aware
bonds. I am sure all of you realize
Sound Equities As Inflation Hedge
the
extensive
amount
of
that investment in prime bonds, of
In the present confused situa¬
including governments, has suf¬ learned analysis being applied to
tion I believe that cash or highfered two direct hits in the past the problem of what form an ex¬
grade bond reserves in investment
profits might take in the
decade or more. One was the de¬ cess
portfolios should largely remain cline
such
legislation becomes
in interest rates which re¬ event
intact if
they are moderate in
necessary.
Any
calculation
of

<

years,

amount.

On the other hand those

duly large dollar reserves for one
reason or the other should begin,

mates

good stocks

in effect speculating on

real

security offer¬ profits taxes at wartime levels
ings such as characterized
the may not be immediately at hand.
1946 market top.
Finally, I think Congress will surely examine any
a good case can be made that most
Administration tax proposals with
issues of sound quality have not care and insist on
knowing the de¬
been unduly high in the market gree to which
prospective military
in relation to conservative esti¬ requirements will nece s s i t a t e

of undigested

living costs.
are
liquidating

who

that

a

investors who may have kept un¬

were

of

Investors

Portfolios

whole

our

any large scale for financial
the U. S. may not reasons. The motive is fear of a
war
situation that might lead to
peacetime economy
years. If the war inten¬ sharp reduction in corporate earn¬
spreads to other areas ings after taxes for a period. This

predict
have

excess

ever,

Unless

government is changed
inevitable consequence is a

the

Proposed Shifts in Investment

permit normal economic

to work.

rise in prices and

be avoided

not accelerated

that

order to

present forces
opinion form

on

dous increase in the nation's mon¬

the

is

corporate

capacity from

to

the

busi¬

of

the

close

210

The chief

rate

in

was

rates.

dividend

Average

it

know

it

justification for going
normal for the FRB Index by 1951
off the deep end on corporate taxes
would be in the vicinity of 185
if there is any chance that the an¬
and higher in subsequent years.3
nual
rate
of
military spending
I will leave it to you to judge
may
not be increased by more
whether the economy has been in
than say, $5 billion in the months
a
high area of dangerous excess. ahead.
Such an amount happens
My own opinion is that "Before to be
only 2V2% of our present
Korea"

over

the
armed
em¬ market, might stop to consider the
phasis on aircraft. There is no longer term implications which
question in my mind that we will may accrue out of the present
I have referred to fur¬
then have not only a wartime sys¬ situation.
tem of taxation that will reduce ther inflationary possibilities.
It
net
corporate
profits, but also is perhaps of even greater import
to note in particular the tremen¬
priorities,
material
allocations,

but

serious,

the

peacetime outlook from referring
to the question of a "normal level"

estimates of

The

the

trols

national dis¬

to

According to his calcu¬
lations the aggregate amount of all
private net debt, relative to na¬
tional income, has dropped in half
as

order.

that

settled

Stock

6V2% based

the boom

on

credit for home financ¬

necessary

be

can

a

mortgage

demand

mortgage

believe

to

Korea

tional $10 billions of military ex¬
building.
It seems penditure. In tnis environment it
dynamic economy appears certain that both

residential

to

there

of

influence

the

look at

a

expansion

loans

istic

unreal¬

seems

Industrial

yields

Settled

At the moment it

(451)

I

think, to give greater consider¬
ation to investing in sound equi¬
ties as a measure of protection

duced the dollar return of income,

second

the

and

was

loss

the

of

realpurchasing power as a result
of

advance

the

in

cost-of-

the

living. Depending on which meas¬
of

urement

reduction

prices yoi, take, the

in

real

from

income

against the threat of possible fur¬

depreciation in the purchas¬
of the dollar. Inflation
of the money supply and the gen¬
eral orice level has always been
ther

ing

an

power

prime bonds due to the price fac¬
from

tor

has

been

We

can

compare

crease

of

over

40%

to

50%.

this with an in¬

100% in total cor¬

eventual consequence of war. I

see

no

other

reason

war

will

to

expect

differ in

an¬

porate dividends since 1940 and a

this im¬

substantial advance in the quoted

that

portant respect, except perhaps in

further

seems

monetary

be avoided
or

later

inconceivable

that

inflation could
Sooner

in any event.

price and other wartime

controls have to be thrown off in

is

the longer run we will

find that investment income
on

dividends

will

value than income

from dollar-type

have

years

tion

based

greater

derived largely

securities.

will

of 1936-39 to some combina¬
earnings results in the

of

after

always

that

two war patterns are ever

legislation

E.P.T.

new

invested

that

it

any

change the base from the prewar

years

by

no

would venture a

I

that Congress will not au¬
thorize a return to the same tax
basis as used in World War II.
It
seems
reasonable to believe that

It

but 1 have confidence

alike

However

guess

with

Argument

over

tax.

postwar

dangerous

parallel

highly tentative. Instead of E.P.T.
we
may end up with a stiff in¬
crease
in the straight corporate

stocks.

value of all listed common

A major war simply can¬
not be financed
entirely out of
taxes.
While we should realize

degree.

earnings and tax protection under
wartime conditions must still be

an

would

be

numerous

1945,

capital

along
option.

manifestly unfair to

corporations, especially^
growth charac¬

those with strong

teristics,

to

do

otherwise.

unrealistic to figure that
ernment
average

would

allow

It

the govthe full

amount of 1946-49 earn-

Continued

on

page

24

.

24

The Commercial and Financial Chronicle

(452)

Continued

from

traditional

23

page

turies

policy of spacing

obtain

to

an

ma-

on

rate

average

of return.
War

developments are not a
quality of high-grade
corporate obligations or preferred
stocks and they have a real piace

Investment Policy Undei
Current Conditions

threat to the

pact

production

different

on

ana

companies will have

credit base, since
probably
not ra'se
enough revenues under conditions
requiring an E. P. T. Perhaps an

ings

as

this

tax

a

would

allowance

of

to

two-thirds

from

between
out

would be a reasonable com¬
promise, with the E. P. T. rate
ranging from 50% to 75%.
This
appears to check with estimates

have

not be

that the E. P. T. rate need

higher than 75% to raise an addi¬
tional $10
billions of corporate
taxes.
I may suggest

here that for the
purchases in

time being any new
ered

against

Based

T.

P.

of

background

a

taxation

heavier
E.

be consid¬

stocks should

common

possible

and

preliminary

on

analysis and keeping in mind the
rather

of

nature

tenuous

such

affect

others, will have
more
difficulty in main¬

among

than

average

taining

profits:

telephone,
electric and natural gas utilities,
net

drugs

ethical

chemicals,

the

However

baccos.
no

to¬
will

doubt

on

and

effect

the

vary widely depending
strategic position of in¬
dividual companies and the mar¬

gin of safety of earnings over div¬
idends. Various growth companies
that
have
increased
earnings

sharply within the last year or so
would also appear to be vulner¬
able to E. P. T., a risk which is
already reflected

in recent

mar¬

ket price action.
If

indus¬

an

try that is likely to benefit

ingswise
activity

from
we

Profits

before

in

was

evidence

Relative

year.
E.

P.

should

taxes

thus accentuating

crease,

that

single out the
particular attention.

can

for

railroads

T.

even

in¬

trend

a

earlier

protection
good

seems

tests and

earn-

military

greater

this

under

various

on

increase in reg¬

an

ular corporate taxes
across
the
board should not impair the pres¬
ent favorable rate of dividends in

I would not object to

many cases.

reasonable

purchases

bonds

come

tions

selling
viding they
sonable

other

or

at

rail

for

in¬

up

term

in

this

and

to be

may prove

the

no exception
liquidation of

persistent

automobile and building material
shares.
It implies that measures
to meet the
be

confined

taxes

merely

credit

or

have

situation may not

war

include

to

higher

to

controls

but

sizable

a

will

reduc¬

will

have

prolonged period of war condi¬
or not.
Here I would place

the

chains, various types

grocery

of retail trade

sition

should

ogn'ze that earnings stand

electrical

and

farm

a po¬

equipment

producers may turn out better
expected. Their profits from

than

civilian goods would of course be
reduced under war conditions but

they are in a position to shift to
to military production and divi¬
dend

might

payments

fairly

be

well maintained.
I

am

prospects

going
for

to

motion

coal

in

that

could rise

will

con¬

after

taxes

sharply for certain

even

However

of

be

less

or

important

I

earnings

companies.
minded

could

have

peacetime problems.
cede

equip¬

greater

all

but

degree

these

of

benefited

war

pictures,

railroad

and

Most

ment.

the
airlines,

over

pass

aircraft,

shipbuilding,

fact

the

I

re-,

am

that

earnings the last time

wartime

given

were

very low appraisal in the mar¬
ket. I suggest that we leave these
a

nimble

the

to

few

trader.

pear

conservative

in

With

but

exceptions they do not ap¬
to have an established place
investment

port¬

folios.

a

rec-

good

Outlook

for

terest rates and
to

are

position.

It

in

is

prime bonds?

It

that

investors, par¬
ticularly those in charge of in¬
stitutional
and
trust
accounts,
should

me

be

that the

reconciled

hold the pattern
in

the

to

fact

Treasury is compelled to
of interest rates

relatively inflexible straitjacket.
Management of a huge
a

national
of

debt

requires

government

ports

the

on

of

bond

a
system
price sup¬

downside.

The

tremendous

a

savings

supply

direction

of

ex¬

money

necessitates

counter-measures

in

the

higher interest rates
prices rise too

bond

much.

semi-war

containers

combination

obtain

I

the

can

see

from

escape

A return to

a

war

or

economy will intensify
for interest rate con¬

need

trols.

real

no

With

short period

the

exception

of

a

in 1948, when infla¬

also

between

How

I would suggest again
long-term investor should
nc:; attempt to dispose of all inv stment
participation
in
this
/er

lass

<

of

stocks

replacing

his

in

the

position at

hope
a

of

later

date.
Several

industries appear to be
rather well off in terms of poten¬
-

tial

tax

protection

and

in

addi¬

tion their operations will tend to
be maintained at very active rates
if

manpower

These

include

conditions

steel,




permit.

metals,

oil,

and

past

accumu¬

savings without

a

on

tax-exempt

overnight,

the

to

of

due

situation

war

term

municipals

least

attractive

bond

market.

were

to

of

segments
The

supply of tax-free bonds in con¬
nection with state and municipal
financing was huge, to say the
least. In addition one could plan
on a large-scale issuance of longterm, wholly tax-free U. S. Hous¬
ing obligations. Now there is (a)
the possibility that war exigencies
may effect a sharp reduction in
public works and new tax-free
issues and (b) a probability that
both corporate and individual tax
rates will be raised.

that

suggests

All of which

further

a

rise

in

municipal bonds may be expected.
Incidentally I believe that any
government efforts to levy Fed¬
eral

taxes

the

on

income

from

municipal bonds will continue to

ment

It

would

this

be

ment witn

uals

of

mary

that

investment

an

would

concise

a

not

only

sum¬

policy

be

nicely

adapted to current conditions but
well-hedged against
developments
may

such

we

can

perfection

occur.

achieve

never

it

and

what¬

is

go

will

the

To Be Limited Partner

Higher

on.

make

I

it

in

am

On

ited

partner

to

3.0%

a

a

of

shares

long
off

Jacob J. Heinrich

that

means

reasonable

common

be

to

This

year.

percentage

will

will

run it

continue

nington, Vt., after

principal and forego the bene¬
higher yields from common

The analyst will
search

of

for

course

partner

in

brief illness.

a

Edward P. Frost
Edward P.

con¬

invest¬

good

War

Heinrich,

W. R. K. Taylor & Company, prior
to his retirement,
died at Ben¬

wise to live

prove

J.

Jacob

prerequisite for most in-

a

lim¬

a

Wood, Walker &
Street, New York

Stock Exchange.

come
cannot
satisfy living re¬
quirements with a return of 2.5%

holding

became

in

Co., 63 Wall
City, members of the New York

agree¬

investment in¬

on

August 1, J. F. B. Mitchell,

general partner,

a

even

view that individ¬

dependent

Frost, member of the

New York Curb

developments

the

Exchange, died at

of 61.

age

Securities Salesman's Corner
By JOHN DUTTON

Prospecting has always been
than

for

even

others.

But

this

be

mastered.

When

more

should

phase of sales work there

done

difficult for
be

certain

are

this is

not

some

Like

so.

people;
other

every

fundamentals

which

must

will find that the problem
trouble you again. I will never
forget
the answer I once had
given to me by a so-called high-powered
sales manager when I was
just starting out to sell securities. I

of "who to see"

will

you

never

having trouble locating prospects that were qualified
buyers;making too many unproductive calls, and I asked him,

was

I

was

"where
Our

the

are

office

people

was

on

the whole town.

said, "There!"
true

the

I

He took

It

was

me

not

call

can

11th

floor

on

of

to

over

and

helpful advice

very

do

business?"

some

building that overlookedthe window, pointed out, and:
a

though it

even

was-

enough.
First of all you have to be eye and

ear

conscious and look for-

prospects continuously.
start.

Your daily paper will give you a good'
blue pencil and circle every name that looks like a'
People that take trips to Europe, or long vacations,

Carry

prospect.

a

good possibilities. Business items, such as recorded sales of
properties, personalities in the local business news, club leaders,
are another.
Estates that are probated are of course, definite leads.
Have your wife keep her
eyes and ears open. She reads the society
are

page more than you do.

difficult to approach it in a
limited
way
now.
The current

investment

rities

Build up a

reserve

prospect file from such

leads.

more

situation

is

the front in Korea.

as

fluid

as

As

an

ana¬

lyst friend of mine in New York
said

ting

a

recently, "Things
little confusing."

The

Chairman

are

the

of

get¬

National

Security

Resources
Board
re¬
ported the other day that Amer¬
is facing

ica
in

the greatest danger
history.
This may be so.

its

There may

the

also be

contention

some

truth in

that

despite bil¬
lions of arms expenditure in re¬
cent years, our military position is
perilous and must be reinforced
with utmost speed. If we go along
with

views

these

we

on

civilian

then

of

course

cannot

disagree with Federal
action to place drastic restrictions

wait

immediately.

complete that the crisis is

grave or

that

activity

evidence to date is

Yet the
from

impending

indicate.

the

analyst

investor
a

I

reiterate

the

and
making
portfolio revisions.

However

we

are

we

can

longto

con¬

wholesale

list the salient

are

still

leads

are

your

that their clients

say

own

customers.

reluctant

are

to

Some

secu¬

give them the
of future em¬

names
of prospects, because of the
possibilities
barrassment they may sustain if their friends have losses on their
investments. In some cases this is
true, but if you are developing
a
clinetele of investors, who are

primarily interested in safety .'
will be able to locate quite a few of them who j
will cooperate.
The important thing to do is to ask for leads.
If you don't ask you
certainly won't get them. You will also find
that you will find some
people who will actually enjoy giving

and

income,

you

leads.

you

When you discover

after them.

a

few of these "lead sources" keep-

Always tell them how

you made out.
Get others to
you.
People like to help if they think they
really doing something worthwhile for others.

take
are

interest

an

Here

is

customers.

a

in

hint

Make

that

up

a

pages of prominent names

be

helpful in obtaining leads from
four or five type-written
in your community. Ask one of your

can

list

of

what

you

he

knows

about

.<■

about

friends who is well-connected if he would be good enough to go
over it with you.
Take it to him and let him read it over. Once
he starts talking let him go. He will become interested in
telling

this

and

one,

that

one,

and

-

before-

know it he will be on your team offering names and advice
that you never expected to receive. If you have success with any
of the people he has talked about be sure and let him know. He

;

start calling
happened.

•

indefinite.

the probabilities are
this period the over¬
all level of net corporate profits

when he hears of

you

a

good prospect.

-

This has
-

Then there is the

"swap lead method." You can make an ar¬
rangement wtih a good insurance man, a lawyer, and an account- :
ant.
All of these people are selling "service" just as you do.,
They can use recommendations, too. You can help them to obtain.
more business and they can
reciprocate. Work this intelligently
and it can be very worthwhile.
There

able to make at this time:

First, any program of military
expansion is going to impinge on
a civilian economy operating close
to capacity.
The timing and ex¬
tent

of

source

men

may

constrained

jumping to

Next

.you
as

the above

must

and

are

bit before

as

far

are

clubs, friends and social organizations of all kinds

that

offer opportunities of

and

investment

never

to

be

a

The
in

so

finding people who have investments 1
This takes tact. Organizations should
getting purposes.

But

you

don't have

•

pusher in order to find out who is who—just keep your
ears open.
answer

becoming

more

problems.

be used for business

and

eyes

Second,

will decline because of restrictions

his

will

taxes

important.

more

gratifying to close

with

review

would

to

income

personal

that during

adhere

move

In any event the need for invest¬

meet with failure.

compared with short matur¬
ities.
The institutional investor
to

com¬

eventually

higher levels.

the

points of investment significance
that come out of such appraisal as

well

123 South
Street, has been elected a
director of E. F. Houghton & Co,
Broad

prospective

phase

do

of Stein Bros. & Boyce,

of the

one

future

as

Barclay Director
PHILADELPHIA, Pa.—William
K. Barclay, Jr., resident partner

suggest

economy,

stocks could

mon

values.

some

growth, the problem will
by permitting govern¬
ment bonds to drop below par.
In the foreseeable period ahead
I
believe that private
investors
ought to accept the yield advan¬
tage offered in longer term issues

Dow-

that the market valuation of

to

at

be resolved

the

Korean crisis.

modern

tinue

outlook.

tax

dynamic

nomic

the

ment

higher

another

in

in

"Before

the

Perhaps

eco¬

stock

might
have
substantially more than

Korea" it could be held that long-

clusions

of

did

namic

and

major change in rates.
Another
period of enforced saving will add
to
the supply of liquid assets.

date,

it

a

tion.

strong

the

stocks.

national

that the

a

almost

term

could

sufficient offset to

a

and

Telephone convertibles
logical pair.

be

course

current

pro¬

peace-type
Pacific

as a

Fourtn, longer term inflationary
implications, coupled with a dy¬

face

lated

e

war

and

war

and

money

in

Without

dropped
it

factor

fit of

from

a

vent

to

industries

price movements

Some comments

pre¬

becor.

shifts

these

to

gen¬

ac¬
policy which giv^s
particular
emphasis
to
longer
term
factors, sound quality and
adequate investment diversifica¬
from

crue

Aveiage

municipals are in order. Here is
a
good example of right-about-

sizable earnings decline if
the situation becomes more acute.

in

issues
the

on

Southern

shares.

would

duction

diverse

on

tionary
pressures
were
pro¬
nounced, our postwar capital re¬
quirements have been satisfied

that

doub ful

these

of

"straddle"

a

market.
Jones

pre¬

eral trend of the stock market and

ever

Rates

mar¬

but
longer term call
It is possible in

a

common.

However

will

depend on subse¬
quent war developments.
Office
equipment, flat glass, installment

Interest

What about the outlook for in¬

this enigma.

course

the

also

chance of being cut. The extent to
which dividends may be impaired

same

companies in

supply merchandise to
the public, and the better insur¬
ance
companies.
Perhaps (the
to

sound

priced in the

are

provide

would

tions

of

reasonably close to their
vailing interest rate basis,

American

whenever

the

of

preferreds

quality that

on

and

a

ket

term investment whether we have

the circumstances

much

sacrifice

in

and

However there are some
appear to occupy a
good "straddle" position for long-

Federal

tin

all industries
a

that

activity in
these two major industries. Under

to reduce civilian

and

stand

to

I be¬

economy

profits.

others

and

of

war

lieve that just about

civilian purposes and other

meas¬

case

bonds

a

strict

a

istence

we

to

peacetime outlook.

In

tion in the allocation of steel for

ure

entitled

strong

their

seems

The stock market often goes to
one

is

time

some

particularly
can
be made for a
convertible corporate

instance

position

which

rea¬

longer

extremes

the

present

give these industries some special
preference since they also have a
balance of favorable attributes in

pro¬

as

holding.
unwarranted

on

obliga¬

discount,

a

measure

values

rail

of

influence

currently

or

;,.ves

liquor,

looking for

are

we

ex¬

Nevertheless

others.

for

savings bonds are more attractive,
considering maturities and yielus,
than
corporate
issues.
In
the

could

controls

adverse

an

felt

have

as

all-

may

I

ever

that marketable governments

profits
in
some
cases,
and
a
shortage of raw materials could

a

early calculations, it would seem
the
following
industries,

that

price

we

supporting

How¬

or

vary

Under

companies.

that

pect

rayon.

taxes

course

conditions

war

three-quarters of the 1946-49 av¬
erage

would of

P. T.

E.

and

higher

of

impact

me

foods

rubber,

paper,

in diversified investment accounts
for fixed-income

Thursday, August 3, 1950

that continued advantages will

and

wide vari¬

a

.

the job more difficult but
impossible. Finally I believe

not

ance.

Third, the supply of
savings snoula operate

purposes.

mgner

industries

.

make

taxes:, Again we cannot make a
precise calculation, and the im¬

civilian

.

in

a

the

is:

be

Prospect

successful

Conscious.

salesman

securities business.

in

any

It

is

field.

the

first

This

is

step
even'

Number 4930

Volume 172

Continued

jrom

.

.

The Commercial and Financial Chronicle

.

capital,

6

page

(453)

and

that

would

be

the

responsibility of the commission
because of its regulatory policies.
So I feel there is

Intangible Factois in
Public Utility

tion

electric

over

only

rates

in my

and

cliearcut

the

Since the amount of depreciation set aside reduces the rate

are

if

and the community

-company

base,

unable to agree.

line

has

pnilosophy of regulation
great deal to do in deter-

a

mining tne prosperity of a utility.
mignt cite as one of the states

"I

where straightdepreciation could result in

with

a

liberal law the State

very

lower rate base than observed
depreciation,
a

Last

states I

prefer to stay out of,

ture

or

tion.

rapid

The

Municipal competi¬

Municipal

or

growth

of

local

Federally
fi¬
utility organiza¬

or

I appeared before a nanced electric
tne Ohio Legisla- tions is a real threat to the con¬
of several who testi- tinued growth of this industry.

year

of

one

as

regulatory

quires, thaUthe State Commission
shall use reproduction cost less
observed
depreciation in deter-

present law.
There was a movement to change the law to orig-

question

inal cost with straight-line depre-

students should study this

as

not

impartial

an

on

and decide for
or

basis

yourselves whether
is justified

this expansion

ciation in place of the present law. because in the last analysis the
pays
the
I was glad that the proposal never taxpayer
bill,
even
ing. New York uses original cost got out of the committee as I can though he may get relatively low
electric rates under some of these
with
straight-line
depreciation see little advantage in changing
back to the time when each par- a favorable utility law that has tax free organizations and think
ticular unit of the property was worked as well as this one has in he is coming out ahead of the
first put to public use. This is a
Ohio. The utilities in Ohio have game. You should study the his¬
much more restrictive philosophy, not misused the' protection this tory of this expansion, get some
That same philosophy is followed law gives them, but where they idea of the tremendous number of
in several other states, including have been unable to get rates that new projects under consideration
Wisconsin.
they
considered-- necessary
in particularly by tax free Federally
financed agencies, and form an
Another
group
of states are order for them to obtain new
mining the value of utility properties for the purpose of rate-mak-

"fair-value''
cause

so-called

states,

do

they

restrict

not

be-

their

valuation to original cost, but, on

capital for construction, the law
I\as worked in their favor, and
rightly so.

tne other

hand, are not as liberal
Ohio. I might cite in that group

as

Michigan,

Indiana, Pennsylvania,

Oklahoma, Kansas and there
others.

consideration

given

is given

other

to

are

states

to original

consideration

but

cost,

fair-value

the

In

is

also

including

factors

reproduction cost.
The

idea

of

using original cost
is that you should establish the
cost of each piece of property as
it is put in service and straightline

depreciation

the

time

first

put

then

the

was

That

use.

is

for

value

determines

property

public

to

ra.te-making
which the commission

purposes on

trouble

is applied from

this

that

of return.

rate

a

with

The

original cost valua-

tion is that it does not reflect the

value or the replacement
properties when costs are
above original cost.
Hence comgoing

value of

missions

this

using

method

tend

should

Regulation

to permit

be

such

as

utility to obtain the
capital at favorable
rates, and if regulation
a

necessary new
money

does

not

do

then

that,

is

it

not

doing the job, because regulation
works both ways—not only to
prevent a company from earning
too much, but also to permit it

™ore
.

ticular percentage
There

is

is

This

allowed
not

to

there

6%

earn

each

no

is

fair.

Regulation

set

given
con-

does

not

guarantee earnings; it limits earn-

not a floor; it almost
is a ceiling. Therefore,
analyst should always keep in

It

ings.

is

always
an

mind
can

that, "it

earn;

is

not what

a

it is what it can

utility
keep,

that counts.

would

not

allowed

be

than 6% on original

more

but cross over into
might earn '3V2%

cost,
and

one

Ohio,
on

re-

cost. The difference
earnings could be

production
in

electric utility

an

probably

earn

allowable

There

enormous.

many rate cases

have had

an

have

not

been

in Ohio, and they

excellent experience

under that law.
'

In Ohio
With

utility arranges rates

a

communities

the

serves,

ordinances

and

which
are

it

gen-

erally set up for a period of two
to ten years. Under that ordinance
the town and the utility agree on
what

rates

shall be

charged dur-

ing this period, and that rate remains in effect unless the company
or

the

town

ordinance
the

disagree

during the

period or at the end of
period.
If so, the

ordinance

matter must then be taken to the
State Commission which will then

apply the statute requirement of
reproduction cost less observed
depreciation. There is a wide difference

work

a

operating dishonestly
cheat anybody,
is

between

observed

straight-line depreciation.




and

which

isn't

as

as

to the wisdom

expansion (much
competitive to some

power

is

least

at

with

taxpaying

a

utility) but also whether the great
drain on the Federal Treasury for
this purpose is justified.
You should also consider the ef¬

free

tax

have

tion

and

partly

for

these

sell

to

power

do

irriga¬

or

purposes

producing power, but in
stances

built

been

partly for flood control

have

not

the

many

of

in¬

firm

round.

year

projects should logically
their surplus power to local

sell

utilities

instead

other facilities

deciding the relative
one
utility stock com¬

of

so

trying to add

as

to

be able to

the loss

means

utility securities offer the best
investment media available. Every
time

a
company is taken over or
reduced in size by some tax free

agency,

the

vestment for

is

denied

nies,

opportunity

life

insurance

widows

trustees,

phans,

for

years to

many

in¬

come

compa¬

and

or¬

pension

with

economic system that very favor¬
able
investment medium is re¬

nia

moved and

in

power

has

in

which

the

competition

tremendous

a

investment

producing

power

facilities

only operated

are

part of

a

and during the rest of

replaced by what?
A
bureaucracy where the rates may
be

higher (not lower) in

ber

a

num¬

of cases,

the year do not have firm power.
Hence they either need steam

and where the effi¬
ciency is likely to be less. In the
long run nothing will be gained

generating facilities

or

except the loss of

nections

other

year,

with

some

intercon¬
source

that has power available in the
dry season. We find now in various
parts of the country that the gov¬
ernment

the

or

minstrations
various

or

going

are

power

or

rural
the

electric ad-

municipalities

combinations

more

and

more

thereof

into the

business through the actual

construction of

competitive highlines, over the territory of
private utilities, or the construc¬

tension

tion

of competitive steam plants
supply power in' those periods
the hydro facilities cannot
supply firm power.

to

when

That

is

direct

competition

no

matter what term you wish to put

it, and it

that

a

untility in such

a

expansion,

in

of

really

power

it

me

the local utility. For example, the
Central Valley project in Califor¬

in

mind

To

of the greatest investment
oppor¬
tunities we have because I believe

funds,
savings
banks and all through our whole

sell

utility expansion
the existing utilities because an
analyst must keep this problem

on

value

instances

numerous

projects

on

business,
attitude

yet
in

we

a

not

why their
and

above-

as any

find

other

a

punitive

areas

some

because

tbey

utility and not

a

or

are a public
steei company

a

chemical

company.

.j Regulation differs, as I told you,
jn a great many states, and the
climate of Regulation is extremely
important to the
have

man

advocated

agencies,

together

at

who is ina

utility. I
numerous

times, that investors should watch
the
trend
of
regulation
and
should place their money in utilities located where the Regulatory
climate is favorable, and should

These

tem?

owned

is

means

and

more

problem

not coopera-

tive.

Capital is a very illusive thing.
It gets the jitters at the slightest
pretence. It will run with great
place where there

to be danger to another
where it seems to be better for
that capital. If the laws of one
state are unfavorable, I can move
seems

capital from that state merely
by selling one utility stock and
buying another, and I have taken
my part of that capital right out
my

of that state,
That is

a

I

theoretical assumption.

haven't

are

Municipal

production

few

more

privately
territory

limited

as

a

very

fine in¬

vestment medium.

Nebraska

used

to

have

some

fine

utility investments.
In Ne¬
braska today, as I understand it,
there is no privately-owned elec¬
tric utility, Puget Sound Power
and Light is fighting with its back
to the wall.
It has to figure on a
sellout, and hopes to get enough
to pay
off its security holders.
Why should that be?
I am sure
I
don't
know.
It
just doesn't
make
to

see

the

I haven't

sense.

been

able

that when it is all finished

customers

will

really be get¬

ting cheaper electric power, and
unless they do, nobody has really
gained except the people having
jobs with the Federally-financed
agency.

to its

not to speak of the
of
comparative
rates

Here is something I should like

have

to

you

get for your library.

the

things

you

are

done

that.

I

have sold a stock and some other
fellow
has
bought
it.
But
if
enough
people, followed
that
course, the utility would be hamstrung in obtaining new equity

Competition.

by

the

Power

Federal

threat

there

not

coming out

ther

growth

expansion
is

of

today to the fur¬

of the electric light

and

power industry.
The indus¬
try has ahead of it continued
growth for many years to come.

a
dynamic industry. We
haven't seen the beginning of the

is

the

of electricity.

Big dams

It is rather useless to talk about
various

uses

to

which

power

might be put, because there are
financing. so many.
If you look back just
Hoover Dam, ten or fifteen years, and see ap¬

like the

for

electric

Roosevelt

power,

but with

administration

movement toward

came

a

sion of Federal

projects, not only
or irrigation, but
actual
development of

for flood control
for

the

of the

air; it is
States

out of the United

Treasury.
Perhaps
a
utility
has
been
bought out by some municipality
Federal organization, and per¬
haps it is paid for through 100%
bond
financing,
tax-free,
of
course.
The theory is that there
is
nothing wrong with any of
these public power projects being
financed with
100% bonds, tax

pliances today that weren't even
the drawing board then, you

free, because Uncle Sam or some
idea why this industry revenue authority is behind them,
dynamic, and why most com¬ and the Authority is generally
panies today are expecting an ex¬ empowered to set rates sufficient
pansion of 100% in 10 years as the to take care of interest and sink¬
probable minimum, barring a war. ing funds, so that is quite all right
My checks indicate that in spite according to the current thought.
get

can

of

an

so

construction

tremendous

the

Wouldn't it be nice if the utility
the companies could be financed with
competi¬ last five years, an even larger 100% bonds, tax-free, and pay no
by municipalities, REA's and program will be necessary over the income taxes?

electric power.
In order to understand
tion

coming

on

the0 is

greater expan¬

debt

forth, whether they are in¬
terested in utilities or not, should
read it.
Government expansion is

or

Federal

TVA, and so forth were designed
partly for flood control, water
supply or irrigation, and partly

the Federal

so

of

which lent themselves because of
to

of

and

ernment was originally designed
primarily for those large projects

size

size

and

because it is the only real

question

use

their

the

public

power

Gov¬

the

Actually

band
elec¬

a

It,

of the

a

rural

with

watch for because they

must

climate is punitive

rapidity from

isolated

agencies

municipally owned electric facili¬
ties and set up a competing sys¬

withdraw their money from those
states
where
the
regulatory
or

the

trification

happening today.

up

board and honorable

are

is

trying to

or

reason

no

vesting his money in

In New York

to

to

perfectly good work. They

business

is

company

Punished

student. The men in
upright men, devoting

a

are

lives

al-

are

rate which the Commission

siders

being

utilities
their

There

frequently utilities

lowed

and

to

for

^an y°u sl?ould

correct,

while

a

par-

rate of return,

always

are

6%.

rule

not

are

any

general conception that

a

utilities
earn

,

general

in

determine

to

where

erally-financed
means.

are

.

Punished for being a utility any

...

this

which

of

There

to what this encroachment of Fed¬

,

to permit too low a dollar return

Commissions

of

of

fect

the

*° earn enough tp keep on ex- pared with another. How fast is which arises when a tax-free Fed¬ Mr. J. W. Thomas, President of
Texas Electric Service Co. gave
Pending. It is that delicate balance competition
or
state
agency
supplies
spreading in a given eral
that makes regulation the dififcult utility's area. How is one utility power alonside a tax-paying pri¬ this address before the American
Petroleum Institute.
It is called,
Pr°blem that it is in some areas, management
handling the prob¬ vately owned utility that has to
Some commissions seem to feel lem as compared with another? obtain its money through common "The Case History of Federal En¬
croachment on the Electrical In¬
t I their duty is to punish a util- Will the
utility lose some of its stock, preferred stock and bonds
dustry."
I consider it something
^ more than to cooperate with it. best
Yet there
territory to municipal owner¬ that are not tax free.
r*Jier.e
no reason why a utility ship. Will local Rural Electric or¬ are instances where, the private you should read.
I think" the speech made by Mr.
shuukl be punished for being a ganizations financed with Federal utility is able to offer a rate al¬
^
w.f have evidences of funds and paying no Federal in¬ most as low or as low as the Thomas, with its accompanying
j-hat philosophy lt^. various direc¬ come taxes be allowed to invade publicly-financed project in spite charts should be read by every¬
because
it
tlons> including actions of our own the
certainly
gives
of all the advantages which might one
territory of a hard working,
government. This is something tax paying
proof of what has been going on,
obtain in that situation.'
privately owned util¬
I hope sometime you folks will and I believe those who are in¬
Jat you should give considerable ity, run transmission lines across
in
thought to because there is no its territory,
public utilities and
have a chance to really give some terested
buy
power
from
reas.°n why a utility should be Federal or State
thorough
consideration
to
this those who are interested in taxes

to their utilities.

required

opinion not only

extent

pe¬

These

—Federal

You

statute

There

That brings me to the next item

fied in behalf of retention of the

the

very

a

policies.

re-

where

Ohio

of

stock,

a

differentiation.

because of unfavorable

you can see

committee

regulatory

work there is

'

Tne

the

flood
power

around.

year

direct rela¬

a

climate and the value of

are

commissions which have authority

between

going to be empty in
riods, it cannot supply

25

Federal

must have

a

Government,

program

you

understanding,
of each individual

good

we

next five.

visited
little

have

had

over

The companies I have

for

the

most

part

have

Generally

speaking,

commissions don't have

the
any

state
con¬

capacity today. One trol over rates or financing of
with over these Federal or state authorities.
project, and most people don't large city company
even know the names of them not
900,000 kilowatts of capacity can
Perhaps it is going a little far to
to speak of the purpose or size not even shut down an 80,000 kilo¬
say
that they are a law unto
or what
it is going to do for or watt generator for repairs because
themselves, but I merely mention
the power demand is so great.
against an existing utility.
it in these words to prove a point,
I had hoped the industry would
It stands to reason that if a dam
as
I think it is worth thinking
is developed to hold back flood catch its breath, but it has just
about.
water, it must have an empty res¬ barely caught up to demand in
There is no place in an economy
construction
ervoir when the flood comes.
If the
program.
The like ours for
competition and du¬
it doesn't have an empty reservoir, money needs are going to be great,
plication of electric facilities be¬
then it doesn't have flood control. but if after the money is obtained,
cause
there isn't sufficient proof
If it does it can't produce power some Federally financed agency
that it reduces rates enough or
because there isn't water to turn comes along and wants to run a
helps anybody enough to justify
line
across
the water wheel.
your
territory, and its cost.
If you could prove that
Those are the fundamental con¬ starts competing, it sort of takes
a
large city could take over its
siderations in deciding whether or the heart out of the investors.
local utility and operate it on sub¬
not a project is for flood control
Management
will
stand
and
stantially lower rates with equiva¬
or for electric power.
It seems to fight off this unjustified inva¬ lent taxes and if this city could
and
I
must
say
that the
me, and I think you will agree, sion
get the money on a proper basis,
that is a sort of simple way to industry is doing a wonderful job
Cnntimiprl nn. rtn.flP. 26
figure it out.
If the reservoir is in trying to educate the people as
purpose

excess

26

The Commercial and Financial Chronicle

(454)

Continued jrom page

team; it is a team of men working
together for a purpose, for a goal,
to better a company in every way.
Management has several groups

Intangible Factors in
Public Utility Analysis
great many people would
a person might argue
in favor of it, but I don't know
of any cases where this type of
competition has resulted in lower
rates on a strictly comparable tax
basis or where the taking over by

«nd if

be

a

aided,

municipality under exactly the
same
accounting conditions has
n

benefited the rate payer.

the first place,

In

to make the

situation comparable, they

should

taxes equal to the taxes paid
the utility.
Otherwise, you

pay

by

I

Now, the next item in the in¬
tangible
Revenue

ifloes

that

of

Characteristics,

the

From

is

factors

utility

cession.

What

customers.

cutomers?

money?
kind

of

Residential customers,

factories, stores, garages, etc. But
what
for

kind

of

customers

utility?

a

best

are

Which

revenue

classification turns out to be the
best?

The

place where the

aver¬

age utility derives a large part of
its revenue is from residential,

rural, and commercial customers.
The best group of customers is the
residential group.

On the average
provide about 30% to 35%

they

•of revenues.

the

Their

stable

most

and

largest growth of
There

revenues

reflect

industrial

of

cus¬

peak in 1929 and
declined for four years. Revenues
tomers reached

a

of commercial customers reached
a

"As

has

not

increased,

-depression.
kwh.

has

the

The average rate per
declined so that even

in spite of all the higher
costs of construction, electric rates
on
the
average
are
the
low¬

history of the industry

-—about 2% cents average, with an
average use of around 1,700 kilo¬
watt hours per residential cus¬

was

.stable
the

is much greater than
and is becoming just as
use

or

even

more

stable

than

The

the

domestic

cus¬

commercial,

23.7;

tomers 31.9."

and

noted at the beginning of

we

the

recession

just

pattern as
Therefore, I feel
same

of

an

exactly the
had before.
examination

classifications

revenue

is

we

very

one

of

a

important in try¬
recession-

might be compared

to another.

of

cost

If

a

company

obtains

from

revenues

50%

industrial

of

cus¬

tomers, it probably will not have
as
strong
a
recession-resistant
position as one that only gets 30%
from industrial customers and the
rest

from

residential,

chines, and for all kinds of
around the farm.

ma¬

power

The fact that it

next

factor, and the last
intangible factors,

of the so-called

is Management. You may ask why
I put management last when per¬

versification.

in

These may be per¬

impor¬
tant, but I don't mean to detract
for a minute from the importance
a

sense

more

in most states that

is not quite
as dependable—stores and
offices
and so forth.
It tends to fluctu¬
ate

according

tions.

to business

condi¬

Revenue from commercial

customers,

show

may

fluctuation but if
between

50%

revenues

in the

and

use

and

to

have

wider

a

company has

60%

of

total

residential, rural

commercial

going

a

group,

you

are

a

company that
ahould show high recession resist¬
ance in its
earnings.

In

March, 1949, I made

parison of the
various

revenue

customer

groups

20-year period, and then
of

what

happened

a

com¬

trends of

to

over
a

a

study

various

groups of customers in the depress




of

some

diffi¬

our

use
them,
just overlapping
have done. I hope

am

you

mind, Professor Ricciardi, if I make a few suggestions.
I

keep track of

as

a

because

is

like

I

happening to
Labor

costs.

fuel

con¬

fact

that

the

wasn't

customer

given just consideration in some
cases,
and it was a wonderful
for

chance
to

it.

else

someone

That

isn't

to

try

but

fuel

offer

costs

turn from coal to natural gas,

the

low

of

cost

hydro

also,

power

in

times of good water is very helpful

true

today. I in reducing fuel costs. Most compa¬
into very nies have adopted fuel clauses,
many areas and prove that some¬ particularly for the large users,
one else
can do the job
better. I where if coal rises above a certain
just don't think so. Not on a level, an additional charge for fuel
do

don't think you can

strictly

go

comparable

accounting

is assessed against the user.

basis.

Today I believe the percentage

Management

has to satisfy the

customer, the employee, the stock¬

holders,

the

regulatory

authori¬

the financial people. If
a company has poor employee re¬
lations, it generally will be a

ties, and

company
that is having
from other directions. Not

but

quite

often.

I

trouble;
always,

don't

mean

strikes, but if there is evidence of
difficulties over a period of time
with employees, you will general¬

of

carried

gross

about

12%

to

where

they

are

where

taxes

to

Due to the many

a

utility is regulated, because it

has

fixed

rates,

and

because

it

that the money just
rolls in, and the company runs
itself, don't ever discount the

may

holding company
have

occurred

in recent years the number of in¬
dividual
creased
many

stockholders

has

tremendously and
stockholders
don't

in¬

great

a

know

much about their company or the

management. Numerous manage¬
are doing a good job in get¬

ting acquainted with their stock¬
and working with them.

holders

There is

seem

a

wide field for further

work. I have been extremely im¬

pressed with the way utility
agement
is working with
stockholders.
is

of

these

manage¬

really something to

be

A

utility president is
man

many-

week have to deal with

cus¬

tomers, employees, and regula¬
tory authorities, financial men and
stockholders and keep them all
happy. The work in most com¬
panies is generally divided, among
a

staff of

gated

to

men

with

handle

duties dele¬

these

different

problems.
I

think

the utilities have

done

excellent job.

As a matter of
fact, I believe, the pension funds
provided for employees of utilities
today are far ahead of any other
industry. I think utility employees
in general are very well paid and
well taken care of, and most of
them
have
lifetime
positions,
an

(which isn't true of most indus¬
tries),
because
the
industry's
earnings stability tends to pro¬
vide
steady jobs.
Utility em¬
ployees are a preferred group of

full return on

a

gas.

Regulation
doesn't
guarantee
earnings; it is a ceiling on earn¬
ings, and economic conditions can
change the earnings of a public
utility to a point where regulation
can
help very little. Just look at
street-car
companies
and
what
happened to them, or look at bus
lines and the hard time they have
had making a go of it.

That is about

all, gentlemen.

I

will be

glad to try to answer any
questions you may care to ask. I

really believe in the utility indus¬
It is a wonderful industry. It
a
great future if it is given

has

now.

chance

even

an

what it

show

to

Its

do.

pected that many utilities will be
permitted to increase rates com¬

But it has to have the power even
to pump the water.

you

lower percentage of

a

carried

to

It

common.

with

mensurate

that

taxes

rise,

the

could

increase

occur

in
the

over

dividends, it is

needs

be

to

watched

something might

be

able

company might not
control costs.
Hence
a

to

pretty low
might result.
some

Other
tant
for

because

along that
revenues ad¬

come

will affect the gross

versely and

factor that

a

common

which

ratios

earnings
impor¬

are

the depreciation deducted

are

tax

can

I

you will decide to study
utility industry more.
I am
if you do you will find it
fascinating, and
gradually you

hope

the

sure

will

that this is

are

impor¬

very

tant.
I

run by men who are
sincere, able and energetic. They

devoting their life to the work

are

of supplying
essential

one

other

comment

to

make before I stop. I have talked
about the
electric
industry be¬
it

is

the

know

I

one

the

about, but there are other
phases of the public utility in¬
dustry which are large and have

different characteristics.
In
for
an

the manufactured gas field,
example, many companies had
experience much worse than
electric

most

labor

and

companies.

fuel

costs

of

companies also showed
erable

a

the

increase,

While
electric

consid¬
cost

of

manufactured gas rose so sharply
in the years 1947 and 1948 that
many

red.
four

companies were in Die
Brooklyn Union alone had
increases

rate

in

two

—

but

also

costs

wage

skyroc¬

I think

they had three wage in¬
in

there

about

creases

over

years.

Although the cost of

four
gas

went up and rates were increased

sharply,

there

amount

a

is

a

company

limit
can

to

enable them

tax free bonds to

yet the
are the lowest
history in spite of all the

charge

rates

lower

that

increases

taken

have

Compare the labor needed

place.

kwh.

per

rates,

they charge

in their

owned

in

produced

utilities

owned

financed

no

tion

free

and

tax

no

agencies

Instead

doing

a

I

bonds.

that

doing

not

are

job.

tax exemp¬

find

will

you

rates

their

Compare

after allowing for

think

privately

municipally

vs.

Federally

or

agencies.

these

better

a

they

probably

job.

Compare and

worse

are

then decide. I think you will de¬
cide

in

favor

owned business

of

the

privately

managed tax pay¬

ing utilities.
I

years.

keted.

an

lowest

the

at

possible cost. Their companies pay
their full share of taxes
they
no benefits of tax exemption

gas

Not only did fuel costs rise sharp¬

ly

the people with

service

have

cost

have

down to earth every¬

a

day business

to

stock ratios

its

as

companies in their territories
will be impressed by the fact

you

or

mon

over

I am.
As you
the managements and visit

meet

the

with

compared

purposes

enthusiastic

become

prospects just

that in the annual report.
Also in
the balance sheet debt and com¬

to

hope I have been able to prove
you

ible

that the so-called intang¬
of

factors

territory,

regula¬

tory climate, revenue diversifica¬

tion,

Federal

petion,

or

municipal comand

management

other considerations

are

certain

more

im¬

the

charge

for
utility
service.
Regulation
workers. That certainly becomes
does not guarantee earnings.
A
deci¬ important in a depression. You
great many companies were ap¬
sions on a great many things, find
the
same
group
working
proaching the point of diminish¬
every day and
if you want a year after year, and they probably
ing returns, where a higher rate
definition of management, that is have
had
only a
small wage
did not produce higher earnings.
the only one I know. Every day cut, if they had any, even in a
Just because we have a favor¬
management decides a number of depression. That makes a big dif¬
able trend for a period doesn't
things, and in so deciding deter¬ ference.
mean
that
utilities
are
mines the policy. Those decisions
always
Management in its policies can
make the policy this way or that either make a utility a wonderful going to be profitable.
You have
these
conditions develop where
way, not by some sudden decision company or it can retard it. In
made to apply in the next few general the managements of the an industry that was profitable
months, but a lot of decisions various operating companies in can be very badly hurt, even
made in many directions every the
temporarily,
and
the
industry today are exception¬ though
day.
ally good. I am not competent to stocks go down just as badly as
if they were going to stay down.
I don't know whether you ever speak of any other
industry, so
thought of it in that light, but I don't think I should compare
Why is natural-gas booming so?
that is what it is.
Management managements, but I must say that Because through the use of natural
isn't one man. Management is a I feel that these
utility officers gas you have a fuel that is avail¬

necessity of management.
Management
represents

its in¬

on

forties, but next

try.

most
a

because he may in the

natural

4%

or

the

gross
is not ex¬

have

cause

commended.

in

opportunities for ex¬
pansion
seem
almost
limitless.
The country is more dependent on
electric
power
today than any
other item except, perhaps, water.

new

I think the cooper¬

attitude

ative

man¬

3%

over

it will make

year

is

Of course,
will either
have to have an offsetting per¬
centage of higher rates or you will

mon

divestments which

large Eastern utility didn't

make

vestment

taxes

common

with

15%

their in¬

on

get a 25% rate reduction.

not

are

trollable,

the

One

what

reve¬

various possibilities for control.
Some areas have been able to

from

stem

may

full return

a

labor

to

costs

earn

vestment.

and

operating

of

percent

nues

to

find

of

and

revenues,

the

payroll as
the operating
the fuel expenses

percentage

a

once

Why? Because Co¬
lumbia Gas is supplying it with
natural gas and the large Eastern
utility has gone on straight natu¬
ral
gas.
As
the
change from
manufactured to natural gas is ac¬
complished, every customer will

REA's

same

Management is still an extreme¬
ly important thing. Just because

The commercial

of

price much lower than
for heating purposes,
suddenly all these utilities,
they get natural gas, are able
a

other fuels

use.

don't

you

the

is

I

already

you

what

that

some

that

few

a

perhaps I

on

are

local

into account.

of management.

are electrified.
think in Michigan and Wiscon¬
sin and that area about 97% of all
the farms are electrified.

because

that

and

com¬

There

to

Perhaps
and

to Item No. 6—Finan¬

as

culties due to Federal power and

sided

pays off is proved

by merely ex¬
amining the percentage of farms

existence

perhaps

forth. That feature must be taken

haps

ways,

milking,

in

employees. The

customer,

ments

for

cooling,

the

rural, and
commercial users, and perhaps a
small amount of power sales to
municipalities for street lighting
or
to
other
companies and so

ritory, regulation, Federal or local
competition, and the revenue di¬

milk

company isn't in
because
of
a
stock¬

the

is

pany

being in

company

The

existence
or

the

ments

conditions occasioned by the ter¬

annual

some

the

he

able at
and

Now,

ly find trouble in other directions. next year.
a oneDuring the war we had some
The management's responsibil¬
sharp recession, we had the
of gross
same
pattern, and again in the ity to stockholders is always im¬ pretty low percentages
Spring of 1949 wnen general busi¬ portant in the utility field. Many carried to the net, due to excess
ness
began to decline, industrial companies have been owned in profits taxes. Since this ratio is
the margin of protection for com¬
revenues began to fall off sharply,
the past
by holding companies.

month's pay to a hired man.
The farms have really gone elec¬
tric.
They use it in many
one

for

served;

for criti¬

1939 when there was

In

elec¬

group

being

the

wonderful job,
room

cism.

year

farms is less than

because
electricity is replacing the hired
man.

for

revenues;

haps it should be the most im¬
portant, but, as I told you before,
management has to deal with the

residential

tricity for

accounted

total

of

The

Farm

in¬

the

of

revenues

section

dustrial

30.5%

tomer.

it

1929

ing to determine how

today,

est in the

"In

resistant

in

staggered

decline, the effect on total earn¬
ings was much less severe than it
might otherwise have been.

the

year

even

this

of

result

a

year

a

company

in
the
last
twenty-five or
thirty
when the average use of elec¬
tricity by residential customers
a

peak in 1930,

are

any group.

has been

never

attention

and

"Revenues

the

Where

its

get

is

is

is

He

gives it strong recession-resistant
for
the
utility
being
characteristics. A study of reve¬ formed. The
utility is created to
nue of three principal groups re¬
supply him.
veals important variations in rate
Some managements in the past
of decline during a business re¬ have failed to see this too
clearly,

compare

lic power.
When it is made, I will
be glad to be shown.

know, but I just want to call

first.

reason

has not been made for pub¬

case

you

holder

later than
the industrial group, and declined
for three years.
However, sales
to
residential
users,
the
most
profitable
group
of the three,
trended upward for two years af¬
ter the depression began and did
with one that must sell taxable
not reach their peak until 1931.
bonds, preferred stock and com¬
They declined for only two years
mon stock? Yet in many cases the
and then only moderately. There¬
privately owned utility operates
under that burden and still charges after, all three groups recovered
together.
low rates.
I claim that a sound

the rates. How
can you compare the rates charged
by a tax-free organization with
one that has to pay taxes, or the
rate of an organization obtaining
its money through tax-free bonds
never can

person

is

existence.

business which

the electric power

Ratios.

reason

unusual feature of

an

cial

who

from this study:

"There is

cus¬

satisfy at all times. The

tomer

sion and which stood out well.
will quote

are really doing a
and there is little

to

25

Thursday, August 3, 1950

...

portant in the analysis of a utility

security than the published income
balance

statement

and

not,

asking

start

sheets.

questions

If

now,

and let's see if I can't clear up any

uncertainties.

Philip B. Flaherty
With Kerr t Bell
(Special to The Financial Chronicle)

LOS

ANGELES, Calif.—Philip
Flaherty has become associated
Kerr & Bell, 210 West 7th
Street, members of the Los An¬
geles Stock Exchange. In the past
B.

with

he
Co.

was

an

officer

of

Fairman &

Volume 172

Number 4930

Continued

from

..

.

The Commercial and Financial Chronicle

that

3

page

(455)

has

lasted

decade, with
public "swim¬
ming in a sea of liquidity" (some
$250 billion in cash-like assets,
not counting the surrender value
business

Economics of "Little Pearl

of

Harbor"—Short-Term Outlook
with which the latter is threaten¬

ing—should
national

create

emergency).

situation

tax

fresh

of

sense

a

In

high

a

burdens

are

flationary momentum. In the first
place, the conversion of industry
to
war-time
production and its
expansion necessitate an appreci¬

subject to

able increase in fresh investments.
For a year or
so, this sort of un¬
avoidable extension of facilities—

political

issues,

During this election year, at any
rate, new taxes are virtually cer¬
tain
to
lag behind the rapidly
mounting expenditures. The safest
is

bet

the

reimposition of

profits

excess

if

tax,

stiff

a

only

after

elections.
A

,

and

abroad—will have

bank

credit

and

enhances

the

supply; it absorbs raw ma¬
terials, especially of the "scarce"
and it diverts labor. Steel
money

Savings

the

best

is

next

Bond
device

output,
stepped

as

steel mills to be

coming home
redemption, precluding the
possibility of truly long-term is¬
sues
at higher interest rates for
the investor's portfolio). It may be
for

shipped to Brazil.
Oil consumption is
jikely to sky¬
rocket; special housing demands
of

the President

suggests. Other¬

wise, its success can be a limited
one only,
given the public's ex¬
perience with halved purchasing
after the last

power

Which leaves

war.

substantial

a

mar¬

gin for deficit financing through
bank

credit.

As

conservative

a

and

optimistic assumption, it may
be set at a tentative $5 billion for

the

first year of the Korean Era.
But that budgetary "gap" does not
actual

the

measure

intensity

of

the

inflationary threat. The be¬
havior of prices will depend on
factors

more

than

ment's deficit

the

govern¬

the next twelve months
such

a

ture

is

the stimulus
faster or slower

the

on

decline

Balls

thing,

one

hinges

in Moth

State

Welfare

For

civilian

of

output
tures

on

federal

element in that picture. Far more

important is the combined volume
of
lavish
mortgage
guarantees,
which do not appear in the na¬
tional

budget, of consumer loans
and
of
municipal projects.
All
three face the certainty of being
deflated, but in no hurry: credits
already
granted
and
ventures
under way are permitted to take
their

and

course

new

to

be

As

only.

gradually

stopped

ones

a

matter
of
fact, we are moving
leisurely; thus far, the "deflation"
of credit subsidies, e.g., consists in
orders to the Housing Adminis¬
tration to raise its down-payment

requirements

on

guaranteed mort¬

slightly above the present
average of 15.9%; and to the Vet¬
gages

Administration

erans'

5%

cash

demand

to

each mortgage.

on

residential building

speculative

type

But

permits of the

are

falling

off

several

For
and

civilian

months,

constructions will
run
concurrently, causing short¬
ages
in
steel,
metals,
lumber,
wool,
rubber,
etc.
However,
pretty soon, the Welfare
State
will have to give way, more or
military

less, to the Garrison State. That,
per se,

of

the

of

be

must

should relieve a great deal
heat. Allocating

inflationary

materials by

priorities and ration¬

ing, seizing of inventories, closing

even

a

mines

President is asking from

Congress

(instead of starting seriously with
he

is

expenditures);

Welfare

not

likely

unless with

get them

to

all

important limitations.

The Inflationary Momentum
But

controls

—

than

to

words," inflationary

their

reduce

efficacy

pros¬

in

raising

iff""

Psychology

demand need not exceed

gregate
the

supply

of

extent

as

minor

surge

in

the

to

U.

goods

cause

of

S.

such

to

an

than

more

domestic

if

so,

the addi¬

once

tional income and corporate taxes

requested by the Administration.)
The

is'lhat

trouble
of

matter

this

is

not

supply-demand

a

arith¬

metics

of a static type.
At least
dynamic factors complicate
the general price'outlook, which
do not fit into the simple equation

two

the

of

so¬

the

of

If an ounce of experience
proverbial weight, a ton
might outweigh all presi¬

it

dential

sermons

ization

attempts.

World

and

price stabil¬

prices

several

rea,"

the

since

weekly
168.9
with

having

incident

the

began.
The
index is ap¬

1948

prospect of

no

Ko^-

accelerated

all-time

July,

risen

"before

has

wholesale

in

Boom

months

trend

the

level

it.

To

money.

"

quantity

,

with, what
about
lying down the
of living, its index

begin

labor? Will it take

rising

cost

nearing
1948

the record high of early

(174.5%

average)?

of

Wage

Mr.

as

The

high

of

(1926=100),
immediate

an

the

1936-1939

rates

rising
incessantly, ip one industry
another; by .^November, the

demand

and

prevail

situation

in

decrease

dollars.

of-Big Steel

mature.

and

Manpower

are

the pattern for automatic

boosts:
ures

"productivity"

by

top

on

standards.

of

cost

Feted

of

at, the

pay

meas¬

living

time

masterpiece of industrial states¬
manship, it will turp out to be a
mechanism to set the vicious cost-

price circle into motion. To
will

it

be

most

a

'task.

V

biggest

could
as

be

a

in

their

from

riences.

We

large

is

of

We

"controls."

now

entered

the

last

requirements will not be as large as some
people had expected according to "The Iron Age," national metalworking weekly, in its current survey of the steel trade. Under
the regular budget for this year they will take
only 1.6% of total
steel production. The extra $10.5 billion voted for
military pur¬
poses will add about 3 to 5%, making a total of 4.6 to 6.6% of
total steel output needed for defense.

that total steel needs for security at home and aid abroad will not
exceed 10% of total steel
production, this trade authority notes.

Moreover, the huge battle and merchant fleets, which took
large tonnages of steel during World War II, will be brought out
as needed.
So will the defense plants thus eliminat¬
ing the necessity for large tonnages of steel for these purposes

of moth balls

unless

is

and

con¬

unemployed,
capacities,
and
a

the

peace-time

and mobilization

war

far beyond

that which

planned.

Voluntary allocation of steel will assure quick shipment of
military needs and still leave enough steel to operate the
civilian economy on a high level. They can also be placed in op¬
eration quickly, with a minimum of red tape, "The Iron
Age"
all

declares.

_

Mandatory steel controls not only aren't needed at this time,
but would cause a deal of unnecessary confusion.
They would
delay the immediate war effort by a month or more. A priority
doesn't get

steel; it is only

a "hunting license."
We learned that
during the last war, when valuable time was lost
cutting through the duplication and red tape, this trade paper

hard

way

adds.

a

Freight

in

payable

face total

we

now

the

could become

cars

bottleneck.

a

A serious

short¬

car

age, potentially the worst in history, is developing. The situation
is likely to become worse before it gets better, and mandatory

effective

in

as

...tW

industrial

„

Aug. 1,
day and Sunday.

The point is that for some time

rail, the

rations.

terials, steel

In

market

if

only

from

of

the

demand

side,- plus stockpiling,
replenishment and in¬

inventory
creased

meantime, world
upward bound,

raw

material consumption

Global

inflation—in

just

not

terms,

cur¬

rencies—while

strengthening the
gold and dollar reserves of the
soft-currency countries, will fan
the fire of

Also,

we

are

bound

(or not gain what

to lose

we

and other products, "The Iron Age" concludes.

scrap

American

Iron

and

This
steel

week's

ingots

1,892,900
and

at

operating rate is equivalent to
castings

and

tons

week

a

production

amounted

"profiteers," other than
They have most to gain,

greatest
Canada.

tion and

from their present
low

levels of

exports.

politically
armament!),

too,

increasingly
Roosevelt

it

as

evident

policy of

great

nations from

lying

on

(re¬

becomes

the

that

blotting
the

two

map,

Russia's

eternal

blunder

est

was

1,765,200

to

tons;

the
a

rate

year

ago

to

92.6%

was

it stood

Attains

Fresh New Historical

a

electrical

energy

distributed by the electric

industry for the week ended July 29, was esti¬
6,190,098,000 kwh., according to the Edison Electric

at

4,396,000 kwh. higher than the figure reported for the

or 12.2% above the total output
July 30, 1949, and 837,659,000 kwh. in excess
of the output reported for the corresponding period two years ago.

previous week, 671,613,000 kwh.,
for the week ended

Carloadings Higher in Latest Week
Loadings of revenue freight for the week ended July 22, 1950,
totaled

829,884

the preceding
The

according

cars,

This

Railroads.

was

an

the Association of American
40,616 cars or 5.1% above

to

of

increase

week.
total

week's

represented an increase of 111,368 cars, or
in 1949, but a decrease of

15.5%

above the corresponding week

52,245

cars,

or

5.9%

below

the comparable period in

1948.

re¬

based

on

the great¬

responsible

any

ago

tons of

compared

power

Auto
peace

friendship,

of

amount

com¬

They will gain

month

A

1,919,600

industry,

Institute.

produc¬

militarily

and

The

It was

be the

entire

the

High Record

come.
may

steel

ij

mated

Germany and Japan

for

ago.

Electric Output

light and

sumably for years to

this week

81.3%, and 1,498,800 tons.

gold

be thoroughly
"duration," pre¬

announced

rise of 1.4 points.

ago, or a

otherwise), and the open
market price of gold is likely to
go
up.
The pattern of inter¬
for the

Institute

Steel

making capacity for the entire industry will be 100.7 % of capacity
for the week beginning July 31, 1950, compared to 99.3% a week

would have

trade will

Satur¬

heavy shipments of iron and steel products by
shortage has been aggravated by heavy grain move¬
shipments of coal, sand, gravel, construction ma¬

gained

-distorted

over

that the operating rate of steel companies having 94% of the

domestic inflation.

our

car

The

dol¬

in local

held

cars

ments and large

are

because

this

abroad.
lar

the

prices

demurrage penalty for

a

In addition to

the Western World will be lagging
behind the U. S. in war prepa¬

statesman has ever committed.

Output Rises Due to Higher Scheduling

to "Ward's Automotive Reports" the past week,
production in the United States and Canada rose
estimated total of 194,828 units, compared with the previ¬

According
motor

to

an

ous

vehicle

week's total

of

increase

(revised)

187,339

units.

attributed to higher scheduling

was

by Kaiser-

Arthur Newfield Is

"in

new

Plymouth operations were

With Shields & Co.
(Special

LOS

A.

to

has

Street.

our

era

of

boom,

one

formerly
ment

&

become

Mr.

associ¬

Co., 510 West
Newfield

was

manager

of

the

invest¬

department of A. W. Morris

Co.

and

and

prior

thereto

was

a

Thomas R. Peirsol, Jr., former¬

affilated with Shields & Co.

of 157,064

built in the United States and a total of

Business
Commercial
week

ended

Continue

Failures
and

July

27

industrial

from

170

Downward

failures

declined

the preceding

in

to

Trend
160

in

the

week, Dun

&

Bradstreet, Inc., reports. Casualties fell slightly below the com¬
parable 1949 total of 168 but remained above the 98 which oc¬
curred
in the similar week of 1948.
Continuing considerably
below

the

prewar

level, failures were down 45% from the 291
of 1939.

recorded in the corresponding week

Manufacturing and retailing accounted for the week's

partner in Newfield & Co.

ly with Fabian & Co., is also

output for the current week was made up
28,299 trucks

6,904 cars and 2,561 trucks built in Canada.

The Financial Chronicle)

ated with Shields &

Sixth

Total
cars

ANGELES, Calif.—Arthur

Newfield

Studebaker and
hindered by wildcat strikes.

Frazer, Nash, Chevrolet, Buick and Ford trucks.

expe¬

million

accomplish (mobilization in the midst of the
greatest

to

of this

imports

exports

well

as

capacity.

by

is very dif¬

depression

Capacity

steel

terials

Com¬

II

enter

Military

loading and shipping rules are a possibility if the picture doesn't
improve.
The Interstate Commerce Commission has ordered,

over-

it

War

excess

bones."

con¬

Current

-

World

10

43,883 for the first six months of 1949 by 19.5%.

Steel Operations Scheduled to Rise to 100.7% of

The

with the past are mis¬
the problem the people

of the U; S. face

organized during the first

aggregate of 52,438, which exceeded the

an

•

before, unless

favorite

ferent

The

con¬

*'

bureaucrats bolster

parisons
leading:

it

substantial

a

S.

of stock corporations

the countries
short of dollars will profit greatly,
Canada above all, because of her
strength
in strategic raw ma¬

commodity
hoarding
passing phenomenon,,

it has been

zealous

which

difficult

unknown

behavior.
of

trend

to

circumstances.

be

U.

The number

as

a

trol

like

part

Evidently,

are

bound to develop.
And, last spring General Motors
set

the

will

increase

paratively

will

would

An obvious consequence

after

shortages

of

1st

in

due

supply

under

of course,

contract

the

hoarding and inventory
replenishment; at any rate, it dis¬
counts the disproportion between

almost

labor

is

less

July

still

Truman

rise

against only four that showed year-to-year losses during May.

Foreign aid programs, including the Marshall Plan and Mil¬
itary Aid Program, will require not more than 4%. This means

Market

Wholesale
for

Industiy

ber of stock company formations in June this
year than a year ago,

national

traditional

theory" of

and




ago

of

war.

has

a

prices

(Especially

Congress enacts at

and

down the in¬

the

1

.

Arithmetics

vs.

The upshot of the pros and cons
that in the short run, the ag¬

is

fiscal

not

circle

phisticated economists, that come
what
may,
prices double after

commodity prices.

automatic

slow

fairly satisfied.

reasonably well
balanced by circumstances which

decade

monetary,

"physical"—may
more

combined

may appear

flict with

artificial,

reductions)

durables, at least

sumer

plants

converting

reducing

of
efforts, and
imports (bolstered
and

tightening of export curbs,

a

to video factories),
automobile plants to
tank production, etc., may com¬
plete the job—later on. Full pow¬
ers to do just that, also to clamp
down price ceilings, are what the
gold

Moreover,

should suffice to keep the civilian
demand for perishables and semi-

The

"unessential"

channels.

hours

tariff

by
with

output
military

moderate lengthening

increase of

an

national

diverted, into

working

(from

down

total

related

and

others

sharply.

decade

a

panicky

not

construction

consumption.
expendi¬
housing, etc., is a minor
of

edge, non-existent
beyond an esoteric

20%

civilian

for

amount

investors, and every
else has acquired: the knowl¬

consumers,

stabilization,
and
being reversed to

activities and of the capital goods
The

"short

The State of Tiade and

half of 1950 reached

one

5

page

ities strained by full employment.
The worst of it is the outlook that

run," military pic¬
likely to deteriorate
to the point of total mobilization.
Therefore, not moire than, say,

pects

The

For

so.

or

from

as

proaching

In other

financing alone.

etc.,

All these considerations refer to

turned into virtual forced savings,
as

kind arise,

temporary

a

etc.

Continued

corresponding
amount was in 1939), with
prices
rising, and with productive facil¬

example, has to be
with a 6 million ton
boost under way, and

capacity

are

the

an

(given the fact that Mr. Morgenchickens

than

up,

thau's

-

a

three-fold effect: it calls for more

type;

reinvigorated

drive

at home

a

the

policies, about four times

larger

keenest pressure-group bickering.

prime

life

and

27

mortality.
increased

Both

wholesaling

slightly,

while

a

and

more

drop in

commercial service casualties
marked rise occurred in con-

now

Continued

on

page

28

,

28

The Commercial and Financial Chronicle

(456)

Continued

from

New England

The State of Trade and

Industry

Northwest

and

tO

The
Pacific

only
States

showed
in

other

regions

Rises

wider number of com¬
modities lifted the Dun & Bradsteet wholesale food price index
iast week to a new high since Oct. 5, 1948, when it stood at $6.51.

figure at $6.49 was up 1.2% over last week's $6.41, and
compared with $5.73 a year ago for a rise of 13.3%.

The July 25

items included in the index moved
higher during the week; only five declined. Lower in price were
beef, hams, bellies, coffee and potatoes.
of

the 31

The index represents

31 foods in general use.

the sum total of the price per pound of
It is not a cost-of-living index.

Commodity Price Index Shows Moderate Improvement
moderately the past week al¬
though movements in individual commodities were somewhat
irregular.
The daily wholesale commodity price index, compiled
by Dun & Bradstreet, Inc., closed at 280.22 on July 25, comparing
with 276.48 a week earlier, and with 238.16 on the corresponding
The

date

a

general price level

rose

unsettled with prices irregular
to that of a week previous.
Wheat futures sold at new seasonal peaks and the cash market
was strong,
aided by good elevator interest. There was active
buying by mills influenced by recent heavy sales of flour. Export
demand for wheat continued rather slow.
Primary market re¬
Leading grain markets

and

trading

equal

ceipts of wheat continued to increase seasonally.

The outlook for

Spring wheat crop improved both in the United States and
Canada as the result of good
moisture conditions. All future
deliveries of corn reached new high ground for the season during
the week. Cash corn was quite steady with a fairly active demand
the

Prospects for the
new
corn
crop were
recent rains over
j>ome
dry areas. The cash oats market declined rather sharply
under pressure of increasing new crop supplies.
noted

from

Cocoa

processors

values

and elevator interests.
improved somewhat by

to

rose

new

highs for the season under good

support combined with short covering
and commission house buying.
Offerings from primary markets
continued on a limited basis. Demand for coffee was somewhat

dealer

manufacturer

and

slower.

Spot prices were quite firm while the futures market was

unsettled by fears of price

maintained
Lard

the

both

in

Strength

under

controls.

the

and

raw

exceptionally

refined sugar markets was
world-wide demands.

heavy

prices advanced steadily to reach new high ground for

market for

the

However,

season.

fresh

pork

developed

weaker undertone due to consumer resistance against recent
which

a

high

This was reflected in slower demand for live hogs
around $1.25 per hundred pounds from recent

asking prices.

quite pronounced.

12% took place. For the year to date

1950, an increase of

highest level in three years on

market

attributed to prospects of

was

comparatively small crop, persistent demand for cotton goods
and the inflationary aspects surrounding the country's economic
-situation. Sales of cotton in the 10 spot markets expanded to a

in the

with 106,300 the pre¬
Mill buying

week a year ago.

same

improvement in the South¬

better and export demand showed

west.

totaling

215,700 bales in the week ended July 13, compared with 172,000
in the preceding week.

2,385,600
active and strong with

Withdrawals for the season through mid-

totalled

July

bales.
many

Cotton textile markets remained
constructions offered at levels con¬

Trade Volume Soars

Strength of Anticipated Shortages

on

which

expenditures,

defense

impose

we

now

when

dollar

volume

rose

Wednesday of last week and

appreciably in the period
moderately above the

was

level for the

corresponding week a year ago, Dun & Bradstreet,
Inc., reports in its current summary of trade.
Accessories

choppers

as

small

by
the volume of apparel increased noticeably last week.
and

furnishings

were

eagerly

sought

Among women's items, hosiery and

undergarments were in
demand; ready-to-wear suits and
dresses were
bought in less sizable volume. The interest in men's wear was
considerable

•about

a

on

seasonal

footwear and
The

level

except for such lines as sport shirts,

haberdashery.

retail

dollar sales

Increasing prices for

some

of

food

products

rose

noticeably in the week;

were

partly responsible for

the rise.
The

buying of meat

practically unchanged, while dairy
products and eggs were sought in growing quantities. There was
'.an increased demand for many kinds of fresh, as well as canned,
produce; the volume of frozen foods continued to rise. The retail
purchasing of soft drinks and ice cream increased seasonally.
There

sold

was

a

marked

was

rise

in the volume of

housefurnishings

last

week; much of the increase was in large appliances.
Other items bought in
fairly increased amounts were floorcoverings, furniture, draperies and television sets. The demand
for lamps housewares and small electrical appliances rose sub¬

stantially in

some

Defe se Costs a d

a

Total retail dollar volume in the period ended on

Of last week

was

estimated to be from 5 to 9% above

other

attacks,




.

a

in

increase

drastic

and

prompt

prove

without

inadequate

taxes.,
"The

fiscal

policies

have
suffi¬

we

would

recommended

not

ciently eliminate the inflationary
threat.
There would be delay in
increase

Federal

of

tax

col¬

in the meantime
government spending would con¬
lections,

and

siderably

exceed
Treasury
re¬
There is also the danger

ceipts.
that

businessmen

and

consumers

engage in panicky buying.
"Further restraint upon civilian

may

for goods

through

through
credit for
construction.
Adminis¬

to

credit,

tightening

and

of

measures

tighten

loans

should now be
the control of

have been taken

terms

insured,

residential

on

guaranteed,

or

made

by the government. Further
legislation is needed to tighten
both

governmental
In
addition,

private and
policies.

lending

further controls should
lished

be

estab¬

specula¬

commodity

over

tion.
"In addition to fiscal and credit

®

and

policy, it is important to recognize

must

we

be

should

now

steps now.

national

imum

economic

power

indefinitely"

Council

The

statement

"This

in

of

con-

regarding public policy
the current situa-

the light of

tion:

"First, these policies should be
to bring about a quick
in production.
Such an
increase is essential not only to

increase

supply our military requirements,
but
also
to
meet
the
essential
needs of

our

and

essential

growing population,

civilian

stantially

needs have

other uses. Hoarding must not be tolerated, nor can

to

over

allow needed scarce materials

for

used

be

nonessential pur-

poses.

"Third,
provide
threat

public policies should
protection
against the

of

a

new

An

inflation.

increase of $10 billion

in military

appropriations, coming at a time
when
our
economy
is
already

operating at near-maximum levels, will greatly increase demand
for goods and for labor, thus putting pressure on our price and
wage
structure.
A
sharp
and
continued
rise
in
prices
and
wages at this time would not only

enlarged

of

1948

=

budget

re-

business.
"In our judgment, the economy

TABLE

half

the

ceipts. The acceleration of economic activity, resulting from the
expansion of defense preparation,
is hurrying the enlargement of
production and employment and
accordingly the growth of tax
revenues.
The imperative need
now
is
to
provide additional
sources of revenue, to cover the
new defense and related expenditures as rapidly as possible,
Such a program will help to curb
inflationary forces (a) by restricting the enlargement of the money
supply, and (b) by reducing the
buying power of consumers and

100,

seasonally

Constant Prices

adjusted!

half
half

Second

half

1950—First

prices
100.0
101.6
100.5
100.6

100.0
105.1
101.7
100.6
104.9

half

1949—First

Constant

prices

Period—

Second

half*

103.9
106.1

quarter

♦Estimates

Source:

quarter*
based

on

incomplete

Department of

Commerce

compul¬
not only

in

increases

cost

from

areas

data; by Council
and Council of

of

these

and

these

limited

outward
economy.
It

spreading

to

104.1

103.5
104.9

of Economic Advisers.
Economic Advisers.

essential

commodities,

excessive

prevent

inven¬

tory accumulation."
The Nation's Economic Budget
As the climax of its
Council

of

presented
called
as

Report, the

Economic

a

Advisers

of

summary

its

so-

Nation's Economic Budget,

follows:

"The

of

and

goods

$268 billion

1950

rate at

the

was

services

at

This is in the

of

5%

midyear 1949.

not

over-all,

second

producing
a
rate of

per year.

neighborhood
had

in

economy

quarter

changed
the

above

the

Since prices

significantly

dollar

increase

ap¬

proximately reflects the real in¬
in economic

second
a

Current

1948—First

a

program,

to assure adequate military sup¬
ply, but also to prevent price and

crease

16

Indexes of Gross National Product, Current and
[First

On

requires

side, this means that we through the whole
should seek to reduce the size of will not be enough, in this con¬
the cash deficit substantially or, nection, to establish a program
better still, to remove it entirely, which enables the military to pro¬
For the maintenance of a large cure promptly the materials which
deficit creates and aggravates in- it needs. This alone would only
flationary pressures in a time aggravate competitive bidding by
like this.
The economy is strong other users. The inevitable rise in
enough to bear the burden of prices would move into the costs
financing the needs which have of production of most producers of
now been outlined, without deficit goods and services. The program
financing and extensive increases should therefore provide for limi¬
tation of nonessential use.
This
in the money supply,
"Before the north Korean at- would reduce the total demand to
tack, the domestic economy was match the supply. There should
moving into a range of national also be the power to requisition
income which would have sub- hoarded or unnecessary supplies

prin-

basic

three broad

prompts

elusions

pressures.

This

allocation

fiscal

these

public pol-

icy:
ciples

sory

flationary

states

then

conclusions regarding

weeks.

"The first and most important
of these is to use fiscal and credit
policies
to
the fullest extent
feasible for the restraint of in-

toward

directed

developing and maintaining max-

Wednesday
year ago.

will

recommended,

.

Second

a

applied im¬

Discussing the economic effects that pressures in specific areas
be of the proposed increases m de- will far exceed the pressures upon
prepared to meet them no matter fense
expenditures, the report the economy generally. Shortages
already exist with respect to some
how long may be the period be- declares:
fore full peace is established.
"We find firm ground for be- of the essential elements of a mil¬
"Economic policy must now be lieving that it will be possible to itary program. The prices of some
adjusted to the prospect of this make and
maintain substantial of these commodities have risen
much more rapidly than average
long pull. If the pull proves to be enlargements in these expendishort, we shall lose little by being tures without resorting to all of prices during the first half of this
prepared; if it proves to be long, the controls of a war economy, year, and some price increases
have been accelerated in recent
we
shall gain much.
Our efforts But we must take some important

be

First

districts.

being

woefully

oic

major war, but there may
other
alarms
and
possibly

avoid

domestic

on

consumers;

mandate

the

hardships

it would weaken our
whole economy and would impede
our military effort."

will not
of the
United Nations has been enforced
in
Korea,
We are striving to
undertaking,

are

end

we

on

program

the

from page 9

Strength With Flexibility First
Need of Economy, Council Says

Nation-wide retail
ended

combination

toward this end.
The
of other restraints, now

building

priority

assurances

strongly that some
of methods should be

trative

of surpluses in many consumers' items,
anticipatory buying continued unabated in scattered communities.
Despite

cannot urge too

consumer

"Second, public policies should
ensure that defense requirements

siderably above a week ago.

could be

revenue

we

demand

designed

Withdrawals from 1949 loan stocks continued heavy,

of

amount

obtained, but

imposed

a

total of 122,300 bales last week, as compared

this

volume

decreased by 3%.

_

moderately after soaring to the
Monday of last week.

endangering the maintenance of
production," the report
"There are, of course,
alternative
sources
from
which

continues.

the

Board's index, department
weekly period to July 22,
1950, advanced 33% from the like period of last year. In the
preceding week a decline of 15% (revised) was registered from
the similar week of 1949.
For the four weeks ended July 22,
According to the Federal Reserve
store sales in New York City for the

Conclusions

Spot cotton prices declined

was

somewhat above the level of

period of last year. An increase of
25% (revised) was recorded in the previous week from that of a
year ago.
For the four weeks ended July 22, 1950, sales showed
a
rise of 22% from the corresponding period a year ago, but for
the year to date register an advance of 1%.
Retail trade manifested strength here in New York last week
with the purchase of items that were in short supply in the past

top levels.

vious week, and 56,900

orders

Department store sales on a country-wide basis, as taken from
Federal Reserve Board's index for the week ended July 22,

war

this

with

accord

in

rates

tax

principle and to do this without

mediately

dropped

Early strength in the

advance

were

about

volume

of

amount

year ago.

Continued

ago.

year

unseasonal

an

during the
was placed

1950, rose 46% from the like

Further moderate advances covering a

Twenty-one

as

noticeable rise in wholesale buying

a

slightly from last week's level, it was
a

strong enough to bear the

now

maximum
was

retailers; the aggregate dollar volume of ordering was
appreciably above the level for the similar week in 1949.
While
the number of buyers present at various wholesale centers dipped

the

22-Month Peak

to New

South

+9; and Southwest and Pacific Coast +6

many

decrease prevailed from last year.

a

Price Index

Food

in the Middle Atlantic States
their respective 1949 levels, but

rise from

week

by

that area and

in

noticeable

a

except construction

groups

less numerous than last year.

major rise in business casualties appeared in the
where 45 concerns succumbed as against 29 last

Failures

■week.

trade

and

industry

all

In

and service, failures were

and Midwest -f-4 to +8; East +3 to +5;

+5 to

is

Thursday, August 3, 1950

.

burden of substantial increases in

-f-Kh
There

struction.

the following

Regional estimates varied from last year's level by
percentages:

27

page

.

.

activity by the

This carries

quarter.

us

to

level of activity surpassing that

of the

table

second

half of

1948.

(See

16.)

"The rate of increase in produc¬
tion

of

goods

and

services from

the fourth quarter of
second

quarter

of

1949 to the

this

year,

if

continued, would be sufficient to

Volume 172

Number 4930

The Commercial and Financial Chronicle

/.

.

'

Com

r

1*»

'i

'

tnw",ii

a

t

(457)

provide

full

able to

before

employment

of the year.

the end

Budget
develop¬

main

(See

penditures.

chart.)

The

table

largest

17

the

in

the first half of this year,
in absolute terms and per¬

vestment.

in

was

business

about 33% over the

or

compared with

rise in

a

an

in

about

2%.

derived
nomic

Table

from

the

accounts

period,

taken

18, which is
eco¬

detailed view

expansion has taken place.

TABLE

the

first

The
of

annual

goods

consumer

somewhat

more

receipts side

Economic Budget.

half

of

computed at

year,

1950, first half*
Excess of

receipts

eral, State and local governments
(expressed as a seasonally ad¬
justed annual rate)
stantial

about

Disposable

income

relating

to

2.5%.

showed

about

2%,
plained by

savings

rent

ment

Exc.

private

receipts

from

of receipts

( + )

I" I

+12.7

loan

Net

GOVT.

(Fed.,

Tax

payments
Adjustment to

.3
-.3

and

State

-2.0
+ .6

+ 1.7

receipts

56.7
—

Government
Cash

from

the

and

services

-2.0

Exc. of

57.7

to

receipts ( + )

veterans

receipts

public

to

(—)

at

part

are

and

in

re¬

nomic Budget also affect the rela¬

(See

the

in personal

government

greatly accelerated consumer
buying, have resulted

third and
The in¬

saving and in
deficit are

increasing threat of short¬
ages,
price increases, and other
inflationary developments.
It is
with these most recent develop¬
ments, and the prospect of fur¬
ther developments initiated by the
changed
international
situation,
that public policy must now con¬

cash

an

cern

^Estimates based

+ 3.5

+ 3.5

—.3

+ .S

+ .#

tlncludes

payments

2.6

billion

the NSLI

on

NOTE—Items
roman

type.

italics;

they

add

totals

to

product

254.1

254.1

265.2

265.2

dollars

(5.2

billion

at

Business investment rose about 10billion dollars (annual

an

annual

the

of

ratei

nonrecurrent

relating

to

ANNUAL

production

current

of

goods

and

services

shown

are

of

Based

OF

the

from

Department

of

Commerce

and

Walter Rosen-

give
in

firm

offices

New

York

and

increase

to 31

its chain

of offices coast

to

COast.

Mr.

Change in

of

Bureau

resigned

from

&

Co.
A

to

cial world
national

50

goods

subsequently

+

Nonresidential

+ 1.4
+

payments to the public

and

—

'

i

-

+

—

:

*

3.1

After

associated with

was

Haupt & Co.
and

He is

Banking, and

a

graduate of

international

an

officer of the Parnell Foundation.

Irving Like, Murray Schiffman,
Roger.' Stearns and Aaron Weil
will

be

associated

senbush in the

istered

with

new

Ro¬

Mr.

office

as

reg¬

representatives.

Howard, Labouisse

Merge

firms

have

a

announced

organizations

partnership to be known

Weil,

&

as

Labouisse,

Fried¬
offices in the

Co., with
Building.

Co., Inc. entered the se¬
Howard,

the

of

firm

Co.

was

G.

are

Frederick Brauer, Economist;

1950,

H.

FIRST HALF

•

-

—11.2
+

Boudousquie, Jr., Edward

Caffery,
;John

D.

Thomas C. Holmes, Jr.,
Lelong, Martin Macdiar-

mid, Robert G. Moroney, Gordon
O.
Quackenbos and
George B.

SECOND HALF

7.9

+

and
Fowler, Jr., Research.
Representatives of the firm are
Waller

Paul C.
INTERNATIONAL

1949,

+ 11.1

_

—

Alexander, Trader; Gerland J.
Foucha, Jr., Assistant
Cashier;"

+ .9

5.2

+ 1.4

expenditures—

1949,
SECOND HALF

7.4

+

—4.8

local

national

gross

+

6.6

+1.9

;

15.4

+ .4

dividend

Other

State

+

f 27.0
+ 3.5

+ .3

-

-

.

NSLI

2.7

+2.4

equipment

Federal

.2

+ .25

—_

inventories

inter¬

1925.

ard, John P. Labouisse, Walter H.
Weil, Jr., and Paul T. Westervelt.
Associated with Howard, Weil,
Labouisse, Friedrichs & Co. are
J. Thomas Whalen, in charge of
the Municipal Department; Alfred
W. Helmke,
Cashier; Robert D.

+ 33.5

___

durable

in

Labouisse, Friedrichs &
organized in 1946.

8.0

+

-t-1.4

._

monfarmi

Change

cash

+

.2

+ 10.6

*

Producers'

Government

2.0
+

investment--.
L

-•Residential

in

2.0

4-

Construction

Forshay,

the American Institute of Finance

Weil &

BUSINESS
+

JL_
:

junior clerk with

a

and

curities business in 1922.

Percent

+ 3.6

domestic

25

F. L. Solomon & Co. and with Ira

IOO

r

|

CONSUMERS

first half4

,

aoiiarst

expenditures

private

as

bankers,

Hibernia

FIRST HALF

Billions of

Services

with

ADJUSTED

I960,

Budget

goods

post.

new

Yorker

Shelby Friedrichs, Alvin H. How¬

hal* to 1950

Nondurable

New

10 years with that organization he

into

18

Expenditure Items—
Durable

the

accept

native

richs

Change from 1949, second

Consumer

the
Broadway
Zuckerman, Smith.

branch office of

Howard,

the

Selected Expenditure Items of the Nation's
Economic

Walter Rosenbush

Rosenbush has

Partners
TABLE

Total

the

three

Budget.

Gross

of

agement

bush. This will

the merger of their

rounding.
data

on

un¬

man¬

vestment

rate)

Consumer ex¬

DOLLARS

RATES, SEASONALLY

in

payments and receipts and subtotals including them are in
not included in the gross national product. Detail will not necessarily

because

Source:

BILLIONS

dividend.

Transfer
are

the

ORLEANS, La.—Howard,
Labouisse, Friedrichs & Co. and
Weil & Co.,
Inc., New Orleans in¬

penditures increased about
billion dollars, which was much
less than the increase in disposable income.

incomplete data.

on

1370

Broadway

NEW

THE NATION'S ECONOMIC BUDGET
-2.8

—.3

national

New

itself."

from the last half of 1949 to the first half of 1950.
Gross

in
at

Zimmerman

during the rest of the
year, would continue to move to¬
wards maximum employment and
production in a steady manner.
Since then, the request for addi¬
tional
military
appropriations,

first half

that

office
York

der

a

years' experience in Wall Street,
he began his career in the finan¬

-5.0

—2.3

adjustments

Total:

upon

1

branch

and Weil Go.

-2.9

L

product
Other

factors

openedon

August

62.5

national

gross

not only

inventory liquida¬
accumulation, and upon

and business

same

saving.

rested

economy,

the year.

"The

to

Goodwin

Prior to the Korean development,
it was to be expected that the

special payments

during the

impetus

&

New York Stock

Exchange and other leading secu¬
rity and commodity exchanges,

21.1

60.6

_

payments

or

relating

reflect in

may

international

new

of the

extraordinary
veterans' dividend, but also upon
factors of more lasting duration.

The pro¬

scarcely

to

members

the payment of the

in durable and nondurable

expenditures

the

41.4

ADJUSTMENTS—

For

increased

a

shift from

tion

over

period, postwar or
Expenditures for nondur¬

goods

expansion of the

before

gave

months has

previous

57.4

17.6

the

1950

of sig¬

inventory accumulation.
analysis of the Nation's
Economic
Budget indicates tnat
the
expansion
of
the
last
six
the

sixth colums of table 17.)

43.0

—:

transfers

payments

■

The disparity between the in¬

of

59.4

1.0

—

public

goods

of

to

homes.

purchase of durable

the first half of

in

creases

Cash

Purchases

new

were

"This

tionship of saving and absorption

local)—

basis

over

further

ac¬

ceipts sides of the Nation's Eco¬

—.3

investm't (—)

or

cash

pay¬

goods, sales of which increased by
8%

-13.7

abroad

investment

inventory move¬
outstanding. This was

even

events

42.2

(—)

liabilities

or

on

were

true

considerable

a

flected in the expenditure and re¬

transfers

receipts ( + )

the

of

28.5

31.6

investment

foreign

Exc. of

for

the nonrecurring

INTERNATIONAL—

Government

payments

crease
183.4

cur¬

investm't

or

ments

behavior of vet¬

used

to

investment..—

nificance in the

ex¬

outstanding debt, to
cumulate
liquid assets or

able

+196.2

6.2

business

last six months,

durable goods was higher than in

•5-22.3

30.8

domestic

be

of

prewar.

179.8

production

Gross

part

Walston, Hoffman

new

ex¬

cially for inventory accumulation.

portion of expenditures devoted to

+

sub¬

a

the second

large increase in the

While several factors

only

(—)

173.8

( + J

business

the

by

deficit

BUSINESS—

Retained

in

may

who

erans

all.

Personal

expenditures

consumer

itures

186.0

of

cess

pend-

16.5

personal income
Expenditures for goods and services—

"The

continued decline.

ceipts

transfers and net interest

Disposable

incomes

"The fact that disposable personal
income increased by 5.5%, and

any

payments

farm

shows

declines from

half of 1949.

or

the second half of 1949.

169.3

Government

a

Only

billion

( +) or

current

production

by nearly $4.7

in¬

Walston, Hoffman

rate.

the combined cash deficit of Fed¬

creased

For

be doubled

annual

an

annual rate. How¬

an

(—)

itures

at

income derived from current
production,
particularly
wages,
business and professional incomes,

deficit

pend-

appears to

counted

Excluding the veterans' dividend,

Ex.

CONSUMERS—

Another N. Y* Branch

of this

dividend,

Re-

( + I or

ceipts

when

ever,

used

receipts
Ex-

which

year,

Another part of the dividend was

Excess of

Re¬

in¬

the pay¬

to

veterans'

portion of their dividend for

this

adjusted]

1949, second half—

Economic Group

the

of

or

this

of

residential construction and espe¬

17

rates, seasonally

is attributable

crease

ment

half

About

Expenditures

Nation's Economic Budget

dollars,

or

during the first six months

by about $10.2 billion

5%.

over

make
[Billions

receipt

had

(See table 19.)
"In

the

which

of the

of the Nation's

"Most of the increase in private
domestic investment is attribut¬

by

Durable and Non-Durable

best be appraised in
a

inflated

the

movement

can

both

consumers

reversing

thus

connection with

of

payment of the veterans' dividend

1949

retained corporate receipts reflects
the increase of funds spent for

place since the 1948 peak.

purchases

income

exceeded the rate of the last half

increased

quarter

"The increase in

in ap¬
in which

areas

second

downward

presented

pendix A, shows the

first half of this year and

the

substantially,

consumer

national

the

in

expenditures of about $3.6 billion
or

the last half of last year

"Outlays for producers' durable
equipment were somewhat higher

annual rate increased by $10.6 bil¬

lion

of

(seasonally adjusted).

in¬

Gross investment at

over

disposable
of

dividends and rental incomes,

made by a rise

was

25% in residential construc¬

over

tion

1949 to

centagewise,

A

important contribution to
increase in private domestic

investment

expenditures from the last half of
both

$6.5 billion (annual rate).

over

and

increase

inventory
inventory

to

second

in national income and ex¬

ments

1949

increase in effective demand of

an

"The Nation's Economic

the

in

accumulation in 1950, resulting in

National Income and Expenditures

summarizes

the swing from

liquidation

2»

4.4

Riviere.

'

*:

~

•

Howard, Weil, Labouisse, Fried¬
richs & Co. will conduct a general
-

4Based

on

tAnnual

preliminary

rates,

estimates

1950,

for

second

half.

1950,

,•'■••;

seasonally adjusted.

FIRST HALF

investment
.

.

..

TABLE

19

Change in Selected Receipt Items of the Nation's Economic Budget
Change from 1949, second
half to 1950 ,

markets

Receipt

Items-

NSLI

transfer

payments

Farm

Personal

valuation

Capital

consumption

Corporate

receipts

the

Federal

State

Total

and

gross,

—.8

national

1

—.6

products..:

RECEIPTS

1949, SECOND HALF

1950,

+

11.1

the Midwest Stock

Exchange.

FIRST HALF

Geo. E. O'Brien With

CONSUMERS

\

i.

Kornblower & Weeks

r'

INTERNATIONAL

—1.9

—3.G
4.4

GOVERNMENT

I

.

DETROIT*t

O'Brien
with

has

Mich.^ George*&'
become ,

Hornblower &

obscot Building.
4Based

.tAnnual

on

preliminary

rates,

estimates'for

seasonally

adjusted.




1950,
,

first half.
-

n.

t;

,,

Ex¬

J

—.5

+

on

7.9

+ 8.

,

in financ¬

+1

+-3.G

I

in.

Mississippi munici¬

change and the New Orleans Stock

(+), EXPENDITURES (-)

BUSINESS

.7-

—.3

n.

.

to

+

+ 1.5

__JL

l

local

relating

receipts

+

dividends

_

2.2

—3.8

public

1

and

+ 1.1

OF

—7.5

+

allowances

taxes

from

.2

+

tax

adjustment

EXCESS

4.4

—2.3

1

before

+

Active

maintained

The partnership holds member¬

2.4

—2.4

under¬

ing established local businesses.

ships

2.5

+

+ 1.3

taxes

receipts

Inventory
Less:

+

3.2

be

particularly interested

1950,
FIRST HALF

3.6

—.3

«:

-

profits

Cash

+

+

1

Corporate

+ 35.2

+ 4.7

—

income

5.5

.6

+

salaries

+

+ 5.2

production——

current

and

Percent

5.8

+

—

income

Other

Business

interest

net

___

from

Wages

Less:

and

dividend

Other

Income

Tron»f«f pe>m#nt|

+10.2

—

as

pal bonds, bank stocks and other
corporate securities. The firm is

SECOND HALT

first half"

dollarst

income

personal

Government

will

Louisiana and

1949,

Billions of

Disposable

business

writer, dealer and broker.

GOVERNMENT

associated

Weeks, Pen¬

Mr. O'Brien was

formerly a partner in S. R. Liv¬
ingstone & Co. - "

30

The Commercial and Financial Chronicle

(458)

Continued

from

The Security
C.

I Like Best

Partner,
,

Van

Noel

Alstyne,

&

Co., Members, New York Stock
and New York Curb Exchanges

(St. Lawrence Corporation, Lid.)
The

choice

Like Best" is not
common

day.

stocks

good buys to¬

are

its

'for

yield, another
its

for

and

pects,

But

on.

so

per¬

in

haps
i

pros¬

these

f 1 ationary

n

days
the

of

two

im¬

most

portant

con-

siderationsare

earning

pow-

erandthe

availability of
materials.

raw

On

both

of

these
Richard C. Noel

counts,
pet issue

my

is

Corporation

rence

Lawrence is
nadian
two

St.

of the large

one

operations.

paper

St.

Ca¬

In

the

since July, 1948, when
recapitalization
plan
went

years

the
into

effect, the common
(now
selling around
19)
has
earned
about $14 a share, before sinking
funds.

In

the matter of

raw

ma¬

terials, the present timber limits
of

the

St.

Lawrence

companies
'

Group
of
8,905
square

cover

miles.

Lawrence

holding
erating

Corporation

is

a

company with three op¬
subsidiaries.
Largest of

these is St. Lawrence Paper Mills

Company, Ltd.; two preferred is¬
publicly
owned, and over 99% of the com¬
mon
stock is held by the parent
company.
The other two subsid¬
iaries

Lake St. John Power &

are:

Paper Company, Ltd., of which
Paper Mills owns all the preferred
and

99.6%

of

Brompton

the

Pulp

and

common;

&

Paper

Com¬

pany, Ltd., 99.9% of which is held
by St. Lawrence Corporation. To¬
tal operating capacity in five mills
is 522,500 tons annually. Products

include newsprint, kraft fibre and

specialty

boxboard,
bleached sulphite,
sulphate
groundwood pulp.
papers,

un¬

and

recapitalization

fective
all

in

ef¬

July, 1948, cleared

dividend

arrears

up

the

on

old

preferred issues of both the Cor¬

poration and the Paper Mills. This
was
accomplished through cash
payments and the issuance of

L'hed

for

second

the

retirement

preferred

nually for the
a'-d
$1,000,000

estab-

were

of

the

$500,000

at

an¬

parent

company

the

for

Paper

Milh.

oecially

fact

'hat

so

significant
far

retir' Tients have

second

ements.

in thr open

have

!

is

the

preferred

considerably

ceeds 1 the minimum
rear'

ex¬

sinking fund

Through purchases

market, the companies
able to

ien

effect

earning

them

at

the

Exchange and
the Cincinnati

earnings
1950

months of

the

for

$2,876,152

were

of

basis
Even

1949.

able

the

for

full

though

exchange

allowance

depreciation
ment,

reduced

did con¬
improve¬

tribute somewhat to the

earnings
satisfactory

actually

current

represent

a

level

of

has

been

correspond¬

a

enhancement of the
com¬
pany's working capital position.
ing

As of June

30, 1950, total working

capital was $24 million, of which
$11.5 million was in cash. This is
than

more

F.

Irvin

for

adequate

operat¬

Combined

weli-run

continuously growing, mocter

Gamble

&

su.ccess-

*ul because it

Westheimer

is

and

dustrial

is

every

When

a

the

the

citizen

a

of

first

which
proud.

is

Cincinnatian

in¬

our

o

community
Circinnatian

about

operations.
There

tion,

year

favor¬

a

and

rate

ing corpora¬

is

that

$13.3 million, represented by sev¬

mortgage

bond,

steadily,

on

burdensome

not

deben¬

The amount is being

ture issues.

reduced

and

terms which
to

the

Cor¬

This total debt seems
low in relation to that of
of the other large Canadian

&

sound

reputation—
tne

reasons—are

for my

Gamble

Any

bright

picking Proc¬
the security I

as

investment in Procter & Gamble

For instance,

pany.

in 1890 at 100 would

makers.

for

the

view' of

In

the

current

market

type

by

will

substantially ex¬
1949.
Newsprint,
principal product of St. Lawrence
1950

year

those

ceed

of

Paper

Mills, accounts for a good
percentage of total volume. De¬
this

for

mand
grow

item

continues

to

annual per capita con¬
in the United States has

—

sumption

risen from 59 to 75 pounds in the

last

twelve

American

needs
a

and

and

years
are

half

current

estimated

million

have

ducers

been

at

tons

a

the

al¬
pro¬

operating

at

than 100% of rated capacity.

more

It is expected that this trend will

Demand

is

products

by the St. Lawrence Group
increase.

the

on

some

other

for

Although

weakness appeared last year

in the

Procter

pulp markets, considerable

rights.

But

look:

than $2,500 000.

more

growth.

&

Gamble

retains

has

also

been

products

of

good

on

Volume

the

kraft

Brompton

Pulp
&
Paper and there have been some
upward price adjustments in this
division.
Another

factor

which

is

very

important to St. Lawrence's out¬
look

is that it is

sible for

new

virtually impos¬
competition to enter

impor¬
in¬

ana

stitutions.

core

of

the

from

of

publicity
has

concerning

been

publici

the

and

quick

when

pick

American

of

Procter

Gamble's

&

careful culling

a

&

youth

Gamble's

plants

and from the universities

the

out

country
for
There is no nepotism.
Stockbrokers

student

it

wise

was

enough

was

to

use

a

to advertise.

Procter
been

Gamble

&

leader

a

has

always

in enlightened

em¬

ployers mployee

relationship,
which
have
thev
developed
through profit sharing (which they
pioneered), stock ownership, and

Continued

from

can

look at

Procter & Gamble's statements for
an

example of continuously

servative operation

a

have

100

XYZ

at

months

or

lises

6"0.

to

sell his

to

executive

let's

few

a

the stock

say

The customer

decides

stock, and the account
enters

XYZ

100

Within

50.

so,

order

an

the

at

Sell

to

market

long.
(Under SEC rules, all sell orders
be

must

short.)
60,

either

marked

The order

and

the

long

the

call

value.

is executed
has

customer

Wr:dell Harper Now
v
J ith John G. Kinnard
L

a

share

common

MINNEAPOLIS,
dell P.

ciated

Co.,
was

Minn. —Wen¬

Harper has
with

Baker

John

become

G.

Arcade.

asso¬

Kinnard

Mr.

&

Harper

formerly with Shields & Co.

and prior thereto was Vice-Presi¬

dent of Shaugnessy & Co., Inc.




not available. With all

conditions, plus
the
continuing savings in pre¬
ferred dividends through second
preferred retirements, earnings of
5?10

(Special to The Financial Chronicle)

are

of these favorable

approximately $1,000 profit. When
he bought it at 50, he paid $5,000
plus commission, and when he
sold

it

less

commission

at

60,

received

he

and

$6,000
In

taxes.

this

Let's look at

that

say

a

XYZ

use

this

short seller

now.

selling at 60 and
customer, at the

moment "even" in

small.

within

are

the

for
a

next

St.

Lawrence

good

possibility

few

years.

St.

Lawrence's recent perform¬

ance,

its ability to retire the sec¬
preferred so rapidly, its fa¬

ond

vorable

raw material
position, its
prospects—all make it a particu¬
larly
attractive
common
stock

around

current

levels.

But

has main¬
near

4:1.

of

when

it is sold

in the transac¬

than

Tide

There

us

as

look
an

an

is

no

funded

at

Procter

industry,

annual

does

and

from

from nat¬

petroieum

materials for shorten¬

raw

profits.

tion

supply

can

investment
tell

to seek

any reason

elsewhere.

like

I

ta

clients when I invest in

my

a

company
that I am giving my
$1,000 to the management of that

to do the best they can

company

it.

with

Patrick

of

know
future

no

but

Henry said,
of judging the

way

by the past."

Procter

& Gamble operates a model busi¬

which

ness

and

grows

prospers.

&

rather

statement.

not rest

Dreft

alone

have

on

If, during the period he was short,
Corporation paid a dividend,

XYZ

the

seller

short

long 100 XYZ and will¬

someone

lend

to

Then,

it.

the

upon

short seller's instruction, it enters
order

an

is

executed

buyer.

The

the

at

Let's say this order
at

stock

100 XYZ

sell

to

market short.

is

60

and

the

delivered

bor¬

to

seller,

short

the
now

short 100 XYZ at 60, must buy it
back someday in order to return a
100

share

stock

certificate

of

the market.

returned to the

ing

up

lender, clear¬
this-; obligation, and the
made a profit of

short seller had

its

order

was

executed,

and

he

be¬

leadership in the detergent mar¬
came "even" again when he "cov¬
ket, and Joy, a semi-liquid dish¬
washing detergent, is on its way ered" his short position through
to take its place along with the the execution of his buy order.

would

have

to

dividend on the stock
which, in effect, he had created
by selling short. The person from
the

pay

the

whom

stock

borrowed

was

still long even though he had
his stock,

entitled

and

therefore

was

dividends

to

declared.

And

the

whep

the short seller sold short
in effect, long the stock and

was,

who had

person

bought

thus also entitled to the dividend.
The

shares

100

extra

"cre¬

was

ated" by the short

seller who must
dividend
on
the
100

the

pay

1

shares he had sold short.

let's talk

Now

-

execution

the

the SEC's

about

selling rule which

short

short

such

changes

of

as

restricts
to

sell

securities

ex¬

orders

national

on

the

York
in

New

Stock Exchange. The SEC says

that no short sales shall
(1) below the price of

effect,
be

made

the last

sale, and (2) at the price

of the last sale unless it
than
made

at

rule

is higher

sale

next

preceding
different price.

the
a

This

designed to prevent sell

was

short orders from depressing mar¬

quence

Its

captured

on

ket

approximately $1,000. He had sold
short at 60, receiving $6,000 less
sales of Ivory soap, but its excel¬ commission and taxes, and when
lent Research Department is con¬ he bought back or "covered" his
stantly bringing forth new prod¬ short position, he paid only $5,000
ucts, and as it happens these are plus commission.
He was short
the products that the public wants. from the moment his sell short
as

tneir

Only the theory of diversifica¬

The member firm shops
around for the short seller to find

for.

was

let

wealth

make either

or

solidated

tion will receive the stock he will
pay

rowed

the habit

in

in order that

"short" the buyer

con¬

and continual

company

been

him

years

Gamble

fats

lent

in 1945.

Additional timber lim¬

of

ing. Foreign commitments are not
a major contribution toward con¬

at

made

debt, and all preferred stock ex¬
And, let's assume this buy or¬
was
executed
at
50.
The
cept a relatively small amount of der
non-callable preferred was retired stock delivered on this purchase

its field.

strong competi¬

a

because

de¬
rivatives; and because of their oil
crushing facilities, used in pro¬

was

XYZ Corporation
to the person
payments —
from whom it was borrowed.
On
the dividend being at
the assumption the short seller's
least 60% of earnings. Reserves
appraisal of the future market ac¬
for possible
inventory losses of
tion of XYZ was correct, and it
$37,000,000 were set up in 1947
and 1948 and partly used in the subsequently declined to 50, the
customer short the 100 XYZ in¬
fical year ending June 30, 1949.
structs his account executive to
Depreciation has been ample but
enter an order to Buy 100 XYZ at
always realistic. Loans are usu¬

ally

position

learned to

or

simply

under

be in

the
New York Stock Exchange

its to support new Canadian mills

$1,365 235

The labor expense

stock, Procter & Gam¬

war

a

Trading

dividend

generous
most

free from

7

page

Round-Lot

ing
look¬

to

Any stockbroker

investor

or

through¬
material.

used

are

ing for figures.
or

They

year.

leadership not only in soaps but
detergents which they have

its

of

growing
They will always know

medium.
how

great

cornerstone

Management

y.

enough
ratio

its

of radio advertising. This

amount

a

Procter

There is

success.

As

ble would

tive

ducing

Procter & Gamble has had wide

XYZ, feels that
good climate it should decline in price. This ap¬
for
good management, and
De- praisal he wants to translate into
cause,
as
their brilliant young a profit which will be real if he
sells the stock at 60 and buys it
President,
Neil
McElroy,
says,
they wish to be close to the heart when and if it declines to 50.
of America—the grass roots. Man¬ Not having the stock, however,
agement and personnel are the requires that it be borrowed for
they feel that it is

current ratio of

sustained.

its

head offices in Cincinnati because

They

be

enormously

ing lor bakeries, hotels

e.

We'll

tained

sulphite,
believed that the higher

is

tant in making commercial snort-

This is real

notably

unbleached

divi¬

cash

•

Procter

hard

labor troubles.

ural

Gamme

illustration, the customer had
dends over the 60 years would effectively translated his appraisal
of the stock—a rise of 10 points
have been almost $1,800,000 and
—into a profit.
the stock (at 60) would be worth
cise

The

will

over

shares.. It would have re¬
quired the investing of $10,000 to
begin with and an additional in¬

growth.

and it is

be

now

improvement began to be evident,
in the
second
quarter of 1950,

in

Gamble

&

42,000

continue—and perhaps accelerate.

made

of

vestment of about $90 000 to exer¬

of paper products
St. Lawrence, I fully
believe that earnings for the full
made

shares

purchase of

a

very

Outlook Is Favorable

a

how

you

would have grown with the com¬
100

paper

tell

can

poration.
most

with

statistician

sharp lead pencil
an

work

remarkably

item is very low.

&

his

to

like best.

ter

In

been

asked

comes

for this

reasons

subsidiaries at the end of 1949

was

Lilt.

wave,

have

in

neighbor and employer and they
like its 59-year dividend record.
are

tne

now

Thursday, August 3, 1950

.

guaranteed

a

entirely eiffc.ent field, Crisco
a consumers
preference as a
shortening over lard, and Procter

a

they

ana

permanent

Cincinnatians like the company as

The

Prell,

are

sn.rn.poo3,

in

nas

lips is always Procter & Gamble.

same reasons

eral

field

Family

drug prod¬
Drene and

tne

m

.

leading home industry

name

funded
debt of the parent company and
needs.

ing

line,

an

manufactur¬

,

same

a

successful

per share after taxes and
preferred
dividends.
This
compares with $6.02 per share on

the

to

of

epitome

or

$4.93
ail

is

change,

Cincinnati the

six

first

Ex¬

Stock

profits before second preferred re¬
tirements.
On this basis, consoli¬
dated

American

and

home

New

Stock

York

common,

rate
E

full

of St. Lawrence Corpora¬
it is,
of
course,
necessary to consider the total net
tion

&

Gamb.e, listed

power

sec¬

ond preferred stocks by both com¬

panies. Sinking funds

the

This is higher than
presently
available
supply
though Canadian newsprint

plans

ter & Gamble.

Excellent

year.

Retirements
The

Earnings

five

Second Preferred Stock

Cincinnatian which ooes not
include Proc¬

a

Procter

determine

To

of this company are

sues

of

on

are

St.

There

best.

to 59,947 shares.

Law¬

common.

that Cincinnati likes
is rarely a portfolio

the security

pre-

Many

easy.

attractive

is

One

so

^are^ Paper Mills" second
£ares, ^aperMdls «ond pre^
Recent

Duz,
uces

security I like best is also

Ivory, they have

leading so^ps, Camay, Oxydol,

Shasta

ration's second preferred had been

Security I

"The

of

& Gamble)

(Procter

By June 30 of this year, the Corpo-

NOEL

Ohio

tne

their soap

The
RICHARD

Co.

Senior Partner, Westheimer &

Cincinnati,

Besides

others.

WESTHEIMER

F.

IRVIN

2

page

.

Let's examine a se¬
sales to
determine

prices.
of

which

of

mitted

a

could

them

sale

short

50, 50y8, 501/s, 50,

have

to

be

per¬

made:

49%, 49%, 49%,

the first sale at 50 as a
starting point, the next sale—the
first at 501/s—was higher than the
Using

preceding
ihe

short

sale of 50 and, under
a member

selling rule,

execute

could

a

client's

sell short at this price,
of course,

a

order to

assuming,

buyer was willing to

at the time.
In Stock
Exchange language, this 50y8 sale
is a
plus tick or up tick sale.
Observe now that the second sale
pay

501/s

at 50 %

while at the same price as

preceding sale, is higher than
the next preceding sale made at
a
different price, namely, higher
than the first sale in our sequence,
the sale at 50.
A short sale could
have been effected on this sec¬
ond
sale at 50 % as well as on
the first sale at 50%.
The second
sale of 50 % is called a zero plus
tick sale because it is at the same
the

price

the sale preceding- it, yet
the next preceding

as

than

higher

sale made at a different

price. In

fact, a series of short sales could
be made at 50%, and each suc¬

ceeding
merely

one
as a

Returning

would be identified
plus tick sale.

zero

to

our

sequence

of

sales, we note that a sale now took
place at 50.
Only an order to
long stock could have been
on that sale.
Remember

sell

executed
we

said

made

a

short sale shall not be

below the price of

the last

Volume 172

sale.

Number 4930

Thus, if

deavoring to

.

The Commercial and Financial Chronicle

,.

member was en¬
his client's

a

execute

ofder to sell at the market short,
he could not offer the short stock

This sale at 50 is

below 50%.
minus tick

or

next sale in

sequence

at

was

49%, and it too could have been
only by a seller of long

niade

It

stock.

was

sale at 50, it
preceding sale.
member holding an

from the

was down

The

the

like

because,

minus tick sale

a

best

a

ofder to sell short could do would
be to offer the short stock at 49%.

short

by implication, a short sale can
be effected at a price
higher than the last sale. An offer

always

of short stock could therefore be
made

to

the

definite

remaiq in the the effect such
we

would

leave

we

following the first

sdle at 49%.

executed,

But in order to be

buyer at 49% would
In our sequence

a

of

sales, this did not occur. A sec¬
sale at 49%: was made, also
only by a seller of long stock.

ond

is called

sale

second

minus

sale

tick

to

it,

zero

a

it

because

is

at

in

sale

final

our

sequence

was

a

have

been

series

executed at this price.

this

at

could

orders

short

of

executed

49%

be

price, each

wants the order to be executed if

ti-ve

it is possible to do so the moment

®rdfr far immediate transmission

than 40%, the
member
holding the stop order will imme¬
diately execute it as a market or¬

always

at

specified
close to the

very

market

current

a

price,

he

and

Orders

classified

be

can

many

categories,

orders

versus

round-

versus

Let's

time

in

remain

two

of

time-inthe length

means

client

a

impor¬

with

deal

This

force first.

etc.

time-in-force, and

tant categories:

price.

orders,

relatively

two

are

as,

stock

commodity

or

There

such

sell orders,

odd-lot,

versus

his

wants

the

order

market—until

possibilities

occurs:

either the order is executed

or

tde

client cancels it. Some clients pre¬
fer

would

write

DEF 40%

the

member

reaches

be

immediately
member, in the

the

to

means

enter

such

day

orders

in the market

are

remain

to

in force only un¬

or

during which, or before which,
they were entered. If a day order
is not executed by the market's

automatically expires,
that is, it is cancelled without any
it

instance, R3310 declines to 17 k, lmmedithe prevailing quota- a*
^he first sale occurring
tion in the stock which explains
(or below it if it doesn't
why the customer's limit order s?
at, on the way'down), sellTOO
latter

orders

are

GTC

orders—

Good Till Cancelled.

Some clients

be

in

the market

orders

longer than

day but not indefinitely. Thus,
we have Good Through the Week
orders, Good Through the Month
orders, and Good Through A Spe¬
cific Date orders.

executed, revealing also at what price an exe-

.

791/2

quests

FOK.

The member

if

other

no

then decide

to

nine

is still headed for lower levels.

ZTtTlu^
rn'17^^"
?.fl' f .,nnlv.ll
PfM1t;nL ij?jj
GX

it

b

fSVj ff

RC

Jute afthat

or-

continues

decline

to

later decide to
his

i^7i/

T„

'

p

If

will

position,

probably by
placing a buy market order or a
buy limit order. But, right now,
he wants to protect a substantial

hJrfl f

hiH

orice

short

he

(buy back)

cover

M1

+

portion of

the bidder had

ond FOK

executed

order would have
at

the

Price declines or rises to or bey°nd the price named in the cus-

Buy 100 GHI 62 Stop Open.

tomer

but

cancelled this

not

% bid, the selling customer's
79%

price

sec-

been

s

stop order,

This is a broad
could be restated

spec-

with

nrteinfl nnnt

in

original quote
sell

executed

price)

a

703/

definition which
as

follows: A sell

q

uses

a

5/

I
a

and this Price wil1 not necessarily

.

hid

buv at market

ordJr
V

*

f

mSdr f nti' wbenwants to
a ch^t
market order, he

h_

buy stock regardless of the price

sold

for.

In

last

sale,

last

sale

the

market

short

may

the

price

below

next

a

sell

marked

not be

the

at the price of the
unless it is higher than
or

preceding sale made at
price. No member or
violate

can

ing rules

the

regardless

short

of

sell-

price in-

sume
are

'

■

.

were sl* uses of
There are three for

the current market price, let's as-

struction*? on orders
strueuons on orders.

Limit orders

,,

sa

*toP orders.
bu^ s P orders and three for sell
,P °rders;
In buy stop orders, a customer
I?a^ want to (1) go long above
tbe current market price, or (2)
stop or limit a loss on a short posil°n'f °r ^
mC^t
on a
*hort P°sltl°ndlus rate a cus\?mer wepting to go long above

different

client

.,

,IT

,

orders,
of

rpa_n;

market." The stop price he selects
is 0nly ttle PriCe level at Which
point he wants his market order

he may have to pay for it, or sell
stock regardless of the price it is
orders

Th

Here

are

some

XYZ which .g currently sell.

those in which

sell order at 85, execution at this

higher

is

possible

the entry of a buy

only 7or

buy limit order with

a

share, if GM declines to that popular use, one of the six differprice from the moment the client ent uses of stop orders!

Buy 100 XYZ at the market when
and if it sells at 25%. The custo-

gives this instruction (any
during the week)
through

mer

per

same

long

client

week.

Sell

100

the
80

(or short) means that
wants

to

sell

at

A

day

GM

this

is

if

selling

currently
should

it

The

61,
62, the
stop order

rise

at

to

member

holding this
will immediately execute it as a
buy market order. If, the stock
should rise to only
to decline again,
would

not

made

be

"elected,"

market

a

61%, then start
the stop order

order.

that

If

in

is,
de¬

clining again, it sold down to say
58, the customer might then de¬
cide to enter a buy stop at 60,
cancelling his 62 stop instruction.
Sell stop orders have three pur¬

too,

poses

scribed

of which

one

earlier

when

de¬

we

started

we

discussion of stop orders.

our

Its

to stop a loss on a
long position. You will recall the
customer was
already long 100
purpose

was

Radio at

18, and wanted to limit
his loss to less than a point. He
decided

17%

on

as

the stop order

price, and his order
to

100

Sell

RC

entered

was

17%

Open

Stop

If RC declined to or below

long.

17%, the member holding it from
the moment it

was

entered would

then sell it out at the market.

a

or

protect

stop order

a

profit

on

long position. Let's use the same
— the
customer already

situation

100 RC at 18—but in this
let's assume RC has risen to

long
case,

The

21.

thinks

customer

it

will

higher, and if it does, will later
to enter an ordinary sell

go

customer

100 Radio
at

say

18.

has

just purchased

Corporation of America
He went long because

of the current dividend return/and

the
the

prospects

for

an

increase

in

dividend, and also because he
price if the order can be executed felt he could some day sell his
through the last market session of long stock at a higher price than
the month during which this order the 18 he paid per share. But, he

current

penetrates
level

of

structs

this upper resistance
25.
The customer in-

the

account

executive

to

decide

market order or

a

sell limit order.

But, right now, he wants to pro¬
tect some of his indicated profit.
He selects 20% as the price level,
which if reached through a de¬
cline from the current price of 21,
would be where he would want
his stock sold at the market His
order will read: Sell 100 RC 20%
Open Long.
Nothing will
happen until and if RC sells at
20% or lower. If RC sells down
Stop

selected this 25% stop price.

(He might have decided on 25%
or

25% for the stop price.)

account executive

writes the

the event of

to

go

market

sudden decline.

short below the current
price. To illustrate, let's

say

customer is "even" in JKL

He

currently selling at 77.
believes JKL is selling too

a
which

The high
or-

a

The third use of a sell stop order

is

on

is

and

wants to

make money

the short side, but hesitates to

der: Buy 100 XYZ 25% Stop Open,

enter

The customer wants to go long
above the current market price,

sell

day
to

say

the

price.
cal

during a market
74%, he would

have 100 shares sold short

wa^t to

at

when JKL

come

<5

accuse,

then

prevailing

market

Strictly from the mechani¬

sice,

stock

it

that

appears

snould

the

if

would

customer

the

75

penetrate its

sistance level by % point

re¬

or more,

be

going

short while the stock is declining
and, theoretically, at least, begin
to

profit

a

snow

from

the

his short sale

on

his sell stop
executed, prenot too far from the 74%
stop pr^ce. But, as with all orders
sxmrt

moment

order

was

sumab y
to sen

snort, the SEC's short sell¬

ing rule cannot be violated and,
you'll recall just one part of.
this rule, it prohibits short sales
below the price of the last sale.

Thus, the very action the cus¬
expecting may defeat his

tomer is

a

at

sell
an

at

market

ordinary

short

limit

or

price

in using

purpose

sell stop short

a

order to go short below the
rent
of

market

tne

price.

If not

possibilities, he

that his short order

cur¬

aware

find

may

executed

was

at

approximately the level he had
anticipated covering at a profit!
If he expected to go short some¬
where beiween 74 and 74 %, actual
action, ' once the
stock
through 75 and sold down
74%, might continue in a se¬
ries of minus tick sales, or at best
zero minus tick sales occasionally,

market

broke
to

until

reaching

70, the first plus

tick sale occurs!
ber

Since the

mem¬

holding the stop order, which

becomes

market short order fol¬

a

lowing the 74%

sale, could offer
point above each suc¬
cessive minus tick sale, he could
not
possibly execute the order
at best

until

%

around

the

when

70

first

avoid
this possibility, the customer may
tick

plus

sale

instruct the
enter

To

occurs.

account

executive to

instead

limit short order

a

market short

order, once the
stop price of 74% has been
reached,,: This type of order is
called a stop limit order. Stop

of

a

orders such

cussing
in

as

have been dis¬

we

to this illustration are,

up

effect,

orders,

market"

"stop

been
at
the market angle being implied
in the plain term, stop order. Us¬
ing a stop limit order in this il¬
though

they

termed

such,

lustration

have

never

buy

the

sell

or

result from the.

would

instruction

say to sell
better, short,
when and if the stock sells at or

customer's
100

JKL

below
A second use of a sell

is to clinch

market order
a limit
are satisfied. If i
price of say 24 or 24 %, he rather to 20
%, then rallies to 23, this
buyers still demand stock at rising} buy it when, to him, it has demoncustomer might decide to raise
prices, the customer's sell order: strated sufficient demand to force
his stop order price from 20 %
will be executed. Stop orders are it decisively through 25. He feels
stop to perhaps 22% stop, protect¬
a
little more complicated.
And he wbuld want to buy 100 shares,
or
clinching thereby the
like market orders or limit orders,: even though he'll pay more than ing
greater portion of his profits in
there can be
price, only when it
or

after lower offers

the

close of the last market session of

stock

•

7Q5/

Wh

pxpri]tiftn nripp

fh

cutlpn Pr
f ® reason
ls that the customer 1S instructing
his 6tock be sold or bought <<at the

be

highest

(the

would

S2' Sd a Sj? Tf

lrtwict

to

79%-%,

order

79%

at

and

PM

GM,

in

market

at

respect

.

the

an

Wl11 act. Is thou.gh he had at that

member

another

enter

indicated

point per
share profit but believes the stock

,9P

quote at the post and is
"%-%." He offers "100 at
a

told,
1/2," and

has

17A' ?e

°J

re-

the

seLs through

.

,

,

GM

should

31

if

order

buy stop orders and
examples: Buy 100 GM 79 GTW. sell stop orders. Before giving you
This means that the client wants a definition of a stop
order, let's:
to buy 100 General Motors at $79 use an illustration
of the most

GTM

upon

res/4,
be hest prevailing short sale. Let's use GHI this
Pnce (the highest bidprice y.■The time, and assume the customer is
eution could have been effected. ™?i
9 n°thmg until RC already short at 70 with the stock
Example: Client instructs, sell 100
at
or l°wer. 1 he instant now selling at 61. The customer
could not have been

price

want their

a

the

or

The third purpose of a buy stop
is to clinch a profit on a

*

clients

He

to

means

higher.

ing at 24, has not within the past
specify a limit price per few months had enough demand
may, of. course, re-enter the
share beyond which they do not
to cause it to sell above 25.
In
same order with perhaps a minor
wish to buy or sell. Buy 100 GM
other words, every time XYZ rose
change, in its price limit the fol¬
75
means
that the customer is to
25, sufficient selling developed
lowing morning.
willing to buy only if he can buy to prevent it from rising above
A client may enter a day order
at $75 per share, or less.
Sell 100 that price and it soon declined to
at any time after the close of a
GM 85 means that the customer■;
below 23 again. Twenty-five was
market session. It will be in force,
wants to sell only if he can
get*an upper resistance level in our
that is, in the market, only through 85
or more.
Thus, in the case of "customer's
estimation
of
the
the close of the following market
the buy order at 75, execution at stock's market action.
He wants
session.
75 or lower is possible only if the to
buy the stock and is probably
An open order is one that re¬ bids higher than 75 are first satislooking for
a
substantial
rise
mains in the market indefinitely, fied.
If additional sellers come* eventually, but rather than give
that is, until it is either executed, in, the customer's buy order will
instructions to purchase it at its
or the client eventually cancels it.
be executed.
In the case of the_ current price of around 24 through

further instruction from the client.

Open

This

the first sale occurring
at or above 40 %. The customer s
purpose is clear—cover my short
position if DEF sells at 40 % or

will advise

This executed

orders.

til the close of the market session

close,

der

^st?mer instructed—when and if

The

Stop Open.

Buy 100

following higher

the

floor

cancelled.

order to

an

that when and if DEF sells at

®t®P ®^der becomes a market orfnstrucTtens. These fall der w,hen a sale occurs at or below
types: market orders, f
p Pnce> a buy st°P order
limit orders, and stop orders.
A becomes a market order wh*n a
market order, whether buy or sell, sale occurs at or above the stop
into
is to be executed at the best ore- P^
a either case, the customer
buy vailing price
Returning to our decldes the Price in his stoP order

Types of Orders

to

execu¬

ecutive, "When and if Radio sells
down to 17%, sell 100 shares at
the market." The account execu-

limit,

stock

ified.
a price higher than
preceding sale made at a
Now
orders
different
price — the
different their
price
price sale being the 49% sale.
into three

one

So he instructs his account

tive to enter

particular

sale being at

the next

of

expecting the stock to de¬

willing to consider his judgment
was wrong if DEF rises to 40%.

der:

fact, as we explained before, a

bond

He sold

since
Sell 100 GM 79% FOK.
If
We can now define a stop order
Jris nine points profit.
higher than the preceding the 79% bid had not been "hit" as an order that becomes a market So, he instructs his account execu¬
short seller's order could meanwhile by another seller, or order -wb®n and if the market tive to enter the following order:

sale,

lot

short

too

described earlier.

as

He decides that if cline, but he recognizes the possi¬
selling around 18, bility of it rising instead. He is

want to be sold out at the market.
He would instruct his account ex-

The client wants to buy or sell a

as

is 49%, a plus tick sale. And,

In

against

rule

Radio, still
should decline to 17%, he would

types, there is one other we can
discuss—the immediate order, also
known as the Fill Or Kill order.

lower

yet

The

it

himself

protect

£>reat a loss.

time-in-force

the sale preced¬ "takes" this
offer, it is withdrawn.
than the next The customer is advised his order
preceding sale made at a different is "out"
(cancelled), and that the
price.
quote is 79%-%. The client may
price

same

ing

market short, executed in accord¬
ance with the SEC's short
selling

stock in particular.

Buy 100 GM 75 GT 8/25.
Before

news would have
stock prices in general, and his
So he decides

on

instruction,

date

«

49 %

at

have to appear.

the

order

through Aug. 25,

t? the floor: Sell 100 RC 17% Stop
a
moment to reread the
trading post for the stock, and if ~?pen
^be member on the
selling rule and note that, not executable at that
moment, to "°®r» this rneans exactly what the

Pause

This

the

use

a

down tick sale. The

our

for

market

(45$)

tive

74

at

74%.

account

The
write

would

Sell

follows:

or

execu¬

order

this

JKL 74%

100

as

stop

Thus, when
below

limit 74 Open Short.

and if JKL sold down to or

the member holding this
limit order would immedi¬
consider he had just re¬
ceived an order to sell 100 at 74
or better short.
If he could exe¬

74%,

stop

ately

now ordinary limit order
higher, without violating
the short selling rule, he would,

cute this
at 74 or

of course,

do so.

But, if sell long

orders continued to force the

stock

the member could offer
the short seller's order no lower
down,

t

than 74.

principle of stop limit or¬
ders can be applied to the other
five purposes of stop orders, at
The

the customer's discretion.

Route of

The

When
ceives

listed

an

an

on

an

Order

account executive re¬
order

in

say

a

stock

the New York Stock Ex^

change, he writes it on his firm's
order blank detailing the instruc¬
tions in much the same manner
we have illustrated in our various

examples, and adds the
account

number

customer's

and/or

name

to

identify the order with the cus¬
tomer for whose account it is to
be executed.

The account execu¬

tive immediately
over

to

a

hands the order

teletype operator who

speedily transmits the order in
short somewhere around 77.
In
one of the abbreviated/forms we
The second purpose of a buy watching the stock's fluctuations, have seen, to the member firm's
stop order is used by a short seller he noticed 75 was a lower resist¬ home office in New
Yprk's finan¬
was entered. GTW or GTM orders
recognizes the possibility that RC to limit his loss on a short posi- ance level. Every time the stock cial district. There, without de¬
never mean good for a week
or may decline instead of rising in tion.
Let's say the client is short had declined, it had met good
lay, it is at once relayed by direct
month. If a client enters an order price. He could not forecast the 100 DEF at 39 through the execu- support (buying) around the 75
Continued on page 32
level.
The customer feels that
on, say July 25, with instructions Korean situation, for example, or tion of an order to sell 100 at the




32

The Commercial and Financial Chronicle

(460)

Continued

from

their

31

page

Their

account.

own

and

offers

the

narrow

bids

in

spread

this

up

relatively

situation*

simple

quickly

market

cries,

"Sold

the

motive, aiding in the maintenance
of
normal
price
continuity
in

Round-Lot Trading on

the
New York Stock Exchange

telephone wire to one of the firm's
telephone booths nearest to the
floor post at

(Stock

is

booth

which the particular

hanas

traded.

clerk

A

it to

trie

at

member who

a

quickly to the proper
post to be "in the market" for the
stock the customer wants to buy
proceeds

member

overhead

an

on

price

simultaneously

and

panel

requests

The

The

then

member

instruction.

tomer's

the

execute

ticker

who

operators
be

to

printed

of the three

usually

somewhere
trict.
or

Then

there

dis¬

another 350

are

called

members

so

space

financial

the

in

desk

just

Specialists.
a

will

orders
at

of

specialist

a

in

be

stocks

during

stands

sessions.

market

has

He

been

3,000

quote

telephoned

is

floor

is in competition with
registered specialists in the

request of their customers.

Meantime,
volved

both

the

in

in¬
have

section

written reports of their order ex¬

member

firms
the

to

relays

the

at

the

and

confirmation

As

1

for

ist,

execu¬

of

the

elapsed

time

trans¬

minute

is

from

New

orders, riare

such

executable

once,

ecutive

to the

until

the

account

in

handling

because

of

orders
the

is

Exchange,

slightly

the

on

day. They
There are

floor

divided

are

about

market

every

325

Fenner

who have "seats"

Averaging
each post, their job

the

1460-odd

traded, and 10 shares for
remaining one-quarter. Odd-

lot

orders

in

shares down to

&

one

nine

shares

down

in

members,
partners
of member
firms,'* who reside outside New
do not

.ship

actively

floor brokers. Other

as

bers,

frequently

■

of

partners

the

-

other

same

lot

"

reasons

their member-

use

>

mem¬

The

second

can.

called
the

$2

category is the

brokers

—

Exchange who

ners

of

member

not

firms

of

lot

function

primarily

to

of

$2

1

part¬

offering

other member firms
ices
>

are

as

extra

needed.

brokers

execute

or

orders

as

their

reserve

There

are

is

for

serv¬

brokers

approxi¬

mately 150 friembers in this

cate¬

gory, and the term $2 broker

by

orders

stocks,

years

ago

when

the

floor

broker's commission for executing
100
share orders
was
in
most




share

the

on

lots.

in 10 share lots.

active

other 25%

traded

are

units, and the
traded

are

Since

is

Generally, the less

stocks

share

Exchange is in

The

the

in

in

10

active

more

100

share

round-lot

rules

apply to both units, we'll confine
discussions

our

illustrations

and

to the 100 share unit stocks.

eral

Radio,

Motors,
hundreds

and
stock

ing

issues

unit

of

other

stocks.

350-odd

common

share

trad¬

Generally,

share

10

Gen¬

Pepsi-Cola,

100

are

unit

the

stocks

are

preferred stocks, though not all
preferred issues are so relatively
inactive

to

as

warrant

trading in

10 share units.

There

lot

where such

orders

orders,

offer side of

or

on

prevail¬

a

ing quotation, are held by two or
more
brokers in competition one
the

single
held
bid

others.

or

If

lowest offer

or

the

price, he would
in

orders

receipt by him.

the

order

But when rel¬

atively active stocks become
active,

more

because

of

con¬

into the market, the various types
of brokers will cry aloud the bid
offer prices in their customers'

other _brokers

as

enter

orders

the

on

opposite

sides.
The first of the three
round-lot

rules

nouncing

low

new

a

priority

first

bid

an¬

price,

offer
price, has
execution of his

the

in

broker

high

new

a

important
priority. This

is

the

that

means

customer's order, over other brok¬

similar

with

ers

tered

the

broker.

at

orders

"crowd"

Let's

proaches

Now,

with

who

after

suppose

75Vs.

a

the

first

stock

a

broker

order

an

en¬

to

is

A.

call

this

ap¬

able

to

The

75 Vs

because the lowest offer

odd-

75V4.

execute his

Now,

broker

customers'

brokers

buy order at
was

walks', in

B

lecturers,

a spe¬

odd-lot dealer, will

greater

detail

100

C

shares

three

brokers

Now

tion of customers'

market

A fifth

category
floor

of

floor

trader.

member

There

is the

are

only

about 20 of these members whose

function
"

•

it

is

'
.

to

buy
'!

or
:

■

v"

sell for
-

'

at

have yet

their functions and
operations and
the rules
governing their execu¬
orders.

walks

He, too, has

75 Vs

"Vs

into
a

75Vs.

order

an

long.

100."
crowd

buy order for
No sellers at

arrived, and
cry, "Vs
for
to

aloud

for

the

broker hastens to

a

with

crying

are

few seconds,

every

now.

much

B and C

ity—neither
the

over

seller

has

100

the

cide

B

75!/s

by

C

and

buyer for

bid

now

The

by matching—flipping coins.
winner of the

is

The

match executes his

And

let's

now

his bid,

renews

sell

Hearing

all
100."
the post

100

the

so

at

ker A would
to

be

sale

completed

floor—wipes out all
precedence in
Our

call

clears

the

priority and

time.

enjoy

75-V4.

you'll

as

re¬

Broker A walked

100.

can

ing

brokers

with

out his

price.

If it isn't, the sale

priority, and he, broker A
on
a
parity—in equal

would

be

standing—with brokers B and C!
This could

happen through a buy¬
rather than a

the

at

market,

seller at

the

the crowd.

market, coming into
hearing the

The buyer,

75V8-V4, is interested only
offer
price, although he
plainly hears the three brokers
each bidding Vs for 100. The buy¬
ing broker quickly says, "take 100
at
V4," thus creating a sale at

quote
in

the

75 V4.

Our

three

imme¬

brokers

diately renew their Vs bids, while
other

whichever

the next lowest

broker

offer,

which will win

under

the

will

the

The

offered.

last

sale

was

matching.

long order, enters the crowd.

He

notes

the

the

last

the

sale

fact

order

at

at

75 V4,

It depends

from

the

on

bid

(or offered,
might be) of each of

case

the brokers

The

competing for

all

rule

given

a

states,

brokers

shares

in

equal to

action

entitled

are

which

sale.

will

This

kers

that
of

amounts

exceeding the
a given trans¬

or

amount involved in

see

effect,

holding

to

match

to

participate in the
that

means

those

bro¬

holding amounts less than the
involved

amount
not

be

the

match

entitled

the

or

give

in
to

you

the

will

sale

participate

in

particular sale.

let's

example,

an

Broker A, the first bidder

assume

a

first to

the

was

high

new

bid

an¬

price.

Broker A's order is for 100 shares-

Broker

then

B

to

buy

walks

but for 200 shares.

arrives with 300
with

seller

with

in

the

at

an

price

same

Broker C then

shares, and bro¬
shares.

400

No

Let's

taken place.

sale

say

a

arrives

and, learning
quote, says, "Sold 400." Bro¬
ker A will buy his 100 because
he had priority, and no interven¬
ing sale had caused him to lose
that priority. There are 300 shares
remaining. Broker B wanted only
200
and
is, therefore, excluded
now

the

from

Brokers C and D,

match.

a

who

equal or exceed the 300
would
match, unless broker C
could
definitely establish
his
precedence in time over broker D.
Let's
take
another
example.

and D are offer¬

Brokers A, B, C

ing respectively, 100, 200, 300 and

in

and

400,

assume

situation,

this

let's

previous sale at another

a

fore

parity, subject only to
rule. When a
at the price of their

a

on

the floor. All
there¬

cleared

had

the size-precedence
sale

occurs

will

matching

deter¬

be

mined by the amount involved in
the
sale—those equaling or ex¬

ceeding the amount being entitled
to match.
So, let's say*a sale is

wanting to

broker

not

created

he

has

buy 100 shares at the offer price.
All brokers offering, namely A,

that

instructions,
a

while

and

Vs-%,

quote

tests

his

executing

price than

and

C

B,

by

which

a

sells

to

match

will

D

one

see

bidding

this

to

If, however, the bidding
200 shares instead

the current quote

broker.

He cries "100 at

broker wanted

just

as

der
a

market

ting
tion,

would indicate.
V4." He does this

though he had
sell

to

100

at

order

any

a

75 V4

limit

or¬

instead of

sell.- Not

to

this

in

response

get^

situa¬

selling broker quickly
says, "Sold 100," and awaits iden¬
tification of the broker, one of the
three, who will buy from him at
75Vs. Brokers A, B and C match.
One of them wins, the other two
the

lose.

buys
The

The

the

stock

losers

the

from

match

the

renew

parity,

on

of

winner

their

because

seller.
bids, still

every

com¬

Now

let's

rule and

the

develop this priority
sale clears the floor

at

holding that order, the broker with

time we'll say
first one to bid

the

to

a

the

little

further.

We'll

start

again but this
that broker A, the

beginning

Vs.

buy 200 shares

has

an

of

broker

100,

cluded

his

was

100

would

A

less than the 200 in-«

volved. Brokers B, C and

match,

be ex¬
because

match

the

from

D would

of them winning and

one

thus, selling the 200 shares to the
broker creating the sale.
If 300
shares were involved in the sale,

only brokers C
entitled
shares
would

ing

or

And„

involved

execute

would

he

D would be

and

match.

to
were

his

be the

order

only

400
D

if

broker

because

one

equal¬

exceeding the amount in¬

volved in the sale.

pleted sale clears the floor.

rule

sizing

mar¬

ket

hears

match

excluded

sale.

offers,

customer's sell 100 at

a

to

be

price

Now, let's say a selling broker,
with

competing brokers

would

the

it
only

that

four of these brokers were

75*4, just effected.

and

by the three brokers, A,
C, and hearing the offer
by the broker or specialist

the

entitled

others

sale but,

a

develops

of

be

lose

or

at 75%,

"100 at %." The quote
75V8-%, 300 wanted and

now

100

auction

determine

size-matching rule,

sometimes
certain

to

holding

say

announces,

is

given

a

another

one

yet

the

stock

in

market situation will match coins

has

clearing the floor rule would wipe

Now,

conveniently describe it as
size-matching rule. Compet¬

the

100" bid.

bid

remaining

A sale clears the floor!

in first and announced his "Vs for

He, thereby, established

longer

no

the

bearing in mind the priority rule,
the sale clears the floor
rule,
let's bring in the third rule. We

D

his

would
on

and

ker

his priority—if the next sale is at

offered. Bro-

buy this 100 shares,

priority

order

starting quote,

was

100

but

sure,

(or offerer)

every

in

as

the sale had only 100 shares. Bro¬

nounce

V\

order,

the

C,

has

beginning again and look further

at

market

to

and

priority—on the next
sale, if it is at his bid price. Let's
say the next sale is at his price,
riloVs, but the seiler who created

To

back

go

A

into the second rule that says that

B,

at

between

his customer.

order and the loser

wanted and

ker

willing

unbiased method

fastest, most

bid at Vs

sell

another

method

some

<t00

as

them, which of the two would be
the

B

amount of shares

price,
enjoying
equal standing, would have to de¬
brokers

Brokers

•

par¬

precedence

now

shares.

time

on

crowd

the

at

B's

now

any

If

clears

or prece¬

as

are

other.

entered

sell

to

such

better

odd-lot orders.

in

C.

over

is,

priority

time,

order

Broker

describe

in

dence

sell

execution

an

the floor of any

That

bidding Vs for 100, broker
Of course, broker A wasn't

two

Your next two

floor.

broker

them, all
under definite rules
governing the

cialist and

the

clears

exe¬

to

of

Every

of

rules,

and

round-lot
trading
rule.
completed
transaction

portant

possibility

are

B

introduce another im¬

we

the

Let's

the

prices

Now,

market

must execute

sells

Brokers

first

the,'Exchange.

who

C.

C quickly renewed their bids by
crying aloud again, "Vs for 100."

disclosing

In

dealer

without having to
that
is,
match
with,

brokers B and

This changes the
75V8-V4, and gives the
broker who just bid Vs priority
over
any
and all brokers who

to

bids.

so

did,

compete,

Upon

100."

for

quote

announce

ap¬

buy

learning the
quote, he immediately announces,
"Vs

A

one

the "crowds" at the posts with ex¬
ecutable

brokers to

first

bid—because his custom¬

broker

er

orders, and will compete with
another

the

was

the other two customers—and be¬

even

a

tinuous flow of customers' orders

or

A

Thursday, August 3, 1950

.

a

say the specialist,
the orders at the highest

execute
of

other

broker,

all

broker

had entered his order ahead of

er

important rules

governing the execution of roundthe bid

as

.

tne previous
examples, then walk
in and bid Vs
respectively, each
for his 100 share
buy order. The
quote is 75Vs-V4, and the size is

awaiting another seller.

three

are

already
buying
broker A. You are right,
the

similar

arose

many

100

market

have

you

guessed

because

his 75 Vs

simple

a

and

would later enter the crowd with

conformity to odd-

when

or

rules so re¬ with an order he just received,
order for odd-lot cus¬ reading to buy 100 at 75 Vs—the
selR the odd-lot dealer same instructions but from an¬
buys from them, and when odd- other, customer.
Broker B adds
lot customers buy,- it is the odd-1 his voice to broker A's and now

brokerage facilities to the public.
The

listed

sues

situation,
correctly

share

units, or

one

execution

•

odd-lot dealer

lot

so-

members

are

proved

to

to

trading

tomers to

execute their customers' orders.
'

in strict

order

quire.

member-

firms,

10-share unit

cuted

99

share in stocks

that are traded in 100 share

the New York Stock
Exchange.
There are an additional 100 or so

York-and who for various

from

amounts

on

-

stock

of

earlier, the unit of trading in ap¬
proximately 75% of the stock is¬

100

of

equal

unit

and

rules, to execute his order. And
for

designated by the Exchange for a
stock.
As we mentioned

quoted 75-^4.

issues

Beane,
membership

or

100.

the

commission

bouse brokers, that is, partners of
member firms,
such as, Merrill

Pierce,

orders,
market

as

the

of

75 Vs

ing the first, he had priority, and
was
entitled,
under
Exchange

Rules

given

or

over

quarters

follows:

as

exist,

that
pro¬

orders

means

shares

of

arpounts

multiples

either 100 shares for about three-

perhaps between 800 and 1,000—

Lynch,

customers'

And

market

Trading

lots

-

is to execute
customers'
orders
for less than the number of shares
in the unit of trading which is

of

whom somewhat less than 1.000—
work

His dealings for
are
restricted

Another type of member is the
odd-lot dealer, of which there are

1,375 members of the
Stock

own

philosophy the prior

of

about five to
are

the

prices fluctuate.

Members and Their Functions

York

the

implies

offer for his

or

where such orders

fluc¬

prices.

There

Round

Exchange rules which have

their basic

as

execution

tuating nature of stock and bond

New

This

of

registered

of

account

own

under

the

necessary

constantly

is

the

his

executed order is returned. Speed

*

each

he

which

account and risk.

ex¬

of

report

fair and

a

in

market
in

stances, to bid

usually only two minutes elapses
from the time the customer gives
bis instruction

specialist's

price continuity
minimizing of the effects
temporary disparity between
supply
and
demand.
Thus,
to
maintain normal price continuity
in a given stock, a specialist is
frequently obliged to a reasonable
degree, under existing circum¬
and

Tele-

at

order

of

market

as

the

specialist.

a

maintenance

typing,
telegraphing
and
tele¬
phoning travel at the speed of
light—186.000 miles per second.
Where "orders,

customer's

dealer,

a

stocks

con¬

York.

will
special¬

once,

stock.

as

sumed, and this regardless of the
distance

Round-Lot

cus¬

always be in the market for

As

out-of-

less

a

at

to the

over

that the

so

orderly

in

any

a

in

cedures in round lots.

with

Exchange floor,

half

executed

function is to maintain

town office to the

than

by

that

transaction

order from,

an

with

will

time

same

another
post

a

entered

turn the order

the ticker tape.

appears on

mitting

the

just

the

where

Thus,

arriving at

be

cannot

customers, arriving

approximately

post

tomer, and learning that the order

Rooms" where the reports of the
executions of both orders are teletives

the
traded.

order

an

"Order

typed back to the account

of

member,

reports

Office

Home

member executing

any

is

stock

ecutions, buy and sell, and a tele¬
phone clerk of each of the two
back

by

re¬

customers' orders. To be continu¬
ously in the market, an order to
buy or sell a given stock must be
represented at all times at the

,

brokers

transaction

commission

floor

same

ceived

by direct wires to obtain quotes
on

broker's broker, he receives

a

bonds.

auction

to

us

units.

the

post to a central quotation
to which member firms call

room

stocks and

stocks

As

the

from

both
leads

most cases,

tickers throughout
interest of better executions of
the country.
If, by this sale, the
brokerage house customers' orders.
quotation is changed, the
new

mately

orders

Exchange is in real¬
auction market place for

an

a

particular section or
one
of the posts at

a

of

handle

a

house

commission

the

as

ity

who

Stock

other

approxi¬

on

York

is

registered (approved) by the Ex¬
change as a specialist in the stocks
at his portion of the post and, in

the

cause

fice

all

re¬

an

reports

bonds, traded in other parts of
Exchange's floor.
The New

broker

the

the term

which

able

floor

a

was

describe these members whose of¬

sections

Exchange employee,
the
transaction to the

porter,

sale

is

If he

order,

this

said

executions

number,

at

a

opposite side of his execution. We

the

a

floor members and the $2 brokers.

or

in

little higher, but
$2 broker is still used to

traded

accordance with his cus¬

offer in
to

bid

proceeds to

category is the
members slightly

brokers,

order

quickly-fortncoming identification of which of the

30

The

arrived

newly

bond

sell

awaits

exe¬

three bidding brokers was on the

the. Exchange.

on

his

cuted

over

such

highest bid and the lowest offer
speedily furnished by
other
members.

average

listed

A sixth and final

specialist will execute orders en¬
trusted to him by other members

quote

a

Radio?"

"How's

saying,

by

last sale

the

notes

sions

now

stocks

the floor commis¬

$2. Now,

They have two functions, one as
broker's broker, the other as
dealer. As a
broker's broker,

the post, the
price

sell. Approaching

or

cases

100," signifying that he has

quotations of stocks, thereby,
despite
the
short-term
profit

.

order

instead of 100

Now just to

add another factor
size-matching rule not yet
explained. If a broker wanted 500
in the

shares, then
kers

none

of the four bro¬

offering would have amounts

equal
shares.

or

In

exceeding
such

;

a

t h i s
situation,
:

.

500

the

'

Volume 172

Number 4930

.

largest amount is entitled to
cution first.

D

would

That

sell

his 400

leave

to the

shares.

of

100

be completed.

yet to

exe¬

This would be broker

would

who

The Commercial and Financial Chronicle

.

.

the

500

We return

equal or exceeding portion

of the

size-matching rule. Brokers

A, B and C would match to deter¬
which of them sold

mine

maining
wanted

100
500

the

to

shares.

the

will

after

find

of the

one

mimeographed write-ups
distribute

who

broker
In

re¬

will

we

lecture, you
additional exam¬
our

many

100

shares wanted, and therefore
protecting for stopping stock,
the selling broker—the second one
who just walked in, immediately

hits

the

order

In other

to

get

not

priority

is

at

ority

his

is

the

on

if

sale

next

price; if not, the pri¬

lost—a' sale

the

clears

was

Sizes

on

a

the order

at

to

the two

sold

the

his

are recognizing the value
advertising and merchandising
important adjuncts to sales.
They do need help, however. I
spoke with at least 60 of them

as

buyers

stock

the

to

and all

two

buyers.
After
this sale, involving 200 shares, the
stock, would

our

(assuming this

quoted

49%

vertising

bid

the next high¬

was

est

subsequent executions at the same
price
are
determined
by
sizematching. All those equaling or

conditions

ate.

exceeding match;
if
none,
the
largest
amount
executes
first.

orders

cleared

or

priority

when

has

has

floor

a

been

broker has been

a

executed his

order,

Except for relatively minor tech¬
nicalities these are the rules, in

brief, governing auction market
procedure—round-lot trading—on
minutes

the

on

which

under

possible.

leaned

stopping
first re¬

The

the side of the

on

is

This

has

is stopped.
Hence, the
against which it is stopped
been

not

executed.

an

done

by

taken

is

stock

which

order,

facility,

a

not

practiced

is

brokers whenever conditions per¬

broker with the
another
broker,
usually the specialist, to guaran¬
tee
to
a
customer the
price at

to-ad

un¬

not

have been executed at the time it

the

reached the trading post.

of

Hence,

had

mit.

been

specialist
the

then

endeavors

execution

better

a

Having

guaranteed, the broker

so

tain

a

customer.

depend

on

next

or

ob¬

to

price for

Usually, this will

the

in

what

orders

come

in

as protection against this
sibility.

The

this
100

shares

shares,
be

broker walks

a

sell

to

100

long.

As

in

with

shares

the

the

at

quote

order

an

market,

indicates, he

is

sell this 100 at 50, because 50
the highest bid.
After testing

at

50 %

can

order

to

if

see

could

be

this sell market
executed

price, and getting

no response,

then asks

broker

that

at

the

the specialist if

he would guarantee him an execu¬
tion at the 50 price. The specialist

and, in effect, pairs off the

agrees

sell

at market

order

with

the

two

orders

at

buy

without

effecflng

one

of

50, but
sale.
The

a

specialist now quotes the stock 50
bid, offered at %, 100 wanted and
100 offered.

The 100 wanted is the

remaining 100 of the 200 originally
in the 50 bid.
50 Vz is in

The

100 offered at

reality the market order

of the selling broker, being shown

though it
sell at 50Vs.
as

"■

were

limit order to

a

One of two possibilities can now

occur/

The

in with

an

stock
sell.

will
If

he

he

will

the

no

which

order

than

worse

walking

an

50.

to

buy

stock

will
was

be

The

or

at
the

stopped

execution

at

customer,

through the facility of stopping
stock, and the cooperation of the
brokers concerned, received a bet¬
ter price' than
that which pre¬

vailed

entered.

was

is

longer

no

sell

the

at

order

This

time

sell

order

Th/e guarantee at 50
necessary

was

won't

his

because the

executed

disturb

the

at

50%.

status

must

of

by

for

400

because

is

the

be left free in the event

in

sends

the

two

cus¬

cancellation

in¬

This

third

condition

governing

c

Let's

now.'

take

A

instead

'given
100

the

selling

of

a

100.

possibility

broker

walks

buying broker.

the duote

and

other

and

Since

50-%,

size:

there

in

He is

is




only

ad-

an

in the U. S. A. to

I

was

never

international
was

upon

opposite
side, the side against which a
newly arrived order could be exe¬

enthusiastic

so

about the future of

business—

our

advertising

as

—

from

return

my

all

complaints
costs

is

am

were

country
that we

a

sure

that

say

Italy

scooters.

of

the

travel,

is

the

They scoot
when you

directions, and

things

low

mortality

is unbelievable.

rate

Unfortunately,
Italy

is

am¬

in

various

kincfs

required and every
having to be recorded.

of

check

We had

entered

sooner

no

hotel, and cashed

our

check at the

a

tourist rate of exchange, when not
more than 10 feet away from the

I
was
approached
by a
banker-type looking gentleman.
In perfect English he Offered to
cash any
currency I
had at 45
cage,

pesetas to
checks

dollar, and travelers'

a

at

40

realizes

one

setas

to

dollar.

a

that the

When

common

la¬

approximately 50

borer makes

pe¬

a

week, you get some
of the problems in Spain.
In

spite

of

idea,

import

severe

re¬

strictions,

one sees many luxury
and cosmetic goods in the stores.
Most are manufactured in Spain.

Many bear American trademarks
and

of good quality

are

sonably

priced

remained

and

the

well-coordinated

could

lieving that business

well

be

rea->

If

boulevards

better

the

near

and

foreigners.

to
on

Real

advertising

to bring in

dangerous

dollars—forms

was

regulations and

currency

was

being

one

advertising

neither

channeled.

nor

hotels,

deceived

he.

into

be¬

was going on

such, are few. The as usual in Spain. In the smaller
and
brokers, which oper¬ towns
industrial
districts,,
group of publishers, and however,
just keeping alive is
really
representatives,
not quite a feat.

are

a

service agencies.

portant

Radio is

medium

for

an

Broad social changes are taking

place

in

these

least of

markets—not

which

is

trend

a

the

toward

standardization, brought about, in
part, by rationing.
Because of
uniformity in consumer
goods, and their use, advertising
greater

be

increasingly

to build

One

called

upon

in

the

"Gallup" poll, is second
and movie shorts

third.

more

as

primary objectives
to review the fa¬

was

associates, so as to
implement our policy of
controlled, well-thought-out ad¬
vertising campaigns and promo¬
tions. In this, I believe, we have
better

has

staff

competent

a

know, is

Palace

Hotel

service

still

large

and

offers
rooms,

latter

displays.

Italy,

country

of in¬

their

forgets to ask the waiter the price

a

dividual

shopkeepers

and

and

are

counters

One thing that startled
was

old

courtly

at a reasonable price.
food, however, is something
again.
The menus are ail
printed without prices arid if one

great opportunity for

a

of small

use

you

the

the

There is

us

small.

in Italy,

the great waste of money by

Their
else

of

a particular dish before order¬
ing, he can be assured that its cost

will

jar his pocketbook.

Italian manufacturers, who
simply plaster their names all over
the country, or in press adver¬

Operating a business in Spain
today would turn normal people's-

tisements,

Spanish

many

mention

does

without

the

of what their

slightest

product is,

costs.

or

From

our

conditions, our
there is doing good busi->

and

ness,

a

importance,

are

economic volume sales.

of

In spite of these

agency

Press, according to "Dosas," who consisting of 25 people. In Madrid,

windows

and wanted!
1

im¬

consumer

products.

I

this

trip. I know our services, when
properly understood, are needed—

of

the

country
in

I

now

conducts

trip

on

on

bicycles,

could

it—they eagerly welcomed

cilities

apparently

but

gray,

seems

can

it.

take

the

Everything

to be black market.

Amer¬

ican

this

country, where ad¬
is so haphazardly han¬

vertising

hair

cigarettes are not allowed to
sold, along with most other for¬
eign products.
Nevertheless on

be

dled, we went to that compact,
business-organization called Swit¬

old

zerland.

skirts

There, people work hard,

live well and enjoy themselves in

each

street

women

sit

corner

innocent little-

with voluminous black
on

Step

their

stools

selling

belief, hotel management com¬
prises only 5% of Swiss business,

for a
pack of Camels, Si Senor! They're
yours for 12 or 14 pesetas, depend¬
ing on your bargaining ability.

quick look at each

44%

being

Ask for

70%

of

following the stopping of a
large quantity of stock, protected

First,
we went to
Italy. I had a bit of
nostalgia going into Naples, for. it

by

had been

cuted

but

would

be

which,

if

stopped.

This

is observed

condition

possible,
latter

dilemmas that might occur

avoid

if,

than

more

half

available

amount

on

the total
opposite
in an even

the

side, there next comes
larger order.
Only a small por¬
tion of this larger order will be
executed

against the small amount

remaining

that

against .the

first

not used
order that was
was

stopped.

Let's take

covered.

we

20 years since see¬

over

this

ing

a

that

country

port.- The

lovely

dock,

with

more

efficient

its

is

is
anything we
Naples proper

than

dirty-looking as al¬
beautiful as ever,

and

poor

Capri

ways;

new

modern cranes,

have in the States.

as

and all the old stones look

the

this execution will go the

With

been successful.

primarily to

difference

only

exactly
Really, the

in Pompeii.

same

here is that the
repute was so

a

quiet

tors

had

"stopped
out," that is, executed at the guar¬
anteed price.
To show the full
amount involved in this

seeing it
pair.

would

will

the second

cause
one

be

whose order

be

stopped—to

his

execution

large sale
customer

could

complain

price.

not

about

This would

tourists

have

to

The

are

the

that the
going to

pleasure

of

because it is under re¬
before

week

pected.

GI's

year

forego

crowded,

was

the

by

this

be

ex¬

same

old

to

the

hear

You

Rome

Easter,

was

as

report stories, depending upon where you
for a smaller amount of shares are in Italy. If in the north, the
only trouble with the country is
executed
at the first execution
price than was printed on the the Southern Italians; if in the
be

because

he

ticker tape.
fault—in

received

No

one

a

would be at

fact,

all
brokers
in¬
volved, had done the very best
under the circumstances, but the
dilemma

there
total

if

would

on

than

more

amount

stock

an

nevertheless

were

order

half
used

be

the

of

to

coming

stop

in

on

South,
those

everyone

in

called

dressed
air

that

and

works

separate

People

Rome.

,

are

filled

95%

meal costs 600

You

to

with

t

—

Ste¬

phen H. Archer has become

con¬

nected

with

Rand Tower.

J.

M.

Dain

&

is

an

Italians,

a

1,500 lire, which

Italian-made

see

"nailons,"
Unfortunately, these

Joins J. M. Dain
MINNEAPOLIS, Minn.

well-

prosperity.
Even in offthe-boulevard restaurants, which

swelled

to The Financial ChroniclS)

are

there certainly

of

is $1.50 to $3.50,

the opposite side.

(Special

except
universe

misunderstood

to

be

nylons,
everywhere.
are generally
DuPont

ny¬

lons.

Cosmetics, luxuries—in fact,
everything—can now,be bought in
know,

can

Thanks to

be
a

secured

rent

at

industry;

carton

a

ask

6 cartons and

or

small

no

illusions

city. The sardines-

about

easy

to

was

be

persuaded

and worked

a

far greater

extent than

to

the

case

a

forgot to
plus

a

run

last year, and this>'

slight drought, slowed down;

business
is

short time ago.

somewhat, but everyone
optimistic for the coming year.

This was one country where your
distributors
were
particularly
requires more than dis¬
thirsty sponges, and sought advice'
play of a fair. It requires adver¬ on the most minute
marketing
tising, and Switzerland certainly questions.
They wanted manufac ¬
has
more
per
capita than any
turing advice too, but in this, I
other country.
Getting an honest must
confess, we do not profess
appraisal of publications, however, to be
experts.
;.
is not easy. As advanced as Swit¬
The
people are getting along
zerland is in other respects, adver¬
well, they work like Portuguese
tising-wise it still operates, with
have always worked, food prices
the exception of very few agen¬
are reasonable, and it is one coun¬
cies, on the basis of brokers, who
try where there is an over-abund¬
actually
represent
a
group
of
ance
of
houses and
apartments.
newspapers.
The better distribu¬
Our friends
were
so
hospitable
tors, those who know our meth¬
that when we left there was a
ods, realize that such agencies are
regular funeral procession with
inadequate to properly service a
six loaded cars taking us to the
client. You cannot be a buyer and
airport.
We almost* missed our
a seller at the same time.
~

Selling merchandise in Switzer¬

land today

plane,

saying

goodbye;,

to

our

.

Italy and, ,import licenses, as you

Co.',

to

people live in

-and

up

The Swiss

had

over

It

devoted

the

common

sales and knew that the customer

"admired"

stopped.

Contrary to

way.

papers.

they will be produced from that
businessmen, in same black skirt and at a discount.
spite of the market being filled
Advertising in Spain is of good
with everything under the sun,
quality by and large. Window
are carrying on with
a quiet op¬
cards in Spain have high value.
timism, but the boys still go out In
spite of the hospitality of our
for their rifle practice, up to the
many friends in Spain, it was a;
age of 50 every Sunday morning.
genuine relief to reach Portugal.
Basel had a large sample fair
Lisbon is a sunny, picturesque,
while we were there and the gen¬
place with hospitality that matches
eral feeling was that the exhibi¬
the charm of the
towns.

famous house of ill

first large order, all of which was

either of the two 100 share orders
to buy at 50 since no sale has yet
occurred at the 50 price.

available

of my

greater than half the

was

as

stopping of stock is that, gen¬
erally, stock will be stopped in an
available

restaurants

are

a

amount

total

ma¬

high.

agencies

the

no

heavy

their

Whereas Denmark

ate for

will

structions.

too

that

were

majority

prove

but

seller would be

a

This

the other of

or

—the

buying

a

buy

seller

guaranteed

or

want

represents

And

market

broker

either

customer,
50V8.

next

executable order in this

400

other

heard

turning out
The
only

month-to-month basis.

the

to

the maximum that could

shares.

100

the

work

help.

represented

was

and

stopped

tomers

The offer is for 100 shares, but in
this example we are going to be
concerned with the bide side. Now

pos¬

is

up

of them

or

were

by two customer's orders, one for

bid

by two orders, each for 100 shares.

stopped

shares

500

one

represented

be

sales

advertising is cumulative and
that, therefore, it must be con¬
sistent, long-term, well-integrated
and
planned—and that statistics

yet

including the largest order on
opposite side. Thus, if a total
500
shares was bid for, and

given stock.
Let's give you an example. Let's
say a stock is quoted 50The 50
is for 200 shares,

condition

second
will

stock

cially in
chinery.

of

the oppo¬

on

a

testimony to the rapid
that the Northern indus¬

When shown that the effectiveness

need

you

site

which the customer's order could

place.

than/one order

more

It permits
cooperation of

execution

no

was

consider the speed at which these

number

be cancelled
at any time.
If instructions are
received to cancel, this must be
since

Fair

of

forth

chandising and sales. A surprising

executed orders may

ping

And

In their desire for

The

Dunn.

trial part of Italy has made—espe¬

backwards to cooper¬

over

by the hand, few of
them really know how to coordi¬
nate and plan advertising, mer¬

stock

facility, "Stopping stock."
Stop¬
ping
stock
bears
no
relation
whatever to stop orders.
Stop¬

a

Unless led

necessary
because stopped stock
does not create a sale at the time

the

sador

future.

market

(guaranteed).

good fortune of
being invited to the official open¬
ing of the Milan Fair, and attend¬
ing a luncheon with our Ambas¬

on

that it

275

restaurant

a

the

help, many
figures and
asked us to stay extra days to help
them lay promotion plans for the

opposite to the order that is to be

stopped

out

over-all

brought

quires that there be at least two

order

the New York Stock Exchange.
Now just a few

is

stop

work

a

merchandising
promotional plan—they

and

costs

had

splendid

were

strict

60,000 lire

on

l

We

.

recovery

through

we

bridge in helping to
sounder

When

that

—

example,
lire.,

ad¬

your

"on-the-spot"

associate

bid), offered at 50V4, the price
of the offer in the original quote.
Here,
briefly,
are
the
three

floor.

integrated

we

living

are

the inflation and the high cost of
some
foods.
A kilo of veal, for

When

like sponges.

were

how

told

be

the

had been warned that Spain

month, about $100, in spite of

per

of

time the second sell¬

broker
of

of

one

same

markets, too.

It is encouraging to see that
European manufacturers and dis¬

It is executed at 50, the
originally prevailing bid price. It
sold

limited the cities

are

tributors

price.
is

frequency

Recognizing Value of Advertising

worse

a

and

in other

at
this sale.

stopped

words, it was not possible
better price, but he did

execute

other

it

order

in

and ritual of the 17 th century. We

My European Trip in 1950

his

executes

is "stopped out''

50,

ing

has

They did look well-dressed and

4

page

33

ple—served with all the decorum

this price

customer's

lows:

offerer

from

food

by selling his
stock to one of the two buyers at
50. The first selling broker, whose

the round-lot trading rules as fol¬
or

and

50, bid

at

at the

bidder

Continued

no

ples further illustrating the pri¬
ority and size-matching rules. In
summary, we can briefly describe
The first

(461)

a

price.

freeze, people in

Spain

Depressed

-s

'

.

From cold

Switzerland, we flew
Swissair to Barcelona—a trip
which took only 3V2 hours. The

by

weather

in

Barcelona

much

was

not

better, and,; in addition,; a
heavy cloud of oppression seemed
to

friends and -yours,.-X

hang over the people.

.The

dailies

-o

in ^Portugal -;a i;e

there are A acceptable
magazines.., Commercial radio.. is

good

and

available

(

on

the

three

stations

other than the National, with

government provision

Continued

the

that all inon

page

34

34

(462)

The Commercial and Financial Chronicle

Continued

jrom

Here,

stores

from

earned

must go

coam.erciais

30

uy

to improve L.e suuv-.

Recuperation in France

has

We flew to Paris, wiucn xs only
hours

picturesque
food

Paris

all

and

Perhaps

it

away,

wiui

that

from

wiui

goes

sheer

other

than

iViu^i

countries.

can

the French character.

to

who

us

stand

the

this, just

of

understand

as we

ta*e

weir

politics.
The

and t..e fac¬

we saw

visited

we

all i.ara at

were

optimiSiii was every¬
where to be seen, in spite of cer¬
tain signs that business was taper¬
ing off after two years of remarKwork,

and

able recovery.
The

is stable and
high.
The old dinners I used to
buy for 8 francs "prixfix," now
are
500, but there are still little
price

level

holes-in-the-wall

where

is

good and one can get a dinner
of
four courses
for
275
francs.

Incidentally, I won
champagne
from
a
Frenchman

wealthy

said

who

of

bottle

a

edible

an

dinner could not be found at that

price.
France

you

is

little

one

which

today

trick

has

in

proved

profitable.
If, by chance,
were
renting an apartment

befofe

the

$200

a

year

rent

it to

and

war

paying

were

for it, you could now
eager-beaver Amer¬
ican for $200 a month and retire
to

in

villa

the

keep

in ample luxury—if you
Frenchman.

you

are

a

question of know-how, but those
are

good.

active, find business
There still is a two-tonow

three year wait for
to

secure

but

if

walk

blocks, how¬

15 to 20 acres
of brick and rubble meet his eyes.
ever, an expanse of

No

reconstruction

We

destruction

evidence.

that this

informed

were

in

is

done one

was

vast

night in

six hours.
Here

the

dressed

than

and

xurt

people

they

along
with

not

merchandise

in Frank-

are

the

vards the stores
but

main

boule¬

well stocked,

are

much

as

better

are

American

finds in Frank¬

as one

friends
you

Renault

a

in

idea

some

edibles

in

the

of

supply

in>

and

drive

you

off

one

the

the

old

as

Havas

wjhen this government
practically controlled pub¬

agency

licity in the market.

There

the States, it takes a good lead of

and

for the British

one

agency

guidance
to

on our

part to keep them

well-planned,

a

coordinated

stricted

in

size,

becomes

soon

bicycles

zone.

the streets like
noon

The

at the

This

the

was

first

really

oughly bombed city
it

and

sight.

is

rather

least

At

buildings
block
In

have

the

been

seen

depressing

quarter of

a

practically

on

thor¬

had

we
a

a.m.

the

every

badly damaged.

Frankfurter

Hof

Hotel

where we stayed, they have only
repaired the servants' quarters and
we

had

hotel

In

six-flight climb to

a

our

tion

of

room.

Frankfurt, forgetting the damage,
one
might well be in the main
street
the

Des

of

store

Moines, finding

windows

the

in

same

American products we have here.
Few Germans, however, can af¬
ford

them.

Western

Germany,

particularly in the manufacturing
towns around Frankfurt, has made
a

clowns

more

rehabilitated

than houses

Germany
comeback

or

more

within

to

3V2

ismaking

as we

recovering,

a

strong

recapturing a number of their
European markets. This, rot onty
because
I've

of

been

quality, but
informed thev

derselling the U. S.

and




because
are

un¬

England

wishes,

There
town

the

all
In

stores,

are

stores

through¬
buy

can

with

dollars.

glass and

ceramic

Dane is rather put upon,

a

most

marked

of

the

for

better

export

items

only,

are

which

that you can only buy them
with dollars.
means

From

by

recent

a

the

School,
mark

ing.

study conducted

Copenhagen

Business

it is apparent that Den¬
appreciates the power of

promotion,
the

it

as

national

invests

income

This is

a

in

1.4%

of

advertis¬

significant figure.

heard

Americans

May,

had

begun

of

machines,

American goods
is much in the

or

way

other

off-the-floor

Although
can

of

movies

and

excep¬

As

opera.

a

one

/

anywhere

eiiican

in

Europe.

for

reason

the

has

ad¬

be seen,

few

there,

of food from

behind lhe Iron Curtain.

235

over

combined
The

papers

circulation

biggest

of

single

circulation of 235,000.

a

feels

certain

a

uneasiness

Sweden.

Perhaps
when they

displayed

their beautiful
told

are

you

that

see

best
you

duplicate of what

a

above

ground

ground.

In

of

case

whole hospital

is

be moved

underground and will fit exactly
as

it does above.

you

They

way

took

the

day train to Nor¬
in the hopes of seeing beau¬

tiful

I

scenery.

was

reminded,

in every detail, of our own North¬
west.
The way the lumberjacks

dressed, their

mills and their

saw

all duplicates of ours.
(Or should I say, ours were dupli¬
of
theirs!)
Perhaps
I've

camps were

cates

overstressed

youth

was

this

detail,

but

my

spent in lumbercamps.

Oslo

was,
celebrating its 700th
anniversary and was gayly decked

out.

In

rather
is

than

somber

in

This is

if

spite

probably

struct

and

substantial

their

and

Companies
market

tonnage

find

you

items.

very

would

many

care

to

goods
are
either
or of inferior qual¬

ambition

Sweden,

the

business

is

capable.

This

sound

one

strictions

wegians today is to
crowns

most

secure

to

visit

now

sdon

as

be

London seemed

lifted

when

import

has

ant

been

re¬

One could

thing

he

practically
in

the

any¬

restaur¬

the

least, the British people now
no hardships.
There
is an air of quiet optimism, for,

are

enduring

as

know, their trade balances
rising and they actually have

you

ended

the last three months

dollar
All

mously
than

of

the

before

high

Nor¬

enough
Stock¬

unani¬
better

were

the war,

prices

of

in

spite
of

much

The same

un¬

derlying tone of confidence, that
there will always be an
England,
and a free England, was felt by
me

; ■

.

living

in

years

that
not

the

.

same

when I

as

was

that

lovely
country
Unfortunately, I feel

ago.

the

future.

case

order

you

London,

I

will

laborers

in

England

are

working

allows,

no

gin

higher

than

68
proof.
Conse¬
rushed to Brussels. ■

quently,

we

1929.

prices

New

York
we

equal to those in
higher.

are

or

all

know, this market has

on
the up-grade longer than
other in Europe and, in spite
tightening conditions for cer¬

any

of

tain

of
their industries, due to
high costs, the gay spending Bel¬
gian doesn't appear to be wor¬
ried.

Their salaries

are high and they
living well.
They were even
boasting that the Belgian franc-

are

is

practically ready for converti¬
bility.

Following business in general,
advertising agency business is
booming, handling a great vol¬

the

fortunate

were

driven

from

dam.

The

two

contrast

cities

Food

Brussels

is

machinery,
keep
scale

produc¬

through improved
be

essential

her

on

to

present

living.
Business, in

general, is good,
mildly optimistic in

spite of the heavy taxation.
They
fully realize, however, and ex¬
it

the

clearly,

that

the

cost

of

socialization

taking place in
England, is tco great, and sooner
later somebody is going to pay
the piper.
or

It

was

that

surprising to
of the old

affairs

fashioned

they

number

and

ready

the

the

75

or

price

of

what

in

except

old-

same

way

that

years

ago.

English

firms,

had

this

on

al¬

fact,

mentioned
that although it
pleasant to do business with

British, they certainly lacked
efficiency of the American
.Quite

saw

know

that

a

contrast

Americans

how to do

to

the

did

not

export business!

Advertising

space is rationed as
to size and amount and it is diffi¬
cult to

get.

more

During

wer<J*;cut

pages whi'cW

our

back

will make

valuable.

the
one.

it

is

in

of

some

Brussels,

the

fancier

tourist restaurants.

Perhaps the
optimism
and
rebuild

greatest

spirit

determination

their

economy
hibited in Holland.

When
the

you

the

a

stores

can

to
ex¬

city completely
gives the im¬

it

small

that

town.

had

The

previously

the center have moved to

temporary buildings
skirts

was

of

Rotterdam, with

see

center of

main

of

the

bombed

the

on

out¬
One

area.

fully realize the terrific
they have for the Ger¬

stay, the
to

four

space even

Other reasons be¬

sides small space allotments make

We

mans.

were

told

that

the

bombing had been done so accu¬
rately because German spies had
been

living in Holland for

years

and

owned
many
shops.
Many
of these German stores and houses
were spared as the bombers flew
low enough to choose their
targets.
I was actually shown some of their

buildings

still standing, but not
by Germans I assure you!

owned

Today, a German cannot enter
Holland except for a specific tech¬
job and then he is given a

nical

permit
then

European distribu¬

commented

house.
old

of

busi¬

that represented both Amer¬

ican

the

25

to find

line

conductin g

in

inefficient

were

tors

still

were

their

A

me

many

nesses

between

hatred

of

businessmen

being
Rotter¬

noticeable

a

been in

greater

or

in
to

in Holland is about half the

greater

will
England

of New York in

us

of

man,

distilled

be

Business is booming, people

away,

work

to

Belgium and Holland
It reminded

pression

of

per

in

the
the

you

complaining to
he brings one tast¬
ing like water.
It is simply im¬
possible to make a dry martini to
our taste, because the government

as hard as those in
the
other
European
countries, ahd that sooner or later,

tion

Martini

of

bombed

many

a.

save

when

We

interviewed

they

agreed

off

In

ume.

laborers

talked to in England,

and

with

surplus.

the

of his

been

before.

purchase tax certainly is
retarding influence on trade.

a

problems, particularly those of
England.
Perhaps the very old
sherry, helped, but I assure you
that an Englishman is confident

restaur¬

off

Of
course,
they still ration
certain scarce items in the homes

a

history.

Everyone talked freely about
their opinions on solving the world

As

ants.

and

week

a

Yet, in spite of all these
agencies
were
doing

the biggest volume in

ceil¬

week

secure

cut

there.

were

gay, people are working hard;
above
all,
they
are
optimistic.

as

the

desired

we

remedy for this in the immediate

Food

to have the lid

taken

prices just

all, typographers

are

arrived,

we

it

or more to
get an ad set, and lit¬
erally months for the printing of
booklets and displays.
I see no

a

lifted.

are

allow

appren¬

This meant it would take

and

will

as

not

agency

organized

market

top

out overtime wnen

waiter

advertising
well

did

training of

tices.

trouble

largest.

Conditions in England

papers

of

is

operating
in-thebusy.
Profits
and

are

many were
the guild system

commercial

are both good.
The ad¬
vertising business, along with the
others, is doing a big volume.
Space is difficult to secure.
Like

and

other

sound

a

business

was

country, as it
foods, as well as

most

occupa¬

understand

building

of the world's

one

here

severe

Their

over-priced,
ity.

Swedish

a

country where I doubt

that

The

was

the

well

in

highly unionized;
lost in the war and

handicaps,

wonderful

during

diffi¬

a

The tradesmen

the business are

future.

When

though, because the gov¬
policy has been to con¬

a

fleet

Rationing

place.

would

you

this,, it

more

many

one

of

other

any

these

can

are

ernment

press

We

which

economy

below

emergency,

can

to¬

only

can

by the Dutch.

lived

new

*

the

it is
show

hospital, built
hill, and upon inquiry you

a

on

that

their merchandise.

have

a

bitterness

*

250

over

finds

one

hear stories of the conditions

tion,

stage of the agency busi¬
associate

whic.i

problem,.

To

their

their hatred.

are

one

off

At

of the

witn

upon

linings.

the Germans

people

the best market data ob¬

us

have.

business

them¬

advertising statistics and

items

immediately.

regimented

morning until midnight.

One

in

get

typewriters

Here,
ward

ings

the Swedes have so
themselves that they

out

clothing

Stockholm

the

no

English
other lan¬

entertainment, with the

feel the pinch of a real seller's
market in some lines.
One could

all

have

the

cult

down

inch of

square

be equalled

speak

learn

never

almost

covers

Sweden
In

Cadillac

a
or

We

prefer
an
apartment."
Another example of
their
teaching!
The guide was
amazed
when
my
wife
spoke
Spanish to a friend—as he had

shortage of

a

items

famous

including
live.

to

anything

plus all other forms of advertis¬
ing—with the evcept.ion of radio,
which is controlled by the state.

For

where you

rationed

the

purchase

They have 450 periodicals, includ¬
ing weeklies and trade magazines,

country is
imports are

despite

dollars.

chance, there

by

then starve

and

place

paper has

the

would get one
They are rapidly

out

(if,

can

3,000,000.

I'm told

to

all know, they are

he

one

They

in
posi¬

you

years.

We

sistently.

Denmark,

example,
if you are running a business to¬
day and would like a new type¬
writer, you would be put on a
list, and at the present rate of

importation,

income.

our

sell to the Swedes, it is
necessary
to
advertise
heavily and con¬

Danish than any

are

although

quickly

stores.

me)

ness—our

down

geographical

restricted.

in

how and
also take a

us

Americans here, please pardon

are

vanced

other nationality.

rapid recovery and plants have

been

where

Perhaps

a

the

and

tne

people and five offices—is that to

swarm

in

their

mind

poverty such as in Amer¬

tainable

advertising.

great sense of humor.

for

walking down the streets of

ica,

no

these

of

don't

telling
live, and

to

large portion of
have

with

active,

lovely hour of 6

where

school of fish at

a

people

spite

We

government

give

5 p.m.

and

passed

Swedisn

proud

are

apartments.

cient,

accustomed

which

highly

Germany: We arrived in Frank¬
furt

Swedes

few European countries

Denmark

Jne

modern

However, Sweden is

zone

Copenhagen is lovely and clean.

Business

Germany

famous

"We

asso¬

carrying

are

.ubstantial amount of

campaign.
In

the

we

went

apartment houses, they would say:

from

hundred^ of dailies,

are

It

consequence, restaurants are filled

trade magazines and trade papers
ivailable
which,
although
re¬

a

philosophy.

something like this: As

of

hardships they suf¬
are four or five good service
agen¬ fered during the occupation are
cies.
Although
some
of
their probably the most optimistic of
executives have been trained in all, perhaps because the Dane has
now

their

humor, and cer¬
tainly out of anything in tne line

looked

situation, and appointed two
ciates, one for the American

can

Advertising in France is not
under

Germany, I
advertising and

the

over

ihe

as

in

in

sewn

under

us

taking

of

Thursday, August 3, 1950

.

for sufficient

us,

patted to make such that no
or
small items
were

was

you

selves

of

point

with

stockings

is

taking tours througn the
was that
the guides, ob¬
intelligent young college
students, could not help offering

tion
While

Sweden

train

their

each

coats

canals,
viously

have

their
gives

this market.

Citroen,

or

have dollars

you

chaotic

Germany
to
England.
This

country,

the

to

when

Frankly,
regimented

of

from

ages

in

guages.

an odd quirk.
A
people informed us
.hey had been sending food pack¬

number

what

socialization

The

only and

furt.

searched

reentering

featuring
price.

all

was

women

traveling on the
were
tnoroughly

reasonable

a

really effective.
One of tne most
interesting things that struck us

car,

Frenchman

a

floor.

days

northwest about six

There

Doing business in France is
that

Hamburg,

district, gives the
impression of not having been
touched by the war.
There is no
destruction.
As one goes to the

of

south

France where the $200 would

a

of

center

an

small

a

The

We discovered

There

quite

as

around the lake

food

the

many pretty girls as
possible to find. Quite a job

was

too!

people

tories

had
depicting their prod¬

floats

ucts with

it

con¬

manufac¬

and

hosiery,

at

ciotning of ail

as

.

advertising in this market

at home,
kinds. Tne

delightful Norwegian

filled

made
them important to the Swedes.

we

from around Hamburg

u..uei-

built

which

parade

wholesalers

Stockholm,

get

to

government realizes this, and two

we

windows, in walk¬

American,

as

more

vehicles of all kinds, on

of

wnich

Tnose of

Were

Frencn

the

way

commercial

turers

lived

have

Ham-

As

such

these,
unfortunately,
imported from England,
the Kayser name, which is Known

driving from the station to
hotel, we were delayed by a

our

auiioutea

oe

Frankfurt.

tnan

ana

impossible

are

Altbougn

were

sisted

I believe,

of

even

available

are

seven

brand

were

and has returned to normal

easier

spirit, France gives one u.e im¬
pression
of recuperation
raster
this,

is

it

of

through
Kayser

with

currency

impression

that

was

~cuve

il.

in

market

first

our

and

ousue

of

practically disappeared.

ourg

good

lis

ing

types

many

this
black

Su.ne

is

in

counted

ijOOliS.

Tne

five

50%

to

the

are

stocKings

My Emopean Trip in 1950
come

holm and return with things that

merchandising and
the highest quality
and prices are reasonable.
Nylon

33

page

.

for

specific

a

returned

We

period
Germany.

to

there

were

at

the

and

official

opening,
which
the
Queen
at¬
tended, of the port of Rotterdam,
Called Rotterdam Ahoy.
The city
was gaily
decorated, and in taking
the tour around this
largest port
in the world, it was
encouraging
to

see

the

reconstruction
job
been
done.
As
you
the port was completely
destroyed by the Germans before
they left.
which

has

know,

Driving from Rotterdam
sterdam
The

through

Hague

though

the

was

to Am¬

Haarlem

and

delightful,

even

tulips

were

not

bloom.

Amsterdam

was

touched

in

and

the last

war

in
not

still

Volume 172

Number 4930

.

The Commercial and Financial Chronicle

.

.

retains its old charm and seems to

Continued

from

be much gayer and more bustling
than

The

shown

in

the

optimistic

are

for

reasons

this,

statistics

Venture

as

rapid improvement.

I

ness,
our

a

know that at least one
client's distributors is takdim view of his future

very

unless restrictions

business

Stores

amended.

Quality items, however,
expensive.

quite

are

attitude

test.

vestment neia in taxing steps
vestment
laKing sieps

The
jf

you

_

is

Of

Mo.—Jon Rob¬
with

Wad-

(Jell & Reed, Inc., 1012 Baltimore
Avenue

Joins

Slayton & Co.

the

Slayton &

Co., Inc., 408 Olive Street.

expropriate

thing

become

you can

current

anticipate, less
and

expenses

your

see

what

capital expenditures, and
hold and

If

you

that

(Special to The Financial Chronicle)

has

have to look, at the gross re-

probably going to be able
keep within the next
two, three, fourM>r five years.

CHARLOTTE, N. C.—Moses S.
.—

the

you

y0ur

the

& McKinnon

with Thomson &

properties,

your

you are

With Thomson

ston

point

have to look at is not
the profit in the ordinary sense,
but the pay out, and you have to
1 nn\r
fo
ohnnt
look for quite a short pay out.

to

„

the

to

affiliated
_

McKinnon, John-

Building

can't-aee the

likelihood

foreign investment may
largely
be
returned
within
a
f airly "short period of time, in the
present state ofcjhe world, it is an
investment you shouldn't make,
T"

'
in

ment

Saunders Stiver Adds

the

.United

"All right;

say

million

(Special to The Financial Chronicle)

dollar^"

'

States,

you

We will spend 10
That is a more

less permanent stake, and if we

or
■

CLEVELAND, Ohio

John M.

—

Gorman

has

staff

Saunders, Stiver & Co.,

of

Terminal
bers

been

Tower
the

of

change.

added

Building,

Midwest

He

mem¬

Stock

Ex-

formerly

was

the

to

with

^

Gottron, Russell & Co.

can

receive 6

10

million

'

to

The

Poisson is
5

in

Chronicle)

Ohio—Robert

A.

with Bache & Co.,

now

West Broad

Street.

Witherspoon Corp.
to

The

if

the

that

on

going to invest

are

you

borderline

trouble

areas

Financial

China

market

able

Chronicle)

worked

we

purely

operation and

to go

on

and

ment,
:i-

Corp. is engaging in

the

business

from

Witherspoon

cers

dent and C. K.

S.

;ese¬

a

offices

Building.

Samuel

are

Street.

ir
in

OffiPresi-

Voigtsberger, Sec-

retary'

With Courts & Co.
;

ROME.

is

now

that
rnai

we

on

were

restricted invest-

a

we

to

able

were

investment
investment

donesia,
in

still

H.

get

have

it

in
In

out, and

business.

If

inIn-

because
we are

out

get

we

of that one,

roved
it will have proved

have

wise

been

back

nue.

exercise

of

to
10

our

TS*'Problem

The

If you are interested

counting,

Julien Collins Adds

esting.

there

are

of

La

the

Thomas

—

Salle

Street,

Midwest

A.

^„
added

rollils t

hdien

Of

South

111.
been

Stock

Indonesia

ratearea
rate area.

(Special to The Financial Chronicle)

has

in tax

some

ac-

angles

members

Exchange.

Financial

CHICAGO, 111.

—

Chronicle)

Carol J. Et_

scheid has been added to the staff

of Geyer & Co., Inc., 231 South La
Salle Street.
Miss Etscheid was

a

hasir

40%

business, oil

or tin, there are gov-

effective

total

Geyer & Co. Adds
The

have

The.^have

0^ ernment royal«ea

On

high-tax-

a

corporation

that raise

payment

your
the

to

government at least to about 50%.
The

to

Thev

is

a basic 40%
ta®~. On
extractive

The second big special risk

in
the foreign field is the risk arising from the relatively non-conKi I i+tr r\f
tirViinVi id
vertibiiity of currency which is an
outstanding
feature
of
foreign
nnrronnv

for

in

in

shortly after the
the "40-calIed accel-

»xn

years

war.
It really started back
during the period of the depres-

considering making

(8pecial

to

The Financial

Chronicle)

'

BATON

Baker

is

business

ROUGE, La.—John W.

engaging in
from

sonic Temple

offices

securiUes

a

in

the

Ma-

iting in me
operating in the area, and n is a
ana it is
matter of increasing your invest**

~—

u

'

dollars. You may be spending
local currency, and in that case,
it is either funds which

you

could

bave converted into dollars or
funds which you could not have
converted into dollars.
it's

If

funds

which

could
have converted, you are spending
dollars. Don't confuse yourself by
the local currency. It it is funds
you could not have converted, you

don't have
there

and

you

They are

problem.

a

don't

you

want

them

Building.

basis,

same

tax

To the extent that you put hard
money in, you want to get hard
money out again, and it is a matter of forecasting what the possibilities
u— are «i that regard,
in —
There has been a tremendous
lot said, in connection with the oil
business

specifically, about the
problem.
It has
xv
up
controversy, I think,

dollar-sterling
uwnai-ovcinns
stirred

business

worried

thatr... .
if an investor
about

the

oil

British

of

com-

Conwav Co. Formed
(Special to The Financial

Chronicle)

figure

until
or

that

he had

that

is

have a
currency problem in the British
efoHW
Mnn
en,,nfrieR
The
and sterling bloc countries. The
British Treasury and the Bank of
England

true,

have

a

you

until

he

he

had

rather stringent

funds control program, and only
certain

under

English

circumstances

currency

be

can

converted

into

you

can

do with the Eng-

retains

a

certain

amount

of international respect.

British fiscal authorities are
anxious that foreigners, and parprofit ticularly American investors,

a

had

as

much

back
as

he

shotild not accumulate non-convertible English currency—as anx-

thought

at

174

portant

in

a

Federal

Street

to

the

was

safety. That

was

factor

minimum

certainly

an

for

im-

in

Chiacch'a.
President and Treasurer, and Mary G.

convincing us
that we ought to go back, and
that we would be justified in doing so. I want to tie that up as

Mahoney,

an

are

securities

business.

engage

Officers

Pasquale

Secretary.




illustration of the enlightened

yni,tlnrtlr

W3S

a^

The
are quite pleased to see

"

uxVex Tl° IIldKe capuai

"vestments m Japan, or bring
country, but there

7

it
'

To

currenUy^you

funds

loc/aJets

down your

.a?.d 7™ <=an build

E.r.

liabilities position.

yaur

of
the

up

You

f^n.,n? ^aV?.
® same protection
.
difficult to remit fnnHs

currentslyalmcu" t0 remlt funds
'/j
*

today

at«U!L€*h' establisbed
getting the money out

.

been

is

,.

matter

funds.

in

a

again.

,,

of

tO

HI dOllarS and dollar SCrVlCCS
establish a
useful enterprise
that

•_

extent that

investors buy yen with
in order to make capital

."

i.:

lem ties in with the

witolredselv *emitVour

faced

* U1
rooonnnhiQ

n

currency

Note il0w this devaluation prob-

i

G ? vJ Jremittance

American
dollars

against

foreign

aegree of
stability

wfu ^n°hesitate Protective

JnvestorsTre

vnnreoX
vourself

tppt
tect

-x

'

r

,

J""

h

„

„

British have
pretty decent to deal with,

.

tremey devaluation situations^

ex
becomes

almost
aimost

'

imnossihip
impossible

tn

to

protect yourself.

regulations has recently

promulgated

by

which

it

able to get, «uu the machinery
and

is
"

cumoersome, and up to date I
know of nn fine who hac crntt^n

I

out in China in
remember
was

talking

of

of

one

Her

our

children

1946, and

with

the

executives
in

were

the

wife

there.

As far

I know, the situation

as

American-occupied

in

Germany

is substantially the same. In sucn
cases, the trick is to see how

Amer-

they
mey

adjusted
to
a
situation
situation
which she was entirely unable

to
to
tn

wnauic tu

_.:.._x

for after-school
treats, but when
she stopped to think, she realized
it was a perfectly

quest,

reasonable
she gave it to them

so

re-

When they returned the little
girl said that she had spent her
$50,000 for a dish of ice cream and
the brother had bought a candv
bar which had cost $40 000. The
mother asked, "What did you do
and with the other $10,000?"

worth of dollar materials
services, so that for a dollar of

The little boy said,

"What

can

investment and local currency in you do with $10,000? I made spitthe equivalent of $10 you ca i balls with it."
111, iucn an inflation you are
£>et^ an $11 enterprise?^ On that
basis

,

.

,

.

getting into

large

a

game at a low cost.

th
.

.

ht

h

.

materials

f^purchlse'
currencv

because

if

or

is

®

J

nnt:;tinn

SV

mavbp

^J^avL

$3

g

y

for

t

which
.

ir.

vour

th

niif

the
to

such= or
capital as such, oi

"

as

to

make

investment

the

when
;

a

alrcad

are

soft-currencv

area

have

vou

currency area, you nave

..

another

of

erouo

Droblems

One

is how to handle the devaluation
of

th-

°ecur
ably

in„al

This
If

you

1*

on

a

-hnniri
reason-

h

of

and reSeptember,

last

be met.

you

look

tT difficulties you
£ i
e is the. normal
dpaiinl
•+? you exPei'tence in
dealing with an

ran

a

dfffin,1if

exchange

find

at

in

that

the

Country

the

balance

X,

current

substantially
current liabilities,

in

are

or

and

assets

of

excess

you have a devaluation risk in terms of United
States dollars>
If the local cur_
re

capabiTity
i«h

t j

y°There

shrink

the Bnt-

the entire Sterling

mean

mea".tae entire Sterling

a™,

rency^ ttwiS,
',
gn

tne Bank of Eng-

,

ver?'"nVer lefused
dollars ^e

They

hold

down

you

to c0"-

profits

dollar investment

on

on

a

the

money

they will let you hivest
particularly the foreign curren(*
cur-

y

tanto

and

eauinmp".!< }J,n ltem of

capital

have
nQt

to^nSSSFK*
luxu
.ce be"i+^.rst

you require for

secondly

eSally

two things

wbjcb you can

do about this risk

available'
.

if they wiU let

you

out before you

thing every time you do it.
is very hard to guess th© day

It
or

Zlbrc

vou

vnn

ug

y n0t
sou.™e'

th

fj}ey

^ur th+at

you, dollars ^

current ScapiS
Inwstcos^thpm^?**3*
£ cost em ess to give

for

the

rnent

It

Qne of thege

is to build up your local liabilities
by
borrowing
money,
running
an
overdraft.
That means you
are taking your profits and costs

i

no? givt

They whl

j
?S'

«•

Sntinrt
.j

T°U
^

hifci

L

from

If

ft

vour

that

reduced

am

elam^le
example,

For

t

ish, and I
AnU

ig devalued your assets and

liabilities

con-

td ]ike the EngBsh one, in
they
attemP"«g to
n!
system within

and

local subsidiary

r

branch

°f current Period

g
fu

sterling

currency
can

sheet of

local

occur

n"
uL" VvT the
iL
organized
basis, ' like

devaluation
lated

:f

™irrPn-v

mal

It

earnings and by the time
paid. jt doesn't aniuuni
^L amount

r°S?A
tvnoc If there are three principal

the

operaHng

jt is

+u~

y?Ui_cap1/ ln
vou
St"^

fpay~®^

*

na!!rPay practlcally no taxes.
npHni?
y°-Ur
S on the prior

in

ODPration

a?e eoiL

canital

.

Y

mnnev

oositivelv

vou

t

^he S

of

$]1

_

'rient

sourre

hard

of

:A

catches up
1S g01ng to wiPe 0L,t

with

local source periods

worth

in

^hlch. lf

the

d

lnca 1

having

see

basi

,t

_

no

worth

eauivaient

thp

extremely fast because
trying to stay ahead of
"
v~. "r"-7
^

are

...
jlYofHinrr

"the ^cal thJ^vnn"^ g°°d ^ing ab°ut

in

vou

there

| a"®e

..

£

services

,

moving

you

,

Everyone is aware of the fact
that if a lot of foreign investors

as

amazingShow quIckW

was

much you can make do with how
little, if you decide to go ahead
at all. If it is possible to borrow
local funds, the problem is one of
ratio- Can you put to work $10
worth of local funds with $1

have actually received them. Another method, if
they will let you, by which you
can protect yourself fairly effectively is buying dollar exchange
forward., It will cost you some-

ions

said it

any, which makes one wonder if her daughter said that she and
anyone is going to.
her brother each needed $50 000

the investor is that he
should not—because the accumulation of nonconvertible pounds
would put pressure on the value
of
pound.

•

BOSTON, Mass. — Conway Co.,
Inc., has been formed with offices

a uuincoui. oper" domestic upcx

t

that you will hesitate. Prospective
that

do

outlook,

hH investment

of
foreign
wouldn't
have

are

Without considering whether or
not

he could do iust what I said, and
not

7.

companies.

pound

#

That meant
were

fob

as

les®

you are

they are concerned to see that the

the

poses.

cost

that

,

pur-

income available for dividends

additional

been involved in

should be possible to get profits
back on approved investments
located, it means putting in dol- *ou,.ican.;11 '■f11
the rate of
lars entirely; if you are already Profit will be that you will be

on

re-

taxpayer
kept his books and -computed his

John Baker Opens
'

The only

that the

was

additional

operations

investment in any particular
area in which you are not already

lish pound
On the other hand,
the English are much more particular about their currency than
most foreign countries are, and

to year.

tnat

-

was

an

from

year

u
x
k,,+

fonfnr

factor

a

A set of
are

constant

a

operations, and the profits
have to be large enough to
carry

niaushde^ur^ncV S?tna
mav^fi^^reasv to^fnvest'

,

sion.

If you

when the

year

cose of

Hnn«
tess piausiDie currency situations,

to the

things

quirement

~
nrm4.rflin„rt

certainly

and
immediately prior

and it didn't have to- be consistent

formerly with Blair & Co.

t.
fh

postwar period

tne

few

a

wnicn

manipulation

have

will

below

rates

or

devaluation is going to take place,
n you try to protect that way,
you

oe

trading

month

or

35

poind®l^SeptemL^^t^asn I trs'upportlherostf you ca^pro!

Non-Convertibility of Currencies thorities

trade

will

thlfsUuaUon tnlapan

American.
You ma.y find
yourself in a position where you
erated or free depreciation plan,
are developing funds wmcn will
iunas which win
under which they Jet a taxpayer be permanently blocked in Engwrite off capital investment for land.
tax Purposes at whatever rate he
However the English pound is
wanted. It didn't have to tie in a comparatively desirable curwith any anticipated useful life,
rency,
and there are a lot of
Dutch,

put

war,

(Special

r\t

of

panies at the expense of American

which I think you will find inter-

CHICAGO,

yidrf.

risks

the

unfriendly governments or revolutionary governments, but you
j
i
can
develop and illustrate the

oil

with

Courts & Co., 4 East Second Ave¬

Watson

of

primarily because of the accusations by a number of persons that
the British were artilicially manipout
again, you can afford to ulating their -exchange in order
some rather special chances,
to increase the share in the world

McWil-

affiliated

out again.
out again,

don't know,

we

don't

we

take

Ga.—Oscar

Jr.

illustration

you

illustration

judgment. On,the other hand, if
you can get a large business going with most of your capital

(Special to The Financial Chronicle)

liams,

give

tiiiiyXynfinn

to be the thing to do.

a

PHILADELPHIA, Pa.—Withercurities

could

lying around in the bank anyway,
If you have a possible expansion
program which otherwise appears
to be sound, it is obviously going

•

spoon

tnat
mat

to come in.
I

week

con-

important factor All producing
impui ^cuit IuLvUX in Jjiuuuliii^j

an
3"

abroad, it is.unrealistic to figure
your profit until you have your
money back.
That is the pay-out
analysis that you have to use in
In

(Special

ill

^QVCmiTlCnt

a

are necessary to induce investors

nfioy

efforts

exchange

That type of

that kind of situation.

Financial

COLUMBUS,

profit

premation reinvested to keep our
capital whole, that may be a good
deal. You don't expect to get the

But

(Special

7%

or

dollars,

consistently
period of time, with the de-

over a
over a

stake back.

Joins Bache & Co.

of

backward,^

after

to

tends to discredit the pound.

MendlveS,vegr^lw thTmiTt P°int ^ ^ ^

You

Felix Gamier

associated with

Mahaley

deterioration

a

government

ceipts that

ST. LOUIS, Mo.
now

risk, either of

a

nou

tSpecial to The Financial Chronicle)

is

i-

mi
that hnoin^c earnot operate at all,
business

Chronicle)

affiliated

now

+V-,nyn

thni

Financial

J KANSAS CITY,
erts

certain of the

nrVmyn

political stability, where there is

_

The

are

nnntjooi cfoKiu+ir

With Waddell & Reed
to

making is that
investing in an area
am

where you can t be
real

(Special

point I

and

three-cornered

official

have not recovered our money
yet, and that, after all, is the final
we

are

well stocked,

are

to

Overseas Investment

Although importation into Hol¬
land
is a highly selective busi¬

those,

in

balances

pressure

made to convert them which leads

Capital in

their

of

tremendous

up

London, there is
vert

businessmen

have

ing

build

8

page

Rotterdam.

and

of

(463)

ditions

because

control

the

which

the effect of

That

but

China tvne

have

a

the

canital

sort

with

•

n'niimr
vn.,

of thin

then

(c.

+eC?

'

Lri tofr®eze

a

Vb„

v

i

kVG
rGPe y°U
govprn n^f 3

of situating

runnwav

nothing that the
"

,?J-x-can

addltl?.ns

make

vou

whatever

Pltal ad-

firct

nl',rrpni

.

infi

vernment can
on page 36

Continued

U

The Commercial and Financial Chronicle

(464)

Continued

from

Venture

from the United
them to a foreign
country, incur special risks that
are necessarily involved, and then
actually pay for the inferior gov¬
ernment protection which you re¬
ceive there—more than you would
capital
States,

35

page

Capital in

Overseas investment

pay

funds

move

on

similar

a

investment

at

vestor,
large
to

tries to do is going to

or

able

with

make

They are dealing
situation which has gotten

a

and

entirely beyond their control.
such

In

cases, if you can talk
official outside his office,

to

an

lie

may

be pretty realistic about

We went

practical problem.

your

along with China for a time. They
would give us dollars just for the
laid down cost of imported oil,

nothing for overhead, nothing for
we kept telling the
Bank of China you can't

profits,

and

Central

stay in business that way.

Finally, we got hold of a lead¬
ing private banker and talked to
him and told him our problem. He
talked

to

whom

official

an

knew and

he

back and told us,

came

*T can't tell you anything. This is
all in confidence, but if you are
riot

including

profit in the
padding your
better start

some

started

It

more

all

it

the

time

long

a

in Asia today.

in U. S. Taxation of Foreign Profits vertibility
of
foreign currency
Where the foreign tax rates are funds, I think that what I have
You get low, on the other hand, the Amer¬ said indicates those are only a
ican

investor

pays

United
That is to

the

as

of the Mexican oil fields,

countries to rig

a

tax so that the

foreigner pays, even without hav¬

ing

it

indicated

on

the

statute

books that there is any distinction

the

between

foreign

the

and

local

good many cases you
likely to run into an unfavor¬

day, and in
are

a

able rate differential.
Those are,

that

inhibit
the large
movement of capital funds to for¬
eign areas where for some reason
operating

to

taxpayer. One easy way is
classification. The big enter¬
prises in most of these countries it isn't desirable.
it."
will be foreign owned, and simply
That raises the question of what
Finally, you can run into a sit¬
adjusting taxes in accordance with
uation where the exchange regu¬
can be done about it, if anything
the total volume of business, and
lations are rigged to produce a
should be done about it. It appears
automatically places the heavy
result of one kind or other.
The
to be a national policy to encour¬
rate against the outsider.
How¬
present
Indonesian regulations
age American investment abroad,
ever
much that may be against
will do for an
laid

down

invoices,

cost

by

maybe

you

example.

official

The

between

United

the

3,8.

Until

was

of

the rate

States

is

dollar

upon

that
which all of¬
made.

were

TPhen

somebody came
system by which they
3.8

rupiah

few months ago

a

transactions

this

exchange

Indonesian

the

and

ficial

rate

with

up

a

preserved

rate

officially but they
regulations some¬
thing known as the foreign ex¬
change certificate.
added

the

to

Whenever you go to the central
bank to buy foreign currency with

Tupiahs,

have

you

give them

to

the official rate of exchange plus

certificates in double that amount,
and you buy the certificates from
the bank, so the net effect is that

you pay about three times the rate

for

hard

currency.

to the bank

If

you

came

to

buy rupiahs, they
give you certificates, but
not twice the amount, only a like
would

amount.

You

see

how that works

out?
It

has

the

effect

of

two

other

things. First, it means that the
Importer has to pay half again as
much for currency by which he
purchases imports as the exporter
gets for foreign currency, the re¬
ceipts of his exports. In effect, it

operates

as a rather high tariff on
everything, without distingushing
between the degree of necessity of

the

item

imported.

(That is

not

by

the interests of the country in the

long

appealing politically in the short

Second, assuming

make

you

a

profit, if

you are a foreign inves¬
tor you then have to convert
your

'-profit back at this three-times of¬
ficial rate which

in effect

pay

tax

In

order

that you
additional 50%

means

an

to

get

your

profits

-out

again.
Now, that, I submit, is not the

'kind

of

system

which

has

any

tendency to

encourage

vestment in

Indonesia, and' that is

private in¬

the kind of system under which it
is most difficult to do business be¬

more

simply,

you can

do it

into

can

you

the

a

shakedown.

The sad part of all this is that

cannot

but

feel

some

sym¬

pathy with the theoretical objec¬
tives behind many such regula¬
tions.

the so-called

Point

designed for that

pur¬

endeavor to train local
until

they

can

take

there

Unless

have

been

some

be

provisions might

quite

broad. They were re¬
guarantees against the
risks inherent in foreign

ferred to

as

consequences

they

are

the

of

the

investment carries the normal tax

it

ered,

I

recovered.

is

By recov¬

actually

mean

brought

mitted

be

restricted

ments?

In that

to future invest¬
case

dis¬

you are

criminating

against the groups
which have been investing abroad
over

period

a

in

criminating
who

have

of

favor

been

of

if

But

abroad.

it

liability

that

it

limited

so

the part

on

is

enormous.

to me
additional

seems

unless there is

implementation

for

now

their funds

isn't

of the United States

Furthermore,

persons

induced

the first time to send

dis¬

and

years

an

the

on

side,

the

very fact that the Government of
the United States has underwrit¬

the

ten

So

funds.

far

re--

or

as

the

American investor abroad is

con¬

cerned, profit which is represent¬
ed

by fixed assets

or cash in the
anything else in a foreign
investment, is not a profit yet. Ac¬

bank

or

to show it

countants have

according
their

the

to

trade,

as

one

conventions

but from

a

of

point of

fiscal management, it isn't a profit

yet, and it

of

that the tax col¬

seems

this country could wait.

lector in

Despite the extraordinary risks
foreign investment, I think

that, barring the development of
a
large-scale international war

convertibility of profits
of capital for the
investors abroad, will
encourage the foreign government

again

in

could

hope to see foreign invest¬

ment

moving

to take

a

three

titude

about

and

recovery

American

tolerable nonchalant at¬

the

supplying

of

that American

in¬

funds.

vestors

investing abroad

tax¬

are

able in the United States

on

those

foreign earnings. However, they
get a credit against the tax pay¬
in the United

able

tax

payable

doesn't

terprise
of

advantage
their

Cuba

cable

rate
tors

American

have

en¬

number

a

tried

of that to

take

to

put

foreign

in¬
fluctuating

to

providing

a

Treaties

Commercial

Improved

Needed

It

to

seems
our

me

that

the

thing

government could most

usefully do is to press with great
vigor a
program
of
improved
treaties

of

friendship
which

under

merce

and
the

com¬

foreign

would be required to
guarantee convertibility of a rea¬
sonable
profit, to be stipulated
perhaps by the treaty, and the
reasonable recovery of capital for
country

United

investments

States

made

in those foreign areas, the execu¬
tion of such treaties being made
condition

precedent to the

to-government
Point

If

IV

technical

aid,

by

the

of

United

things

done.

were

instead of
limited degree to un¬
derwrite the risks, put the pres¬
sure on the foreign government to
government,

our

lessen

so,

a

risks

those

that it

the

to

would have such

you

extent

their power to do

in

was

an

im¬

proved opportunity for foreign in¬
vestments

to

as

it

make

much

more

desirable. The foreign coun¬

tries

would

have

realize

to

this,
point could certainly be
brought home to them.
this

and

should not put a
foreign profit in
the United States unless the profit
is realized.
The most important
point is that the foreign backward
areas, desiring dollar investment,
must realize that "you can't have
your cake and eat it."
You can¬
not
simultaneously penalize an
investment for the local political
advantage which you might ob¬

way

services,

capital,
special governmental projects.

the
of
or

you

burden

tax

tain

by

on

a

doing and

so

have the money come

the

want

expect to
in. If they

money

and if it is not

from

available

government-to-

government sources on a basis of
competition with private invest¬

that

think

I

ment,

most foreign

governments can be made to see
the point.
If those things could be done, I
think there is very little doubt of
the

advantages

to all concerned.
a great deal of

There has been

ex¬

under

program

out

fairly good amount if

a

Second,

proposed a tax appli¬

equal to the rate the inves¬
paid at home.

which

States in

we

money

treasuries.

specifically

vestors

as

higher abroad,

the

own

once

long

As

anything, but

countries

into

rate

a

cost

the

States for

abroad.

the tax isn't

it

the next few years,

trying to

mentioned

tension of any of the government-

As originally drawn,

for¬

whichever of the two
higher, and that is the net ef¬
fect of the foreign tax credit, his
rate,

is

to

oped

areas.

pay¬

or

back in terms of dividends

a

guarantees'

eign

until

that would be poten¬

even

ment in the so-called underdevel¬

the

position of

tially Very large indeed, and is it

I

talk,

tremendous amount in the

a

foreign countries, and some in the
United States, about the

exploita¬
the for¬

tion of backward areas by

in

a

over more and

investment.

The bill most promi¬

The second

eign,

thing which I think

and

particularly

British,

ton

the

investors.

less than the wages

lieve, to the risk of nonconverti-

ican investor abroad

bility of

reasonable profit plus
the recovery of capital investment
in United States currency as dis¬
tinguished from local currency,
and a guarantee by the United

ings abroad. That is

States

responsible positions in your
organization.
If local capital de¬
sires to invest, particularly if it is
exploit local resources, probably
you should welcome that capital

more

into your organization.
If your wages are low,

special

your

Charles

Chinese

actual

Carroll, of General Mo¬
tors, and a number of others in

who

As Mr. Austin Foster expressed

the National Foreign Trade Coun¬
cil.

a

that

maybe available

they ought to be higher. They

are

low by the American standards in

dollar

in

the

funds

event

will

of

be

expropriation.
it, neither
sense

that

guarantees in the
lawyer would recog¬

a

intended

government is

not

the guarantor

on

his

earn¬

are

paid to

subject, and I don't
plan to spend very long on it, but
I would like to sketch the basic

day laborer in the United States,
that, of course, is true.
However,
if they mean that the Shell Oil
Company in Hong Kong pays less

argument

to

a

highly

con¬

troversial

There is

are

foreign government which presses nize a
guarantee because a guar¬
this type of regulation against the
antee is the underwriting by one
consequences of the system. It is foreign investor. Nevertheless, you
individual of the promises of an¬
•one
device out of many which must not fail to realize that if "the
other individual.
In these cases
might have been adopted to take thing is pushed too far, there will
there isn't any basic promise. Our
a little more
from the foreigner. be no foreign investment at all.
system;

Yet,

pose.

legislative

put the American inves¬

American
Now, if
nently under discussion at the our government might do to great by exploitation they simply mean
personnel
present time limits those, I be¬ advantage is not to tax the Amer¬ the wages paid to a coolie in Can¬

If you are operating
given country, it should be

cause the
hardships experienced most foreign fields, and you can't
by the foreign investor are not the feel a total lack of sympathy for a

accidental

have

we

happenings
recently
that I haven't heard about, the
by enforcing the taxes against
present status of that Point IV
some people and not enforcing the
program is that the implementing
taxes against other people.
That
bill has been passed authorizing
appears to be happening in China
the expenditure of funds for va¬
today from the little we can learn.
rious types of projects designed
Then you can have limitations
to improve the economic status of
on the percentage of foreigners a
the so-called backward areas. Ac¬
business may have employed, and
cording to the pronouncements of
set categories by which the em¬
Government
spokesmen,
that
ployers have to upgrade a certain
money will go primarily for sur¬
percentage
of
local
employees
veys and technical advice, and to
whether they are actually ready
a
limited extent, for such actual
to take the responsibility or not.
investments as are in their nature
You can do it by actually ex¬
not attractive to private investors.
cluding categories of specialists.
Railroads, apparently, are in that
It is very difficult for an account¬
category; some types of irrigation,
ant to work, for example, in the
crop control, agricultural develop¬
Philippines today because of the
ment projects are also of that type.
regulations designed to limit ac¬
I
believe that the House has
countants to persons licensed for
that profession, which is denied to appropriated $35 million for the
purpose and the Senate has ap¬
any but Filipinos.
propriated $10 million, and unless0
A move which is quite popular
in the case of the extractive in¬ something has happened very re¬
dustries particularly is to require cently, that discrepancy has not
yet been resolved. Neither $35 or
a percentage of local
capital par¬
$10 million amounts to anything
ticipation, which may be all right
very substantial on that type of
if the local capital is bona
fide,
program.
but if there are only a few persons
The second measure which is
who can put in that capital on an
extremely preferential basis, such pending is a provision for limited
guarantees of American invest¬
a
policy
degenerate
Still

the, importer gets the
exporter.)

same as

it is obviously extremely

and

IV program

run.

quite true because they do have a
small list of basic essentials where

:

run,

pure

-

making foreign investment.

been

have

If you

tor abroad in the

even in backward areas with high
proportion, although an im¬ risk and low local tax rates. He
portant proportion, of the total should at least be free from taxes
special risks that are involved in in the U. S. on the foreign profit

the potential

I think, the principal

considerations

likely to find your mature
in England, for in¬
stance, where the rate will be
higher than the United States
rates, or as high.
tax system, as

small

—

for most of these underdeveloped

Thursday, August 3, 1950

.

ing the United States rate

hold down to those two
expropriation and noncon-

you

more

the celebrated case States rate anyway.
for ex¬ say, if you have a foreign branch
ample, down to a constant niggling operation, the income from that
attack
either excessive import operation goes into your gross in¬
and export duties or exchange re¬ come and taxable net income and
lations so rigged as to produce the the United States rate of 38% ap¬
same
consequences
as excessive plies. If you have a foreign sub¬
duties, special taxes applicable to sidiary operation, the same thing
foreigners, either in form or in will happen if you declare a divi¬
substance, regulations which oper¬ dend and bring the money in. So
ate as taxes against foreigners.
at best you can't get a tax advan¬
Of course, it is perfectly easy tage out of foreign investment to¬
propriation,

be

.

more

the direction

over

investment which is to

guaranteed.

risks,

from outright ex¬

way

consider¬

very

ago

spreading

America,

South

assuming

authority

the

of

with¬

commitments

such

also

out

If

President Truman's Point IV.

difference.

any

me

dertake

home.
do

you would get much too
commitment, and it seems
no
government could un¬

a

.

a

it

developed

by

tendency for taxes in

particular country tb adjust
requirements of the com¬

any

to

for

the

munity.

When

an

where

area

dealing in
have an un¬

you are
you

derdeveloped economy with high
business risk, you will generally
find

relatively

low

taxes

meas¬

a

a

The

common

converse

is true.

works for

vestors

than

laborer

than

the

merchant that isn't true.

is

The native

the industrial in¬

uniformly

better

off

his

neighbor who is not so
employed. The customer of the
foreign investor is uniformily receiveing a product which local ef¬
fort could not have supplied, or at
a
more resonable price. The for¬
eign

government

from

a

more

is

reliable

benefiting
source

of

Quite apart from discrimination, in this program but the principal ured
by income. They may make tax income. But if these benefits
Anti-Foreign Regulations
moreover, certain policies are un¬ obligor.
be enjoyed, the country
up for it to a considerable extent are to
That, brings up the whole group suitable for
underdeveloped areas.
It is very questionable whether* in indirect taxes of various kinds, desiring foreign investment must
of
nationalistic
or
anti-foreign The tax rate in the United
States, that type of program has much but they will give the investor a minimize the special risks, so far
types of regulations which are
assuming no upstream dividend value. If you do not limit the run for his
money because they as possible, and must afford op¬
constantly increasing in the very and no
consolidation, is 38% at type of risk against which your have to.
portunity for enought profit to en¬
areas in which
foreign investment the moment.
In India it runs government guarantees
As you get a more fully devel¬ courage venture capital to assume
or, more
is in fact most necessary—the soaround 54%, I believe.
It is not properly, which your government oped
economy with greater secur¬ these risks which cannot be elim¬
called underdeveloped
areas
of particularly
encouraging to take assumes on the behalf of the in¬ ity of capital and
inated.
i




profit,

you

are

Volume 172

Number 4930

.

.

The Commercial and Financial Chronicle

.

The

Indications of Current

■>."

w ■<

week

or

month ended

on

IRON

Indicated

steel

STEEL

AND

operations

capacity)

Aug.
Aug.

Month

and

ingots

AMERICAN

condensate

and

tons)

(net

Ago

1,919,600

6

1,892,900

Gasoline

(bbls.

average

of

Gas,

fuel

oil

5,356,750

output

July 22

(15,757,000

5,806,000

5,636,000

5,148,000
18,301,000

Gas,

(bbls.)
fuel

oil

(bbls.)

OF

19,626,000

2; 147,000

2,001,000

1,491,000

7,179,000

6,868,000

5,807,000

8,056,000

8,026,000

7,461,000

7,489,000

July 22
July 22

108,915,000

111,739,000

115,036,000

22,766,000

22,532,000

20,165,000

58,658,000

50,580,000

42,708,000

41,291,000

68,517,000

July 22

829,884

789,268

810,152

S.

U.

Private

July 22

662,416

570,886

667,761

CONSTRUCTION

—

ENGINEERING

July 27

$252,489,000

$343,307,000

$287,582,000

$131,819,000

July 27

120,259,000

217,786,000

177,294,000

51,921,000

July 27

1—1_ July

municipal

7,260

DEPT.

SERIES

$31,200

$33,600

COM-

OF

Month

of

May

dollars):

9,500

9,400

9,200

14,300

"14,100

14,100

$55,200

$54,800

$56,900

$210,600

$483,200

22,977,000

20,221,000

21,101,000
20,229,000

23,779,000
21,479,000

10,435,000

8,935,000

10,320,000

452

473

461

325,217

304,640

260,700

27,100

27,400

21,100

20,568

16,122

2,496

$128,731,000
40,216,000

$152,034,000

7,884,000

8,354,000

$124,889,000
37,960,009
8,013,000

19,888,000

—

Total

CASH

DIVIDENDS
S.

U.

PUBLICLY

—

CORPORATIONS
OF

May

REPORTED
IJ.

—

S.

DE¬

omitted)

(000's

COMMERCE

SPINNING

(DEPT. OF

Month

—

27
July 27

Federal

132,230,000

125,521,000

110,288,000

79,898,000

122,756,000

91,187,000

88,994,000

61,870,000

9,474,000

34,334,000

21,294,000

of

spindles

in

spindles

active on July 1
1000's omitted) July

place

July

on

1

Active spindle hours

Active spindle hours per spindle in place July

18,028,000

HOUSEHOLD

WASHERS

STANDARD

IRONERS

AND

SIZE

LAUNDRY

$188,20Cr

COMMERCE):

Spinning

NEWS-

construction

and

9,216

556,456

cars)

construction

State

of

PARTMENT

construction

Public

NEW

Spinning

ENGINEERING

$99,280,pOQ

BRADSTREET,

June

Wholesale

718,516

RECORD:

Total

&

$102,528,000

THE

Manufacturing

COTTON

CIVIL

Ago

$31,500

of

INVENTORIES.

(millions

RAILROADS:

of

Year

Month

$112,075,000

(NEW) IN

69,365,000

42,424,000

Revenue

(number

Previous

8,861

STATES—DUN

MERCE

24,544,000

59,434,000

July 22

freight loaded (number of cars)
Revenue freight received from connections

of that date:

SYSTEM—

110,569,000

July 22

"II

at

AMERICAN

RESERVE

(in thousands)

May

BUSINESS

BY

ASSOCIATION

are as

OF

Retail

at

oil, and distillate fuel oil (bbls.) at

Residual

19,311,000

1,848,000

7,166,000

July 22

output

19,754,000

July 22

(bbls.)

(bbls.)
Stocks at refineries, at bulk terminals, in transit and in
pipe lines
Finished and unfinished gasoline (bbls.) at
Kerosene

either for the

4,738,800

juiy 22

and

Residual

5,495,450

GOVERNORS

OF

INCORPORATIONS

INC.—Month

5,537,500

July 22

output (bbls.)
distillate fuel oil

oil,

Month of

42

(bbls.)

average

—

FEDERAL

UNITED

output —daily

daily
(bbls.)

output

Kerosene

1,498,800

July 22
stills

to

runs

DEBITS—BOARD

BANK

THE

1,765,200

are

Latest

81.3

BUSINESS

gallons each)
Crude

of quotations,

cases

Ago

92.6

99.3

'

INSTITUTE:

PETROLEUM

oil

Crude

castings

in

pr,

Year

Week

100.7

6

Equivalent to—
Steel

production and other figures for the

cover

Dates shown in first column

that date,

37

Month

Previous

Week

INSTITUTE:

(percent of

(465)

.

month available.

or

Latest

AMERICAN

f

following statistical tabulations

latest week

Business Activity

.i '

>

—

HOME

(AMERICAN

ASSOCIA¬

MANUFACTURERS'

TION)—Month of June:
COAL

OUTPUT

(U.

S.

BUREAU

OF MINES):

sales
sales

July22

11,205,000

"9,115,000

10,622,000

7,278,000

July 22

855,000

786,000

950,000

1,060,000

Beehive coke

July 22

136,400

"117,800

133,600

of

sales

Factory

Bituminous coal and lignite (tons)
Pennsylvania anthracite (tons)

of

washers (units)
ironers (units)
dryers (units)

5,500

(tons)

Factory
Factory
LIFE

of

INSURANCE—BENEFIT

POLICYHOLDERS

DEPARTMENT

STORE

TEM—1935-39

SALES

INDEX—FEDERAL

RESERVE

SYS¬

AVERAGE=100

"265

302

July 22

207

250

Electric

(in

output

000

endowments

kwh.)_

-.July 29

6,185,702

6,190,098

6,115,119

5,518,485

Annuity

(COMMERCIAL

INDUSTRIAL)

AND

—

DUN

&

170

160

July 27

168

156

iron

(per

3.837c

3.837c

3.837c

3.705c

$46.38

$45.38

$46.38

$45.91

July 25

Scrap steel (per gross ton)

$36.83

$37.17

$37.67

$19.33

PRICES

(E.

J.

M.

&

of

COMMERCE)

July 26
July 26

tin

(St.

Zinc

York)

(New

(New

Lead

York)

Louis)
St.

(East

at

at

at

Louis)

at

22.200c

22.200c

22.200c

22.425c

22.425c

22.425c

97.500c

89.500c

77.500c

103.000c

12.000c

12.000c

11.500c

14.250c

11.800c

11.800c

11.300c

U. 6.

BOND

PRICES

15.000c

15.000c

10.000c

15.000c

Government

Average

Aug.
Aug.

Bonds

corporate

.

As

of

May

MOTOR

IN

Utilities

696,893

593,640

102.17

102.11

103.16

Number of

cars

720,688

575,518

115.24

115.04

113.89

Number

of

motor

trucks

135,332

120,963

493,882
99,126

120.02

120.22

120.22

Number

of

motor

coaches

606

412

632

1
1

119.00

118.60

118.80

114.66

114.85

112.93

1

108.16

107.98

l

110.88

110.34

109.60

108.34

1

116.80

116.41

116.61

115.24

Industrials Group

1

119.20

119.00

119.41

118.40

MOODY'S

BOND

YIELD DAILY

PERSONAL INCOME IN THE UNITED ST4TES
(DEPARTMENT

105.17

107.03

of

personal

Wage

2.34

2.34

2.34

Aug.

l

2.90

2.96

-Aug.

1

2.62

2.65

2.64

2.64

Aug.

1

2.70

2.72

2.71

2.73

A

Aug.

1

2.90

2.92

2.91

3.01

Baa

Aug.

1

3.27

3.28

3.33

3.44

3.15

3.19

3.26

Average

Aug.

Bonds

corporate

Aaa

Aa

Railroad
Public

Aug.
Aug.

l
1

'3.12
2.81

2.83

2.82

1

2.69

2.70

2.68

COMMODITY

MOODY'S

Aug.

1

449.1

INDEX

406.0

341.1

labor

transfer

PORTLAND
Month

Orders

received

Production

227,940

188,355

208,738

152,210

Shipment

213,031

July 22
July 22

(tons)

(tons)

186,959

211,027

158,764

Stocks

-July 22

Percentage of activity
Unfilled orders (tons)

95

82

94

76

__July 22

at

501,212

489,490

390,879

"2.3

♦2.3

"39.8

"42.6

17.9

"18.2

"17.1

(BUREAU

"17.2

"12.3

"198.7

"188.7

MINES)—

OF

June:

20,007,000
24,749,000

end

month)

of

_—

'

(bbls.)

19,950,000

18,279,009

15,302,000

22,834.000
20,043,000

20,667,000
19,785,000

93%

(bbls.)

mills

from

90%

247

241

274,741

used

Capacity

RECEIVED

NUMBER

DRUG

2.2

"2.8

3.4

14.1

income—

(bbls.)

(at

PRICES

OIL, PAINT AND

"40.1

197.2

payments

CEMENT
of

2.8

dividends—

and

income

; "20.1

41.5

—

nonagricuitural

Production

ASSOCIATION:

PAPERBOARD

NATIONAL

1

income

rental

"17.#

"21.1

"57.1

social

for

income

and

interest

Personal

Total
Total

447.9

contributions

insurance

Proprietors'

2.73

Group

employee

Other

2.89

-Aug.

Group

Utilities

Industrials Group

Less

"18.2

21.1

Government

"39.7

18.3

*

"134.9

"59.1

39.5

industries

Service

"207.#

"132,7

"138.1

60.3

industries

"213.8
"135.3

139.2

and

Distributive

2.27

2.89

Government

213.3
136.4

income

salary receipts, total
employer disbursements—
Commodity producing industries

AVERAGES:
2.87

S.

COMMERCE)—Month

OF

(in billions):

May

Total

Total

1

U.

passenger

118.40

115.04

Aug.
-Aug.
Aug.

Group

of June:

vehicles——

115.63

Aug.
Group

MANU¬

ASSOC.)—Month

of

102.07

1

AugAug-

Baa

Public

$27,507,000

FROM

(AUTOMOBILE

S.

U.

number

SALES

FACTORY

1
1

Aug.

—

A

Railroad

omitted)

(000's

31

VEHICLE

PLANTS

120.63

Aaa

Aa

$27,048,355

856,626

Sales
MONEY IN CIRCULATION—TREASURY DEPT.

Total

AVERAGES:

DAILY

18,500

$33,600
17,700

14.050c

26
26
26
26

17.325c

FACTURERS'

MOODY'S

17,600

$31,200

$27,090,000

Durable

17.550c

July
July
July
July

reiinery at
refinery at

Lead

$14,160

17,200

SERIES—
dollars):

Total

Domestic
Straits

'$14,100

NEW

(millions of

May

SALES

&

Inventories:

QUOTATIONS):

Electrolytic copper—
Export

$285,303,009

17,300

OF

Month

INVENTORIES

Nondurable
METAL

$358,738,000

$31,500

(DEPT.

July 25
July 25

toi)

gross

46,348,000

$14,300

Total

COMPOSITE PRICES:

Finished steel (per lb.)

Pig

48,837,009

BRAD-

INC.

MANUFACTURER'S
IRON AGE

19,256,000

63,116,000

65,460,000

$295,802,000

values

dividends

21,704,000

46,463,000

20,400

Policy
STREET

48,070,000

52,620,000

payments

Surrender
FAILURES

LIFE

Disability payments

INSTITUTE:

ELECTRIC

OF

INSURANCE—Month of April:
Death benefits
Matured

EDISON

INSTITUTE

—

TO

PAYMENTS

REPORTER PRICE INDEX—1926-36

-I

121.1

123.5

125.1

July 28

AVERAGE=100

TURE

121.7

of

S.

U.

—

DEPT.

1909-July,

August,

May

FARMERS

BY

87%

INDEX

—

AGRICUL¬

OF

1914=100

As

—

15:

Unadjusted—
STOCK TRANSACTIONS FOR THE ODD-LOT ACCOUNT OF ODDLOT DEALERS
AND SPECIALISTS ON THE N. Y. STOCK

EXCHANGE—SECURITIES EXCHANGE
Odd-lot sales by dealers icustomers'

Dollar

total

shares—Customers'

of

products

-July 15
July 15
Ju*y 15

-—

43,206

25,093

27,376

1,255,795

722,305

833,176

471,820

$54,157,514

$30,976,066

$38,337,323

$17,508,389

Number

short

other

sales—

sales

Customers'

July 15

sales

Number

shares—Customers*

of

36,140

July 15

orders—Customers' total

of

Customers'

19,311

411

30,777

Fruit

168

252

Meat

July 15
total

35,729

19,159

30,609

15,739

July 15

sales

1,095,740

555,812

866,107

447,882

6.202

5,960

9,645

549,510

860,147

438,237

Customers'

short

sales

July 15

Customers'

other

sales—:

July 15

16,836
1,078,904

July 15

$42,832,672

$22,532,535

$35,526,685

$14,148,078

July 15

279,460

135,810

306,310

158,020

279,460

135,810

306.310

•

158.020

Dollar

value

•

Round-lot sales

;

Short

sales

July 15

Other

sales

July 15

Round-lot purchases by
Number of shares

246,220

279,150

455,910

July 15

178,870

.

operating
income.

.

PRICES

NEW

SERIES

—

U.

S.

DEPT.

OF

LABOR—

"<•

Net

All

Livestock

after

Fuel

and

Metals

other

products

than farm and

foods—

—

—

materials

lighting

and

Building

fixpd charges—:

157.1

153.0

165.0

164.2

Federal

172.0

169.3

152.8

Dividend

241.0

244.2

173,8

"175.4

269.2

metal

products

,

materials

Chemicals

and

allied

products—

—

25

151.7

25

140.8

July 25 ,
—July 25 "

•

f

118.6

■

139.6

133.7

138.3

'..

({Includes 503,000 barrels of foreign crude




runs.

*

.

133.1

173.3
.

1

On

income

common

of

201.4

130.1

173.1

*204.1
117.7

....

,r

Li.

114.3

168.G

3,271,669

2,971,984

to

39,666,629

34,920,312

33,138,022

1,366,965

1,371,026

1,374,619

26,546,039

31,548,927

26,001,351

i.^1——1

1_—

4,585,789

11,595,049

2,968,177

ui—_

529,162

4,945,685

529,233

fixed charges.——_
,* 11
•
' »'

2.17

2.52

2.24

$825,000

"$809,000

$1,092.090

659,800

583,304

540,639

stock

income

3,315,608
49,436,602

35,033,571

,

On preferred stock

Ratio

equip. )—

taxes

appropriations:

u

145.1

>

♦Revised figure.

J60.2
225.2

148.7

.-J* 133.5

*173.5
£07.2

207.8

162.7

"150.6

133.8:

25

July 25

217.5

241.5

'

42,638,613

3,127,369

"176.9

259.4

77,108,625

52,752,210

37,529,948

deductions

"163.3

25

87,548,734

40,657,317

income

175.0

JUly
—July
July
July

15,918,189
80,380,285

4,616,875

75,376,221

i*:

177.0

'
—

$64,462,099

16,459,294

92,165,609

3,854,281

income.—

163.7

July 25
-—

commodities

Textile

from

(way & structures &
Amortization of defense projects

July 25

Meats

All

deductions

July 25

Foods

$75,706,315

17,013,627

July 25

;

2U5

79,230,502

-.July 25

1

products

Grains

235

161

$62,216,875

.___

—

income

Depreciation

commodities

Farm

319

235

I

.Income available for fixed charges—

Other

t

;u

1926b=100:

312

Commission)

income

______

Income

WHOLESALE

Commerce

271

154

CLASS

If*

256

of April:

Miscellaneous

dealers—

289

24#

230

—

ITEMS OF U. S.

(Interstate

Total

206

205
239

342

—

—

railway

Other

255

269

!

products

animals

—Month
Net

242

229

178

Dairy products
Foultry and eggs

RYS.

by dealers—

Number of shares—Total sales

463

285

248

crops

and

SELECTED INCOME

174

389

195

_

Livestock

,

181

387

,

crops

Oil-bearing

15,991

152

>

,

227

lc0

—

Cotton

(customers' sales)—

259

225

246

grain

Tobacco

16,205

•

223

230

grain and hay

Truck

Odd-lot purchases by dealers

—

:—

Food

Feed

sales

value

farm

Crops

purchases)—

Number of orders
Number

All

COMMISSION:

-

UNITED

STATES

EXPORTS AND IMPORTSOF CENSUS, -frt.Month) <rf{ May

BUREAU

(000's

omitted):

y

*

188.7

Exports

118.4

IinRorts

i—

"Revised

figure.

'
~~~

j—

38

The Commercial and Financial Chronicle

(466)

•

Securities Now in Registration
•

Alabama

Power

stockholders.

Birmingham, Ala.

Co.,

filed 64,000 shares oi 1-0% preferred stock
(par $100) to be offered in exchange for a like number
of outstanding 4.20%
preferred snares of Birmingham

July

28

Inc., Seattle, Wash.
July 27 (letter of notification) 9,b'/o shares of non-voting
preferred stock. Trice—At par ($00 per share). Under¬
writer—None.
Proceeds—10
buy
new
equipment.
•

capital.

per

corporate

general

purposes.

Alaska-Wrangell Mills,

Alberta-Canaca

July 18 filed 1,000,000 snares of common siock (par 50
cents).
Price—$2.50 per share.
Underwriter—Thomas

•

Proceeds—For general funds.
Allen Organ Co., Allentown, Pa. (9-1)
July 19 (letter of notification) l,oo0 shares of 6% pre¬
ferred stock (par $100) and 750 snares of common stock
(par $100).
Price—At par.
Underwriter—None. Pro¬
ceeds—For expansion of plant and development of other
electronic products.
Office—8th and Pittston Streets,

June

G. Wylie

Co., New York.

Allentown, Pa.
•

Diamond

American

Corp.

Mining

(8/4)

July 28 (letter of notification) 299.000 shares of common
stock.
Price—At par ($1 per share).
Underwriter—F.

New York. Proceeds—For explora¬
of property operated in MurfreesOffice—99 Wall St., New York, N. Y.

W. McDonald & Co.,

tion and development

boro, Ark.
t

Fire

American

Fla.

Casualty Co., Orlando,

&

(letter of notification) 11,100 shares of common
$10). Price—$27 per share. UnderwriterGuardian Credit Corp., Orlando. Proceeds—For working

30

None.
714

Expected

Insurance Co.,

Chicago

(par $5) to
stockholders of record July 25 at rate of

to

Price—At par.

share for each three held.

Pro¬

ceeds—For

general
corporate
purposes.
Business—
Casualty insurance. Statement effective July 26.
Radio & Television,

American

June
mon

Inc., North Little

Rock, Ark.
(letter of notification) 301,686 shares of com¬
stock (par 10 cents).
Price—75 cents per share.
16

Underwriters—Gearhart, Kinnard & Otis, New York
City. Proceeds—For additional working capital. Office
—Fifth and Cornish Streets, No. Little Rock, Ark.
•

Anderson

Farmer

iProceeds—For

Corp.,

Cleveland,

Ohio

working

capital.

Office—1370

Ontario

reached.

stock

^amendment.

Dealer-Managers—Emanuel, Deetjen & Co.

and Lehman Brothers.

Axe-Houghton Fund B,

Inc., New York
July 27 filed 1,000,000 shares of capital stock (par $5).
U derwriter—Axe Securities Corp., New York. Business
iivestment

stock

com-

(par lc).

er—John

Cameron

.

drill additional

oil

Office—

Plate

Shillinglaw,

Bolger & Co. Proceeds—Proceeds to
together with term loan of $1,000,000 from

company,

E.

(Wm.)

(amendment) 159,000 shares of capital stock (par
;$7), if which 100,000 will be sold to the public and 59,000
offer, d to employees. Of the total
offering, 150,333 shares
will i ? sold by the company and 8 667 for account of

Louisiana

Electric

Proceeds—For

tions.

construction

Office—528 Monroe St.,

June

2

and property
Alexandria, La.

addi¬

common

shares

of

class A stock

Price—$44.50

and

one

share of class

B

stock.

unit. Underwriter—Emory S. Warren
& Co., Washington, D. C.
Proceeds—For general funds.
Office—1707 Eye St., N. W., Washington, D. C.
per

City Stores Co.
July 17 filed an unspecified number of shares of common
stock
(par $5) to be offered in exchange for common
stock (par $10) of Oppenheim, Collins &
Co., Inc., and
for the 4V2%

convertible preferred stock

stock- (par

Co. when

$1)

(par $50)

and

of Franklin

Simon & Co., Inc.,
by the directors of City Stores

registration becomes effective.

The

exchange
offer is expected to expire around
Sept. 15, 1950. DealerManager—W. E. Hutton & Co.
•

June

7

(letter of notitication) 4,000 shares of common
stock (par $1), to be offered to emoiovees
—$25
per share.
Proceeds—To benefit employees for services.
Office—2930 N. Market St., St. Louia, mo.

Community Finance, lnc.r Newark, N. J.
(letter of notification) $100,000 6% cumulative

July 26

deferred

multiples

years

Underwriter—None.

—To

debentures (in
from date of issue.

make

loans.

Office

—

405

of

$100)

due

in

20

Proceeds

Seventh Ave., Newark,

N. J.
•
Conrac, Inc., Glendora, Calif.
July 28 (letter of notification) 96,000 shares of capital

stock.

Price—At par (50 cents per share).
—None. Proceeds—To pay debt and for

Underwriter

Power Co., Jackson, Mich.
499,903 shares of common stock (no par)
present holders at the rate of one new
share for each 10 held, with an oversubscription
privi¬
lege.
Underwriter—To be named in an amendment,

June
to

23 filed

be

offered

along with offering price. Five months ago an offering
of 454,457 shares of common stock to common stockhold¬
ers

was

underwritten

Stanley & Co.
share.

by a group headed by Morgan
Price—Expected to be not less than $33

Proceeds—For construction.

•

Offering—Post¬

Continental

July

Refrigeration Corp., N. Y. (8/3)
(letter of notification) $250,000 of 6% 5-year

28

income notes dated June 1, 1950 in multiples of $1,000.
Price—At 100 and interest. Underwriter—National In¬
vestors Service, New York. Proceeds—To pay expenses
incurred in prosecuting infringement actions under
pa¬

and

for

commercialization

of

patent. > Office—50

Broadway, New York, N. Y.
Cristina Mines, Inc., N. Y. City
May 24 filed 400,000 shares of common stock (par 50
cents). Underwriter—Max Wolberg, a director of com¬
pany.
Price—$1 per share. Proceeds—For development
of tonnage and mining and shipment of ore.
Darden

28

Associates, Inc., Washington, D. C.
notification) 2,000 units of interest.

(letter of
per

unit.

working capital.
ington, D.C.

•

stock
Stock
None.
•

Underwriter—None.

Office—830

Bowen

Proceeds—

Bldg.,

Wash¬




to

all

offices

Cleveland

Corp.

be offered to stockholders of record
one

Brothers, Inc., Waynesboro, Va.
of notification) 310 shares of capital
(par $1) and $25,000 of debenture bonds. Price—

24

at

(letter
par

(8 8)
(par $5)

Aug. 8 at

to
of

me rate

share for each three held, with

new

oversubscription
privilege; rights are to expire Aug. 23. Underwriter—
6i
Co., New York. Price—To be filed by amend¬

mien

ment.

Proceeds—To

capital.

Business

bank

pay

Stainless

—

loans
steel

for

and

plates

working
sheets.

and

Fedders-Quigan Corp.
filed

103,102 shares of series A cumulative

stockholders

each

12

(par $50) to be offered to

&

Co., New York.

complete purchase of

Underwriter—Smitn, barney
pay promissory note,
plant at El Monte, Calif.,

Proceeds—To

for additional

and

con¬

com¬

basis of one preferred share for
Price—To be filed by amendment,

on

shares held.

along with dividend rate.

•

a new

working capital.

Offering postponed.

and

bonds at $1,000

Proceeds—For

Federal Services Finance Corp., Washington,
D. C.

July

21

(letter

of

notification)

3,000 shares of 5%
series B, to be offered
initially in exchange, par for par, for 6% preferred
stock.
Price—At par ($100 per share). Underwriter-!—
Mackall & Coe, Washington, D.C. Proceeds—To redeem
6% preferred stock and for working capital.
1
convertible

preferred

stock,

Fleming-Hall Tobacco Co., Inc., N. Y.
30 (letter of notification) 180,000 shares of com¬
stock (par $1). Price—$1.25 per share. Underwriter
—Carstairs & Co., 1421 Chestnut Street, Philadelphia 2,
June
mon

Pa.,

will

act

added to

financial

as

general funds.

adviser.

operating

each.

Underwriter—

expenses.

Diesel

Power, Inc., Pittsburgh, Pa. (8/5)
July 28 (letter of notification) 25,000 shares of common

be

(Ala.)

Telephone Co.

June 29 (letter of notification) 1,200 shares of 4% cumu¬
lative preferred stock.
Price—At par ($25 per share).
Underwriter—None.
ize

Proceeds—To extend

and

modern¬

plant, lines and other telephone facilities.

Frontier Leather Co., Sherwood, Ore.
July 8 (letter of notification) 1,000 shares of 6% cumula¬
tive preferred stock (par $100) and 10,000 shares of com¬
mon stock
(par 20 cents) to be offered in units of one

preferred and ten common shares. Price—$101 per unit.
Underwriter—George Patton & Co., Portland, Ore. Pro¬
ceeds—To pay off mortgages and for additions, plant
facilities and equipment.

General Radiant Heater Co., Inc.
May 3 filed 170,000 shares of common stock (par 250).
Price—$3 per share. Proceeds—For plant and warehouse,
advertising research, working capital, etc. Temporarily
postponed. Amendment may be filed.
General
June

30

stock

Shoe

filed

Corp., Nashville, Tenn.

maximum

a

of

to be offered

(par $1)

32,885 shares of

common

share-for-share basis

a

on

in

exchange for outstanding preferred stock of W L.
Douglas Shoe Co. No underwriter. Statement effective

July 25.
•

Georgia-Pacific
Augusta, Ga.

Plywood

&

Lumber Co.,

July 27

(letter of notification) 4,000 shares of common
$1).
Price—$14 per share.
Underwriter—
Reynolds & Co., New York. Proceeds—For benefit of
stock

(par

Julian North Cheatham, Winnetka,

111., the selling stock¬

holder.
Globe Hill Mining Co., Colorado Springs, Colo.
May 26 (letter of notification) 5,885,000 shares of com¬
mon stock.
Price—At par (one cent per share). Under¬
writers—George C. Carroll Co., Denver; Inter-Mountain
Shares, Inc., Denver; and M. A. Cleek, Spokane,; Wash.
Proceeds—For mining equipment.
•

Goldwaters, Inc., Phoenix, Ariz.
28
(letter of notification) 2,900 shares of 5%
preferred stock.
Price—At par ($100 per
share).
Underwriter—None.
Proceeds—For
working
capital. Office—31 North First St., Phoenix, Ariz.

July

cumulative

•

be

Granite City
offered
for

share

(III.)

common

each

Steel Co.

&

ner

porate

four

common

stockholders
shares held.

on

stock (no par) to
of one®new

basis

Price—To

Underwriter—Merrill Lynch,

amendment.

Beane, New York.

Proceeds—For

be

filed

by

Pierce, Fengeneral

cor¬

purposes.

Granville

Mines

Corp.,

Ltd.,

British Columbia,

'

Canada

stock to be offered only to common

Feb.
stock

stockholders during
10-day period, up to 100 shares each. Price—At par
($1 per share). Underwriter—Graham & Co., Pittsburgh,
Pa.
Proceeds—To expand production and for working

Proceeds—To

Office—595 Fifth Avenue, New

York, N. Y.

a

San Francisco

Private fVires

Steel

100,000 shares of capital stock

July 31 filed 99,446 shares of

Dawbarn

July

Philadelphia

Stainless

filed

Florala

Coca-Cola Bottling Co. of St. Louis.

•

con¬

of

stock

For

Chicago

Proceeds—To repay bank loans and finance

to

Washington, D. C.
notification) 3,000 shares of class A
(par $12.50) and 1,000 shares of class B
stock (par 25 cents), to be sold in units of three

(letter

common

July

Pittsburgh

Co.

mon

(par

Price—$150

Boston

&

struction.

vertible preferred stock

Co., Inc.

(letter of notification) 9,888 shares of common
$10). Price—$30 per snare.
Underwriter—

19

None.

•

New York.

Wnite, Weld & Co.; Drexel & Co. and Equitable Secur¬
Corp. (jointly); First Boston Corp.; Giore, Forgan

June 21

Temporarily postponed.

tent

Co.

il

bidders for bonds: Halsey, Stuart & Co.
Inc.;
Loeb & Co., Union Securities Corp. and A. C.
& Co. (jointly); Harriman Ripley & Co., Inc.;

ities

firm, will be used to pay existing long-term
obligations and the balance to be used as working capital.
Central

25

Bus¬

Underwriters—To be determined by competitive bidding.

insurance

•

*

(par

Duquesne Light Co. (8/22)
July 2d filed $12,0u0,000 first mortgage bonds due 1980.

Ailyn

com¬

Underwriter—
wells.

Shares, Inc., New York
6,000,000 shares of capital stock

iness—Investment company.

poned.

Price—50 cents per share. UnderBlair, Vice-President and a director,
310 East 66th Street, New
York, N. Y. Proceeds—For
working capital. Office—29 West 65th Street, New York
-23, :r. Y.
-Ju.l\

share sof

($1 per share).

Granite Bldg., 6th Ave. and Wood

cerus). Underwriter—Calvin Bullock, New York.

Kufin,

Great Falls,

300,000

Dividend

July 27 filed

Eastern

per

company.

Broadway Angels, Inc., N. Y. City
July 20 (letter of notification) 570,000 shares of
wr

Inc.,

Office—601

Hooable

Consumers

com¬

(par $3) to be offered in exchange for shares
of Bendix Home Appliances, Inc., at a rate to be filed
by

mo.i

drilling

working capital.

Avco Manufacturing Corp., N. Y. City
July 14 filed an unspecified number of shares of

—

and

July 27

Arkansas Power & Light Co.
May 23 filed 155,000 shares of cumulative preferred stock
(par $100). Proceeds—To be applitd to (a) redemption
on
Aug. 1, 1950, at $110 per share plus dividend ac¬
cruals, of all the 47,609 shares of outstanding $7 pre¬
ferred and 45,891 shares of outstanding $6 preferred;
and (b) the carrying forward of the company's construc•tion program.
Bids—Received by company up to noon
(EDT) on June 19, but rejected. Only one bid was made
of $100,003 per share, with a $4.95 dividend from Lehman
•Brothers, Equitable Securities Corp. and White, Weld &
Co. (jointly).
Statement effective June 12. No further

•

geological

Co., Chicago, III.
June 16 filed 150,000 shares of common stock (par $1),
of which 50,000 shares are to be sold by company and
100,000 shares by three stockholders. Price—To be filed
by amendment. Underwriters—F. Eberstadt & Co. inc.
and

ADDITIONS

Great Falls, Mont.

in ratios to be determined

St., Cleveland, O.

mon

Underwriter—Dillon,

Associates,

Proceeds—To

common

July 14 (letter of notification) 3,000 shares of 4% cumu¬
lative
preferred stock '(par $100), to be offered to
patrons of Anderson Elevator Co.
Underwriter—None.

^decision

$1).

Citizens Credit Corp.,
Motorists

June 28 filed 100,000 shares of capital stock
offered

(par

Temporarily postponed.

(letter of notification)

Caspers Tin

week.
American

be

(Tom)

13th St. South,

stock

(par

one new

by amendment.
Proceeds—For

stock. Price—At par

mon

July

this

Inc.

Ltd.

common stock

•

of

Montana

stock

Office—American Bldg., Orlando, Fla.

Co.

Carney

July 21

capital.

Superior Oil of California,

operations in Canada.

(9/1)

(Del.)

Inc.

Oiis,

&

Distributor

—

originally eiiective July
July 26.

2,150,000 shares of

Price—To be filed
Read

South, Seattle, Wash.

Office—216 Third Ave.,

Canadian
June 27 filed

Business

Statement

Amendment effective

10.

INDICATES

Si., Pittsburgh 22, Pa.

building materials,

No underwriter.

Electric Co.

$16.95

Underwriter—Dealers may

—

Thursday, August 3, 1950

.

SINCE PREVIOUS ISSUE

To

be underwrit¬
public, $19.50 per share; to employees,
share. Piocteus — 'lo reuuee a loan anu lor

Price

ers.

.

.

None.

16

filed

(par

100,000 shares of common
Price—35c per share.

50c).

Proceeds—To

working capital.

non-assessable
Underwriter—

buy mining machinery
Statement effective May 10.

and

for

Volume 172

,

,

Number 4930

Gulf Atlantic

.

.

.

The Commercial and Financial Chronicle

Transportation Co.,

(467)

Mission Appliance Corp;, Hawthorne, Calif.
July 24 filed 50,000 shares of 6% cumulative convertible
preferred stock. Price—At par ($20 per share). Under¬

Jacksonville,

Florida

May 27, 1949, filed 620,000 shares of class A partic. ($1
par; stock and 270,000 shares (25c par) common stock
Offering—135,000 shares of common will be offered foi
subscription by holders on the basis of one-for-two at
25 cents per share. fJnderwriters—Names by amendment
and may include Blair, Jlollins & Co., Inc.; John J. Ber¬
& Co. and A. M. Kidder & Co.

gen

basis."

on

"best

a

Price—Par for common $5 for class A.

NEW ISSUE CALENDAR
August 3, 1950
Continental Refrigeration Corp
Mutual Telephone Co

August 4,

Proceeds
American

Hirst-Chichagof Mining Co., Seattle, Wash.
July 28 (letter of notification) 400,000 shares of common

Power,

Treesdale Laboratories & Textile

Indianapolis,

Eastern Stainless Steel Corp

Seaboard

July 28 filed $9,500,000 of first mortgage bonds, series
A, due Sept. 1, 1980. Underwriter—To be determined by
competitive bidding. Probable bidders: Halsey, Stuart

Finance

$9,440,000

Equip. Trust Ctfs.

August 15,

outstanding

1950

Industrial Stamping & Mfg. Co...Bonds & Common

Offering—Expected late this month.

August

Industrial

Stamping & Mfg. Co. (8/15)
July 6 filed (by amendment) $500,000 of first mortgage
5% bonds due 1967 (with warrants to purchase 60,000

1950

16,

Maine Central RR., noon (EDT)-.Equip. Trust Ctfs.
Pacific Petroleums, Ltd
Common

common stock) and 400,000 shares of common
(par SI). Of the latter, 272,000 shares will be
publicly offered and 28,000 shares will be offered to cer¬

August

stock

Idaho

October

Common

9,

1950

Bonds

Light Co

OFFERINGS TEMPORARILY POSTPONED
American Natural Gas Co

Consumers Power Co

..Common

Middlesex Water Co

Office—11 West 42nd

.........Common

Northwestern Public Service Co

Kauai

mon

Common

Fedders-Quigan Corp.

St., New York 18, N. Y.
June

.Common

Caspers Tin Plate Co

Uranium Corp., N. Y. City
(letter of notification) 20,000 shares of capital
Price—25 cents per share.
Underwriter—None.

Proceeds—For mining operations.

.Common

Canadian Superior Oil of California, Ltd.-Common

International

stock.

Public Service Co. of Colorado

Engineering Works, Ltd., Lihue, Hawaii
23 (letter of notification) 98,000 shares of com¬
stock
(par $1).
Price—$1.10 per share. Under¬

Rochester Telephone

Common

Debs. & Pfd.

Common

Corp...

Safeway Stores, Inc

...

writer—Ross & Co., Box 2665, Honolulu, T. H. Proceeds
—For working capital. Co.'s Address—Box 1589, Lihue,

Tele-Tone

•

United States Plywood Corp

Pfd. & Com.

Southern Co.

T. H.

t

27

filed

1,000,000

shares

Underwriter—Knickerbocker

of beneficial interest.
Shares, Inc.
Business—

Investment company.

Lennox Hotel Co., St. Louis, Mo.

July 28 (letter of notification) 11,326 shares of common
stock (par SI).
Price—$6.04 per share.
Underwriter—
Mayfair Hotel, Inc., St. Louis, Mo.
off first and second mortgage bonds.

Proceeds—To

pay

Office—825 Wash¬

Power &

Light Co.
May 23 filed 90,000 shares of preferred stock (par $100).
Proceeds—To be used to redeem, at $110 per shart plus
dividend accruals, the 59,422 shares of outstanding $6
preferred stock, and for construction and other purposes.
Bids—Received by company up to noon (EDT) on June
19, but rejected.
Three bids were made as follows:
Union Securities Corp., $100.40 per share with a $4.65
dividend; Blyth & Co., Inc., and Equitable Securities
Corp. (jointly), $100.10 with a $4.65 dividend; and W. C.
Langley & Co. and First Boston Corp. (jointly), $100.30
with a $5.80 dividend. Statement effective June 12. No
further decision reached.
Lovett Chemical

of

California, Newhall, Calif.
May 31 (letter of notification) 282,250 shares of capital
stock. Price—At par ($1 per share). Underwriter—Floyd
A. Allen & Co., Inc., Lps Angeles, Calif. Proceeds—To
buy land, build a plant and equip it to produce so-called
"impact" plastics. Office—244 S. Pine St., Newhall, Calif.

Preferred

Middle South Utilities,

•"

Telephone Co., Honolulu, Hawaii (8/3)
$1,000,000 first mtge 3Vs%' bonds, series G,

ally to common stockholders of record July 7 (with
rights to expire Aug. 15) at rate of one preferred share
for each 7.5778 common shares held with employees en¬
titled

to subscribe

bonds:

and

Co.

Mississippi Power & Light Co. Underwriter—
Equitable Securities Corp will serve as "dealer-man¬
ager." (See also listings of Arkansas, Louisiana and
Mississippi companies elsewhere in these columns.)

9

stock
on

Co.

a

Newark, N. J.

offered

to

common

basis.

Underwriter—Clark, Dodge &

Proceeds—To pay notes and for additional

capital.

Metal pa k

Corp., Salinas, Calif.
July 20 (letter of notification) 2,500 shares of class A
stock (par $10) and 7.500 shares of class B stock (no
par), the latter to be issued in exchange for property
acquired. Price—Of class A stock, $10 per share. Under¬
writer—None. Proceeds—For working capital. Office—
40 Los Lareles, Salinas, Calif.
Metro, Inc., Baltimore, Md.
July 25 (letter of notification) 10,000 shares of 7% pre¬
ferred stock.
Price—At par ($100 per share). Under-




Under¬

writer—Kidder, Peabody & Co. Proceeds—To pay shortterm notes and toward 1950-1951 construction.
Offering
—Being made today.
•

New

Hampshire Electric Co., Cambridge, Mass.

Aug. 2 filed $3,600,000 of first mortgage sinking fund
bonds, series A, due 1975.
Underwriter—To be deter¬
mined by competitive bidding. Probable bidders: Halsey,
Stuart & Co. Inc.; The First Boston Corp.; Kidder, Pea¬

body & Co., and White, Weld & Co. (jointly).
—To retire

Proceeds

(a) $1,880,000 first mortgage bonds, series A

and

B, due

Dec.

31, 1952; and the balance for construction purposes.

1963, and

(b) $1,250,000 of bank loans due

Illinois

Coal

Corp.,

Chicago

of notification) up to 2,000 shares of
common stock
(no par) to be sold at the market price
(between $20 and $22 per share) by T. Howard Green,
10

May

(letter

Vice-President

&

the

of

comoanv.

Underwrite*—Faroll

Co., Rogers & Tracy and Shields & Co., Chicago.

Huron, S. D.
(par $3) to
offered to present stockholders at rate of one share
each 10 held. Underwriter—A. C. Allyn and Co., Inc.,
Public

Service Co.,

June 9 filed 49,200 shares of common stock
be
Or

New York.

Price—To be filed by

—For construction expenditures.
•

Overseas

National

amendment. Proceeds
Postponed temporarily.

Airways,

San Francisco,

Calif.

(letter of notification) 100.000 shares of class
preferred stock (par $1) and 200,000 shares of com¬
stock (par 10 cents); also 30,500 shares of class B
preferred stock (par $1) to be offered to Calasia Air
Transport for certain rights. Price—Of class A preferred

working

Indefinitely postponed.

mon

and

Miles

Laboratories, Inc., Elkhart, Ind.
(letter of notification) 2,500 shares of common
stock (no par). Price—$16.50 per share. Underwriter—
Cohu & Co., New York City. Proceeds—To two selling
stockholders. Offering date indefinite.
Miller

(Walter R.) Co., Inc.
(letter of notification) 1,000 shares of 6%
cumulative preferred stock at par ($100 per share). Un¬
derwriter—George D. B. Bonbright & Co., Binghamton,
N. Y. Proceeds—To assist in acquisition of 1216 shares
6

San Francisco,, 2,

Pacific

at par.

Underwriter—None. Pro¬
Office—291 Geary St.,

expenses.

Calif.

Petroleums Ltd.

(8/16)

shares of common stock (par
$1-Canadian). Price—To be filed by amendment. Under¬
writer—Eastman, Dillon & Co. Proceeds—To pay bank
loan and for corporate purposes, including development
June

30

filed

of oil and gas

900,000

landsj.

Pan American

Gold Ltd.,

Toronto, Canada

July 20, 1948 filed 1,983,295 shares of common stock (par
$1). Underwriters may be brokers. Price—45 cents per
share.

of company's common stock.

stock,
general

common

ceeds—For

June 23

March

Price—For

A

5,200 shares of Common
stockholders at $50 per share

(letter of notification)

one-for-five

shares.

For preferred, at par.

July 28

Middlesex Water Co.,
Feb.

unsubscribed

for

102.46 and interest.

Northwestern

Inc.

Proceeds

—

Mainly for development. Statement

effective April 10. 1950
•

Merry Brothers Brick & Tile Co., Augusta, Ga,

Underwriter—Johnson, Lane, Space & Co,, Inc. Proceeds
—To Ernest B. Merry, Jr., Vice-President and General
Manager, the selling stockholder.

Carmel,

Mt.

Office—316 Market St.,

June 27 filed

'

June 15 (letter of notification) 1,250 shares of 5% cumu¬
lative preferred stock. Price—At par ($100 per share).

Under¬

share).

Illinois.

a

Office—

June 1 filed 400,000 shares of common stock (no par) to
be offered to preferred stockholders of three subsidiaries
—Arkansas Power & Light Co., Louisiana Power & Light

ington Ave.. St. Louis, Mo.
Louisiana

per

Corp.____________Class A & Com.

Proceeds—For working capital.
St., Baltimore 2, Md.

808 E. Fayette

Knickerbocker Fund, New York

July

•

Common

Radio

writer—None.

I

($100

Proceeds—To retire short-term notes and

Northern

Kaye-Halbert Corp., Culver City, Calif.
July 28 filed 100,000 shares of class A common stock
(par $1). Price—$5 per share. Underwriter—Sills, Fairman & Harris, Inc., Chicago, III.
Proceeds—For working
capital.

/

1980, and 100,000 shares of preferred stock, series C
(par $10), the new preferred stock being offered initi¬

Falls,

July 27 (letter of notification) 300,000 shares of capital
stock.
Price—At par (50 cents per share).
Underwriter
—None.
Proceeds—For working capital.
Address—P. O
Box 325, Idaho Falls, Idaho.
•

Price—At par

expand facilities.

Mutual

\

■

(III.) Public Utility Co.
July 24 (letter of notification) 3,000 shares of 4% pre¬
ferred stock.

Pfd. & Common

./

.

Mt. Carmel

writer—None.

Common

Idaho.

July 14

•
Modern Supply Co., Inc., Pittsburgh, Pa.
July 28 (letter of notification) 2,000 shares of 5% pre¬
ferred stock (par $100) and 50,000 shares of common
stock (no par—$1 declared value), of which 145 pre¬
ferred and 15,055 com. shares were sold in Pennsylvania.
Price—For preferred, $100 and for common, $1 per share.
Underwriter—None.
Proceeds—For expansion and de¬
velopment. Office—837 W. North Ave., Pittsburgh 12,

due

Utah Power &

Copper Co.,

.Common

Utah Power & Light Co

Offering—Expected middle of this month.
&

,

September 12, 1950

Proceeds—

To pay mortgage and certain debts, and balance added
to working capital. part of which will be used to reduce

Lead

Mississippi Power & Light Co.
May 23 filed 85,000 shares of cumulative preferred stock
(par 100). Proceeds—To be used to redeem at $110 per
share plus dividends, the outstanding 44,476 shares of $6
preferred stock and for construction and other corpo¬
rate purposes. Bids—Received by company up to noon
(EDT) on June 19 but rejected. Four bids were made
as follows*
Union Securities Corp., $100.10 per share
with a $4.80 dividend; Lehman Brothers, $100,551 with
a $4.85 div.; W. C. Langley & Co. and First Boston Corp.
(jointly), $100.30 with a $4.90 dividend; and Blyth & Co.,
Inc., Equitable Securities Corp
Shields & Co., White,
Weld & Co. and Kidder, Peabody & Co. (jointly), $100.19
with a $4.90 dividend. Statement effective June 12. No

•

1950

Alberta-Canada Oils, Inc
Allen Organ Co..

optioned to the underwriter of the bonds. Price—
of bonds, 100; and of stock to public and
employees, $1
per share.
Underwriters—For bonds, P. W. Brooks &

International

1950

September 1,

be

•

22,

Transvision, Inc

tain officers and directors of the
company; 60,000 shares
to be reserved for stock options; and 40,000 shares to

bank loans.

water and space heaters.

pa.

shares of

Co., Inc.; for stock, Baker, Simonds & Co.

a proposed new plant to be located east of the Rocky
Mountains. Business—Manufacturer of gas and electric

further decision reached.

August 9, 1950

Inc.; First Boston Corp.; Harriman Ripley & Co.,
Blyth & Co., Inc. (jointly); Kidder, Peabody
redeem

Common
.Preferred

Co

Chesapeake & Ohio Ry

and

Proceeds—To

Preferred

Processing Co.

August 8, 1950

Indiana Gas & Water Co., Inc.,
Indiana

Co.

Common

Inc

tle, Wash.

bonds.

Common

August 7, 1950

stock.
Price—50 cents per share.
Underwriter—H. B.
Houston, license broker, Seattle, Wash.
Proceeds—For
working capital. Office—415 Seventh Ave. South, Seat¬

&

1950

Diamond Mining Corp

August 5, 1950
Diesel

•

Inc.

in

Notes
Bonds & Preferred

efforts;

working capital..

& Co.

writer—Lester & Co., Los Angeles, Calif. Proceeds—To
loans and install machinery and equipment

retire bank

—To complete an ocean ferry, to finance dock and term¬
inal facilities to pay current obligations, and to provide

•

39

CONFIDENTIAL

SERVICE

SURG

''

SINCE

mo

PRINTING CO., Inc.'
80 SOUTH ST., NEW YORK

y

Xhiatge Asieaatfs

JAcCOSMICK and

HENDER5&N,

'

w-

;

*

7,

fyY.
0#mtesr4>

< tomtoa Associate
The lEAGRAVE PRESS, Ltd.

Parks Air Lines,

Inc., East St. Louis, III.

July 26 (letter of notification) 100,000 shares of common
stock (par $2). Price—$3 per share. Underwriter—None.
Proceeds—For operating purposes. Office—Parks Met¬
ropolitan Airport, East St. Louis, 111.
•

Pendleton

(Ore.)

Grain Growers,

Inc.

July 17 (letter of notification) $155,709 of series 18 cap¬
ital reserve certificates to be issued to patrons for the
year 1949 in proportion to their patronage.
Proceeds—For capital purposes.

Underwriter

—None.

•
Phibian, Inc., Vancouver, Wash.
July 17 (letter of notification) 9.650 shares of common
stock (no par). Price—$25 per share.
Underwriter—
None. Proceeds—For working capital. Address—P. O.
Box 464, Vancouver, Wash.

Continued

on

page

40

,

40

The Commercial and Financial Chronicle

(468)

Continued

from

page

Petroleum

Power

working capital.
Spring. Md.

39
Toronto Canada

Ltd.,

administration
June 27,

•effective

Public

June

26

and

expenses

drilling.

Statement

1949.

$7,000,000 of convertible debentures, due

I960, and 100,000 shares of cumulative preferred stock
(par $100). Underwriters—To be determined by com-

ptetitive bidding, along with prices, interest rate on de¬
stock. Probable
Halsey, Stuart & Co. Inc.; Blyth &

bentures and dividend rate on preferred
for

bonds:

Inc., and Smith, Barney & Co. (jointly); Lehman
Brothers; First Boston Corp.; Harris, Hall & Co., Inc.;
Kidder, Peabody & Co. Probable bidders for preferred:
•Glore, Forgan & Co. and W. C. Langley & Co. (jointly);
Kehman Brothers; First Boston Corp., Boettcher & Co.
and Bos worth, Sullivan & Co.; Kuhn, Loeb & Co. and
Harris, Hall & Co., Inc. (jointly.) Proceeds—For con¬
struction. Temporarily postponed. It was stated on Aug.
I. that company plans to reduce new financing to $10,900,000.
Co.,

•

Pueblo

July

(letter

24

14,852

(Colo.)

shares

offered

stock.

common

of

$1,000

one

(par
bond

Price—$1,492.20

'For working capital.

of

bonds

and

91

unit.

per

to

Proceeds—

Office—702 N. Main St., Pueblo,

Colo.

—To

Quinby Plan, Inc., Rochester, N. Y.
■July 28 Hied $2,000,000 of Quinby Plans. Underwriter—
Quinby & Co., Inc. Business—An investment company.
•

Raysol, Inc., Washington, D. C.
July 24 (letter of notification) 10,000 shares of 6% pre¬
ferred stock (par $10) and 5,000 shares of common stock,
to

be

offered
share

■one

units

in

of

in

Niagara

of

shares

two

stock.

common

Falls,

Office—415

of

preferred

Price—$20

per

and

unit.

Proceeds—To install

N. Y.,

Butternut

develop

and

St.,

bottling plant
foreign markets.

Washington,

N.W.,

D.C.

writers—Hornblower & Weeks and Paine, Webber, Jack¬
& Curtis.

Proceeds—For working capital. Business—
Electronic tubes and equipment for television and radio
sets.

Rochester

(N. Y.) Telephone Corp. *
125,000 shares of common stock (par $10)
io be offered to present stockholders at rate of one new
.

June 29 filed

/jhare for each four held.

Price—To be filed by amend¬

Underwriter—The First Boston Corp., New York.
Proceeds—For general corporate purposes, including con¬
ment.

struction and

acquire properties and for working capital.

loan.

a

Offering postponed.

Mills,

Inc.,

Denver,

Colorado
ible

of

(letter of notification)

$150 000 of 5%

convert¬

sinking fund debentures, due 1960, and 15,000 shares
stock (par $10), to be sold separately or in

common

units

of

$1,000 debenture and

one

JPrice—Separately, at

100

shares of stock.

in units, at $2,000 each.
Underwriters—Boettcher & Co. and Peters, Writer &
•Christensen, Inc., Denver, Col.
Proceeds—For new ma¬
chinery, equipment and working capital. May be placed

and

par,

semi-privately.
Safeway Stores, Inc.
■$une 8 filed 321,000 shares of cumulative preferred stock
(par $100) and 257,064 shares of common stock (par $5).
The
at

will

common

the

Of

rate

the

of

one

preferred

be

offered

new

share

to

each

shares

205,661

stockholders

common

for

will

10

So.

Beverly

Drive,

the unsubscribed

offered

in

common

shares

as

well

as

85,114 shares

of preferred not needed for the
exchange and 30,225
shares which will be created by
converting that many of
the old 5% shares brought in under the

exchange into
Any old preferred not exchanged
will be redeemed on Oct. 1.
Price—To be filed by
amendment, along with the dividend rate on the new
preferred. Proceeds—To redeem the unexchanged 5%
preferred stock.

stock, make cash payments
prepayment of $20,000,000

Beverly

Hills,

Industries, Inc., St. Louis, Mo.
July 20 (letter of notification) 10,000 shares of
stock

(no

None.

par).

Price—$15

per

Proceeds—For

working
Kentucky Ave., St. Louis, Mo.

share.

common

Underwriter—

capital.

Office—1317

Nevada

July 20 (letter of notification) 200,000 shares of common
stock.
Price—At par
($1 per share).
Underwriter—
None.

Proceeds—For

working

capital.

Office—333

Bridge St., Winnemuca, Nev.

on

in

exchange, and toward the
bank

loans.

Offering—

Mining & Developing Co., Montrose,

Colorado

July 24 (letter of notification) 20,000 shares of common
stock (par one cent) to be issued as a
bonus, with no
proceeds- to company.

Address—Box 18, Montrose, Colo:

Seaboard Finance Co.

(8/8)

July 20 filed 114,000 shares of $1.35 convertible
preferred
stock, series B (no par), to be offered in exchange
•on
a
share-for-share basis for $1.35 convertible
pre¬
of

company

ing underwriting firms.
the

latter

$25.50

stock

sold

to

owned by 26 participat¬
additional 36,000 shares of
two institutional investors at
now

An

share will remain outstanding. Price—To be
filed by amendment. Underwriters -J
The First Boston
Corp. and five others. Proceeds—For
acquisition of stock
ot Employees Credit
Corp. and for working
per

capital.

•

Seafood

exchange for assets of Petroleum Royalties Co.
—Kennedy Building, Tulsa. Okla.
Transvision, Inc.
June

13

filed

capital

'Price—At

stock.

Underwriter—E, W.

par

McRoberts

(25

cents

ing

capital

and

per

share).

&

Southeastern

Fund, Columbia, S. C.
July 26 (letter of notification) 150 5% collateral trust
notes of $1,000 each, maturing in one, two or three years
from the dates of the respective notes.
Underwriter—
Proceeds—To

purchase

house

trailers.

Office—

Liberty Life Bldg., Columbia, S. C.
Co.

Southern

818,415 shares of common stock (par $51
to be offered in exchange for 254,045 shares of common
stock of Birmingham Electric Co.
No underwriter.
.

Southern

loans

repay

Co., Atlanta, Ga.

1,000,000 shares of

common

stock (par $5).

Underwriters—To be determined by competitive bidding.
bidders are: Morgan Stanley & Co., Kidder,

•

Treesdale
Co.

RFC

Croydon

and

July

At

Laboratories

(letter

27

Textile

Processing

of

notification) 100,000 shares of 5%
stock, convertible into common
share, on or before Oct. 1, 1959. Price—
share). Underwriter — Graham & Co.,

preferred

share for

($3

par

&

(8/7)

per

Pittsburgh, Pa. Proceeds—To pay indebtedness, to ac¬
quire and install additional equipment and for working
Office—223 Fourth Ave., Pittsburgh 22, Pa.

Tri-State Oil &

July 27
mon

Refining Co., Denver, Col.
4,000,000 shares of
par (five cents per share).

(letter of notification)

stock.

Price—At

ceeds—For

working
Bldg., Denver, Colo.
United

capital.

com¬

Pro¬
California

Office—201

Mining & Leasing Corp., Central City,

July 19 (letter of notification) 891,250 shares of common
stock. Price—At par (10 cents per share). Underwriter
—None.

Proceeds—For

working capital.

United States Plywood Corp.
June 19 filed 60,000 shares of series B cumulative con¬
vertible preferred stock (par $100). Underwriter—East¬

Dillon

& Co., New York.

Price—To be filed by
Proceeds—To in¬
crease working capital and for other corporate purposes,
including the erection of a new plant at Anderson, Calif.
man,

amendment along with dividend rate.

Upson-Walton Co., Cleveland, Ohio
July 12 (letter of notification) 28,584 shares of common
stock (par $1), of which 24,284 shares are offered to
common stockholders of record July 7 at rate of one new
share for each five held, with rights expiring Aug. 10,
and 4,300 shares are offered to employees. Price—$5 per
share.

Peabody & Co. and Merrill Lynch, Pierce, Fenner &
Beane (jointly); Blyth & Co., Inc. and Bear, Stearns &
Co. (jointly); Lehman Brothers; Union Securities Corp.
and Equitable Securities Corp. (jointly); Harriman Rip¬
ley & Co., Inc. Proceeds—To purchase shares of subsid¬

700 Perry-Payne Bldg.,

iaries in order to assist them in

•

from

F.

increase work¬

Syndicate, Inc.

Probable

tion.

Proceeds—To

Temporarily postponed.

July 28 filed

June 23 filed

(par $1).
Clay-

stock

common

Underwriter—Blair

Colorado
common

Co., Twin Falls, Ida.
Proceeds—For mining development.

None.

share.

per

Office

(8/22)

300,000 shares of

baugh & Co., New York.

•

Mining Co., Hailey, Ida.
July 17 (letter of notification) 250,000 shares of

financing

construc¬

new

•

Proceeds—To erect

new

office building.

Office—

Cleveland, O.

Vanadium-Alloys Steel Co.
(letter of notification) 3,000 shares of capital
(no par) to be offered employees. Price—$31 per

Aug.

1

stock

Underwriter—None.

share.

Proceeds—To

be

added

to

working capital.

general

Temporarily postponed.

Vieh

Southern

Co., Columbus, Ohio

Industries Corp., Mobile, Ala.
July 24 (letter of notification) 1,000 shares of common
stock.
Price—At par ($100 per share).
Underwriter—

(letter of notification) 19,500 shares of common
stock at $10 per share. Underwriter—The Ohio Co. Pro¬
for

Proceeds—To

Gulf

Shipbuilding Corp., selling
Office—61 St. Joseph St., Mobile, Ala.

stockholder.

Natural

Southwest

Gas

Co., Shreveport, La.
June 26 (letter of notification) 13,500 shares of common
stock to be sold by Ronald M. Craigmyle, at market
(about $7.37V2 per share) through Craigmyle, Pinney &
Co., New York City.
•
Sprague Devices, Inc., Michigan City, Ind.
July 27 (letter of notification) $100,000 of first mortgage
sinking fund convertible 5% bonds (in denominations
of $500 and $1,000 each).
Underwriter—City Securities

Corp., Indianapolis, Ind. Proceeds—For working capital.
Office—Huron St., Michigan City, Ind.
Standard Oil Co.

July 14 filed
stock

(New Jersey)

unspecified number of shares of capital
(par $25), to be offered in exchange for 500,000
an

shares of outstanding capital stock of

Creole Petroleum
Corp. at rate of eight Standard Oil shares for 15 Creole
shares.

Purpose—To increase holdings of

to 95%

Creole stock

from present 93.12%.

Corp. of Maryland* ;•
July 27 (letter of notification) 4.000 shares
qf

stock owned by John Wexler.
Price—At
share)., Proceeds—Net proceeds; less $1

par:

per.

—$1 per share (U. S. funds).
ment,
•

road

Underwriter—None.

construction,

Sun Finance & Loan




Office—222

Proceeds—For

working

capital.

Republic Bldg., Cleveland, O.

Disinfecting Co.

(letter of notification) 3,000 shares of common
stock (par 50 cents). Price—At market (about $10 per
share).
Underwriter—Coffin & Burr, Inc., New York.
Proceeds—To

stockholder.

selling

Office—42-16

West

Street, Long Island City, N. Y.
Western Carolina Telephone
June

22

(letter of notification)

stock to be offered to
for each two shares

Underwriter—None.

Co., Franklin, N. C.
1,406 shares of capital

stockholders at rate of

held.

one

share

Price—At par ($50 per share).

Proceeds—To pay bank

loans.

Western Oil

Fields, Inc., Denver, Colo.
May 5 (letter of notification) 600,000 shares of common
stock and a $50,000 note carrying interest at 4% payable
from percentage of oil sold.
This note will carry with
it as a bonus 500,000 shares of stock.
Price—Of stock,
250 per share.
Underwriter—John G. Perry & Co., Den¬
ver.
Proceeds—To drill for oil in Wyoming and for
working capital.

Prospective Offerings

(par $1)..
Price—$6 per share. Underwriters — Sills, Fairman &
Harris; Straus & Blosser. Proceeds—To 15 selling stock¬
holders. Temporarily postponed.
Tele-Tone Radio Corp., N. Y.
City
22 filed 100,000 shares of cumulative convertible
class A stock. Price—At par ($10 per share). Under¬

June

writers—Sills, Fairman & Harris; Straus & Blosser. Pro¬
ceeds

For additional plant facilities and

—

capital.

for working

Temporarily postponed.

Texas

Consolidated

Oils

(formerly Texmass

Office—Dallas, Tex.

,s

-

,

Titan

Explosives Co^Portland,^Ore»
July 20 (letter of notification) 1,000 shares of 4% cumu-

•/)["}

V»n,>

•

.

•

"V

«■•->

June 3 it

Finance

Co.

later

reported company may do some financing
this.. year.
Traditional underwriter: Goldman,

Sachs

&

.

was

Co.

Alabama

'

.

*

Power Co.

May 12 company reported to be considering issue in late
of about $10,000,000 preferred stock.
Probable

)',t

•.

.

bidders: Morgan Stanley & Co.; Blyth & Co., Inc.; Union
Securities Corp. and Equitable Securities Corp. (jointly);
First Boston Corp.; Drexel & Co. Proceeds will be used
for construction

expenditures.

•

■

American Investment Co. of Illinois

-

;<
May 24 announced company is planning to file shortly
registration statement covering 160,000 shares of prior
preferred stock (par $50). Price—To be filed by amend¬
ment. Underwriters—Glore, Forgan & Co.; Kidder, Pea¬
body & Co., and Alex. Brown & Sons, and others. Pro¬
ceeds—For additional working capital.
a

American Natural

Petroleum Co.)

•

Aetna

summer

Tele-Tone Radio Corp., N. Y. City
June 22 filed 135,000 shares of common stock

Forrester A. Clark.

per'

West

Pro¬

purchase of equip¬
exploration and development.

common

■donated by John Wexler to the
corporation, and used for

buy the assets of Brodhead-Garrett Co. and
working capital.

July 25

ceeds—Funds will be applied to the

($10

share, to be

ceeds—To

Mines Ltd., Toronto, Canada
6, 1949, filed 375,000 shares of common stock. Price

July 24 filed voting trust certificates representing 25,500
shares of $5 cumulative preferred stock, class A (no
par).
Voting Trustees—John F. Chase, Uindsey Hooper and

Products

May 8

Sudor* Gold
June

Underwriter—None.

stock

mon

Snoose

411

Royalty Corp., Tulsa, Okla.

(letter of notification) 109,030 shares of com¬
stock (par 70 cents) to be issued at $2.50 per share

in

•

•

ferred

Toklan

July 21

capital.

Co., Cleveland, Ohio
July 20 (letter of notification) 3,000 shares of class A
6% preferred stock.
Price—At par ($100 per share).

Juan

•

retire

Proceeds—To

to

purchase and install additional ma¬
Address—P. O. Box 43C4, Portland 8, Ore.

chinery.

stock

Slumbering Hills Mining Corp., Winnemucca,

•

Underwriter—None.

par).

debentures and

cumulative

Sinclair

Temporarily postponed.
San

participating preferred stock to be offered at
per share) and 6,572 shares of common stock

($25

Price—2.75

Calif.,
•

shares held.

be

exchange for 186,965 shares of outstanding 5% preferred
stock, along with an unspecified cash payment. Under¬
writer—Merrill Lynch, Pierce, Fenner & Beane will offer

new

Office—321

poses.

Thursday. August 3, 1950

.

None.

repayment of

Rocky Mountain Textile
July 11

capital
and Profit

Television Productions, Inc.
June 29 (letter of notification) 150,000 shares of common
stock
(par $1).
Price—$2 per share.
Underwriter—
Koellmer & Gunther, Newark, N. J. Proceeds—To com¬
plete films in progress and for general corporate pur¬

•

Raytheon Manufacturing Co.
July 12 filed 289,459 shares of common stock (par $5),
being offered to holders of common stock of record July
31 at rate of one share for each five shares held; rights
will expire on Aug. 14.
Price—$6.75 per share. Under¬
son

of

Simmel-Meservey

•

Underwriter—None.

shares

Co., Oklahoma City, Okla.
April 27 (letter of notification) 225,782 shares of class A
stock (par 500).
Price—$1.25 per share. Underwriter—
Genesee Valley Securities Co., Rochester, N. Y.
Proceeds

and

be
shares of

cent),

one

lative

(no

750,000

stock to be purchased under "The Savings
Sharing Pension Fund of Sears, Roebuck & Co. Em¬
ployees," through not more than 25,000 memberships in
the Fund which is voluntary.

•

Investment

$25,000

stock

common

units

in

Medico Clinic

notification)

of

of

Silver

par

Sears, Roebuck & Co.
July 26 filed not more tnan

'

bidders

Lane,

Seneca Oil

of Colorado

Service Co.

filed

Linden

•

1949, filed 1,150,000 shares ($1 par) common
1,000,000 on behalf of company and 150,000 by
Hew York Co., Ltd.
Price—50 cents per share.
Underwriters—S. G. Cranwell & Co., New York.
Proceeds—
April 25,

ot which

For

Office—1520

.

.

May

18

380,607

Gas Co.

it was announced company plans
shares of common stock (no par)

stockholders at rate of

share

for each

issuance of
to

common

eight shares
held. Price—To be filed by amendment. Underwriters—
To be determined by competitive bidding. Probable bid¬
ders: Glore, Forgan & Co. and W. C. Langley & Co.
(jointly); Blyth & Co., Inc.; Lehman Brothers; The First
one

Volume 172

Number 4930

The Commercial and Financial Chronicle

..

.

(469)

Boston Corp. Proceeds—To increase investments in stock
of

Michigan Consolidated Gas Co. and Milwaukee
Light Co. Offering—Postponed indefinitely. Terms

Gas
may

be revised.
•

Anton

Corp., Fort Worth, Tex.
a registration statement will
covering $10,500,000 of preferred and common

July 31 it
filed

be

Oil

rumored that

was

stock.
Associated
June

14

it

Natural

announced

was

Co.

Gas

plans

issuance of
$234,000 common stock and $450,000 of 18-year 4 xk % first
mortgage bonds, plus a 5-year bank loan of $250,000, to
finance construction of

company

pipe line project in south¬
eastern Missouri, authorized by FPC, to cost $934,000.
Associated

a

Chicago & Western Indiana RR.
Jan. 31 reported company will
probably issue in the near
some bonds to refund the 4% non-callable con¬
solidated first mortgage bonds due
future

July 1, 1952. Re¬
funding of the first and refunding mortgage 4Y4% bonds,
series A, due Sept. 1, 1962, is also said to be a
possibility.

Probable bidders: Halsey, Stuart & Co.
Inc.; Morgan
Stanley & Co.; Lee Higginson Corp.; Harris, Hall & Co.
(Inc.); Drexel & Co.; Kuhn, Loeb & Co. and Salomon
Bros. & Hutzler (jointly); Harriman, Ripley &
Co., Inc.;
First Boston Corp.; Lehman
Brothers; Paine, Webber,
Jackson & Curtis; Kidder,
Peabody & Co.

Commercial

new

Telephone Co.,

Ltd.
June 15 it was announced that the company's present
intention is to raise approximately $10,000,000 of addi¬
tional funds by selling, in the fall of the current
year,
50,000 additional shares of cumulative preferred stock
(par $20), a like amount of common stock (par $20) and
$8,000,000 of first mortgage bonds, series G.
Under¬
writers—For

preferred stock, probably Paine, Webber,
Jackson & Curtis, Stone & Webster Securities Corp. and

Mitchum, Tully & Co. For the bonds, to be determined
by competitive bidding.
Probable bidders for bonds:
Halsey, Stuart & Co. Inc.; Kuhn, Loeb & Co. and Salo¬

Credit

Co.

March 30
stockholders approved
creation of 500,000
shares of cumulative preferred stock (par
$100) of which

plans to sell 230,000 shares. A group of under¬
writers, headed by Kidder, Peabody & Co. and The First
Boston Corp., are expected to offer the stock.

company

Consolidated Edison Co. of New
York, Inc.
May 15, Ralph H. Tapscott, Chairman, said the company
will require
approximately $90,000,000 of "new money'
through the sale of securities. No permanent financing is
contemplated before this fall, however, and current ex¬
penditures are being financed by short-term loans, of
which $16,000,000 are now
outstanding. It is anticipated
that $257,000,000 will be needed for the construction
pro¬

Bros. & Hutzler (jointly); Lehman Brothers; Paine,
Webber, Jackson & Curtis and Stone & Webster Secur¬
ities Corp. (jointly); White, Weld & Co. and Kidder,
Peabody
& Co. (jointly); Equitakle Securities Corp.
and Harris, Hall & Co. (Inc.) (jointly). Proceeds—For

gram

construction

the

four

the

mon

program.

Big Bear Markets of Michigan,

Inc.
June 9 it was announced company plans early registra¬
tion of 100,000 shares of additional capital stock.
Under¬
writer—J. G. White & Co., New York.
Canada

July

25

it

(Dominion of)

reported that registration is expected
about the middle of September of a new issue of $100,000,000 bonds, the proceeds of which are to be used to
refund on Oct. 1, next, a like amount of 4% external
bonds, due Oct. 1, 1960, which are payable in U. S. dol¬
lars.

was

Probable

underwriter—Morgan Stanley & Co.

Corp. of America
April 12 the stockholders voted to authorize the creation
of 1,000,000 shares of a new preferred stock (par $100),
505,000 shares of which can be issued at any time
Plans are being formulated for the issuance this year,
market

conditions

initial series of this

an

be convertible into

considered

are

satisfactory,

of

preferred stock which may

new

be used in

part for expansion of the business, including
additional production facilities.
Probable underwriters
Dillon, Read & Co. Inc.; Morgan Stanley & Co.
Central

Maine

Power

Co.

& Co.

(jointly); Coffin & Burr, Inc.; First Boston Corp.;
Harriman Ripley & Co., Inc. and Goldman, Sachs & Co.
(jointly). The proceeds would be used to pay outstand¬
ing notes of NEPSCO.
March 1 it

Electric

announced that under

was

an

amended plan

reorganization it is proposed to issue to holders of all
each old share the right
to buy a unit consisting of eight shares of new common
stock and $14 principal amount of new 4V2% income de¬
bentures for a package price of $18. The common stock,
except for approximately 4,600,000 shares held by Harri¬
son Williams and associates, would be offered the right
to buy a unit of one new common share and $1.75 of new
income debentures for a package price of $2.25 for each
shares held.

common

The

issue

of

new

stock and

debentures would be underwritten by Darien Corp.

and
a banking
group headed by Hemphill Noyes, Graham.
Parsons & Co., Shields & Co., Blair, Rollins & Co., Drexel
& Co. and Sterling Grace Co.

Central
tion

Telephone Co.
announced it plans to file a registra¬
late in July covering 90,000 shares of

statement

mon

stock (par

$10), which

are

to be issued to com¬

stockholders of Central Electric & Gas Co.
basis.

for-13
&

son

<

company

common

Dealer

Curtis

and

Proceeds—Mainly
Central

May 4, it

Stone

to

Vermont

was

&

retire

on

a

Public

Service

Corp.
announced that if offer to acquire Green

effective, it plans to re¬
first and refunding 3%%
bonds due 1963 of Green Mountain by the issue and sale
for cash of first mortgage bonds of a new series and of
outstanding

series

$7,715,000

of

preferred stock, $100 par value. Prob¬
able bidders for bonds: Halsey, Stuart & Co. Inc.; prob¬
able bidders for preferred: W.A C. Langley & Co. and
Hemphill, Noyes, Graham, Parsons & Co. (jointly).
a

new

'

Chenango & Unadilla Telephone Co.
July 17' Company applied to New York P. S. Commission
for authority to issue $1,000,000 of mortgage bonds, $357,000 of preferred stock and $300,000 of common stock.
•

Chesapeake & Ohio Ry.

(8/9)

Bids will be received until Aug. 9 for

the purchase from
the company of $5,370,000 equipment trust certificates,
third issue of 1950, to be dated Sept. 1, 1950 and to be
due in 30 semi-annual instalments from March 1, 1951
to Sept. 1, 1965, inclusive.
Probable bidders: Halsey,
Stuart &

& Co.

Co., Inc.; Salomon Bros & Hutzler; Harris, Hall
(Inc.); Harriman Ripley & Co., Inc. and Lehman

Brothers

years. Probable bidders: Hal¬
Morgan Stanley & Co.; First

Delaware

Power &

Light Co.

(jointly).




This estimate may be raised to

demands

power

the system.

on

accommodate increased
If this is the case, mora
he added.
This may hb

financing will be necessary,
done
through additional common
financing.
Iowa

Southern

April 26

to

plan

bonds to finance part of its
gram for

1950.

sale of first mortgage
$3,200,000 construction pro¬

Probable underwriter:

The First Bosto»

Corp.
La Crosse

Telephone Co.

June 6,
company announced that it has advised the Wis¬
consin P. S. Commission that it
expects to sell
of

$1,090,000
long-term bonds and not less than $600,000 additional
stock.

common

Proceeds will be used to repay
$1,300,000

bank

loans, due in September, 1951, and the remaining
$300,000 will go to Central Telephone Co., parent, to re¬
temporary advances for construction. Probable
Paine, Webber Jackson & Curtis.

pay

Long Island Lighting Co.
May 18 it
in

1950

was

reported company's construction program

will

cost $20,000,000 which is
currently being
financed by up to $12,000,000 bank loans
pending per¬

manent

financing which

be done following effec¬

may

tiveness of consolidation plan. Probable bidders
for anynew securities include
Smith, Barney & Co.

Lorillard (P.) Co.
April 4, Herbert A. Kent, President, said: "It
may
necessary to do some financing" before Aug.
1, 1951 U*
redeem $6,195,450 of 5% bonds due on
that date anct
for

additional

working capital to

meet

expanded

volume.

Securities Corp.

and

•

Duquesne Light Co.

July

27 it

that the company plans the
bidding of $7,500,000 of new pre¬
(par $50), following sale of $12,000,000 of
first mortgage bonds due Aug. 1, 1980 (registration state¬
sale

at

ferred

announced

was

competitive

une

derwriter:

sey, Stuart & Co. Inc.; Kuhn, Loeb & Co. and Salomon
Bros.
& Hutzler
(jointly); First Boston

Corp.; Union
Earlier this year, it was said that com¬
pany planned to issue and sell $10,000,000 of bonds and
50,000 shares of preferred stock (par $100).

stock

Utilities Co.

said

company

preferred

or

He added that company
plans to
bank loans in full by
July, 1950. These loans
to $12,000,000.
Traditional underwriters:

saleei

pay

off its*

now

amount;

Lehman Broa

Smith, Barney & Co.

Macy
May 8 it

(R. H.)

& Co.

reported that company is considering issu¬
ance of
$10,000,000 of new securities, either debenture®
or preferred stock.
Traditional underwriters — Lehimm
was

Brothers; Goldman, Sachs & Co.

stock

for

latter

issue

was

filed

with

SEC

on

July 25).

Probable bidders: W. C. Langley & Co.; Kuhn, Loeb &
Co. and Smith, Barney & Co. (jointly); First Boston

Corp.;

Kidder,

Fenner

&

Peabody

Beane

Lehman Brothers.

and

& Co., Merrill Lynch, Pierce,
White, Weld & Co. (jointly);

Proceeds will be used for construction

•

Maine

Central

July 27 it

RR.

(8/16)

announced

was

that

bids will be

received

the

company's office, 222 St. John Street. Portland 4, Mc,.
before noon (EDT) on
Aug. 16 for the purchase
from it of
$5,600,000 equipment trust certificates date*!
Sept. 1, 1950 and to mature in 20 semi-annual instal¬
at

or

ments from March

1, 1951 to and including Sept. 1, I960
bidders: Halsey, Stuart & Co.
Inc.; Harriman
Ripley & Co., Inc. and Lehman Brothers (jointly); Salo¬
Probable

program.

Eastern

May 23 it
the SEC
assets

Utilities Associates

was

a

new

issue

of the Brockton Edison Co., Fall
Light Co. and Montaup Electric Co. and

and

sell

first mortgage and
collateral trust bonds and $8,500,000 of preferred stock.
El

$22,000,000

of

Paso Electric Co.,

El Paso, Tex.
July 19 it was announced company plans to refund $3,500,000 bank loans (authority for which is sought from
FPC) with permanent financing prior to March 31, 1951,
their maturity date.
The last issue of debentures was
placed privately last September with the John Hancock
Mutual Life Insurance Co. Previous financing underwrit¬
ten by White, Weld & Co.
Elliott Co.

Co.

Radio

&

Phonograph Corp.
May 29, Benjamin Abrams, President, announced that
company may use unissued 1,240,390 shares of capital
stock (par $5) to acquire additional plant facilities if
needed.

Traditional underwriter: F. Eberstadt & Co.

Florida

Power Corp.
July 10 company reported to be contemplating issuance
of $25,000,000 new bonds, the proceeds to be used to
refund the outstanding 3J/4% and 3%% issues. Probable
bidders: Halsey, Stuart & Co., Inc.; Glore, Forgan & Co.
and W. C. Langley & Co. (jointly); First Boston Corp.;
Kidder, Peabody & Co. and Merrill Lynch, Pierce, Fenner

& Beane (jointly); Harriman

considered

9

Ripley & Co., Inc.

Not

imminent.

Florida

June

Power &

stockholders

$4.50 cumulative preferred stock (par $100). These
are soon expected to be offered to finance part of
construction program which is expected to require ap¬
shares

proximately $25,000,000

new

capital through 1952.

Holeproof
June 22 it

was

stock,

time.

Traditional

Hosiery Co.
announced that

underwriter:

and

additional

an

(par $15)

stock, series cv
30,000 shares of preferred^

be authorized.

to

Further

available.
•

Meek

Industries, Inc., Plymouth, Ind.

July 29 it

was

reported company plans sale of approxi¬
shares of common
stock, subject to

mately

250,000

market

conditions.

Underwriter—Otis
working capital.

—For

details no*

&

Co.

Proceed®
»'

Michigan Bumper Corp., Grand Rapidsr, Mich.
July 20 stockholders voted to increase authorized com—,
,

stock

(par $1) from 250,000 shares to 500,000 shares^,
with holders of present
outstanding stock to have no pre¬
emptive rights.

Michigan Consolidated Gas Co.
July 25 it was reported company expects to sell between*
$20,000,000 and $25,000,000 of first mortgage bonds thi®
fall. Underwriters
To be determined by competitive
bidding. Probable bidders: Halsey, Stuart & Co. Inc.'
White, Weld & Co. and Lehman Brothers (jointly);
Smith, Barney & Co. Proceeds—To pay off short terra
—

bank

loans

funds
sale

for

of

Gas

and

for

new

construction

additional

construction

will

common

also
stock

be
to

costs.

raised

Additional

through the

American

Natural

Co., parent.

Michigan-Wisconsin Pipe Line Co.
July 25 company received SEC authority to borrow no!
more than
$20,000,000 from banks. A permanent financ¬
ing program provides for the elimination of these bank
loans prior to their maturity,
July 1, 1951, and such pro¬
will

include the

issuance and sale of $12,000,00<*
$3,000,000 of additional common*
Previous debt financing was placed privately.

additional
stock.
•

bonds

MidSouth

July

31

it

and

Gas

Co.

that this newly organized
issue and sell publicly $2,800,000 of com¬
mon stock and
place privately with institutional investors
$6,900,000 of 20-year 3%% first mortgage bonds, the
proceeds to be used in connection with the acquisition
was

announced

company may

Granite City Steel Co.
July 11, company announced stockholders will vote Aug.
17 on increasing authorized common stock from 400,000
shares to 1,000,000 shares, and directors approved tenta¬
tive plans for a proposed offering to stockholders of
rights to subscribe to additional common stock.
The
proceeds will be used to reimburse company for capital
expenditures already made and to provide funds for
further capital expenditures contemplated.
A registra¬
tion statement is expected to be filed with the SEC at

appropriate
Forgan & Co.

(par $15)

gram

Light Co.

approved creation of 50,000 shares

of

an

Market Basket, Los
Angeles, Calif.
May 25 company announced it plans sale of
4,452 share®
of authorized but
unissued, preferred

mon

May 26 it was reported that between 47,000 and 48,000
shares of this company's common stock may be offered
some
time in the near futuer through F. Eberstadt &
Emerson

Bros. & Hutzler.

mon

announced that under a plan filed with
company will be formed to acquire the

of Eastern, and

River Electric

1-

Webber,

Jack¬
Webster Securities Corp.
$850,000 short-term loans.

Managers—Paine,

Mountain Power Corp. becomes

fund

Inc.;

1 it was reported that company expects to be in
market this fall with an offering of bonds to com¬
plete its 1950 financing program. Probable bidders: Hal¬

Corp.

classes of 6% preferred stock for

June 22

Co.

,

States

of

five

next

&

Corp.

Ang.

will

July 24 New England Public Service Co. applied to the
SEC for authority to sell 260,000 shares of its holdings
(1,315,181 shares) of the common stock of Central Maine
Power Co. at competitive bidding prior to Oct. 1, 1950.
Probable bidders: Blyth & Co., Inc., and Kidder, Peabody

Central

•

Net proceeds would

stock.

common

Boston

ment

Celanese

if

over

Stuart

sey,

4J

Glore,

* / '
' ' '
/,
registration statement is
,

expected to be filed shortly covering not less than 25%
and not exceeding 33%% of the stock held by principal
stockholders following proposed 7%-for-l stock split up
to be voted upon Aug.-16;
Houston Lighting & 'Power Cd.
•* ' i;i. "
'
'
April 14, S: R. Bertron,'President; estimated construction
expenditures for 1950 between $19,000,000 and $20,000,000.

of the gas

Light Co.

Equitable

distribution properties of Arkansas Power &
Probable bidders for stock: Lehman Brothers^
Securities

Corp.

and

White

Weld

&

Co.

(jointly).
Milwaukee
June 21 it

was

Gas

Light Co.

announced that the

company's permanent
financing program, expected to be consummated prior
to October, 1950, will involve refinancing of
$13,334,000
of first mortgage 41/2% bonds due 1967, $2,000,000 of 7%
preferred stock and bank loans (about $8,500,000) through
the issuance ,of new senior securities and common stock.
(American Natural
£as Co. now owns 97.7% of presently

outstanding'common stock). Probable bidders for bonds;
Halsey, Stbart & Co. Inc.; Glore, Forgan & Co., and Leh¬
man Brothers
(jointly); Kidder, Peabody & Co.; Harri¬
man Ripley & Co.; Smith,
Barney & Co., Kuhn, Loeb
Co. and Blyth & Co., Inc. (jointly).
*
Continued

on

page

42

42

The Commercial and Financial Chronicle

(470)

Continued

Kuhn, Loeb & Co. and Lehman Brothers (jointly);
Boston Corp.

from page 41
of Utah

Fuel Supply Co.

Mountain

Expected this Fall.

Boston Corp.

New

New York State

Electric & Gas Corp.

will

Ry.

received

be

of 430 box

provement

Co.

96

be

sold

at

under

an
a

estimated cost of $2,450,000

conditional sale

and

agreement, the $2,250,000 is to be paid in either
or
120 equal monthly instalments beginning Sept.

•

Northern

States

was

Power Co.

ers

Pacific

be used for

Northwest

new

Co.
Corp. proposed, under its amended plan
filed with SEC, to sell its holdings of 154,231.8 shares of
South Jersey Gas Co. common stock as to which an
exemption from competitive bidding is requested.
Southern

construction.

Pipeline

March 3 it

Corp.

this

June 30 company sought FPC authority to

build a 2,175
Washing¬
for major
process
of being

requirements

are

now

in

Power

&

Feb.

6,
a

up

lowed

be

either

the

issuance and sale

the

by additional financing

sale

of at

least $5,000,000

Pipe Line Co.
reported that this company, an affiliate
of Standard
Oil Co.
(New Jersey), is contemplating
financing of about $50 000,000, part of which is expected
to be placed privately and the balance sold to the
public.

Underwriter—May be Morgan Stanley & Co.
To be used to build

begin

early

early 1952.

next

new

year

Proceeds—
pippe line, with construction to
and completion scheduled for
.

^

Public Service Electric & Gas Co.

April
000,000
000

17

stockholders

new

3y8%

approved

bonds for the

purpose

the

.

\f..

issuance

of

$90,of refunding $50,000-

bonds due

1965; $10,000,000 3y4% bonds due
1968; $15,000,000 3% bonds due 1970 and $15,000,000
bonds due 1972.
Probable bidders: Halsey Stuart & Co.

Inc.; Morgan Stanley & Co. and Drexel & Co. (jointly);




was

expected to

8

SEC

Utah

Power

authorized

Vulcan

Detinning Co.

Early registration with SEC expected.
Underwriters—
Goldman, Sachs & Co. and Lehman Brothers.

r.:

500,000 and

325;000 shares of new common stock (par $1) to the pubnation-wide group of underwriters headed

'

by F. Eberstadt & Co., Inc.

include

A

some

beginning Sept. 1, 1950.

additional' ebriVmbn

stock.

The

This

may

Standard

Coil

Products

Co.

gage

,

Proceeds—To retire first mort¬
convertible income 4^% bonds

summer

:

.

Corp.

Worcester County

April

25

company

Electric Co.
planning issuance

reported

OOQ,pOO first mortgage bonds.

of $10,*

Probable bidders: Halsey,

Sthart & Co. Inc.; Harriman Ripley & Co., Inc.; Lehman

President, announced
this

*

Wilcox-Gay

capital.
,

Tennessee Gas Transmission Co.
bonds will be sold late

and

offering of a new issue of stock. Traditional Underwriter
—Gearhart, Kinnard & Otis. Proceeds — For working

•

"some

bonds

July 14 it was announced that in connection with pro¬
posed acquisition of Garod Radio Corp. and Majestic
Radio & Television, Inc., Wilcox-Gay Corp. plans public

Tampa Electric Co.
April 25 it was announced company plans to raise
$4,700,000 in. new money through sale of additional
securities, the proceeds to finance in part 1950 con*
struction expenditures.
1
x
Symonds,

4%

due-2014.

Eberstadt
&
Co., New York. Proceeds—
Major part to selling stockholders and partly for work¬
ing capital.

Gardiner

.*.

Pierce, Fenner & Beane.

writer—F.

25

■

RR.

thers

July 31 it was reported company plans sale publicly of
367,500 shares of common stock, with registration ex¬
pected in mid-August.
Price $15.25 per share. Under¬

Jan.

Pacific

Stuart & Co. Inc.; Blyth & Co., Inc.; Lehman Bro¬
and Bear, Stearns & Co. (jointly); Merrill Lynch,

sey,

proceeds

to pay for construction costs.
Jfv.M kV,

•

Western

July 17 it was reported company plans issuance and sale
of $22,000,000 mortgage bonds. Probable bidders: Hal¬

$18,000,000 through the sale of securities
year

in name

Warner-Hudnut, Inc.; also to file a registration state¬
with the SEC covering the sale of approximately

rife through a

Service Co.

was announced by Herbert L. Nichols, Chair¬
that the company expects to raise between $17,—

during the fiscal

Inc.

ment

Aug. 1 it
man,

& Co.,

President, announced that cor¬

poration proposes recapitalization and change
to

$550,000 base price, plus adjustments.
Public

(William R.)

June 12 Elmer H. Bobst,

&

Electric Co. to undertake negotiations with "all interested
parties" for the sale of its common stock interest (62,910
shares) in Southern Utah Power Co. for not less than a

Southwestern

contemplates public offering of part of its
stock holdings (which now total 59..2%).

common

4-L*Warner
Washington Gas

offer

July 18, A. C. Buttfield, President, announced that,
following approval of proposed two-for-one split-up of
the common stock to be voted upon Aug. 17, Continental

Co.
of

to

pected this Fallr

early in 1951, involving
additional common stock

trustee

expects

of H

First Boston Corp.
Southern

company

ceeds will be used to finance construction program.

Vulcan

June

announced

Kuhn, Loeb & Co.; White, Weld & Co.; Stone & Web¬
ster Securities Corp.; Salomon Bros. & Hutzler.
Pro¬
Ex¬

at $32,520,-

Can Co., Inc.,

are

was

borrowings of

least $10,000,000

at

of

it

competitive bidding not exceeding $20,000,000
oL first and refunding mortgage bonds.
Probable bid¬
ders: Halsey, Stuart & Co. Inc.; Union Securities Corp.;

rights. Probable bidders for bonds: Halsey, Stuart & Co.
Inc.; Blyth & Co. and Kidder, Peabody & Co. (jointly);

Plantation

July 6, it

temporary bank

20

through

Co. n '■

Gas

approved

Virginia Electric & Power Co.
June

which will be offered to stockholders under preemptive

•

would

Natural

SEC

Com¬

is now in process of completing negotiations for
its major financing requirements.
pany

to $20,000,000 to mature July 1, 1951, the proceeds to

involve

Philadelphia Electric Co.

stock

21

Michigan.

Texas to markets in Indiana, Ohio and

first mortgage bonds, with respect to which a declaration
is expected to be filed prior to Nov. 1, 1950, to be fol¬

Pennsylvania RR.
July 12 company reported planning issuance and sale
early in September of $10,005,000 additional equipment
trust certificates, series Z, to mature annually April 1,
1951 to April 1, 1965.
Probable bidders: Halsey, Stuart
& Co. Inc.; Harriman Ripley & Co., Inc. and Lehman
Brothers (jointly); Salomon Bros. & Hutzler.

competitive, and preferred
negotiated or competitive.

Edison Co.

be used for construction program, estimated
000 for 1950-1951.
Permanent financing is

practical date, which may be shortly after Aug. 6. A. C.
Allyn & Co., Inc. and Bear, Sterns & Co. headed this
group.
The 500,000 shares of common stock are being
split-up on a 3V2-for-l basis, all or part of which will
be publicly
offered.
Company also expects to raise
$3,000,000 in new money later this year and a similar
amount in 1951.
Registration of new 1,750,000 soon ex¬
pected.

be

a

reported that company expects to issue
$55,000,000 of bonds.
Probable bidders:

summer

June

last, have informed him of their intention to
public distribution of these shares at earliest

May 5 it was said that there will be additional financing
later this year, with probably some common stock to be
underwritten by Drexel & Co.
Bond financing would

sought FPC authorization to construct
$144,500,000 pipeline project to carry natural gas from
the Gulf Coast and off-shore fields in Louisiana and

June 27 company

was

Southern

Light Co.

April 13, Paul McKee, Presdient, disclosed that a group
of 16 purchasers who acquired company's 500,000 shares
Of common stock from American Power & Light Co. on
make

California

Valley Gas Pipe Line Co., Inc., Houston, Tex.

First Boston Corp. and Harris, Hall & Co. (Inc.)
(jointly); Halsey, Stuart & Co. Inc.; Blyth & Co., Inc.;
Shields & Co.
Proceeds would be used to refund $30,000,000 3y4% bonds and for construction costs.

completed.
Pacific

Proceeds from the bond and stock
short-term loans in connec¬

to repay

bonds about Oct. 9.

and

12

The

mile pipeline system—from southern Texas to
ton—at a cost of $174,186,602.
Negotiations

financing

shares to be offered to pres¬
of one new share for each

June 15 United

probably this fall with an offering of $17,500,000
preferred stock. Probable bidders: Lehman Broth¬
and Riter & Co.
(jointly); Smith, Barney & Co.

Proceeds would

announced company plans to spend in

South Jersey Gas

(Minn.)

reported that, the company will be in the

market
new

was

spent in 1950.

Brothers.

15, 1950.
July 29 it

Halsey, Stuart & Co. Inc.;

money

Under

agreement.

it

11

(10/9)

(9/12)

tion/with the company's construction program, and for
carrying forward the expansion program into 1951.
Probable bidders for bonds: Halsey, Stuart & Co. Inc.;
Lehman Brothers and Bear, Stearns & Co. (jointly);
Union Securities Corp. and Smith, Barney & Co. (joint¬
ly);.. First Boston Corp. and Blyth & Co.. Inc.; Harriman
Ripley & Co., Inc.; Kidder, Peabody & Co.; White, Weld
& Co.; Salomon Bros. & Hutzler.
Probable bidders for
common: Blyth & Co., Inc.; Union Securities Corp. and
Smith, Barney & Co. (jointly); Lehman Brothers; W. C.
Langley & Co. and Glore, Forgan & Co. (jointly); Kid¬
der, Peabody & Co. and Merrill Lynch, Pierce, Fenner
& Beane (jointly).
Common stock expected about Sept.

$34,000,000^ of which $11,600,000 will
It is estimated that $6,000,000 of new
will be required this year, to be raised by
the sale of $3,000,000 of bonds and 60,000 shares of pre¬
ferred stock (par $50). Probable bidders include Lehman
be

held.

shares

ratio

in

sales will be used

the next four years

and 50 cabooses from Northwestern Im¬

cars

bonds:

common

shareholders

eight

South Carolina Electric & Gas Co.

May

approximately 90% of the purchase price

for financing

the

which

at

rate

166,604 additional

Power Co.

bidders for

Light Co.

15 it was reported that registration is expected
Aug. 2 of $8,000,000 of additional first mortgage
bonds
to
be sold
through competitive
bidding, and

about

Webster Securities Corp.

&

Stone

8

in St. Paul, Minn., for the lowest
bidders will provide $2,250,000

at the company's office
interest

Aug

on

Utah Power &

July

plans to finance and per¬
manently refund $2,200,000 of bank loans by the sale of
debentures and common stock prior to Oct. 31, 1950.
Probable

(CDT)

noon

~r

June 2 company announced it

(8/8)

until

1950, and mature

ent

Sierra Pacific

22-inch

pipe line in Utah to cost approximately
Hearings willr be held before the Utah
P. S. Commission in August or September, after a study
of. the project.

(jointly).

for

...

mile

Higginson Corp. and Harris, Hall & Co. (Inc.) (jointly);
Harriman Ripley
& Co., Inc^ and Lehman Brothers

Corp.

will neces¬
than $25,000,000 of additional debt

Pacific

Northern

be

to

$25,000,000.

Probable bidders:
Halsey, Stuart & Co. Inc.; Salomon Bros. & Hutzler; Lee

Loeb & Co.

Bids

2.84%.

placed privately with institutional investors through''a
banking group headed by Dominion Securities Corp.
and Harriman Ripley & Co., Inc.

of $3,570,000 equipment trust certifi¬

H, to be dated Sept. 1,
annually from 1951 to 1965, inclusive.

including short-term bank loans
bonds: Halsey, Stuart & Co. Inc.;
Morgan Stanley & Co.; The First Boston Corp.; Kuhn,
bidders

company

cates, series

financing,

equity

Probable

provide funds
The proposal pro¬

vides for borrowing at an average interest rate of
It is understood that the
new
debentures are

^

to noon (EDT) on Aug. 15 for the purchase from the

up

railroad

Jan. 19 announced that construction program
more

Union Securities Corp.;

United States of $15,000,000 debentures to

Gallagher & Walton, 15 Broad Street, New York 5, N. Y.,

Inc.

sitate in 1950 not

underwriters:

Langley & Co.

Toronto (Ont.), Canada
July 25 the Board of Control authorized the sale in the

Bids will be received at the office of Willkie Owen Farr

Barney & Co. (jointly); First Boston Corp. and Glore,
Forgan & Co. (jointly); Harriman Ripley & Co. Inc.
Probable bidders for bonds only: Halsey, Stuart & Co.
Power

It

Traditional

C.

W.

..

in part, cost of new construction estimated to total
$55,800,000 in the next three years.
Probable bidden
for bonds and preferred: Blyth & Co., Inc., and Smith,

Mohawk

in the

increase

an

*

pay,

to

sold.

-

company expects to sell $14,000,000 of bonds and $6,000,000 of new preferred stock
in June, 1951, with an additional $10,000,000 of new
securities to be sold in 1952, the proceeds to be used to

Niagara

was

approved

stock to 1,000,000 shares from 500,000
understood that 125,000 shares may be

registered with the SEC in the near future and offered
for sale to the highest bidder by the Office of Alien
United Gas Pipe Line Co.
Property. Probable bidders: A. G. Becker & Co. (Inc.),_
Union Securities Corp. and Ladenburg, Thalmann & Co.:; "July 25 filed with FPC for authority to build 1,130 miles
of new lines in Texas, Louisiana and Mississippi at a
(jointly); Merrill Lynch, Pierce, Fenner & Beane; Kid¬
cost of about $110,000,000, including new facilities.
der, Peabody & Co.; F. Eberstadt & Co.; Allen & Co.;
It is
new company
to be formed by United States & Inter¬
probable that the bulk of this new capital will be raised
national Securities Corp.; Dillon, Read & Co.; F. S. Mosethrough the public sale of new securities.
•.
ley & Co.; Riter & Co.
Utah Natural Gas Co.
•
Seaboard Air Line Ry.
•June 5 it was announced company plans to build a 325-

For

May 24 it was reported

•

shares.

have

common

for construction of Toronto's subway.

Schering Corp.

50,000 shares

(1)

stockholders

authorized

May 4, it was'announced that the company's entire com-,
mon
stock issue (440,000 shares) was expected to be"

of preferred stock.
Probable
bonds—Halsev. Stuart & Co., Inc..
(2) for bonds and preferred: Harriman Ripley & Co.
Inc.; Lehman Brothers; Kidder, Peabody & Co.; First
Boston Corp.; Merrill Lynch, Pierce, Fenner & Beane;
(3) for preferred:—W. C. Langley & Co.
and

bidders:

or

Tide Water Power Co.

Hutzler.

&

Bros.

Salomon

(jointly).

May 4

Corp.; Merrill Lynch, Pierce, Fenner & Beane;
Lehman
Brothers and Bear, Stearns & Co. (jointly);

England Power Co.

Co.

to pay

curities

April 24 it was estimated that about $37,000,000 nev
financing will be required to pay construction costi
estimated at $40,000,000 for 1950 to 1952. Present plani
are
to issue in late summer or early fall $10,000,00(1
bonds

&

$10,000,000 of bonds. Probable bidders: Halsey, Stuart
& Co. Inc.; Blyth & Co., Inc.; White, Weld & Co. and
Shields & Co. (jointly): First Boston Corp.; Union Se¬

Beane.

(jointly); Kuhn, Loeb & Co. and A. C. Allyn
The proceeds would be used in part
for construction.

Weld & Co.

Diego Gas & Electric Co.
July 3 it was reported that company may issue late in
September or early October between $8,000,000 and

May 17 the stockholders voted to increase the author¬
ized preferred stock (par $50) from 75,000 to 150,000
shares. There are presently outstanding 72,993 shares
Probable underwriter: Merrill Lynch, Pierce, Fenner &

Thursday, August 3, 1950

Stone & Webster Securities Corp. and White,

& Co. Inc.;

San

Power Co.

States

Mountain

.

bidding, but the amount has not yet been decided."
Banking circles speculated that a $40,000,000 bond sale
would be forthcoming. Probable bidders: Halsey, Stuart

June 7 company

to create a new

6 company announced plans

.

tive

First

Reynolds Metals Co.
announced stockholders will vote Aug. 9
on
increasing authorized common stock from 1,500,000
shares to 2,500,000 shares.
The increase is being sought
to make additional shares available for any future need.
Probable underwriter: Reynolds & Co.

firm
to take over its exploration and development of natural
gas
and oil operations. It will be financed, in part,
through public sale by the new unit of 1,000,000 shares of
capital stock (par $8). Financing plan submitted by First
June

.

Brothers;

tftat

at competi--

_

Kidder,

Peabody

& Co.; First Boston Corp.;

Merrill, Lynch, Pierce, Fenner & Beane.

Volume 172

Number 4930

..

.

The Commercial and Financial Chronicle

(471)

Continued

jrom

which

5

page

ing

Forecasts

is

await

to

ments

larger than in most years.

further
to

or

price

price

in¬

'

"Butter offers another example
of

the

dampening

price

of

in¬

by the existence of large

creases

The price of butter did

surpluses.

not advance at all until the fourth

week of hostilities and then it

was

by only 0.3%. The Commodity
Credit Corporation has about 185
million pounds of butter in stor¬
up

the

In

age.

price

it

there

is

of

fit,

sees

perishable
sell at any

may

but
that

danger

ducts will

of

case

products the CCC

only

deteriorate.

competition

when

these

pro¬

The threat

from

oleomar¬

garine,

however, may also be a
contributing factor in restraining
price increases for butter.

Some manufacturers have

creases.

since

returned

with

substantially

There

are

at

even

these

the

tftg market but
higher

prices.

reports of eager buying

the volume

low

to

higher

of

but

has been

saies

recent

prices,

high

be¬

The

pace.

mills

are said to be
solidly booked
through the third quarter of 1950.
Many have substantial fourth

quarter bookings and
small
the

of

amounts

second

business

quarter

of

into

1951.

To

in

pronounced

more

of those

case

foodstuffs

large surpluses

able,

at

least

of

part

the

prices

prices 28%."

crisis,

advance
uted

for

have

steers

the

to

fact

been

be

can

attrib¬

that their prices,

maintained

tively high levels.

rela¬

at

purchases
and
sustained
high-level consumer demand indi¬
cate that seasonal declines in meat

prices will be smaller than usual
this

fall.

Fats

and

oils, which
experienced larger declines from
postwar peaks than other food¬

stuffs,
In

have

the

since

month

the

lard

oil

tops,

three

has

invasion,
jumped 27%

principal imported
—

and

have

advanced

increase

has

nounced.

Cocoa

14%,

coffee,

cocoa,

sugar—the

not

first
sig¬

very

nificantly, whereas for

tops

elapsed

Korean

has

products

wool

sharply.

sugar

been

so

the
pro¬

18%, wool

was up

and coffee

13%, while
sugar rose only 7%.
Here again
the, variations in the availability
<?f supplies apparently explain the
differences
in
price
increases.
Supplies of sugar are more than

held

gram

in

the

of

Columbia

the

new

sugar from Cuba. This

provide, the 'United States
the
largest
supply
ever

available

in

single

any

calendar

"The

advance

has been

their

one

in

cotton

This rise began in early June
accelerated by the devel-

dprrifents iri
impetus
ment

that

Korea, but the main'
when

came

of

the

Agriculture

Depart¬

announced

smaller cotton crop was in

a

for

prospect

previously

market

The winning

is

year

1950-51

been

31%

As

year.

a

than

had

expected.

The

sources

that

of

last

damage, private

crop

estimate

will

crop

below

result of the reduced

acreage and

yield

that

the

new

only
some
10
million bales compared with more
than, 16

1949-50

14 million

in

-

million

Consumption

tion

bales

year.

'disappearance'

crop

year

bales, and, if

the

last

crop* year

was

in

the
3

duced.

other

the

as

25-year

new.,

cents.

per

fered

about

When

the

goods,
-

yarns,

among

the

rowers

in the

heaviest

the

finished

from the market

current

moment

the

bor¬

bulk

with

the

extent

101.707.

of

only

This

$1.73

was

withdrew




VANDERSTUCKEN, JR.,^
Assistant Secretary

REFRACTORIES COMPANY
Pittsburgh

of

The Directors of the
its meeting held on

Byrndun Corporation at
August 1st, 1950, declared
a
dividend of Twenty-five cents (25<f)
per
share on the Class "A"
Participating Stock,
the Class

such

"A"

Stock;

Common

Stock

dividend

no

and the

Com¬

fractional shares,

on

all payable on August
17, 1950 to stockholders
of record at 3 :00 P.
M., August 10, 1950.

ar¬

Pennsylvania
July 23,

Board

ending

of

Directors

September

On July 25,
and

1950

three-quarters

CENTS

share
payable

per

STOCK,
holders

of

record

2,

1950

on

similar

$110,000,000

debentures

in

June

No.

share has been declared

per

the capital stock of The Borden

payable

September

E. L.

one

on

record

September 14, 1950.

the

developed
the

financial

of

hostilities

of

outbreak

for

at

EDMUND

CITY

HOFFMAN, Secretary.

AMERICAN MACHINE
AND

METALS, INC.
A dividend

will

a

1,

be

1950,

record

25

1,
at

Treasurer

INVESTING

BROAD

The

2.87%,
actly
the

issue

of 25c per share

paid on September
to stockholders of
close

at

of

of

Directors

company,
payable
holders of record

September
The

July
per

15,

Board

the

3s,

as

1950,
share on

this

of

October
at

the

Direotors

declared
the

a

the company
payable
stockholders of record at
on

August

4,

1,

1950,

close

market

has

eration

will

to

Common

Dividend

Stock

regular quarterly dividend of
A seventy-five cents (75c) per share
on the Common capital stock of the Com¬
pany issued and outstanding in the hands of
the public has been declared p yable Sep¬
tember 11,1950, to the hoIders of record at
the close of business August 14, 1950.
A

_

the

cn

of

company

this

on

August
the

of

15

ccn o

outstanding
15,
1950,
to

close

of

entail

Into

FRAHER,

likely

curtain
issues

on

W. J.

the

MANUFACTURING

COMPANY

until

Labor

ROSE, Secretary.

ring

in

the

D"fed

Manufacturing Company
a dividend
of Fifty
Cents (50tf) per share on the out¬
standing common stock of the
Company, payable August 25,

H. C.

July 24,

record

j-

On the

28,

Stock of

prospective calendar the
next piece of business in
sight is
Duquesne Light Co.'s $12,000,000

23,
the

at

1950;

1950,

1950.

business

on

Common
Corporation.

Atlas

MASSACHUSETTS

July 26, 1950
Board

of

Directors of Naumkeag
Company at a meeting
held on July 26, 1950 declared a divi¬
dend of Twenty-five Cents
($.25) a
share, pavable 'on August 25, 1950 to

COMPANY

Cotton

of

record

extra

the

of busi¬

close

RUDOLPH C. DICK

President and Treasurer

Manufacturing Company
an

at

August 15. 1950. Old Colony Trust
Company, of Boston, will mail checks.

ness

107)

PEQUOT

dividend of

pay

SHEETS

&

PILLOW

CASES

daily dividends of luxurious and

restful sleep.

"The

Nation

Sleeps

on

PEQUOT SHEETS

shareholders of record at
the close of business Aug. 10,1950.

the

on

BRAND, Secretary.

DIVIDEND No. 229

Fifty Cents (50^) per share on the
outstanding common stock of the
Company, payable August 25,

holders of

to
of

close

1950

to

H. C.

STUESSY, Secretary

THE FLINTK0TE COMPANY

July 28,1950

Walter A. Peterson, Treasurer

July 31, 1950

30-year first mortgage bonds.
piece of business is now

This

scheduled to

come

for bids

up

Meanwhile, sponsoring bankers
making ready to open books

the

middle

fering

of

of

next

week

convertible

the

shares

preferred

Coast

of

in

Boston

and

preparation

the

on

payable
holders

A

Further appreciable recovery

ably

speed

several

the

up

large

.

marketing

stock

on

September
of

record

dividend

of

operations

on

1,

at

ot

25

1950,

the

share

close

to stock¬
of busi¬

September 1,
:

at

has

•

per

been

share

on

declared

A

Corporation, Minneapolis, Min¬

!

.

of business August 11, 1950.

JOHN E. KING
Treasurer

ber

11,

ord

shareon outstanding capital stock
stockholders of record at the close

1950.

the

has

been

declared

at

on

1950, to stockholders of
the

the

rec¬

close of business August

26, 1950.
CLIFTON

-

busi¬

1950.

Common Stock payable Septem-

quarterly dividend of 25c per

the close of business

to

on

quarterly dividend of( $.50 per

share

payable September 11, 1950, to

1950,

$1.00

of

at the close of

September 1,

ness

Directors of First Bank Stock

stock¬

23,

dividend

payable September 15, 1950 to stock¬

nesota, on July 19,1950, declared
a

cents

Stock

September

holders ot record

in

per

August 24, 1950.

Common

21,

$4 Cumulative Preferred Stock

)Cpoi>ition

the Preferred Stock has been declared

ness

the

the equity market might conceiv¬

quarterly

share has been declared

holders of record

quarterly dividend of $1.75

payable

Setting

per

COMMON DIVIDEND
A

undertaking.
Awaiting Proper

A

Dividend

Pillsluryli

PREFERRED DIVIDEND

of

New

for

YORK

N.Y.

FLAZA

/ 51st
Consecutive

Sanitary

$1.35

Chicago,

X

Standard

■

:

of¬

on

stock

in

and

Philadelphia,
York

American

Radiator

corporation

114,000

NEW

30 ROCKEFELLEI

on

August 22.

are

1950,

o'clock

will

Stt*m
SALEM,

STUESSY, Secretary

MANUFACTURING

has declared

Common Stock

September

16,

3:00

at

Checks

NAUMKEAG

The Board of Directors

regular quarterly dividend of 40^
per share has been declared, payable

August

O.

July 28,1950

Corporation

A

interval

August

record

1950.

9

1950, to shareholders of record at
the close of business Aug. 10,1950.

(DIVIDEND No.

Dividend No. 35

debt

Directors

of

mailed.

DIVIDEND NO. 106

of Eaton

will weigh heavily in contemplated

plans.

of

4,

August

holders

along toward
And,1 of course, the.

events

m.,

EXTRA DIVIDEND

on

Board

of forty cents per
the common stock of

payable

rtockholders

Cleveland 10, Ohio

the

the
on

of Eaton

EATON

ap¬

corporate

Corporation,

to
p.

Ohio

of

dividend

a

declared

was

b.

33 Pint Street, New York 5, N.Y.

down

today,

The

well

Day.
of

to

meeting

Steam

Doldrums

new

Dividend Notice
a

held

op¬

flotation

Lexington Avenue, New York 17

Secretary.

■hare

greater selling

Columbia

peared

trend

the

420

business

August 2, 1950.

mean¬

current

America

of

stock¬

has declared

ex¬

stiffened

Secretary

Vanadium Corporation

At

AMERICAN CAN

Atlas
The

A. C. MINION,

July 31, 1950.

But, although

while, it appears the

August 10, 1950.

on

Checks will be mailed.

The Board of Directors

AND ELECTRIC COMPANY

yield

for

September 12, 1950, to stock¬
holders of record at the close of business, three

1950.
EDWARD

m

the

matching

the

on

business

of

dividend
Stock

Cleveland 10,

por¬

yield

current

debentures.

on

share. This dividend

per

will be payable

o'clock P.M.,

Y.

company

Common

of

EATON

Korea.

to

,

COMPANY

1950.
of

27,

business

H. T. McMeekin, Treasurer.

priced for

102.308

at

also

is

JR.,,

Secretary

COMPANY

STREET, NEW YORK 4, N.

Board

August 15, 1950. To obtain
dividend, holders of Voting
Trust
Certificates
should
exchange same for Capital
Stock promptly.

some
bonds, held in
syndicate accounts, passed to buy¬
ers
slightly under the original
price.
v

current

and

cash dividend

a

capital stock of $1.25

27j
1950, declared the regular quarterly
dividend of $1-375 per share on the outstanding
§\'i% Series Cumulative Preferred Stock of the

Thereafter

The

stock¬

Directors of the

OIL

has this day declared

July

of

until

to

CRONMILLER,

the

with

that
in

COMMON

1, 1950
1950.

President

Board of

NOETZEL

July 25, 1950

Transfer

winning group, at that time,
reoffering publicly at a price of
102.488 to yield 2.86%. A brisk
tion

PAR

NO

11,

(Incorporated in New Jersey)

sixty cents

the

demand

F.

STANDARD

162

1950, to stockholders of record

Checks will be mailed.

transaction.

sold

August
G.

the close of business August 11, 1950.

declared

Stockholders of

to

profiting to the
$155,700 on the overall

Columbia

ONE

Preferred Stock of this Company, payable Octo¬

ber

close of business

issuer

of

was

the

on

September

FAHLBUSCH, President

An interim dividend of

quarterly dividend of

a

quarter

Esso

STOCK

per cent

for

DIVIDEND of

1970,
Pipe

Gas

COMPANY

PREFERRED

declared

1950,

August 1st, 1950.

Company,
CAN

30,

(lVa9i) PER CENT or $1.50 per
PREFERRED STOCK, payable October
20,
1950 to stockholders of record
October 6,
1950.
Also
declared
a
DIVIDEND
of
FIFTY
on

Vice

H. G.

1950

have

and ONE-HALF
share

The

bond

a

announcement

goods

E. F.

HARBISON-WALKER

mon

completed

Transcontinental

of¬

runner-up

on

entirely, in order

August 25, 1950,

stock.

common

CORPORATION

capital market.

new

have

as

beginning

knit goods, and

\

of business

are

outcome

bid brought

Seaboard
Finance
Corp.
Meet¬
ings with dealers have been held

Department of Agriculture
first made, many sellers of

Its

The BYiofDHH

-

the

debentures

The

to pay

differential

of the
was

to

consump¬

August 1 is of the same magni¬
tude, stocks on hand (7.3 million
bales) will be substantially re¬

gray

Big Borrowers

Natural gas pipe line firms

the company a price of 101.88 for

report of the Department of Agri¬
culture indicates that acreage this; of

the

field

banking

close

proved.

prices

was

of

;

|

on

DIVIDEND NOTICES

underwrite any unsubscribed por¬
tions.

evidently set

groups

calculations

of the most striking

commodities, and it
is affecting the entire textile mar¬

ket.

"rights"
existing
shareholders,
with
banking groups having agreed to

books will remain open.

current

domestic

and

$17,500,000

notes.

j

the Com-

stockholders subscribed in full for

effort.

year.

for

addi¬

pro¬

issue

investment

Competing

initial

tvith

of

interim

share

pany's capital stock, payable September 15,
1950, to stockholders of record at the close

ad¬

shares

in

cents per

These issues all involve

interest

syndicates.

tons of
will

of

center

corporate

nation-wide

reoffering

raw

$12,000,000

ditional

499,923

Gas

week, with the $90,000,COO
offering bringing out bids by two

especially since the De¬
partment of Agriculture has con¬
tracted to purchase 600,000 extra

ample,

also

with

plans

common.

47%,

"Of the four
farm

that

North

cottonseed
and

rebounded

dividend of 50

bonds

Co.

AMERICAN
Completion

Increased mil¬

itary

The Board of Directors has declared a dividend of 75 cents per share and an
additional

13

$80,000,000

Power

(60tf)

this

smaller

&

of

institutions,

DIVIDEND NOTICES

low

The

TEXAS GULF SULPHUR COMPANY

Peoples Gas, Light
placed

DIVIDEND

System's extensive financing

6%.

abeyance

of

Line Corp.

had been under
the
Korean

steers

mortgage

to

for

the basis of supply and
By June 23, hog
prices were 29% above their 1950
and

first

125,000

DIVIDEND NOTICES

issues. This

new

group of institutions $32,000,000
of first mortgage
bonds, due

price

on

Co.,

rangements for a total of better
than $152,000,000 of new
money.
Bankers placed directly with a

the

demand factors.

sell

companies

before

even

to

Consumers

tional

in

common

Coke

financing is being done via

may
be attributed to
anticipatory buying.
Hog prices
on July 28 were 23% above their
June 23 level, but steers were up
only 6%. Seasonal increases in

way,

and

of

$120,000,000 of

affiliate

such

increases

livestock

shares

has

of

Ro¬

the direct placement route.
Within
the
week
two

avail¬

are

Telephone

And Texas Illinois Natural Gas

Pipeline Co. completed placement

and

common

preferred.,,

15% since June 23 and print cloth

not available.

are

of these foodstuffs

chester

of

at

However, since adequate supplies
even

shares

to

And

which

of

has. plans

date (July 28) on the spot market,
the price of cotton has increased

"Price increases have been gen¬

erally

110,000

few have

a

Stores

sell 253,064 shares of

develop¬

prepare

been deferred pend¬
propitious conditions.

Safeway

Only Limited Rise in Food Prices

stocks but this carryover

1949

have

more

43

-

W.

GREGG,

Vice-President and Treasurer

E. O. Jenkins, President
August 2,1950

be

44

The Commercial and Financial Chronicle

(472)

.

.

With E. F. Hutton

BUSINESS BUZZ

(Special to The Financial Chronicle)

LOS

Washington...
A y* gJ
xl f w\A/

Behind-the-Scene Interpretation*
from the Nation'*

Capital

Thursday, August 3, 1950

.

Calif.—Irving

ANGELES,
is

Hirsch

F. Hutton &

with

connected

now

E.

Co., 623 South Spring

Street.

\

JL

IM/
Joins

Witherspoon Staff

(Special to The Financial Chronicle)

question of long-range tax
is
being handled here
with a care, deliberateness, and
conscientiousness
which
is
in

with the "off the
been oper¬
ated since the opening of the Ko¬
sharp

contrast

cuff'' way things have

rean

war.

place, what is being
a proposed overall

In the first

worked out IS

legislation in the
interests
of
bringing about as
amuch equity as possible consistent
with boosting the total tax take.
What
is NOT being done is a
scheme to cook up merely an ex¬
revision

of

tax

profits tax and toss in several
other things in addition.
Secretary Snyder has enlisted
the services of A. Lee M. Wig¬

cess

former Under Secretary of
the Treasury, to pull this together.

gins,

<oC

Wiggins is both
tive

and

railroad

a

small

a

His

personal

pole

execu¬

banker.

town

and one-time Treasury tax

men.

approach is to review and

The

,

bring

date

to

up

22
facets
by the Treas¬
the

some

studies made of all principal
of the tax problem

ury's research staff, a study super¬
vised by Mr. Wiggins when he was
Under Secretary. In private con¬
ferences Wiggins is soliciting the
advice not only from virtually the
«ntire

government, including the
CEA, but of business and even
labor
groups.
The Treasury is
asking for advice and information.
It is not telling these groups what
it proposes to do and asking their
reaction.
The Treasury has not
■decided what it will recommend.

the

what

Thus

is re¬

Treasury

ported to have in mind is funda¬

revision of the tax
question of an ex¬
cess profits tax as such, is there¬
fore an incidental question, just
one phase, if an important phase,
■of the whole question.
It is not planned at present to
mentally

a

laws

the

and

submit

the

revisions

tax

election,

until

after

the earliest, and

at

If to-

perhaps not until January.
'jfc

these

tal

total

near

or

country,

the

then

tions will

go

war

is upon the

recommenda¬

down to the Capitol

in November and perhaps

after

considered

the

the "lame duck"
in special

whole

Congress sitting

Otherwise the

session.

affair

will be
election by

may

not

come

up

until January.
Hence it is premature

late about what the

to

specu¬

excess

profits

tax will
-or

tors

be, either as to rate, base,
exemptions. Tax administra¬
have gone on the record in

can

which

be sufficiently akin to an ex¬

profits tax to be called one,

cess

blood

*

*

are
imple¬

produce

to

five

be

World

will
as
in

the

planned

variation
come

of

the

be

corporation

a

in¬

tax.

The overall revision of the tax

ing

the

is

capacity,

is

however,

pushed,

for

rate
to
45%,
whilst at the same time taking in

loophole-plugging
of
the
House passed
bill minus excise
the

*

BOSTON, Mass.

its

recent

most

"My present success came slowly-—I started out as a

that control of conventional mort¬
*

*

*

reported in several quar¬
ters that business echoes the Tru¬
is

It

is

there

control

rigid

credit

sumer

the

IF

and

con¬

over

tax

bill

is passed quickly enough, the U. S.
can have "guns and butter" too—

the scope of war does
expand beyond the presently-

long

so

not

as

outlined program.

civilian

will

production
but

somewhat

back

and

be

cut

drasti¬

not

A tentative estimate made

cally.

indicates that the

here

other

new

mili¬

Marshall Plan
aid
cannot
take

tary program plus

plus

military

more

than

the steel

outside of

an

13%

production of the

of

coun¬

and
the
development
of
foreign military aid production

try,

will

much later in 1950. To¬

come

tal

military requirements for the
military other than MAP are said
to require an outside of 9%
of
U. S. steel production.
But it is said to be important
control

there
TV
so

are

sets,

credit

some

that

washing
the

will hold effective demand
the

near

moderately

reduced

in

the

situation," wrote
Mr. Foley, "the control of housing
credit,
insured,
guaranteed,
or
conventional, must be integrated
with the basic housing responsi¬
ment.

tions

are

of

Govern¬
condi¬

current

paramount

impor¬

restrictions

whatever

equitably ap¬
requiring
undue

are

without

least able to

those

from

for housing."

Mr.

note.
He said that the policy of "stra¬
tegic dispersion" will require ad¬
ditional housing during the war.
In
other
words, he doesn't go
along with NSRB on using pre¬
fabs, trailers, tent cities, and com¬
pulsory billeting to save housing
materials and labor during' the
Foley

added

new

a

war.
*

*

*

Republicans have been knocked

completely off base

to what is

as

the best strategy to use politically,
because

of

the

sudden

ment of the Korean

to what

toward deficit
Despite the feverish

fi¬

On

nancing.

ac¬

those

tivity

get

be

approach
to

of

is

that

sacrifice
pay

Under

.

.

Federal

the

of
.

necessary

plied

in

way

present

it

tance

deliberation

will

There

a

set

for

the

war,

it

few months before out-

a

volume of

new

borrow¬

tax cuts.




the

staff

of

develop¬

They split

war.

as

was

the

hand

one

tried

who

ministration
out

schools
best politics.

Baruch

to

there

were

goad the Ad¬
adopting the all-

idea, controlling

tioning. The thought behind back¬

this

line

officials

would

and

had

who

to

Mass.

SPRINGFIELD,
C.

man

—

Nor¬

Nagle has become affili¬

ated with Lloyd D.

Fernald & Co.,

Inc., 1387 Maine Street, members
of

the Boston

Stock

Exchange.

the

those

other hand

there

President

were

U. S. Finishing

that the

took the tack

who

Television

virtually
the same powers as he sought un¬
der the Spence bill—first to fight
inflation, then to promote infla¬
tion, and now to promote the
prosecution of the war. These

Republicans,
and

seeking

was

and

Video

Rep.

Cinema Television B

P.

Scophony-Baird Ltd.

Jesse

Wolcott, demanded to know why
such
if

broad

this

is

powers

strictly

a

were

"10

needed

per

cent

war."

controls
(never a hopeful prospect) price
control, and rationing do not get
enacted, industry had better pre¬
Assuming

that

Corp. of America

Norwalk Tire & Rubber

Capehart

Senators

Bricker

M. S. WlEN & Co.

public

40

relations

ian economy

beating.

Teletype N. Y. 1-1397

Even

scale

of

will not be great IF
the

to its present

war

is

For

the

scope,

bidding

overtime

and

for

help and in
time, sew¬

double

fabric the higher
price level. Then labor will blame
into

business

the

and

so

the Admin¬

will

istration and there ultimately will
come

the clamor for

a

Large Appreciation Potential
WE SUGGEST

confined

prices mean¬
while will have risen, and labor
will have secured not only wage
increases but larger total wages

ing

HA. 2-8780

Exchange PI., N. Y. 5

though the upsetting of the civil¬

in

1919

ESTABLISHED

wage

itself for another prolonged

pare

the

Equipment Corp.

Trad Television

RIVERSIDE CEMENT CO.
CLASS B (common) STOCK
A leading
in

producer of cement
Southern

fast -growing

California.

Analysis of this Company and
a

review of the Cement

Indus¬

try available on request.

"roll back"

of prices.

$8*25

Selling about

to

prices, wages, and instituting ra¬
ing

the

blame

controls

Lloyd D. Fernald

(Special to The Financial Chronicle)

operate them.
On

Com¬

into two sharply diverging

supply.

will be

government-

mittee's attention to the fact that,

when

machines, and
stricter credit

be

with

should like to call the

"I

cutbacks of autos,

that

on,

so

operated

must

these

abetted

subsidized credit.

bilities

automobile

Hence

to

gage
credit
concurrently

Administration belief that IF

man

With

"guiding"

tention.

Warren B.

Street.

again the
In a letter to Chairman May- tioning and wage control came, the
economic ex¬
bear
the
pansion, the President in his own bank of the Senate Banking Com¬ Administration would
mid-year Economic Report, threw mittee, who had asked some point¬ blame of the consuming and labor
this
down—something which in ed questions about real estate groups, for the public would for¬
that Republicans aided and
the welter of news got little at¬ credit control, Mr. Foley related get
of

idea

—

joined

Vice-President!"

emphasized

President

of Kansas

Blair, Rollins & Co., Inc., 50 State

the

to

report

has

Stetson

While the CEA

respect to steel.
in

Inc.

With Blair, Rollins

was

that

once

ra¬

(This column is intended to re¬

flect the "behind the scene" inter¬
pretation from the nation's Capital
and may or may not coincide with
the "Chronicle's" own views.)

LERNER & CO.
Investment

Securities

10 Post Office Square, Boston 2
Tel.

HUbbard

Mais.

2-1990

ing.
The Treasury will be con¬
ferring with bankers, insurance
HAnover

this month, although it may be.
*

*

Teletype—NY 1-971

2-0050

subject.
It does not follow that
the pattern of borrowing for the
new war will be set by the end of

Firm Trading Markets

Empire State^Oil
Foundation

Company

Jack Cr Heintz

FOREIGN SECURITIES

W. L. Maxson

*

All Issues

Tracerlab, lnc-

Ray Foley, the top housing ex¬

corporation

Reed,

L.

with

(Special to The Financial Chronicle)

Neither Secre¬
tary Sawyer of Commerce nor
President Truman favors it, with

ecutive of the government, has al¬

course,

&

connected

City.

performance.

in

from

of

bill

rates to around the 1945 level and

the

Waddell

a

now being
boosting individual

separate,

"quickie"

now

subject which is expected to get
more attention
in headlines than

laws which the Treasury is study¬

^

is

overall revision.

New

Colo.—Jerome

Bechter

to

bill, with just about everybody's
blessing. It will not have to await
the

to The Financial Chronicle)

DENVER,

"quickie" tax

the

to

on

same

is

It

II.

executives, and others during the
first part of this month on this

even

(Special

The

allowed.

be

years,

War

this

tack

Corp., Bos¬

Building.

With Waddell & Reed

accelerated amor¬

war,

will

proximating an excess profits tax
in burden, it might only be a type
It could

Payne have joined the staff of

ton

payments become so heavy as to
call for anything unusual in the

of such tax.

&

Hamilton Management

in the cards political¬
ly.
This would seem to be indi¬
cated by the President's commit¬
ment and the shouting of the CIO.
On the other hand, while ap¬

is probably

DENVER, Colo.—Ralph J. Harsha, William F. Jemison, and Eric

meet

amortization period probably

the

something

of

tization

to

many

(Special to The Financial Chronicle)

when new plants

an^

constructed
ments

215

Inc.,

Three With Hamilton

excess

corporation

for

*

IF

Co.,

renego¬

an

would not

it

but

need

the

terms

categories.
i
Nevertheless,

of

lieu

in

from the labor groups.

profits tax is probably a dif¬
ficult thing to work out without
leaving great inequities in

law

position,

joined the staff

&

West Seventh Street.

profits tax might be scientific in
that its operation would be tail¬
ored to each individual company's

the past as indicating that an ex¬
cess

comprehensive

a

use

tiation

Witherspoon

Senator George's plan

somewhat.
to

of

distorted

be

might

bill

range

ANGELES, Calif.—Frank¬

lin K. Koerner has

profits tax on the floor,
careful plans for a long-

excess

an

a

inclination is at a
long way removed from the
CIO line.
He is getting some ad¬
vice
from
Roy Blough
of the
Council
of
Economic Advisers,

LOS

should tack on

the Congress

IF

This

revision

ready confirmed that when mort¬

credit is curtailed, the per¬
sons who pay 50% down and bor¬
row for only
10 years are likely
to get hit as hard as the little
or nothing down boys who make

r.ARL MARKS & P.O. INC.

gage

take 30 years to repay.

FOREIGN SECURITIES
SPECIALISTS

50 Broad Street

ill, Thompson & Co., Inc.
Trading Department

New York 4, N. Y.

70 WALL STREET, N. Y.
Tel. WHitehall 4-4540

5