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UNIVERSITY
OF
MICHIGAN
ESTABLISHED 1839
SEP 6
Beg. U. S. Pat. Office
Volume 172
Number 4938
New York,
N. Y., Thursday, August 31, 1950
Price 30 Cents
a
Copy
EDITORIAL
Fools' Paradise
Likely Characteristics of
As We See It
Our Defense Economy
The present status
and related issues would be
reatmament
highly
deadly serious. Of
course, a similar situation is developing around
the question of rearmament and defense prepara¬
tions in Japan. Both are part and parcel of the
same
strange war and early postwar notions about
many things.
amusing
they not
were
so
It is
faintly amusing to say the least to recall
a
prominent and influential mem¬
ber of the Washington Administration who found
a solution for then foreseen world
problems, and
a
hope of universal and permanent peace, in a
ruralized and agriculturalized Germany.
That
some such idea as
regards Japan did not come
the notions of
forth at that time
be
By PROFESSOR
of the question of German
or
soon
-
Dr.
Palyi lists illusions U. S. has operated under in
over last five years.
Says
Russia is endeavoring to mob lize against us in stirring
up teeming millions of Asia and that it is a mistake to
hold that Russian system does not provide incentives.
Points out cost of long-range European armaments on
large scale is prohibitive and a well-armed Europe is
likely to turn into a neutral Europe. Concludes we can
and should cure Europe of misconception that we are
responsible for its prosperity and defense.
Economics, Harvard University
Professor Stickler maintains defense economy, which will
prevail indefinitely, will be accompanied by record nonwartime government expenditures; higher corporate taxes
which will be largely passed on; decreasing government
debt burden because of. higher prices; higher hourly
wage-earnings; satisfactory profits; good dividends;
unchanged individual savings; and expanding techno¬
logical research. Calls for expanded plant expenditures.
In absence of Government bond payable in dollars of
constant purchasing power, commends investment trusts'
of a Germany eking out a living
population in agricultural pur¬
suits obviously ignored the facts, which even to
crowded
not
begin too
invaluable years, we have lived and operated under
illusions, which must now be corrected at great human
material sacrifice, such as,
(a) That the Soviets could be ap¬
peased into friendly "competition," if
not brotherly love, and a magnilo¬
quent debating club could
guaran¬
tee
collective
security, without a
A,*-*?# h
and
to attempt to de¬
soon
fine the characteristics of the defense
balance of power;
J^fcconomy.
~:r*
the casual observer made it evident that the idea
(b) That we possess a diplomatic
military leadership that knows
In
was
preposterous
—
particular, I shall attempt to
throw light on whether or riot this
period of the { defense^ economy will
be a time wh£n American industry
unless indeed the -plane of
living of the German people were to be taken
down
to
would
be
could
was
bare
a
subsistence,
be made
to
Almost
work.
remove
output
from the
would
economic
have
order
resulted in
of
a
that
equally patent
economy
drastic
change
Continent,
and
general enfeeblement
of the industries and the economies of
virtually
all of the Continental countries.
Armed Forces
half
on
page
NSTA
on
are
at least two and
and
in
which
defense will
the
run
a
*An address
Second
in the
Annual
by Prof. Slich'ter at the Investment Dealers' Digest,
Fund
Conference, New York City, Aug.
Mutual
1950.
what
the
little
toe
fensible
the
a
same
is:
score
it
defends
the
China (deemed inde¬
earlier) for exactly
of
year
reasons
which had
served
to
justify dumping the whole of
China;
(c) That we are slowly but surely
winning the cold war and can go on
with business
as
(d)
That we
enormous cost)
usual;
have built
Dr. Melchior Paly!
up
(at
a powerful and reliable system of al¬
liances;
(e) That the bolshevization of China would burden
Russia with indigestion and weaken Bolshevism;
(f) That our resources, physical and financial, are
virtually unlimited and can be wasted indefinitely,
whilst
Continued
22
CONVENTION—The
.'j
and
-
ex¬
neighborhood of 10%, or a little bit
of the net national product.
Prof. 8. H. Slichter
About a month ago Mr. Shinwell,
the Minister of Defense for Britain, speaking before a
session of Parliament, estimated that Russia with a per
Annual
on
page
Continued
30
on
page
18
Convention of the National Security Traders Asso¬
25 to Sept. 30. It's still time to make
arrangements for attending this important event.
ciation will be held at Virginia Beach, Va., from Sept.
Incorporated by Royal Charter 1727
HEAD
millions
more,
28,
Continued
Royal Bank of Scotland
good investment for the
economy
European
a
a
savings of the country. The defense
will be one in which the
scheme
a
penditures
and
the
Should be
German industrial
would have been to necessitate
in
then it
even
questionable whether such
the fact that to
work
and
1
The Rude Awakening
My remarks will attempt to outline some of the prin¬
cipal characteristics of the defense economy, the econ¬
omy which I believe will prevail in the United States for
the indefinite future.
Of course, it is early to attempt
the task that I am essaying, in one
sense.
But in another sense, one can
thereafter appears to
j
It is not just one fools' paradise which is being liqui¬
dated in the fire of the Korean "incident."
For five
shares to small investors.
The concept
for its
Liqoidation
By MELCHIOR PALYI
SUMNER SLICHTER*
matter of Russian relations
oversight.
an
Lament Professor of
In
State and
OFFICE—Edinburgh
Branches throughout Scotland
LONDON
3
OFFICES:
f 8 West Smithfield, E. C. 1
49
Franklin
Charing Cross, S. W. 1
Custodian
Funds,
Bishopsgate, E. C. 2
./100 Branches
inc.
^
A Mutual Fund
Burlington Gardens, W. 1
COMMON STOCK FUND
64 New Bond Street, W. 1
PREFERRED STOCK FUND
across
£156,628,838
Associated Banks:
Glyn, Mills & Co.
Williams Deacon's Bank, Ltd.
THE NATIONAL CITY BANK
(BALANCED) FUND
64 Wall
Bond
Head Office: Toronto
Dept. Teletype: NY 1-708
i
Department
CHASE
THE
NATIONAL BANK
DISTRIBUTORS, Inc.
Street, New York 5
Bond
^Canadian Bank
OF NEW YORK
Prospectus on request
FRANKLIN
5
■
upon request
UTILITIES FUND
INCOME
Bonds
Canada
Monthly Commercial Letter
BOND FUND
TOTAL ASSETS
Municipal
New York
Seattle
OF
THE CITY OF
NEW YORK
Agency: 20 Exchange PL
Portland, Ore. San Francisco Los Angeles
CANADIAN
Distributors of Municipal
and
Prospectus from authorized dealers or
VAN^IS, SANDERS As CO.
OTIS & CO.
COMMON
BONDS
»
Analysis
& CO.
ESTABLISHED 1891
1899
New York
Cincinnati
Chicago
Columbus
Denver
Toledo
Domduox Securities
(ORPORATKXN
upon
request
IRA HAUPT & CO.
York Stock Exchange
Principal Exchanges' -
Members New
and
other
MEMBERS NEW YORK STOCK EXCHs
40 Exchange Place. Now York 5, N.Y.
CLEVELAND
Chicago
Angeles
Public Service Co.
Goodbody
(Incorporated)
Established
BOSTON
Los
bonds & stocks
Corporate Securities
Ill Devonshire Street
New York
Central Vermont
STOCKS AND
Underwriters and
CANADIAN
Dallas
Buffalo
115 BROADWAY
NEW YORK
105 W.
ADAMS ST.
CHICAGO
111 Broadway,
WOrth 4-6000
Teletype NY 1-702-3
WHitehaU 4-8161
Boston
N. Y. 6
Teletype NY 1-27®®
Telephone: Enterprise 182®
1
The Commercial and Financial Chronicle
(802)
MARKETS
TRADING
Fresnillo
Mexican
5/75
—
—
Security I Like Best
A continuous forum in which, each
Light & Power
Preferred
National
The
IN
Corp.
in the investment
Common
participate and give their
nor
All Issues
this forum
in
they to he regarded,
are
different
a
for favoring
reasons
(The articles contained
Railways of Mexico
This
Forum
of experts
and advisory field from all sections of the country
week,
as
intended to be,
Louisiana Securities
ment
Barclay Investment Co.,
Corporation
Chicago, Illinois
1920
Established
devices
120 Broadway, New York 5
&
Fi¬
for
my
"Commercial
the
When
asked
"Security I Like Best" I was at
first
surprised
because
I have
been talking
Specialists in
Hammond
strument
Rights & Scrip
In¬
Co.
Common since
1928 when the
was
organized and
I
MCPONNELL&Q
New
120
York Stock
York
Curb
Exchange
I
Tel. REctor
r
f
o
2-7815
it
was
31/4
in
and
again,
recently,
American Air Filter Co.
early in 1950 when it was 11. Just
prior to the outbreak of the Ko¬
Common
war, it got up to 25^2, sub¬
sequently sold down to 15% and
at this writing is at 22,.where it
yields almost 10%. This "dog" has
rean
Churchill-Downs Inc.
Capital Stock
Consider H. Willett
Common
investment
reached
now
with
10
1
to
BANKERS BOND
™
trend firmly es¬
through
products
new
Kentucky Home Life Bldg.
The
is
Bell Tele. L8 186
Hammond
almost
now
investment
an
the
any
The
the
Electric
Organ
well
as
the
as
field by long odds,
more for less.
known
combination
CONTROL
genius and
I
of
on
Request
President,
fellow, a
keen, inventive
of
astute business
to
learn
piano, but he
Electric Organ, and
Chord
Organ.
Hammond
is
discount and
who
148 State St., Boston 9, Mass.
Tel.
^
CA.
7-0425
:
quite
N. Y. Telephone WOrth 4-5000
r
re¬
an organ
the
brains
in
at
a
laboratory,
now
younger
men
many
and breathe
electronics,
"unsatisfied"
recently
Southern Production
a
well
as
other
as
income
earned;
After all of the above facts have
portant
there is the all im¬
"Safety
be considered.
pal
I
than
no
in
that
no
more
be
than 10% in any one
more
new
instru¬
percentages
preferred
added to the line.
"Anybody" can play it.
Lots of
people can play the melody but
the base stops them. The Ham¬
of
me
common
was
as
be
held
for
ity
Toledo Edison
V0GELL & CO., Inc.
and above
37 Wall
Street, New York 5
WHitehall 4-2530 Teletype NY 1-3568
trend and
upon
good piano.
Even though the dividend
a
recently
Inquiries Invited In
Over-The-Counter
doubled
$1
was
to
$2
For the
ended March 31,
25%,
compared
three months in
new YOMK STOCK EXCHANGE
fiscal
year
1950, net income
with
the
same
1949.
a
This/of course, is all based on
presumption that there will be
no
serious curtailment in the out-,
put of the company's normal prod¬
Phone
ucts
security
that is
portfolio.
This
stock
a
is
the
as
one
in
any
"must"
irrespective
which,
I
must
admit,
is
a
pretty big presumption. In World
split-ups,
antitrust
of
suit
the
govern¬
and
present
TRADING MARKETS
*Lea Fabrics
"Winters &
all,
well
as
new
the ~basis
-
continued
items in
of
develop¬
new
"Douglas & Lomason
"Copeland Refriger'n
they
all
the
*lnformation
Raymond Sprague
quali-
must
be
in
With this
considered.
although
mind,
have
I
many
on
requett
AETNA SECURITIES
Corporation
favorites, I have chosen the stock
of the A. O. Smith
"The
Corporation
Security I Like Best."
-
The
cause
stock
of
as
111
continued
WOrtb
Tele.N.Y.
1*2494
market
supply, roughly a halfbeing available, has
received the market accept¬
not
that
ance
it
and
although
warrants,
investors
more
this
N. Q. B.
are
security attractive to me.
that that "something"
believe
fields,
perseverance
earnings of du Pont is its hold¬
ings in General Motors. (Note: the
4*6400
million shares
future
Still another factor in the assets
Broadway, New York 5
.
this company
be¬
its comparatively limited
of
the
growth of the company, in addi¬
tion to earnings received from its
various chemical activities.
and
Crampton
"Plywood Inc.
se-
even
more
public at fair and equitable prices
ment of
PH 771
BOwling Green 9-4818
City Tel.:
I have, it is
policy of obli¬ being attracted by the progres¬
gation to stockholder and em¬ sively better years the company is
Above I have referred
ployee—the production - of' many enjoying.
products daily consumed by the to a "something" that would make
—as
Bell System Teletype
Telephone
asso¬
The management
is
40 EXCHANGE PL., NEW YORK 5, N. Y.
Teletype NY 1-953
common
I. du Pont de Ne¬
earnings make it logical to expect
a
continuing uptrend in annual
MCMIEKS
DIgby 4-4950
I consider E.
price of the stock. *
share and for the first quarter of
this fiscal
year
were
about
up
NEW YOXK CUXB EXCHANGE
Irrespective of all of the above
ment
Exchange
fications,
cussion.
previous
after taxes amounted to $4.94 per
Shmkan&Co.
in the present dis¬
annually, the exceptionally strong
financial position and increasing
distributions.
Securities
from
Stock
all
though
factors, I feel that I must permit
room for my selection of the one
security that I am asked to name
and my reasons for said selection.
of
been
at-
above
other
mours
has
tractive
meet
growth possibilities with a "ma¬
chine" like this, less than the cost
Phila.
New York
would
one
i t y
c u r
ited
sician, in no time, via the Ham¬
mond Chord Organ.
Think of the
Exchange
Dif¬
months and/or years, are also lim¬
mu¬
Stock
Phila.-Balto.
123 South Broad St., Phila. 9, Pa.
times,
different
mu¬
accomplished
Henry B. Warner & Co., Inc.
SPRAGUE
Like
night, and are they
thrilled. Eight hundred and eighty
dollars is now the new low price
space
possibilities.
years, as
I
problem and "dubs" become
by
Dan River Mills Common
past record
upon
Y.
Best."
others
over
Purolator Products Common
portfolio than
any
who
nearly 50
market quotations, must be given
consideration
over
a
period of
Organ
in
Light Common
Philadelphia Transportation Co.
stock that is any more
no
one
make
based
1
difficult to nominate "The Secur¬
hold¬
bond
Treasury investments needed.
The change in type of investments
to
that
add
me
ciated with the securities business
Tax Exempt and
and
let
Allan Wood Steel Com. & Pfd.
Penna. Power &
PEnnypacker 5-2857
this
sicians
date:
share.
(A. O. Smith Corporation)
that
stock
well
or
Members N.
of becoming an
Southwestern Public Service
declared to
West Penn Power Common
Philadelphia Electric Common
Equitable Gas Common
com¬
common
Corp. Units
Warner Company Common
Members
solves
Chord
mond
per
RAYMOND
For
BS 142
stock, something
U. S.
as
Tele.
Enterprise 6800
needs, differ¬
to ent yardsticks,
dwell upon such important factors
permit
not
paid
Ino.
security— ferent
one
any
to
protect princi¬
of any corpus should
invested
and
Principal"
of
To
recommend
5%
ings,
Organ
$3.40
Partner, Raymond Sprague & Co.
annually.
Dealers
Enterprise 2904
Pocono Hotel
share.
and future growth
(4) The tax obligation to be faced
been studied,
Securities
share.
selection
required,
of
Open End Phone to New York Canal 6-1613
June, 1949 earnings:
Pont, based
(3)
received and
income
of
amount
called the Hammond Chord
ment
Northwestern Public Service
the
du
Assn.
Portland, Me.
dividends: $1.76
share.
"must"
a
Nat'l
June, 1950 earnings,
closing,
requirements;
The average income
as
Quite
portfolio
etc.)
making a
and/or
recommendation
for
Quoted
Hartford, Conn.
dividends:
know of
of
are
right.
Federal Water & Gas
Herbert G. Einstein
—
in
—
75 Federal St., Boston 10, Mass.
com¬
per
March, 1950 earn¬
common share.
common
per
In
important
Sold
J. B. Mognire & Co., Inc.
share.
$3.10
wid¬
they
believe
to
all
—
Tel. HUbbard 2-5500
$4.52
per common
1950
indi¬
—
I'm
reached
beginning
earnings:
1949
and
think the millen-
been
has
share.
per common
to
industry.
Space will
never
who
Bought
1940-49 average
the employee (teacher, clerk,
plays the
investor
rest assured that
won't rest—they are
men
ium
Teletype BS 259
:
live
now
buying
can
with
sense.
invented
The
Hammond's
staffed
its
of
or
★
★
★
Associates
share.
$1.82
ow—trusts for
are
cently that he can't play
Analysis
in
because it does
sort
amazed
was
leader
Hammond,
unusual
an
1949
earnings: $2.22
average
per common
mon
vidual
branch offices
Spinning
the
of
strong;
Members
1940-49
busi¬
tired
our
Berkshire Fine
of
interest:
of
6 months to
restricted)
Laurens
position
exceptionally
6 months to
minors (not
is
is
$2.59 per
The individual
wit:
NY 1-1557
Mobile, Ala.
current assets $450,000,000
against $88,300,000 of liabilities.
mon
—
—
York 4, N. Y.
General
of
each share
on
financial
ings: $4.76 per
music
U. S. THERMO
to
estate; (2;
involved
share
per
12 months to
throughout the world as music it¬
self.
The Organ is recognized by
lovers
program,
in-
size
dividend
following figures (received
from sources deemed reliable) are
(1)
namely:
$4
The
vestment
portfolio
25 Broad St., New
New Orleans, La. - Birmingham, Ala.
The
in
^
Ray¬
Sprague & Co., N. Y. City.
recent
securities
for
York Curb Exehonqe
Motors is equivalent to about 83 V2
selection
of
York Stock Exchange
Direct wires to
one
considered
Partner,
to wit:
security is almost
an
unfair inquiry, in view of so
many basic facts which must be
any
New
Member $ New
HAnover 2-0700
company
(E. I. du Pont de Nemours
Common)
In
Member 1
Corporation—Ray¬
Sprague,
mond
as
name
Smith
Co!
Steiner, Rouse &
nessman—re¬
present models.
LOUISVILLE 2, KENTUCKY
Long Distance 238-9
and
and forthcoming improvements in
Incorporated
lot Floor,
status
ratio
current
with the growth
tablished
™
1942,
O.
mond
City
Stock
York
New
Einstein, Einstein
du Pont.
and Curb Exchanges
purchase
more
of
G.
Stern, New York City.
A.
taxes
b ody
y
&
cents
Members
Hammond
when
Harold Barclay
profits
excess
Einstein & Stern, New York
advocated
the
BROADWAY, NEW YORK 5
war
HERBERT G. EINSTEIN
knew it.
Exchange
New
e
v
last
lished.
thought
e
Members
the
to
hit
hard, but this time the situation
in this respect is greatly improved,
as
earnings have averaged $3.63
per share in the past four fiscal
years,
so
that a better base of
"normal" earnings has been estab¬
the
sult
Hammond
Clock Co.
—Herbert
relatively low and as a re¬
d ecessor,
p r e
Since 1917
prior
Earnings
were
Chronicle"
nancial
E. I. du Pont de Nemours Common
the
and
aviation
in
used
woodworking plant made coffins.
(Hammond Instrument Co.)
Teletype NY 1-583
BArctay 7-5660
musical
instruments
was
stopped
and
Hammond
produced
electronic
Bought—Sold—Quoted
Co., Chicago, 111.
the production of
War II
BARCLAY
HAROLD
Company—
Harold Barclay, Barclay Invest¬
discussed.)
New York Hanseatic
Alabama &
and
Selections
Hammond Instrument
offer to sell the securities
an
Their
Thursday, August 31, 1950
.
.
Week's
Participants
particular security.
a
not
are
group
.
I
is
on
the
part
the
of
management through the years of
continuous search1 K|p^, jnore and
ways
philosophy
11'Year Performance of
35 Industrial Stocks-
of its history and the
romance
better
OVER-THE-COUNTER
INDUSTRIAL STOCK INDEX
to
of
things.
do
the
A.
O.
The
Smith
*
1
BOOKLET
on
page
19
REQUEST
National Quotation Bureau
Incorporated
46 Front Street
Continued
ON
-
,
New York
4, N.Y.
Number 4938
Volume 172
.. .
-
(803)
The Commercial and Financial Chronicle
INDEX
V'!' 'l
Investment in
3
a
LicHTfnsTEtn
B. S.
Articles and News
Part-War Economy
Page
AMD COMPANY
Fools' Paradise in Liquidation—Melchior
Cover
Pal.yi
By THOMAS D. SEARS
Investment Counsel, Santa Barbara,
Likely Characteristics of Our Defense Economy
Cal.
* /
and stock market effects of Korean
War, writer outLnes factors in situation, and advises maintain¬
ing a diversified portfolio and a "wait and see'1 attitude.
Recommends restricted investment in concerns not participat¬
After reviewing economic
and whose
ing in government contracts
in line of
materials
raw
Investment In
and
J.
—Frank
Coyle.
V_
T
^
place, seem
(1) The intensified effort at re¬
carries distinct infla¬
Following that date, events have
armament
moved
tionary implications for our econ¬
at
startling
The
a
That transportation compa¬
nies and companies supplying the
raw sinews of war will fare rela¬
Dow
Indus¬
Jones
trial
Stock
Average
tained
tively better, earnings-wise, than
sus¬
an
(2)
.
others.
ex¬
ties
approximating
joyed
en¬
rally
a
amounting
to
living costs during World War II,
a few observations seem
to be in
about two-
thirds
the
of
First, in estimating the
inflationary potential, we should
remember that major inflationary
order.
early decline.
Thomas D. Sears
Following the
initial drop in which the Railroad
Stock
Average
virtually dupli¬
cated the performance of the In¬
dustrial
price
take
they tend rather to follow
During World War II, the im¬
position of various types of con¬
trols kept commodity prices and
gency;
rail stocks
turned about and rose steadily to
establish a new high for the year.
The Public Utility Stock Average,
suffered
which
the
Average,
initial
an
living costs from getting out of
hand, but the years of 1946 and
1947 witnessed terrific rises in re¬
great as the Industrials,
to
has
as
date
rallied
not
sub¬
as
sponse
stantially.
r
These
divergent
the
time
news.
At the outset,
after, an uninterrupted advance of
approximately one year, was cer¬
tainly ripe .for a technical correc¬
be ascribed to
in
position
a
weak technical
the market
and
how
much to the character of the news
The fact
itself is difficult to say.
that
all
types of stocks retreated
simultaneously at the outset and
that
develop two weeks later,
that the selling which
took place in the early sessions
was
prompted by the usual urge
to
gan
suggests
for
which seems to
liquidity
the
began to
more
later
still
be
in
represented
a
appear
to be in
The market is certainly
second phase. In all
this
honesty, it must be said that the
efforts to appraise future earning
necessarily of a fumb¬
ling and conjectural variety.
It
is pretty difficult to build a struc¬
power are
ture
without
a
foundation
and
cornerstones,
and, in our present
situation,
do not have most of
necessary
in
we
'essential facts
forming conclusions.
the
living costs, as meas¬
in
by the Department of Labor,
16%.
From that date until
ured
end
the
of
the
1947
rises
•
Current
SEC
—Donald
13
Cook
*
'
*
5
Exchange
Opportunities in Securities Business for Young People
Cites
Nation's Savings Deposits
Brothers
Tyson
Corner)
(Securities
It
Do
Second, the degree of inflation¬
Treasury deficits incurred
financing it. The expenditures
and the
in
cilities
to
armament
and,
output
quarters, there is definitely
disposition to finance, to a very
large degree, the expenditures by
tax increases.
As We
Bank
See It
and
Cover
(Editorial)
14
*
Stocks-
Insurance
L__
Business Man's Bookshelf_.
18
Coming Events in the Investment Field
Dealer-Broker Investment
tation
will
is that the military budget
increased
be
8
Recommendations
33
12
Continental Aviation &
Eng.;
Lear Inc.
,T
Singer, Bean
MACKIE, Inc.
&
8
NSTA Notes
40 Exchange
HAnover 2-0270
22
News About Banks and Bankers.
Observations—A Wilfred May....—
-
Engineering & Mfg.
7
;
__
Liberty Products
Texas
14
.Indications of Business Activity
Our
PI., N. Y.
;;
sf:
*
Teletype NY 1-1825 & NY 1-1826
5
—
_
Reporter
*
Reporter's Report
Our
BUY
Prospective
on
17
Governments
Offerings
Security
Public Utility
by
billion
$15
The tax increases voted
upon this week are estimated to
add $5 to $8 billion per year to
existing receipts.
The speed-up
of corporation
income tax pay¬
ments under the plan which will
bring
SAVINGS
BONDS
.
21
24
*
A
2
Like Best..;
The Security I
State of Trade
The
34
Registration——
Securities Now In
5
and Industry
Tomorrow's Markets (Walter Whyte
rather
than
to
a
year-
Pto+ftpt ll/ine Sehuica
FOR BROKERS AND
ANGELES
LOS
Washington and You
40
—
DEALERS
To Western markets in
30
Says)
corporation payments to a
DENVER
•
SPOKANE
SALT LAKE CITY
•
behind basis, will add to Treasury
receipts.
is
If
an
excess
4Not available this week.
profits tax
imposed, its take, under existing
Continued
on
page
26
Published Twice
1
Weekly
COMMERCIAL
FINANCIAL
York Stock Exchange
4
Members
York
New
Curb Exchange
fflLLIAM
25
B.
U. 8.
1-5
-
'
Park Place, New York 8, N. Y.
Worcester
post office at New
the Act of March
Subscription Rates
SEIBERT, President
Subscriptions in United States, U. 8.
Territories and Members of i
Pan-American Union, $35.0.0 per year;
ir
Dominion
of
Canada,
$38.00
per
year.
Possessions,
Other
J. A. HOGLE & CO*
ESTABLISHED
New York
Thursday (general news and adissue) and every Monday
(com¬
statistical issue — market quotation
••ecords, corporation news, benk clearings,
Other
Every
rertising
and
Other
Chicago
city news, etc.).
Offices:
3,
111.
135
and
Ncte^—On
La
Salle
St.,
State 2-0613);
;
Publications
Record — Monthly,'
(Foreign postage extra.)
Quotation
account of the fluctuations In
the rate of exchange,
South
(Telephone:
Bank
$25.00 per year.
remittances for for¬
eign subscriptions and advertisements
be made in New York funds
1915
.
Members
Countries, $42.00 per year.
Thursday, August 31, 1950
"l
state
-
at the
under
1879.
9576
plete
1
Schenectady
8,
second-class matter Febru¬
as
25, 1942,
York,
N.
Y.,
ary
DANA COMPANY, Publisher*
to
C., Eng¬
Company
Patent Office
2-9570
E.
Copyright 1950 by William B. Dana
WILLIAM D. RIGGS, Business Manager
,U
Hubbard 2-8200
Teletype—NY
Gardens, London,
Edwards & Smith.
Drapers'
CHRONICLE
SERBERT D. SEIBERT, Editor A Publisher
50 Congress Street, Boston 8
2-4300
Glens Falls
and
Reentered
Spencer Trask & Co.
-
S.
U;
28
Securities
Securities Salesman's Corner
WILLIAM DANA
Street, New York
37
—.
Railroad Securities
REctor
11
Foote Bros. Gear & Machine
per year.
PREFERRED STOCKS
Chicago
__
Washington Ahead of the News—Carlisle Bargeron
Mutual Funds
EQUIPMENT
27
!
Securities
Canadian
AIRCRAFT
MANUFACTURERS
The current expec¬
High Grade Public Utility and Industrial
-
Teletype NY 1-3370
BO 9-5133
Reg.
Albany
Broadway, New York 6
61
Regular Features
in all
a
interested in offerings of
HAnover
Quoted
Incorporated
24
a
land c/o
25 Broad
—
J.F.Reilly&Co.
Salesman's
in our post-Korean
pressure
period will be in direct ratio to
the magnitude of the war effort
Sold
—
21
Off $43 Million
From
ary
Bought
Opening New Accounts?—Read How Phila¬
Having Trouble
delphia's
8
17
Bank of Montreal
"Canada Today" Issued by
Engineering
(New)
9
Banks Place Debentures
FIC
Texas
8
Westbrook
S.
Lone Star Steel
6
Provide for Oneself, Says James
Security—Capacity to
Best
The
New
Stock
Federal Reserve Board Presents Fiscal and Credit Policies
price indices declined
very substantially and the cost of
living remained stationary.
\ '
the
years
price movements of individual
stocks
and
industrial groups in
Members
Harrisburg Steel
Emil Schram Resigns as President of the New York
Einzig—"Can Western Europe Rearm?"
the
are
Portsmouth Steel
Regarding Investment Companies
Policy
C.
70%
and
29.2%, respec¬
tively.
During the two following
80%,
current
To, date, the reactions of the
investing public, as revealed in
We
Newport Steel
were
trends
calculated adjustment to the
conditions which
prospect.
rise
YORK,
periods,
such
price
weeks
fwo
modity Price Index was 18%, and
the
will
12
Industry—Roger W. Babson__
the Dow Jones Com¬
contemplated to date do not sug¬
which gest anything resembling an allout conversion of production fa¬
take form ten days or
in
characteristic
whereas
when the war
closed, the Moody Index of Spot
Commodity Prices rose only 17%.
selective market be¬
more
a
until Sep¬
Harbor
1945,
tember,
was
tion. Just how much of the break
the
From
restraints.
Pearl
of
The rise in
it should be stated that the market,
can
The Fish
to the termination of these
arbitrary
in
movements
prices are significant in indicating
the rapidly changing attitudes and
responses of investors and specu¬
lators to
WALL STREET, NEW
11
it.
decline
fully
movements do not usually
place during the war emer¬
stocks
else
10
Fraser
Korean Hostilities and Real Estate Trends—A. M. Weimer
*
as
relatively undiminished.
These
premises and attitudes
may turn out to be justified, but,
in the light of the record of stock
prices, corporation earnings and
13%, and sub¬
the
sequently
market
The Outlook for Railroads—Donald V.
-
.
.
That the attraction of equi¬
investment media remains
(3)
treme reaction,
on
Telephone: WHitehall 4-6551
omy.
pace.
time
nobody
9
to be as
follows:
impact of the Korean news.
69
6
The New York Central—A Reexamination—Hubert F. Atwater
market
the
that
bonds
4
military needs.
Eight weeks have elapsed since
the
market
buckled
under the
the
all
'em
use
quote!
Monetary Policy in Free Economy—M. S. Szymczak
first
We
4
Business Conduct and the New York Stock Exchange
ASKED"
AND
"BID
3
The Marketing of World Bank Bonds—Davidson Sommers
not
are
Part-War Economy—Thomas D. Sears
a
3 Little Words
Cover
—Sumner Slichter
mutt
Stock'Exchange
and other Principal Exchanges>
50
Broadway, New Yark 5
Telephone WHitehall 3-6700
Teletype NY 1-1856
-———TIT--—-rsi
i
<
f
(804)
The Commercial and Financial Chronicle
to
necessary,
| The Marketing of
f
but
t
World Bank Bonds
'
*
.]]'
By
with
I AVIDSON SOMMERS*
World Bank official d .-scribes procedures,
of marketing i
ress
.
Cites
obligations.
s
prog-
banks in
loan
tions?
tional Bank for Reconstruction and
an
Development usually is thought of
primarily as an instrument for
raising funds
ing under
in
way
the
Amer¬
the
international
an
The
and
has
Bank
is
the
and
status
agree¬
corporate
easiest
to understand its organization
is to compare
shall
to
ness
corporation, which it
enough
bles
in many respects.
give
try
Like
descrip¬
a
tion
of
to
Bank
nish
a
Bank
the
fur¬
ground against
which
one can
appreciate
its
marketing?
ope rations,
and then
tion
the
men¬
Davidson Sommers
principal
have
we
in
met
The Bank
raising
funds.
Leid
at
Bret-
ultimate
the
lows
of the
Bank,
Articles
of
Agreement
fornj.Uu.ted and
agreed to by representatives of the
44 countries attending the Confer¬
ence,
The Bank came into exis¬
tence in December, 1945, when 28
was
countries
signed
the
charter, and opeiat.ons began
.on
Bank's
the
board of
ticles
directors,
of
chief
it
often
are
asked
institution
the
kind
what
Bank
is.
'
Is
corporation, an association of
nations, or some other form of
a
cooperative association among na*A
in
a
lecture
series
given
of
17
on
July'31,
on
the
New
the 10th
York Secu¬
their Operation, spon¬
jointly by the New YVrk Securities
Industry and the. Un'ver?ity of Ver¬
mont's
Department'' of"-'Commerce
A
Economics.
the
who
Since 1932 Specialists in
VIRGINIA—WEST VIRGINIA
NORTH and SOUTH
and
MUNICIPAL BONDS
From
them,
are
se¬
The
chairman
ex
of Executive
President
conducts
its
the
of
business
Bank
that very few of its member
gov¬
could afford to export
capital
credit immediately af¬
ter the war.
Most of them needed
all
on
their
domestic
production for
internal reconstruc¬
of
purposes
tion
if-they, had
orr
excess
pro¬
they needed the excess
acquire an immediate return in
foreign exchange-for purposes of
pect of the Bank's organization is
capital structure.
There we
The
Bank
has
capitalization
of
authorized
an
$10
billion,
ex¬
pressed in terms of United States
-dollars of the weight and fineness
in effect on
July 1, 1944, and di¬
into
100,000
value
par
this
of
total
been
of
the
each.
Of
authorized
.
capital," ap¬
$8,400,000,000
has
subscribed.
that
mean
shares
$100,000
proximately
the
shares
of
That
Bank
does
has
not
over
$8
stock
is divided
part
price
of
paid
to
each
to
of
subscription
share
of
stock
is
the
United
Bank, in gold or
dollars, when
a
accepts membership.
States
our
make
are
usuable by us for
corporate
loans,
to
purposes—
operating
pay
expenses,
or
to pay
our
debts.
From that source we now have
The next
tion
18% of the subscrip¬
price of each share of stock
is also
paid to the Bank when a
country accepts membership, but
in
this
GARFIELD
0514
SL-80
payment
currency
member.
In
United
TELETYPE:
case
the
MIDWEST STOCK EXCHANGE
It may,
for
to
me
to
read
? Perhaps
article I of the
Cohstitu t i
of" the
York
function
o n
New
the
ng/e,
meet
is still
action
of
their
relatively small.
1
third
Frank
furnish
to
members;
J.
Coyle
trans¬
business
its
by
other
facil¬
part of the subscrip¬
tion price of each share of stock,
80% of the total, is never paid into
members; to maintain high stand¬
the
ards
Bank
for
in
use
its
lending
operations. It is subject to call by
the Bank, but only when needed to
meets
its
ties
has
it
obligations
issued
securi¬
on
or
guaranteed.
In other words, this 80% liability,
as
we
call it, is in substance a
fund
guarantee
member
which
by
the
governments jointly
severally
and
(but
ities
for
its
members
allied
and
commercial
of
honor
and
integrity among its members and
members;
and
to
pro¬
mote and inculcate just and equi¬
principles of trade and busi¬
The only change since made in
that
section
the
of
addition
has' been
Constitution
of
the
words
"allied members."
We have had
tions
of that
pays
of
the
other
Kingdom,
is
made
particular
in pounds sterling, France in
francs.
This
18%
capital,
used by
as
we
call
it, may be
us for
L administrative,
-expenses, > end, -if
technical
nature
liability, which reflects the
interest in the mechanics.
should
need
to
obligation
did
and
$50
a
its
bonds,
liquid funds
on
have
not
If the
,
meet
available for the purpose, it could
of that liability, which reflect the
make
call for $50 million
a
policy-making body of the
Board
Governors.
of
is
know,
you
as
their
stock
members
amount
could
subscriptions.
should
due
make
fail. to
by them,
further
a
If
any
the
pay
the
call
Bank
the
on
others, assessing against them the
amounts which
on
the
first
were
call,
the full amount
not collected
and
so
its
until
Up
on
kind
would
be
The
by
be
more
of
its
amount
of
of
that
member
no
to
than
amount
govern¬
calls
that
stock
various
our
ments
of
required
aggregate
amount
series
a
in the
unpaid
subscription.
stock
subscribed
govern¬
The
not
comes
the
Next
United
in
Kingdom,
order
with
total subscription of
$1,300,000,-
000,
or
about 16% of the total, and
then the others in
ing
amounts
rang¬
from
France, with approxi¬
mately 6%, down to Panama, with
less than
The
is
of
States
particular
I
picture
of the
names
whose
One
is
subscription
importance not
our
marketing
been, and un¬
doubtedly will be in the foresee-
have
Continued
on
-
page
26
in--
in public
accounting.
Slow assets
an
given
are
whatever—such
no
value
membership in
as
exchange, real estate, and fur-fixtures.
and
which
are
accounts
Securities
in
owned
proprietary
given value only to
are
the extent of 70%
and
then
and
Securities
in
of their value,
if they have an
general market.
only
which may
be sterling
market,'
value for capital pur-!
quality, but
possess
no
have
no
assumed
the Committee
by
over
ital
it.
that
they
the
work
the
of
as
to
period
respond.
the "long form."
as
The
"short form."
a
the
to
answers
"long form"
Continued
assumed
Committee
asked
be
other is known
The
also
four-month
each
will
One of the three questionnaires
firms and their cap¬
department
in
is known
positions.
The
year, once in every four-month
period, each member firm is re-,
quired to answer a questionnaire
a
Busi¬
on
the conduct of members
and member
checks upon observance
capital requirements is a sys¬
tem of questionnaires. Three times
from the Exchange./ No advance
warning of the questionnaire's re¬
ceipt is given.
Firms know only
standing committees
work *"was
was
its
get a
give the
we
Audits
and
by which the Ex-,
of
will
you
if
in
method
change
.
Conduct, the name of which
clear.
It maintained supervi¬
sion
on
page
23
on
Quotations and Commissions,
whose work was,
the
of
the
its name im¬
as
plied—supervision
Established
the
over
Exchange;
of
is,
the
H. Hentz & Co.
the ticker system or by
wires.
It
commission
also
law
enforced
the
of
1856
quo¬
that
publicity given quotations by
private
Members
Ex¬
New
change.
The
incidentally, is
commission
in
securities
dealings
a
which
the
upon
Stock
Exchange
York
Curb
Exchange
New
York
Cotton
Commodity
Chicago
admitted
are
York
New
law,
basic agreement
among
the membership that, in
doing business with non-members
certain
TT~
*A
in
a
rities
sored
t
minima.^
/is
lecture
<.>! »
bnsiaverj
Board
given ,pn
series->of'17
Markets
on
and
.;
•
•
And
.
:T.
July, 28, the ninth
the Nei*1 York
Secu¬
their Operation
spon¬
jointly by the New York Securities
Industry and the University of Vermont's
Department of Commerce & Economics.
of
New Orleans Cotton
Exchange,
.
JS
Exchange
Exchange,
other
commissions shall not be less than
because
also
operations
think
name.
only because it is by far the largest
but
.a
.
described
clearer
to
.005%.
United
well
very
means
capital.
firm
different meaning and defi¬
from that ordinarily used
One
Department
of
Member
Firms;The work that department does is
proximately 38% of the total
scribed
a
nition
Questionnaires
Firms
tations
sub¬
has
Department of Member
One of these departments is the
greatly. The largest
subscription is that of the
United States, $3,175,000,000, ap¬
stock
the
of
aggregate
debtedness grows, it must provide
additional capital.
That capital
fessionally.
pay
member
business
and 7 its
.
the
varies
the
.
ness
only limitation on the
payable by any member
ment
until
on
collected. The
was
As
1938, when the government of the ■poses.
"/;•/ ".7 /
;
Exchange was reorganized, the
Exceptions to the 70% valua*Board was divided, for manage¬
tion
are
United States Govern*ment
purposes,, into
committees
ment
and 'municipal
securities,
and sub-committees. - The organi-,
which are valued at market. High
zation of the Exchange now gives
grade bonds are given something
those functions, under the direc¬
less
than
100%, but more than
tion of a paid president who is not
-70%, depending upon the quality
a
member of the
Exchange, to
of their rating.. 7.'
'
departments that are staffed pro¬
to be
paid pro rata by the various mem¬
ber governments in proportion to
in
words,
the
for
example,
number of ques¬
a
the
about
-
immediate
The
Exchange,
member,
the
niture
ness."
■
of
business^ with the
:
\ Y J
•*
.
Expands,
allied
table
do
indebtedness, whichever is great-'
er.-
convenient
furnish
to
or
...
with ; ;the - public
must
Exchange's requirement
that it have a minimum capital of
$50,000, or l/15th of its aggregate
(the
the
be
on
Every member firm which does
business
"Its
positions
who
public.
in
1792.?
1
Committee
the / most important
of
the
Department of
capital
firms
written
originally
the
Member Firms is the supervision
that the Exchange maintains over
Stock
Excha
Foreign Business, An-;
so-called customers',men..
of
2
was
hiring of registered employees
you
section
on
other
never-
Customers' Men, which had super¬
vision over the qualifications and
for
currency
mittee
appropri¬
.
ate
a
on
to
Another
committee succeeded
by the department was the Com¬
a
organization
less,
e
rooms
a
approximately $165 million.
STREET
1
Exchange.
have
you
Exchange
could
manner.
The first 2% of the
any
into
being pay¬
by the stockholder in a dif¬
These funds
.
given
the
of
aggregate .«amount> f-r.ee! y
available in non-dollar currencies
members
their
use
million
country
MEMBERS
the
t h
have
me
picture
good
of
that those who
sure
am
the part of
permit us to
for loans but
growing tendency
Bank
ferent
St. Louis l.Mo.
and there is
Exchange laws and disciplinary pro¬
applying to allied members as well as to members.
Exchange's)
object
shall
depart somewhat from the normal
corporate pattern.
CRAIGIE&CO.
SECURITIES
about $570 million
its
able
Stix & Co.
I
preceded
be
to
as
an
organization, not to
of the member governments.
Perhaps the most complex as¬
any
three parts, each
RICHMOND, VIRGINIA
Bell System Teletype: RH 83 & 84
Telephone 3-9137
lines application of Stock
cedure
recognized
was
,
to
■F. W.-
SQ9 OLIVE
the
Ar¬
billion available for its
operations.
The unusual feature of its
capital
structure is that each subscription
CAROLINA
INVESTMENT
-
stockholders.
executive
vided
TELEPHONE:
it
firms, together with their
Describes methods of checking
financial positions.
or
member firms' affairs through questionnaires and audits as well
as the execution
of the numerous rules of business conduct.
Lists requirements for
position of "customers' men" and out¬
immediate
any
indirectly) guar¬
and
is responsible for
selecting antee the Bank's obligations to its
and organizing the
operating staff. security holders. This liability,is
The President, officers and em¬ payable either in gold, in dollars,
in
whatever
ployees are recruited on an inter¬ or
currency
the
national scale, some 27 nationali¬ Bank needs to discharge the obli¬
ties being represented at
present, gation for which tjhe particular
'tout; they owe their duty to the call is made.
rities Markets and
sored
call
Directors, who
by
Bank,
Sweden's application for member¬
ship. is pending, Poland has fust
withdrawn from membership.
fol¬
as our
Agreement
Executive
lected
or,
Bank, including most o. the im¬
portant countries in the world ex¬
an
>
that
ernments
The
Its operations and policies are un¬
der the general supervision of a
the Board
and
voting
corporate pattern.
is
New. Zealand,
our
administration
usual
Directors
Argentina,
Switzerland.
over
through, their
officio of
Spain,
exer¬
stockholders.
as
The
control
June 25, 1946. At the present time
48 countries are members of the
We
from
the
called
of
organized
was
bers, are governments. They
rights
Russia,
export
conduct of members and member
over
capital
economic
other
Woods, New Hampshire, in
1944. There-our charter, which is
ton
cept
an
foreign exchange.
by governments and are not
transferable, our stockholders,
we
usually call our mem¬
operations
Conference
subscribed
be
can
whom
nancial
was
Exchange executive reviews operations of itsDepartment of Member Firms, which maintains supervision
any currency
duction,
is
cise
44
resem¬
private corporation the
a
organized at the
United Nations Monetary and Fi¬
off the
private busi¬
a
only
that
problems
it to
shares of stock
of
few
a
in
granted by its charter
"full juridical personality," that importing
food, raw materials or
is to say, full capacity to own equipment.
Consequently, as was.
property, to make contracts, to sue contemplated when the Bank was
and, unlike most international or¬ formed, not all member govern¬
ganizations, to be sued in courts of ments have -released their 18%
law.
It is owned by stockholders capital for lending
purposes: The
and its capital is raised by issuing United States has released its en¬
shares of stock. In our case, since tire
18%
capital,"amounting to
.back¬
Vice-President, New York Stock Exchange
New York Stock
point of view it is
equivalent of an export of
capital on credit.
When the Bank
Bank
ican market. I
of
by the Bank in
Exchange
By FRANK J. COYLE*
consider the economic
without
the
international institution, exist¬
form
New York Stock
govern¬
is" loaned.
the
Technically,
ment.
the
country
the Dutch market.
In financial circles the Interna¬
of
currency
return in
number of countries and have been introduced into
a
consent
you
results
purchase by national banks, insurance companies and trustees.
Says World Bank bjnds are now eligible for investment by
'
the
position of many vf the Bank's
member governments at the time
of the
Bank's
organization,
A
of efforts to
success
in
used
lending operations except
the
when
problems and
be
The purpose of that rather un¬
usual
provision
becomes
clear
obtain wide d.stribution of these securities among all classes
of investors by obtaining legislation making them eligible for
-
not
may
ment whose
General Counsel, Int'l Bank for Reconstruction & Development
,
Business Conduct and the
by the Bank is subject to one
important restriction.
These
funds
Thursday, August 31"; 1950
.
.
its
use
Bank's
debts,
pay
.
,
•
..
N.
>1
...
.
Y. Cotton
i: '
Inc.
Trade
Exchange
Exchanges
■
-
i
.
Exchange Bldg.
NEW YORK 4, N. Y.
CHICAGO
DETROIT
PITTSBURGH
GENEVA, SWITZERLAND
Volume 172
Number 4938
.
.
.
The Commercial and Financial Chronicle
Schram Resigns as
N.Y.S.E. President
f
Steel Production
-
The
Electric Output
Cat-loadings
After 10 years
Commodity Pi-ice Index
'
>
Food Price Index
Industry
President of the
as
By A. WILFRED MAY;
organization, he offers his resig¬
Auto Production
and
Observations.
Retail Trade
State of Trade
nation. Had been absent for
Business Failures
time due to
Korea's Atomization of Investment
some
illness, and will
re¬
farms in Illinois and
to his
turn
What is the motivation
States
happened, when President Truman ordered gov¬
of the country's railroads and instructed the
It
U.
the
S.
Brotherhood
The
A.
Railroad"
of
Trainmen
the
17
For
that
have said last week
negotiate with the unions for a
to
new
Charles Ross,
was
to
Act
a
year due
illness, his
place
Robert
of
Board of
voke
one
party
Stock
six-months
in¬
may
ence
"escap e"
acceptance
the
time
additional
that
if
longer
or
it
Upon actually leaving office he
of the wildest scrambles for material ever
a
tation.
markets, according to "The Iron Age," weekly
.
eral
for trying to buy what he has been told will be allocated?/That
he will try to buy scarce materials is as basic as self-preservation,:
observes "Iron Age." ./
; .\V"
.■ ■
•• -v ••
'•
•<;
:
demand
hit-or-miss basis, says this
on a
steel authority.
They
are
Association and
two years later became the Chief
of the Drainage,; Levee and. Irri¬
gation Division of the Reconstruc¬
tion Finance Corporation. / From
f
Some
,
.
companies have
a
more
definite plan.
They have arbi¬
position, he advanced by de¬
the Chairmanship of the
Reconstruction Finance Corpora¬
this
their October and November tonnage into two
categories: (1) To fill government orders, and (2) to fill regular
orders.
They will book government orders against this tonnage
-until Sept. 15.
If government orders total more than they esti¬
mated they will cut back on regular orders during November to
fill them.
If they underestimated they will increase some November allotments to regular customers.
divided
trarily
Whether
•
seems
Iron
to
the
depend
Age."
freight
builders
car
are
getting
enough
grees to
tion,
Steel people say yes.
Carbuilders
say
no.
of $48,000,
steel
to
Structural
-
fabricators
obtain reinforcing
post upon his retirement
the Exchange but will de¬
himself to his large
already extended to the end of the year.
centers.
some
ton
a
of
Exchange
will be rhanged to Green¬
Co., I v Herbert. Lax re¬
City,
field &
signed
The "Iron Age" steel scrap composite price rose
also the Street *
market it is realized that highercorporate taxes get. passed on to the consumer, with little long-;
term effects on net profits. In his formulation of judgment on the
effects of prospective excess profits taxation, the investor is being"
fairly inundated under a tremendous variety of elaborate statis¬
tical projections of company net earnings calculated with decimal!
Toward the factor of prospective tax programs
4
blows hot and cofcL During a bull
point precision.
.
Much of this calculation is
has
on
become
associated
highly competent brok-V
firms.
Following are the differing calculations by the two ,
firms
(designated "A" and "B") stated as an average of net
after tax price-earnings ratios for the leading stocks in
various1
erage
industries.
"B's" Projection
''A's" Projection
Industry
7
Chemical
11
7
12
—
—
11
35
*
7
metals
19
9
9
Merchandising
16
20
Surely the investor—expert or amateur—is not basing his cur¬
rent investment decisions on confident conclusions about future
Continued
]4-
■
■
'
was
"Steel"
6,5^
from last week's revised rate which
strike.
Consumer pressure
inroads
manufacturers
due
to
cago,
up
all
as
since
rail strikes, particularly at Cleveland
March
.
when operations
'
•
build
and Chi-*
added
to
on page
32
(Special to THe Financial
'zara
ton
Rainsford
and
been
Hamilton
■
Chronicle)
DENVER, Colo —Joseph E. Laz-
have
'adversely affected by
Continued
'
added
to
J.
the
Winslow
staff of
Management Corp., Bos¬
Building.
"
<
,
'
r
;
us
.
in
our
Trading Department
Hamilton Managem't Adds
i '•'
p0Yp ti' tQ' ^O!% - of 'capacity,
were
.been
associated with
Fresno Street.
far into the future as they care to go-. " Last we£k,'
the token
now
civilian goods
the corners in attempts to
the national ingot'rate dropped 10
lowest
staff
Apprehensive of
But not much success attends their efforts with mills
inventories.
booked
playing
are
metalworking.
has
4
Chronicle)
M.
the
of Bailey & Davidson, 2133
Darneal
is
Calif.—Marley
FRESNO
for steel shipments was never greater, says
military on steel supplies,
the
by
to The Financial
(Special
"Steel," the weekly magazine of
early
Bailey Davidson Adds
Magazine Reports Record Consumer Demand
page
CHRISTIAN
'
,
an upsurge of
affected by the rail
on
in announcing that
Mr. EDGAR A.
'
'capacity,
.
,
We take pleasure
with
Stanley Pelz & Co.
Steelmaking operations this week are scheduled at 97.5% of rated
conflicting. For example, the writer
his desk such projections from two
Aug. 24
officer on
an
as
has
and
<
Lax & Co., Inc.,
Place, New York
Greenfield,
40
$42.58 per gross ton, another new high for the year.
to
Taxation?
.
the firm name
Effective Sept. 1
of
-
...»
Food
Greenfield & Go.
will be,
ears."
Non-ferrous
Firm Name to Be
"If and when"
Despite the fact that some big scrap consumers were staying
out of the market this week, prices remained firm, even increased
SI
farming
and Indiana.
interests in Illinois
They are afraid to
bid because those letting the jobs will give them to fabricators
more likely to be able to get steel—regardless of price.
in
the industry's
Steel
vote
about to flood the
was
steel soon may well be "running out
investment managers that
from
-.bidding is back.
That is in bidding they specify delivery if and
when they can get the steel.
Other fabricators with good mill
connections refrain from bidding on jobs because their backlogs
are
subsequently increased
production
price of metals and other commodities, but that there
Automotive
finding it more difficult than ever
are
bars and structural shapes.
calculated that petroleum
porate
petition and the carbuilders want to step up operations to clean
up orders on hand and go after new ones.
to
salary
reported that Mr. Schram
expected to accept any cor¬
is
is not
Delivery dates are an important factor in this com¬
been placed.
officially ap¬
of the New
$100,000 per annum.
It
With rail¬
pledged to increase total freight cars by 122,000, carbuilders
all out competing for the orders, of which 60,000 have already
are
was
President
York Stock Exchange at a
roads
*•
1941, he
pointed
what side of the fence you are on, notes "The
on
position he held, when in
a
July,
Scarcity?
ago
National Drainage
filling critical government orders as they come along, taking the
tonnage out of the customers' regular allotment whenever possible.
When they: are unable to do this, everyone s allotments are cut*
"back proportionately.
,".V"'• '
r
-
year
the deflationary results of traditional steel over-capacity wasr
controlling, reflected in the extraordinarily low price-earnings Jratios of steel shares; now the market has to some extent thefe.
too joined the consumer in scare-buying. And this despite the fact!
that it has been pointed out clearly that foreseeable armament*
requirements will use less than 10% of our steel capacity; and in:
the face of the fact that,steel industry economists have appraised;
drainage and irrigation'
land
generally ill-
......
to
projects, along with elevator and
other agricultural
facilities.
In
1931 he was elected Chairman of
the
Board of
Directors of the
producers are still trying to meet the torrent of
steel
Most
-
in Peru,
on
early interested himself lh
land drainage and land cultivation
and became connected with sev¬
two months to speculate.
was
in the
He
Industry and individuals have already had more than
Who can blame a man or a company
confusion.
r.
.
born
was
explanation of bull stock markets after-
important shortages. Hence the current scramble for wealth-in-^
the-ground.
'
Toward steel, we haveil seen the same popular attitude revet-':
sals.
Whereas until two months ago the fear of incipient retufn
1
;
Nov. 23, 1893 and was
educated at the local high school.
slow-motion probing of the Administration for a pre"painless" controls has compounded the industrial
The
•
Schram
Mr.
Ind.,
election set of
-
"
an
country and break the price structure. Now—the popular investing
credo holds that not only will there be a "dollar-depreciation" rise;
period of 10 years,
receive a pension of $25,000 an¬
nually and be on call for consul¬
would, for
national metalworking authority.
;
as
From Surplus to
six-months'
the
;
the public envisaged a collapse in the price of,
copper due to "recurrently unmanageable" supplies, a situation
that could be forestalled only by a protective tariff; and similarly
A
pos¬
clause is not invoked until Nov. 1
And it has culminated this week in a state of utter
confusion in many
;
.
!
inflation
timed.
"
experienced.
of
continue in office
would
that he
for
May
remember that in
the-event, and that its "analyses" are short-term and
his
of
Wilfred
a,
equities fell in the face of a postwar inflation; and that the
cutting of the dollar's purchasing power by one-half between 1939f
and June 1949 was not accompanied by any proportionate rise in*
stock prices.
*
< ?
We must conclude that the public is prone to realize the exist¬
resignation would, therefore, mean
This week industry is sweating out an advanced case of preallocation jitters.
For more than two months they have known
allocations were coming and they have tried to buy accordingly.
The result has been
either
The
clause.
evi¬
marked increases in
1920
Governors.
a
sibly
;
Schram
Schram and the New York
A Case of Pre-Allocation Jitters
.
Emil
the
Exchange,
statistical
1933,
as
the money supply, have been accompanied oy
bear markets, temporary but drastic. We must
P.
Under the contract between Mr.
interest is because
since
dences of inflation such
Boylan, Chairman
occasions
several
filled
tempo rarily
by
joined the world's other nations in
depreciation of the monetary unit—but on a
However, as we have seen on
long-term basis.
having
been
President and his executive aides.
;
conviction
to
re¬
from
This writer happens to hold the long-term
that this country within the last
previous
April of
this
a
unions can expect no sympathy
adjudication, the
of¬
some
decade has
The reason ascribed for the Administra¬
leadership's action in ordering
for
time
strike when there is
critical danger threatening our American troops who are fighting
our battles in Korea.
It is also thought that in ordering a strike in
defiance of the national interest and in rejecting a Railroad Labor
'
to
of '
on
his
fice
the President would not
contract, nor would other
tion's refusal to become involved in the unions
-\
majority to be ascribed to carefully con¬
expectations of inflationary phenom¬
ena that are relevant to securities; and to ob¬
jectively reached conclusions that the infla¬
tionary factors are stronger than the counter¬
balancing deflationary and bearish elements,
such as wartime taxation, interventionist meas¬
ures, and the nation's enormous productive
capacity?
ceived
absent
from
atmosphere of
the
has-
'
been
designated by the President's executive
order to take over railroad control.
Secretary Pace thereupon
named Karl B. Bendetsen, Assistant Secretary of the Army, to
carry out the assignment, who designated Maj. Gen. F. A. Heilman,
Chief of Transportation, to supervise the government's fourth
railroad seizure in four years, assisted by about 50 other Army
officials, including some of the railroad presidents who served in
a similar capacity in World War II.
of the union
Is the controllingly bullish
Mri.
Schram
One of President Truman's secretaries,
extraordinarily sharp rise mak¬
Inflation?
of
Exchange for
will offer his
years,
Board
Sept. 14.
the Army Frank Pace was
.
25
•
months, these two unions have waged a battle with
for a 40-hour week and higher pay.
Secretary of.
government agencies.
10
Governors
railroads
ported
last
the
Railway Conductors, the two unions which had called the
strike to begin at 6 a.m. last Monday, promptly cancelled their
strike threat and announced that they would "gladly" operate the
roads for the government.
on
Aug.
President
Schram,
resignation
Order of
the
Emil
the New York Stock
the
and
announced
was
that
take over control of their operation at
5 p.m. Sunday.
By this action, Mr. Truman averted a nationwide
strike which would have paralyzed rail transportation throughout
to
Army
an
ing up two-thirds of its preceding June-to-July break, and in con¬
flicting group-to-group movements?
"seizure"
ernment
United
Principles
behind the market's interesting post-
Korean behavior—reflected in
Indiana.
The expected
$
(805)
JANNEY & CO.
PHILADELPHIA
.
i
16
f?
The Commercial and Financial Chronicle
(C06)
■.
Thursday, August 31; 1950
.
.
in the market,
increase
provide
Monetary Policy in Free Economy Federal Reserve Board Presents
By M. S. SZYMCZAK*
In confidential
Distinguishing between long-range and short-range problems
of monetary policy, Governor of Federal Reserve System
asserts a timely and appropriate flexible monetary policy can
greatly assist in leveling off booms and depressions. Sees need
of changes in interest rates in order to meet fluctuations in
credit demands so as to create greater economic stability, and
calls for close liaison between monetary policy and the fiscal
and debt management policy in control of inflation.
I
.
shall
address
remarks to
my
the basic issues of current
mone¬
tary policy. Any discussion of this
subject must take into account
certain
basic
inci
p r
that
1
p
es
underlie
country's
dramatic
banks
institutions,
public in character, for reenforcing private commercial banking.
They have important supplemen¬
tary functions to perform.
i cy
task
at
any
time, whether
it
be
of
period
a
natio
n a
1
emerge ncy,
the course
f
business cy¬
a
cle,
or a
long-
Their
is:
(1) To help safeguard the gen¬
liquidity and soundness of
private commercial banks;
(2) To
national
exchange of
currency into other
peacetime
period of eco¬
(3) To provide elasticity to the
currency and deposit mechanism;
nomic growth.
and
would go so
far as to say
S.
M.
that
Szymczak
thinking
rethinking
and
of fundamentals
of maximum
are
importance right now, for mone¬
tary policy, intelligently and flex¬
ibly administered, can and should
play
our
important role in helpipg
an
economy to meet our defense
My remarks, there¬
emergency.
fore, begin with consideration
basic principles.
to
on
consider
of
Then I shall go
their application
to the current situation.
For purposes of present discus¬
sion, the basic problems of mone¬
tary policy can be divided into
two parts, (1) the
long-range and
(2) the short-range.
The longproblem
range
simply. It
be
can
concerns
put
and
money
to
with
the
needs
of
growth
and
standard
people.
very
having enough
credit
keep
Thus
the
date the
total
increased
of
money
need.
the
Economic growth and a steadily
rising standard of living are basic
features
of
our
free-enterprise
No other society in the
history has accomplished
economy.
world's
much
so
One
years.
Why
in
this
been
brief
so
of the
has
a
span
main
related
community
in
expanding
functions
of
means
these
encour¬
aging enough expansion of credit
and money to foster full utiliza¬
tion
of
sources,
expanding physical re¬
technical skills, and man¬
power.
-
"Enough"
credit
monetary expansion
much
to
as
means
foster
and
not
so
inflationary
little as to
pressures, and not so
induce deflationary trends. Main¬
tenance of the right amount of
credit and
is the heart of
money
the monetary problem.
It is what
monetary
through
policy, carried out
central banking opera¬
tions,
designed
to
banks
have
is
Central
accomplish.
grown
up
because of a need manifested by
recurring monetary and banking
problems.
Our own Federal Re¬
System
serve
after
1913
a
established
was
in
extensive Con-
very
pressional
study
of
American
banking and monetary experience,
well
tries.
as
As
Reserve
of that of other
experience
coun¬
since
the
System's
founding has
brought shortcomings to light, the
Congress
has
authorized
some
modifications
in
the
System's
authorities and organization.
its
our
fi¬
range
on
memoran¬
the long-
monetary problem, I should
like to turn to what I think is the
expansion of capacity
Korea has called for
of
nomic
policy
the
j or
American
war
in
reappraisal
a
economic
develop¬
of
ly administered
eco¬
immeaiaie
be
to
of
expenditures,
curtail
overall
that
to
and the
private
program,
situation
far
beyond wnat the figures of $10 or
$20 billion by themselves suggest.
Unless incisive offsetting Govern¬
ment
action
inflation
is
inevitable.
seems
United
States
in
cannot
suc¬
increased
vestment
sures
now
also
always
already
pres¬
powerful
snowball.
and
have been put on notice that they
insured against depression for
Fiscal
and
not
be
.
(2) To provide its
f
in
the form of
against
money
1
own
money
for
the
United
maintain
we
checking accounts
deposits
as
the
principal
form used in the country;
(3) To assist private enterprise
and
individuals to
ate
development
find
appropri¬
opportunities;
and
economic
situation. " In part, this
adjusting credit and mone¬
tary conditions in such a way that
monetary policies do not in them¬
means
selves contribute
to economic
(4) To expand the community's
bank deposits on the basis of bor¬
means
rowing to realize such opportuni¬
policy should seek
ties.
or
As
government
provide
essential
has
grown
police;
to
emergencies such as war, com¬
mercial banking has helped in fi¬
nancing governmental needs. Our
private banking mechanism has
been a propelling force in
our
*A
lecture
by Governor Szymczak at
Banking,
University of
Wisconsin, Madison, Wis., Aug. 29, 1950.
School
of
More
that
particularly,
credit
compensate
for
and
to
in¬
it
monetary
counteract
unstabilizing
forces.
An
health,
educational,
and
other
public
services, or to meet great national
the
stability.
credit
and
is
avoidance
the
ing
of
monetary
the
Nations,
the
strength
lied
for the years
'
on
ahead.
(aside from
In the
other
immediately
from
aspects, the ob¬ increased demand). The increased
policy are cost of
living
and
the
larger
three-fold: (1) to assure that the
profits, together with high em¬
military program obtains the goods
ployment and the attraction of
and
of
economic
needed
manpower
to
accom¬
labor into defense
plish the task assumed; (2) to fi¬ stimulate
the
nance
increased
expenditures in
avoid
a
Government
way
diminish trie
or
which will
possibilities
wage
costs
wage
industries, will
demands and
some
increases.
In addition, labor
per unit will tend to rise as
overtime payments are required
during and after and
as
less
e ficieiit
marginal
the emergency; and (3) to curtail
workers are reemployed in an ef¬
or
restrain private spending and
fort to maintain or
of inflation both
investment,
expand
well
as
State
and
as
local
non-miii-
of
expenditures
Federal,
governments,
to
extent
necessary not only to
essential supplies
to the
assure
military
but
also
to
current and future
consideration
reduce
duction.
(d)
This
is
finance
of
the
development
Continued
on
be
to
taken
into
the following:
are
The
bv
creased
be
actual
the
cash
expendi¬
Government
for
in¬
military supplies will not
the
of
measure
tied
sources
general
of
an
par-
page
28
time
far
resolve
to
national
gram
a
to
defense pro¬
as
as
pay-as-you-go
experienced great
difficulty in maintaining economic
stability in the postwar period.
consequence, we
After
taxation, the
up as
and
in
up
scarce
this
re¬
work.
resources
work proceeds
planes, tai ks, and
viding additional
producing
on
and
guns
capacity
before actual payments
by the Government.
(e)
sharp contrast to that existing in
1940
and
1941
when
defense program
the
previous
commenced.
was
Spectulative
are
buying
investment activities
pro¬
even
made
is for the Treasury
nance
fine its
inflationary spiral is fore¬
boding. Such an inflation would
great
hardship
to
It
In
many
would
addition, holdings of money groups of our people.
and other liquid assets by busi¬ diminish incentives and misdirect
and
nesses
greater
individuals
relative
to
much
are
the
national
product than in 1940 and, together
with
growing current
cculd provide the basis
incomes,
for
a
tremendous amounts of effort into
non-productive
inflation
is
substantial
of
increase
private
in
matter
a
The
in
taken alone
presently
the
be
has
critical
borrowing
public
can
and
savings
businesses
met
by the
other
lenders
readily obtain funds for
new
can
vestment
ing
available
Reserve should purchase these se¬
the
to
the civilian
economy.
sector of
In particular
areas
selling low-yield
securities.
to
not
it
Cur¬
and
sufficient to
essential
program.
curities
offered
especially
is
The
sub¬
a
most
If
the
maintain
se¬
these
important.
important immediate
for
*
a
tax program to become effective.
In the meantime, the only weapon
command
our
is
restriction
of
private nonessential credit exten¬
sion. In fact, it will be necessary
maintain a more effective set
to
of restraints
on
private credit
ex¬
tension than has been undertaken
in recent years.
The
task
of restraining
extension
credit
is
private
much,
more
difficult under existing conditions
than it was in previous periods.
The large volume of liquid assets,
including cash and government
securities, held by banks, other
lending
institutions,
businesses
constitute
a
large
for other
of funds available
uses.
Particular
for
use
will
emergency
more
fiscal
that
measures
sidered
and
might
in
not
monetary
be
con¬
the
be
present
discussed
fully.
Taxation
In
Federal
rates
the
of
raise
to
It will take tr'
purposes.
govern¬
stable
for
Choice
task of credit policy is to curtail
private
credit
for non-essential
most
curities
be
military
lend¬
economy with little change in the
volume
of
goods
and
services
ment
as
individuals
of
would
block
already
and
by
far
as
banks.
source of funds,
particu¬
larly if limitations are placed on
extension of housing and other in¬
tial
panies
as pos¬
provide the Treasury with
and individuals
expansion,
been substan¬
announced
program
avoid
to
urgency.
monetary means for an inflation¬
ary spmal. Banks, insurance com¬
the
to con¬
much
as
borrowing from
rent
credit
this year, is likely to be ac¬
celerated. This would provide the
military
could
which
Private
of
and
spending
investment.
increase
(4)
To prevent
areas.
existing potentials for credit importance and
and
infla¬
sible to the current savings of the
at
and
be read¬
can
rious
cause
least
tionary method of government fi¬
funds
productive
is
economy
structure
Avoidance of
the
the
stantial
The
tures
the
possibilities of
pro¬
ily financed either by available
already
liquid assets or by borrowing from
operating at close to capacity and
banks and other lending agencies.
the leeway for further expansion
All in all, the outlook for a se¬
is
limited. This situation
is
in
(1)
(2)
soundness
-
,
Scope of Fiscal and Credit Policies
on
pressures
broadest
jectives
volume
weaken¬
gradually undermine
credit situation.
unbalanced
in
adjustment
of any
financial
which would
the
consideration
'
-
restrictive.
,
expansion
essential
controls
,
developments
monetary problem is how to ad¬
just credit and monetary condi¬
tions to current changes in the
genuinely
painless.
used
To express it in the fewest pos¬
sible
words,
the
short-range
monetary
dispense with the price sys¬
as a guide to civilian produc¬
tem
gen¬
tions.
of its im¬
some
humanly possible
basis. Nothing
could be as effective in combating
and
integrity
of
our
domestic
(b) Businesses and individuals
and preventing inflation as taxes
economy.
It is as impel ative to have been educated by recent ex¬
to absorb surplus
.maintain our economic strength as perience regarding inflation. If a high enough
money
competing
for
scarce
it is to provide for our military price rise becomes
general, tney
goods. In retrospect, the gravest
strength.
Without
the
one,
we can be expected to move quickly
mistake
we
made
in
financing
cannot have the other.
Inflation to spend vast amounts of liquid
World War II, and the mistake
at 'home
can
be
as
deadly an funas in an attempt to protect which left the
deepest mark on
ene'my
ds
the
armed
enemy themselves against future declines the American
economy, was fail¬
abroad. We have to assure success in the value of the dollar. Some
ure
to tax enough.
This railure
on both fronts.
Botn require sac¬ are already doing so.
left us with ' a
huge burden of
rifices of all of us.
(c) Prices will be under up¬ government debt and tremendous
ward pressure from the cost side
potentialities for inflation. As a
The Nature of the Problem
arsenal
unless
Higher incomes will also be
and
postpone
as
are
erated
currency
up
involve less infringement upon in¬
dividual freedom and choice, do
will
(a) Businesses
cessfully discharge its great re¬ some; time to come. The general
sponsibilities of world leadership,' caution which tempered the post¬
it cannot fulfill its function as an war inflation cannot safely be re¬
short-range monetary problem. By inflation.
short-range problem, I do not
Attainment of these objectives
In this development our
private necessarily mean today's problem, is essential to the maintenance of
commercial
but rather the short-range prob¬ a sound
banking mechanism
economy. In determining
has played a vital role.
This role lem at any given point of time, policies directed toward
them, the
has been—and continues to be:
regardless of the prevailing over¬ principal aspects of the current
all economic and financial condi¬ situation and of
"(1) To mobilize and safeguard
possible future
community's
deposits;
back
to
Their administration could not be
speculative
nancial assets as its resources and
the
needed
direct controls if inflation is to be
avoided. At their best, direct con¬
trols do not prevent inflation so
individuals
in
Inflationary
productive power have increased.
bank
direct
will
consumption and in¬
but
commitments.
substantial
taken,
controls
to
tion, are less difficult to admin¬
ister, are less costly, and are more
readily relaxed or otherwise ad¬
justed flexibly to changing situa¬
tions, thus creating fewer postemergency problems. It will
be
necessary, however, for such con¬
trols to be applied
wisely and
courageously in a manner that
The impact of these other factors incidental to such a
expenditures on all development will not only result
aspects of the economic
preferable
if they can do the job. They
are
will
civilian
are
being injected into
various stimuli given to
already showing signs
bulging at its production and spending by the psychological and
ui.der these conditions will go
fiscal and
of
Such
pact.
increase
goods
seams.
always
ones
much
of
and
defense
set
controls.
monetary
are
the military program and the rate
economy
new
is
sorts
The immediate need is for
(5)
economic policies of spending. The increase in incomes
the Government.
Increased Gov¬ resulting from the expanded milithe diversion oi
ernment expenditures for military itaiy program,
an
various
well constructed, ably and firm¬
a
contrac¬
or
of
also to be expected.
future, irrespective of the size of
The sudden outbreak of
the
From these remarks
of the
tary
Short-Range Monetary Problem
has
commitments
Says
(3) The major problem of
follows:
The
performance
reasons
been
possible
inventiveness
of
the
of
at high levels of
economy
Efficient
as
JLong-Range Monetary Problem
The full text
dum
activity.
economic
supply, mainly bank deposits, has
increased substantially during the
last 50 years largely to accommo¬
maintain supply condi¬
tions for credit and money in ac¬
cordance with the over-all needs
pace
a
steadily
rising
living for all the
of
To
(4)
far
as
basis.
pay-as-you-go
present emergency.
price
currencies;
run
I
Joint
purposes
facilitate
national
and for
of
Economic Re¬ tion
consumption
will
be
staff of the
Federal needed. A considerable expansion
Reserve
System
prepared a of the military program beyond
memorandum on fiscal and credit what has yet been indicated would
policies to be pur sue d in the drastically change the situation.
ments
eral
the
on
will
consumer durable goods,
expansion of business in¬
ventories. Widespread demand for
bank credit to finance speculative
Economic Report,
the
port,
socially de¬
often
quasi-
the
of
request
Committee on the
are
monetary pol-
the
At
economic
vised
on
and commercial credits, and
consumers
basis
for
multiple
Strong credit
undoubtedly con¬
tinue in the housing field, for pur¬
government borrowing should come from non-bank investors.
growth.
Central
on
humanly possible taxation
as
an
which
reserves
expansion.
demands
the Board urges curtailment of overall civilian spending, drastic
restrictions
there would be
bank
chases of
Joint Committee
to
memo
the
credit-
Fiscal and Credit Policies
Member, Board of Governors, Federal Reserve System
in
the
important
fiscal and
a
present emergency,
volume
credit
of
measure
area
Federal
is to
in
the
the
assure
government
Volume 172
Number 4938
that
revenue
rigid
cuts in
of
taxes
and
From
expenditures, such
with
those
as
the
Ahead
agricul¬
tural commodity support program,
housing, and unemployment
should come automatically. Others
will be necessary and will require
courageous action.
In
Ii
thnt nothing had done
challenging Stalin in Korea.
the
Democrats'
argument
gressional
campaigns,
assuming
be
been
of
he
will
individuals
on
middle
in
income
absolutely
in¬
those
lower
and
is
brackets,
essential
available
goods
the
tax
if
income
for
the
purchase
services
is
to
and
such
out
goods and
As
Public
of
such
an
income
considerably aided
avoid
to
income
taxes
subject
were
to closer scrutiny
and enforcement. The plugging of
other
tax
certain
loopholes,
tax
free
including
exemptions,
would aPo improve the receptiv¬
ity
of
the
general
income taxes
higher
public
selective
for
well
as
substantially increase
Use* of
thp
Carlisle
as
revenues.
excise
an
of
"prosperity."
greater
you
can
Additional
rest assured, by
readjustment in the "take home" pay.
bring them votes.
spectacle in the Senate several
rather amazing
a statement criticizing the
policy in Asia, saying it was responsible for the
was a rather mealy mouthed statement at best.-
Four Republicans joined in
It
it with the charge that the
a
tragedy. Two of the signers of the state¬
adherents of the Eastern internationalist press, were so
unnerved that they apologized.
They said, in effect, that they
were not intending to be partisan at all, simply wanted to point,
out the errors that had been made so they could be corrected.
ment,
Why, Republicans had been partly to blame, they said.
There is seldom a day that there is not an article by some
pundit in the press that the Republicans hope to gain from Korea.
The effect is to make the voters feel "oh, one politician is as bad
as
another."
The
Republicans should work into the indignant mood, not
seekers of voters.
statement to the
harangue thrown at them should have been that, of course, they,
hoped their conduct in office brought votes, that this was the way
our government is operated.
But what was important to the voters
was
whether their indictment was true.
It was, but not nearly
permit themselves to be portrayed as callous
over
hundred miles removed from the
a
political capital out of
in Eastern
The
mainland,
seemingly relatively easy job.
Throughout the hearings
before Congress, running back to 1948, the military is consistently
shown as saying that Korea could not be defended.
Occasionally
there are some optimistic puffs by men having to do yvith the
was
But the Democrats pounced upon
•«'
in mind that the argument
island more than
part
Republicans had come to stoop so low they were trying to make
the Adminis¬
tration's policy in Asia has been around the defense of Formosa,
and
their
on
Korean mess.
Strategically, no expert, military or otherwise, has argued, to
knowledge, that Korea was important, that it meant a thing
in the world one way or the other.
This was the line Truman
followed until, on the spur of the moment, he changed his mind
and ordered
South Korea defended.* Insofar as any of us in
Washington can find out, no one of his official family, in or out
of the military, pressed him to make this decision.
Every indica¬
It must be kept
spending will
increased .government
deductions will be offset,
Administration's
So, manifestly, nothing conclusive will
own.
the
the Korean episode because it will
There
Bargeron
have been accomplished in Korea.
his
war
days ago.
there will be similar incidents, in Iran,
was
that
is
they consider are even better times.
The
probably will not hit into enough homes to offset
feeling
over
complete vic¬
The Administration has asked for and has
gotten some $16 billion additionally from Congress, although it is
anticipated that but a small fraction of this will be needed for
Korea.
The rest is based on the proposition that Korea is but a
tion is that it
ideological
Indeed, this far ahead of November, the propaganda is putting
the Republicans in a ghoulish light. They are pictured as gloating
it will not.
that
this country a tremendous
what
demands for
r,"^nf»p"*ndTc+Q
Admini^^abnn
saying
starter,
if groups that are known for their
ability
a
also,
payroll tax
my
individual
taxes would be
it, even
Germany, in the Balkans.
services with¬
acceptances
in
I understand
No¬
opposition consists of huge racial and
whose leaders are not concerned in the efficiency or
tremendous
a
against in
up
tnem
Korean
this
tory in Korea will not mean this at all; indeed,
of
price spirals.
increase
into
come
their enemies.
bring
and foresight—the man who
be
brought into line with the supply
of
transformed
be
amazing,
The Republicans'
True
"has
stopped Stalin.
wealthy individuals
ness
enterprises.
An
in
are
giving the Republicans no small amount
From a man who has committed
of the most tragic blunders in our history,
to taxation of
increase
That's
the Con¬
Stalin
be
they control have ceased to be free to the extent
they do any thinking of their own. They are incapable of becom¬
ing indignant over such as the Korean episode, over the whole
tragedy of our conduct of foreign affairs the past 16 or so years.
They are saturated with the belief that the government responsible
for this is a government that is good to them.
The Republicans
stopped" by then, and it is an argument
stature of courage
Financing the expanded mili¬
tary budget should not be limited
including
in
would
hordes of voters
worry.
one
ofiteering and speculative
activity.
rates,
as
it
inefficiency of the Washington Government.
Their sole concern
is that it is the government which gives them their power.
The
that is
p
x
Asia
of
are
blocs
labor
President's
the
in
to
(3) Tne tax program should hit
t
Wars
much to hearten the
so
spirits
action
especially to be cur¬
tailed
to
help prevent military
procurement from creating price
spirals in these areas.
across--he-board
Foreign
the
flagging
is
of
victory by then or are definitely on
to winning one.
conclusion of his strong argument
for the defense of Formosa, the General said
In
goods need
come
Veterans
probably unwittingly, gave him an issue for the
campaigns; that is, of course, if we have won a
the way
is
(2) Purchases of certain civilian
b
the
to
message
circumstances
the
However, we are living in an amazing period.
division.
decisive
economy.
and
McArthur's
Congressional
highly important to
curb purchasing power through¬
out
the
private sectors of the
war
tion.
because the latter,
expenditures, the following
or principles are suggested:
(1)
of the News
is doubtful if President Truman is very much miffed with
General
considering an expanded tax
to finance increased de¬
guides
Under
vember, that the voters of this country would feel grateful to the
present Administration for having ^'stopped Stalin" or anything
else.
You would think their mood would be one of utter indigna¬
-We
It
7
training of the South Koreans, designed to justify their appropria- *
tions for this work, that the South Koreans could take care of
themselves, but nowhere, so far as I can find, has there been any
suggestion that we defend Korea.
By CARLISLE BARGERON
program
fense
(807)
Washington
Some
government.
connection
in
in
in the less essential
economy
functions
The Commercial and Financial Chronicle
.
expendi¬
require a sub¬
increase
stantial
.
exceeds
will
This
tures.
.
a
>
_*•
reply of the signers of the foreign policy
strong enough.
-
,
,
,
taxes
should also be expanded to divert
private
purchasing
sectors
of
well
as
from
for
as
non-essential
products
services
that
Withou
such taxes
trols
utilize
"ndi'nres
-
critical
purchase
or
o
in
This announcement is neither an offer to
and
The
labor.
scarce
her
sell
nor a
solicitation of an offer to buy any of these
offer is made only by the Prospectus.
Bonds.
•
'
con¬
t
would
be restricted only through
higher prices with resulting high¬
er
business
(windfall)
profits.
This
would
contribute
velopment
spiral.
of
With
excise
an
flows
to
the
$50,000,000
de¬
inflationary
an
directly
this
tax
into
the
Treasury. Consideration should be
given to levying excises as tem¬
porary measures with a definite
expiration date related to the im¬
money
Government of Canada
Twenty-Five Year 23/4% Bonds
mediate and prospective situation.
Not only should there be a well
conceived
contract
renegotiation
policy applicable to business cor¬
porations
Dated September
handling
military con¬
tracts, but all business corpora¬
tions should share in carrying the
burden
of the increased
gram.
A
of
program
tax
pro¬
corporate
Price 101% and Accrued Interest
a
increases
tax
designed
Due September 15,1975
15, 1950
for
a
relatively short emergency would
place considerable reliance
excess
profits
tax.
The
weakness
of
incentive
given
other
and
ditures,
cost
that
is
program
excess
should
the
Copies of the Prospectus may be obtained from only such of the undersigned as
offer these Bonds
compliance with the in
securities laws of the respective
expen¬
tne
very
anti-inflation
extravagance
MORGAN STANLEY &
unlimited allow¬
expendi¬
tures, and may need to be accom¬
'
THE FIRST BOSTON
Such
ureases.
cost
HARRIMAN RIPLEY & CO.
in¬
stream and defeat the purposes
of
WOOD, GUNDY & CO., INC.
If, the emergency
long
lates
surtax
well
come
as
to
ta>e^.
on
corporations
as
adjust individual in¬
rather than continue
Continued,
on
page
15
i;
Incorporated
the anti-inflationary program.
is likely to be
duration, it would be
preferable to raise normal and
SMITH, BARNEY & CO.
CORPORATION
creases, if left unrestricted would
divert
funds into
the
spending
of
CO.
nonessential
panied by wage controls in order
to
resa ain
excessive wage and
salar;;
may legally
States.
intended to prevent.
profits tax legislation
from
for
ance
invite
discourage
resulting
is
nonessential
increasing
the
an
basic
tax
a
to
which
situation
New
such
on
A. E. AMES &
n
t
,<t - j
•*(.>-•»
j.
,i!<>
.'I
itji
August 30, 1950.
..«•*»
■* i
-
-
'
•.
Incorporated
I--.!'-
CO.
DOMINION SECURITIES
CORPORATION
McLEOD, YOUNG, WEIR
Incorporated
»♦
-M
*,
I
8
(808)
The Commercial and Financial Chronicle
LETTER
TO
THE
EDITOR:
Corp., Smith, Kline & French Lab.,
Tracerlab,
Company,
Best
Security—Capacity
Thermal
Westbroo^, in teli.ng story of security be likes best,
prime security is being deliberately destroyed.
contends
this
Speer
Inc.,
Ultrasonic
Research
Electric
To Provide for Oneself
James S.
Thursday, August 31/1950
...
Bond
Memorandum
&
Carbon
Corp.,
Share
&
Arthur
—
berger & Co., 61
York 6, N. Y.
and
Engineering
Co.
NSTA
—
Wiesen-
Notes
Broadway, New
Erie
Railroad—Analysis—Bache
Co., 36 Wall Street, New York 1
5, N. Y.
AD
LIBB1NG
&
Editor, Commercial and Financial
.s
Chronicle:
better
no
of the
today in the mouths
powerful, than it
when
homage and
Those
few
past
was
men
were
vowing
fealty, and endowing the mighty
oppressor with their goods (lands)
Hartford-Empire
Company —
Analysis—Eisele & King, Libaire,
Stout & Co., 50 Broadway, New
of
ment.
in
York
ates had
The
Private
property, the right to
manage and use the avails
own,
of one's
in
be
the
had
such
rights
of
ends
held
are
himself
his
immediate
It
pity
a
a
their
resume
security
de¬
is
a
that
have
Until they
obligations
proper
word
in
it is
likely
that monarchs
would/still deny their subjects
property rights. There is an ex¬
of
prerogative,
was
in that day.
at least
or
Metaphorically speaking, King
already in the bed cham¬
concept is the security that I
I
am
the
looking for others who feel
way
about it.
I am
same
champion will
a
some¬
where emerge to rally around him
whatever support survives for this
outmoded and reactionary idea.
As
things
are
ernment
the
possesses
income
of
to
power
this
people
tax
to
an
the
which presents to the cold
eye
of
reason
a
deliberate
con¬
voice
Unless
none
touched
else to
security and protection (welfare)
Win¬
Inc.,
Douglas
& Lomason,
Refrigeration.
land
and
Cope-
&
Co.,
120
I
—Lee
Higginson Corp., 40
Street, New York 5, N. Y.
overlooked
Aircraft
Ma^ufacturi*?
S-ocks
A World War
III—Soecial
view—John H. Lewis &
Co.,
"Wall Street, New York 5. N. Y.
an
Branch Banking Builds
Empire
in
brochure
N.
the
63
For
contributors
your
this
upon
most
has
essen¬
of
a
Golden
in the New York "Times"
America,
& S. A.—Blair, Rollins &
Inc., 44 Wall Street, New
York 5, N. Y.«
on
securities bus¬
iness
Bond
Yields
and
Money
1911-1950 —Chart —C.
F.
er
in
Bureau
the
ties
5, N. Y.
in
Insurance
Stocks—Comparative
tabulation for the 6 months ended
June 30, 1950—Geyer &
Co., Inc.,
63 Wall Street, New York
5, N. Y.
To my knowledge, this unheard-of
was
of
con¬
not
Philadelphia and simply told
he would try and do
me
admirable side of this work
industrial
&
*
Co.,
115
the
traded
today
good
a
Advertising Committee
year
/
and
the
rejections I
receive
every
due
to other pressing duties.
Herb, you're swell, and I sincerely hope our national organiza¬
tion appreciates your serious endeavors in their behalf.
are
nearly $15,000.
INVESTMENT TRADERS ASSOCIATION OF PHILADELPHIA
The annual
the
meeting and election of officers and
Investment
Traders Association
of
governors
of
Philadelphia will be held
Friday, Sept. 15.
i
The Nominating Committee has presented the following slate
for the 1950-51 fiscal year:
President:
Albert
Vice-President:
James
Fenstermacher, M. M. Freeman & Co.; First
B. McFarland, III, H. M. Byllesby &
Co.;
*
*
of
Midwest
in
of
on
Central States Electric.
Air
and
thus
business
of
there
the
expansion
if
recruited
are
more
is
per¬
ser¬
twenty
years
will
young
member¬
"Fifteen
see
a
great
change in the makeup of the mem¬
bership.
Projecting the present
average age
future
of 58 for 15
suggests
years
the
into
extent
of
Bernard Tobias
Joseph E. Smith
the change to occur.
"Events
tumn
of
of
beginning
1929
many.
in
the
au¬
blighted the hopes
Others
stuck
make
a
it
out
to
livelihood in the field. The
young men who entered
Also available is an
analysis of
Ohio Oil Company, Inc.
young,
ness
and
stayed
are
the busi¬
no
since.
have
The result:
been
when
the
sidered
the business is
opportunities
better .than
generation ago
were
Few
recruited
advertising for recruits at
are
longer
to express it mildly.
youngsters
analyses of
parison between the thirty listed Footc
Mineral Co., Beryllium Cor¬
industrial stocks used in the Dowporation, Berry Motors, Inc., FilJoroes Averages and the
thirty- trol Company, Consolidated
Eng.
vYilliaivi J. McCulien
Midwest
for
Lines, Inc.—Study
—Hayden, Stone & Co., 25 Broad
Street, New York 4, N. Y.
Share—Bulle¬
McFarland, II)
on
the stock exchanges
greater than in any pre¬
period,
further
the
bulletin
B.
Exchange is growing and promises
to
Co.—Analysis—Ira Haupt & Co.,
Ill
Broadway, New York 6, N. Y.
J.
A. H. Fenstermacher
securities
ship," Mr. Hargrave said.
Corpora¬
Central Vermont Public Service
a
Herb's part
is the fact, he is represented on at least two other
committees of
the NSTA, and active ones also.
I need not go into the time and
effort I use in the developing of an
of
number
are
vious
men
%
Central Public
Utility
on
aver¬
members
Hargrave
the
National
—Goodbody
&
most
the
Exchange is 58, and this is
probably 20 years higher than the
average in the late 1920s. He no*ed
Broadway, New York 6, N. Y.
Electric Bond
the
Stock
"The
is
think
Com¬
on
age
age
Earnings for the first half
available
I
time since
that the
tin—Coffin, Betz & Co., 123 South
Over-the-Counter Index—Book¬ Broad
Street, Philadelphia 9, Pa.
let showing an up-to-date com¬
Also available
name
challenge to all local
that
more
opportunity for those
eleven-year period—Na¬
forming broker and dealer
tional Quotation
Bureau, Inc., 46 vices.
Front Street, New York
4, N. Y.
Eastern
chap by the
a
a
are
—
Hickey, 49 Wall Street, New York
made
and
an
Also
Eastern Railroad Common
Stocks
—Leaflet on
outlook
Vilas
&
and
pointed out
Common Stocks for Long-Term
Co., 25 Broad Street, New York
4, N. Y.
quotas
situation, Mr.
Hargrave
Averages,
*
in
is
men,
any
Company, 1 Wall Street, New tion—Card report—F. S. Yantis &
York 5, N. Y.
Co., Inc., 135 South La Salle St.,
Chicago 3, 111.
&
their
today
greater than
and
Commitments—Circular—Laidlaw
made
the opportuni¬
that
Rates
Cbilds
had
percent¬
figures produced by the four
have
needof young¬
line
over-the-counter
1950
or
SMITH, Chairman
Advertising Committee
Pershing & Co., 120 Broadway, New York City.
Exchange in
Chicago, the
Homer P.
Rail
as com¬
time
no
NSTA
of the Midwest Stock
that I have nothing
offer on this subject.
Quo¬
both as
to yield and market
performance
of
At
HAROLD B.
Aug.
27, Homer P. Hargrave, Chairman
sorry
stocks used
T.
Co.,
year.
and, having posted the necessary
prize donation, claimed he would percentage¬
wise produce the largest amount of advertis¬
special dispatch
a
name
mentioned will be pleased
the following literature'.
tation
last
Don't let up, but keep after contracts.
Young People
According to
Aug. 23, 1950
955 Main St.,
Bridgeport, Conn.
over
West—Illustrated
Bank
on
re¬
informed that five affili¬
chairmen
Opportunities in
JAMES S. WESTBROOK
five
gross
who
Securities Business
it
understood that the firms
parties
four
Blizzard
We
Cites
Recommendations and Literature
interested
Herb
of
Wall
U. S. Thermo Control—Analysis
—Raymond
&
Co.,
148
Stat*
Street, Boston 9, Mass.
>
:
Dealer-Broker Investment
send
results
lated for their local club.
S. Potash Co.—Memorandum
1 9 2 9.
to
of the
some
the
Adver¬
accepted, and yet at the writ¬
ing he not only equalled his quota but has
gone over by practically 100%.
In my mind,
Herbert H. Blizzard
it
is
typical, of Herbert Blizzard when he
accepted the Chairmanship of the Investment Traders Association
Square D Company—Analysis—
Eastman, Dillon & Co., 15 Broad
Street, New York 5, N. Y.
menting
It is
with
fidence
Broadway,
New York 5, N. Y.
have
ears
thing dubbed by that
am
seen
for
complete
now
ing.
Newport Steel Corp.—Emanuel,
Deetjen
been
Many weeks ago
on
Plywood
Crampton,
Si
data
are
will exist.
to
discuss with you is
being deliber¬
ately destroyed. The promise of
my
have
tially basic security of all securi¬
ties, in the neglect of which no
U. S. Constitution.
care
ters
it.
I
of
other
only security that I
Corporation, 111
Also available
the
working for themselves in the "Take
Home" or participation that is
being accumu¬
honorable
an
faint, that
so
scious conspiracy
to perpetuate
itself in that power. The evidences
of that
conspiracy are many, and
not confined to the
appointment
to place of avowed enemies of
the
The
Securities
Libbing" column
have
already exceeded their quota
in the
age
"Ad
and
expressed any definite amount
we
Broadway, New York 6, N. Y.
private owner¬
ship of property. If they acknowl¬
edge this obligation it is with a
Government is in the hands of
gang
Aetna
guardians of
not detected
unlimited extent.
a
have
even
Investment bankers ought to be
and abso¬
The administration of this
gov¬
Fabric s—Information—
Lea
have
affiliates
going security will
burial.
absolutely."
N. Y.
the
acquainted with
now
job.
noping that
bers of this people.
"All power corrupts,
corrupts
120 Broadway,
followed
are
work.
You
are
U.
not
power
New York 5,
—
like best.
John is
lute
Memorandum
—
the
This natural, ancient, and famil¬
iar
Co.
Sutro Bros. & Co.,
men
power.
mere
their
to
dictionary.
bed chambers of the barons of his
there
is
erected such
life.
treme
become
willing slaves
all powerful masters.
de¬
Had it not been for the fact that
the King became persuaded that
his prerogatives extended into the
court,
and
and
gars
pendents for the simple necessities
of
There is too
praved and cloyed and sated beg¬
beyond the needs of
and
to
Kendall
of
characteristics
toil
capacity
own
4, N. Y.
its
pared
ever
man
ticated
could expect to benefit from
own
his
a
greed and avarice. Men
losing their virility as domes¬
dogs lose
their natural
are
Until Englishmen compelled
King
John
to
recognize
their
rights to their own property no
man
in
lies
vices
judged.
his
security
wealth, Sir.
The virtue of
manhood has given way to the
organized society—that is the cri¬
terion by which the enlightenment
and freedom of any society must
be
only
much
to
in
government
ages.
provide for himself.
labor, and the estate
own
which
dark
have
tising Committee of the NSTA
Thank you for your invitation
to tell my story about the security
I like best.
Bear with me a mo¬
the
who
months
they
when
a
are
con¬
were
young
clamoring to get in."
time
a
men
Second
Vice-President:
wood; Treasurer:
retary:
William
J.
McCulien, Hendricks & East¬
Bernard Tobias, Gerstley,
Sunstein & Co.; Sec¬
Joseph E. Smith, Newburger & Co.
Six members to
serve on
the Board of Governors will be elect¬
ed from the
following nominees: John L. Bradbury, Dolphin & Co.;
William Doerr, Reynolds & Co.; Joseph R.
Dorsey, Merrill Lynch,
Pierce, Fenner & Beane; Edward J. Jennings, Jr., Boenning & Co.;
James J. McAtee, Butcher & Sherrerd; Frank J.
Morrissey, F. J.
Morrissey & Co.; John W. Murphy, Hornblower & Weeks; Gordon
Pfau, Stroud & Co.; Samuel K. Phillips, Jr., Samuel K. Phillips &
Co.; Joseph A. Zeller, Bankers Securities Corp.
Thomas Ji. Love, George E. Snyder & Co., has been nominated
Trustee of the Gratuity Fund.
to serve three years as
The
meeting!and" election, which will be followed by dinner, is
for members only.-—
■
-
,
,
.
<&
Continued
on
page
39
Number 4938
Volume 172
.
.
The Commercial and Financial Chronicle
.
(809)
vestments
of
maturities
as
The N. T. Central—
$12,775,000 and has
1951-
share
By HUBERT F. ATWATER
Gammack & Co.,
1,500,000
the
1,435,000
1959
him
Members of New York Stock Exchange
analysis of the 1949 Annual Report of the New York
an
Central Railroad,
excellent showings,
Points to sound working
capital position and progress made in dieselization of its motive
pov/er and calls attention to improvement in New York Central's
Mr. Afwater finds
ments
some
?A
its
i t
report
?ddrls.s„edJS
data and
but the
stockholders
exhibits
annual
the
to
for the information of
are
While
less
to
ness
ber, the cred¬
lease
itors,
to undertake
least
at
in railroad
ment
corporations,
surance
are more
often
Equitable Life As¬
of
Society
its
and
States
this form of invest¬
the
was
United
of
1.500 box
1,500 box
the
first acquisition
than not long-
eauiDment consisted of
equipment consisted of
term investors
cars
in the proper¬
York Central Railroad. These cars,
ty, and collec¬
built
tively by their
willingness to
Car
increase
i
from
time
time, do
to
to
Atwater
F.
Hubert
the
set
than its
stockholders.
nation
of
report
surance
the
given railroad property
a
leased to the New
capacity standard
of the
the
exami-
An
statistical
detailed
Central
New York
company
and
cars
des¬
car
is taking title to
a
large
advancing
part (probably 80%) of their delivered price to the manufacturer
price
The railroad makes
down pay¬
no
ment but enters into
lease with
a
Railroad should be made annually
the insurance company,
by the bondholders.
as
owner
and
not
described
vendor, and
as
to pay rental as follows for
primary period of 15 years:
agrees
1949
The
In
its
annual
Report
the
1949,
displays
for the first time (at least in re¬
cent years) a consolidated balance
the
New
sheet.
lound
the
notes
appended
interest
of
data
holders
3 years
3 years
that
would
be
not
avail-
and of the consolidated companies
$125
million,
that
sums
appear
adequate.
valuable
most
flow
of
cash
table
the
of
the
through
York Central Treasury
New
mtviuc
tu
llull.,aail
but $1 984 118 of the
all
etc
xC-
sale of prop-
payment of advance
large
large
'for'
tor
expenditures
expenditures
and
and
road
road
equipment and retirement of $18
million of debt
This' is
coming
dire
met last year.
were
excellent
an
it does at
as
predictions
railroads
that
made
being
are
as
showing,
time when
a
class
a
equipm««t.
Railroads
is
American
20 cents per
ily apparent
oar't
thereof
tnereoi,
pan
put
to
cars on
as
soon
in
the
possi¬
rebuilt in railroad
or
shops.
While the New York Central has
made excellent progress
in diesel¬
ization of its motive power, it does
not intend to stop at the present
level.
At the end of 1949 freight
19.1%
was
surance
are
diesel
freight
diesel
or
units
service two Budd Cars
round
two
experience
extension
service between Springfield
and
this
probably lead to
of this
makes
trips daily, is fast and well
patronized,
will
car
an
and Pittsfield.
rule
of thumb,
railroad
is said to have an adequate supply
of freight cars when it owns a
number of diversified units equal
to the number of cars (exclusive
As
a
that
such
a
company.
on
Aug# 29 offered
the public
to
therefore
larger debt, bear-
kets
0^,
Miccigan,
Inc.
common
ing, "igher interest rates, less cash stock (par SI) at $9 per share. The
f
a
T
rl barely ttock is Dting sold for the account
group ol selling stockholders
m excess of $2,000,000. It was an o
fra.w^e? no attention was paid ana none cf the proceeds of the
«o
nnn
nnn
a
J?
balance sheet for look how
the money rolls ln"
TJ16 ?^ew York Central stock0 der has over many years been
f toyal and perhaps Jong suffer-
sale will be received
oversubscribed
books
closed.
business
Plaiting
1938 with
in
c^Terf-s^^icrrupeTma^t/'the
ft*
regular dividends with hardly
n+u?1
^
ia?
?
Pe, ,s received a total of $2 00,
at, w"al
has d°ne tar
Pr°Perty and the public. In
t
the
and
.
an /
by the com¬
The offering was well
pany.
has 19 units in operation and five additional locations
bave been leased. The corporation>s outlets are in the Greater
company now
*
,
Detroit
They sell at retail
area.
ajj products normally handled by
chajn store supermarkets, inciud-
.Q
years the stockholders directly
|hyrnS" hscr!p
or 1 ? ? 1 r .e c.
y ing groceries, meats, meat prod"h?s" shares " is
owns.in part 50 invested X^sTlvAmlhoTln New ucts; vegetables, fruits, canned
that the rental
modified
all
of
leases
paid
nnhiioiv
ohovoc
,
railroads
only
on
Thic
publicly held shares. This has eviGently amounted to a large saving
over
recent years and is some-
thing that the Pennsylvania Railroad decided to do only recently
to save $2,000,000 annually.
^vested over $417 miRion in Nevv
1,810,000 shares
There
is
introduction
1929.
appropriate
annual report
to
an
«ALin L
J=
Central
tL NevJ
1049
"
\
Zork
performed a large
volume of work for relatively little return."
Compare the results
of 1949 with 1929, a year when
~
-
Central
York
New
'
,
.
both sold above 250.
-
share for
a
.
.,
,
$10 subscription
.,.i
to
revenue
mile
for
was
.
a
as
unusual performance, it is weL
to remember that twice in recent
and
Santa
Fe
In the earlier
mile
each
cessfully completed conversion o?
debentures.
A 6%
into
stock
verted
year
the
3,217,581 revenue ton-
issue
at
was
105
con¬
and
a
later issue of 3V4S at 40. The Penn-
sylvania is presently paying off in
cash
a
the
at
similar 3y4% issue created
same
time
which failed
1950
$7,978,939 and net in-*
For the full year
were
5253,126.
come
1949 sales amounted to
and
income
net
dends of $55,556 were
common
$18,265,975
Divi¬
paid on the
,
$511,131.
stockTn "1949.
the company
of notes and
400,00j shaies of common stock of
Capitalization
consists
'-par
of
of
$450,000
value.
of
FIG isnks Place Dels.
conversion,
A Challenge
to Management
This digression
operated.
Last
New York Central has sue-
years
Central hauled
tons of freight
York
New
year
„
delicatessen
goods,
dairy
products,
foods, beer, wine, cigars,
cigarettes and sundries. Sales are
™.e J^ayj.eV, l-®_a
made on a cash and carry basis.
Saies for the first 20 weeks of
Southern Pacific Co. to tap each
„T1
an
for 1949 than President Metzman's
remark.
frozen
more
no
provisions,
baked
issued since
were
convertible bond and think of it
Stockholder
The
£
York Central stock. Of this over
into the past is
A successful offering of an issue
of debentures of the Federal in-
no other purpose than to call termeciate
Credit
Banks was
attention to the recuperative powAug. 16 by M. G. Newcomb,
ers of the New York Central. We
for
miles Per mile of road and phe^ all know the reasons for the poor
Y°rk ..
.
g
.
,
gross take wag $69? miljjon
showing in 1949 and overlook the barks. The financing consisted
®
of
a
brands) normally on its
Now
that
the
per
diem
.
•
ciease
01
id/0
in
gioss
me net
!
was
nti
fp
revenue from railway operations
•
placed at
par.
The proceeds,
together with $4,-
increased only $6 million. From
For a parallel, it may be said
?his. P°int onward the comparison that the volume of business of 530,000 cash in treasury, was used
*.s distorted by changes in account- ^ew York Central follows cl°sefy
retire $52,195,000 of debentures
the level of business activity. In
important a property this cannot fail to be so. The problem is,
Shall we have activity and no t 1950j the total am0Unt of Re¬
profit, or can expenses be trimmed
„
will amount
to carry an appreciable part of the bentures outstanding will amount
current gross into net?
to $564,725,000.
preciation was stressed. In 1949
these charges were $35,981,728, a
sum
exceeded only in 1943, 1944
and 1945. Out of these charges the
Central
York
New
lessor
$9,753,222
as
the
of
the
maturing
in
since
the
York
10
„
$9,500,000
Central
years
June
1
cash
1950
has
Indiana Gas & Water
First Mortgage
been
Dated
Due
September 1, 1980
Price 100.50% and accrued interest
1,368,000
1956
2%% Bonds, Series A
September 1, 1950
$3,999,000 paid July 1
3,024,000
1952
Company, Inc.
period, is:
bany maturing in this
1951.1
offer to sell or a solicitation of an offer to buy these securities.
offering is made only by the Prospectus.
an
The
evident that obliga¬
New
As ol' the close of business Sept.
It there¬
increasing. Its own funded debt,
including that of Boston & Al¬
1950
This announcement is not
of
appli-
maturing feept. 1, lyou.
■
its
depreciation
cable to their properties.
is again
to
sum
paid
companies
14,193,000
13,297,000
1950
The Prospectus may
Total. _$35,881,000
be obtained in
in which this announcement is circulatedfrom only such
securities in such state.
any state
of the undersigned and other dealers as may lawfully offer these
The three principal lessor com¬
panies have set aside out of the
respective
depreciation
large
which
sums
are
amounts
issues
its maturities in the 10-year peri°d aggregate $243,000.
Cleveland, Cincinnati, Chicago
& St. Louis had $13,710,000. Other
investments and its maturities in
line.
$3,164,000.
'
same
HALSEY, STUART A CO. INC.
invested in
of the U. S.
Treasury and held in "other investments." Toledo & Ohio Central had $4,325,000 of such investments on May 31, 1950, whereas
short-term
the
charge for freight cars is $1.75, it
....
larger other income from investment in subsidiaries, hence a net
0f $16.88 per share and dividend
payments of $8. Compared to net
of private
facing the future than he
firms which
of investment
group
In my contribution to the "Commerclal and Financial Chronicle
of Aug- 4' 1949' the imPortance of
the large annual charges for de-
and
passenger cars
There have recently
Each
J. G. White & Co., Inc., heads a
comfort
so
elec¬
operating between Springfield and
Boston.
to
ing formulae. In 1929 we had no
large charges for road depreciation or payroll taxes. We also had
and
order.
on
been put in
power
less
Depreciation, Etc.
and
yard switching operations 41%.
More
had
nvPr
leasing
arrangement leaves room for a
saving to the lessee while providing a safe "investment for theV in-
tric; passenger mileage 34%
more
and
taxable, the New York Central has
at
at
that
as
in-
corporate
lessor
the
to
come
is
in
as
by car for another
car, ior anomer
be
railroads
Since
such
portion
represents divi-
as
stocks
on
Big Sear Markets Stk.
well
dv
anv
any
ble—some to be built and many to
122,000 freight
Class I
service
dends
density
through 1959 are not a problem,
We know that New York Central
alone had a net working capital
on Dec. 31, last, of $61 million and
planning
service
repaired
of lease rentals
creditor
as
Railway operating expenses rose efficient work of the management $47,665,000 of 1.40% consolidated
from $302 mihi°n in 1929 to $597
i!,02 ,ng+
operating ratio at debentures dated Sept. 1,' .1950,
*
1Q4q
..
.
'85.62% last year, a rise of only .0o
.
_
J"
lay. It will be reaaf° tnat on an ln7 over i948 in the face of s0 many a"d due June 1, 1951. The issue
iq4« in thp facp of so manv
l
day. u win ne read- m!mon lr?
car
or
tions
of
that
lected $397 million.
renewing
of
ruled
has
For this and other services it col-
1<5
rail
15 vp9vc th* railyeais the
option
10 years,
fore
Equipment
Association
the
the lease,
cannot
afford tlte down payments on new
The
has
rentals.
lease
of
toe
Department of Internal Reve-
nue
one
is found on
This table
shows that by the application of
non-cash charges to income, reertv
road
of the report.
page 38
the
stockholder
■
digging,
workabout $61 million,
The parent company's net
ing capital 'is
3 years
At
nH
At tho end nf
the
of
bond¬
$21,995,000.
3,469,954
$1.50 per day
1.35 per day
1.10 per day
.85 per day
.47 per day
3 years
are
to
able without considerable
A
3 years
Central
This exhibit is informative
in
and
for
report
York
the
all
payment
ignated PS-1. It is evident from
the agreement, which is in almost
standard lease form, that the in¬
more
credit of
were
by the Pullman Standard
Manufacturing Co., are the
50-ton
their
tment
nve s
which
com-
$30,810,000,
maturing bonds
NJiTvoiTSaT "handles"
have indicated a willing¬
purchase freight cars for
to the railroads.
The first
panies
num¬
lessor
three
Another point of accounting that
brings about a considerable tax
saving is the method by which the
Recently two life insurance com¬
usually
in
J?,n
amortize its cost, including interest, in 15 years.
creditors.
s
J J™6?! PAAP,0.SA
invest-
of the three in this decade amount
calculated that at this
has been
other
19, We & Go. Offer
all
realize
we
asi t(^a£' i°r i20 year/*gZ the 1^,UOo shares of Big Bear Mara
aggregate
whereas
debt position.
custom,
these
of
panies
despite dire predictions to contrary.
By
the
Summarized,
than $1.50 per
this looks won¬
when
railroad had
10-year total —_$18,588,000
In
the
But
3,100,000
1957
less
year
even
the interruptions of 1949.
12,004,000
1956—
last
derful
——$549,000
1952
A Reexamination
earnings, of
follows:,
In¬
10-year
period
are
Michigan Central held other in-
HARRIS, HALL A COMPANY
HORNBLOWER
A WEEKS
(incorporated)
PAINE, WEBBER, JACKSON A CURTIS
WILLIAM
BLAIR A COMPANY
CITY SECURITIES CORPORATION
MULLANEY, WELLS A COMPANY
August 31. 1950
■
R. W. PRESSPRICH
OTIS A CO.
(incorporated)
A CO.
THE ILLINOIS COMPANY
JULIEN COLLINS A COMPANY
RAFFENSPERGER, HUGHES A CO.
incorporated
i
10
The Commercial and Financial Chronicle
(810)
railroad
the
The Outlook Foi Railroads
industry
and
—
railroad securities— is good.
for
I
dustry,
am
close
definitely optimistic about the fu¬
ture of our industry, while at the
same time I realize the underlying
need for a realistic approach to
By DONALD V. FRASER*
President, Missouri-Kansas-Texas Railroad Company
the
Prominent railroad executive
particularly
industry and the important place it occupies in the economy.
Warns, if nation is to progress, railroads must be kept in
healthy condition. Is optimistic on outlook for railroad secu¬
rities, despite need of enlightened public understanding of rail¬
(b)
Railroads—most
ical
road
"new
model"
form of
econom¬
(e)
which
ter
of
subject
dis-
my
gentlemen, to-
day is "The Outlook for the RailI
not
am
know that
to
you
'
You are
k
©f
study
research,
our
D. V. Fraser
nation's
bankine
a
eco-
and research problems as
they affect the field of investment
banking.
nomic
of
fuel.
Diesel
To
have
I
to
as
circumstances
which
bearing
railroads.,
the
a
on
I believe my
of your most
ing
upon my
This
I
will
I
future
subject
have
feel
of
can
the
be
one
interesting, dependability to make it so.
try to do.
Health
Into
Industry
return
Since
the
securities
in
the
of
practi-
in¬
on
as
(50,000),
30
and
tank
of
times
of
cars
the
aviation
f1'913 ln 19*°'
a«e
(h) Tonnage Handled
'
hauled
was
1.340
difficulties
cents, about the
'(j)
of
mize
You
so
Uncertainty
must
you
can
have
give
—
Mini-
strict
many
other kinds of
and help
(k)
knowledge
fair appraisal
a
of the value and the future
pros-
businesses
thou;
good of
(4)
investment
and, in turn,
be
based
of
their
(b)
of
indus-
try.
I
into the
"
"2? .!» Welfare and
the
ou^
my
riod
in
the
reduction
of
non-
equipment debt. Taking advantage
of the high wartime earnings and
privileges
granted
the
of
by
income
modi¬
tax
laws,
Without
that has
of 22.4%. Incidentally, our own rail¬
is road, the Missouri-Kan3as-Texas
important development Lines, reacquired and retired over
the
doubt,
from
advent
locomotive
in
occurred
industry for
sults
1948 reduced non-equip¬
by $2,200,000,000, or
debt
ment
the
railroad
the
$47,000,000
The
many years.
bonds, which resulted in reduction
re¬
operation of these
fixed
of
face
rior locomotives, through $2,000,000
a
efficiency, economy and mately 50%.
supe
amount
bond
interest
year,
of
of
its
over
approxi¬
or
greater
ballast
we
Progress
over
covers
and
-
today.
a
span
from
the
some
nation
our
operated
at greater
etc.; auxiliary
handling mer¬
of the price level of the commodi¬
ers,
retarders,
car
truck
service
for
chandise freight—just to
a few.
(h) $7,000,000,000
service or at lower rates in terms
ties
mention
they transport.
Never before has railroad
exercised
agement
in¬ genuity
capital
vested in last 10 years
In the
'
10-year period 1940-1949
the railroads have invested
or
been
improvement
man¬
greater
in¬
more
alert in the
rail
transporta¬
of
tion. The railroads' financial house
in
is
better
condition
than
$7,000,-
000,000 of capital in their
for
proper¬
many years.
ties.
Improvements
to
roadbed,
tracks, yards and terminals, shops
and
other
physical
properties,
(d) Railroads constitute virile,
progressive and indispen¬
have added to the capacity of the
railroad plant and have increased
(e) Railroad traffic
operating efficiency and economy.
In 1949 alone capital expendi¬
tures amounted to $1,312,200,000,
the greatest amount for any year
of
1950
orders
out¬
the
ponent
sable
industry
eter
of
barom¬
as
business
activity
I think this summary of railroad
and development clearly
progress
indicates that the railroads of
country
constitute
nearly
new
freight
three
times
as
have placed
four
cars
as
times
and
many
were
as
more
Diesel
ordered
in
period of 1949.
great part in
velopment
virile,
a
our
pro¬
traffic
the growth and de¬
of
will
was
built, and
in
Railroad
history
125 years,
its
outset
major
(i)
eter of business
carloadings
continue
trends
Here
revenues
with
business
railroad
sible,
with
new
high
records
are
con¬
tinually being made in operating
efficiency.
Cars
per
Train speed
(1)
Improved
ness
have fluctuated
a
near
whole, reaching new
the top of each major
cycle.
Prior
to
yearly increases in
fairly regular.
were
of
fluctu¬
cycles
major rhythms of busi¬
as
peaks
War I
;
utilization
the
re¬
interesting to note,
growth
factor, that
revenues
business
freight train
(k)
is
it
another
as
to effect economies wherever pos¬
to
business
and
Railroad
alertness of railroad managements
of the many com¬
activity—railroad
will
ate
the
barom¬
a
as
Rail
in
as
Operating
improvements and greater operat¬
ing skill, and also because of the
(j)
nation.
past, to be regarded
efficiency
cycles.
reached new high records
(f)
By virtue of these technological
progress
the
continue,
flect business
of some
use
the railroads
for
same
has been based upon improvement
in the design, construction, main¬
tenance and
*Jhe_ ^ss iblyexpressS
possibly
and
efficiency, with faster and better
locomotives
years
growth -continues
strides
as
ord
of
communications; flood- lighted
yards equipped with loud-speak¬
than
give due consideration to the
that
some
and
cleaners,
cribbers
tampers; radio train control
many
In discussing the outlook of the
railroads, I think it important that
from
It is, therefore, a matter of rec¬
that never have the railroads
equipment for track maintenance;
ties. Certainly more and more at¬ on record, and this pace is not
gressive and indispensable indus¬
tention is now being focused on
slowing down. In the first quarter try, which will continue to
play a
railroad
day the first line
opinions
express
difficul-
acute
fact that the railroad industry has
been a growing industry from the
the railroad in¬
dustry—including
to
you
more
standing
physical and f i-
nancial health of
(3) The Railroad Industry-What
give
the
(b)
understanding
anxious to
am
insight
comes
of
<6> A Growth Industry
(a) Technical advances
As I will
Industry
Clear analysis
clear
a
performance
the
(a) Motive for discussion
money,
sound "analysis
and appraisal of the financial and
operating
Railroad
are
generally.
national welfare.
our
of
opinions must
your
upon
of the country.
prerogatives,
problems and the com¬
petitive situation in transportation
Physical and Financial Health
for advice and counsel in
you
in
re¬
repeat, notwithstanding these
some
occupies
management
that
approaching a turning
point in the public regard for the
railroad problem, and an oppor¬
tunity to find at least a solution to
we
discuss later, this also points up
the need to keep this industry
healthy and progressive for the
mize uncertainty as much as pos¬
sible. The investing public looks
the
it
place
pects of these securities, and mini¬
to
the future outlook of the
on
of Diesel-electric through
operations
difficulties, there also is basis for
optimism in the hopeful signs that
support
Summary
portant
I
—
a
support
economy
this
railroad
regulations
government
Iiailroad Purchases
are charged with
So much for industry statistics,
responsibility to have an insight 1 Wanted to cite
them, however,
into
the
physical and financial to impress upon you the magnihealth of industry generally.
tude 0f our industry, and the im-
Appraisals
Advent
locomotive
i921, and the average
$7,000,000
investment
Fair
in
today—aggravated by unfavorable
per
passenger-mile
was
2.452 public policies, high material and
labor
costs, competition that is
cents> or less than the return in
wholly
or
partially
subsidized,
i93i
in
as
same
a
(b)
ing
railroads, is the remarkable rec¬
they made during the war pe¬
ord
per
banking business
,
nation's economy, but also a bear¬
the railroads in the period of 1942
(f)
most
times
gasoline (2,700). Furthermore, the
Number of Employees
are
commercial
tripled the life of
tim¬
Diesel-electric
time
in the in-, which employ additional
those engaged sands of persons,
industry
vestment market,
research, have
the
number
which
cally all
through extensive
the
three
about
wound up
net income of less In the air, you would use 15 times
billion dollars, or ap¬ as many man-days of plane-crew
day for the thousands of
items of supplies and
of materials used in their operations,
Investment Banker
(a) Insight
in
non-equip¬
average revenue collected by the availability, are truly amazing.
(b) Financial house in order
Employee railroads for
hauling a ton of
—basis for optimism
' :
(g) Other technological im-.
(g) Earnings per Employee
freight a mile is only about oneThis record of placing their fi¬
provements
as
much as the average
This $23.3 billion railroad plant fourth
nancial house in order is another
Other improved methods
in 1949 employed about 1,200,000 collected by motor carriers.
that
reason why the future of the rail¬
are producing operating economies
persons, and investment per em¬
(c) Industrial and population
road industry can be viewed with
include such items
as:
Modern
ployee
averaged
about $20,000.
growth
optimism.
The average annual earnings per
(d) Improved standard of signaling, which improves service
(c) Record of greatest effi¬
and safety and speeds up opera¬
living
employee in 1949 was $3,709, a
ciency — best service —
mechanized
handling
in
(e) Better public regard for tions;
*WVand up-from an averlowest rates in history
freight stations; modern off-track
railroad problem
■••».
Responsibility of Commercial
Bet¬
tim¬
much
and
The railroads spend an average
(2)
1922.
preserving
for
ber, developed
many man-
and
say,
installed
was
methods
rail
as
the
do
These facts, coupled
^
with the
tremendous
industrial
the
develop¬
(i) Passengers Handled
ment of our nation, our popula¬
-opinions I express, are necessarily
In
1949
the
railroads
moved
based upon my own experience of
tion growth
and continued im¬
2i/3 billion tons of freight an aver34 years in the railroad industry,
provement in our standard of liv¬
age of 228 miles each, and carried
and on my own analysis of coning, assures us, I think, of a steady
555 mini0n passengers an average
ditions within and
outside^ the in- of ,63 miles each. The average growth in rail tonnage.
dustry, weighted with facts and reVenue per ton-mile of freight
Notwithstanding 'the attending
What
in service
in
debt
Another factor that has a great
bearing not only upon the present
position of the railroads in our
fication
a
2.9%
methods of
and
fuel (250 tank cars of Diesel fuel).
railroads
with
(f) Investment
your
vanced
The
metallurgy
liable to failure
days of truck-driver time (90,000),
turnover of several
in most indus¬
a
investment
Reduction
ment
the
cars
-
in
than
Structure
(a)
bers.
90 tank
1949
Improvement in Financial
railroad cross-ties and bridge
some
than 25 times
(e)
wledge,
through ad¬
and
hfl
vestment.
n o
sign,
improvements in the de¬
manufacture, steel rail now being
installed
is
only one-fourth as
job by trucks would require
proximately
in
of in¬
creasing
of
more
than half
setting for the
purpose
tons
same
beautiful
this
illustra¬
of
way
100,000
about one-third ot
lion represents
tries).
gath¬
here
By
move
trans¬
(7)
train-crew time and
*8%
the year
Wisconsin.
ered
to
the
on
mass
in
faster
1944.
freight by rail from coast to coast
require 3,500 man-days of
parenthetically, thatthis $8.5i
times
of
Banking of
the University
of
based
would
nueSJ?u
compared to
of the
School
sonaf
1949> Pr°'
m
is
optimism
tion,
^a'3i
ati°Q
Due to
the railroad industry's investment,
un¬
mindful of the
purpose
My
portation plant which has a valu-
you,
roads," I want
portation
indisputable fact that
4%
1948, and nearly 8% faster than in "
How¬
year.
cross-ties
yet devised.
the
every
than
Increased life of rails and
trans¬
mass
financial statements.
with
cannot
few hours,
a
These
new
records in
freight
the railroads have steadily train
operating efficiency were
pushed operating efficiency and achieved
despite a lower volume
service standards on upwards to
of traffic in 1949.
new
high levels.
Research and
economical form of transportation
While
for
Thursday, August 31, 1950
.
ever,
portation moving on wheels run¬
ning on steel tracks is the most
cussion
railroads
for retooling, and come out with a
problems. Points out railroad industry is a "growth indus¬
try," and, though less glamorous than auto industry, recent
physical and operational improvements portend continued
progress and expanded use.
Cites improvement in financial
structure of rails in last decade, and explains leading railroad
(1) Introduction
the
even
problems confronting it, and
those phases of the
problems that can be solved only study are going on constantly to
through an enlightened public un¬ cevelop improvements in railroad
derstanding.
equipment.
magnitude of railroad
stresses
for
down,
;
.
World
revenue
After World
War I the fluctuations
were
more
parts which the railroads
rolling equipment extreme, but the overall growth
thoughts which might be helpful must use to perform the job of
In
1949
more
tons of
United
States
Since I am honored to speak
freight continued. Thus,
to you ip your future analyses of producing
mass
transportation were moved more miles
operating < revenues" in
per train railroad
•iy0Uj °
on behalf °f the railroad securities. I have a selfish with ever improving dependabil¬ hour than ever
railroad
before, • and the 1944 increased 50.3%, and in 1949
industry
I feel at the motive in
doing this, because I ity, economy, safety and dispatch.
36.6% over the boom
outset
average number of cars per freight increased
that we
should consider
Economy of Nation
feej
briefly
just
industry,
the
what
and
welfare
makes
what
and
it
up
economy
of
to
our
country,
securities
as
a
investment
analysis
banker—that
of
railroad
a
clear
securities
only from a clear under¬
standing of the accomplishments
of the industry, its position in our
(b) Earnings
(c) Net Income
economic
(d) Return on Investment
The 132 Class I railroads of the
United States comprise a trans-
(5) Basis for Optimisih
(a) Need for
realistic
proach
Banking,
University
of Wisconsin,
by the Central States Confer-
sponsored
ence
of Investment
Bankers
Madison, Wis., Aug. 25,1950.
Association,
picture, and of the prob¬
lems with which it is faced.
"^.A lecture by Mr. Fraser at the School
«r£
railroad
comes
(a) Investment
,
that
this whole merit close scrutiny by the
means
to
railroad
Technical
I have
cause
I
of
.
ap¬
glamorous
prob¬
selfish motive, too, be¬
feel that the outlook for
a
represent the
train
and
the
average
freight
engineering and train
speed reached new high rec¬
technological skill in railroad de¬ ords. Tons of
freight moved one
velopment, and the progress over mile for each hour of
freight train
the years - has been outstanding.
operation
averaged
19,023
tonThis fact is sometimes
overlooked, miles in
1949, compared with the
and may I say that part of the
previous high of 18,779 ton-miles
fault lies with management in not
in 1948, and 10,580 in 1929.
The
publicizing
outstanding
accom¬
performance in 1949 was greater
plishments.
>.
by 8% than the wartime record of
(c) Railroad progress not 17,623 ton-miles per hour in 1944.
(d)
lems
*
advances
contributions
Research
The average freight train moved
.
1
56.8
Railroad progress is less glamor¬
ous
than
say
the automobile
in¬
cars
in
1949, compared with
54.5 in 1948 and 53 in 1944.
trains
on
of
year
1929.
business
miles
As
(lading
train-hour,
creased
creased
for
measured
only)
66.6%,
net
per
tonnage
79.8%
volume
by=
in
and
freight
1944. in¬
in
1949
in¬
the
over
1929
fig¬
ure.
(8)
Railroad Rates and Fares
In any
the
tion
discussion
railroad
of
or
analysis of
industry,
considera¬
course
must
be
given
to
on
page
20
Freight
the average moved more
of
ton-
Continued
Number 4938
Volume 172
.
.
The Commercial and Financial Chronicle
.
(811)
tively
pi World War II.
In 1944
the Federal Reserve's index of in-
Korean Hostilities and
and because of the
more conserva-
tive
policies being followed by
lenders, with respect to construeof the 1935 to 1939 average,' the ,tion loans.
'
highest point in history. In JUrie
of 1950 the index reached a new
Incomes and Savings
diistrial production reached 247%
Real Estate Trends
COMING
EVENTS
.
Dean, School of Business, Indiana University
that the wartime production record was achieved when the civil-
Piikikg out nation's productive capacity and, potential expan-1
sfcn m:ay make it possible for U. S. to- develop a military and
civilian economy side by sicb, Dr. Weimer warns, however, no
take place under rigid government controls.
even without controls,
because of growing shortages of materials and rapidly rising
costs.
Reports ''panic buying" on part of prospective homeowners and rush of mortgage lenders to make loans.
ian
labor
million.
Looks for reduced home construction,
production
stood
end
r
of
quent
only
seasonal factors.
and
the
a
be
of
before
year
war
there
dividends
Personal
to the effect that it
possible
to
cut
paid to veter-
savings
continued
to
be
high in the second quarter but
declined from the very high levels
attained in the first quarter Prob-
back
the
military production
to release productive capacity
civilian
goods.
Apparently
ably
the
GI
insurance
for
es¬
tate trends for
capacity. At the present time op¬
sizing the tremendous output that
vanced
had
dominate
business
and
real
forward
above 100%. We have
the foreseeable
erations
future. Of
been
mary
the rate of over seven million per
pri¬
impor¬
tance
is
rising
tide
are
automobiles
producing
at
million per year in
while
in
1940,
inflation. 4 472,000 were produced.
Housing
Prices and starts totaled 602,600 in 1940 in
the
had been
ing
prior
of
which
costs,
mov¬
upward
the
to
Korean devel¬
opments, have
advanced
mu.ch
Arthur
more
sharply
Weimer
M.
since
that time.
For
the price index of zd
commodities, published
example,
sensitive
Island.
*
.'
Sept. 8-9, 1950 (Portland, Ore.)
Pacific Northwest Group of the
Investment Bankers Association
'annual meeting at Gearhart Hotel,
Gearhart-by-the-Sea, Ore.
$6.2 billion in the fourth quarter
of 1949 to $15.3 billion in the first
mo¬
number of forces which will
a
by the Bureau of Labor Statistics,
advanced from 261.4 to above 300
month following
in
the
of
fighting in Korea.
date
the upward
To
the start
(nine
year
recent
weeks)
contrast to
of
building rate
1,300,000 units per
during the first six months
year
of
house
a
than
more
1950.
adjustment
process, even
our defense
program turns out to be somewhat
entire
though
the
Thus,
limited than is currently ex¬
more
pected, will be much more diffi¬
cult than was the case prior to
pressure
prices appears to be the result
of "panic buying" induced primar¬
ily by a fear of shortages of
goods and, to a lesser degree, by
a
fear that prices will advance
rapidly in the future. Advancing
rumors
little
had
foundation
been
plant
in
available
With
equipment
at
that
a
more
than
time
and
was
with
from
The
Outlook
Changing Economic
Had
it
for
been
not
recent
in¬
ternational developments, there
is
real possibility that the general
level of business activity would
have
tended
Under
the
this
decline
to
impact of the defense
firmer
tional policy, however,
virtually no chance that
ume of business activity
and
program
fall.
a
interna¬
there is
the vol¬
will de¬
an
annual
rate
quarter of this year and then
a larger labor
force, it would seem
entirely reasonable to develop the
ceded
to
$10.1 billion in the
of
resec-
t
aJ? ^a ?
The fut^ tr*nd of incomes and
Jan ec°uomy savings will be affected greatly
durmg tbe next few by
S
years
the enlarged defense program.
PorcnnQi inoAmocuiiu rion
Jrersonai incomes will rise as more
House Construction
workers
receive
„UU1^0
seem
serious
more
much
likely
of
goods,
shortages
certain
1LLWVt
important
exceeded
six
total
* in
those
of
the
first
,
SeDt
gen,
removed.
were
Another
approach to the prob¬
imposition
lem of inflation is the
of rigorous
controls
consumer,
on
mortgage and business credit. Ac¬
tion
of this type can
the
once
be effective
wave
of "panic
initial
buying" has passed, but the credit
controls
must
be
sufficiently
the desired effect will
not be achieved. To date, for ex¬
strong
or
ample,
the
that have
been imposed
gage credit appear to
erated house buying
have retarded
to
1950
on
mort¬
have accel¬
rather than
it.
vs.
current
The
restrictions
limited
basis of the
1940
condition
of
the
contrasts sharply with
pre-World War II situation.
effort.
year
On
or
the
exercised
large
effort
scale
order
portion
channel
assumption
In
additional
auu»uuucu
uvciover-
factor in determining
incomes,
money
the
Va.)
i
National Security Traders Ash
s^ciaflon Annual . Convent on
n
„
wood Beach Hotel,
relatively little effect to date,
Indeed, there has been a rush on
off,
somewhat
the part of builders to start addi-
vance.
eases
housing units, and we have
some "panic buying" on
of
part
prospective
Fla.)
Investment Bankers Association
Dec. 8, 1950 (New York City).
certain
goods become
scarcer and prices ad—
New
sociation Silver Anniversary Din-*
ner at the Waldorf Astoria Hotel
Joins H. B. Cohle
(Special to The Financial Chronicle)
abandoned
because
of
the
1
-
staff
many
uncertainties that have to be faced
This
announcement
appears
(Special to The Financial Chronicle)
CINCINNATI,
_
of
Minneapolis Asso-
ciates, Inc., Rand Tbwer.
this
to be the more
B.
Cohle
with Frederic Latscha & Co. and
Horan & Grischy.
I
With McDaniel Lewis
(Special to The Financial Chronicle)
bonds have
not
been, and
are not
With
there
were
some
7V2
LUMBERTON, N. C.—Verna L.
Sanderson has joined the staff of
Reynolds & Co., 316 Elm Street.
being, offered
to
the public.
First
Company
Mortgage Pipe Line Bonds
3!/4% Series due July 1,1970
of.
Productive
Capacity
One of the significant factors to
unemployed. At consider in analyzing the prob¬
time only about three lems arising from the necessity of
million persons are unemployed. meeting both military and civilian
In 1940 the index of industrial requirements is the tremendous
productive potential of the Amer¬
*An address by Dr. Weimer before the
ican economy. The capacity of the
Graduate School of American Savings and
economy for expanding produc¬
Loan Institute, Blcomington, Ind., Aug.
million
persons
Carl M. Loeb,
the present
22,
1950.
tion
was
Reynolds & Co.
(Special to The Financial Chronicle)
$61,000,000
Trunkline Gas
demonstrated most effec¬
't,
August 25, 1950
Rhoades
j
GREENSBORO, N. C.—J. David
Murray has become affiliated with
McDaniel Lewis & Co., Jefferson
Bldg.
ment has been absorbed.
1940
the staff of
U^on
&
for purposes of record. Contracts, negotiated by the undersigned,
a
years
In
Ohio—Lawrence
ioined"
Co.,
Trust
Bldg., members of the Cincinnati
Stock Exchange.
He was formerly
h.
NEW ISSUE
prolonged
period of expansion could be an¬
ticipated with a civilian and a
military economy developing side
by side. On the basis of this as¬
case
the
experience of the
prewar
of
1940
and
1941
for
guidance in making plans to meet
current problems.
_
Gessin J has
g
have been entered into for the purchase of these securities by certain institutions
investment. The
„
York Security Dealers As-
With Baker Simonds
home¬
1
theHolly-
(Starlight Roof).
witnessed
the
1950 (Hollywood,
annual""convention "at
had
tional
Nov. 26-Dec. |,
sumption, a fairly orderly period
expansion may be anticipated
after the initial shock of readjust¬
This makes it difficult to draw on
,
w
past
they believe will become
tion of restrictions on mortgage scarce.
This trend probably will
lending activity appear to have be reversed as "panic buying"
building by the imposi-
our
productive
meeting of fullrequirements.
appears
,
1
a
At the present time the second
Pa )
Sept. 26-30, 1950 (Virginia Beach,
that
Attempts to restrict the volume
of house
of
the
wartime
to
...
,
second
in
into
2
„,
,Phliade|Dhla
1950
/L
.
assumption a
longer period of heavy production
may be anticipated, perhaps run¬
ning for five or six years or
longer If it is assumed that we
are now in the preliminary stages
of a third World War, there would
undoubtedly be a drastic revision
of
the economy with the most
rigorous types of controls being
realistic.
economy
the
intensive
of
two
a
(N.W Vork nitv,
V '
,
Bond Club of Philadelphia Field <
Day at the Manufacturers Coun-
parts
faces at least
economy
15
„
„
would
persist and would break out in
full force when the price controls
pressures
1950
.V
.
inflationary
14
.
'New York Curb Exchange Golf*
Tournament at the Garden City1
Country Club, Garden City, L. I. \
few weeks many
people have been drawing on their
savings in order to purchase goods
53%.
1-~~
the
.
pay,
starts in the first six months thus
cline in the foreseeable future.
While
.,
and as the number of
Cavalier Hotel.
unemployed persons is reduced to Oct 12, 1950 (Dallas, Tex.)
were
started
in
comparison
to a minimum. It .is not clear at the
; nQnao
n„h
Anmiqi^rni
449,000 units started during the moment how soon, if at all, in^mhus Day Outing at the Northsame
period of 1949.
Housing creased wage rates will become an S Club
time
During the first half of 1950,
686,900 non-farm housing units
owners.
Many mortgage lenders,
assuming that the rate of house
DETROIT, Mich. —Charles P.
of
the
building will be reduced in the White
is
now
affiliated
with
however, and steps to control in¬ civilian economy may be slowed
months ahead, have been trying Baker, Simonds & Co., Buhl Bldg.,
flation are at the moment more down in order to provide the ma¬
to channel additional tods into
members of the Detroit Stock Exbadly needed than measures to terials and manpower required for
control material, manpower and the defense program, the economy mortgages, and there has been a change,
greater tendency on the part of
as a whole faces a period of full
production.
The most effective method for employment of all its resources many mortgage lenders to hold
With Hulburd, Warren
manpower
for some time. mortgages rather than to sell them
reducing
inflationary
pressures and
(Special to The Financial Chronicle)
to other private investors or to
would be heavy tax increases. At How long this condition will con¬
FNMA.
GRAND RAPIDS, Mich.—Rich¬
the present time, however, it does tinue depends largely on inter¬
Even if major controls are im- ard C. Northrup has become connot seem likely that sufficiently national developments. Three pos¬
heavy
tax
programs
will
be sible assumptions may be made: posed on mortgage lending, it is nected with Hulburd, Warren
Chandler, Peoples National
adopted even though they are the First, it may be assumed that entirely probable that over a mil- &
most effective method for slow¬ there will be a short period of lion housing units will be started Bank Bldg.
active fighting; second, that there
by the end of the current year. .
ing
down
inflationary
trends.
main
deterrents
to
house
Price controls and rationing sys¬ be a prolonged period of "border The
With Minneapolis Assoc.
warfare" of the Korean type; and
tems
building currently are: (1) grow¬
might be imposed in the
(Special to The Financial Chronicle)
third, that the present situation ing shortages of building mate¬
hope of "holding the line" against
inflation, but such action would will develop into World War III. rials and (2) rapidly rising costs.
MINNEAPOLIS, Minn. —Glenfor di
merely postpone certain price ad¬
On the basis of the first as¬ In addition, some proposals
A
Timm has been added to
new
building projects are being
vances, since without heavy taxes sumption it is probable that the
prices
than
n
try Club.
ond quarter.
^n?^rvVLaaPaCi-yn-°MSUPPOrt 3
ri/in
„
ac-
counting for the marked changes
in personal savings, which ad-
fact, empha-
achieved.
and
than
more
of the main factors
one
months of last year by 237,900, or
World War II.
a
on
those
was
York annual Outing at the
New York Athletic Club, Traver9'
dividend
rently, it is over 200 and moving
rapidly. In 1940 steel
mills were operating at 82% of
sequent events have set into
tion
Security Traders Association of
was due chiefly
the reduced volume of GI in-
ans.
the
fre-
were
_
New
The decline from
the first quarter
to
Field
Sept* 8» 1950 (New York City)
$213.7 billion, after adjustment of
55
surance
than
rumors
would
Cur¬
125.
at
totaled
.
More
some
The Korean hostilities and sub¬
force
Investment
^
mained at the high annual rate of
million in contrast to the present
civilian labor force of almost 65
great expansion can
.
In
pbstwar high of 199, still substan- *
In the second ■ quarter of 1950'
tially below the levels reached personal.incomes declined slightly
during the war. It should be noted from the first quarter but still re-
By A. M. WEIMER*
11
&
Co.
for
12
<812)
The Commercial and Financial Chronicle
The Fish
Mutual Funds
MATIO
Keynotes
iifnVe^merfT^qpo u n t
Open
Details
of
and
program
prospectus
A
CORPORATION
RESEARCH
H.
earnings
higher
and
indicated
are
not
Y.
120 BROADWAY, NEW YORK 5, N.
half, of
similar
period
for
record,
on
any
shows
notes, published by The Keystone
Company of Boston, reported. The
is based on preliminary
figures on the stocks making up
1949
same
marks
;rend
a
The
912
of
dividends
high
considered
20%;
Dealers
velopment
and
Explains
for
Trusts
of
in
the
de¬
portunity
funds
for
sales
trusts
as
an
canalizing
should
read
op¬
and other
descriptive material about
Group's
pamphlet
"Em¬
ployees' Profit-Sharing and Re¬
Distributors, which began an
pioneering work on this
subject in 1943, organized its own
six-year period.
Consequently, it feels it can speak
from experience on such matters.
It has
Registered
1
prepared, for the
dealers and
I Investment Company J
Plan
a
employers,
which
can
a
serve
use
as
basis
a
for
Available
from
authorized
any
investment dealer
Hugh W. Long
or
Wall
Institute
CH1CACO
Plots
York
5
LOS ANGELES
;■<
Trusts' Behavior
If
Street, New
em¬
the
"average behaviour" of
trusts is plotted against "interest
compounded annually" curves of
20%, 15%, 10% and 6%, for the
period from 1920 through the first
half of 1950, one might be sur¬
prised to find out that the average
performance
of
the
trusts
never
fell below the 6% curve. Further¬
from 1932 until the present,
more,
it
contained in the
the
the
published
Institute
Funds
entitled
Funds
Certificates of Participation in
purpose
in
only two one-hun1%, wnile the common
shares
declined 4.8%.
net
of
only
our
As
value
asset
of
de¬
period."
company
in
2.5%
Commonwealth
fcommonwealth
Company's
the
Assets
Rise
Investment
68.6%
jumped
since the beginning of the
year.
On
of
the
Fund
17, the net assets
were
approximately
$19,650,000.
position
ample buying
the
of
months
recent
the
weeks
Jones
in
take
ad¬
crisis.
As
a
during the first three
July
when
Industrial
between
210
for
Economic
from
The
were
chart
a
a
Research,
Trusts
and
Investor's Point
was
the
Average
and
Dow-
ranged
common
from
55%
diversification
maintained by the purchase of
stocks"
stocks"
power
of
and
as
well
as
additional
"war
buying
remains to take advantage
further
ma¬
and
to nation.
cently in a western city where
five salesmen sold all the bananas
eaten;
baked
and
out
comes
the
loaves
wrapped
weakness,
would
you
if
newspaper
In
it
the
is
case
for
pay
this
the
of most fish you eat
different. After being
net, the fish are as¬
very
caught in
by
hand;
the
headed
and
gutted
if it should
taken
are
from
the
fish
and
boat
in
used
connection
90%
handled
the
of
in
a
expensive.
"modern
big
oil
fish
which
way
In
fact,
invention"
powered
sailing
eat
you
is
is
the
trawlers
own
own
schooners,
fish
many
ket,
-
;
as
ever
these
in the
long run; while most have ended
bankruptcy. Yet, potentially the
industry has great possibilities.
(1)
taxes
and
common Stocks
:»
1
to
has
as
will
Tlie
District
j
Boston 9, .Massachusetts
the
little
fish
would
concerns
^
,
Representative
less
money.
national
would
As
a
result,
half
fillets
after
delivered
and
what
you
now
but
health
Fish
builds
containing
building qual*-
is
up
our
brains;
brains
today that make
families good earners. Hence,
much more salt water fish.
bags of fertilizer and the human
and
are
garbage
likewise
from
city
into
washed
Hence, the ocean products
lobsters and other sea
are
constantly
becoming
grain,
vegetables,
while
of
regularly depend
upon
fishing industry is the hope of
mankind; it needs only capital and
United
Nations
supervision.
Yet,
our
government spends only one
dollar to protect our fisheries for
each one hundred dollars to
fish
increase;
must
help
more
agriculture.
people would be employed at good
and
wages;
be very
seaport
every
selling
on
could
With
The waste of
prosperous.
fish
today
instance, I
Edgerton, Wykoff
'■"fSpecial to The Financial Chronicle)
is
S.
was re¬
LOS ANGELES, Calif—Bertram
Urbach has become associated
Edgerton, Wykoff & Co., 618
Spring Street, members of
was
Stock Exchange.
formerly
&
Co.
■
'
for the
Diversification, Supervision and
Safe-keeping of Investments
>
and
."
with
R.
John
F.
.
.
Ruth
/
may
Seer/ye
PUTNAM
:
be obtained from
FUND
investment dealer describing
and its shares, includ¬
price and terms of offering.
KNICKIRBOCKER
SHARES WC.
mton
*
\
20 Exchange Place
,
to
orange
fish for proteins and minerals. The
the
consumption
greatly
Prospectus
National Distributors
WALNUT ST., PHIL A. 2,^PA.
instantly
and
sealed
the
it
ants
combine,
using
Robert
Steel's
newly
designed
vessel
hulls,
erecting one large new automatic
filleting plant and have one sales
force, you would get better fish
S
(St Co.
'l420
«
for
richer,
ing
j
for
Sj/ie
us
are
or
the company
*
fish
complete
poultry, eggs, etc., may constantly
operate a
be getting poorer. The time is
per¬
continuous national advertising. If
haps coming when your descend¬
your
j
ground
caught,
chocolate
one
—•
of Boston
Congress Street
and
that
Keystone Company
50
be
being
Dunbar
become associated with
a
perfect
procurable.
Someday,
on
Bromfield's factory
boats, these
He
announce
with fish.
so
water
rich enough to
modern plant and afford
—
be obtained from
salt
the Los Angeles
James E. Halbkat
,
_
may
most
fish,
* r
.,
(Series S1-S2-S3-S4)
pleased
Whole
of
FUND
are
the
food
co.
Prospectus
feeding; but not
(3)
the
foods
WELLINGTON
We
A
pay
need
raising and
feeding. If you raise cattle, hogs,
sheep or chickens they need care
South
■
all.
to
not
wa:ste
concerns—no
free
the only "livestock"
are
do
and
big
is
buy land and
but not so with
it;
(2) Fish
which
of
(Series B1-B2-B3-B4)
(Series Kl-K2)
ocean
must
on
fisherman.
with
PREFERRED STOCKS
The
farmer
large
poorly financed
present
few fish
very
200 40-acre farms, with their
vitamins and minerals, are washed
down rivers into the sea. Millions
investing their capital
BONDS
In tact,
in
sea.
of which is
under
wages
have made money
of
mar¬
inefficient
the
vegetables, and livestock are con¬
stantly
being
reduced
in
food
values. Every day the
equivalent
of
Selling Fish
of
catch
to
more
concerns
the
number
than
pay
conditions.
Oner/difficulty is that the fish
business is being carried on by a
very great. For
IN
sell
(5) Due to rains and winds, our
soils and their products of
grains,
..
,
Waste
sutfer
a
sewers
Huge
wages
They truly cannot afford to
eat
instead
get to
fish
more
merchants
local
to
more
our
only
but
for
fish!
fish.
(4)
are
use
selling
The employers so in¬
childish way, upon their
brands and sending out their
salesmen that it costs them
sist, in
and
very
the
the
hun¬
seaport
our
strike
all
one
ities.
and
machinery
is
with canning;
automatic
sold
over
were
therefrom.
double
forks; filleted
by hand, etc.
Some
while
wonder
the
pay
are
weighed by hand
by hand, packed
money
develop.
INVESTMENT FUNDS
No
workers
flavored
by hand; fish
salesmen
used;
salesmen
you
a
sorted
ten
steel
dred
buy. One more thought: Think
-
197,
increased
well-balanced
"peace
automatic
mill
a
you
for
by the American
"Investment
into
Fund
provided
to
power
Korean
consequence,
il¬
chinery. The grain is then dumped
as
vantage of the low prices resulting
from
by
better
a
tyawlergj, probably destroy almost
Fund Report*
Nesbett
Fund
reported to
its
stockholders that the conservative
during
even
harvested
of
investment
is
ground is plowed,
planted, cultivated and the grain
but
have
assets
Aug.
hi nery!
The
value
to
the
bread
lustration.
by
cow
m a c
their
.»i
A
edition of
the
was
from
newsprint was
now
made by hand as it was 100
years ago!
decline
held
we
result,
clined
curve.
new
drink
what
stocks
book
.
31,"
to -32% of net assets.
This data is revealed in
Custodian
July
by
2d,
closely followed the 10% annually
compounded interest
and
h i nery.
Even the milk
same
to
the average performance curve has
eystone
holding
was
23
served
Nesbett
from
INCORPOKATt*
48
constructing a particular
ployees' profit-sharing trust.
Company
and
of
Standard
in¬
Korea,
of net assets the
Prankard,
for
stock
active
over
in
war
are
m a c
Roger \v. Babson
prior to the out¬
June
dredths of
a
served
Investors, inc.
A
com¬
Business Shares, Inc.,
which
amounted
plan at the time which it has ob¬
<
cessed
in
pro¬
.
canned
you
to 44.5%
I.
well,
«•
Fundamental
picked,
equipment
gas
home
your
com¬
transmission
the
of
portfolio
mutual
Distribu¬
goods used
dis¬
are
President,
commented, "the securities in the
capital stability section of ' our
the
retirement
all the canned
gas
stability of capital.
H.
tirement Trusts."
f
Its
Producing
integrated com¬
June 23, just
securities
tors
<
$11,116,-
31.
woven
hand; you
are
no
longer
wearing shoes
made by hand;
Your
American
on
ever-widening
field of employees' profit sharing
for the latest
no
longer
wearing
are
Has Enviable Record
break
interested
be
by
Business Shares
"From
prospectus
You
Indus¬
distribution
25%;
creased
Retirement
today
"handmade."
uni¬
your
to
taken
normal.
Distributors
only
of
continues
follows:
18%;
companies, 2%.
CALVIN BULLOCK
send
Dec.
panies,
was
to
investments
as
panies,
panies,
about 50% of earnings was paid
out iri contrast to the 65% usually
Established 1894
which
home
the
product
Expand
case
or
almost
used
30, compared with
of
as
companies, 35%;
a
plant and equipment. As was the
in the past three years, only
Investment
point
is
cloth
Gas
of
amounted
of June
as
tributed
earn¬
achieved despite the plowing back
of a large amount of earnings into
Dealers
par¬
Fish
versally
and lists advantages of fish
run
industry
Fund
assets
net
Fund
$8,491,009
toward
all-time
Industries
Total
tries
higher profits durng a period when "recession" was
widely
feared,
Keynotes
notes.
available
strongly,
the turning
after
industry
high
continuation
in long
money
the
Assets
period.
The indicated record
ings
Prospectuses
if
would
results
clothes from
Earnings for the first six months
the same period in
by $.68 a share—$11.84 as
against $11.16. Dividends of $6.00
a
share compare to $5.40 for the
Securities
from
have made
such
1932.
Gas
1949
Dividend Shares
and
estimate
of 1950 topped
Bullock Fund
Mennis
A.
through
ticularly
of
E.
starting date
1929, rather than 1920. But,
so, the performance of funds
even
Key¬
the Dow-Jones Industrial Average.
Nation-Wide
obtain
the
for
than
1950
by
Industry
Mr. Babson, pointing oat
growing importance of fish as food,
deplores waste in selling fish through large number of ineffi¬
cient and poorly financed concerns.
Says very few concerns
Wenzler.
course,
were
first
SECURITIES
NATIONAL
View,"
G.
Earnings
Of
Higher
dividends
request
upon
of
Notes
.Record Industry
<
le
Thursday, August 31, 1950
.
.
By ROGER W. BABSON
By ROBERT R. RICH
IN* SIMENT PROGRAM
An
.
Pvtmam Fund Dis
•
30 Sure
*
i-rewnr p -hi*.-
.
;-V
ypMft;
-
Street,
IM-
F.
&
:
;1Nutobep 4938
Volume 172
.
\
The Commercial and Financial Chronicle
v
.
liabilities
CnnentSEC
through
adherence
Above
.
j
look
this document
on
in
assistance
of
means
as a
the
tor of any worries in connection or if it omits to state a material
investments. "Peace of fact necessary to make the state-
should with his
think you
all, I
better
jmind and freedom from invest- ment made, in the light of the cir-
dis-;
'ment worries," is the promise.
charge of the real responsibilities
that membership in the securities
By DONALD C. COOK*
The
policy
standaras
these
administer
to
matter
and for your
missi0n
investment company
wno
idea
tains, although funds
of companies
or
can never serve
or
dealers.
Main¬
same purposes
ings banks, government bonds, insurance companies and loan
associations, they
ful part in any
become "institutionalized" to play
can
comprehensive investment
program.
S5 SfiL fni
use¬
InS
for the current regulations.
reasons
I
I
been
have
with
asked
there
discuss
to
the Commission's re¬
published
Statement
of
which sets up reasonable
you
cently
Policy
of
standards
form,
and
use
of
conte nt
supplemental
is
thing I
implication
no
in
any¬
to you today or in the
say
Statement
of
Policy that all in¬
companies or all dealers
have encouraged, or has all litera¬
ture contained, the various abuses
we are attempting to correct and
sale
in
the
i
Minority Behavior Selfish
shares.
I
par¬
wel¬
small
this op¬
be¬
portunity
of
most
cause
in the
you are
direct
sales
of
the
business.
The
end
Donald C. Cook
or
success
failure
the
of
industry's cooperative effort with
the Commission to> maintain its
practices consistent with both the
requirements of the Securities Act
and the Investment Company Act
the
on
and appropriate
hand
one
industries
by
many
ticularly
come
standards of commercial honor on
a
—
their
group,
relatively
practices,
have lowered the standards of the
in
other,
pends
investors
with
or
who do
have such direct contact with the
under
salesmen
you
public.
helpful,
be
have some of the
fore. for you to
background
there¬
discussions
the
on
of
committee
undewriters and dealers which
with
NASD
the
sulted in this Statement of
re¬
Policy
joint administration of it
that is now getting under way.
Moreover,
I
think
you
should
and the
know
the
of
some
the Commission
why
reasons
the industry
and
the selfishness
of the
resulting impact
;1
Since,
with
few
aid
first
serious
avoid
we
now
companies
of
in¬
integral
as an
of
Policy
in
will
any
well
worth
effort involved
make
either
formulation
its
or
in
com¬
right here I want to make
points clear to you: one, that
the
industry,
through
the
NASD, not intervened in this situ¬
Codification
further
One
of 1933 Aet
point
of consider¬
significance,
particularly to
lawyers, is the fact that the
simply
a
Policy, in substance,
partial codification of
of the Securities Act of
two
mission
find
a
with the Com¬
worked
and
cooperative basis to
reasonable and workable
on
a
sanctions the Com¬
considering invoking
would have had a far more drastic,
solution,
mission
the
was
far
new
for
standards
been
have
that
than
restrictive" effect
more
the
should ,;be
set
future
There
up.
this.
about
doubt
no
the
Unquestionably, the NASD, on be¬
half of, the industry, by working
with'
and
us
volunteering
curative
dertake
*
to
action
un¬
a
as
has
rendered you a .real service. It
could have been worse,
gentle¬
sell-regulation,
of
measure
of that I
men:
assure
you.
^My isecond point is equally im¬
portant: This Statement of Policy
aftd
the
reasons
will
I
give
you
for its
adoption constitute no in¬
dictment,of the Investment com¬
pany
idea
does
as
sound and .useful
a
of
medium
investment
constitute
it
dictment
of
all
17
investment
law
has
————
been
made
-
address
determine
insurance
as
cases,
the.
is
<?
between
the
legal
all
tbat there
and
published
pany is limited by its charter to
investments similar to those of insurance
couipairies, it is clearly
on
was
not pretend
complete unanim-
proper
sjon and
pany so to state.
And, since this
There
industry at all times
progress of
Commission
has
noted
in
investment
company
is' made
and
of
manage-
.other
expenses
charges
characteristics of a particular investment company.
of Policy.
1
In ti.ese days of low return on
many types of high-grade securi-
meni
ties, it is
ot difficult to imagine
phrase "to represent or imply." it
frequently happens that supplemental sales literature used in the
sale of investment company shares
is misleading not so much because
of - the? express
representations
made but by- virtue of the skills
ful use of language to imply something that is not expressly stated,
Thus, it has been necessary in the
centage leuirn frequently promjsed, expressly or by implication,
the sales literature of inveslment companies.' A single examPle taken from a recent advertise-,
ment will illustrate what I mean,
It read, in parh as follows:
in
' "Security? -A-v million s people
are interested in buying se¬
curity anu a dependable monthly
income have turned to Mutual
Funds which pay a current return
who
Statement of Policy to deal not of 5l/z% or. more."
only with express statements but
Rather inviting'don't you think7
also with statements designed to Such <^enerous ra'tes 0f return are
lead the investor to draw infer- freqUfc ,uy
computed
upon
the
ences unwarranted by facts. Since: bssis of net asset value and do
not ail implications are mislead- not represent a return upon the
Furthermore
inv€St<vr'<? Post
t.*
where
.
tf.
•
the
wf
*
ba<5
hppn
decrease
_
pej_sh*re asset value dur_
nerloH
this
bl?ought'to
fact
is
nnt
ai
the attention of
tte ilmst,r. Accordingly, it will
hereafter
be
J
materU
considered
mis-ea:lin,
„
too leading if it contains either an un-
all
companies
*
tne great appeal of a liberal per-
bought the shares in question had tion 17 of the Securities Act. It is,
they
realized
the substantial in substance, that sales literature
amount of charges involved.
*•
is deemed to be materially misInvestment
.
«
have ard of disclosure set forth in Sec-
not
will turn now to the various
provisions of the State-
I
speciiic
company.
would
^and
of fac--
use
investment restrictions and other
the investor's mg, it seemed wise to include in
Inves- the Statement of Policy a definitors sometimes
complain to the tion of the types of implications to
Commission that they were un- which reference is intended. The
aware
of these
deductions and definition is based upon the standthe
a
vestment policies and objectives,
chargeable against
in
contains
tual statements, fairly presented,
concerning the fundamental in-
jt wm be noted that most of the
growing use of sales
which, if not actually
designed to do so, at least tended
to
mislead prospective investors
in
investment- company
shares-:
For instance, while sales; literacure emphasizes one or more advantages to be gained by the pur-
mehtion
Policy
of
com-
Accordingly, the
provision twat nothing in it is in-
policy statements begin with the
literature
meat-fees
investment
the
illustrations are erable divergence of views, but, tended to prevent the
side. These
recent years a
of
for
the survey. Statement
at the outset a consid-
was
bad
atutory prospectus and is not
The
Policy would forbid such
ity of views between the Commis-
wnat we might call during the
side.
tne
drawn trom this
.
the same
insurance
operate under
restrictions
as
ment of
Commission and tne
evolved
was
.
Policy, we are look-
,,
seamy
so,
no
not
ao
After several months of intensive
leading up to adoption of the
s
some
investment companies in question
guide to the industry,
a
In
companies.
tiiis is misleading since the
represent" otf
t0
f.
v
Continued on page 24
considerably
policy statement. It is, then
an
earnest effort to give specific
content
to the general terms of
the law by setting up standard
to govern literature used in the
sale of these very important se¬
is under
no
an
NEW
for you
buy,
solicitation of an offer to buy, any of such stock.
or as a
ISSUE
*100,000 Shares
Eastern Stainless Steel
difficult
more
to do business.
■/
one
that can b*
necessity is: indicated
by that good teacher, expe* iehce
It
most certainly is not an
aU
tempt to supply all the answers
and it certainly is no policy jof in¬
surance
against
liabilities
for
violations, of Section 17 that may
(Par Value $5 Per Share)
document;
have
been overlooked
or
unfore¬
drafting. .But''41 cer¬
tainly should make it easier-for
in
its
in " the ; business
those
avoid
to
i..
Capital Stock
amended as
seen
Corporation
.*
Moreover,
the
Statement
of
Policy should be considered a liv¬
ing
and
circumstances to be construed
offer to
curities.1 It is distinctly not some
sort of "government crackdown'
designed to make it
this announcement appears as a matter of record only,
as an offering of this stock for sale, or as
All of this stock having been sold,
of the
f
■
'
i
i
fc
Company's outstanding Capital Stock were offeresd the right to subscribe for
shares On the basis of one share thereof for each thred shares held of record at 3
*Holders of the
the above
Subscription Price
Eastern Daylight
Savings Time on August 25, 1950. Holders of the Company's Capital Stock were als6 offered^
the privilege to subscribe at the same Subscription Price for the slbo.ve stock not subscribed
for through the,exercise of Rights to Subscribe, and allotments for such Additional Subscriptions have been made pro rata in proportion to the number of shares subscribed for pursuant
o'clock p.m.,
of
$1.2.00
to the
Eastern Daylight Savings Time on August 10, 1950, at the
per
V
•!
share. Subscription Warrants expired at 3 o'clock p.m.,'
Right to Subscribe.
*
1 The
part,
Statement of
Policy
Copies of the Prospectus pursuant to which the offering
provides, in
that:
•
,
"It
will
be
considered
materially
mis¬
or
}
was
made
may
be obtained from the undersigned.
' >
.
:
Xr?. *4/
C *
■
£-*
^ \
-
Cook before the
"Investment Dealers''.Digest
Scwaj ahnuStl Mutual Fund Conference, New .York
*An
to
1933.
specific by the formulation
more
in¬
com¬
literature
That rather broad section of the
of all dealers selling leading hereafter for sales literature ».> <.
their share#.,..There i$ no spirit oi (r) to employ material in -whole£
part from piublished article^ Or documents
hostility in the Commission
descriptive of or. relating to < investment
against investment companies, an£l Companies unless such
material,^;^
panies
serve
neither
general
a
such
NASD, the -Statement of Policy comparisons, but where a com-
,
.
Statement ot
interest
pliance with it.
the fair intendment of Section
ation
.
chase
while
is
had
record
in
Statement of
Sanctions
the
to our feelings about
the benefits to the industry
greater public confidence and shares, rarely is there any mention that the acquisition of such
acceptance that should stem from
strict adherence to the spirit as shares involves the payment of a
Likewise, little or
well as the letter of the Statement ?ales charge.
that
your
And
of
what the principal abuses are and
to establish standards which might
misleading.
the
nation's
financial
structure, I obviously also believe
able
Forestalled More Drastic
'
prefatory
Bear in roina that in tne follow- Aug. 11, 1950.* I will
per¬
of
part
would
later on.
surgery
companies and their
an example, some inf
ciation of Securities Dealers a vestment companies liken their
broad and thoroughgoing survey investment policies to those of
dertook, with the assistance and vestment
The "Seamy" Side
the
all.
upon
is well known, I
as
institutionalization
mate
impelled
plying
Com-
a
indeed, if practice follows theory,
in the real potentialities for ulti¬
to undertake this
venture in the belief that by ap¬
felt
the
of them; but
vestment
should
It
to
the
enlightened regulation, WOrk and frequent consultation companies. In general, the State-
•E?
large
with
contact
the
to
a
your
on
policies might operate to hampei
the impartial description of in-
concern
and
as |be work progressed, the area
point where remedial are the worst instances. They are 0f
disagreement was continually
action was necessary. This group
n° E^3118 means does all lit- narrowed, and, at: the completion
has attempted to push even tne
equally, by no
0f the survey, the Commission and
real sales points in favor of in¬ erature contam
Li0rce\en some the NASD were ^ ip . complete
vestment companies past the point • of these
objectionable features.
agreement on all matters covered
of reason; and many firms that
The continuing increase in the by the Statement of Policy.
The
otherwise would have refused to
size and importance of investment Commission and the Association
indulge
in
such
extravagances
companies has been paralleled by are now working out procedures
have,
undoubtedly
because
of
an increasing use of supplemental
whereby the Association will ascompetitive factors, thought they
sales
literature. Such literature sist the Commission in carrying
were forced to go along. It became
may, of course,? be used provided out the Statement of Policy as a
a sort of chain reaction, set oi f by
it is not used as a substitute for measure of self-regulation. .
■?
industry to
measure de-, sonally
firmly
believe
in
the
appreciation and theoretical soundness of the in¬
understanding of this aim in your vestment company concept and,
the
'
these
setting
pressed some fear that the prinr
ciples laid down in the various
of
mJv! cooperation of the National Asso- shares. As
with this further note of caution:
sons
What has
company
t
^ rln
this venture in what we think and
.
happened is what un¬
fortunately so often happens in
n
as
investment
industry for some time,
commission, therefore, un-
The
lng discussion? oi some of the rea-
of
vestme
n
at
straight
correct.
literature used
end
would
Factual Statements
;i
While the Commission and the
company
directly
wp
ronnpraHvp
'
efforts
vestment
will
ot
it
Explains in
vou
itemized detail the
members,
dealing
will be
course,
as sav¬
benefit* Those of you
-NA£>lj
* !
inS-
appeals embodied in the
derwriters and dealers has been a
regarding supplemental literature does not imply indictment of
not
cumstances of its use, not mislead*
statements
prepared and used by un- NASD were working on the Statement of Policy, the industry ex-
erature
as
being truly cooperative with you
are
the
iarge volume of supplemental lit-
should look
r
of
nature
and sajes
eptails-LArid I think you
on the NASD s efforts
Vice-Chairman, Securities and Exchange Commission
SEC official reveals Commission's recent statement of
is
cmy
frequently offer to free the inves- true statement of a material fact
to
both its letter and its spirit.
i rv
by
,
Mr.
.19S0.»
^.. ^
.<
literature
including
plies with
<
such
'.^ii^; Statement1 of ^PaKcyt and
context' in'h
intended
ntdnrter
meaning."
>
*'
J. ARtNOR WARNER & Co»
*'»■»
material/.com¬
opt
ui addition such mdtef'al Sa not
Of
i
iihich
alters
•
its
August 29, IfS&r*
*
; J'i- /}'*•
•
*
1
"t
as
.14
The Commercial and Financial Chronicle
(814)
Dr.
This Week—Insurance Stocks
standards
.
available.
the
covering
to June
months
Some of the
30.
in the
evidence
1950,
liability.
'
of economic strength.
Indeed, from
view, Britain and most Western European
of
,
saiu
this column we have selected eighteen of the
companies from the tabulation and present below in
shown in the final column.
,
.
to
arise
not
their:'
Acquisition
Net
Adjusted
Exp. Incurred
Under¬
armament
Operating
on
t
;'
*
■.
•
Unearned
Premiums
i
$1.95
.
,6.01
,
Taxes
.$4.55
3.07
,
0.49
1.25
.0.85
0.35
0.91
0.78
0.14
1.75
2.00
3.75
0.97
3.06
1.54
0.21
2.02
.2.08
0.83
3.30
2.39
5v69
7.22
1.61
Insurance.—
2.09
Phenix
1.81
2.47
Fireman's
.
■
.
.
2.10
,
3.50
1.17
4.67
2.55
1.91
0.23
2.14
1.18
2.53
0.98
3.51
1.41
Hanover Fire
1.28
0.71
Ins. Co. of North Am._
1.10
1.06
Northern
St.
—0.02
Insurance..
F.
Security
0.88
1.20
3.52
0.86
-
\
1.69
1.47
'
'• "
M
1238
3.88
16.26
0.31
3.40
2.89
.0.61
2.06
1.18
;
_
Insurance
Tax Deductible
Acquisition Costs
Co.-.—
$1.25
Agricultural Insurance—
2.53
American
Camden
Insurance
$0.22*
0.40
Fire
0.34
1.54
0.13
0.98
0.06
0.88
0.37
1.-33
2.73
Federal
3.35
1.06
0.08
1.23
0.32
4.14
Association
0.44
4.56
Firemen's
Insurance.
1.17
0.09
2.06
0.38 V"
3.43
3.50
0.43
0.27
2.49
3.50
Ins. Co. of North Am
1.66
0 34*
3.68
National
0.41
0.29
1.69
.
.
;
Hanover
Fire
Union
Northern
Insurance
*
0.14
<
3.02
or
St. Paul F. & M._
1.10
0.08
5.11
0.81
0.15*
2.28
2.35
♦Additional
incurred
the
if
Federal
the
acquisition
income
Company
costs
had
of
had
indeterminable
benefit
amount
of
of
amount
would
have
deducting
premium
in
(for tax
force at end
to
last
of
make
have
year,
allowance
specifically incurred,
the
deductibility
Thus in
addition
of
to
in their current
for
the
was
tax
deferred to
expenses
the
compilation
liability
for
which,
of
been
increased
premium
operating earnings of the
saved
any
by
the deduction for tax
amount
purposes
Federal
.
'
tories
not
on
costs
5
"
the
for
some
period
of the more
between the
have
largely
two
periods
if anything,
was,
In
Eurooe.
Russia
even more
the maintenance
of
would
this
is
possible.
The
of
secret
the
of
living.
Members New York Stock
Exchange
Members New York Curb
Exchange
120
BROADWAY, NEW YORK 5, N. Y.
Telephone:
Belt
B A relay 7-3500
Teletype—NY
1-1248-49
(L, A. Gibbs. Manager
Trading Dept.)
Specialists in Bank Stocks
have
balance
and
been
largely re-equipped
end
modernized.
not
in
banking
and
armament
.——£2,500,000
-
every
Or
the collegiate
other
the
industrial
complacency and defeatism.
*** *
*
drives
to
the
extent
to
which' it
is
are
-
repre¬
pub¬
me
world in
activities
of«the
gratifying
a
oppor¬
Wriston
as
has
long
been
educator.
an
Born
in Laramie,
ago
University, Harvard
New
York
Uni¬
University,
University,
Rhode
Is¬
State
President
as
College from
he
ol
1925
Law¬
to
1937,
University.
became
Wriston
President
is
a
Mutual
>.
of
of
trustee
Life
insur¬
Co., Carnegie Endowment for
International
Foundation,
Bur
Feace, World Peace
Educational
records
and
'teacherR un
ranee
and Annuity Association Stock.
Phila. Bond Club
To Hold Field
Day
PHILADELPHIA, Pa.—The 25th
annual field day of the Bond Club
of Philadelphia will be held at the
Manufacturers
Country Club on
A special silver jubilee
program
is
being
arranged
by
Lawrence
Stevens, Hemphill,
Noyes, Graham, Parsons &« Co.,
Sept. 15.
politi¬
-
could 7'
Chairman
tee.
An
renew
of the
effort
the
Outing Commit¬
being made to
is
series
of
golf
matches
between the New York and Phila¬
,
delphia bond clubs.
*
Midwest Exch. Members
-
possible without
terms they cannot expect the ordinary man to realize the
extent and urgency of the efforts and sacrifices called for
by the
situation.*^*-'
—**
such
Executorships
also undertaken
i
position
workers
•
is
served
ance
Workers
sacrificing postwar standards of living. The sooner they discard
such ideas the better.
So long as Ministers continue to speak in
description' of
exchange business
Trusteeships and
it.
Ex¬
other
me
To
economy.
CHICAGO,
£2,000,000
Reserve Fund
for
our
d
a.
Dr.
is, is Western Europe mentally ready to rearm?
accepting considerable reductions in the standard
harder
sat¬
t..e
point of view of;
Northwestern
be
work
of
facu ty
when
Rolling
Many of the governments are not yet aware of the n^ed for
facing realities.
They still think in terms of limiting their re¬
£4,000,000
The' Bank 'conducts
to
with special
program
Brown
Supplies of consumers' goods have been replen¬
existing democratic regimes the populations
*a
universities, students
others, to study its true posi¬
years
he
Housing has made
a
nation's*
requires
College, Rutgers Uni¬
versity, Tufts College, Wesieyan
University and Western Reserve
University. Following 11 years of
teaching at Wesieyan University,
during which to rest, and thanks to
improved food supplies their vitality is now restored.
struck between
Zanzibar
Capital
a
dustry,
mbers
land
of
merchant fleets have been rebuilt.
Our
me.
is enabling
Princeton
a
threatening their;security and that the danger could be averted
through their whole-hearted efforts.
A happy medium must be
Burma, Oeylon. Kenya
Kenya, and Aden
Paid-up
as
of the Exchange,
noted
the
versity,
power strongly
in ravor cf
political necessity to raise the
working classes, at the expense of national
It has become
of the rearmament drive depends on the
ability of the governments
concerned to persuade their nationals that there is a grave danger
Bishopsgate,
Subscribed Capital
t*ope,
i
lumbia
This
economic
mean
Under the
London, E. C.
Kericho,
the
accepting
my
Wyom¬
ing, he received degrees from Co¬
economic
nearly as drastic as they would have been three
years earlier.
If proper use is made of the increased productive
capacity it should now be possible to have guns as well as some
butter—though not as much, of the latter as the Western European
peoples have * grown accustomed to have during recent years.
the Government in
Kenya Colony and Uganda
Colony,
of
s
healthy flow of private funas into
productive enterprise. '
v
61
living, and working much harder.
Thanks to the progress of
reconstruction, the sacrifices called for by rearmament in 1950
to
26,
in
is
strength
prominent
refuse their whole-hearted cooperation in the rearmament effort,
in which case its Results are doomed to be inadequate.
The success
Office:
"It
governor
Dr.
strong
have
Head
President
tunity."
during the
unsatisfactory
NATIONAL BANK
Branches in India.
Laird, Bissell & Meeds
public
this
USSR
ol INDIA. LIMITED
STOCKS
Wriston,
lic and of
a positiop by majority vote to refuse their approval of a
policy under which they would have less butter and they would
Bankers
and
Chemical Corp.
said:
sent the
The question
usual methods
are
Board
Dr.
post,
tion
cally in
INSURANCE
the
and
Pro¬
classes had five years
It would
f-
primary
significance and considering the difficulties
experienced; net op¬
erating results are in most cases relatively favorable.
BANK
of
Mathieson
Excharge
the
Materially, the Western European nations are now in
to rearm.
This is, however, only half the battle.
therefore
are
Company of St. Louis,
Nichols, Cnairman
of American
Inflation has been checked and budgets are more or less balanced.
on
-
are
and Thomas S.
rence
'this and to
computation by approximately this amount.
comparisons
of
good progress.
income taxes
,
have
ished both in wholesale-and retail business and in homes.
cf all
deduction
a
Trust
of
Operating earnings after taxes
Final
state
and
stocks and
volume.
of acquisition
increase in business is shown.
lower than they would be under
of
of
and
that
would
Thanks to the progress of reconstruction, productive capacity
in Western Europe has now risen well above prewar level.
Fac¬
period.
regular income tax liability incurred
Gov¬
Gfle F. John¬
segments of the financial
advanced
that
defense.
result of
a
statutory underwriting profits and investment
income,
from
Western
standard
political
endeavored
as
other
ston, President
Mercantile-Commerce Bank
of the
purposes),
although
later date
a
and- would
rearmament
the economic situation in
organized labor.
Geyer & Co., in accordance with the policy adopted at the
end
disturbances
military strength of Western Europe.
standard of living of the
taxes
not
increased
on
the
would have been
to
on an extremely
is politically impossible in demo¬
countries except during brief periods of acute danger.
In
Western Europe the war and postwar coraitiops have changed the
6.20*
Security Insurance
.
on
result
leading
unrest,
cratic
12.74
_
to
member¬
change, in cooperation wit
compel the workers to work extremely hard
low
3.62
11.01
_
Henry M. Wriston
"I
efficiency of Communist dictatorship lies in its ability to persuade
5.84
1,20
Fire
true,
totalitarian
2.40
4.05
Pacific
n's
o
ernors
industrial
military power was only possible through maintaining the stand¬
ard of living of the population at its low wartime level.
In a
2.44*
1.11
is
in
th^n
4.50
.
___
rearmament the
of
industrial
early postwar years
3.76
2.22
Dr.
t
s
Public
isfaction
largely handicapped
It
5.79*
<
Fund
Glens Falls
short¬
and raw material stocks available.
3.38
2.96
Fire
t.
i
two
long interested
was a
3.52
*
r
ship of 33. The
was
ductive capacity would have been far from sufficient to cover
'Vital civilian requirements, and the half-hearted workers would
not have made the best use of the limited industrial equipment
2.02
1.22
7
Continental Insurance
Insurance
have
5.74
Fireman's
.
out during the war was not
weak.
-offset its effect
$4.34
7
,
upheaval
becorre necessary in
the interest
6-30-49
6.30
0.16
was
inflation,
$3.08
0.25
•
Fidelity Phenix
'
social
1947, or even a year later, at the
time of the Berlin airlift, to make a supreme economic effort in
3.24
-
'
e n
full
have
considerably under prewar level..
proportion of industrial equipment
yet replaced.a Productivity
Einzig
Had it
Six Months Ended
6-30-50
i 1
Governors
Their budgets were unbalanced and confidence in monetary
stability
After Taxes
Actually
■
tion.
Operating Earnings
Incurred
Aetna
then
would
6.29
1.45
Insurance
/,V
'•
scale
rolling stock-and
shipping dunnage;
Most
Western
European countries were more or less in a state* of acute infla—
3.16
3.16
was
ced
m
eiectL.. brings
th e
Board ol
By then
demobilized, and
of
age
2.39
-1.70
-
Saved By
V
were
Transport con^itiors were unsatisfactory. 'There
5.68
1.53
Federal Income Taxes
"
3.19
-
9.22
—0.01
_
&
1.99
2.16
#
3.09
Fire.
Paul
1 d
.
National Union
Pacific
*
ways
many
disaster and
or worn
g e
h
adversely af¬ to aid in
bringing about the broad
fected by the acute housing shortage.Con-;
understanding of investment proc¬
sumers' good were in short supply.^ Worn out household goods r
esses
that is essential to an in¬
and clothing were not replaced.
The populations were underfed,
formed public ownership oi Amer¬
their
vitality was low.
They . had not been; able to recover
ican industry. The
desirability of
physically or mentally from the prolonged,strain and privations :
achieving r'.those
objectives
has
of the war years.
>
<t;.
Paul
Dr.
4.92
Fund
large
a n
W
be
for
was
destroyed
3.32
Glens Falls
■
A
4.10
Fireman's Insurance__
-
;
4.60
<
may
c
Ex-
Schram, Pres-
In 1947. industrial productive,
progress.
capacity
1.69
Fire Association
?
good
9.08
0.76.
—
Insurance
Fidelity
Income
*
O.C-3
Insurance—
Continental
Profit
$2.60
0.66
Before"
ment
writing
v
$1.56
5.35
Ins
Camden Fire
Federal
on
$1.04
Aetna Insurance Co.__
Agricultural
American
-
(Tax basis)
'
h
by
incalculable political consequences.
It is only during the last two years that
reconstruction in Western Europe has made
'
Profit
'•
b 1 i
^u
a n n o u n
earlier.
years
lar?e
a
a
tue
c
with
Profit
Invest¬
govern¬
military
caused economic
Under¬
writing
for,
weakness would have been
aggravated by their economic weakness.
Re¬
,
Universities,
as
cur
three
some
M.
Governor
then
war
thank
the democratic pawers
share earnings. Also a comparison oi the net;
those of the comparable period of last year are
with
American
of
they were in 1939.
lucky star that the
present dangerous international situation did
two tables the per
results
ciation
0
countries
in
H jr.ry
versity and President of the Asso¬
economic point
an
better piepared
have
We
For purpose of
better known
be
to
rearmament ana
,
v
Dr.
paredness
the percentage gain in premium volume so
far this year as compared with 1949 and current market price
and dividend rates. In addition the per share earnings are shown,
with a breakdown as to their source, and the Federal income tax
of
half
first
of
Wriston, President of Brown Uni¬
LONDON, Eng.—The gloomy picture of the military unpreof Western Europe is somewhat relieved by growing
figures presented in the report
asset values, net premiums written
include the estimated
called
is
rearmament
of people with
facing stern realities.
ments in
bank stocks, have just recently
and
work if full
more
and stresses need of all-oat cooperation
63 Wall Street, New York, specialists in in¬
issued a cimpilation
operations of forty-seven companies for the six
Co.,
Geyer &
and
election
The
Einzig recounts economic and political progress in Western
Europe since War's end, and points out in last year or so, pro¬
ductive capacity there has risen above prewar level along with
higher living standards. Foresees likelihood of lower living
Operating statements of most of the major fire and casualty
insurance companies for the first half of the current year are now
surance
Of N.Y. Stock Ixch.
By PAUL EINZIG
By H. E. JOHNSON
Thursday, August 31, 1950
.
.
Wriston Public Gov.
Can Western Europe Rearm?
Bank and Insurance Stocks
.
Committee
of
111.—The
the
Executive
Midwest
Stock
Exchange has elected to member¬
ship Lloyd I. Miller of Cincinnati,
O., and Edward M. Harkness of
Mason.
Mr.
Morgan & Co,,. Chicago.
Miller plans to come to Chi¬
cago and act as
Exchange Floor.
a
broker
on
the
Number 4938
Volume 172
.
.
from
slightly less on three-month Treas¬
bills.
With this spread in
(2) Open Market Operations— rates, banks prefer to sell Govt;
ernment
securities
rather
than
Under
existing conditions, with
thie large volume of government borrow to obtain needed reserves,
seturities outstanding, the prin¬ but a narrower spread in rates
sumer
available to banks.
credit, and various types
requirements as to real estate
credit. These are important sup¬
7
page
which limit the supply of reserves
of
Continued
plementary instruments but they
cannot
by themselves be relied
Federal Reserve Board Presents
to meet the present anti-in¬
upon
flation
Fiscal and Credit Policies
indefinitely a system
excess
profits taxes.
of
Such
heavy
practices
Government
Even
tures
Investors
fully covered by tax¬
ation, ii v.ould be highly desirable
under
present
and
prospective
obtain
for
Treasury to
volume of excess
a
funds
possible by
from
real
savings.
effort' should be made to
as
borrowing
Every
sell bonds to the public, including
individuals, corporations, and nonbank
fii ancial
institutions, thus
money
that
would
absorbmg
otherwise
be
spent
ion
consump
vestment.
or
Such
a
current
on
private
new
in¬
would
program
not
oni.
absorb redundant funds
but
also
make
it
possible
to
re¬
duce U.e volume of securities held
by banks, which would be
a fur¬
anti-inflationary influence.
ther
The
of
.uccess
defense
a
bond
financing program
should not be
judged
in
terms
of
amount
of
bonds
the
dollar
The
sold.
pro¬
should be judged mamly by
extent to
which purchasing
gram
the
really diverted from the
power is
public to the Federal Government.
should
It
the effect
have
of
cur¬
tailing current purchases of goods
and
to
If
services.
sold
bonds
new
investors who in
existing
major
bought
holdings
purpose
are
sell
turn
to banks, the
is
not
accom¬
best to
oi uer
the
accomplish this
of
bor¬
rowing from nonbank investors
should vary somewhat from that
program
followed during the last war.
Tne
would
be
(1)
Efforts
become
a
that
nature
would
hold;
tion
would
and
Continuous
should
ing
should
ions,
corpora
both
nonbank
to
of
banks
by
on
a
wish
supported market when they
without loss.
Their ability
require continuous support
operations which- exert highly in¬
flationary effects at times when
prevention of inflation is most
essential. The second objection is
that such securities present at all
times
potential
a
would
purchases
Series
Limitations
mi^ht
be
limited
the
with
cordance
manner
tion
Series, '"<•
a
bonds
•
to
means
as.
w
issue
an
ac¬
portant
a
on
savings
available. With
mortgage credit and
funds
of
?
funds.
7
,7....
securities; should
limited,and
'
large-scale " loan
drives of the kind used during the
war
should
be avoided.
Vigorous
selling campaigns, inevitably en¬
courage a certain amount of freeriding (oversubscription hi order
to sell later at a profit) and re¬
sult in substantial switching from
existing
holdings to
new
issues.
through
ments
discount
and
in
absorb
to
used
An
rates.
increase
requirements
reserve
can
be
reserves
excess
of
dis¬
dim¬
effectiveness
the
inished
the
by
very
bank
large
holdings of Government securities
which
them
enable
needed
by
reserves
to
the
obtain
Discount rate
changes,
however, still have a considerable
rowing.
influence
used
on
are
appropriate occasions. The
discount
with
Reserve
credit
expansion.
Its
do not hold excess reserves
makes"
banks to liquidate
assets in order to obtain the ad-"
it necessary for
the
needed.
reserves
circumstances,
would
reserves
plied
by
Under
the additional
have
Federal
to
be
Reserve
sup¬
pur¬
chases of securities or advances to
restrictiveof the action would depend
member
ness
The
banks.
1V2 %,
compared in
large part upon whether banks;
current
market rate of
Continued on page 16
one-year certificates and
a
114 %
Federal
at
rate
is
Banks
and
further
application at a time when banks
of ditional
sale
such securities instead of by bor¬
psychological
for
on
now
ts
neither
offer to sell, nor a solicitation oj offers to buy, any oj these shares.
offering is made only by the Prospectus.
an
100,000 Shares
'
y
'-bp.
for
Big Bear Markets of Michigan, Inc.
line
the
Price $9 per
,
'
Copies of the Prospectus may be obtainedfrom any of the several underwriters, only in states in which such
legally offer these shares in compliance with the securities laws of the respective states.
*
■
banks
be
restrained by gbverhmeht regula¬
tion
imposing conditions as to
types
of
.
advanced.
examples
are
margin requirements on security
loans, maturity and down-pay¬
ment requirements on consumer
instalment ' credit
and
payment
limitations on other types of con¬
■
s, •
Baker, Simonds & Co.
— ~
;
,
August 29, 1950.
& Co.
^
.
^
;
■*.
1
1,;
R. C. O'Donnell & Co.
f
'■
1,
Straus & Blosser
White, Noble A Company
Stoetzer, Faulkner & Company
•
'
Watling, Lerchen & Co*
| '• McDonald-Moore & Co.
j!
„
Company, Inc.
A. M. Kidder & Co.
<
George A. McDowell & Co;
Wm. C. Roney
*
Curtis
Paine, Webber, Jackson &
credit' can
the nature of the credit
outstanding
t
J; G. White &
*
(1) Selective Credit Instruments
—Some
The
«■-
underwriters may
^
■
share
1
of governT.
follows:
as
•
It:
Par Value $1.00 Per Share
reserves
are
U
immediately
holding
liquidation
by
■
Common Stock
nbdded vfor
credit
expansion- in ' a
similar
manner. The various means avail¬
able for restraint on credit expan¬
sion
be
out
rate changes has been
count
The
economic deci¬
to
be privately
obtain
to
v .•
(4) So far as possible, sales of
marketable
This advertisement
limited,
is
ment securities but also for
perhaps,on other types of. private
and^public, financing,, and .with
appro
atr selling efforts, these
bonds should attract a substantial
amount
policy may be carried
the flexible instru^
of open market operations
monetary
member bank borrowing were
years,
and
to provide
supervisory policy applied coop¬
eratively by the State and Fed¬
eral authorities, and through the
use of general credit instruments
dividuals, businesses, and finan-;
cial institutions to obtain heeded
thev; become
limitations
changes
Changes in reserve
Banks.
requirements
are
particularly
adapted to bringing about broad
adjustments in the reserve posi¬
tion
of member
banks so that
short-
Rates—In earlier
in discount rates
Discount
Re¬
Federal
the
with
hold
principal instrument of Fed¬ that banks might hold in order to
eral
Reserve
policy. In
recent make them unavailable as a basis
working capi¬
tal or carry inventories because
specific rules as to repayment a,re
not generally applicable Expan¬
sion of these credits, as well as
of those subject to selective regu¬
lation, can be restrained to an
important
degree
through
the
voluntary cooperation of banks
and other lenders, through bank
against
an
inflationary
price
spiral. As previously pointed out,
however, that task is necessarily
complicated by the large volume
of public debt Outstanding, which
makes it possible not only for in¬
of bond.
of tapping current
farmers
in
increase
an
to
serve
the
of credit,
businesses
out in interest is credit is to
change the ^mount of
through income taxes reserves that banks are required
of
induce¬
where
instrument
available
limited
offer
(3)
years,
on
to
!'
pays
simply by the additional charge
against the current budget.
not suit¬
loans
condi¬
discount
the
changing
by
to
by taxation and not be measured
are
restraint.
as
varied
of course, can be
accordance with credit
tions
rates, for example, ought to
take account of what is recaptured
moderately re¬
authority is
adequate to restrain credit in this
area
if speculative developments
in the stock market should require
such
sales of
securities
Penalties on bor¬
rate.
ernment
strictive. The present
able to most other types
in
term
motivated, and where new and
adequate taxes have not yet be¬
come effective, vigorous measures
of restraint on private credit ex¬
tension constitute the most im¬
institutional
would
appear
are
by
adjustment
market.
the
rowing,
paid by corporate and individual
recipients of the interest pay¬
ments. Hence, the cost to the gov¬
regulations as
Selective controls
in
American
the
important
it
what
which are now 50%
collateral,
to
to
remember,
(4) Reserve Requirements—One
furthermore, that the government means of decreasing or increasing
no
longer issues tax-exempt se¬ the
supply of reserves available tb
curities so that some portion of
banks as a basis for extension of
of the current value of stocks held
as
is
It
repaptured
requirements
of
strength
is
than
short-term Government
economy.
Credit
Bank
expansion
for
continue
sions
as
rglit be considered instead
of offering a new type
•:b Such
quirements,
open
basic
adequate to deal with any situa¬
tion which may arise. Margin re¬
where the bulk of
to invest¬
similar
a
on
margin
expansion and specula¬
substantial, where ca¬
are
pacity
in oider to discourage buying
by sale cf outstanding securities
to
the
banks.
Opening up of
investors
on
situation
a
ments for
ors,
basis
use
credit
for ac¬
■
In
accumulation
funds available
new
in
Present laws and
interest rates than
market operations
bank
discounting is more restrictive in
its effects on the credit situation
combat inflation and maintain the
complishing this purpose.
to
in
funds at
Federal Reserve
Consequently,
adjustment
reserve positions by re-
debt.
and
important for the
more
low
very
Expansion
bonds.., Pur¬
G
and
F
E,
chases
of
the same
limited
experience
procedures
easy
securities.
(per¬
light of market conditions.
This bo d should be continuously
in
the
obligations is less likely to occur
than
is the sale of marketable
in the
available
indicates
penalty involved, however,
redemption of nonmarketable
determ ned
be
obli¬
Previous
necessary.
advance the thought
of the
and limitations upon
values,
demand
gation upon the Treasury of in¬
determinable magnitude. Because
savings deposits).
The maturity
of the bond, tne scale of redemp¬
tion
however,
sales,
such
make
would
relation' to
in
not
are
with large financial in¬
vestors, who naturally would pre¬
fer to be able to sell their bonds
haps with limited purchases per¬
mitted
they
popular
2%%
investors
that
is
ap¬
with regulation of consumer
more
oojections have been raised
issues of this
One
sort:
non-
a
and
non-marketable
to
offer¬
redeemable
market operations,
after the war
open
during
emergency.
their
(or tap)
made
be
marketable
bond
its
in
materially the bur¬
so
Federal Ressrve System
den of the
pressed
be
leuernpreflected in
lor
credit.
such
is
be
government to have access to un¬
including particularly in¬
stalment credit, is provided for in
legislation before Congress. Under
that authority restrictions could
be imposed on new extensions of
with
money
it
that
Authority to regulate consumer
prices of outstanding se¬
No other type of issue
contribute so
greatly to
lighten
for
means
of neces¬
sity be related in some degree to
changes in short-term rates on
impose
of
proponents
cheap
credit,
inducement to
an
provide the
Some
1950"
of
Act
would
rates
terest
plying further restraints and this
authority is necessary.
stability in the long-term market,
are
(3)
provide
market
Sales
of
savings
notes,
largely purchased by
(2)
would
The
reserve positions.
condiuons, changes'
rates must
discount
expansion of bank credit Government securities.
There is a well-established, and
limiting its purchases of se¬
curities to the amount necessary on the whole desirable, tradition
to maintain orderly conditions in on the part of banks against con¬
the market. Under such a policy tinuous borrowing which results
some flexibility in short-term in¬
in restraint when banks are
in
im¬
an
Under present
a
temporary
by
toward
Production
fense
interest, which
also, demands
would not be
curities.
redemption at some penalty.
which
loss of
some
is
could
bank
tential
curtailment
in this field, but additional action
will be required.
The authority
requested in the proposed "De¬
upsetting effects on the economy.
The bond would be redeemable,
but at
stimulants
step
expansion.
Reserve
in
shifts
in
increase
some
adjusting
of
means
for
used
encourage
amount of borrowing as
the
in
definite restrictions upon the po¬
action
Recent
it
(c)
1948
and
Federal
be
can
credit
multiple
highest
to rates
related
1947
in
the
at
which
serves
in
times.
all
portant
sustainable
a
outstanding bonds; and
occurred
permitting
although
liquidation,
of
at
they
as
are
might
credit
govern¬
Such sales create bank re¬
serve.
President to reduce gov¬
ernmental
provide, both for the emer¬
gency period and for later years,
a
security that would discourage
widespread
liquidation such as
E, F
discourages
the
of
would
directly
come
rates
of
level
it would
long-term
(b)
level
a
reasonably
basis
on
from
individuals and the bonds are of
funds
These
available;
interest
intensified.
and
long-
a
bond
funds
investment
establish
to
sell Series
to
continued
offering of
credit
such
by the
certain
absorb
and G bonds to individuals should
be
credit.
bank
of
of
sale
the
ment securities to the Federal Re¬
character.
activity and
the expansion of mortgage credit
as well as the outstanding volume
desirable purposes.
(1) It would always be on lap to
follows:
as
largely
is
ury
funds for
of
source
extension
construction
Current
banks,
the indirect
these
practices
is to
nonmarketable
plish
program
a
be
cipal
inflationary
very
type proposed would help accom¬
tnat
might *-ive most effective results
of
p^cts
a
would
Continuous
term
Two
purpose,
main
of
increase
plished.
In
by
effect
the
large
as
investment
to
as
Since the securities sold by
subscribers
were
conditions
long
problem.
Expanding credit in the housing
field during recent years has been
greatly
stimulated
by
govern¬
mental
policies and is currently
short-term
than long-term
lower
are
rates.
Government. expendi¬
'
so
rates
Borrowing from
Nonbank
profitable
are
subscribers and cannot be entirely
prevented
15
(815)
The Commercial and Financial Chronicle
.
,
<
.
A. FU Vogel & Co.
•
*
J:
m
(8ie)
The Commercial and Financial Chronicle
"Broker's Grer
Assisted!
-
Continued
by Tyson
from
15
page
.
Thursday, August 31,; 1950
.
.
amounts
any
interest
Federal Reserve Board
*'•
previously
increased
financed
have
sufficient
Government
se¬
tally- to
cation
standards.
cash
The interest yield rate
the
Federal
Reserve
which
at
bought securities
would
in¬
also
fluence the response of the banks
to the action.
One of the disadvantages of an
increase
is
its
It
affects
relation
requirements
reserve
unselective
banks.
in
in
to
application
all
banks
to
alike
their respective de¬
posits without regard to the nature
their
ol
credit
assets
their
or
policies.
In
fluence
indirectly
open
their in¬
tnrougn
market without
money
current
contrast,
market operations exert
tne
the
deposits
arbitrary
of cities and
balances
reserves.
Means
such
aoout
under
eral
the
to
for
and
subject
within
the
staff
study
should
Report some time ago. Since then,
System
has
extended
its
consultation
in
Federal
these
Advisory
studies
with
of
con¬
banks
Federal
Reserve
credit demands and
the
than
ments
non-member
banks.
securities
critical period of- inflation, it
would be of less than, maximum
tions
effectiveness
is
a
method
ment's
to
to
as
well.as.inequitable
impose higher requirements
member
banks
consideration to
PHILADELPHIA, * ci.—aii alert investment firm and one of
the largest and most fashionable women's apparel stores here are
Such
jointly
ous
Sept.
sponsoring
designed
2)
sale of women's
mon
unique
a
promotion
stimulate
to
at the
wear
is
milady
with
shade
new
a
the Fall
for
time.
that
(Aug.
week
securities
the
same
for the week is "broker's
;grey"
this
business
28
itations
to
and
the
and
introduction
the
is
being
strong assist from Tyson & Co., Inc., security dealers..
latter firm suggested to The Blum Store that the; new
fabric be promoted by dressing all 12 of The Blum Store windows
„
fashionable Chestnut Street
on
the
problem
of
arose
sections of
as
where
to
.
in
brokerage house.
material for the
a
get the
background of stock tickers, ticker tape, charts and manuals.
admin¬
same
bank
State
These
vent
New
Chicago,'re¬ them
against
demand
de¬
to be
would
tively
money
to
limit
the
1%.
For banks in New York and
the
amounts
required
of
needs
to
securities
with
cent
4%
years
on
as
other
banks
in
rates
the
money' market
$50,000,000 Canada
banks
•Morgan
Stanley
V. S. and
on
& Co. and
Canadian
82
underwriters
Aug. 30 offered $50,000,000 25-
year
ment
surplus
The
bonds
which
will
during
each of the past could be permitted to reflect the
four fiscal years ended March 31 operation.
despite substantial reductions in
There are certain inequities in
personal income and excise taxes the
existing system of reserve
2%% bonds of the Govern¬
of Canada, priced at 101%.
mature
Sept. 15, 1975. will be direct obli.gations of the< Government
of
since
the
of
end
World
II.
War
requirements
Canada, like other members of the
Canada, with principal snd inter,est payable in U. S. dollars.
North
upon
Atlantic Pact, is undertak¬
to
•
of
Proceeds
used
rinillion
.are
retire
to
issue
the
part
issue of 4%
will
of
ing
payable in U. S. dollars.
will
which
These
have
been
called
preparedness program which
$100
a
bonds
bonds
an
and
be
for
expansion of its military
mean
substantial
a
sirable
may
It
to
computing
in its national defense budget and
're¬
establishment
so
as
of
would
revise
the
be
the
reserve
seriously
banks while not
(3)
chase
Federal
this
is
of
restrict
some
restricting others.
could
forcing
be
used
banks
to
as
pur¬
securities.
would
the Federal Reserve
refuse
to
buy,
or
would
the
supply
at
then
to
to
NOT
A
buy
any
NEW
an
in
avoided
be
inducement
"
a
solicitation
of
With Dempsey & Co,
to The Financial
CHICAGO,
*
111.
Chronicle)
with
La
Dempsey
Salle
Co.,
&
Street,
tv
specifi-r
an.
follow
the
policy of buying
.
2
.
(no
.
par
& Co.
.First California Co.
value)
,
;
„■
earnings.
Nor
are
such estimates applied
-
.
i
*
^
-
h
v-»y
growth companies
.
•
(The Market
Nor do the
:
on
the other.
a
*
has
First
j
{
.rs
:
^
become
Co.. and
prior thereto
Share
these
two
Gerard
phenomena,, it must be remembered that prospects for v
-
likely to presage bearish as bullish market actionswitness the investing public's recurrent
"peace-scares" accompanied by market declines during World War II.
peace
Copies
of the
such
descriptive circular
of the undersigned
us
in
may
are
such
be
obtained
registered
in
any
dealers
State
in
only
from
securities
■>
State.
,
-August 31,
•>'
1$&C
'
<
<.-t-
,r
.
•,.52
..
.
v
'•*'
Utalt St.,-lie*;Tork
sj
'
<
•
!•
*.
i.
S
■
■
°iv
»»«•
*
*
tired
Beekman
investment
Hoppin,
broker,
the age of 80 after
One
..
of
the
Brothers &
partner
*
The ,writer is eoqvinoed that the market's
^;.ar,e not motivated- by factors tha$
financial,
;i-
as
*
< r j
Sprint St*. U* A««*ks 14
y.y
a
founders
Co., he
re¬
died
at
long illness.
of
was a
Hoppin
limited
"
J
£34 S.
are
Vice-
(Special to The Financial Chronicle)
Korea
.
per
was
Conrad, JBruce & Co.:,
Gerard B. Hoppin
,
day-to-day fortunes of the UN's troops and planes
really furnish the valid explanation of our stock mar¬
ket's gyrations.
In addition to the evidenced non-correlation of
$4
associated
California
President of
•
Military New& Bulletin?
ANGELES, Calif.—Walter
Devlin
Co.,
647
Spring Street. He was for¬
merly with Dempsey-Tegeler &
companies determining his back-and-forth shifts between
heavily capitalized enterprises as the railroads on the one hand
and
Chronicle)
South
to indivi¬
dual
in
Price
the
Walter Devlin Joins
►>,
,
•
Common-Stock.
.
South
of
Stock
L. F. Rothschild
LOS
Kimberly Corporation
.
135
members
Exchange.
Mr.
Veneklasen
was
formerly
with
Voss & Co., Reynolds & Co. and
with
|
37,500 Shares
■
W.
Herman
—
Veneklasen has become associated
E.
net-after-tax
K
a
character.
(Special
offer
an
y
.
it
sell, Government securities, rather
The offering is made only by the
descriptive circular.
,
as
than
rather
well require increased taxes.
offer to sell, nor
.
Re¬
Herman Veneklasen
of this stock.
ISSUE
sub¬
rates
Federal
(Special to The Financial
advertisement is neither
level
a
discouragement to government fi¬
nancing through the banks. Such
a
situation is highly inflationary
Continued from page 5
This
banks
long-term
should
sort
Midwest
Effective restrictions could
other
reserves.
It
also
the maintenance of
below
and
an
requirements
Government
(4)
requirements
to relate them more
of
be applied if
highly de¬
methods
They
means
based
are
banks, such
mieht
the needs of situations prior
Reserve.
increase
which
among
sell
Banks. Another situation of
serve
to
,
Morgan Stanley Croup
di¬
is a great encouragement to the
shifting of government securities,
as
they
approach
maturity, to
next
on
either
turn
rates
stantially
and would
be unduly penalized fluctuate.
Oct. 1.
The relative to other banks if sub¬
Following are the principal ob¬
remainder of the funds required jected
to
disproportionate in¬ jections advanced
against require¬
will be provided out of the Treas¬ creases
in
requirements. vAlto- ments of this nature:
ury of the Government.
gether the remaining authority to
(1) In view of the large hold¬
The refunding of half of the increase
requirements
woula
issue and the payment of the re¬ amount to about $2.4-billion of re-i ings of Government securities by
oanks, very
high
requirements
mainder will result in a reduction serves. This small
authority could
be
needed
to
exert
an
of $2,625,000
in annual interest be used with some degree of ef¬ would
effective degree of restraint.
fectiveness
charges payable in U. S. dollars.
under
circumstances
Canada has enjoyed a budgetary when
(2) Because of wide variations
short-term
interest
rates
demption
war
rela¬
was
nonbank in¬
or to
in
to
that
short-term
meet
the
demand
have
last
it
securities
needed
showed
situation.,
It
oe as would also be necessary for the
deposits. Federal Reserve System to follow
These banks have not shown the a flexible
open market and dis¬
same increase in resources in re¬
count policy which would permit
as
the
securities to banks, as long as the
Federal
Reserve bought
enough
Chicago, the increase could
much
of
who
vestors
securities which it issues to mini¬
mum
the
po¬
borrowings, the
inflationary. Over
that
rectly to banks
eligible
can be increased by only
and against time deposits by
methods
to sell any amount of
easy
government
effective, the Treasury
have
such
is still
demonstrated
not pre¬
the
funds from the
special
nonbank investors.
unused
York, and
of
Experience
would
of
if
from banking sources, but
borrowing has been partly
counterbalanced
by Federal Re¬
serve sales of long-term bonds to
of credit.
expansion
needed
Even
this
time make it pos¬
the availability
measures
inflationary
funds
restrict
of other types
borrow
tential
relatively low rates
posits
new
in that
are
the
be
at
to
2%
And
the mannikins
could
existing
quirements
window dressing, Tyson & Co. solved it by virtually turning over
'all the paraphernalia in iheir offices to The Blum Store. So, when
you walk along Chestnut Street near Juniper this week, don't
be surprised if you see The Blum Store mannikins against a
by the way, those smart suits on
Fall shade—"broker's grey."
and
securities
and at the
sible
pay-as-you-go
most
the past few months, the govern¬
ment has secured most of its new
authority supply as a result of Government
for the Board to increase require¬
financing through the banks, but
ments
under the present law is would be
designed to reduce its
limited. For banks other than cen¬ multiple
effects, particularly in
tral reserve city banks, which are the
post emergency period. For
The
When
forms
The
made
a
banks.
limitations could take vari¬
through
supervisors.
grey." For the uninitiated "broker's
Blum Store is introducing to.,
similar lim¬
some
financial
the
carry
The
of financing the govern¬
military deficit would be
method
for
object of such measures to
retention of a stable" de¬
assure
mili¬
out
employed to keep down
secondary credit expansion
giving mand for short-term Government
non-member
on
istered
What they have in com¬
The
season
-without
on
the
requirements
are
immobilizing por¬
the bank's holdings. ; It
of
tne
to
through
banks.
difficulty
market, proposals have
made
been
made
taxation.
System which, in general, are al¬ of
restraining
such
liquidation
ready subject to higher require¬ without upsetting the Government
In
monetary
burden
Require¬
ments—In view of the
of the
irreducible
tary program, every effort should
upon individual
large hold¬
banks.
Under, present
law, the ings of Government securities by
authority to increase reserve re¬ banks,
which
can
readily
be
quirements applies only to mem¬ liquidated to meet other types of
ber
In
be
Supplementary
con¬
finance
to
wartime economy.
the case of an all
a
>"
cluded.
(5)
that
on
the volume of
the
to
needed
increased
but
yet
sources
funds
private invest¬
new
held
be
minimum
the
Council,
not
are
with
Government securities held by the
banks. Any borrowing trom banks
on
the
studies
nonbank
absorb
ment and to reduce
the Economic
on
to
otherwise be spent
sumption and
presented to the
was
Joint Committee
order
would
sev¬
a
taxation
to
borrowing from
in
been
System for
Reserve
years
as
bringing
have
cnanges
as
be
inflationary borrow¬
ing
from' the' banking
system.
Vigorous fiscal action should be
supplemented
by * Government
extent
count
program
.
tnrough
resort
no
classifi¬
some
consideration
Federal
and
also to permit
holdings and to
inierbank
obvious
an
airect effect
and
of
types
eliminate
the
and should
can
•*
*
suggested,
military
scheduled
now
*
Banks
As
curities to part with some of them
and
still
meet
their
liquidity
keep
to
rising.
Government Borrowing From
; ;
Fiscal and Credit Policies
needed
from
rates
or
technical—rhut^ to
^.by^the PSYCHOLOGY.
an
are
current movements
political, military, economic,
even
(sitate the
#•,
-greater extent than usual,
OF THE CROWD.
.
He holds the eonvic-u
.^ tion that the monetary,
•
of his
political, and value elements truly neeesdevotion of. a major portion of one's capital to
equity
Ia.fltb; yW if* lien of
a
IB-minute outlook!
:
the
firm
at
the
time
yWith Wwfetell & Reed f:
BEVERLY HILLS, Calif.—Donald.B.
«
in
death.
Dreager has been added to
the staff of Waddell & Reed,
8843, Wilshire Boulevard.
Inc.,
.,
-
.
Volume 172
Number 4938
.
.
The Commercial and Financial Chronicle
.
(817)
served
Firs!
Security Bank
Loan
the
Advances Five
real
Salt
Lakers
week
to
First
Security
Bank
of
Estate
Utah,
the
National
Board and
Salesman's
Associa¬
Board.
tion,
accord¬
ing to an an-
of two
sons
makes
his
o
n
u
c
n
.ment
e
He is
tant
President.
A.
J.
home
head
V.
West
fenson, Vice-President, was given
general supervisory authority over
all mortgage
.40
banking
loan activities of the
offices of the First
Security Corporation System in
Utah, Idaho and Wyoming and
elected
also
was
directors
the
to
the
and
of
board
advisory board
First
the
Security Bank of
Utah, N. A. "
'
At the Exchange Place Branch,
of
.
S.
Nielson
R.
Vice-
elected
was
President and
placed in charge of
mortgage loan
department;
the
R.
Willie
G.
advanced
was
1941
ing
department.
West, who has been affili¬
First
Security
its
and
predecessor banks for more than
25
joined
first
years,
Central
Trust
Company as a salesman in
the
bond
department
in
1925.
After this organization was
merged with Bankers Trust Com¬
to. form the First Security
Company, he was elected
Assistant Treasurer,
becom¬
ing Treasurer in 1937.
In 1948,
pany
Trust
he
elected
was
President of
Assistant
the
of .Utah
in
and
Assistant
Vice-
Exchange Place
Branch of the First
Security Bank
1949
made
was
Vice-President
the
of
head office of the banking organi¬
zation.
•;»
V.
in
West received; his
University
as
member
a
and
of
ried, the father
Exchange for the
married
is
two
past
and
years.
father
of
Dr. James S, and John
N.
West; both of Los Angeles.
Mrs. West, active in civic affairs
for
sons,
number of years, is a former
President
of
the
Parent-
a
State
Teachers'
served
Association
on
and
has
national and
numerous
,
Mr.
Steffenson
Trust
named Assistant
was
of the
First
in
pany
joined
Placed
Trunkline
on
in
Secretary
advanced
,1942
consolidation
in
1946.
-
with
to
Sec¬
became
and
Vice-President
the
After
First
Se¬
curity Bank of Utah, N. A., in
1948, he became Vice-President of
Exchange
charge
Place
in
Branch
of
the mortgage loan de¬
partment.
He received his school¬
ing at the-University of Utah and
has served two terms
of
the
Utah
Association.
as
President
Mortgage
Bankers'
At
present
he
is
a
member of the committee on real
estate mortgages of the American
Bankers
ber of
Association
the
-Club,
Athletic
a
1970.
The
vately to
bonds
were
sold
pri¬
group of life insurance
a
companies. Carl M. Loeb, Rhoades
& Co., negotiated the
sale.
Trunkline
Gas
Co., formerly
as Trunkline
Gas Supply
Co., is building and will operate
a
pipe line approximately 1,300
miles in length from Trunkline's
gas supply in Texas and Louis¬
known
iana to
will
join
with
the
sole customer at present. The line
expected
to
be
completed
in
October, 1951.
addition
bond
$14 000,000 of $5
stock.
mon
par
value
Panhandle
purchased 60%
sue.
Club
He
of
each
stock
is¬
issues
has
vately.
been
No
subscribed
pri¬
public
financing
presently contemplated.
is
and
Sigma
Alpha
and resides at 1107 East South
Eastern Stainless
Steel
Offering
having
of
the
York
New
Stock
Exchange,
New
York
Curb
•
Ex¬
Banks
because
it
for the intermediate and
to be
tendency
a
is
possible to
get
more
ChI leased
This has created
to go
are
higher,
as
was
the
veloped,
de¬
a
of
last
be
as some money
tion
larged
to
curtail
the credit
probably before the
base, which would be
Federal's purchase of the called
by
issues,
the
or
of
markets
has
resulted
in
are
that
condition
being offered by the Treasury in the refunding. In time
will be resolved, but probably not without some
adverse effect upon the principal operators in the
money markets.
The
ineligible
issues had
the lower reaches of
from
up
been
in
demand
and
recently established range.
Federal, according to reports, has been supplying these bonds, and
seems to have stemmed the
price-rise for the time being.
The
Vies
nonetheless
are
there
is not
not
without
enthusiasm
much
as
sizable
a
desire
or
following
to
although
and buy
step up
recently.
Switching has been a factor in
the market action and volume in the taps with the 1952
eligibles
getting a not important play. The 1959/62s seem to be the favor¬
the
was
as
that
case
national
Securities
:
ana Gas & Water.
Co., Inc., "first
mortgage 2%% bonds, series A,
due Sept. 1, 1980 at 100%% and
issue
ding
•
interest.
was won
on
Net
Award of the?
competitive bid4
at
Aug. 29.
proceeds
\
the- sale,
gether with other funds on
of
to¬
deposij
with the trustee, will be applied to
the extent required to the refund*
ing of all of the company's out¬
standing first mortgage bonds. \
<
/
*
♦
.
-
With Burton, Cluett
moved
the
a 7
the
Halsey, Stuart & Co. Inc. and
associates, yesterday (Aug; 30);
publicly offered $9,500,000 Indi¬
some
are
this
is
of
Offers Ind. G. &W. Bds,
new
refunding issue attractive. Other certifi¬
likewise yielding more in the open market than the ones
plan several
Halsey Stuart Group
unusual
cates
a
the
dealers from coast
as
Latshaw
accrued
the- money
since
_
in a general stock
brokerage and
commodity business in the Kansas
City area.
en¬
situations, particularly ip the near-term end of the list.
Federal is supporting the 1V4 % operation of the
Treasury, by pur¬
chasing the called 2s and 2Vfes to, keep the yield at 1.25%.
Yet
Treasury bills, a three-months' obligation, are available at a yield
noted
market
Association and the firm
Uhlmann & Latshaw is engaged
Money Market Dilemma
dilemma
local
Traders
securities.
The
Dealers.-* De¬
have
Vice-President
passing effect upon the money markets. It is inflationary in more
ways than one,' and has some of the earmarks of the "Goldenweiser Plan," especially if reserve requirements should have to be
order
to
,
John
~
Banks may end up with most of the new issue.
This is
favorable development and will no doubt have more than a
in
offering
to coast recognize the advantages
it offers them.
Central
raised
Securities
members
months ago
So far in the refunding
operation, Federal has been the prin¬
cipal buyer of the issues which holders want to get rid of, and the
a
said, with
commissions
announcement of this
refunding operation is completed.
If the Treasury is to continue
the policy of financing at low interest
cost, there must be help
from the Central Banks.
There cannot be divergent policies in
the money markets,
particularly at a time like this.
not
of
broader
.
the not distant future,
preferential
troit
the
President Truman in
Latshaw
members of the National Associa¬
market
followers believe, yields of the middle maturities of the
eligibles
could be vulnerable at present levels.
While the longest bank
obligations would also be affected by such a development, the
scarcity factor might have a favorable influence upon the return
of this security.
;
will
Mr.
the recent announcement
seems
case
r
interest in the Detroit market de¬
favorable
longer eligibles although there
not to reach for issues
now
If short-term rates
week.
Ex-
of the
yields through self-refunding operations.
mand
and
Midwest'
Primary Market Force
Money Markets" continues in full force,
buying and selling large amounts of government
Issues that are being refunded are being pushed into
Central
The
offering to stockholders of
Eastern
Stainless Steel Corp. of
100,000 additional shares of stock
($5 par value) at $12 per share
of the Steel company, and Thomas
C.
Kehlenbach,
and
General
Vice-President
Manager
of
J.
Arthur Warner &
Co., Inc., under¬
offering. The suc¬
cessful completion of the offering
writer
of
marked
ties
the
the
firm
entry
into
of the
the
securi¬
underwriting
field.
scribe
for
basis of
the
one
new
stock
share for
on
each
the
three
shares held.
The
net
proceeds
still large,
>
bers
of
the New York Stock Exj
change,
Frank
have
Reed
announced
Hanson
has
-
that
become
associated with the firm.
"Canada
have
backed
been
away
well
u. s.
bought, but
after
the
initial
TREASURY
★
Demand for this obligation is
★
★
the smaller banks.
among
Today"
The Municipal Bond
It
A booklet worth
;
reading
'
NOTES
is the touchstone of safe
BONDS
investment because
The Bank of
Montreal, head of¬ It is a prior lien on the Homes
fice Montreal, has issued a revised'
of America.
version of its very comprehensive
It builds schools that we may know
hand-book entitled "Canada To¬
our past and plan the future
day."
It builds roads that we may know
This 100-page illustrated refer¬
our neighbors near and far
ence
booklet presents a descrip-,
tive and entertaining account of: It builds hospitals that we might
; enjoy better
living
(I) The Country; (II) The People,
and
(III)
northern
the Resources, of our It builds harbors that ships might
sail
neighbor.
A map and
other features
are
Messrs. C. T.
F.
York
W.
included.
Agents
It is the financial worth of
your
Aulph, A. S. Nichol
Hunter
of
the
New
Bank's
the
A
It
It
-
will
be
copy
mailed
The "Chronicle"
Mr.
W.
on
E. Howard.
of this book¬
to readers of
application to
Aubrey G. Lanston
*
8c Co.
community
New
are
York branch at 64 Wall Street.
let
maturing in 1951 and 1952.
1956/59s
also
BILLS
retirement of current
prepayment of term loans
the
CERTIFICATES
complimentary
loans
have
especially
nancing, estimated at around $1,will be utilized for the
bank
and
by self-refunding operations.
way
and
from the fi¬
1956/58s
securities
^
INCORPORATED
signifies progress
means a
better tomorrow by
providing these things today.
HOWARD K. SMITH,
Starrett-Smith Company,
67 Wall Street, New York City
J
Cluett
&
Dana,
120
Broadway, New York City, mem-:
looking for the near-term elgibility in the
are
.
Burton,
strength, because of the uncertain trend of short-term rates. The
bank 2V2S of 1967/72—the only issue which
yields more than 2%—
have been quoted down following the early rise caused in no small
has
been
substantially oversub¬
scribed, according to an announce¬
ment made on Aug. 28 by John M.
Curley, Chairman and President
and the
1920,
the
these
Oversubscribed
The
with First Security and its prede¬
since
also
members
Stock
"Battle
ites of those
030,000,
banks
firm.
are
restricted issues..
Temple.
.Mr. Nielson has been affiliated
cessor
They
Federal
bonds
The
subscription offer, which
expired Aug. 25, gave stockholders
of record Aug. 10 the right to sub¬
the
belongs to
the
Ambassador
The
with
com¬
Eastern
The remaining 40% of both
,
member
change
Federal
1
n
Latshaw,
City,
Mo.,
as
a
the
that does not make the
*
In
after
a n
as.a
'
&
it is believed in
until
m
'
Kansas
transmission
system of Panhandle Eastern Pipe
Line
Co., which is Trunkline's
is
U h 1
likely
what is going to happen in the current
securities.
see
Latshaw
Exchange and the
registration of
over.
Tuscola, Illinois, where it
mem¬
Epsilon, national social fraternity.
He is married, the father of one
son
announces,
Society of Residential
Appraisers.
Alta
and
Privately
Co.
28, that it has sold an
issue of $61,000 000 first
mortgage
pipe line 3V4% bonds, due July
1,
1927.
Security Trust Com¬
1937,
in
retary
the
Gas
are
will most
•
What
Aug.
old
the
Company
prices
John
member of the
mone¬
outcome of the controversy between the
monetary authorities, over the level of interest rates, is anyone's
guess at this time.
This problem may have to be decided by
Trunkline Gas Bonds
Association.
Central
He
and
,
Cross, P. T. A. and Visiting
Nurses'
daughter,
lives at 540 East 1st South.
and
local committees of the American
Red
one
mar¬
ferred stock of $100 par value, and
15
the
of
in
the
at
He is
of
board
of the Salt Lake Stock
governors
He
has
the
schooling
procedures
served
training
accounting and- finance at New
York
special
mortgage loan
University of Illinois.
to the $61,000,000
financing
presently
an¬
nounced, Trunkline Gas has sold
$6,500,000 of $5 convertible pre¬
..
.
Mr,
-
to
Petterborg was named Assis¬
tant Manager in the mortgage loan
with
the mortgage account¬
department.
In
1947,
he
received
zil
Mr.
in
admission of
the
over
the
There is considerable activity in this section,
with holders of the called 2s and 2V2S
selling these issues to Fed¬
eral and using the proceeds
mainly for higher yielding obliga¬
tions;
*'•1 *!
obligations.
Petterborg was employed
by First Security Trust Company
sevens
among
worked
on more
mar¬
Mr.
Assistant Vice-President and Den-
ated
refunding is
loan
nue.
in
Until these differences
uncertain
Exchange
DETROIT, Mich.—The Detroit
Stock
Exchange announces. the
of agreement
The short-term market is all out of
gear, and
some, quarters that it will
not be back in line
Later,
ried, the father of two sons, and
resides at 1404 Westminster Ave¬
Stef-
R.
be
be inclined to wait and
student
a
Company in the mortgage
department in 1937.
He is
office,
r
in 1929 while
University of Utah.
will
dispute, before taking
completing his schooling and
passing the State bar examination,
he joined the First
Security Trust
depart-
■ment,
East
the
Of Detroit
out, condi¬
reflect the
nervousness that seems to be in the
market.
After a rather sharp
rise in quotations, the longest maturities of
Treasury issues have
given up most, of their gains on lighter volume. Buyers seem to
tions
after
Presi¬
invest-
ment
,
at the
in charge
the
of
1107
began his
banking firm as
for the National Cop¬
with
per Bank
West
-
at
Vice-President,
career
elected
<yice
dent
tary authorities.
married, the father
daughters and
and two
messenger
:
Treasury refunding and the lack
the
of
Mr. Willie, who becomes Assis¬
made
.was
The government market is still at sixes and
President of*
as
Division
Governments
on
By JOHN T. CHIPPENDALE, JR.
South Temple.
-
by George S.
Eccles,
Bank
:
Reporter
Place
He attended the
President of the Salt Lake Real
as
the
in
Vice-Presi¬
Exchange
1948.
Our
University of Utah and has served*
this
advanced
high* positions
John Lalshaw Member
Manager- of
departments.
He
Assistant
the
of
Chief
.as*
and
estate
Branch in
CITY, Utah—Five
were
various times
made
was
dent
SALT LAKE
at
Appraiser
17
15
Btopd Street
45 Milk Street
NE#Y0RK5
BOSTON 9
Whitehall 3-1200
HAncock 6-6463
,
18
(818)
The Commercial and, Financial Chronicle
Continued
.
Thursday, August 31, 1950
..
ficult
task
of
preventing
prob¬
a
gard to the persistent flow of for¬
eign funds into Canada,
the other hand could be described
it is true that
proportion
a
the
oi
as
embarrassment of riches and
an
(g) The Russian colossus is an
economic and psychological mon¬
strosity that may die of its own
crudeness, so to speak;
(h) That
moral record in in¬
our
ternational
affairs
is
beyond
re¬
proach, although we have followed
Europe's amorality in sacrificing
capital influx represents specula¬ it will be surprising if the con¬
activity based on expectation servative and capable managers other nations on the altar of ap¬
of a higher valuation of the Cana¬ of the Canadian economy can not
peasement.
dian dollar it is insignificant in find the appropriate solution.
The
reaction
of the righteous
relation to the imposing total of
Without question a 10% upward to the
disappointment which is
more permanent investment in the
adjustment of the Canadian dollar Kprea ttiok here the form of jitters
tive
Dominion's
industries and
This
stration of
nomic
in
natural
practical
faith
resources.
future
is
demon¬
Canada's
eco¬
confined
not
to
would
the in¬
about
speculative hot money but
not discourage the move¬
while
serve
flow of
would
of
ment
as
brake
a
on
investment
external
in
foreign
believers
for
in
recent Canadian industry and natural re¬
Canadians themselves have sources. Revaluation of the cur¬
participated to a sharply rising ex¬ rency would also provide a simple
years
tent
in
the
Dominion's
economic
Russian
a
thrust,
fairly
remained
Europe
calm.
near-term
This is characteristic of the
immature tendency to swing from
extreme to
one
another: from the
1939
1948
1949
Dominion's
The
been
has
obliged to issue cer¬
During the current year and the tificates of deposit for an addition¬
past few months in particular the al $200 million, presumably to fi¬
increase
has
been
have
even
markable
success
Canadian
living
stable basis.
the
only
to
.
•
a
on
It would appear that
the
current
raising of the
,
"
•
could
try at this time leaves little
•„/ if
■
$
to
of
to
this
the
kind
would
the
"natural"
vided.
They
There
is
little
doubt
therefore
that the
now
question of revaluation is
principal preoccupation of
a
authorities
in
Ottawa
espe¬
the
run
of
general .policy
headache to
are
>
counter
a
nored
cially in view of the forthcoming
imposition of restrictions on the International
:Monetary
Fund
entry of foreign capital-but dras¬ meeting in Paris.
Whether the
tic action
become
doubt, whereas four years ago
opinion on this, subject was di¬
the
,
V AS
made-
be
ex¬
room
for
immediately
brake
change rate.
A
re¬
maintaining
measure
available
'Resort
in
standards
movement is the
A
achieved
will
matter
the
be
left
international
encouragement of foreign partici¬
pation in Canadian economic de¬
In
velopment.
return
for
study
authorities
are
be fit
and
fact
the
that
for
sufficiently civilized to
for mechanized
modern
enough
so
Asiatics
Bolshevism.
to
slave
labor
warfare,
but
not
the A-B-C
The
Soviets
by
a moot point.
the probability of the
agents
out
ate
any
case
the
of
Canadian
dollar
to
opinion.
During the week the attention
in the external section of the bond
market
CANADIAN BONDS
was
centered
on
the
new
direct
their
native
remote controls,
ever
themselves
with
the
peasants
million
internals
Provincial
continued
with
demand
1954/57 still
Municipal
either pure anarchy or some
of inefficient arbitrariness.
Orientals,
and
form
Like
Occi¬
many
dentals, they respect nothing like
War
Power.
is
a
way
of
persistent
Dominion
3s
of
the most popular
is¬
bond callable in less than
CANADIAN STOCKS
'
ed at 10%%-10%>
A. E. Ames & Co.
New York 5, N.Y.
.—-4
.
iv
Fifty Congreee
which
ny 1-1045'
Nrtfi
Stocks after
expected
the
turn
India:
over
the
600
million
Satel¬
es¬
in
momentarily.
the
market
and know-how.
mean
that
capable
of
production
This
is
the
'!
•
Above
sort—"sticks"
into
mechanized
labor
a
much
of
(How
on
its
comings,
bureaucratic
serious
much
duce if
nationalistic up¬
reckless promises.
all, Bolshevism enforces
discipline which offsets
these
could we
are.
as
more
had
we
short¬
no
strikes
pro¬
labor
or
conflicts?)
the
to
have
know-how, not only
Russians
the
Central
own
brains
Europe's
their
at
and
their
disposal, but also ours. Economic
espionage is a prime purpose of
world-wide
Trojan
horse
practice1. Their footholds in Aus¬
tria, Germany and Finland serve
the same purpose (among others).
their
The
East-West
trade
of
and
Hong Kong, which
use
even
unethical
pur¬
drawing upon our
Actually, the
permits
store of
technology.
Satellites
kets
Allies
to divert ECA materials,
poses as
also
such
for
Europe
our
of
are
conquering the
Middle
the
mar¬
shows
their
bility.
The blockade of the Soviet
Empire
is
commercial
adapta¬
under
getting
slowly
way—at last.
Inferior as the Eastern economic
potential
the
be to the Western,
may
comparison
between
them
is
misleading from the outset. The
is primarily consumption-
of
war
exhaustion
and
dissatisfied population.
Anyhow,
them to do
challenge
on
they
an
talistic
impel
so (unless we
squarely
them). They can rely
eventual crisis of the capi¬
and semi-socialistic econ¬
omies,
which
would
to
they have other,
And
Bolshevist
another
of
our
smug
the
infiltra¬
even
stronger
aces
in
their
hands.
Stalin is in the process of
realizing
the Grand Strategy of Lenin: the
coalition of proletarian revolution
in
(Central) Europe with colonial
revolution
in
Asia.
time, he tightens
stretches
from
organizes
its
and
tension
mine
the
to
Canton,
division
the
West
promises
economy
mean¬
Empire that
Berlin
keeps
that
its
In
an
internal
to
a
under¬
well
as
of
in
as
its
morale.
Containing Russia
"Containing"
ticed
Russia, as prac¬
far, might turn under
thus
the circumstances into
of
disastrous
a
the
Soviet
heavier
would
At
to
illusion
an
kind.
Policing
perimeter may
in
the
long
run
weigh
than it
slug it out with Russia.
rate, this totally unstable
any
situation is the greatest
challenge
this country has ever had to face.
Several
answers
are
being
of¬
fered.
Sword
one
rattling
should
of them. It is
propose,
as
dividuals
threaten
(All
with
wars
not
prominent
that
in¬
should
we
preventive
a
are
be
irresponsible to
some
have,
war.
"preventive";
as
Hugo Grotius put it 300 years ago:
"every war is waged for peace.")
Nothing suits the Politburo better
preparing to attack. That
strongest weapon in its
such
loose
greatly simplifies the problems of
economic planning by eliminating
reducing the
ganda
of
annuls
much
mitting
the
talk.
arsenal,
number
human
of
products,
and
per¬
ruthless exploitation
and
physical
resources.
And "guns" are what matter in
this contest. Surely, we could out¬
Russians
the
do
line,
if they allegedly spend
annual
along
that
billion
180
rubles
(nominally $40 billion) on armed
we
are
willing to go
forces—if
with
less
take
which
"butter."
the chin
on
duction
is
But
can
we
a
permanent
re¬
living
of
standards
—
what
is
stake
at
the
of
That
is
ex¬
is
the
propa¬
which
one
efforts
our
win public opinion in
Asia to our side.
to
Europe and
Moreover,
bluffing
in
inter¬
a
risky enter¬
prise, especially so in a sad state
national
affairs is
of unpreparedness such as ours.
The bluff may be called—what
then?
Backing down may cost
mor ethan
just losing face. On the
other hand, we are not
ready
war.
We would have to
for
fight a
long
(despite
one
or
which
Otherwise, we
will in due course either lag be¬
hind Russian military prepared¬
atom
bombs),
and
without
major
their
—
"freezing"?
ness;
or
else, the attempt to
pro¬
vide both "guns and butter" could
bring
about
stresses in
fatal
strains
and
system. Our social
our
and political set-up may not stand
the strains either of a severe in¬
flation
or
of
protracted,
controls to check
ners
flict?
The
pays,
in
aggression.
for, the French
have shown in 1940.
Arming the Allies?
As
con¬
open
have
a
matter
of
fact,- short
by Russia,-
aggression
no
totally misleading. Hitler and the
tual
Kaiser
allies to count
armed
to
unleash world
been
for
their
have
dared
had
it not
wars
'■»'«
incisive
head-on
would
leftist
army is
worth that does not believe in the
cause it is
fighting
German precedents are
never
Their
alone would take care of
that by sabotage and even active
resistance. And what an
groups
inflation.
premature
a
never
allies, who would most
certainly refuse to become part¬
Why, then, should the Kremlin
risk
that
expectation
war.
Western
physically
chologically. Its
ture
is
for ^ac¬
on
as
well
as
economic
cramped
by
exorbitant
tion,
latent
it
It
did
should
not
scarcely leave its
without
be
expect
air
sup¬
apparent
that
us
to
engage
actively in South Korea. Not only
did
evacuate that country and
we
neglect
its defense, but General
Marshall has announced that it is
neither defensible
nor
worth .de¬
fending
Mr.
urged
1946 to
the
(just
as
Congress in
"agrarian"
—
Achesoh
equip
communist
price-wage
or
rigidities,
psy¬
struc¬
welfarism,
bureaucratism,
nothing of America, and that a
quick knock-out was a practical
certainty. No such assumptions
can
be made at present. If war
against the U. S. were planned,
open
taxa¬
inflations,
?
cartelized
commercial warfares. It would
the financial doldrums
in
notwithstanding
were
it
flation
not
and
for
of
we
Europe is dis¬
Britain would stay neutral, to say
port.
hase^metals Had illusions:, that
soften
resistance
tion.
than
Russians
developing high-class
a modern scale.
to
in¬
nor
actly what its ideological machine
grinds relentlessly: that we are
would
on
have
not
domestic
circumstances
orientated; the former strives for
guns rather than for butter, which
satellite
in¬
do
Neither
ternational
latter
Korean
are
against
advantage of surprising a
relatively unprepared opponent is
virtually
lost
already.
Besides,
they would be hampered by the
disloyalty of a vast, subjugated
which
East,
Czecho¬
as
The
labor
Moscow
,
.
a
pro¬
production;
but
also
"carrots":
promotions, consumer goods, and
social standing to the technically
efficient.
It
provides a further
incentive, especially for the youth,
though
an
irrational
one:
a
But that does not
they
are
semilazy and inept;. that
also met with steady investor sup¬ barbarians,
lacking the incentive of the profit
port and1 the golds, after their long
.roptive and having no free "price
period
of,/"stagnation,' Had 'also mechanism," their system does not
shown, signs, of gyeatpr animatibrL even possess objective standards
Western oils, and.
fourrtBe.'
fTnT.
is
Before
Str'e^jf 80
f
As the
pressure.
learned
in
new
possibly as a result of the rail¬
road
strike,
the
settlement
of
Two Wall Street
j
have
Western
hold
and
,
unbear¬
population
British
trend in New York
incorporated
,
their
lites.- Time, too, is of the essence
highs : in< earlier
for industrialization.
Of course,
sessions
led
by the industrials,
we should be able to maintain the
subsequently reacted in sympathy
initial
advantage in
equipment
with the lower
tablishing
worth 4-2400,
able
alleviate
four years,
*
V
in
to
serves
technique reduces mor¬
tality while nativity does not de¬
with a yield in Canada
cline, which makes for an un¬
of nearly 2J/2% compared with the
precedented rise in numbers and
customary 1%%-on a three-year
for more misery.
note this special attention is hardly
surprising. Free funds were also
The Long-Run Contest
in steady demand at a slight pre¬
Furthermore, the Soviets must
mium above the official rate. The
bide their time. For one thing, it
corporate-arbitrage market on the
takes
time
to
consolidate
their
other hand was quiet and neglect¬
sue; as a
Corporation
I
the
slaves
too—even
2%%
Dominion
of
life to them, in which they have
refunding issue which was
tremendous experience and Which
immediately oversubscribed. The
$50
fit
does
system
vide incentives of
which
an
Canada
Government
Russian
manage to
naked
of our
ignoring the
potential of
part
a
attack.
The
that
industrially superior coalition.
an
the enemy.
whose
all
intervention,
demand fluctuations,
absorb
of democracy.
with¬
appearing as invaders or
exploiters. The native Bolshevists,
by
in turn, take good care to ingrati¬
on
matters is
currency
a
Russia, ig¬
territory they invade, and
canalize the nationalistic
or confidence in Canada which has
its original parity with the U. S. xenophobias (founded on colonial
been
laboriously built up since dollar has been anticipated for history) against the West. To the
1939 would be seriously impaired some time in the world's
leading Chinese, in particular, an author¬
itarian system is the obvious way
and
the
Canadian
authorities financial
centers;
this
matter
of
"civilized" life;
would be faced with the more dif- therefore should not
in all their
give rise to
anything
else
meant
lengthy debate or confliction of history,
Strong foreign invest¬
accepted
international outlook,
tremendous economic
As
is the enthusiasm with
change reserves mount at an in¬ discoveries of Alberta oil, Quebec
creasing tempo foreign specula¬ titanium, Gaspe copper, and the which the ignorant Asiatic masses,
once
in Communist
tive anticipation of an upward re¬ realization of the
hands, em¬
potential wealth
brace Bolshevism. They are ready
valuation of the Canadian dollar of the Labrador iron
deposits have
is further stimulated. The steady fired the imagination of foreign to die for it. The Washington ex¬
rise in the level of prices is al¬ holders of venture capital. Like¬ perts
(Lattimore!) who favored
ready the cause of serious con¬ wise in comparison with 1946 the abandoning China, contending that
cern to the Dominion
authorities question of inflation in this coun¬ her "agrarian
reformers" would
hitherto
All that drivel has be¬
come
lift founded
thinkers
who
petition!)
an
wonder
As aggressors, the Soviets would
produc¬
farm prices,
our own
to
What they are in the process of
carrying out is to mobilize aginst
us
the teeming millions of Asia.
We may never
have to fight a
single Russian, but may "bleed
white" in fighting Koreans, Chi¬
its
gauge
quasi-religious,
paradise of assured peace
the near-hysterical expectation
nese, Annamites, Burmese, Phil¬
After
nance
the influx of U. S. dollars ippine, Hukbalahaps, etc.
more accentuated.
Indeed the re¬ during August. If such is the case sovietizing Tibet, which is under
cent heavy influx of U. S. funds the
exchange reserves will now way, they might ignite something
in India, too, where the fire of
has presented the Bank of Canada mve reached a level
surpassing
with an embarrassing problem of the record total that was reached civil war is simmering.
That is
financing the heavy volume of for¬ orior
to
the
1946
devaluation. what our "commitments" imply.
One big surprise to our wishful
eign funds. Moreover as the ex¬ Since 1946 also the spectacular
of
rate
(As if
ex¬
and since then the Bank of Cana¬
da
to
interest rates and wages were de¬
termined in undiluted free com¬
Mobilizing Asia
change reserves at the end of last
July had already reached a total
of
approximately $1,400 million,
4,990
5,590
5,890
Small
expected to fall with¬
was
our
slovakia and China did.
Liqndation
which
tivity.
of
means
direction.
$4,150
1945
by
fools'
checking the inflationary of an impending world war; from
development.
forces that are now stimulated by an
unwarranted
sense
of global
the present undervaluation of the
Foreign investment in Canada
supremacy to a shocking inferi¬
has now reached a record level of currency unit.
ority complex. In reality, the im¬
approximately $8 billion. Of this
Whereas in 1946 the taking of mediate objectives of the Soviets
total the U. S. interest comprises this
step appeared to involve cer¬ are more limited and more in¬
nearly $6 billion and since 1939 tain risks, the recent developments sidious.
has increased sharply as follows:
now
almost dictate action in this
Millions
*
face
able movement in the opposite di¬
rection.
The current problem on
Although
*
Fools' Paradise in
WILLIAM J. McKAY
A
survey
of
recent
statistics
leaves little wonderrrent wit.i re¬
-
out
Canadian Securities
By
page
Chinese).
Korea
jrom first
be
again,
Marshall
aid,
our
domestic
shortages
(of
in¬
which
it makes the
most).
The Atlantic Pact nations claim
to be incapable of
major military
preparations
us..
in
unless
financed
by
-Characteristically, their help
Kprea is of the token type, and
their rearmament
effort? are little
more
than symbolic.
Supposedly,
even
in, peacetime, they
,
capable, of standing
on
are
their
not
own
Number 4938
Volume 172
billion
feet. Indeed, the $35
.
.
opera¬
nomic
Council
Social
and
and
bility
restore
to
Eisenhower
officially calls now,
"a splendid start
.
but only a
start." What is more disappoint¬
ing: it did not add anything to
Europe's military preparedness or
to its will to be prepared. In the
.
.
multi-billion
not go to
vertical
the sinking of ships set
Smith researchers and
at
—
financed—need
and
the limit of bankrupting
of rubber,: etc.
The
is obvious: we must
humoring
the>, world
by
the
to work
result
could
we
misconception
of
Europe
cure
that
are
we
defense—which
the
is
true
our
ment"
A.
In
range
large
have
be
taken
over,
or
shoulder
to
of
most
should
then
still
offer
to
What, then,
the
fact
estimated
the
needs
manpower
as
Russian
it." No
tive
that
at
suggests that seriously.
proved as yet that
not
be
to
lesson
a
for wartime production — which the Soviets. Surely, they will con¬
proportionately are much larger tinue to stir
up trouble, but the
in the East—give
the following British
Empire grew rich for a
picture:
century
with
colonial troubles
Mobilizable
virtually every
Manpower
Actual
for the
Forces
(without
West
Germanyi-
Forces
24,000.000
The
of
in¬
Japan. As to Ger¬
or
her West has three times the
population and at least five times
Corporation that "Nothing is good
enough today if a better way can
be found tomorrow" is exempli¬
ation
founded
that
willing to give
Europe
is
"opulence"
in favor of defense. By and large,
up
it is determined to let Uncle Sam
the burden of both. He, in
pretends to be able to do
abroad
so
well
as
Rearming
The
as
at home.
a
likely
to
Europe
is
into
neutral
Europe.
own
turn
vast
The
ability
the
of
Illustrative
management
the
of
com¬
to find better ways of doing
things is the storyf of the develop¬
ment of the bicycle frame.
The
pany
case
that Russia would do
supply infantry alone; they make
military
pendent
would take
them
with
Russia?
which
in
an
has been amply docu¬
as it may: Allies
Be that
much, and perhaps
exchange, that
to offer4 so little in
they
risk
of little help against the
we
are
incurring, the
are
risk
basic
of
the
The
management.
millions
impoverishing
this
coun¬
frames.
frame
built for the early
mobiles
there
duction
of
top of
On
,
are
we
vs.
lenge
Bolshevism
all military
outlays,
supposed to meet the chal¬
of
Bolshevist
encirclement
by raising the living standards of
million people in Asia, with¬
out forgetting the dollar needs of
300 million Europeans, plus mil¬
lions
of
downtrodden
Africans
500
and
Latin
spending
ih "hand:,
Americans.
The
two
must go-, hand
spreadingprosperity
policies
abroad is useless unless protected
by arms; and arms are futile un-r
less, the natives' go„od will is bol¬
of .dollars. Such
last word ■ of globalist wis¬
stered by billions
is
the
dom, emanating from
.
the UN Eco¬
time
short
a
fabricated
the
tubu¬
and
pro¬
Ford Motor
000
"N."
This
marked
was
one
The
unheard
-an
these
the* advent
A.
designed
of
mile
Today the company is equipped V
make pipe ranging in diameter of
8% inches to 30 inches and even
$5.7
this,
to
showed
with
in
sales
working
million.
In
had
million
$152.4
share in 1940
at
with
increased
working
and
capital to $29.2 million.
per
of $29.9
capital
contrast
sales
1949
Earnings
$1.69 and
were
in 1949, $7.02.
Long-term debt as
of July 31,
1949, was $6,562,500
and there
1,00,0000 shares of
a
book value
were
stock with
common
of $47.70
share.
a
Current assets
of $41.8
million, including $7 mil¬
lion cash, as against current lia¬
bilities
of
million
$12.6
an
excellent
The
dividends
of
per
year
modest
room
year
favorable
and
leave
anticipations.
increases
current
with
disclose
position.
$1.60 per share
future
Substantial
the
current
are
for
and distribute all of the
new corporation's
output of pipe
and casing.1: A large part of the
steel
will
be furnished
by the
operate
in
sales for
probable
are
earnings
for
the
the
on
have
seemed
descriptive
There
of pressure vessels and
of fusing glass on
metal.
The, building
of these
vessels for the brewing industry
and
for hot water supply.
All
these
a r e
f
u
of
Christian
1 re¬
growth of the com¬
the
demand
for
itr
Today the Milwaukee
works produce automobile frames,
control
arms,
pipes and
other
tubular goods, railroad products,
country.,
A. Christian
with
has
associated
department of
become
trading
the
Janney & Co., 1529 Walnut Street.
For the past 15 years he has been
associated with the Philadelphia
office of E. H. Rollins & Sons
and
Blair, Rollins & Co.
Directors
A.; Lincoln, .President ol
pressure vessels, heat exchangers
the Metropolitan Life
Insurance
welding
electrodes
and
equip¬ Company; Arthur B. Lawrence,
ment. The Kankakee works de¬
Senior Partner of F. S. Smithers
votes
on
itself
to
automatic
water heaters and
a
new
•;
storag
<
&
product
Leroy
Co.,
Partner
and
of
Henry V. B. Smith,
J. Baker & Bro.,
H.
a
glass lined have been elected to the Board of
automatic silo for the
Directors
of
Commercial Solv¬
industry. Normally this ents
Corooration,
it
was
an¬
plant turns out approximately 1,- nounced by Major T. P. Walker,
000 water heaters a day and has
Chairman of the Board.
produced as high as 2,000 a day.
the
-and
"Harvestore,"
coated
farming
The
its
home water heater, has
been
New Office
:
popular item and many innova¬
Samuel
tions and improvements have re¬ ■i
sulted from constant-supervision Jices at
,
,
a
.
im¬
c
favorable locations throughout thr
imagination,
were-then
and
products brought about the deci¬
sion to erect or acquire plants in
and skill of applica¬
Electrodes
The
and
pany
Edgar
PHILADELPHIA, Pa.—Edgar A.
accomplishments
are
search.
tion, the know-how that goes into
force.
process
perseverance
am
the
many
building
long
phase of the operation of the
O.
Smith
Corporation, it is
are
progressiveness
the
the
frames
matter
Corporation
other examples
and
the
pioneering spirit of the company:
The designing and building of the
first arc welded "pressure cooker"
for the oil industry in 1925.
The
of
The third
overly
Smith
Janney & Co.
operating the two largest mills in
the world producing large diam¬
eter steel pipe.
O.
tractors.
O.
A.
With
Thus
is
Houston plant of Sheffield.
on
the research
-
rivets
sec¬
Among them thr
designed.
of steel were saved in every
specialized
A.
progressiveness,
of
and
quantity
special
and
stretching steel with
This process pro¬
duced pipe so much lighter tha'
in many cases more than 100 ton.'
•
manufacturing
were
Up
process
a
operations.
- »
Early in this work it
The company's growth in the
was found that cold /riveting pro¬
vided
-tighter
and
more
solid ; welding .field ;is-, little 'known.
-joints and this eliminated . rattling /Experience was gained in World
and squeaking in the frame., A. O. -. War. I when it was asked to weld
Smith turned its skill to the task Ismail aerial; bombs for our air
of
1920s
engi¬
water pressure.
trying to emphasize
the character of the company, the
production.,
>
came
in approximately 30
1940
year
financial
company's
million
set against
Special machines
problem.
were
make of
was
concentrated
this
because I
days
of
I
If
with
Cohpany ordered 10,-
for
frames
'
posi¬
tion is good.
The company has
never done outside financing and
the growth
during the past 10
years has been outstanding.
The
to 15 miles of pipe,
3,000 tons, have been turned out
in a single day.
New processes
vital
individual
control arms, etc.
All three divi¬
sions operate as a unit.
pressed
quantity
This
for
specialized
steel
frames
and
housings, for. its original Model
*
end
of each
model
year.
need
Another
company
research.
this
to
of trucks and
another, all the product of
and
bicycle
play, so in the middle
the company's research and
frames
Smith set up
three
separate automotive divi¬
sions.
One dealt only with the
problem of passenger car frames.
mobile.
engineering
each
the
frame for the famed Loco¬
One 'development
fol¬
alloy
lowed
each
developed
heat-treated
first
the
with
training
into
chal¬
lenge that A. O. Smith met.
As
car
Packard and others.
for Cadillac,
In
Dollar
for
frames
steel
As
their
engineers worked constantly on
the problems.
All of the frame
design problems had to be met
and
changes
they
the
followed
was
Mr. L. R. Smith as President.
makes of auto¬
pressed
present corporate
established
with
the
1916,
improvements in car designs were
made by the makers of automo¬
biles it was vitally necessary for
A. O. Smith to keep apace of the
ap¬
designed
strong
A better
cost.
had been found.
structure
35,000,000
the original
From
long war or by even longer war
preparations.
than
more
brazed
lar
then
Since
States.
made
light,
year,
per
minimum
at
In
of frames for auto¬
mobiles.
In 1903, they made the
first
pressed steel frame in the
United
the
eight seconds.
a day,
way
to the making
have
auto¬
of
end
frames
10,000
and
cen¬
company
one
every
one
than
More
coming
then
industry was
being and the
into
fed
were
into
Flat
before.
seen
steel
of
of
rate
automo¬
new
companies
painted frames
out of the other end at the
came
tury, Mr. Arthur O. Smith, one of
C. J. Smith's sons, took over the
try into totalitarianism—either by
a
the
of
turn
with
Working
machine and black
rolling tubes was to become the
of future techniques.
about
their
and with
a
matically
germ
At
The
tubular
onds.
day.
a
been
sheets
plied its knowledge and technique
deals
the
cost.
Toe
Edgar A. Christian
of
time, who could
Her
to cost so
method
This
one.
bile
territorial
emergency
afford
to
dealing directly
willingness to
some
from
stop
de¬
equality.
fully equipped,
once
are
cooperation
all-round
on
low
at
in
development attests to this fact.
could
welded
purpose
served,
ever
so.
Rearming Germany and Japan
may
backfire:
it may
provoke
war.
Besides,
both
refuse
to
O. Smith
pipe for
aside
set
reserve
stock.
that in 1915
To summarize: Because of the
Mr. L. R. Smith, a son of A. O.
Smith, who had joined the com¬ larger and to make casing from history and character of the com¬
pany
in 1905, called upon his 5V2 inches in diameter and up. pany and the management, the
engineering staff to produce a In order to service the oil anc" attractive picture of the present
plant that would turn out frames pipeline
industries,
the A.
O and the future exciting possibili¬
automatically. Again the progres- Smith
Corporation
has
joined ties of research and engineering,
siveness
and
perseverance
of with the Sheffield Steel Corpora¬ together with its growth possi¬
management was rewarded. After tion in creating a new corpora¬ bilities. I name the stock of the
six years of labor and an expen¬
tion, the A. O. Smith Corporation A. O. Smith Corooration as "The
diture of $8 million the plant be¬ of Texas.
Security I Like Best."
This new corporation
came
a
reality.
It was a "ma¬
jointly owned, is building a new
chine" nearly two city blocks in
pipe mill at Houston, Texas. Th'
length.
Nothing like this had A.
O.
Smith
Corporation
will
they added
by the 1890s
they were the largest maker of
bicycle
frames
in
the United
the
of
produce only three
large diameter pipe in a
day.
There was a need for pipe
that could be made light, fast and
this
frames grew so great
bicycle frames and
States.
manufacture
neering facilities
high degree of co¬
operation
and
confidence
was
engendered.
The demand from
the automobile industry for
—
mented.
reasonable pre¬
on
substantial
the balance sheet for research and
miles of
ac¬
equipment finally turned out
1,500,000
it
early bicycles were cumbersome,
people
favors
had solid frames and weighed
of a Russoabout 125 pounds.
The cost was
American conflict. Already, both
excessive. C. J.
Smith & Sons,
Britain and France make it un¬
after
extensive experimenting,
mistakably clear that they do not
produced a frame of hollow steel,
share our.. Formosa policy; they
formed from flat sheets into tubes
insist on a "negotiated peace" and
and brazed, stronger, lighter and
on
appeasing Mao.
less expensive.
These frames re¬
Actually, even non-communist
placed the solid ones, bringing
Buropeans worry more about the
new
efficiency and lower cost to
danger that we might blunder
the
bicycle,
and
consequently
into war
though for an ad¬
making the bicycle available to
mittedly worth-while cause—than
thousands who had not been able
make
tackled
the various automobile
this
To
this
for
its
majority
of
neutrality in
But
reliance
more
by Mr. C. J. Smith, was
carriages.
well-
is that
armed
their
be
to
cordingly—with less hysteria and
engaged in general machine shop
work and made parts for baby
of
for—Neutrality?
of it
worst
a
has
that
to the company's growth and
abnity to serve industry.
The
sary
growing oil industry. Twenty-
nation
the reservoir of
waukee works is
five years ago all the mills of the
a chapter in
itself. So is
problem of domestic mobiliz¬
the
then known as C. J. Smith & Sons,
is
trouble
turn,
policy has to
of waiting
instead
reversed:
That is
the concern
ble beginning in 1874,
sector.
carry
both.
mentioning the very heart of the
company
which is the Research
and Engineering group.
Here in
a
moatrn
building at the Mil¬
to lead to the impor¬
was
co.i.pany
knowledge and skill vitally neces¬
part played by A.
the
the
for the next move of Russia, we
have to turn the table on her.
From a hum¬
fied in its history.
the machine-power of her Eastern
not
in
Toe
employee
built, endless
hours were spent over many prob¬
lems until today a 40-foot length
of large
diameter pipe can be
1.500,000
not
does
course,
clude China
The
or
demo¬
Security I Like Best
1,300.000
15,000.000
A.
many
of life,
foreign
our
the
or
Continued from page 2
2.000,000
2,000.000
This,
dollar
were
Turkey,
Greece
U. S.
And
be
tant
throwing overboard
between
the
welding
alterna¬
14 000,000 4,500.000
Germanyt
Yugoslavia,
elec¬
The knowledge gained in the
experience with electrodes and
(without
Europe
fabrica¬
own
Smith's
the world.
over
of Armed
U.S.S.R. & East Europe
O.
A.
Succa4
enjoys excellent
relations.
The story
woulu be incomplete without
day, the company's electrodes and
welding machines are in use all
doubt, paredness.
No
year.
Then
by
industry which needed them. To¬
Strength
Armed
in its
company
de4
pro¬
heaters and
water
gasoline dispensing plants.
Mil¬
used
were
works
Jersey, plant produces
sunna, New
trodes were made available to any
ditched
be
the
reach
cratic system
at
and "go
must
State
we
either
impending,
mobilize
to
men
electrodes
of
tions.
Trumanian
the
case,
any
before
it
is
would
Korea
true
were
have
million
one
Nor
it
aggression is
12
once
of such
being made
are
we
In
Welfare
the
that
means
no
If
would
we
this:
is
by
believe.
to
figures, based
adult male population—minus
on
is
magnitude
available
best
be done to meet
The number one
realize
to
problem
com¬
a
the
of
one
mill
already been
heating equipment and the
dilemma..
can
challenge?
devise
to
the
solve their armament
promise to
What's the Answer?
we
major
portion of the armed forces even
in Europe.
In reality, Europe single-handed
should
be capable
of matching
the Soviets. It is stronger in basic
raw
materials, including Middle
East
oil, and in industrial ca¬
pacity. As to manpower for war,
the
well.
a
difficult
be
that
welding.
to
became
Smith
O.
lions
out, by the enemy.
it),
nothing of the claim that
say
keep
fields
new
the
and
electrode
an
volume
duces
steel
new
Toledo
The
and pres-*
pumps
The
has
rmuston
scribed.
scientists
the problem
turbine
vessels.
sure
the A. O.
largest makers of electrodes.
pose
behind the propaganda for
simply
not
pouring out assistance and paying Atlantic Union—by
short,
the
cost
of
long-; fantastic prices for - imports, in continuing to subsidize it beyond
As to
European armaments on a addition to providing all or most an irreducible minimum.
scale is prohibitive (if we of the arms, if not the troops as Germany and Japan,, it should not
might
pur¬
on
was
opened
responsible for its prosperity and
end,
bombed
"invest¬
And
-
price
implication
high
ported from Great Britain, but
interruptions in the supply due to
the nation.
from
saved
a
administered
Chinese
guerrillas not just by the 140,000
British troops, but by the record
is
for the possi¬
World War; but the
properly
directed,
prepare
of
armaments
has not gone Bolshevik as yet, so
because of the Marshall Plan; that
Malaya
must
we
Europe's self-re¬ other high places.
We are being told that if Europe
liance will end in 1952 with what
tion
U9
(819)
The Commercial and Financial Chronicle
.
opened
has
of-
Broadway, New, York
The Los -Angeles works, tity, to act ^s broker end dealer
produces motors;' meters, pump- m obligations.of the United States
and pressure vessels. The Houston Government.. He was formerly at
works turn out liquid gas systems, 1ft74 Third Avenue. N. Y. City. :
and study.
^
Sacks
,
,
20
The Commercial and Financial Chronicle
-(820)
Continued
from
(e) Rail
10
page
The Ontlook For
Railroad
strength
transportation
'
less than
eral price trend
-
railroad
iWhile
since
increased
have
rates
fares
of
"World War
to.
II, they have increased
much
lesser
degree
than
a
either
operating
costs, as meas¬
increased wages, material
ured by
ginning of the war.
July,
1946,
Beginning
freight
postwar
in
rate
In
57.3%.
totaled
many
industries,
industrial
rates
(a) Primarily
beginning of the
i
have not
The
railroads
had ample funds to carry
forward
a
products.
tion
return of 2.9%
best service to
1946
and
A
(c) Ample funds furnished by
but
were
wholesale
value
shipped by rail,
7.26
of
in
10.66 in
5.46%
of
the
commodities
against
as
of
1941; 8.43
ratio
a
in 1939 and
1933.
Since
1946, a small part of the
lag in freight rates behind general
prices has been made up, but a
wide gap still remains between
the
current
and
prewar
ships of railroad freight
to
wholesale
ties
is
value
transported.
estimated
one-fifth
at
below
ratio, and little
The
the
1949
ratio
which
1941
below
more
revenues
commodi¬
5.85%,
one-third
nearly
of
relation¬
is
ratio,
the
1939
than half the
1933 ratio.
And
the
to
that
extent
a
Curiously, this lack of funds for
the
modernization
the years
not
seem
In
have
of
plants does
built
been
fast
as
as
(c)
Rate and fare
structures
.Railroad freight rates and pas¬
senger fares are
closely regulated
by the Interstate Commerce Com¬
mission and the .various state
missions.
Most
of
the
for transport on
imum rates, which
orders
sider fair and
The
rates
the Great Lakes
fares
is
.
a
road
management that they have
(12)
been
able to put the railroads
in
the
best
physical
condition in
history, and greatly to improve
operating efficiency, by the instal¬
lation of new. cost-saving equipr
borrowed money.
to finance
this new equipment partly out of
earnings, and through equipment
ment, largely
has
been
trusts
on
necessary
conditional
or
sale
agree¬
definite limit
to which they can go without the
aid of new equity capital.
ments, but there is
S p
1
a
Opportunity for
improvements
(c)
e n
d id
greater
are
the
in
ments
to carry out
railroad
plant,
but
these programs prop¬
erly it will be necessary to raise
millions
more
many
dollars
of
investors.
from
ar¬
con¬
•
.;
For
at
establishing
and
the
least,
past
the
the
century,
quarter
been
has
problem
railroads
might
make
enough to enable them to
money
finance
the
improvements' they
exacting, and the result of many
conflicting -transporation and com¬
had to have if they were to
mercial forces.
ing enterprises.
different
moves
preparation
While all of the
necessary
in the
rates and fares
liave the appearance of much red
of
taper the system has the merit of
giving all interested parties an
opportunity to see what is' tran¬
spiring, and all railroads an' 'op¬
portunity
to
meet
competitive
conditions.
Although the opera¬
.
tion
the machinery for publi¬
cation of rates seems in many in¬
of
business
as
stay in
solvent, self-support¬
That is the real
railroad problem of modern times
—how
ing.
railroads
can
make
a
liv¬
World War II, and
again at the present time, the in¬
crease
in traffic Volume arising
from
During
rearmament
and
military
demands, has lightened the pres¬
sure
the
of
particularly
by
the
long-haul, intercity
will
be
over-all transportation bill increased
Country's
»
tor, and also by the inland water¬
the airways,
etc.
These
have
matters
discussed
been
at
length in the press and in many
Two splen¬
did articles appeared recently in
"Reader's Digest Magazine," one
important periodicals.
June,
the
on
subject
of
"The
These
Deal."
articles
give
a
commend
I
them
to
your
reading.
public about railroad transporta¬
tion.
One such misapprehension
Public
(a)
of excessive
and highway costs
tax
There
is evidence of
public
rebellion
cessive
use
growing
a
the
against
public highway systems which
being ruined by heavy truck
use.
action tends to increase our
transportation
in
the
transportation industry, as it ex¬
overall
other
In
words,
ists today, we have, on the one
hand, a privately owned railroad
transportation plant which must
collect
directly
from
service
other
hand,
all
costs
customers.
its
into
arriving at
acted
which
contributions
enter
do
picture when
charges
the
of
the
that
customers
are
ex¬
who
-
r
(d)
"
Unfair
public,
reg¬
Commission
merce
by the Interstate Commerce Com¬
mission
completely than
more
any
other phase of railroad operations.
The
Commission
prescribes the
form
in
which
the
Income
Ac¬
count and the Balance Shee.t shall
be
stated.
Commission
The
prescribes
also
classifica¬
accounting
tions, defining expenditures which
shall
be
charged
vestment
which
shall
those
and
charged
to
of
roadway
shall
structures
depreciable
scribes
ex¬
what
It has determined
penses.
items
be
(in¬
capital
to
accounts)
and
property
considered
be
as
and pre¬
depreciation
rates.
property,
the
.
And, incidentally, the depreciation
rates set by the Commission are
always acceptable to the In¬
ternal
Revenue
income
tax
confusing
for
Department
which
is
burdensome—
purposes,
and
necessitating two sets of deprecia¬
tion records.
Purpose of Income State¬
(b)
ment
The
railroad
statement
income
designed with
two-fold pur¬
a
pose.
First and foremost, for de¬
termining the net result from op¬
results
net
as
so
general
a
set
intermediate,
it
that
is
It
Income.
in sections with
up
also
serves
analysis
statistical
absolute necessity not
for the
public
including
bodies,
Total Operating Revenues
(c)
section
first
various
classes
of
a
railroad
of
consists
statement
income
of
the
the
revenues,
items
being
Freight
Revenue; Passenger Revenue;
Mail and Express Revenue. These
principal
combined with other in¬
such as dining
revenues,
cidental
car
revenue
switching revenue,
is called in
revenue,
represent what
etc.,
statement
income
the
"Total Op¬
erating Revenues."
Operating
(d)
Expenses—
Ratio
Next in the income statement
regula¬
is
Operating Expenses—divided be¬
tween six classes of expenses:
Maintenance
(1)
Structure—This
maintaining
is
of
and
Way
the
cost
of
the track structures,
rail, ties, ballast, signals; depots
and regulations based on a and similar structures including
monopolistic concept do not now- depreciation on depreciable struc¬
apply to the conditions of modern- tures. (Depreciation is not accrued
rail transportation. Greater flexi¬ on
rail, ties and ballast.)
bility for the railroads to meet
(2) Maintenance of Equipment
the new conditions now becomes
essential and the growing recog¬ —The cost of maintaining locomo¬
laws
nition of this need by public
bod— tives,
ies is beginning to find expression
in their actions.
and other rolling equip¬
cars
ment, also machinery necessary to
make such repairs,
including de¬
preciation.
(d)
Secretary Sawyer's state¬
recent
address,
Secretary
Commerce
Sawyer
suggested
In
of
that
a
a
system
be
developed
of
user
charges whereby
transportation operations
adequate
private
which
use
facilities
the government
provided
by
will help pay the
Expenses—The ex-"
providing freight and
Traffic
(3)
ment
pense
of
tariffs,
passenger
business
to
and
solicitation
of
service
information
patrons.
(4) Transportation Expenses
The
over
expense
the
of
rails;
operating
salaries
of
—
trains
train
cost of those facilities. "Today all
crews,
yard crews, station em¬
shippers and forms of domestic transportation, ployees; cost of fuel, station and"
well as to rail¬ except railroads and pipe lines,, train supplies; payments for em¬
to
as
roads
'
back, sharpened
and in¬
equitable condition in the trans¬
portation
industries.
accounting
Railroad accounting is regulated
use
these publicly supported plants.
profit and
or
ulated by Interstate Com¬
The
for peacetime but in the
eventuality of another World War
or
ernment
Railroad
dif¬
statements,
manufacturing
merchandizing
(a)
rail
self-sustaining
only
the
partially owned, trans¬
portation plants which are .sup¬
ported in whole or in part by gov¬
owned,
not
and
Need for preserving mod¬
ern,
publicly
have
we
for
On
of
statements
income
quite
income
from
earnings statements
loss
latures, are waking up to the fact
and
it is
of operations.
(b)
inland
waterways users, reduces the costs
of those agencies, compared with
the railroads, but at the same time
bill.
ferent
railroads'
the
because
erations—Net
Federal, state and local
airlines
of
account,
portation agencies.
The public is becoming keenly
aware
of the staggering cost of
that rail transportation today is a
such
review
is
tory commissions, the Congress of
the United States and State Legis¬
trucks,
industry, I believe
will be interested in a brief
use
highly competitive business, is in
no
sense
a
monopoly, and that
the
railroad
you
of public funds for the purpose of
providing expensive facilities that
benefit only certain private trans¬
are
,
Before ending my discussion of
the
of tax money for sub¬
sidies and other uneconomical
our
to stop."
ex¬
supplying facilities used by
aid in
knowing when
aware
concerning subsidized com¬
is that
is
not
Further Basis for Confidence
norriic costs
The existence of this unfair, un¬
tensified.
truck opera¬
preservation of a modern,
progressive and serviceable rail
transportation system, operating
(c) Government subsidies not
as a self-sustaining
agency under
part
of
transportation
our American
system of free en¬
charges
terprise.
In order to improve the credit
(c) Official recognition of
standing of the railroad industry,
railroad problem
we
must dissipate
some
of the
There is growing evidences that
common misapprehensions of the
(b) Railroads collect all eco-
)
once
traffic volume falls
but
today,
heavy-duty,
ways,
nizing the
when
more, it
problem,
competition
'
(a)
undue advantages.
The great dif¬
ficulty with giving Federal funds
system
Subsidized Competition
country's
(d) Earnings must assure
solvent,
self - supporting
rait industry
damaging
railroads
(13)
our
he
continued, "that no
competitor, or class of competitors,
should have special privileges or
concern¬
The American people are recog¬
petition.
opportunities
present for still greater improve¬
how
complex
not
going into details
the
and
Secretary Sawyer said. "It is
policy,"
Digest" articles
the
in
weather reports, maps and charts,
other
aids
to
navigation,"
and
recognition—
confronting
roads, that have
been without
adequate funds for thorough mod¬
.
of
reasonable.
procedure for
and
is
This
years.
am
ernization.
leaves to the
riving at charges that they
railroads for
com¬
certain latitude in
a
of
healthy situation. I think you will
agree that it is a credit to rail¬
the Commissions provide for max¬
railroads
issues
Public
(f)
ing
waterways, harbor developments,
government
convincingly
that
the
will benefit the users of
transportation and the taxpayers.
the
pipe could be produced; there has
been no lack of investment funds
In the postwar years,
stock
twenty
It
of
shown
to
apply to other agen¬
cies of transportation. Pipe lines
through 1948, the average re¬
new
retail
prices are higher than wholesale,
freight charges are an even small¬
er part of retail prices.
objective
competing splendid, objective description of
the plight of the railroad industry,
for
taxpayers
railroad
charges
The
I
Thursday, August 31, 1950
.
.
(14) The Income Account
Rape of Our Roads," and the other
(b) Same conditions do not in the July issue on the subject.
apply to competitors
"All the Railroads Want Is a Fair
striking illustration of the lag
turn was about 3.5%.
nor for the coastwise shipment of
freight rates behind
oil in tankers. More trucks are
■the
(a) Financing out of earnings,
general price trend in the
equipment trusts, condi¬ being built than ever before for
postwar
period
comes
from
a
operation over the highways, and
tional sales agreements
comparison of total freight
ample funds seem to be available
charges with the wholesale value
(b) Definite limit without for the airlines and the artificial
of commodities transported. Stud¬
new
equity capital
inland waterways.
Funds are be¬
ies of the Bureau
of Transport
The return on investment in the ing made available for these pur¬
.Economics and Statistics of the ;
railroad
industry has been too poses, although most of the money
Interstate Commerce Commission
low to attract equity money, and, is furnished by the taxpayers. It
.show that in 1946 (the latest year
consequently, there have been no is the railroads, and only the rail¬
•covered)
total
railroad
freight"
iit
objective
assessment
should be that each form of trans¬
somewhat stultified.
when
1947,
only 3.1%.
render
to
net investment,
on
depreciation.
after
accordingly,
their
the public has been
and,
opportunity
facilities
earned
railroads
the
1949
full-grown moderniza¬
program,
the
Financing
In
1945
be
"Readers'
Industry decreases costs and im¬
handicaps that confront rail¬
war
modities transported
as¬
of
full charges for facilities
furnished
credit prob-
a
The present railroad problem,
therefore, is primarily and pos¬
sibly exclusively a railroad credit
problem.
The prudent spending
of money on improvements is the
chief means by which American
proves
important ob¬
industrial
corporation profits were the
(b) Ratio of freight rates to
wholesale value of com¬ greatest on record, they earned
^,
should
lem
traffic, and due to down¬
road
management,
and
which
adjustments to meet sub¬
sidized competition
which have jeopardize the future development
of the industry if they are not
already been made in some of the
increased rates, the actual level of corrected.
freight rates today is something
(10) Returns on Investment—
.leSs than 57%.
fares have increased
about 34%, mail pay is up only
2o%, and express rates and
charges have advanced about 75%.
are
additional
Government
(e)
'
ward
Since the
The Railroad Problem
(11)
Handicaps jeopardize fu¬
of industry
One of the most
fi^ssenger
Since then, the
they
are
which support these subsidies.
pay
together—
were
who
change
ture
and
stocks
users
transporta¬
tion charge through the taxes they
aver¬
.held above the average for rails.
on
terstate
the Dow-Jones
because
an
at its peak in 1906.
is today
intrastate jectives in my discussion with you
traffic corresponding to those the today is to lay emphasis upon
some
of these critical problems
Commission has authorized on in¬
in
were
sessed
of market prices for rail and
ages
themselves.
(b)
States have not yet allowed
increases
investors
for railroads stocks
was
In that year
the fu¬
in
rail transportation
roads
However, because
which
pay
transportation
penalized
compared with stocks of other
as
paid by the American people, in¬
cluding the taxes paid by the rail¬
state Commerce Commission have
financial
and
for the last time.
of faith
evidence
and
ture,
increases authorized by the Inter¬
rail
of
credit
public gen¬
erally—and especially to the
Serious
prices and taxes,
or
increased faced with the most serious com¬
prices of commodities and services petitive disadvantage in its his¬
tory. The irony of that disadvan¬
generally.
At the end of the World War tage is that it is created and main¬
II, railroad freight rates were no tained largely out of the taxes
greater than they were at the be¬
willing to
been
all taxpayers—the
to
competitive dis¬ •averages have gone up to great
portation pay its fair costs for the
advantages createdby peaks and down into deep valleys,
facilities it uses. The public will
taxes paid by public, in¬
.and have cilmbed up again and become
sufficiently interested to
cluding railroads
relapsed and climbed again, but influence a fulfillment of this ob¬
always the industrial average has jective if and
spite of this notable progress
when it can be
(a)
end
great
slow,
have
Operations
gen-
and
the
unduly
provements
product
(a) Increases
1
stances
the railroads can charge
the
since
measured by the aver¬
as
prices
age
im¬
made in
they sell.
In railroad language, the handling of rate matters, es¬
these charges are called "rates" pecially when emergencies arise.
as
to freight and
"fares" as to
(9) Difficulties Involving Railroad
passengers.
iHe price
below
averages
1906
,
:for
prices
stock
industrial
.
industry
is
receive
of
concern
dies
or
help
either
from
subsi¬
from Federal provision of
facilities, such as airports and air¬
way
markets, highways, inland
in train service,,
injury or property
damage of others; for loss or dam¬
age to property in transit, and all
ployees
for
injured
personal
Number 4938
Volume 172
..
The Commercial and Financial Chronicle
.
it
amount
utility values because of
of
the
poor
statistical
more
company.
properties of the
In other words, the net
with
return
the
other expenses directly connected
cause
with
over
the rails.
dining
other
incidental
as
includes
but
cars,
operations,
from
operation
transportation
(5) Miscellaneous Operations—
Primarily the expense of oper-^
ating
the
represents
earned
running trains
on
amount
of
money
invested in the facilities necessary
to provide transportation. The In¬
such
stock pens, etc.
terstate
Commerce
has
(6) General Expenses—The ex¬
of all general office em¬
that
said
of
return
ployees, from the President down
boy, other than those
in the traffic, engineering, oper¬
ating and purchasing departments.
It includes rent of offices, station¬
ery and office supplies and other
to the office
6%
re¬
this
the
It
turn.
is
Interstate
for
uses
figure
railroads
that
Commission
Commerce
its regulation of
in
as
whole
a
in
freight, passenger
and other rates.
combined
classes
of
total
represent
ating Expenses."
(j)
expenses
Total Income
After
"Oper¬
Net
Income,
,,
we
accounts
The ratio of total
Railway Operating
have a group of credit
income
representing
operating ex¬
penses to total operating revenues
is an index of operating-perform¬
from owned property not
ance.
and income from securities owned
used by
reporting carrier, rented to others,
I
if
mean
of
way
operating
these
carriers.
added
The
net
to
income
rail¬
produces
Income
maintained, the ratio to revenues
be
lowered; while
standard
raise
would
Next
ratio.
the
the railroad
especially respect¬
ing its outlook for the future. I
am especially pleased to have this
industry,
within
according
without
be regulated
volume of traffic
reason,
to
Available
for
generally
Total
followed.
of
measure
efficiency is the ratio
portation Expenses to
Revenues
the
dling
they
trains
from
This
discount
•
pri¬
fluctuates
expenses
"Income
Fixed
borrowed
on
road
industry, but over and above
capacities as bankers, there
other ways in which you can
are
the
railroads,
is
getting
trains
If three trains
are
when
road
the
delays.
over
without unnecessary
terminals
cars
equipment
used exclusively by the reporting
carrier (which as you can see is
analagoUs to use of borrowed cap¬
could
leaves
for
"Income
Contingent
job, that is inefficient
Added train miles are
sometimes
caused
by
delayed
train arrivals or failure of classi¬
fication
yards
get cars ready
to
the
facts
these
ratio, more than
any other single factor, indicates
the degree of operating efficiency.
transportation
(f) Income account also a sta*•'
tistical
of
Available
Income
for
Con¬
tingent Charges, leaves '"Net In¬
come"
such
—
which
corporate
is
purposes
as
Directors of the company may
the preceding
high degree of con¬
trol
directly
from the
income
statements.
That is why I said in
a
beginning that a railroad "in¬
account" is also a statistical
railroad
rather
easily
it
is
iead,
in
fact
a
easily under¬
a
Railroad
Property
(g) Net Operating Revenue
After
we
operating
deducting
operating
from
penses
There are,
ex¬
revenues,
have what we call "Net Oper¬
ating Revenue."
Operating In¬
taxes—ad va¬
The next item is
lorem, payroll, franchise,
income
all other taxes—which is de¬
and
financial struc¬
investment possibilities
efficiency,
and
ture
railroad
a
property.
I
have
few statistics pertain¬
ing to the industry as a whole.
presented
There
Operating Rev¬
that
the balance is called "Rail¬
Operating Income."
a
is, however, one thought
like to leave with
should
you,
from
ducted
Net
enue,,
way
presented from which conclusions
drawn pertaining to the oper¬
are
of
come
of course, many sta¬
and
physical
analyses
tistical
ating
(h) Railway
I
which has to do with your
appraisal of any individual rail¬
That is—the railroad's im¬
road.
Railway
(i) Net
Operating
Income
portance
real
its
The next group
of accounts are
rent credits
from the standpoint of
utility value to the ter¬
ritory it serves.
the rent accounts—the
is too
represent amounts received from
locomotives, pas¬
freight cars and joint
yards or
senger cars,
facilities such as stations,
owned by one
jointly used by an¬
other. The rent debits are amounts
line
main
carrier
tracks
and
paid by the debtor
of the rent
Net
or.
credit
deducted
way
at
as
the case may be,
from
or
Railway
is
added to Rail¬
Operating Income to
"Net
arrive
Operating
In¬
come."
(a)
I feel this factor
Utility Worth of a rail¬
road to a territory, which is de¬
though
such
the
come
ores,
railroads be¬
to move harvests,
wheat and cotton; is the
upon
transportation
etc.,
mediately
or
agency
must be able to im¬
move
perishable
fice, like fresh vegetables,
livestock, and so on.
Operating Income
important item in the in¬
account of the
as
for
the distribution of steel, coal,
chief
traffruits
railroad
of
worth
these
basic
a
railroad
with
of
deposit
regular
increased 6,000
the
banks
reduced
holdings of cash by $76,000,-
000 and of U.
S. Governments
by
$82,000,000. Holdings of corporate
and municipal securities remained
accounts
virtually unchanged.
in July.
se¬
involves the other collateral
problems that we have discussed,
and the misapprehensions of the
Carrier Earnings
Railroad securities have
ever,
public concerning these collateral
problems are of prime concern to
all of us.
Because the fallacies
misapprehensions
these
nVayv
evident to you, you must not
them
evident
to
as
equally
being
public at large.
the
Public Education
(d)
The railroads can be helped not
only by clarifying their problems,
but also by carrying the resulting
opinion—and this
to public
ideas
in
invested
—shall
we
of
industry
private
keep it so, or permit a
to
government
socialistic
take
which will destroy private
capital and private industry.
over,
(e) Railroads
ported
be
must
sup¬
firmly believe that the rail¬
must have the sup¬
understanding
and
port
the
of
public if it is to remain as a sym¬
bol of American freedom of en¬
terprise—as a bulwark against the
encroachment of socialism in our
Outlook Excellent
rail transporta¬
tion—must determine to his own
—every
user
satisfaction
of
whether
or
feels that the railroads, as
not he
private,
enterprises, are a
valuable
asset to the economic
health and well-being of the na¬
tion.
If he is convinced of this
selfsustaining
then he
fact,
must, for his own
good, support the industry. If the
railroads
are,
like the Church,
something
you
in,
believe
they must have your
then
full support.
been
(
pretty much marking time re¬
cently, despite the appearance during the past week of July earn¬
ings reports. Almost without exception these reports have been
highly favorable and it had been expected in many quarters that
they would supply the incentive for further general strength s
throughout the group. That they did not respond to the continuing,
improvement in earnings may probably be attributed at least in»
large part to the still unsettled labor situation. The long drawnout wage and hour controversy was impressed on the conscious¬
ness of the public by a series of small strikes and then driven home
by the call for a general strike.
A general strike on the railroads could not, of course, be toler¬
ated at this time, if it could be tolerated under any conditions. Thealternative was government seizure which was resorted to over
the weekend when all attempts at mediation had failed.
Seizure
by the government does assure continued operation of the rail¬
roads.
They will be run and managed by the same people and in
the same manner as they were before seizure. Financial decisions
will still rest with the management and there is no question of con¬
fiscating profits. Nevertheless, the controversy that brought on the
threat of a general strike remains.
Fundamentally, the necessary action taken by the govern¬
prevent the strike is disturbing to investors. There is con¬
siderable apprehension, supported by the Administration's record
in other labor controversies, that any settlement reached with the
unions while the carriers are under government control will be
more
favorable to the workers than that suggested by the Fact
ment to
Finding Boards. Despite the past record, there are reasons to hope
that this will not be the case in the present instance. For one thing,
the unions weakened their case
Administration
the
with the public and antagonized
by authorizing
the strike
a
bare hour or so
giving assurances that no general strike was contemplated.
Also, there is very great pressure on all sides at this time to resist
an inflationary spiral.
after
Every taxpaying citizen
country.
Nervousness
over
rail securities may well continue
until the
wage-hour dispute is finally settled. This should not be long,
delayed. If it should be settled along the lines of the original.4
recommendations of the Fact Finding Board, or the somewhat
better
in recent weeks, the market
opinion of many railroad analysts.
if the unions should get more than has already been offered
offer
should
Even
made
by
the carriers
react favorably in the
has been the case many times in the past, it should have
than a temporary adverse market influence at worst.
presumably again turn their attention more to cur¬
rent and prospective earnings and the dividend outlook.
them,
no
as
more
Investors will
Earnings
was
are
estimated
good.
at
Net income of all Class I carriers in June
$72 million. This compares with net
roundly
The June net railway oper¬
Going back over a period
years there were only six periods in which net operating
income topped $90 million.
They were the five years from 1941
through 1945 and the one year 1948. The 1948 results, however,
were distorted by certain credits taken in that month which, inci¬
dentally, was the best month of the year.
income of
$42 million in June 1949.
ating income amounted to $90,046,000.
Conclusion
optimistic
for
the
of
reemphasize that I am
regarding the outlook
railroad
The',
industry.
that are
made; the general upward
great technical advances
being
business trend in our
country; the
recognition and more favorable
thinking by high government of¬
ficials. the press and the public,
and the alertness and abilities of
railroad
management,
all,
I
am
convinced, point the way for con¬
tinuing increased volume of
We must not discount the
ber
their
deposit, the num¬
on
of adequate net in¬
one
I want to
mean
the amount
withdrawals,
Adequate net income, how¬
come.
(17)
Basic Utility Worth
by this that possibly we
sometimes
overlook
that
basic,
I
Net Railway
is .an
often
pended
line.
accounts, debit
curities is
absent from analyti¬
cal reports.
others for use of
in
investor
the
and
I
Value of
1949, but withdrawals increased
sharply, rising to $594,000,000 in
July, 1950 or 21% more than in
July, 1949. Despite the drop in
net
road industry
Utility
(15)
statement.
of
railroad problem
standpoint of the banker
from the
informative statement and
statistical analysis of the affairs
of the company.
are
lems
stood,
come
savings
evident in recent months and that
paid. Amounts
had been evidenced previously in
deposited
in
a lessened rate of deposit growth.
regular
ac¬
Portfolio
counts during
policy
during
the
month was featured by a further
July
con¬
tinued at high
spurt of record proportions —
$126,000,000—in mortgage hold*
levels,
total¬
A. Livingston Keliey
ings, to reach $7,291,000,000 on
ling $515,000,July 31. To provide the funds for
000,
or
2%
above
the corresponding month this
purpose, as well as to meet
public education.
The banker is
interested in seeing private capi¬
a
seasonal
normal
income to collateral prob¬
,
the
de¬
at first glance, ap¬
involved,
pear
when
accounts
Mu¬
pattern of
vacations, collec¬
tion by depositors of semi-annual
dividends, some public apprehen¬
sion over the Korean situatioii,
and the high level of consumer
buying that had already been
Christmas
Club
of
Banks, and Presi¬
dent, Providence Institution for
Savings, Providence R. I., reflects
withdrawals for
Novem-
ber,
Association
Savings
Of course, the
tal
may,
every
National
the
the
sea¬
sonal drop
and of more importance,
you have opportunities to inter¬
pret these problems to others.
is the big job ahead of us; one
termine.
except
years,
for the
education and by training,
have the capacity to under¬
stand the problems of the rail¬
for
available
the first
was
decline in two
By
pay¬
are
earnings permit. The
these charges, deducted
While the Income Account of
with
year
enables
year
funds, etc., which
able only if
statement
comparison of expenses of the
current
ment
decline in deposits, stated
Livingston Kelley, President of
The
the
tual
you
(c) Relation of adequate
in
$19,896,000,000. This
Understanding
and
in¬
terpretation
of
railroad
problems
(b)
dismiss
Contingent Charges are charges
for interest on bonds,
improve¬
from
of
enterprise. This, of course, is
personal capacity as an
and influential citizen.
seem
sum
for departure.
Because
through
and
system of pri¬
your
of
Net Income
(m)
the
done
the
Charges
Charges."
have
operation.
A
Fixed
Available
used between
two
our
informed
capital, rent
ducted from Income Available for
switch
to
railroads,
the
serve
and
yards. Of almost equal importance
used
rail¬
road
and
in
marily with the number of trains
run
and the number of engines
crews
the
to
in¬
their
Charges—
interest
ital, and for some railroads close¬
ly approximates the amount paid
for interest on borrowed funds).
The
total of fixed
charges de¬
and
Commercial
deposits
July,
A.
roads,
Charges."
fixed
of
leased
for
time
transportation job is completed.'
group
renders
dispensable services
.
Operating
the
Fixed
comes
consisting
set for loading until the
are
leaves
Income
Next
Trans¬
the expense of han¬
—
purposes.
these, deducted from
(1) Income Available for Con¬
tingent Charges
operating
of
transportation
Available for
Ratio
The vital
for
used
Transportation Expense—
".(e)
the
Banker
Investment
im¬
an
During
nation's 530 mutual savings banks
declined $43,000,000, to a total of
Investment Bank¬
Obviously,
ers.
Miscellaneous
comes
The total of
disturbing the standard of
maintenance
and
of Commercial
Charges to income, such as rents
paid and taxes on property not
The expenditures for maintenance
can,
food for
some
Fixed Charges
high
a
gentlemen
concerning
you
thought
*
would
Banker
hope that I have been able to
give
in
(k)
Commercial
of
July, ascribed to vacation
Savings
exceed $7 billion.
of deposit growth.
banks mortgage holdings now
Investment
vate
Income."
"Total
low standard is
a
reporting
total
dard of maintenance of both way
and structures and equipment. By
that
the
by
This ratio, of courses can be
regulated to a degree by the stan¬
First decline in two years recorded in
less
withdrawals and slowed op rate
opportunity to discuss such
portant subject with this
expenses.
six
with
roads
of
Influence
(a)
I
Nation's Savings Deposits Off $43 Million
compared
Summation
(16)
on
a
current
a
record,
21
spectacular statistical
performances
utility value.
Commission
the
value
of
property used
transportation is a reasonable
pense
These
(821)
fic and better gross
ings for most
of
traf¬
and net earn¬
our
railroads.
21
The roads got
off to
a
poor
start this year due to the pro¬
longed strikes in the coal industry. On a year-to-year basis this
early drag has now been fully offset. For the full half year net
income amounted to $210 million compared with $174 million a
There is no question, based on the trend of individual
reports that have been coming in, that results in July were also
well above those of the like 1949 month.»■ Even with the proposed
year ago.
;
full year may come J
That level has been
topped in only two years (1942 and 1943) since 1929. Moreover,
the carriers appear assured of a peak volume of traffic so far ahead
higher taxes it seems likely that net for the
close to the $698 million reported in ,1948.
as
can
now
be seen—a couple of more years
at least.
22
The Commercial and Financial Chronicle
(822)
of
department
of America
Bank
.
.
Thursday, August 31, 1950
.
Continued from first page
National Trust & Savings Associa¬
nounced
the
of
NEW BRANCHES
REVISED
fornia, New York City, and east¬
ern
states.
Mr. Clark joined the
CAPITALIZATIONS
bank's staff in 1930.
*
*
M.
H.
Office
New
Co. of
Sept. 1, it
the
years' service with
31
*
been
"The
Federal
first
Chicago
in
here
went
to
on
Bank of
Reserve
opened
in
1918
has
Jr.,
Vice-
Assistant
West Side Trust
of the
branch
a
the
Congress
housed
under
and Assistant
the
until
roof
one
not
were
present offices at Fort and Shelby
ready.for occupancy in 1927."
were
Henry
of
President
National
First
the
«
Atwood,
E.
of
Bank
announced on Minneapolis since 1945, was the
Aug. 23 by Ray E. Mayham, Presi¬ victim of a heart attack at his
Secretary,
it
was
"Evening News"
Newark
The
board.
Chairman of the
dent and
in
this, states that Mr.
joined the trust com¬
reporting
Wickham
home, Lake Minnetonka, on Aug.
Recently returned from an
vacation, Mr. Atwood,
27.
extended
who was 57 years of age, had re¬
in 1929, and after various sumed his duties at the bank with¬
promotions became Assistant Sec¬ in the past three weeks.
Mr. At¬
retary and Treasurer in 1946. Mr. wood was a native of Keeseville,
pany
Clerk
in
appointed Chief
1948.
*
*
*
noting the death in Montclair,
In
N.
Executive As¬
1944 and
sistant in
J.,
on
Aug. 25 of Mellville W.
Terry, retired Vice-President of
the-Guaranty Trust Co. of New
News"
York, the Newark "Evening
National
Com¬
of
Bank
New York. He later was
named Second Vice-President of
merce,
when
it
merged with Guaranty Trust Co.
in 1.929, he held the same position
that
institution,
and
there until his retirement in 1946."
At his death, Mr. Terry was 62
years of age.
.
*
*
*
War I.
Completing his service with the
rank of Captain, he returned to
Minneapolis and entered the in¬
Securities
advance¬
Following
the
announced on
Aug, 25 by Bartholomew O'Toole,
rwas
O'Toole,
for¬
merly Assistant Cashier and Man¬
ager of the Instalment Credit De¬
partment, was named Assistant
Vice-President. Before joining the
staff of Pullman Bank in 1948, he
of
First
First
and
Minne¬
apolis Trust Co. in 1933, Mr. At¬
wood served as Vice-President of
First National Bank until January,
when he
1936
resigned to become
Vice-President and director of the
Nelson
F.
Manufacturing
Minneapolis.
April,
In
elected
was
Co.,
1943 Mr.
director of
a
On June 29,
1945, he returned to active service
in
the
was
banking business when he
elected President of First Na¬
tional
Mr.
Bank.
Vice-President
First
Stock
Bank
Atwood
was
director
and
a
of
Corp.,
a
group
banking organization which owns
controlling
Interest
in
75
the
Chicago Construction bank affiliates in the Ninth Fed¬
Equipment Co.; Carl A. Brink, eral Reserve District.
Manager of the Bookkeeping and
Among his various other con¬
Proof Departments, and Robert H.
nections he was a director of the
Costello, Instalment Credit Loan Federal Reserve Bank of Minne¬
Interviewer, were named Assistant
apolis, and has represented the
Cashiers.
Mr. Brink joined the
Ninth Federal Reserve District on
staff
of
Pullman
in
Bank
after previous service
1940
with Inland
the
Federal
the
Federal
was
also
Rubber
Co. and Guarantee Trust
& Savings Bank. Mr. Costello en¬
tered
the
Pullman
in
Bank
1949
after
serving with General Motors
Acceptance Corp. and Commercial
Credit Corp.
❖
V
»
'
*
National
'
•
t
'
*
Bank
troit
new
Branch
Bank
of
Chicago
as
*
of
*
the
building of the De¬
of
the
Federal
Re¬
of
at the ceremonies.
Mr.
March
was
dedication
in the
saying that
quoted
Detroit "Free Press"
"the
as
expressed
the
faith of the Federal Reserve Sys¬
tem
in
"Next
the
future
of
J
Detroit."
year," he coritinued,
"De¬
troit will mark the 250tb anniver¬
sary
Bank.
member of the
He
Credit
the
Association
of
Re¬
*
♦
in
1701.
protect
The settlement he* built
and
charge
of
in
He
department.
was
promoted to Assistant Cashier in
1948
and
placed
in charge of
loans and credits.
*
it
*
Reporting the return of Frank
L. Buell to Seattle, after a lengthy
Seattle "Times" of
stated that Mr. Buell,
Cashier of the Miners & Merchants
the
absence,
Aug.
19
Bank
of Chelan
the past
(Wash.)
five years,
Valley
part
Wenatchee
its
of
encourage
not far from where
we
.if-
Evidence of Mbwnderstanding
But
"His
appointment
was
an¬
nounced by Lawrence M. Arnold
and Thomas F. Gleed, Chairman
and President of the Seattle-First,
respectively, who said Mr Buell
would be assigned to duties at the
bank's main office here."
Int'l Bank
enough aware of the absurdity of any supposi¬
Germany, Italy, and Japan were the only sources
danger.
of
Many of
us
of the
war
did our best to delude ourselves during
days, at least- after our entry into the
conflict, with the idea that Russia was a true ally of the
democracies, so-called.
Doubtless, official propaganda,
Communist preachments and wishful thinking led all too
many to some strange ideas in those dark days.
There
does, however, scarcely seem to be any excuse for selfdeception by the time the fighting ceased or within a very
few months thereafter. By that time, it should have been
plain as a pikestaff even to a wayfaring man though a fool,
most
that World War II involved
nies
to
destroy
W.
Senior
Partner of Courts & Co., is sailing
on
the Queen Mary, Aug. 30 to
attend meetings in Paris of the
the
to
the
increase
tional
Bank
Recon-
for
struction
and
Develop-
m e n
Mr.
t.
is
Courts
at¬
in
National
of
Bank'
meetings
Aug
11
from $100,000 to $200,000.
<•
•.
*
*
,
*
.;
National
Bank
in
Albuquerque,
tation
U. S. Treasury
f i
f
o
i
c
1
a
visit
France
he
s
some
language other than force.
:
Richard W. Courts
attended
as
we
Droit, University of Paris, in 1919
Before
from
U.
the
S.
Army.
returning, Mr. Courts ex¬
to visit in Germany,
way, Sweden, Switzerland,
and England.
pects
New York Stock
Nor¬
Italy
Exchange
The New York Stock
Exchange
in Faroll
Vose
&
of Aug.
as
Co.
limited part¬
Company, retired
Aug. 31.
&
has
been
dissolved
George L. Langreth retires from
George J. Hanley i
George. J.
Appointment of Selden Clark;to He became-' associated with the
position of; Vice-President: in Stokes firm in 19218. and was ad¬
the
mitted to partnership in
1937.
From such of his remarks
dispatches reaching this country,
gather that the former Prime Minister did not go very
much
into
about
it
detail
to
precisely what ought to be done
be done about the danger his
country is exposed to from the Continent. There are, of
all
or
as
what
can
the Atlantic Pact and various other understandings,
explicit and implicit, but we are now face to face with
the question of how Western Europe can be defended
against Russian might without the industrial power for
war and the
manpower for war which Germany has time
and again revealed in years past.
course,
It
has been said
in
over
and over again that no fdrce
Europe could hope to stop the Soviet army short
of the Atlantic.
without
it would
could do
31.
partnership in Wood, Struthers &
Co. Aug. 31.
;
characteristic utterance the other
contained in the
were
now
Warren G. Hamer,
ner
a
the Kremlin decide to march.
since
leave
in
particularly the helplessness of Western Europe should
to
the Faculte de
on
previously preferred
ignore.
.
his
This * is
first
nicipal Bond Club of Philadelphia.
dedi¬
Throughout it all, however, the
to have persisted that the Krem¬
day called the attention of his countrymen and, for that
matter, of the world to the hazard in the existing situation,
Hanley, partner of
raising it, effective Aug. 17, Walter Stokes & Co., Philadelphia,
$1,000,000 to $1,500,000; of died on Aug. 23 at the age of 46.
the $500,000 increase, $375,000 re¬
Mr. Hanley was a graduate of the
sulted from the sale of new stock;
University of Pennsylvania and
while a stock dividend of $125,000
the Law School of Temple .Univer¬
made possible the further increase.
sity. He was President of -the Mu¬
the corporation and bank relations
appears
Mr Churchill
of
N. M.,
trade
side and the so-called democracies
one
the other.
peoples who have been arguing and pleading with
dictatorship have permitted their armed strength to
ebb into startling ineffectiveness at the same time that
their words were growing increasingly strong. The possi¬
bility, not to say the advisability or even the necessity of
making allies of our former enemies—real allies with a
punch—appears to have been wholly out of the minds of
the powers that be, at least until Korea brought the world
the
of
and
from
"
Indeed,
The
to
An
increase of $500,000 has oc¬
curred in the capital of the First
on
situation.
maneuvering between Soviet Russia and
the
on
this
that
invi¬
the
at
McAlester,
at McAlester, Okla., as of
been
essence
of
diplomacy of that half-decade has
face to face with facts which it had
these
tending
has
capital of
inwardness
true
Courts,
Interna¬
from the firm
A stock dividend of $100,000
the
much if not most of the
lin could understand
changes:
served
of
sense
Meeting
Aug. 15 from $100,000 to $150,000
through
a
stock
dividend
of
$50,000.
•
of them and leave the other in full flower
one
About five years have elapsed since firing ceased.
During that time, we and some of the other former foes
of Germany have had good reason to come to a realizing
has announced the following firm
.
conflict between two tyran¬
to invite disaster.
was
silly supposition
Weekly Firm Changes
1
a
types of tyrannies not altogether unlike, and that
or
Grown Weak
Richard
The City National Bank of Law-
*
!
respects
as
tion that
of the west
Courts Sails for
proposal
been well
its satellites
ton, Okla., increased its capital on
t
the
Germany, and the
broadly similar attitude toward Japan (although never, so
far as we recall, expressed in-quite the same words or in
so
bald a fashion) is even more striking as an evidence
of a complete want of understanding of the true inward¬
ness
of the world political situation at the end of the
fighting. It would be impossible to say what went on in
the minds of officialdom at that time, but every informed
citizen of this country, and of other countries, should have
in
"Times"
The
branch.
*
of its founding by, Cadillac
to
was
Reserve
'
cornerstone
Chicago occurred
on Aug. 24, at which time Ben R.
Marsh, Detroit branch Chairman
of the board of directors, presided
serve
credit
to
office
Oakland
City Bankers.
•»
laying
the
in
active
serve
|; j
for
the
transferred
was
'
*
The
a
Advisory Council of
Policy Commission of the Ameri¬
can Bankers Association, and was
"
Auditor.
.
1947
in
and
♦
r.
According to the Chicago "Jour¬
nal of Commerce" of Aug. 26, Rob¬
ert O. Brown has joined Mercan¬
tile
the credit department
entered
he
boy; in 1932
messenger
as a
bank
with
was
1925,
Corp.
merger
Bank
National
Stock
Bank
First National Bank.
Trust & Savings Bank
Justin
Aug. 27.
Mr. Bartman joined the
bank's offices in San Francisco in
af¬
investment
Corp.,
First
of
filiate
at JPullmgn
President.
Century Club it was announced on
added:
military service in World
Atwood
Chicago
just completed 25 years of service
with
the
institution, is now a
member
of
the
bank's
Quarter
University of Minnesota, to enter
ment of three members of the staff
of
having
Cal.,
Oakland,
staff
B.
of the
Announcement
of
is returning as Assist¬
ant Vice-President of the SeattleFirst
National Bank, which
he
served from 1939 to 1942 on the
He
Y.
said:
vestment business.
In
1924 he
"Mir. Terry had spent his entire
joined the staff of Minneapolis
career in the banking business. He
Trust Co., formerly affiliated with
rose
to the position of Assistant and now
merged with First Na¬
Trust Officer
in
the Columbia tional Bank of Minneapolis.
He
Trust Co. of New York, leaving in became its Bond Officer and later
1925 to accept the. same position served as Vice-President of First
the
Cashier of Crocker First National
Bank
graduated from Dart¬
mouth College in 1913 and took a
master's degree in Romance
N.
in its issue of Aug. 26
in
Assistant
Bartman,
Languages at Harvard in 1914. In
1917 he left the faculty of the
Smith has been with the company
since 1927; he was
T.
Lester
the
*
*
ward J. Smith has been named as
Assistant Treasurer
operations
while Ed¬
J.,
N.
Newark,
its
"But
Wickman,
appointed
of
Co.
Press"
"Free
The
say:
*
*
G.
President
encouragement."
and
Building.
company.
William
tection
He
30.
Aug.
on
succeeds Gustave Pressac, who re¬
tires after
cate the structure to the same pro¬
Trust
effective
York,
Paris
the
of
Guaranty
announced
was
been
has
Masson
Auditor
of
As We See tt
require Mr. Clark to divide
his time between Southern Cali¬
Bankers
and
NEW OFFICERS, ETC.
Rene
an¬
by A. J. Gock, Chairman
board.
The appointment
will
CONSOLIDATIONS
appointed
been
Angeles has
tion of Los
News About Banks
Korea has shown how little
we
could do
relatively long period of preparation. Indeed,
appear rather more than doubtful whether we/
very much in time even if we were ready on this5
a
side of the Atlantic.
of
And once Russia has enveloped all
Europe, the Kremlin, not its enemies, would be in com¬
mand of the Saar and the Ruhr. No notions about
a
dis¬
armed
Germany, a ruralized Germany, or any fear of a
rearmed Germany, would blind the Soviet to the value
of this asset.
Nor
can
we
dismiss
as
absurd
the
notion
that
the
Kremlin could make very extensive use of the
professional;
soldier element within Germany or of a very substantial
part of the German population at large. :One can scarcely
suppress the wish that this were the kind-of world in
which
peaceful policies could hope to succeed: It is equally
difficult
to
avoid
the
conclusion
that
the
Soviets
have
Number 4938
Volume 172
been much
.
.
The Commercial and Financial Chronicle
.
financial
the
the postwar realists than we—and for
more
(823)
tice
that reason, if for no other, the more to be feared.
and
that
porting
plainly on the horns of a very uncomfortable
dilemma as regards both Germany and Japan. We are on
the horns of that dilemma because of our faulty under¬
standing of what was going on in ihe world in 1939, 1941
and in 1945. What is clear beyond any doubt is that if
we must—and
apparently we think we must—defend the
world against Communist aggression in the years ahead,
we must not fail to make
prompt and full use of all tools
are
available to
has
or
by having offices
no¬
a
With
been
prepared
is available for his inspection.
Another
A Dilemma
We
statement
one
rule
requires
the
to
the
Exchange
unless
in
of
excess
is
sion
to
getting
$2,500.
assist
commitments
Prior
the
though,
even
obligations
in
partners of the
as
excessive
us.
rule which prohibits
a
trading
excessive in relation to the finan¬
cial
resources
excessive in
ket for
the
of
member
relation to the
the
securities
he
have
respect
or
is trad¬
Business Conduct and the
by
discretionary
reflect
information
reflect
into
comes
firm's
the
date selected
office
at
by himself and,
ber
securities.
a
employed;
as
segregation
are
method
of
direct
a
has
a
attached
of
corps
the
to
certificate,
or
a
segregation which
provides for a card record of own¬
ership
setting
forth
detail
as
required by rules.
bulk system of
examiners, all of whom are ex¬
pert accountants.
Heading this
group is a chief examiner and an
assistant chief examiner.
Their
duties
least
once
Their
is
a
it
spects
is
is
Federal
have
of
or
to
that
and
frequently
during
there
the
firms
relation
be
must
evaluated
necessary
the
that
creased
ask
a
In; almost all
in
*
business, that is so rigidly and
completely regulated.
The prin¬
or
cipal'rules dealing with the con¬
duct of the member firms are the
so-called
Five
.Hundred
rules.
Among those rules? is one that
requires segregation of customers'
fully
paid
curities..
or
excess
Firms
margin
may
not
se¬
co-
complementary rule covering odd
lots.
mentioned
I
As
earlier,
the
Exchange supervises the employ¬
ment and activities of registered
employees—customers'
business—the
of
pro¬
men,
link
be¬
tween the customer and the firm.
ary
of
in
representative
registered
acts in a quasi-fiduci¬
many cases
position, being the instrument
handing over securities and
cash from
or
He
to the customer.
received
broker
such
able
a
in
account
an
the
of
informed
be
condition
Monthly
For
the
counts,
home
or
of
purpose
Securities
the
under
becoming
bers.
ac¬
a
of
violation
a
taken
rectly
to
can¬
moment
of
none
Customers
of
diately.
as
an
an
Financial Statements Furnished
to
qualified
you
as
are
their
you,
incidentally,
customers'
examination
monthly statement from
a
that
it
state¬
We do
to
mem¬
ex¬
control.
no
Exchange
men
re¬
as
a
is
today
partner who
owns
a
prove
we
has
an
Member
of
receives
business
facts
and
whether
the
a
sole
man
is
done
the
on
that may
the
Over
past
com¬
Here
interest
firms
he
he
was
got
was
to,
entitled
words, the charges as
sented by the Exchange are
sented
to
as
whether
or
execution
an
at
his
consequence,
a
as
the
his
sold
order should have been executed.
the
In
majority of those cases,
were readily
ascertain¬
and the complainants, get¬
a
clear
of
what
picture
In
pre¬
pre¬
laymen.
In
cases
brought by the Department of
Member Firms, I present the facts
to the Board in the presence of
the member charged with the
by
offense.
In
arriving
has
suspend
or
the
of
at
the
decision
a
to
power
While many
censure.
sections
the
expel,
which
under
a
member may
be charged are spe-*
cifically enumerated, such as
fraud, fictitious transactions, and
so forth, there is a catch-all sec¬
tion which
"A
reads:
member
who
shall
allied
or
member
be
adjudged guilty by
an affirmative vote of the major¬
ity of the Governors then in office
of a violation of the Constitution
Exchange,
rule
or
of
violation of
to the
or a
pursuant
adopted
resolution
violation
a
Board
the
of
of
a
Gov¬
regulating the conduct of
ernors
business
of
members
.
members
which I want to
draw your attention—.
conduct
sistent
allied
or
."—and here is pow¬
.
erful language to
or of
proceedings fncon-.
just and equitable
or
with
.
principles of trade, may be sus¬
pended or expelled as the Board
determine."
may
were
price
a
shares
some
and,
Most
whether
good
as
entitled
because
limit
to
as
cus¬
against member
received.
were
136
year,
tomer complaints
From
1938
period
a
Board
ing
heard
has
from
12
over
17
charges
of failure
or
the present time,
to
of
to
of
use
misconduct
Five
suspended
two
mem¬
expelled; eight were
for
periods ranging
were
from
result¬
the diligence
expected of members.
bers
the
years,
cases
months to three years,
the facts
and
able
by censure and fines.
ting
occurred,
satisfied
are
with
the
handling of their orders.
In the
event, I should add, the investi¬
gations leave
four
mation.
50
effect
Stock
a
satisfactory
a
settlement
When there is
clear-cut disagreement between
the
customer
firm
the
and
the facts
to
as
the parties are referred
of
law
arbitrators
member
that
obtain,
to either
Here
are
the facts:
years,
a
period of
record of
members
has
the solvency
Exchange
been 99.73%, which is better than
the record
of all United
States
banks, all national banks, and of
commercial
houses
the
for
period, and since 1938
our
same
record
set
a
court
hear the
to
swer
based
have
The
upon
their
perhaps
a
a
findings.
dozen
year.
great while does
himself
will
arbitrators
complaint, hear the an¬
it, and render a decision
arbitration
a
We
cases
Maine Investors
Service
ors
offices
with
at
76
Main Street.
of
defending his position in
In 86 of the 136 instances
100%.
WATERVILLE, Me.—Arthur B.
Levine has formed Maine Invest¬
Only once in
member find
court.
of
has been
by up the Ex¬
arbitrators consist
members of the Exchange and
outsiders.
a
board
a
The
change.
of
to
or
of
terminated
were
Since 1899, covering
any
with the customer.
cases
I mentioned previously that the
Exchange is proud of its solvency
record and promised more infor¬
degree of doubt,
the member firm will invariably
men¬
Harris, Upham to Admit
Harris, Upham & Co., 14 Wall
Street, members of the New York
Stock Exchange, will admit Lewis
Harder
to
partnership
on
possible to B.
give the
customer a
complete Sept. 7.
explanation which terminated the
matter.
In 15 cases the parties
Edgar Andrews Opens
tion previously, it was
at the
were
referred
tion.
could
In
10
to
law
or
instances,
arbitra¬
upon
(Special to The Financial
imme¬
with the customer.
ing
cases were
The
remain¬
not, to our knowl¬
edge, completed because the cus¬
tomer did not communicate again
your
with
been
the
ROWLEY, Mass.—Edgar J. An¬
i
the
I
mentioned
enough
indication
of
you
qualified, any
about 'some
a
is
engaging in
a
securities
business from offices on Wethersfield Street. He
was
formerly with
Boardman, Freeman & Co.
' little
position
•
of
Stator
the
Company
:
Disciplinary
examination.
drews
Exchange .after; haying
given
firm.
Chronicle)
re¬
viewing the facts, the firm settled
it broad
not think
be'
Governors.
of
member may not be
accused
Constitution
Department
also
some
treat it for the value
as
of such charges
Board
other
a
Complaints
you:
addition, pass
to
hearing
the
Board
bring charges against
member, rather than
the
of
are
knowledge of the business. It is a
broad
comprehensive
examina¬
Every
financial
their customers.
or
Exchange, the number of
plaints would be sizable.
You would have to serve
apprentice or trainee in
tion, and
required to offer
are
the
before
of the
ume
by educational standards,
the business and, in
any
cellations.
'
As
the floor, and
or
to
The
of "Customers' Men"
Supervision
become
every
The
~
Firms
and
law
for
partners
Constitution,
Customers'
refer¬
without
are required to
order or wire
given directly or indi¬
members
preserve
the
against
the land.
desig¬
record of
a
they had
allied
an
regular repre¬
a
it
of
to
ence
address.
customers'
for
their
of
of the Exchange; he thus
subjects himself, in other words,
to the same discipline as do mem¬
char¬
qualifications.
who might be
qualify as a registered
to
of from
'
business
for acts
which
instance,
one
suspended
were
Rules
"
nated
rules.
of
by and be amenable to all provi¬
sions
of
the
Constitution
and
persons
other sentative
or
mis¬
vised, each general partner of
registration unless he has a crim¬
inal record, can be barred from
membership in the Exchange or
approved by a partner of
must
of good
person
a
Many
careful
partner of the firm.
must
of
one
of
member firm must agree to abide
Exchange Act, because it is dif¬
ficult to bar a man from such
firm,
copies
Exchange has many rules.
I know of no other organization,
a
and
ments
The
Exchange has
acter
Members
Numerous Rules
The
lots.
be
that this situation has been prop¬
"
round
rule
the
must
employer
than
more
Under
higher
price
a
covers
number,
be sent to the account at a
tell
erly ;observed.
it, in
pelled
measures
event
guilty
the rule and, as a result
members
firmations of all transactions must
de¬
capital fig¬
we find
at
That
if it is des¬
or a
except
Exchange.
regis¬
by
the
the
against
person
was
complaints
on
periodic statements of account are
provided for that purpose.
Con¬
in
cases
constitute
before
periodically
in positions and to
them for current
ures.
to
noted
have
we
value
curity
employee of a
an
employee's
their accounts.
not often, it
call some firms
morning
'following
them
in
another
Participation
of exemption.
The
Customers
but
to
time.
the
ducers
transactions
Sometimes,
profit resulting from
in prices existing
than the last different sale
the firm.
available.
is
re¬
are
in
of
of violations
or
was
customer
be
must
must be
immediately
capital
to
the
underwritings
An account
or,
symbol
a
Transactions
lists of security holdings of mem¬
ber
owner
scrutiny by
The
overtime.
uolkoited
imme¬
an
or
the
the Dow-Jones averages, our staff
works
a
where
may be accepted.
A discre¬
tionary account, where the discre¬
tion is vested in an employee of
seen
fluctuations
of
member
disciplinary
taken
partners
That
difference
form
it
where
month,
past
sharp
are
have
handled
representatives.
that
proprietary accounts is studied.
we
at
bank, an insurance company, the
Exchange itself, or other fiduci¬
aries must have the approval of
of securities held in firm positions
as
transactions,
purchase and
almost immediate, sale
of the same or equivalent securi¬
supervision
exercise
to
The account of
minutely in relation to the re¬
porting firm's capital.
Going back, for a minute, to
responses
received by the Ex¬
change to its questionnaires, a list
In markets such
diate,
facts.
underwritings.
The reports that come to
the Exchange today are examined
or
there is
erty of, say, John Zilch, and that
the
firm
knows the
essential
by
positions in
reflected
words, if you carry cus¬
margin accounts, anything
arbitrage
evidence in the
files to show that it is the prop¬
In years past,
difficulties
financial
your
Con¬
explores
the complaints of customers.
One
you personally buy must be paid'
for in full.
An exception covers would suppose that, with the vol¬
partner
a
Partners
accounts
there
position of its member firms in¬
volves weekly reports on under¬
writing positions.
on
by
approved
firm.
beneficial
the capital
the Exchange to watch
be
the
ignated by
record
employed
method
public busi¬
tomers'
must be carried in the name of its
later on.
Another
a
should know who John
tered
member
this
about
more
account
over
Incidentally, it is superior
that of banks.
I want to tell
you
doing
Short Sales
quired
firms.
to
you
of
think, proud of the solvency rec¬
its members
Jones'
must
plored
carefully;
exhaustively,
might be a better word. The Ex¬
change
is,
understandably
I
of
has
is, what he does for a liv¬
You are familiar, I know, with
ing, when you enter into financial
relationship with him."
Member the Securities and Exchange Com¬
firms must know their customers. mission's short-selling rule which
The opening
of each account prohibits the short sale of a se¬
examiners
them
what
to
rule that prohibits a
a
Jones
merits further examination is ex¬
ord
account car¬
every
other
ties for
books,
been
made
are
the
by
defend
asked
its
of
from carrying on margin the, seat.
ness
the
John
is
authorities,
aspect
any
the
to
rules of
any
Reports
Exchange
and
make
State
or
breached.
the
they
Exchange,
the
with
by the firm.
The Exchange
not try to be paternalistic,
the
Exchange
does
say
to
its
member firms that "If you have
than
of
his
enabled
member firm
does
re¬
purpose
whether
determine
nection
It
many
inclusive
more
examination
of
audit.
In
to
mem¬
occurred.
ried
an
not
The
audit.
an
to learn the essential facts in con¬
year.
visit
examination.
an
Every member firm is required
each
upon
of the Exchange at
firm
member
call
to
are
explain and
be
the
of
resources
the
charges
against members and partners and
1938,
the
was
any
were
placing the name of the customer proprietary accounts of the part¬
on
an
appropriate identification ners or of the firm itself.
In
*
Exchange
a
to
appears
market, the
the firm will
of
There is
Two methods of
I
have mentioned, unknown to the
firm.
It is a surprise audit.
The
the
to
account and the
mingle such securities with other
gained
pursuant to and ordered by an
independent outside auditor, who
account
If
heavy volume of trading in
relation
New York Stock Exchange
firms.
member
for
written
of
represented by legal counsel.
The
Exchange
with
rule
discretionary accounts
to
carried
similar
a
members.
The
over
We
allied
provisions
presentation
reorganization
mar¬
ing in.
Continued from page 4
the
and
are
members.
on the part of
conduct
Exchange; either
members of the
people of this country must go to the polls this
autumn. They must not fail to study all these questions
carefully meanwhile.
to
Exchange, in
whom
firm.
We nave
to
up
stitution did not provide for allied
instances, unrelated to their
some
the handling of discipproceedings involving
in
nors
linarv
There
measures
Allied Members
full picture of partners'
a
powers upon the Board of Gover¬
members
That provi¬
Exchange in
the
the Exchange,
moral and ethical standards.
all
loans of partners of member firms
The
must
he
private wires
or
of
what
the Exchange considers high
re¬
of
member
a
23
Procedures
that I would
more
of
CAMBRIDGE,"
the
give
information
disciplinary
Mass.
—
Stater
been formed with
offices at 1430 Massachusetts Ave¬
Company
nue
has
to engage
ness.
Officers
in
a
are
securities busi¬
Daniel F. Com-
procedures taken against mem¬ stock.
President
and
Treasurer,
more than you would consider the
his examination in any one of your bers of the Exchange. I wouldn't and William Creamer, Secretary.
want you
courses
as
broker for a statement
fi¬
to go away believing
being the sole stand¬
nancial position.
That statement ard of whether a person has done that because we ha^e these'con¬
must be as of the most recent the necessary work to qualify for trols. rules, and methods Of in¬
i Frank (At
-Shea? partner in Mcspection
and • examination/ that
-V
r»r.
questionnaire
date;
Within • ,35 a degree.
No
nOn-member of the Ex¬ nothing wrong ever Occurs. Mem¬ Martmis & Mackey and a member
days after the .annual
audited
questionnaire has been completed, change may enjoy the collateral bers of the Exchange are just as of the New York Stock Exchange,
died at his home kt the age of 56
•. '•
'the member is required to send to facilities; of the Exchange,' such human as the 12 Disciples.
-The Constitution1 confers abroad after a long ilkiesS. ;
■ •••■*•
every customer either a copy -of as continuous quotation service or
ber firm
the
carries the notation that
customer
may
call
upon
of his
'
,1;;,^Vank:A.Shea '
..
*
24
(824)
The Commercial and Financial Chronicle
delphia," Albert Tyson says.
"They work.
work in any city in the country." '■
•
•
Both
Securities Salesman9s Corner
Tysons
for securities
.
in
wealth
has
been
tion than
claims.
Having Trouble Opening Up New Accounts? Then Read
How
A
comparatively
accounts each month and has been doing it for nearly
Officers of the firm make no sedret of how it is being
done.
They describe their methods as the application of sound
merchandising practices to the securities business.
ing 60
a
new
year.
firm
The
is
Tyson
&
brothers Albert and Joseph
think
they will
today that
which
huge
a
The
One
to
someone
more
need it.
The response to our efforts confirms
one
ity to get back their money at any
However, the prospective
time.
investor is
in
Continued
Co., Inc., whose top officers are the
Tyson, President and Vice-President,
from
asset
value, less any redemption
charges.
Moreover,
there
is
a
respectively.
Both
Current SEC
Policy Regarding
Investment Companies
experienced in different aspects of the business.
Joseph in his early forties and junior to his brother by a few
were
knew the selling, administrative and analytic end of the
business.
Albert, widely known in Philadelphia as a direct mail
years,
expert, numbered
many
had long had the
feeling that the promotional and selling prob¬
brokers among his clients.
Both Tysons
imply
lems of the securties business differed little from other fields.
It
was
Oct.
on
The firm had
no
as
1, 1949, that Tyson & Co. opened its doors.
prospects and
no
salesmen.
function
long-term
a
set out to
for
get salesmen.
new firm
to get
a
mail
The brothers decided
program
is to get prospects.
and
was
direct
was
At the
same
securities
more
or
immediately preceding full
stated
a
aver¬
and
the date of publication.
This
information must be accompanied
by a statement to the effect that
was
Their
called for salesmen preferably without securities expe¬
rience, on the theory that, if a man could sell, he could make
more money in the securities business than in most other fields.
a
a
total
of
10,000
limited either to
letter.
When
report on
a
report
order blank is enclosed.
postal cards
a
on
month.
Mailings are
timely market situation or a market
timely situation is distributed an
Quite frequently salmon-colored two-way
used to call attention to
are
past 10 months the firm
•reached
a
upwards
of
a
estimates that
100,000
people
in
sylvania, South Jersey and Pittsburgh
special situation.
its
In the
direct mailings
have
Penn¬
areas.
on
both the finan¬
cial and classified pages of the newspapers.
Such advertisements
have been factual, down-to-earth statements minus all the
glowing
promises that are so typical of so many salesmen "ads."
thing Tyson & Co. promises salesmen are leads.
The only
Gradually a sales force was built up. True to their convictions
the Tyson brothers have favored the inexperienced securities sales¬
man, and it has paid off.
Today, out of a force of 14 salesmen, only two had previous
experience in the securities field.
Paradoxically, the firm's best
are
an
ex-accountant
and
a
former
engineer.
Neither
had any experience in selling prior to
going with the Tysons.
't
The Tysons do not depend exclusively on mail order
motion.
proy-
Ever since its
newspaper
organization, the firm has been a consistent
advertiser using the financial pages. But the firm looks
upon newspaper
advertising
as
a
prestige builder and supplement
to its mail order work.
"We
lqok
advertising
newspaper
as
It
necessary.
is
tising."
"
The elder Tyson explained it this
way: "As we added salesmen
stepped up our newspaper advertising on the financial pages.
We did it with the thought in mind that it would
increase the
percentage return on our direct mail advertising—it really pays
For
receives
financial
on
centage return
receive
we have a special situation that we are
mailing on, we time it so that our prospect
the day we advertise the
special situation in the
a
columns
of
the
local
newspapers.
Invariably
the mail order rises while at the
on
numerous
inquiries
as
a
result
of
our
same
our
per¬
time
newspaper
!.
Salesmen, even experienced securities salesmen, must
through a short training period when the firm takes them
men
have little
or
go
on.
knowledge of the securities business,
the training period is longer.
Moreover, the latter type salesman
is permitted, for the first several
weeks, to sell only mutual funds,
preferably one of the better known balanced funds.
no
There is good reason for this,
according to Joseph Tyson.
"New salesmen, especially the real green
ones," he says, "want to
go out and sell right away and
frequently they want to sell their
friends.
Well, we want them to sell too, but not before they have
plied by the funds they get a birdseye view of the distinction
between investment and speculation.
They learn about yield,
diversification, quality, etc."
To date the Tyson
theory that a good salesman in another
out
good salesman in the securities field has worked
A case in point is a former insurance salesman.
very well.
He took a post with the Tysons, went
through the training period
and has become a steady producer for the firm.
"What is more,"
Joseph Tyson
says,
"he has
none
of the usual
inhibitions that
so
many of the men long in the business develop."
Albert Tyson believes that a
good salesman should make a
sale to one out of every four
prospective clients.
"We like our
salesmen to shoot for that
mark," he says.
-
monthly basis the goal will be reached."
Right now Tyson & Co. is expanding.
the firm opened
scale
expansion
sentation in
a Pittsburgh office.
throughout western
seven
originally
be
shares.
It
in¬
are
or
and
value.
surplus.
The
so-called
"yield" represented by these com¬
that the Federal
ments
distributions is misleading
because it hides the fact that the
ulate
of
the
Statement
of
the
the
a
Policy declares
that it will be considered mislead¬
ment
ing in the future to
management."
combine into
variations
any one amount distributions from
net investment income and
dis¬
tributions from any other
but
source.
A further
ciation.
misrepresentation fre->
quently appearing in sales liter¬
of
are
general
matter
a
company
fixed
pay
demand
amounts
of
at definite
or
money
on
periods. To
prevent these misleading implica¬
Statement
the
tions,
Policy
of
flatly prohibits the representation
or
implication that shares of an
many
theme,
investment
running through them all is
constantly
to
of fact, in-+
shares are in
way similar to securities repre¬
senting contractual obligations to
to
the implication that the Commis¬
sion or the Federal Government
is
similar
are
no
investment
There
this
As
vestment
reg¬
practices
supervise
or
of
shares
insur¬
is that in¬
in
addition,
offer
higher
yields and opportunity for appre¬
way as to provide
regulation
life
and,
Ex¬
and
Federal
protection to investors.
Typical of these is the statement
"safeguards offered by govern¬
practice,
and
accounts
shares
annuities,
implication
management
companies
open-end
The implication
vestment
re¬
State Govern¬
or
statements
common are
with government bonds,
savings
gen¬
conserv¬
these fixed contractual obligations
or
Securities
them in such
security profits, and only in part
a
dividend paid from investment
this
the
media
highly
major sales
as a
change Commission actually
distribution is in part a return of
capital, in part a distribution of
correct
or
as
are
frequently
their securi¬
are
investment
compare
ance.
bined
To
with
erally regarded
the invest¬
Much of the sales literature
viewed employed
appeal the claim
income.
Investment companies
which
inherently involved in
with
company
saying that people
known by the company they
ties
a
ment.
income
net
from profits on the sale of
securities and distributions from
State¬
old
an
ative. Most
those
The
investment
given to comparing
these matters may
discussed without pointing
explaining the market risks
or
was
.
is
Furthermore,
tributions
from
of
exception and
no
preser¬
in
purchased.
less
it
1
keep.
investment
capital
be
may
which
at
discussion of the redemption
any
features
loss
against
price
ment of Policy requires that these
represent
a
redemption
not be
practice similar to that re¬
ferred to above is to combine dis¬
or
are
safe
as
similar
are
company
as
government
bonds, insurance annuities, sav^
ings accounts or life insurance or
supervising
invest¬ have the fixed income, principal or
management, its any other features of a debt se-;
assets, its portfolio practices and curity.
erous yields indicated are contin¬
; ?
; -;
uous
and dependable.
A. similar device is the use of;
There is policies and its operational activ¬
ities.
Nearly, all of these state¬ language implying that the man¬
constant repetition of phrases such
ments go beyond
the statements agements of open-end companies
as
permitted by the Securities Act handle
their
investments
in
a
"A dividend check
every month" of
1933 that
ature in this field is that the gen¬
ment
company
"
the
"Dependable
"You
income"
receive
offered
continuous
in¬
come."
Since the income
investment
on
company shares is dependent upon
the company's
income from its
portfolio securities and is subject
to
deductions
for
management
fees and other expenses, it is ob¬
vious that the claimed
liberality
and
dependability of the investors'
return is open to serious
to
represent
ance
a
that
an
liberal
or
rates.
more
cities in this
"Frequently
on
a
Federal
insurance companies are continu¬
out
by Federal and
authorities, and no such su-,
pervision is exercised over the >
portfolios of open-end companies.»
The Statement of Policy, there¬
or
State authority with¬
explaining that this does not
involve supervision of manage¬
ment
investment
or
Over-Emphasis
the
for
favorite
As
growth
investment
company
of capital
investment.
the
particular
words
phrases
may
differ, the
same
to
nearly
potential
always
as
believe
to
that
his
ap¬
investors
couched
lead
or
the
in
is
such
investor
capital
will
to
in¬
crease, without pointing out the
risk factors involved or that his
capital
may
Some six months ago
Now it is planning large-
diminish. It is the
up¬
downtrend.
Pennsylvania
held
with
repre¬
area.
act
custodian
as
out
estate
or
as
the
a
means
investor
become
dependent.
agent
Banking
can
through
build
or
of
securities,
dividend
objection
an
financially in¬
Obviously,
general
to
the
it
ever,
that the
has
has
frequently occurred
role of these
institutions
been
over-emphasized.
It is
implied that these institutions in
some
comparisons except to the extent
that a particular company is so
restricted or limited by the statement of its
Perhaps
purchase and sale of portfolio
securities
and
the
payment
of
as
this
prac¬
tice, the Statement of Policy pro¬
hibits such misleading statements
and
of
requires, where the functions
banking
ferred
to,
institutions
that
the
are
limited
re¬
role
most
the
difficult
^
parison of the performance of a
particular company
with some
other
security
vestment
index
ment
or
or
with
or
medium of in-;
some
security
market average.
Invest-
fre¬
quently compared with those of a
particular security in the induscompany
ket
correct
■!
Claims
problem in this field is the com-
parisons.
supervisory functions
management in such matters
To
■■
Performance
have
some
•
policies filed with the
Commission.
provide protection
investors against possible de¬
preciation of assets, against man¬
agement mistakes and, in addition,
manner
to
over
making of such,
fore, forbids the
dis¬
course,
functions of
these institutions being
accurately
described in the sales literature
of investment
companies.
How¬
dividends.
Investment company shares are
which
or.
you
.
attractions
Though
terms
of
State
Functions
transfer
shares in much of the sales liter¬
ature reviewed is the
possibility-
peal
practices
supervised
ally
bursing agent. There is, of
trend that is emphasized, not the
Of course, with its
expansion? it is stepping up its promotional
"We've tried out our ideas for 10 months in
Phila¬
activities.
of
similar to insurance com¬
,
no
of
manner
The Statement of have no such restrictions except;
Policy, therefore, declares it to be as recited in their stated objec¬
misleading to make any reference tives and by the quantitative reto registration or regulation of trictions in the 1940 Act. More¬
any investment company
under over, the portfolios of banks and
or
imply an assur-,i
investor will receive
Claimed Growth of Capital
claimed
be
under that Act.
question.; policies.
receive any specified rate
of return.
One
to
are
know, it is quite cus¬
continuous, dependable
tomary for investment companies
return, or that he will to
employ banking institutions to.
stable,
or
securities
registered, or by the- panies or savings banks or oper-y
Investment Company Act of 1940 ate under similar investment re¬
that the
company
is registered strictions. ; Investment companies
Accordingly, the Statement
of
Policy declares it to be misleading
idea of what they are selling.
So, to give them an outlet
for their energy, we let them sell the better known
balanced funds.
By studying such funds and reading the excellent literature sup¬
a
original
the
of
an
conditions the
investment at the
factors be brought to the attention
of the investor in connection with
of
increase
of
of
as
market
his
of
time
than
principal.
that
will
purchase
of
some
field will be
to
assurances
capital
protection
out
we
advertisement."
Where
of
misleading
the
vation
A
instance, when
it
increase
company shares involves
during such period.
we
off.
prognostication
any
imply
that
representation of future results.
value
mislead¬
are
result of
a
.
upon
vital in building a
healthy business," Albert Tyson says, "but in
our scheme of things it is a
secondary means of promotion.
We
use newspaper
advertising to supplement our direct mail adver¬
going to make
assured
capital
southeastern
the
To obtain salesmen the firm has advertised
salesmen
make
vestor's
There must also be disclosed any
increase or decrease in asset value
pieces of literature each
a
to
an
or
,
general failure to explain that
ing since rarely is£ an open-end
investment company in a position
deemed
the return is based upon dividends
in the period covered and is not
Albert Tyson handled the direct mail work.
Since the firm
first opened its doors, it has made mailings every two weeks for
claims of this nature
Accordingly,
the
Statement
Policy declares that it will
at
program
^
one
offering price and a stated
dated offering price current
age
launched.
Its
time the firm
salesmen.
a
fiscal years to both
The brothers knew how difficult it
experienced
percentage return except
ratio of dividends paid from
a
net investment income for
to put their convictions to the test from the very beginning.
First,
rarely told, or is told
wholly inadequate manner,
a
that the sales load will not be re¬
turned but merely the then net
13
page
ap¬
of the best protective features
which they can obtain is the abil¬
more
thinking."
our
,
principal sales
nies is the redemption feature. In¬
vestors are generally assured that
them.
approach
economically and
the
of
potential securities
are
Redemption Process
of
peals with respect to the securities
open-end investment compa¬
before in the history of our country,"
Joseph Tyson
ever
they play be accurately set
market
new
"The middle class today is greater in propor¬
"Most of the people in this class
Thursday, August 31, 1950
.
.
forth.
directly by direct mail, backed by timely newspaper advertising,
than by any other means.
In telling our story, we tell it simply
and plainly.
We have a product to sell and people both want and
investment firm in Philadelphia is open¬
new
as
buyers.
They are only waiting for
We think this market can be reached
Philadelphia's Tyson Brothers Do It!
We
..
in the past 10 years by the shift
the result of inflation, taxes, and
created
that has occurred
union organization..
By JOHN BUTTON
convinced
are
.
trial
shares
commercial
or
are
field.
also made with mar¬
such as the Dow-
Industrial
Averages
or
Standard & Poor's 90 Stock Index.
The comparison of
an
,
,
Com¬
averages
Jones
r
are
investment
,
,
m
with shares of d
any other company may be mis- ,
leading unless carefully qualified
or
explained. The comparison of I
the performance of an individual
investment company with
some
company's shares
Number 4938♦, .The Commercial and Financial Chronicle
Volume 172
(825)
25
these charts usually averaging," have
been increas- is
mentioned,
the
descriptive Statement of Policy so requires.
And there you have it.
While
period arbitrarily se- ingly advocated in the sales lit- statements made are wholly inerature.
The basic argument in adequate.
*
erly Qualified or explained since lected
to
show
a*
substantial
Only
through
the it certainly isn't perfect, there :is
a
reason
for every word in the
•the.comparison
the company;' In addi- support of this continuous system prospectus is the investor able to
of investment is that dollar av- ascertain what an investment will Statement
of
fairly indicateva claim'of expert.
Policy;* each was
the charts . Were prepared so
inahagement. V *:Thei7^PWiissiQhVt3S';tp.: include in the growth of the eraging solves the problem of cost him. In order that the in- carefully weighed and re-weighed*"6-^
and "the
timing purchases ana is a sci- Vestor may be forewarned of the by your representatives on the \
industry attempted toinvestment not only increases in
means
of
work put an explicit Statement of net asset value but also all dis- entific
turning price sales load when residing favorable industry committee and by the >
selected market index is likewise
found
apt to be misleading if not prop-
covered
that
a
-
,
,
Policy
what
tributions made during the period fluctuations
covered, whether from investment vantage.
to what would be con^-
as
sidered
fair
a
would
comparison
considered
be
and
income, security profits
mis-
to
investor's
an
ad-
pany
capital
or
However, because of the
of
investment
corn-
securities, the Statement of
Policy
Flaw in "Dollar Averaging"
surplus. The charts were based
great variety of such comparisons upon net asset value and did not,
This
supposed
scientific
apand the many factors involved in therefore, commence with the in- proach to continuous investment
determining whether or not a par- vestor's true cost.
Furthermore, of fixed amounts of money over
ticular comparison is fair, it was it was impossible for an investor a
period of time has been used in
ultimately determined that, cer- t° ascertain what his investment a manner that distorts and extainly at this time, the working experience would have been had ploits a simple mathematic truism
out of explicit rules is not feas*ie purchased shares of the com- for the purpose of promoting
ible.
The
Statement of Policy, Pany at any time after the begin- sales. As now used, it
ignores the
therelore, does no more than lay
the period covered by the realistic fact that in a declining
down certain general rules to be chart. In subsequent letter to the market only an investor of
ample
followed.
One of these is that NASD, the Commission set forth means could
afford to continue
leading.
descriptions
requires
which
ature
all
does
sales
not
liter-
state
the
Commission
A
agreed
was
-
Living Amendable Document
As
I
mentioned
amount or rate of the sales load
to include a statement that there living document;
is a sales charge to the investor
included in the offering price of
amended
the shares of the company and to
applications
include a reference to the prospectus where detailed information
*n regard to the sales load and
other information is set forth,
show up
The Switching Evil
it
before
upon.
to
it is
earlier,
that
one
cover
corrected to remove any
or
that
do
sets
have had
with
sincerely
hope
we
literature.
it
eliminate
to
much
the difficulties
so,
standards
the
will
this
unfair
possibly
may
during its administration.
believe
I
forth
a
be
can
situations
new
I
for I believe in the soundness
'
of the investment company idea.
in some detail certain standards the fixed payments necessary to
It has long been
a
favorite
average was selected by the per--' Which these charts should
meet obtain the increasing number of device of some in the investment But I am anxious that its oper¬
son making the comparison and is,
order not to be considered shares at reduced cost. Only such fraternity to stimulate business by ation be consistent with its sound
therefore, not necessarily general- misleading. I assume that you are an investor could afford to leave encouraging investors to switch theory, so that its real purpose,
ly recognized as a proper basis
familiar with these standards his depreciating principal un- from the securities of one corn- which is to provide a sound in¬
instrument
for
the
for comparison.
Secondly, it is to ail(*
n°t> therefore, stop to liquidated over the full life of the pany to those of another company vestment
be pointed out that the results dis- discuss them at this time.
The "program" or ignore the fact that or to other securities of the same smaller investor* will be served
closed should be considered in the Statement of Policy merely refers when, by choice or necessity, he company. Some investment corn- rather than subverted.
This very useful instrument was
light of the company's investment to the Commission's release and discontinues the plan, the cost of panies are no exception to this
policy, the character and quality >to the above-mentioned letter and the total amount of shares pur- rule, and the sales literature of nearly destroyed in the 1920's by
the
financial
excesses
of
that
of its investments and the period adopts the standards set forth in chased may well exceed the asset such companies frequently seeks
the particular security or index or
selected.
but
Finally,
very
the' comparison
make
to
sary
fair
from
one
the
the letter,
im-
portant, the comparison must inelude any factor which is neces-
y
r
sales tool
.
standpoint
bigh-soilnding phrases
is frequently enhanced by representations
that investment companies gener-
ment company shares
and
be.
The
requires
perhaps they ; should
of
Policy
such
statements
to
companies
particular
limited to
be
where
Misleading
.
from the operation of such a
pointing
the
to above
are
or averages
duplicated by visual
presentation in chart form. Since
this graphic method necessitates
considerable
over-simplification,
its undesirable impact on the investor is obviously intensified. An
illustration
of
the
misleading
character of such
charts is the
case
of a
chart which recently
came to our attention which com-
invest-
showing the growth of a similiar
investment in the shares of the
omitted.
were
dividends
all
company,
The
irvestment
better investment,
of
dividends
the
were
company
fairly
a
generally
few
company
its performance
would have been greatly superior
had been included,
of
that
to
the
investment
com-
the
of
investment
phrases
simply
deemed to be
of
made
of
any
clear
will incur
the
such
that
plans
objec-
not
a
in
that
transaction
switch
the
involves
payment
additional sales load.
Statement of Policy requires
a11 sales literature urging
vestors to switch from one
an
The
that
in-
security to another contain a statemeot disclosing the fact that an
additional sales load must be paid
an<^ cautioning the investor to
measure
the cost against the
claimed advantage of the switch,
that
the
investor
investor
warned
be
industry
or
in several
-industries, • to use
literature "puffing" the general inticular
related
dustry concerned, thereby implying
that
whatever
spectacular
advantages are foreseen for the
industry
will
automatically
be
reflected in increased value for
the investment company shares,
The electronics industry is frequently
chosen because of its
currently popular appeal,
Such statements
loss if he discontinues
It must also
the
dis-
the
such plan it must
plan when the
his investment
cost.
or
The Statement of Policy
provides
cussion
be
are
descriptive of
therefore,
tionable.
which
market
is
to
below
be pointed
out
is investing
his
into
take
are
misleading
unless fully qualified by adequate
his explanation that what an industry
value
do generally has no automatic direct effect on the value of
may
investment company
vested therein, since
shares in¬
what indi-
vidual
within
mnagements
-
his
,
since only
funds
have
a
been
relatively
declared
or
;
at the end
shorter
table.
period
It is not
of each year
shown in
that of
use
in such tables,
in
it to be misleading to represent or
sales
The*'Sales-Load
various
material
in
li-iu:,
as
is
tually the
company
case.
The Commission and the indus-
try
in
time to
to
devoted considerable
the question of charts used
1948
show
the history of an invest?a1 particular investment
The
purchase <-of
in
successful
in
birth
For, if the
ture
excesses
re¬
by
the
of sales litera¬
they
corrected/
not
were
could
discredit
the
companies,
and
thus
destroy this useful instrument.
ultimately
open-end
Our desire for correction, there¬
fore,
hostility
from
not
arose
the investment medium
industry,
that
to
the
to
or
rather
but,
conviction
the
from
instrument
this
should be properly
served.
used and pre¬
being hostile, I
from
Far
believe
investment
that
com¬
panies, if wisely cared for, can
ultimately become "institutional¬
ized"
though
—
serve
the
same
they
never
can
purposes as
savings
banks, building and loan associa¬
tions, insurance companies and
government
their
bonds.' Nevertheless,
function
play
a
can
such
be
part in
investment
useful
prehensive
Thus, they
as
to
com¬
any
program.
achieve the per¬
manent and useful place in
our
economy' that their basic theory
contemplates. The problem, then,
is to make the practice consistent
with the theory and not permit
the
can
selfish
quick
insistence
of
some
on
returns fob the
present, to divert the industry
from concentrating on the realiza¬
and
easy
tion of these
entirely
goals.
highly desirable and
attainable long-term
James Halbkat With
W. R.
Morgan Co.
PHILADELPHIA, Pa. —James
E. Halbkat, formerly Vice-Presi¬
dent
Co.,
of Sidlo, Simons, Roberts &
investment bankers of Den¬
ver,
has
Col.,
joined
staff of
the
W.
L.
Morgan &
Co*1
national
dis-
u
tot«
Wellington
of
Fund.
Mr. Halbkat
ha§
been associatel
with
apparent attempt to "educate". investors
in
investment
an
v
e s
in-
the
t
m
e
n't
banking busi¬
investment
ness
1927,
since
first
Halbkat
Colorado.
He
has
i
in
the
later
,
Midwest
and
E.
James
in
specialized for
number of years in the
chandising of mutual funds.
a
mer¬
Wilredge Gorman
H.
Gorman,
stock¬
Portland, Ore., died art
Wilredge
company
.
companies. This
threatened
was
publications.
Such
usually disseminated
investing of shares
and has
published a
pointing out certain re-
A**
abuses I have been talking about.
promotion literature
felt
that
where> §uch
ing commitments at the wrong asset value. In nearly all of tftQ1 mis sion
time. How successful the.y have sale^'literature'currently in'use.' ma* erial is 'Osed it, or the litthere is almost & complete
release
absent^eralure including it, should conbeen, I leave to you. ' In addiof any mention of the sales load^forha to the
same standards as
spects in which such charts ap-•tion, continuous investment plans,
peared Jo: be
ito : asL ."dollar, and, in the few instances where it • other-" safes ' literature. " and" "the
ment
the open-end
widespread
purchased.
These
loads to the extent, that it encourages
funds is the correct timing of range up to more than 9% of the the purchase of investment cornpurchases and sales. Many form- net asset value, and the greater pany shares. The disadvantages
ulas and timing plans have been number of companies charge be- and pitfajls of such investment
J
evolved for the purpose of avoid- twOen • 7% andi 8% * of the ne¥.!jarei usually>> ignored.The Cornfactors
V
renaissance with the expansion of
the
companies generally, but in actual
as
reflected
by a three-dimen- imply that. investment company company shares of most companies practice we are certain that it is
sional
chart,
from
a
not
toe shares generally have been, se* involves the payment of a sub- used by dealers and others to sell
careful perusal, would indicate a lected by fiduciaries,
€tantial sales load which is added particular
funds.
This material
;
better performance than was acOne
of
the
most
important to' the net asset value of the seems to be used only when, and
ance
years,
t rib
a
in
of
experienced,
a
kind
has
the 0f reprints of articles appearing
permissible to use
hypothetical data
fi
It
recent
more
financial
vestment
legal investments for such fiduciaries and
only
in a limited
number of states.
Accordingly,
period.
an
industry may accomplish is not
necessarily comparable to, what
the investment company involved
account may accomplish.
The Statement
shares of the
Furthermore, the perform- the Statement of Policy declares
pany.
the
are,
also
selection
whereas if the
utility
to
indeed that there is any mention
of the fact that each switching
particular company erally approximate
is evidence of their investment quality and merit; These land: must include the total cost industry,
and liquidating value of the inThere has been
claims are misleading when used
comparison,
thereforej indicated that shares of
the
investors
persuade
from the securities of one invest-
ability to continue of Policy, therefore, forbids the
;the plan under all conditions of representation or implication that
Another favorite claim is that the market and that such plans the performance of any particular
open-end
company may be measured by or
company
shares
gen- cannot protect him against loss in
erally
have
been
selected
for value in declining markets. Where compared with the performance
investment by trustees, institu- any table is used to depict the of a particular industry unless the
tions, estates, charitable organiza- operation of a plan of continuous extent and scope of the portfolio
tions, insurance companies and investment, it must be based upon of the particular company is such
other fiduciaries and that their the actual offering price of the that its performance will gen-
including aU dividends and capital
distributions.
However,
in
utility
averaging"
and
imply that investment companies
are operated as or are similar to
The chart cooperatives.
an
although
used,
ventures conducted not alone for
primarily in securities subthe benefit of shareholders but ject to market fluctuations and
that
the
method
involves
conalsb for the profit of promoters,
managers and underwriters. The tinuous investment at regular inStatement of Policy declares it to tervals regardless of price levels,
be misleading to represent or Furthermore, the investor must
the investment company,
ment in
averaging" or
dollar" shall not
the
"dollar cost averaging"
"cost
that
funds
pared the shares of an investment
company with those of a leading
public utility company.
reflected the growth of
requires
"dollar
term
be
creates the impression that such
companies are operated as nonprofit organizations.
This obscures the fact that in essence
they are privately established
referred
term "dollar
is .misleading
since
averaging of dollars,
very
therefore,
"averaging
making of
"investment cooperatives"
other media of investment or se-
the
no
Policy,
company
curity indices
to
There is an increased tendency
by
some
open-end
companies
but only an averaging of the in- which
have a large portion, of
vestors' cost.
The Statement of their portfolios invested in a paris
there
comparison of investsecurities
with ; There is an increasing tendency
other corporate securities or with to refer to open-end companies as
ment
plan and the probinvestors
of
limited means.
Furupon
averaging"
extravagant claims regarding
management ability or competence.,
the improper
or
thermore,
misrepresentations and mis- an^
The
leading implications resulting from
the
effect
average
plan
without
inherent weak-
the
out
in
nesses
able'
agement. The Statement of Policy
therefore forbids the
conditions
ideal
under
related to the skill and performance °f
particular man-
Comparisons
at a
aging have been misleading in the
past
because
they
have
highlighted the advantages accruing
Pani4es,*ndjto°uld be reasonably
the
plan
The descriptions of dollar aver-
*err('discussion o:f man-
made is disclosed.
are
this
attract
loss.
*aSement should^ be limited to the
management of particular corn-
which such investments
extent to
Yet
to
first to discontinue the
gen-
•?raP^jlregarding, management
Jesuits, policy and performance,
General statements such as "the
excellent performance record" of
ally are important sources of new investment companies and "efficapital
for
industry.
Actually, "Oient and skilled management" of
with few exceptions, they simply
companies are quite common,
invest
the funds of
the share- These
general laudatory stateholders, after deducting the sales ments> unrelated to any particular
load, in outstanding corporate se- company, are misleading because
curities.
In general, their contri.^ea * e. investor to infer
bution of new so-called "venture *bat the management of the corncapital" and their purchases of Pany whose shares he is asked to
new unseasoned issues are limited,
}?uy possesses the qualities reStatement:
used
High-Sounding Phrases
persons of moderate means who ment company to those of another
The sales literature of invest- can least afford depreciation of or to other securities of the same
;ment companies contains many capital and who would be the investment company. It is seldom <
-The romantic appeal* of invest*
as
investment.
is often
9 y
the investor.
/
value of his
..
'
broker
the
lii
of
summer
home of his
daughter,
Ogdensburg, N!*YT He was 78. ~
.
;
26
(826)
The Commercial andFinancial
Chronicle
Continued
jrom
cogent
3
page
administrative
for
reason
which
give
action in this regard
Investment in
which, with¬
doubt, would have been
taken even if the Korean episode
Pait-Wai
ernment
had not occurred.
a
little
out much
restricted
The expansion
of credit has been proceeding at
dangerously high rate for over
Economy
and
year,
contributed
has
conditions
price
thought that the most consistently
levels, could easily range between
and $15 billion per year, de¬
prosperous groups would be the
distillers, the motion picture pro¬
pending upon the rates set. Thus,
a
Treasury deficit need not be
ducers and
taken
predictions
and
$7
for
granted unless, of
the war effort exceeds
course,
greatly anything
As
Weekly"
in
its
Fi¬
s
leading
article for the Aug. 14 issue, sug¬
that
gests
surplus
Treasury
a
rather than
deficit is in prospect
a
by the end of 1951.
As
foregoing
be
that the degree of post emergency
inflation will be in direct ratio to
the magnitude of our rearmament
nor
precludes the advisability of con¬
the search for answers.
point is that to date we sim¬
ply do not have any solid ground
upon which to build firm conclu¬
sions, while the uncertainties are
legion. How can one predict the
the
peratures
of
the
"cold
How
war?
tain to develop in inverse ratio to
duration?
hot"
to
estimate
its
proportion
of
one
can
tem¬
our
the
periphery of Soviet influence,
-rand our responsibilities increase,
there will be a corresponding in¬
in
crease
and
taxes
in
controls of all types to
Federal
the detri¬
of corporation earnings.
ment
would
appear,
there
therefore,
It
that
grounds for doubt that
are
will
latter
the
financed?
What controls
allocation?
What
will
corporations be permitted to earn
ject
to
government contracts?
par¬
smooth
ticularly
the
current
answer
gives every
continuing
indefi¬
nitely, even after the Korean
campaign may close. Throughout
the
past
17
the
years
cold.
been
operative throughout that period,
but
the
investing public has al¬
invariably caught the fever
most
at the wrong
effect
special
time.
taxes
of
controls
and
usually
been
fully
accurately
or
is tempted
one
to
think that such may again be the
case.
also
appears
bit
a
early
to
and
develop
"peace" groups,
convictions
as
^industries will benefit
'
revenues as
or
to
what
will lose
result of the
a
or
to
emer¬
In the first place, on an
basis, war is no boon to
business. There will be very few
gency.
overall
companies able
in
a
war
earn
much
as
economy as in a time of
Our
peace.
to
productive
facilities
are
already operating at virtual
capacity, so no great upsurge of
activity in the basic industries is
possible.
Output for war will be
Achieved only by decreasing out¬
put for civilian consumption in
those lines making large claims
iipon critical materials, and
does
not
to
need
be
one
of
much
a
mathematician to figure the effect
upon
earnings of the increase in
the normal
tax
position
a
tax.
of
In
rate
stiff
many
and
the
profits
excess
cases
im¬
such
taxes
could reduce earnings
by as much
as
40%, and they might be further
reduced
by
profit
government
second
have
limitations
contracts.
In
on
the
place,
any
very
few people
idea of how much or
how little of a given company's
output will be directed into war
use.
to
Guesses in 1940 and 1941
what companies
as
would benefit
most, or be hurt least, by the war
effort were almost 100%
wr<mg.
Few,
for
instance, guessed that
from 1942 through 1945 the steel
^industry would earn progressively
less
money
in each successive
blend
The
and
emerge
ribbon
printed
in the shape of
as
a
with the
an invest¬
of
fact
the
matter
that
is
presently are in possession of
only a few basic facts:
we
(1) We
a
are
period
to
entering upon
characterized by
now
be
foreign
wages
frozen
are
at
seem
a
purchase of double
household
and
(2)
Inasmuch
the U. S.
as
econ¬
is now producing at virtual
capacity it will be necessary to
fit
the
armament
requirements
into
the
existing productive
omy
framework.
Such
a
will
process
almost
certainly involve cut-backs
production for civilian use in
certain lines.
and
The
equipment.
(3) Whereas
there
rather good
had
been
for
reasons
ex¬
pecting a tapering off of the very
high level of industrial activity by
the close of the year, there is now
little or no prospect of a general
recession
in
business.
continue
be
to
for
sumption with only
be
devoted
Unless
our
civilian
con¬
portion to
a
to
output for war.
involvement increases
greatly, it is not likely that auto¬
mobile manufacturing will be sus¬
pended,
or
that
other
major
industries
will
wholesale
tions
have
to
undergo
conversion.
now
that
are
it
Indica¬
will
be
a
partial conversion, that the im¬
position of production controls,
rationing, allocation of materials
and
ing
possible price and wage fix¬
will await further develop¬
ments.
voked
Initial
the Korean
as
on
and
both personal
will be increased
Indications
that tax boosts will be
now
corporate
in
surtax
income,
immediately.
The rate
II.
normal
corporate,
almost
rate
of
buying.
temporarily produced
of
one
This
has
illusion
an
scarcity and resulted in
price advances.
some
rather sharp
effect
severe.
agreed on for nor¬
taxes exceeds the
during World War
An excess profits tax is rather
generally expected after the first
of the coming year.
'■<'
:
j
sively lower earnings.
outlook
(6) Curbs
of
upon
war
further exten¬
has
furnished
a
of sales
atmosphere
straints
and
of
gives
credit
re¬
influences,
war
and
whose earnings record or invested
capital situation suggests that an
excess profits tax
could be borne
without a
devastating effect
upon
earnings.
Marketing of
World Bank Bonds
able
future,
mentioned
United
The
sections
ous
the
of
cate
that
has
subsided.
the
in
country indi¬
initial
In
prices
cases
exist
buying
scare
great
a
have
to the Bank
lic
is
wind
blowing.
tries
propriation
obligation
will
It
we
be
can
little
some
time
the
measure
before
extent
to
pub¬
a
In view of that
ap¬
Congres¬
necessary to en¬
the
Secretary of the Treas¬
nerability in
economy.
"as
further
or
action
able
part-war
due and
as
Congressional
no
and
individual
companies
according to their degree of vul¬
a
when and
Liberty Bond Act.
sional
indus¬
Agreements
transaction," proceeds of
securities issued under the Second
tainty,
major
$2,540,000,000.
Woods
debt
They do not, however, make it
possible to classify, with any cer¬
various
is
for that purpose
use
provision
the
to
stock, $635
Treasury to
the United States subscription
lower
to
the
Bretton
pay
The foregoing facts afford some
indication of the general direction
which
the
Act,
under
which
the
United
States joined the
Bank, authorized
the Secretary of the
after their initial advance.
in
liability,
many
turned
previously,
has- subscribed
worth of
million of which has been
paid in.
The remainder, the United States'
only a
few fields, and reports from vari¬
scarcities
States
$3,175,000 000
80%
tually,
concentrated largely
United States market.
As
the
I
Ac¬
to
ury
is
the
meet
United
States'
its capital subscrip¬
on
tion.
created
to
coordinate
the
United States Government's activ¬
ities in the field of
foreign finan¬
was
cial
and
monetary
transactions.
It consists of the Secretaries of
the
Treasury,
the
State
Chairman
and
of
Commerce,
the
Board
of
Governors of the Federal Reserve
System, the Chairman of the Ex¬
port-Import Bank and the ECA
Administrator.
Turning to our actual market¬
ing operations, I should mention
misconceptions as to their po¬
two
tential scope and nature, which
prevailed at the time of the BretWoods
ton
time
it
since
Conference.
At
that
widely believed that
was
the
Bank's unpaid capital,
capital, would amount to
its 80%
$6.5 billion, the Bank would have
difficulty in issuing securities
no
in the American market up to ap¬
proximately
turned
that
out, that
total.
As
highly
By 1947, when
was
a
it
op¬
The capital structure is the basis
of our credit and defines the
first
goods and housing will
be restricted as a result of credit
of
world
with two
ture
was
controls.
to
been
generally anticipated in 1944
which
the
demand
for
durable
consumer
scope
our
operations.
It
devised
was
objectives in mind: First,
that the Bank's obliga¬
result of conversion to war work, tions would be of
high investment
any
appreciable
dislocation
of quality; and second, to insure that
durable
goods
manufacturing in its operations the Bank would
It is
will
processes
final
unlikely that,
quarter
felt before
be
this
of
in
the
already
must
of
an
tax
to
but
crystalliza¬
in
have
to
rely .very largely
market
the
as
the
on
of
source
its loanable funds.
I
posed to do.
to
that
war
You
will remember
during the decade before the
private
before
capital,
which
had
arriving at anything other previously played an
important
conclusions regarding role in
stimulating world trade,
its effect upon corporation earn¬
had practically disappeared from
ings.
In addition, one must also the international
scene.
Private
than
broad
conjure
with
the
distinct
possi¬
bility that corporation earnings
in this emergency will not be re¬
stricted by tax increases alone.
defnite and strong
feeling in government circles that,
in this emergency, business should
not be permitted much profit on
a
very
war
orders.
such
business will be
probability
done
on
events
to
unfold
it
attempt
be
in¬
may
to
adapt
vestment portfolios to realities in
changing economy. At the pres¬
ent writing, however, it appears
a
to
be
time
a
for
than
more
or¬
dinary reliance upon the simple
principle of diversification and
the
maintenance
see"
be
of
"wait
a
attitude. A straddle
and
seems
to
the
only intelligent course at
present. Investment accounts
the
should be carrying liberal reserves
in bonds or cash. The stock com¬
mitments should be in the strong¬
est
companies and spread
over
rather wide list of industries.
It
does
not
to
seem
be
a
It
nerable,
has
,
a
r„
pro¬
to
shock
developments
itself
proved
and
from
I
vul¬
foreign
do
not
be-,
major struggle,
if
ag¬
gression should break out in
an¬
a
other quarter.
It
is
true,
or
,
.
however,
credit
and
resources.
The
International
disappearance
from
the
of f private
field
of
long-term
vestments.
:-
Its
to work
such
*
cases,
darker
American
less confidence
than
market
the
in
hid
placed
obligations
of the Bank's other member gov¬
ernments than had originally been
in
expected
quarters.
some
In
ties American investors tended
to
look
primarily
at
the
United
States capital.
As a result, it was
evident even as we opened for
business that for the first years of
operations, at least, and in t e
state of the world, we
our
present
could
not
the
lions,
to
expect
substantially in
raise
funds
$2.5 bil¬
excess of
of the unpaid
United States subscription.
That
amount
presented
immediate
no
problem to us. In fact, we have
not yet needed in our lending op¬
erations anything like $2.5 billion.
The other misconception however,
involve
did
the
time
policy problem. At
a
of
the
-
is,
in¬
Woods
Bretton
first,
to
Conference, the Bank was thought
of primarily
as
a
guaranteeing
which might perhaps
a
loans itself and issue
some
of
purposes made
would
to
market
when
able
ply
through the usual
channel^;'
and
second,
private
capital is not avail¬
reasonable terms, to sup¬
on
the
loans,
capital
to
Itself
by
governments
making
to
or
pri¬
vate
businessej^fout of its own
capital and
oth^r funds or use of
funds
raised in
rying
the
Jhe
market. In
car¬
objectives,
thesfe
out
ties.
maj|«;engage in three
kinns^f financial activi¬
First, It may participate in
.foans made by pri¬
lenders.! Sffcond it may make
few
its
market.
bulk
securities,
own
concent: ate
loans
ing
It
of
antees
on
but
guarantee¬
Bank's
bond
this country by
operations
placing its guar¬
floated
issues
in
foreign borrowers
underwriting
usual
the
through
on
floated in the public
was thought that the
the
would consist of
mechanism.
the
Bank
principal
We gave a good
to
this
matter
deal of thought
at
the
time
we
commenced operations and we de¬
cided that
guaranteed public loans
and guarantee
could
be made the
vate
ture
direct
loans
ects in the
ber
governmfenferr
raise
by
"
productive proj¬
of its mem¬
territories
issuing
secuwties.
third phase
keting
sell
any
ion
to
appli*
activities!
our
is
given
National
the
c<
yoi
suph-j
by
a
v"'
require-
a
all
our
Before
? the
meml
Accordingly,
case
is
«^
securities
of
It
V
First I must
ment that
may
purposes
will discuss in
detail.
some
Third, it
f<|r these
money
mar-
toe 'can
market
of
countries, we:
try's approval,
ust assume, in?
follows, that in
proval has al-
when investment switches <of the United States
being contemplated, my pref¬
erence
would
be for companies
are
the
much
make
ready been obtai:
In
our
appeared, the
political pic¬
agency, one
must have that
that
|ob
foreign
field
as
as
issue
economic and
by paijdcipating in and
guaranteeing loans for productive
that
the discussion thi
well
and
stimulate the return of capital
every
cash
was
by the
capital
medium-
productive
in
put
Bank
created to fill the gap left
perative
to
al¬
was
theih productive facilities
conditions sometimes make it im-r
investments.
and
businesses that needed imports to
lieve it would be able to keep its
present position in the event that
the Korean War should expand
into
exchange
most unavailable to countries and
expand
bond
an
margin and will
subject to renegotiation.
made
feasible
all
thin
extremely
As
In
foreign
timistic view.
fact, in judging the Bank's securi¬
should like to discuss briefly
job which the Bank is sup¬
the
tax
regard
profits
excess
insure
private
rate
appraised,
the
sentiment
for
plans
been
await
the
power
normal
a
The
year.
vulnerability of earning
increases
as
pitious time to take on any
they will be in¬ extensive new commitments *? in
rapidly as occasion de¬ stocks.
The market is in a high
(5) The
mal
to
has been
news
anticipatory
area.
are
consumer response
that
mands.
and
armament
There is every indication,
however,
rates
for
in
(7)
be
(4) For the present at least, we
face a mixed type of
economy.
The major share of activity will
labor
use.
There is
some
an
con¬
by making credit
freely availaole to tne con¬
sumer, demand for such goods will
tion
war.
un¬
later
some
in
less
simultaneously, conducting
minor
ana
sources,
likely to be pinched if prices and
goods, principally automo¬
biles
one
sion of long-term and instalment
credit are in early prospect.
The
the
sumer
has
year, or that in the nonferrous
metal group the next three out of
four years would show progres¬
Fewer still
from
date, whose volume
promise of being well maintained
tightening consumer credit is that
Continued from page 4
controlling the housing boom
active efforts at rearmament and,
begin the division of stocks into
"war"
poured into a hopper
expectation that they
ment program?
in
It
be
the
will
The corrosive
and
executive powers has not
appraised, and
with
inflation
.threat has blown hot and
.Inflationary
forces
have
How
extreme doubts on all of these
This is
of
will be
prices and wages?
And what materials may be sub¬
in the market place.
evidence
be
over
matters
true since
emergency situation
they
will
established
result of greatly increased
effort, as to how and when they
may become effective influences
up as a
deficits
If
take?
how
incurred,
are
upon
set
are
the
will
extent
expenditures be covered
by tax increases, and what form
can
forces
what
To
ment?
increased
effort,
if such
What
productive capacity will ulti¬
mately be required for rearma¬
inflationary
forces
will
neces¬
sarily be generated from our war
or,
not
be
Thursday, August 31, 1950
.
.
of
tinuing
eventual
should the Korean
conflict spread to other areas on
likely to
by military needs,
slacken, and free essential mate¬
forces
the
words,
not
are
in
rials
potential
conflicting
the magnitude of the program.
other
raw
are
of
or
In
gov¬
whose
whose margins of profit
connote that the shadow of a maze
imminent
cer¬
objective
in
a
very
having
participation
contracts,
materials
It is hoped that
cor¬
effort, it can be stated that
poration earnings during
emergency period are almost
The
progress.
and
be
to
intended
does it
not
is
Jeremiad,
a
out
turn
accurate.
more
The
to
will
The
corollary to the statement
a
much
in prospect.
now
matter of fact, "Barron
a
nancial
the publishers.
It can
be doubted if many of the current
in
of
prospect
no
a
materially to the industrial boom
business
or
.
body
In the
case
the approval
called
The
Advisory Council, which
not
of
our
main fea¬
marketing operations..
We feared that guaranteed obli¬
gations might not be generally ac¬
ceptable or- if they were accept¬
able,
'
rather
would
than
'
tend
-
to
establish,
confuse,
-
our
credit.'
We
felt, for example, that if the
bonds of a country with a good
credit
with our
should sell on a dif¬
yield basis than v bonds of
another country with a poor credit
standing and that if this situation
standings sold
guarantee,
ferent
persisted in the market during the
early years of our operations, it
might be difficult to prove to our¬
selves and to potential investors
what our own independent credit
was
early
4-^.r^A
worth.
stage
rinKli/t
Accordingly,
we
rejected
Knnrl
icciiPC
at
.
an
guaranQC
thp
Volume 172
i
Number 4938
tecnnique in
guarantee
with
nection
one
two
or
placements of securities
that
the
in
future.
first
cur
should
may
of
the
of
unse¬
for the future.
With that
I
should like
had
we
to
to
summarize
offer
when,
what
in
July,
; 1947,
we went to the American
market with our first bond
issue,
'
which
1
investment, have socalled legal-lists, and statutes governing the types of investments
companies,
and
ous
We had assets of about $475
entirely apart from
a
larger sum in non-dollar
much
currencies.
•
call
on
We
had
the right to
the $6.5 billion which our
member
governments
obli¬
were
to pay on their 80% liability, including over $2.5 billion
gated
'
which the
for
:
United
States
was
obligated.
All
1 tial
constituted
that
for
backing
a
substan-
$250
a
million
ing
question
Since
the
Bank
institution, not
is
the
on
one
hand
a gov-
the
on
United
in any underwriting
syndicate;
by Standard & Poor's.
banks should be permitted to par¬
in
ticipate in the distribution of
countries and substantial amounts
sufficient for
our
time.
then
Since
This
was
purposes at the
each
of
these
organizations has raised its ratings
and a third, Moody's, which did
not rate our bonds at all in
has
now,,
given them
1947,
rating of
a
LLAvT,,Ncxt;Mwe had to choose the
method by which we would offer
securities.
We had a choice
our
of
several
have had
methods.
We
might
negotiated sale to an
a
underwriting
That would
group.
have
priother
or a
States
market, it
usual
categories contained in the varinot fit
into any of the
statutes,
authorizing
institu-
Before
matter
of
rather
that,
selecting
one
than, another.
as .a
group
We
thought
;public institution, our
first issue^shnuld
be
vestment; dealers
tional investment.
generally,
to in-
open
with
all haytp^w^ujair opportunity to
tiy to participatej.*.;£#articularly
if,
as
could go to the mar-
we
ket, therefore-we had to
get legislation or administrative
rulings authorizing investment in
seemed. likely at that time, the
offering would be successful. For
our bonds at least in a few of the
this reason we rejected the techmore important states.'
That in- nique of a negotiated sale to an
volved
r,
extensive
legislative underwriting
group.
For
the
program.
As you may know, in same reason we rejected selling
many states it involves a separate on a commission basis through a
statute for-each type of institu- small sponsoring group although
an
It
seemed
securities.
of
of
us
that
portance
desired
to
the
result
our
place,
for
its
we
own
sake since the participation
of
the commercial banks would sub¬
legislature, state insurance first public issue. We finally chose
structure; copitnissioners and state banking the. .techniques selling the bonds
commissioners were at least as
exbasis through
planations I have given you this unfamiliar with the Bank and its dealers. We fixed the price our^.orning. 'Those who had heard purposes and operations as was selves, as well as the commission,
the general public.
In addition, and
permitted
all
something about the Bank were
recognized
many
of
these
officials,
with dealers to participate.
very suspcious as to the way in
memories of the thirties in their
which it might conduct its busi¬
There was a very broad particiness, as Jo
the type of lending minds, wanted no further dealings nation with over 1 700 dealers
with foreign bonds and until they
operations in which it might en¬
sharing in the distribution
the
had an opportunity to analyze our
gage. : They were afraid that in¬
largest group that eyer took\part
securities, were unable to appre¬ in
stead of making loans for sound
any bond issue in this country
ar.d productive projects, on the ciate how the United States sub- aside from
government issues. In
seription in effect insulates the other
basis of full economic, financial
respects, too. the issue was
American investor from the nsks
and technical investigations and
successful. It was oversubscribed
of foreign lending.
analysis,
it
might throw
its
and sold quickly.
A strong deIn spite of these difficulties we mand
money away without knowing the
developed for the bonds
purposes
for
which
the funds undertook the legislative program and they rose in price, somewhat
would be used or whether the al¬ and during the last three years faster in fact than we would have
or
capital
its
to the extent of the brief
even
•
familiar with its'pur¬ }M$te
were
poses
leged purposes had any basis in
economic or technical reality.
It
have
with
met
considerable
than we antici¬
pated in the early days.
Almost
cess, more success
widely said that the Bank
was just another relief agency, a
device to give money away with¬
out worrying about the prospects
for
of repayment.
been enacted by
was
L'xpoi'ence ihus far has shown
those
that
apprehensions
wide
lather
the mark.
of
were
Actu-
"
ally, under the Bank's Articles of
thirty separate pieces of legislaLion
making our bonds eligible
institutional
and
even
in
carefully,
gate
attention
repayment.
are
We must investi-
and
particularly
to the prospects of
But in
1947
these
requirements
not
were
widely
ay
almost openthe our ltuall to ins se¬
^
Uonal
However,
consider
first job was to
Vain to the public by sessions
Accordingly,
our
of this kind throughout the coun¬
try how the Eank was organized
of
was
a
not even
until
issue
we-
ruling from the
Com.Pt*oiler of the Currency persecurities
our
banks to
and
invest
until
New
York, Connecticpt and a few other
important institutional states had
similarly
m
our
its Articles
Agreement, to operate.
required
T.
The
by
of
bonds-
The* next
major
problem
ratin/s.
that
us was the so-called eligi¬
bility, problem, the legal restric¬
tions
governing investments by
institutional investors, principally
savings and commercial banks in¬
surance
companies, trust funds
and
pension
funds.
Since
our
bonds
are
high
grade taxable
faced
In 1947 none of the recognized rating services had established a rating for our securities,
At that time they (knew very little
about the Bank. 4 We
had en-
operlions
gaged in
no
had
and they
pattern to
expensive
no
Here lagain we were
.aced with the job of trying' to
familiarize others with the Bank,
judge
by.
and><§perations.
bonds, these institutional investors
its
constitute
Ratings were oijimportance to
us for two reasons.!
First, ratings
tent'al
our
largest
po-
The
market
af¬
by far
market.
forded
by private investors, ex¬
cluding these
who prefer tax-
be
time,
rra
redeemed
at
par
is relatively small.
at
If
At the peak the
went to a price
bonds
short]y after
gue
jn
our
first bond is_
decjded weakness developed
a
the
government bond
market,
wbjcb affected the entire market,
also
was
an
bonds
Throughout
lhe
structure
this
entire
period
rnternational
d
Bank
issue
com.
favorabiy
with the per.
formance of th(f high grade bond
as a whole.
Subsequently,
the market strengthened
gener„
By the end of 1949, In-
tern/tionaf
sellipf?
'were
bonds
Bank
ahove
thpir
bonds
call
are
Drices
noS
After
maifcet
would give the
the benefit
experienced
this
issue
the
Bank
^ns,riered various means of imPr°™g marketing methods for
subsequent issues. One of the
factors that appeared of m°st imjortance was that the National
Banking Act, as it then existed,
did not permit commercial banks
bond departments and are a very
.
.
™„«i™r4oie
state bonds and municipals.
ai
Al-
our
services
of
a
judgment
secur'ties
a
cordingly,
test
we
pf^eligibility: Ac- could not deal in the bonds for
discussed the rat- their own account or participate
,
the
into
Dutch
of
we
dollars.
We
value
it
very
and felt that it was
respond to current events in the
they
same
important that
should be handled by the
people and traded in the
same
same
classifying those bonds
securities
under
the
exempt
as
Federal
Se¬
curities Law. That legislation was
in
enacted
1949.
advantage to
It
the
broadened
of great
was
since it not only
us
for
market
our
bonds by allowing national banks
to
paiticipate in their distribution
but also solved
number of tech¬
a
nical problems under the securi¬
laws which
ties
tered in
our
next
Our
had
we
encoun¬
first issue.
public
issue
this
in
country took place early in 1950.
That was an issue of $100 mil¬
lion for the purpose of
the
we
2^4%
refunding
which
bonds
ten-year
had issued iin 1947, and
blocked
were
from any
this
which
by their call price
further market rise. For
issue
chose
we
different
a
kind of marketing technique.
determined
to offer the
We
bonds at
bidding and encour¬
competitive
sensitive and the markets iri
will
countries
other
way
always
not
the American mart *
as
We have already seen .cases
ket.
where
institutions
foreign
have
stepped in during a period of rela¬
tive weakness in the American
market
and
provided
b
u y
ing
for
International Bank
bonds, which has given a real sup¬
port to the market.
For these
power
reasons we
intensify
intend to continue and
efforts to introduce
our
dollar bonds into markets out¬
our
side of the United States.
That gives a very
general sum¬
market operations to
date. At the present time we have
outstanding in direct and con¬
tingent
obligations
only about
$280
million.
Against this we
have some $800 million outstand¬
ing in loans and nearly $300 mil¬
lion in uncommitted liquid dollar
funds and over $6 billion in un¬
paid 80% liabilities of our member
governments, including over $2.5
billion
representing the obliga¬
tions of the United States.
As
mary
of
our
you can see
there is a big margin
before
will
we
limitations.
credit
into
run
Our
loan operations
expanding and we look for¬
an expansion of our mar¬
are
ward to
keting
operations.
the formation of large syndi¬
cates with national
representation
Barrett Herrick Adds
including both commercial
banks and securities dealers. Four
and
such
favorable
was
a
to
us.
ST.
LOUIS,
has
Harris
staff
Inc.
of
added
to
W.
thf*
Herrick
&
Co.
Mo. —George
been
Barrett
418 Locust Street.
We
good price for our
very
bonds due to the broadened mar
ket, our improved credit standing
and the fact that the offering war
made at a time when the govern¬
ment bond market was at a high
point.
This offering
a
2%
same
resulted in
our re¬
2y4% coupon bond with
coupon
bond having the
funding
a
average
maturity and in ad¬
a
premium of
receiving
dition
Ex
$500,000.
nth
Report
to
Congress; of
the Economic Cooperation
Markets
In
Other
Countries
I should like to add a few words
about the Bank's efforts to estab¬
lish
We
markets
are
in
countries.
other
only beginning our efforts
in that field but we intend to
The Bank has
Admin¬
ended
March
31, 1950—Superintendent
of Documents, U. S. Government
Printing Office, Washington 25,
D. C.—paper-—40c.
istration
push
those efforts during the next few
placed two issues
Switzer¬
for
the
quarter
Gas Facts—Statistical
record of
the
gas utility industry jn' the
United States 1949 r1 American
Gas Association' Bureau of
Statist
of Swiss franc bonds in
tics, 420 Lexington Avenue, New
land but has not
York
yet tried to bor¬
row non-dollar currencies in any
of its member countries. Obvi¬
large, if not the largest factor, in ously,
the markat for government bonds,
market and
had the character of government,
rather than corporate obligations,
years.
to deal in pr underwriter International Bank bonds. As y.ou
know, several of the large commercial banks in this country have
introduced
been
These two types of business within the limits of their economic
usually dealt with by sepa¬ conditions, td our lendable funds.
rate departments in the various
In
addition, we believe that
securities firms and, since the cor¬ having our bonds established in
porate bond business is subject to the markets of a number of coun¬
the Federal securities laws, are tries not only broadens and
carried on in a very different strengthens our potential market,
manner.
We thought our bonds hut the American bond market is
over
first
been
bought in Canada,
Mexico,
Cuba
and
Western
Europe. Recently, our bonds have
ness.
received
"ma7ke"t" peVf ormance oT'the
have
are
result
long-term
our
member
our
view.
In
think
it
tended to fall into two separate strengthens the international
patterns.
On the one hand there character of our organization. We
is the government, state and mu¬ wish all the Bank's member coun¬
nicipal bond business and on the tries to have an interest in our
other the corporate bond busi¬ credit standing and to contribute,
Jow
point
of
United States banks, the- from another point of
bond business in this country has the
first
place,
we
securities dealers and banks. The
fell>
number
a
tions of
our
generally
eligible for investment by banks
volume
there
important psychological factor.
Since the separation in the early
bonds following the others. At the
prices
made
thirties of the commercial bank¬
But
potential
our
syndicates were organized,
each including a large number of
Bond
been
ing and investment banking func¬
broaden
market.
age
any
keting operations were to sue-
oc-
market
bf
though these banks were peranalysts/jS to the qual- mitted to invest in International
ity cf our obligations.
Second, Bank bonds or to buy thein >fPC
some of the state
if vestment laws ..
,
~
make ratings/by rcicg-zed rating mei* customers on
order,they
security bonds, such as
state and piunicipql obligations, or
government savings bonds which
exempt
can
the
0f 103
Problem of Ratings
Closely related to the o-oblem
PrllhI,.m
Eligibility Problem
time
of
ing above 103.
of eligibility was the problem of
Fl.vihiIifv
a'
disorderly.
long-term
amount
quick turnover
a
For
investment
authorized
and how it intended, in fact how it
was
was
certain
a
buying for
curred.
our
1947, that
We could
bond
a
time
the
at
issue in
obtained
had
is
since
sold under 95.
not the case
ra
ex
market
mitting national
known.
•
the
rulings.
At
the
present time I think it is fair to
first bond
pay
.
instances
more
curities.
we
'
;
have
administrative
cal motivation.
.
investment
liked
the various states
result has been achieved by
same
required to
o
erate in a very different way.
Our leans must be for productive
purposes ard made without politi¬
Agreement
:
suc¬
'
7
have
bonds
expect that simi¬
lar transactions may take place in
several other European markets.
We
do .not
expect that this
process will bring us a very large
stantially
'
them
encouraging degree
an
success.
Our
im¬
great
commercial
In the first
that
bidding
or
way as government, state
involved the and
issue.
But we faced many serious tional investor, each involving re- that w
municipal bonds.
problems.
First and by far the ports bf« different administrative ^n^^g«kt|?j4ifechnique.
For these reasons we requested
was
an; most important, was the fact that official and -hearings before a dif- :
the United States Government to
of offering introduce into
very few
potential investors^ or ierent legislative committee., Apd,
Congress legislation
more important than the complexbut *thati^w«,4hought, presented
securities dealers'knew anything
permitting national banks to deal
,ity of the, task; was the fact that difficulties in connection with our in International
about the Bank. ' Hardly any ipf
Bank bonds and
'
with
met
with
the
leading
and, by the time of our
first bond issue, had achieved a
rating of "AA" by Fitch and "A"
given us the advantage of
obtaining the sponsorship of some
corporation
on
the
of the leading investment bankhand, and since it had not previ- ing houses, but it would have preously had securities outstanding sented obvious difficulties in the
ernment
did
million "
•
are
specific.
unusual
an
banks,
etc.
usually detailed
savings
These stautes
loan of $250 million to France.
That constituted our loan port¬
'
■
permissible for insurance
are
consisting of $150 million of 3%
25-year sinking fund bonds and
$100 million of 2%% 10-year term
bonds. At that time we had made
one
are
available for
vate
'
"
institutiohal
volumes of institutional funds
folio.
:
for
we opened
business there mere practically no
important state! in the country in
that
background in mind,
"
tifhe
particularly those in which large
and that apto be the probable pattern
pears
But at the
if
(827)
services
that
issue
an
insti-
operation
unconditional
own
had ftr reach the
we
tutional investor.
investors
could legally buy any substantial
amount of our bonds. Most
states,
obligations,
'
•
private
and
decided
marketing
consist
Bank's
cured
We
ceed,
con¬
likely continue to resort to
technique from time to time
very
■
The Comme 1 cial and Financial Chronicle
principal type of public marketing
opeiaaon, although we have used
the
-
...
as long as we have unused
capital available to us in sterling
and French francs, for example,
'we have
no
What
we
let—International
or
France.
Manual of
countries outside
States is to
dollar
for
Re¬
Sugar
&
Companies-k
Co.,
120
Wa&
Street, New York 5, N.. Y.—-$2.00.
have tried to do in mem¬
,
ber
Bank
Development,
Washington 25, D. C.—paper.
1949-50—Farr
England
"
and
construction
need tb borrow those
currencies in
17, N. Y.—paper—$1.00.
Loans at Work—Pictorial book¬
open'a
obligations
the United
market for our
and
we
have
Survey cf United States Inter¬
national Finance 1949—Princeton
University Press, Princeton, N. J,
—paper—$1.75.
28
The Commercial and Financial Chronicle
(828)
Continued
from
6
page
V Thursday, August 31, 1950
.
.
difficult,
if
not
impossible,
to
manage.
Public Utility Securities
By OWEN
Monetary Policy in a Free Economy
ELY
ticular categories of credit is also
Utah Power & Light Co.
I
The main
in
Light
south
serves
Idaho,
total
action that is taken before isolated
unsettling economic changes set in
will
by
.
offset
the larger demand
b,y
from
other
industries, and
months
ended
May 31, 1950, were approximately 42% resi22% commercial, only 26% industrial, and 10%
other utilities and municipal and miscellaneous customers.
^
,
Contrary to the possible impression that the company is
closely tied in with the mining industry, the company in the first
months -of 1950 did' not sell any power to Utah Copper or
Kennecott Copper, but probably bought power from the latter
company.
Dollar sales to smelters and metal mining companies
were only about 6%
of total revenues, and sales to coal mining
less than 3%.
were
At'the
time, Utah Company
present
produces approximately
60% of its electric energy requirements, the remainder being pur¬
chased principally from Idaho Power Company, Montana Power
Company, Geneva Steel Co. and Kennecott Copper Corporation.
The Colorado subsidiary generates
substantially all of its energy
requirements. The two companies have about 190,000 kw. hydro
capacity, 112,000 kw. steam, and 2,000 kw. Diesel.
Utah Power's
The company and its subsidiaries expect to
spend $17 million
176,000 kw.
generating capacity, of which 44,000 kw. was installed this year,
66,000 kw, in 1951,. and 66,000 kw. in 1952.
The company is evi¬
dently looking forward to continuation of rapid growth since the
construction
reflect an increase over
Present financing includes the sale
capacity of over 68%.
million bonds, in addition
The company.has
revenues
million
in
uicome
doubled
the
12
of $8
$14
million
in
1945
to
$20.4
July 31, .1950, or 45%.
Gross
increased from $3.8 million to
$5.0 million, and net income
from $1.9 million to $8.8 million.
The current trend of
for the
Utah
Fower
&
Light
Light, but
in
influ¬
for
their
assets;
more
obtain
to
cash.
These
changes necessarily alter the will¬
which borrowers obtain credit.
of influence is, of
limited to types of credit
which are customarily extended
on a standardized pattern, which,
method
course,
was
originally
a
January, 1946, the old
held
warrant
special
that
mind.
immediately
Consumer
well
of
33.6
more
or
wise
to
:
to
special
'
regulative
H.
C.
Mugler
and
have
formed
offices'- at
to
R.
C.
in
fSpfecial
-
avenue
of influence
the econ¬
somewhat
somewhat less than other¬
spend.
a
The
Financial
Chronicle)
NORFOLK,^ Va.—Clyde H. Ja¬
merly with the Norfolk office of
Abbott, Proctor & Paine.
SPOKANE, Wash.—Spokane Se¬
curities
with
Corp.
has
been
the
offices in
Building to
Radio
Moyer Admits
formed
Central
engage in a securities
busihess. Officers are'J. R.
PHILADELPHIA, Pa.—JVIq^er
'
•
•
*
of
'•
market
money are
affecting the finan¬
place,
credit
and
"easy," ,the effect is to
invite, business, investor, and
con-,
expenditures. When the fir;
climate 'as .unfavorable,
that 'is;./, when credit and money
'
partnership*
Sept.
I,'5" '*-'■?
TT
'
^
V-
nancial
are
"tight,"
comes
that
permit
it
credit
temper in¬
can
deflation.
structures
In
before
and
they
losses.
some
little
or
monetary measures
na¬
of
out
us
was
an
to reach the conclu¬
expansion
on
of credit.
It was
had
contraction
or
asserted, and in
quarters accepted
a
fact,
that somehow
example,
and
a
easy
influence at any time,
no
bor¬
as
would borrow just so much
only
much, virtually irre¬
spective of whatever action might
be
so
taken either
strain
The
the
to
ease
availability
level
the
and
short-term
to
or
re¬
credit.
of
of
movement
interest rates
came
to
be rather widely regarded as hav¬
ing little
or
economic signifi¬
no
cance.
the
In
world is
who
present
would
vidual
who
the
when
era,
divided between those
so
control
decision
indi¬
every
those
and
maximize
would
of
the
us
area
of individual choice and initiative,
I
believe it is appropriate to take
look
another
Drastic
apparent
was
that monetary measures
either
in¬
an
give
rise to an inflationary spiral that
inevitably leads to deflation and
tivity and cushioning rapid down¬
ward
the
at
virtues
of
We should ask
monetary policy.
a
,
■
ib The
•Vie J-.
i"
,Y;
j'iit.q.t.
■
Meaning of a Flexible
Over the years, the slight mone¬
tary and credit action taken from
time
time
to
moderate
to
exces¬
sively sharp movements of con¬
or expansion in the econ¬
omy makes major contributions to
our
well-begin.
An illustration
traction
how
of
it
with
works
particular
effectiveness, unnoticed by most
people, is its role in relieving sea¬
sonal tensions in the money mar¬
Monetary. Policy* : : j s i ~»i
'Flexibility
in * * monetary
' and
credit
polity mektis readiness to
mavfi i.
.quickly.
...
in., response
Reserve
abrupt and dis¬
seasonal changes in the
had
we
ruptive
part1
scarcely
funds.
Today,
tautness
slackness
or
smoothly
so
nancial
are
we
of the existence of
aware
seasonal
geographical
large
to
in
credit,
Federal
the
Before
System
does
fi¬
our
these
absorb
mechanism
of
shocks."
Another
noteworthy feature
rapid changes in
example, early in
monetary
authorities
to
For
tempo.
the
eased credit
business slackened
as
Later in the year,
off.
ed their policy from
restraint
they shift¬
credit ease to
forces
inflationary
as
strenthened again.
In
free
a
and
monetary
and
flexible
policy to
busts"
is
in
reflected
be
to
it
may
be
point that
a
is frequently
credit
forgotten. It is that
monetary - action pri¬
and
with
decisions
influences
marily
and
relatively small
respect to credit spending
influences only a
—
margin of these decisions.
It is
those 'marginal
decisions,
however, that are taken quickly in
times
of
economic
change and
just
that
have
fect
on
disproportionate
a
prices.
is
It
not
ef¬
neces¬
to touch all points in order
contribute to the maintenance
sary
to
of
sufficient for
be
It may well
stable economy.
a
meas¬
influence only a lringe of
to
ures
monetary
10%, or 15% of credit
decisions to be a very
effective stabilizing factor, par¬
5%,
or
spending
ticular y if that influence
of the
One
is prop¬
:
where mone¬
areas
tary measures can have a marginal
influence is
in connection with
decisions not to spend but to save.
It is true that a
large part of our
today
is made through
contractual arrangements such as
saving
by the payment of
life insurance, the
mortgage
of
ment
premiums on
regular repay¬
and
consumer
"bond-aplans of banks
enterprises,. On this
instalment debt, and the
economy,
"booms
prevent
.
this,
worth while to stress
of
pol¬
monetary
icy is its quick reversibility. It is
1949
do
erly timed.
implemented
susceptible
some
change in interest rates, particu¬
larly short-term rates, which are
the
market's
expression of the
savings
month"
business
and
saving, monetary policy has,little
On other types of,individ¬
elfect.
saving, tighter supply condi¬
for. credit and higher;, rates
ual
tions
rates have been firming since
stimulate more sav¬
other hand, easier
credit conditions and lower rates
last half of last year as
of return may lead to
cost
of
credit.
Thus, short-term
the
the mone¬
of return may
ing.
tary authorities have attempted to
credit
restrain
panding
expansion.
for
demand
are
made
credit
available.
on
credit
rates;
of
and
Put¬
avail¬
easing of credit tends
it
is
true
that
if
since
tend
to
rather than
becomes
costly.
will
not
harder
saved ?for
changes
in
credit
dehiands,
monetary policy directed, toward
/ito. greatereconorqi#-gt^ijitx
nesses'.
of
to
get and
more
themselves;-it will be
their, busi¬
them .by
-Thus, 'while
monetary
.imliima.
yr
to use these funds
credit, as money from
Stockholders and ofwhers
have a .chance to spend
vented from
to
retain more of their
capital markets or from banks
the
this money
response
some
earnings and
changes in interest levels are pre¬
occurring in;
restric¬
businesses may
tighten dividend and profit "with¬
drawal policies.
Companies that
have begun an expansion program
tive,
will
a
to soften short-term interest rates.
Certainly
also.be sjg-r
monetary policy becomes
interest
short-term
less saving.
will
ability tends to be reflected in,
firming
Business saving may
nificantly increased in total .when
naturally result in higher interest
supplies of
funds
the
On
'
Ex¬
rates unless additional
i
'
.
I
Before
degree of ' caution
business ting limitations
.and then spreads to others.
areas
decisions.
movements.
,to certain sensitive
By having this kind of an influ¬
ence,
monetary
policy
further
helps to buoy up
(or dampen
down) the total level of spend-
^
Co., 1500 Walnut, Street, meiPbters.
Meeli,
frh e-n PhiladelphiawBkltinfore>
President; M. L. Lee, Vice-Presi¬ Stock
Exchange, will adiftit
dent, and Thelma Meek; Secretary- W-.' Moyer to limited
Treasurer.
a po¬
,is, when, in the language of
the
cob, ■ Jr. has 1 become associated
securities with
Virginia Securities Co., Roys<rr<*
ter Building:
Mr. Jacob was for¬
Spokane Securities Corp.
economy
flation, for example, it can help
to restrain price increases before
they become embedded in cost
bound
cial climate of the economy. When
*
step for
sion
for
are
and
well
the total volume
and other liquid assets.
words, as a result of
tent factor for
Clyde H. Jacob, Jr.
to
the
it
adequate to lift
major depression. It
rowers
usu¬
1930's
not
is
higher levels of activ¬
As such,
on
sumer,
Mugler
Delaware
'
«
Donahue
&
607)4
engage
business.
Adds
As
doses.
and re-spent.
This effect
continue for some time.-"
that
Virginia Securities Co.
Donahue,
Donahue
with
Street
selling around 25 and paying
the
slacken
to
credit
something to be taken promptly as
various
symptoms develop—that
is,
taken
in
moderate,
timely
"road
the financial climate is favorable,
PERKY, Okia.—H.
timely
usually in order.
Monetary and credit medicine is
credit
spent
100%
range to date has been 27V2-23.
,
to
tighten
It relates to the secondary
and other uses of money as it is
■(
Donahue & Mugler
J.
and
power.
may
•P?^VcreS: Li|St is currently
The 1950
to
shifts
them¬
Monetary policy, lastly, is
to yield 6.6%,
begins
ease
measures
in
This effect is in
addition
to
the
one
previously
mentioned of supplying the orig¬
inal borrower with new buying
is
/"Excluding intangibles.
*1
returns
ity,
and
its
In
that monetary and credit ease was
many
to
ally indicated.
an
comes
credit
also lend
policy changes,
as
a
whole has
omy
36
$92.6
other
credit
Percent
64%
money
In
capi¬
stock)
$59.0
-
prompt
business
off, action
on
spending is through the effect of
by EL being
Present
and
Millions
Stock
As
for
approaches
supply conditions for credit, due
to
economy
A fourth
subsidiary of Electric
common
_
instrument
ket.
treatment.
was
Debt
$
of
credit policy on
cancelled, with control thus passing to the
public.
talization
(including the new issues of bonds
approximately as follows:
'"Common
order
selves
months ended
seven
over-capitalized in relation to earnings.
preferred stocks (with arrears) received the
new common
issued
directly
is, it makes them feel
real estate credit
outstanding).
Power
&
The old
stock
be
other
(or less) disposed to sell assets in
to
July 31 gained 41%, and for the month of July 81%.
Share earn¬
ings for the 12 months ended
July 31 were $2.54 compared with
$2.10 in the previous period (both based on
the increased number
of shares to
not
receive
would
that
example
ended
earnings is also favorable: net income
do
regulative treatment.
Loans
stock exchange collateral are
enjoyed steady postwar growth, with system
months
No
accordingly, can be singled out by
statute for regulation, and are of
sufficient current importance to
1949
to the sale of stock.
increasing steadily from
enacted
quickly.
the
and/will
program
volume
part, the available policy in¬
This
new
promptly
is
Flexible Monetary Policy
Can Do
a
turally catch public attention. Un¬ ourselves what monetary action
cost
and
availability of shortfortunately, drastic measures ap-, can do to help us keep our free
term credit.
In other words, they
plied in the past are what the enterprise
economy
functioning
make it
easier and cheaper (or
public associates with credit and fully.
In what specific way can
more
difficult and more costly)
monetary policy. But they are not monetary action serve to promote
to
borrow for the short-term.
the monetary measures that make economic progress and stability?
Monetary influence is also ex¬ the greatest contribution to the
To throw light on these ques¬
erted
by moderate
upward or smooth functioning of a free en¬
tions, I should like to consider
downward pressure on the value
terprise
economy.
For
normal with you some principal areas
of marketable assets.
Such pres¬
conditions, monetary policy is best where monetary measures do in¬
sure
increases (or decreases) the
thought of as a snubbing opera¬ fluence individual spending, but
amount
that
individuals,
busi¬ tion, dragging somewhat against
only indirectly and without direct
nesses, and financial institutions rapid upward movements in ac¬
governmental control of individual
on
in 1950, $13 million in
1951, and $10 million in 1952, for construc¬
The program when completed will include
tion.
the
ingness of those affected to spend.
1949, reflecting
,'S A third avenue of influence is
- ^
-n
through the regulation of terms
residential average rate per kwh. was
only 2.2c; in
low hydro costs.
*■
• .
conditions
effect
take
Their immediate impact is on the
five
companeis
influence is exerted
on
credit spending; rather, their
effect
is
general
and
indirect.
dential and farm,
be
can
can
flation
ence
of the Utah and Colorado companies for the
revenues
influencing
spending
which
is
financed
through credit extension. For the
struments
affords
safer diversification of output.
Electric
pressure
most
experimentally at reasonable cost) hold potentialities for future
expansion. Loss of the Utah Copper contract has been more than
develop¬
volume of spending.
In part this
coal, and other mines; smelters, cement plants, packing houses, a
such
avert
It does this by
ments.
the
steel
12
often
more
mill, sugar mills, flour mills, oil refineries, irrigation systems
and railroads.
Large and only partially developed iron and coal
deposits, plus oil shales (from which oil can now be produced
of
activity,
employment,
prices appeared.
Monetary
and
square mijies in Colorado, including 15 communities.
The
population served by the two companies exceeds 632,000.
important industries in the area are copper, lead, silver,
3,000
the
action
in point is
case
business
subsidiary, Western Colorado Power Company, serves an area of
The
A
monetary au¬
thorities in easing credit in early
1949, when downward trends in
retail, of which Salt Lake City and Ogden are the largest, and
wholesale customers serving various communities.
A
advantage of monetary
other policies to
economic
capacity
tioning basis.
also has 32
conditions.
action.
help to keep the econ¬
stable and smooth func¬
can
omy on a
about 300 communities
It services
it
and
Thus it
and
center
the
to
mone¬
economic
over some
influence
that
appropriate
in
policy can greatly assist in
leveling off booms and recessions.
of about 20,000 square
area
an
Functions
General
the
Ashton,
from
border of Utah.
southeastern
at
&
Power
extending
Policy
tary
$8 million mortgage bonds due 1980.
Utah
Monetary
Timely and
break in the market (which
proved rather damaging to utility stock prices because of fears of
EPT).
Stockholders of record Sept. 12 are to be offered subscrip¬
tion rights to 166,-304 shares of common stock on a l-for-8 basis,
at a price to be determined by competitive bidding Sept. U by
underwriting groups.
The company will also offer competitively
financing since the "Korean crisis"
miles
policy
How
from the Curb to the Big
It is also the first electric utility company to do equity
Utah Power & Light recently moved
Board.
changes
crucial.
What
r\(
policy
wurina
on
ic
the
the
effect
fotal^
Volume 172
Number 4938
...
The Commercial and Financial Chronicle
not
general, it should not be
neglected entirely.
Can monetary and credit .action
have any significant effect on
Do restrict! vemone-
borrowing?
tary policies, for example, influ¬
ence any significant number of
businesses to postpone
or
reduce the spending of bor¬
rowed money?
It probably can
be agreed that the decisions of a
large bloc of borrowers may be
persons or
for ex¬
little affected. Consumers,
borrow at retail and the
market is not par¬
ample,
credit
retail
volume
of
spending -and
thus
and
saving
sharp
moderate
to
changes in economic activity. To
all who prize a high degree of
freedom in economic and political
life, it is most desirable that this
be
done
without
direct
ment intervention in
a
govern¬
single in¬
market
exercised
traditional monetary
through
influences
the
on
market
place,
millions of judgments can
be freely made and tested
where
still
day. Such results continue
composite expression of
every
individual
wishes of all of
that instru¬
selective credit control
are called for when over-all eco¬
nomic
and financial conditions
restrictions on specific
credit. The regulation of
loan margins against stock mar¬
ket collateral, and of such credit
terms as down-payment and ma¬
require
types of
requirements in the ease of
borrowing, has been
to be very effective in regu¬
the volume of credit ex¬
consumer
lating
tended.
■
what
But
His
man?
.
.
_
'
about the business¬
business expectations
certainly affected
are
by changes
policy, if for no other
reason
than that these changes
signal changes in the avaaability
of
credit.
The
fact that the
in monetary
needs is harder (or
borrow, and perhaps
dearer (or cheaper) is a concrete
money
he
easier)
to
in the business cli¬
proceeds more cautious¬
his working capital com-
mate. He
in
From
the
standpoint he uses less
mitments.
does less
monetary
credit and
credit spending.
in g
e
Situation
the role of monetary
free economy, what
of
ground
policy
in
a
Management Policy
had such
monetary powers as the
currency against sil¬
ver, the minting of coin, and the
ability to make changes in its cash
issuance
of
balances with the Federal Reserve
System. More recently, however,
the magnitude of its public debt
operations and the rate of interest
paid on refundings have come to
have
much
important ef¬
fect than formerly upon Federal
Reserve policies to influence the
supply, cost, and availability of
a
more
private
money to
as
well
as
public
The
greater influence of fiscal
on
about
as
a
monetary policy comes
result of the responsi¬
bility of the Federal Reserve Sys¬
tem
to maintain orderly condi¬
tions
the
in
regarding
the
role
and financial
arisen
as
problems that have
result of the invasion
a
of South Korea?
Prior to that in¬
vasion, inflationary
error
pressures
had
no
already gained considerable mo¬
mentum as a result largely of
heavy peacetime consumer and
business buying. This buying was
financed by a substantial expan¬ mobilization than they
well
income.
ment
bank
and
deposits,
as
by high levels of current
as
Following
Govern¬
larger
the
announcement
of
a
period
effort.
borrowed.
/
bank
securities
particularly conscious of the
Underwriters of new
are
influence of credit
and monetary
for
Govern¬
the market for new
policies are
restrictive,
for example,
these
middlemen
between
borrowers
and lenders encounter difficulties
in distributing new issues. They
become reluctant to commit them¬
selves on proposed new offerings.
They are likely to discourage in¬
quiries about security flotations
and cause some issues which may
be ready for sale to be withdrawn
pending a more favorable market
policies on
When credit
issues.
,
situation.
These
actions
cause
postponement of some capital ex¬
penditures by businesses and even
local
governments,
which is ex¬
exist¬
demand for goods is pressing
actly what is needed when
ing
on
our
capacity to produce.
Finally, monetary action has an
important influence on lenders
themselves.
Total lending power
of Federal Reserve member banks
can,
of course, be very closely
circumscribed if the Federal Re¬
disposed to take such ac¬
tion.
Bankers are aware of this
and even moderate credit tighten¬
serve
ing
is
actibn
is
carefully
and has its impact on
watched
the amount
banks are willing to do;
What happens is that if bankers
see
restraining monetary meas¬
ures underway, they tend to cut
back the credit lines available to
their: customers
and they
may
even refuse some marginal credit
of lending
All of the effects of restraining
monetary action in particular
fi¬
nancing areas that I have out¬
lined here,
taken together, can
add
up
to "important dimensions.
If monetary measures
are
vigor¬
ously and appropriately, .applied
tfiey. eah be positive stabilizing
jbrceV,- operating to influence the
in
turn
a
occurring.,
was
During
of this period, however, the
some
Treasury had the benefit of a
budgetary surplus which was used
retire
to
bank-held
affect
thus
and
impact of
the
Federal
public
debt
inflationary
Reserve
open
market operations.
It stands to
the
prices
of
basic
commodities
off by higher taxation and if
ings of corporate and municipal private credit creation is
securities
member
at
banks
in
action
straining
in
ibe
of
-area
monetary and credit policy; The
Board of Governors then approved
of the civilian demand is drained
17% and the loans and hold¬
rose
increase
an
in
the
discount
rate
new
0f
pre-
New York from IVz to 1%%, and
within a few days -approved a
vented.
Federal
the
of
Reserve; Bank
It is my belief that the proper similar increase at other Reserve
leading cities alone expanded by
billions.
Inflationary forces method of dealing with our im- Banks; Also, on Aug. 18, the
have become so strong that the mediate
inflationary situation is Board and the System's Open
$1.7
public has clamored for effective
to
action to
of monetary
Market Committee issued a joint
statement indicating that both
bodies were prepared to use alt
the means at their command to
restrain further expansion of bank
coordinated program
policy, fiscal and debt
In recognition of the inflation¬ management policies, and a sysof
selective
priorities and
ary situation into which the Ko¬ tem
rean
developments
have
cata¬ allocations of strategic materials,
stop them.
adopt
a
The
cornerstone
of
our
anti- credit consistent with the policy
July 18 directed the Fed¬ inflation program must be bold of maintaining orderly conditions
eral agencies concerned with real fiscal measures including across- *n the government securities marincreases
in personal -ket. On the same day, the Treasestate credit operations to tighten the-board
and corporate income tax rates, ury announced that it had temthe
terms
on
which
Federally
selective excise taxes, and taxes porarily increased ihe volume of
aided credit is available. A day
and "G savings bonds
later he requested the Congress on war profits and speculation. Series.'"F
to authorize emergency powers to Financing the expanded military available to nonbank financial lnlimit the use of essential mate¬ budget cannot be limited to the stitutions.
It is to be hoped that all these
rials; to regulate consumer, real taxation of wealthy individuals
estate, and commodity* tr a ding and business enterprises if it is efforts may prove effective; in.
to be useful as an effective anti- curbing loans to businesses and
credit; and to assure adequate fi¬
pulted the country, President Tru¬
on
an
emergency situation like the
billions.
When
being written, the present, our tax changes must be
Congress was considering in con¬ designed primarily to meet the
>
ference the Defense Production danger of inflation.
proximately
this lecture
$5
was
In addition to higher tax«s, the
provide the President not only Government should make every
with the powers he requested, but attempt in its debt management
Act of 1950. This bill was intended
in
addition standby controls over
price and wage stabilization and
Legislation to raise
rationing.
taxes
fiscal and
debt
man¬
policy must maintain
Both
a
monetary pol¬
Committees
icy and fiscal and debt manage¬
ment
contribution to economic stability,
Consistency with the objectives of
the
Employment
Act
of
1946
means
that these respective pol¬
icies should be coordinated and
tailored to the economic situation.
Indications
revenue
will
two
are
that the
as
larae
a
defense effort. If they are
not, monetary policy will need to
on our
resort to even more /restrictive
use of one or more of4 the general
instruments 6f credit 'control at
its disposal, namelyy bikn market
*>£***
A
and
means
for
cumulative
^Pacn^vl
funds
as
priVdlG
possible.
UlVCbinicI l
Concerted
ef¬
nonbank
and
institu^
financial
consumption or
gram
dundant
make
it
volume
funds
but
possible
to
also
would
reduce
which
our
n
aJuLiflST
- well
fn
to nnncidor ifin desirability
consider the riAoiroKilifv
authorizing additional -powers
over, bank
credit expansion in
some form of supplementary re¬
serve requirements. Such powers
very
need
,•
iffht i
ciaf
v
reserve
^at
the
^
_
requirement simitar
dual
Federal Reserve
re¬
plan .about which
have spoken to this group on.
previous occasions,
or
reserve
j
the
is
highly
Summary
My
remarks
today reflect a
monetary and
credit measures, taken together
with appropriate fiscal measures,
sincere
Monetary and credit controls to
with
might
of
of Government financing
through banks,
inflationary.
deal
Congress
^on new quested in 1947) 0r>so me ceiling
Such a prowould not only absorb reinvestment.
private
i
measures prove load equate,
the
current
principal
advocated
rp,.
volume
mainly tions thus absorbing money that
otherwise
be
spent
on
personal and would
that
preventing
price
were
(1)
imposing a
comprehensive harness of direct
controls, including price and wage
fixing
and
rationing, and
(2)
undertaking a vigorous credit and
fiscal program to limit the total
demand for goods.
It is outside
the scope of my talk today to
embark upon a discussion of the
problems involved in imposing an
were
tan
come
higher levies on
corporate incomes.
policy have a primary re¬ indefinite
sponsibility to make a maximum increases
to
aVaudulc
receiving active forts should be made to sell nonby the appropriate marketable bonds and tax savings
of the
Congress at notes to individuals, businesses,
from
The
nolicies
01
also
was
consideration
reasdn, in the kind
individuals which might be used
for speculation or other purposes
that would have,adverse effects
to
added
agement
1 should like to underthe importance of your own.
support of these - efforts to encourage
voluntary restraint in
credit.
score
substantially, and commodity tribute available civilian goods at
prices rose sharply. From the end equitable,
administered
prices,
of June to the middle of
August, can only be accomplished if some
that time.
close liaison.
co-
program, the tempo of which is to cushion the pressure bank and other* lending,
spending accelerated of military demands on supplies
On Aug. 18, the Federal Regreatly, credit demands increased of goods and services and dis- serve System took, further re¬
since World War II, that monetary
policy and
to'
private
of financial situation we have had
immediate
infla-
belief that
inflationary dangers are greatest,
policy should aim to pro¬
a budgetary surplus so that
monetary
policy
may
operate
freely, if necessary, to restrain
are invaluable weapons in cur
economic and financial arsenal for
use in the battle to maintain economic stability witbinihe frameinclusive set of direct controls.
thing, the application of effective work of a free enterprise system,
It is relevant to note, however, curbs on consumer and real estate This is true not only over the
that an adequate mechanism for credit. There ii no doubt that the long run when we Jook forward
normal peacetime activity
administering such a set of con¬ recent large increases in consumer tp
excessive credit and monetary ex¬
trols does not
pansion.
the
For
example, at high levels of
employment and production, when
fiscal
duce
.
Debt
management
pol¬
now
an
Even if
and
adequate
exist.
establishment of
and should
be broad in scope, restrictive in
character,
and
vigorously administered. They involve, for one
tionary
fuel
situation
can
again, but also in the short run
when military and inflationary
1945, consumer pressures
seem : almost
over-!
increasing by whelming.: .Fwcat. measures, par^
year.
The; in- ticularly higher taxes, must be*
mortgage credit have added
to
the
inflationary
fires,
icy, in these circumstances, needs
mechanism cqujd.be accomplished Since the end of
been
play either a neutral role pr a within a reasonable' period of credit has
role of supporting monetary pol-- tithe, I do not believe direct con¬ about $3 billion a
icy by emphasizing borrow i n k trols 1 are the present answer to crease in May and June of ,this
our immediate inflation problem.
from rionbahk investors. H
': 1
year was about a billion dollars,
When economic activity recedes They deal only with effects and the largest on record for those
to
from
applications altogether.
*
flation
which
the private credit
time when price in¬
ease
market at
bankers
urged
operate in restricting nonessential
.
market
reserves,
tended to
further
of
Civilian
particularly true in the ment securities. At times that
case of commerce, where the cost
responsibility involves some sac¬
of carrying inventories is an im¬
rifice of positive influence over
portant element in the total cost the supply of bank credit.
During
nancing for defense production inflationary measure. It must reof merchandise, and in the public
much of the postwar period, for
strict spending, and most spending
and
productive
facilities.
Still
utility industry, where the cost
example, the Federal Reserve
later in the month he presented to is done by the vast number of
of amortizing a huge P^nt and
System purchased a large volume
individuals and families with low
equipment is greatly influenced of U. S. Government securities. the Congress a tax program to in¬
In
crease
Federal revenues by ap¬ and middle bracket incomes.
by the rate at which money can This action operated
to
create
This is
be
Peterson of that Association has
are in; a
all-out
war
goods will still
be available in large amounts but
the total demand for such goods
will far exceed their supply.
The
job that direct controls can do,
limited
military
man
borrowers.
policy
said
policy can and should play
in helping to solve the economic
currency
The Treasury has always
War II.
be
29
could, be madel lations, general measures to curb
painless way of con- the availability of credit to other
trolling
inflationary
pressures, types of borrowers are called for.
Either we meet them head on and On August 4 a joint statment was
overcome
them or
we
wage
a made by the Board of Governors
losing rear guard action against of the. Federal Reserve System,
them. If the fuel of inflation is the Comptroller of the Currency,
provided, all that direct controls the Federal Deposit
Insurance
can do is to drive the inflationary
Corporation, the Home Loan Bank
pressures
under ground and to Board, and the National Associpostpone some of their effect.
ation
of
Supervisors
of State
Therefore, even if direct con- Banks urging that banks and all
trols eventually become necessary; other institutions engaged in exbroad, basic monetary and fiscal tending credit exercise special
measures
will
be
essential
to care In their lending and investmake them effective.
Price and ment activities. Somewhat earlier,
wage
fixing and rationing are the American Bankers Association,
mucn more difficult to administer
had issued a similar statement,
in a orotracted period of partial and,
more
recently,
President
serious
There is
sion of credit and by an increased
use of our very large supply of
Monetary and credit policy has
always been closely related to
fiscal and debt management pol¬
icy, but this relationship has been
much closer and more important
as a result of the huge expansion
of the public debt during World
fact—a change
ly
who buy and
us
Policy and Fiscal and Debt
of
found
and
Relationship between Monetary
It is in such areas
turity
decisions
sell.
measures.
ments
dh
On the basis of this broad back¬
can
monetary policies.
the twenties that
insensitive
n
such
the
stock
deficit"f i
favor
Monetary Policy in the Current
through credit and monetary pol¬
icy came about through general
ticularly responsive to
speculation is likewise
to "moderate
restraint
time
through the banks.
dividual decision. Results effected
to be the
restrictive
We found in
(829)
high levels, another arrange¬
policy may be appropri¬
not
with
basic
The
causes.
basic
two
months.
Home
mortgages
main
our
line
of defense,
but
monetary and credit action is also
t0 restrict private credit
necessary
.
■
,
■
by-all lenders in the first expansion and, moreover, can be
is
continuing rapid credit and half of .1950 exceeded ,$6.5 billion, applied, more promptly to.hqld the
ate.
Fiscal policy at
sucfy fimes
By thh fend* of JunC; tothl 'homo line until fiscal .'measures ^akei
by
may permit a Government deficit monetary expansion, abetted
outstanding
and debt management' policy may current Government deficits which
Financial.Jnstriiments^
threaten to grow larger.and larger. ceededh$40; billion,, a;new- peak
■
,•
need to stress financing»through
ment of
cause
of
our
inflationary problem
made
.
.
-
^e
and. more than double, the volume;
iTOst. v
among, .pur.
Some people look upon direct
Monetary policy while
adapted * to,: discouraging, credit controls as a practically, painless, outstanding; at the end of the war. major , weapons ,agains( seconorqie
In addition to effective ' con-/, instability as long as we value ,ou#*
contraction and encouraging the way of meeting the emergency
sumer and real estate creditregti-* "freedom.
expansion off/dredit; beiay afHhal fi hand al'< problem.^" N6*
the banks.
,
,
.
.
30
The Commercial and Financial Chronicle
(830)
.
Thursday, August 31, 1950
.
.
■K£
tance to go
Markets
Whyte
latter
June before
backing away. At the same
time the rails, though making
By WALTER WHYTE=
a new
high, leveled off. Such
It
I've been away from my action is always suspect.
desk for the past few weeks, brings to the fore suspicions
Says—
that lack of confirmation
may
though not out of touch with
the stock market. Practically bring about reversals and the
or
had
either
the
a
stock ticker
or
❖
be¬
York boardroom
New
tween
*
difference
main
habitues and those in the
sorts is the
versations.
*
❖
few days
back
of
past
it looks like a set¬
is
kind
some
ahead.
re¬
length of the con¬
In New York, I
The
major
in
cause
their advance has been
decline should
mostly be¬
rails
the
sharpest. Any reaction in
n d u s t r i a Is, however,
the i
tion easily. In the resorts one
becomes acquainted with
people who have nothing to
do except to boast of their
financial
acumen
and to quote
capita
than
215.
13%
of
British
The
[The
expressed in this
necessarily at any
with those of the
views
not
do
coincide
Chronicle.
They
presented as
are
the author only.]
those of
have
on
been
6%
of our
But this
period, this period
new
will
period of defense
be
in
one
which
expenditures on our armed serv¬
ices and on military aid to other
countries will
national
exceed
10%
of the
They will
somewhere between $25 and
billion a year, curing most
run
$30
product.
There
be a little bulge
reequipping our
services, but I suspect
we
may
are
increases
year.
around
normally
billion a
$7%
•
the
look at
market.
*
Ponderosa
He is also
Western Industries,
largest
lumber organizations.
a
*
*
nation's
the
director
of
recently formed by Blair
Holdings Corp. and the Golden
Inc.,
Before I left
on
my
trip,
a
vacation
and
State Co.,
Ltd., for the purpose of
investing
of
combination
lecture tour,
in
the
food
and
food
I felt the market processing industries.
up,
subject to
diversions. The major
Daniel
minor
while I
was
this
But
bullish I felt that
any new buying should await
periods of reaction for the
simple reason that buying on
strength seldom gives the
*buyer any room to move
That situation still
about.
(Special
prior
even
Mass.— Harvey
joined the staff
L.
of
be
have
seen
the industrial
you
aver¬
(Special
$10 billion
Mass.
—
Paul
defense
a
established
industrials still had
some
dis-
(Special
to The
BOSTON,
Romero
has
staff of J.
Pacific Coast
added
Arthur Warner
J.
to
the
&
Co.,
SPECIAL CALL OFFERINGS
•
on
Mass. —William
been
Per
Chrysler
100
..
Shares Plus Tax
a
probably
year.
be
up.
taxes
will
close
a
year
•
J. @ 68% Oct. 14 $275.00
be
levied, and
$10 billion a
to
Schwabacher & Co.
Members
,
.
Fortunately,
in
a
large part of the
taxes
will
fall
upon
corporate income. It will be sim¬
increase in the general
corporate income tax. The desir¬
an
able feature of
is
last
that
it
a
corporate income
is passed
on
fairly
10
or
15
years
will convince
I think quite plainly, how
promptly corporations have been
willing — have been able — to
pass on an increase in the general
corporate income tax.
you,
A third characteristic of the de¬
fense
economy
will
be
that
the
budget of the Federal government
will be in the red by several bil¬
New
New
York
Stock
Chicago Board of Trade
COrtlandt
7-4150
observation. Perhaps I don't have
475.00
any
am
Amer. Woolen
237.50
do
225.00
will
New York 5. N. Y.
@14% Oct. 16
3
Montg. Ward @54% Nov. 3 237.50
CeIaneseCorp.@37% Nov. 3 212.50
Am&ForPw$7@32% Nov. 27 625.00
Subject to prior sale
or
price change
Teletype NY 1-928
Private Wires to Princivnl
oi'ices
THOMAS, HAAB & BOTTS
Members
San Francisco—Santa Barbara
Rosa
&
Dealers
Monterey——Oaklan d—Sacr am en to
Fresno—Santa
Put
50
Calls Brokers
&
Assn., Inc.
Broadway, N. Y. 4, TeL BO 9-8470
a
year.
That is
a
servation rather than
325.00
Exchange
York Curb Exchange lAssoc'ate)
Francisco Stock Exchange
San
14 Wall Street
lions
325.00
@ 12
Oct. 30
Y'ngst'n Sheet @ 93% Oct. 11
Republic Steel (§>38% Nov. 28
Ry. (g) 40% Nov.
the
right
not
not
a
to
make
political
think
that
political ob¬
an
economic
it,1 because
expert. But
the
politicians
willing to tax.
years
I
I
Congress
be
The
characteristics
economy
burden
of
the
will
ment
Federal
I
1948 and
in
the
think
high
as
as
The increase
year.
a
the
national
net
product, with
prices not rising, ought to be in
the neighborhood of $7% billion.
With prices rising, it ought to be
greater.
With
the
Federal
debt
increasing substantially less than
$7% billion a year, with the net
billion,
product
rising
$7%
by
or more, the burden of the
fense
economy is that the bar¬
gaining power of unions will be
strong, and wages will rise fairly
It
year.
what
is
has
or
more
interesting to
note
happened to wages
by hourly earnings
measured
as
in
recent years.
I
take
in
wages
of
all
manufactur¬
ing. That is not always a safe
thing to do, but in this particular
period, the wages in manufactur¬
ing have gone
rate
in
about the
up
same
all wages.
as
Hourly earnings
manufacturing in the three
1939 to
years
1942—that
the
was
period immediately preceding the
institution
of
controls
wage
World War II—in that
And
then
1942
to
months
the
when
manufacturing
then
hourly earnings
So,
that
I
think
21%.
in
And
1949,
rose
when
little bit
a
the
shows
record
suggestion that hourly
will rise at least 5%,
my
earnings
probably
tive
earnings
to
than 13%.
more
and
earn¬
1945 to
came
rose
1947
came
is
more,
resumed,
a conserva¬
output
course,
will
in
increase
per man
also.
Ordinar¬
10-year
a
period, output
hou^ will
increase
man
the
KoreanWar,'
prices had
rise
very substantial
wholesale prices had oc¬
in
and
a
curred in the two months immedi¬
ately
the
preceding
outbreak
of
hostilities in Korea.
.
*
■
The
story of the consumer
prices is pretty much the same. I
will not burden you with the fig¬
-
which I have before me, but
the
ten-year
period
when
wholesale prices doubled, the con¬
price index
sumer
70%.
rose
In this defense economy,
profits,.
corporate profits, I think, will be
That is
moderately good.
characteristic
enth
It
omy.
tive
to
of
to
seems
sev¬
a
the
me
that
assume
econ¬
conserva¬
corporations
should make, after
including after an excess
profits tax, around four cents per
as
whole
a
taxes,
dollar
of
much
sales,
4%
as
and
cents
perhaps
as
dollar
per
of
:
sales.
billions
$400
better.
year,
a
These sales
run
little
a
or
$2-30 bil¬
were
lions in
1949, and they were $381
in 1948, with allowance
some expansion in fiscal out¬
billions
for
put, and the index of fiscal
duction is
1948,
when
rise
some
pro¬
above the peak
now
and
in
allows
one
the
general
of
for
price
lions
or
more a
year seems a con¬
servative estimate.
Well,
four
at
cents
dollar,
per
after taxes, that would mean cor¬
porate profits of $16 billions, and
at
4%, it would mean corporate
profits of $18 billions.
You
might be interested in the
records of recent years as a means
of
enabling
to test the real¬
you
ism and the reasonableness of my
4
to
4%
figure.
cent
have !
I
profits, for
methods
corporate
the improper accounting
almost
universally used by Amer¬
ican
corporations.
most
of
They persist,
them, in counting an in- "
replacing in¬
in the cost of
crease
ventories
as
viously, if
profit.
a
Well,
ob¬
going to count ;
profits, you
can make
your profit figures look
pretty nice, and I am shocked and
amazed that high-paid managers ;
increases
of
you are
in
costs
as
don't
corporations
better than to allow
countants
to
know
any
ignorant
mislead
believing that
hour
But since
year.
of wholesale
one.
Now, of
a
before
corrected
hourly
ings rose 20%. Then
1947, when hourly
years
running until, well, run-'
rise
manu¬
the period of
control," from
came
"wage
1945,
in
three-year
period, hourly earnings in
facturing rose 35%.
so-called
two
level, corporate sales of $400 bil¬
representative
as
the
wages
last
Sales of corporations should
slowly drop.
A fifth characteristic of this de¬
a
the
the middle of Spring, about three
govern¬
don't
that the deficit will be
$7% billion
of
is that the debt
decrease.
in
ning for about
in
fourth
rise
interrupted only for a brief
period beginning about August of
was
ures
Decreasing Debt Burden
A
per
Cities Service @ 78% Oct. 27. 275.00
Halliburton Oil@ 10
Oct. 30 225.00
Southern
not
are
lot of people
a
whom
taxes
pay
ily,
Lonis. & Nash.
PacificCoastExchanges
taxation. It makes
in addi¬
quickly and does not fall on the
corporation. The record of the
Chronicle)
Inc., 89 Devonshire Street.
Securities
Orders Executed
Financial
figure is
and
year.
tax
J. A. Warner Adds
high, the
new
year,
taxes.
probably
ply
themselves at
expenditures,
a
existing taxes will yield $1%
billion to $2 billion more a year
than they have been yielding. But
cross
rails
net
is that the tax
Of course, the
necessity for raising taxes will be
limited by the greater yield of
increase
the
The
The Corporate Tax
W.
to better than 222, Hatch, Jefferis Stetson and Har¬
rails managed to old E. Winn are now associated
63 by a large fraction. with Edward E. Mathews Co., 53
interesting to note that State Street.
It is
II.
economy
will
rates
ages go up
while the
while
a
immediately
Federal Budget,
substantial cur¬
civilian
realistic
to The Financial Chronicle)
BOSTON,
of
at least $5 billion
Hodgdon & Co., 10 State Street.
Three With E. E. Mathews
few weeks
the
assuming
tional
In the past
in
War
and
**
*
World
to
Govern¬
The greater de¬
mand for goods will raise incomes,
Joins Hodgdon Staff
has
ment for all purposes
increase
existing
(Special to The Financial Chronicle)
Keller
Federal
The second characteristic of this
BOSTON, Mass.—Daniel Beatty
ex¬
ists.
as
the
of
$15 billion
is engaging in a securities business
from offices at 26 Allston Street.
BOSTON,
neighborhood of
large as the entire
outlays
will
to The Financial Chronicle)
two
account
inflation, moderate inflation,
despite all of the things which
quite
properly
may
be
said
against it, is not a bad method of
rapidly, probably by 5%
the
three times
more
Beatty Opens
picture which led to
opinion hasn't changed.
in
be
tailment
headed
was
will
into
that
Federal debt will
length "inside" information
Elected Director
Expenditures
that is at once boring and
V. F. Palmer, former Treasurer
Well,
I
have
already
made,
amusing to listen to. If people of the Standard Oil Co. of Cali¬ -really, the first point that I was
in high places knew how their
fornia, has been elected a di¬ going to make, namely, that gov¬
names
were
being bandied rector and member of the execu¬ ernment expenditures will be
about as having told soandso tive committee of Blair Holdings considerably larger than ever be¬
Corp., it was announced by V. D. fore, in the absence of a general
things of vital importance Dardi, President.
shooting war.
These defense expenditures of
they'd be shocked. Anyway
Mr.
Palmer
is
a
director of
I'm back at my desk and once Southwest Lumber Mills, one of $25 billion to $30 billion a year
a
take
to
somewhere between $25 and
$30 billion, out of a net national
product which in 1949 was around
$240 billion, and which
fact
already quite high,
are
must
one
national
at
taking
and
military
that expenditures will settle down
Record Non-Shooting War
again
that taxes
the
account
defense
which I call the
economy,
into
take
must
na¬
tional income.
while
to
income
national
her
defense.
years.
limited
be
less
spending about 7%% of their na¬
tional
income.
They have been
spending considerably more than
any other country of Western Eu¬
rope. The United States has been
spending a little bit less, in rela¬
tive
terms, than the British, a
about
article
time
substantially
income
ours, substantially less than
British, is expending about
the
Should the averages go
should
cut off "inside" informa¬ lower, look out for storms.
can
Likely Characteristic of
Our Defense Economy
net
the
last
the
came
prices have risen 9%.
little bit less than
come
rect lines to the main offices.
*
*
accord¬
acts
From the action of the
on
there was a
branch office nearby with di¬
premises
The
trader
stopped at,
upper New York ingly.
in New Hampshire,
whether
State
cautious
I
place
Then
jrom jirst page
during which time wholesale
of
part
=
every
Continued
performance. What is perhaps
more
significant is that the
industrials
got up to just
under a "breakaway
level"
(about 225) established the
Tomorrow's
Walter
to duplicate that
'
ac¬
into ;
them
increase in the
cost of replacing inventories is a
profit. It is not a credit to the
an
,
astuteness of highly-paid business
executives.
around 35%. It did in the
10-year
period, 1939 to 1949, for the econ¬
as a whole,: and it increased
1949
omy
around 35% in the 10 years of the
In the 10 years of the
twenties.
thirties, output
not do
per
than 20%.
more
So
hour did
man
well. It increased
so
t^e
rise
little
a
^
in
hourly earnings
represent
A
Rising
siyth
defense
l^rice
economy! will be
With
a
with
labor
one
prices are,
1949
the
rising
a
ris¬
costs
a
spe¬
econorpics to see that
as a whole, pretty cer¬
in
in
1948,
discover that corporate prof-
.
in particular,
substantially
were
less than the
But here are the
dollar of sales;
per
1942, 4 cents.
In 1943—a
period of controls, in the period
of
the
1944,
1945
to
World
4.3
feel
from
The
foods.
of
cents.
1945,
the
.
cents.
3.8
cents.
the year when we began
the effects of transition
a
war
interesting-to look at the though
and
tax
War—4.2
was
is
I'll take wholesale prices,
profits
excess
second
It
moving upward.
products
correct them
you
its in 1946 and 1947,
be
farm
than
you
to
except
greater
when
•
dis¬
you
profits
also
tain
record.
corporate
were
corpo-
you cor¬
In
of
deficit in the
doesn't have to be
in
that
cover
1948
the
profit figures. When
them, incidentally,
rect
profits,
Level
characteristic
price level.
cialist
corrected
reported profits.
budget arid
ing,
in¬
some
in labor cost.
The
rate
Profits Exceeded
have
I
and
is only partly a rise in labor
cost,
but
it does
crease
So
worst
would
to
year
the
not
corrected
-•
civilian economy.
a
in
recent
years,
published
figures
it—only the
indicate
figures
will
willing to increase taxes
sufficiently to keep the budget
During the pericjd, 1939 to 1942,
preceding the cohtrols, wholesale
transition
prices,
production
was
If I
may
inject an economic
observation, it would be a blunder
to attempt completely to balance
the k budget
at this time, even
though a deficit had appeared. A
very high point is something one
does not ordinarily desire, but one
and
food, rose [17%%,
three-year period, Then
indicate
-
,
occurred,
in balance.
outside
of
farm
products
that
the
1946,
controls, 1942 to 1945,
prices rose a
of
wholesal^
the
1946,
when
most
more
period
than4 4%.
1945
pricey
to
Then
1947,
shot
up
came
when
36%.
an
unprecedented
profits
of
the
and
when
held up by strikes
after
period
wholesale
to
in
came
when
little
it—was
per
extent.
dollar
sales,
cents.
In
taxes, were 3.2
3.9 cents, though the reported profits were substantially
larger.
1948, 4.9 cents. In 1949,
1947,
5.3
cents,
though
the
-
In
of
reported
.
*
-
Number 4938
Volume 172
profits
*, I
1949; were
for
smaller..
just
indef¬
continued
be
5.3
the
expect
not
to
rate
something
somewhat
:
should
Cent
initely, but I think, on the basis
of this record, one is justified in
assuming that profits per dollar
of sales ought to hold
above 4
cents, and perhaps maybe as high
as 4V2
cents.
eighth characteristic of this
economy
is that indi¬
An
.
defense
vidual
savings,
personal
savings,
in
investment
for
available
in¬
probably be little
changed, either upward or down¬
will
dustry,
Tax increases will cut into
ward.
the
savings
to
a
other
the
individual
of
volume
total
certain extent.
On
hand,
shortages
of
various kinds will tend to increase
the volume
available
individual savings
of
in¬
in
investment
for
dustry.
one of the sur¬
of this post-war
period has been the high rate of
individual
savings.
A little bit
For
example,
things
prising
higher proportion of income after
taxes has been saved than before
the
As
war.
bit
little
than
saved
the
spite
this
the
be
that
will continue to expand and will be limited by the shortage of personnel,
As you know, a technological research has been expanding quite
of
volume
will
economy
technological
in taxes has
absolute
the
It
outlook
for
seems
to
further
that
the
Excess Profits Tax Dangerous
dividend
in-
If
me
The country must not
that this is not
as
overlook
saving
individual
raised
rate,
of
a
narrow
as
com-
limit
training
to
increase
the
our
at
rate
think
I
far
as
as
of
craftsmen are
drop a fifth, or a
fourth.
durable
saver.
it.
the public utility field,
or any
in the last infla¬ other field.
Is it not fair to say
trying to get the that the investment trust which
Little Steel formula on salaries at embodies the principle of diversi¬
tion.
placement in the industries? These
didn't,
We
were
after Mr. Truman fication diminishes the magnitude
ought to have of the mistake which the small
18-cents an hour; in the Spring of saver is
likely to make in select¬
1946, we didn't have a Little Steel ing his securities?
Harvard
long
had
everyone
said
formula and so I want to be sure
professors and the other
workers get their
that the
as
craftsmen
concerned.
are
back
by
for
year,
one
the
riod,
be planned so it will not
can
hold
limited by shortages.
at¬
that
see
share
have
an
Cruttenden Co. Adds
collar
white
that
we
fair chance for it, and
not
of
a
and
inflation,
inequitable inflation.
f
landlords
The
(Special to The Financial Chronicle)
pretty
ed
a r
badly as the figures
indicated, because they cut down
on
maintenance—but while
the
badly—not
four
as
price
consumer
went
index
national
gross
in- spent
on
111. —Harry
CHICAGO,
A.
Zeldes is with Cruttenden & Co.,
up
70%, rents went up 16%.
You
1946, 1947, can't
defend
singling
out
the
The difficult problem is going 1948 and 1949. In that period,, we
landlords for that type of treat¬
to be how universal military train- stepped up the proportion of our
ment.
as
expenditures on
consumer goods will be ing
Furthermore, the
to
a
They
to capital formation, and capital re-
well as in the military have the same effect, on capital
services, so that universal mili- formation that the Second World
tary training will help us develop War had.
a better-trained labor force, as far
Let's look at the post-war pe¬
the industry
with pre-war.
Well, shortages will limit the
number of dwelling units put up.
may
It isn't right. It is taking
advantage of the people. I don't
Now, one can't get away from
the fact that the small saver has.,
moderate amount of in¬
got to choose. I suppose he cafi
flation is necessary, but if we are
make mistakes in selecting invest¬
going to have a moderate amount ment trust securities just as he
of inflation, I want to
be sure can make mistakes in selecting
that the professors get their share
securities in the retail field, or in
our
technology improves.
pared
It
fering.
so
If wages are going to
faster than output per man
hour,
to years, 1942, 1943, 1944 and 1945,
the war years, and what happened
ability
which
like
don't
rise
pacity to produce, and we must into making our plant larger and
not
permit
universal -i military more modern. Then came the four
com¬
as
is
profits tax
excess
tempted.
proportion of incomes after concerned, at least most types of priyafe expenditures on plant and
craftsmen, as distinguished from equipment dropped to 3.8% of the
taxes, saved, has been a little bit
greater than before the war. The professional workers, I think uni- gross national product. In other
versal military training will prob- words, the proportion of our gross
explanation
of
that
somewhat
surprising fact is very obvious ably help us to increase the num- national product that we devoted
bers of most types of craftsmen, 1° enlarging and improving our
and
very
simple.
People have
electricians, various Plan*» that proportion more than
been buying houses on a very big machinists,
scale and the money which they types of repair and maintenance dropped in half,
men
required for the equipment
Now, it would be a calamity in
spend on buying houses is partly,
of the Army, the Navy, and the this production contest with Rusof course, their personal savings.
Air Force.
The skills of all of sia if the defense economy were
So, it is the housing boom, more
those
men
are
of great use in to exhibit the same. effects c*r to
than any other single influence,
has
the
I
in non-agricultural industries.
In other words, it is the total
figure for industry.
Eight per-
the
which
today and urge them
creases
petition as a mere military com- cent of the gross national product
petition. It is a competition in ca- in those three prewar years went
the group in the
higher brackets.
Nevertheless, for individuals as
a
whole, the proportion of in¬
comes
before
taxes,
and
also
think,
savers
buy the type of savings bond
researcn
the competition of Russia.
savings among
I
to
which the government is today of¬
of their profits in the form of divjdends.
small
corporations from should, capacity will be expanded
higher proportion most rapidly at those very points.
a good
many
distributing a
31
regardless of the rate of stiff that the industries which are think it is anything to be laughed
I
don't
think
the
SEC
corporate—the volume of corpo- making very large profits are not about.
rate profits—the outlook for divi- able to use a substantial part of would permit it, if the SEC had
dend increases is not too bright. those profits to expand their ca¬ authority.
Another solution for the small
Furthermore, it does not seem pacity, the excess profits tax can
to me that it would be in the na- be a very dangerous obstacle to saver would be to pick high-quaU
our
winning the production race ity stocks, but that is fine only
rapidly. It ought to expand faster tional interest for corporate profthan ever but whether with uni- its to be made out to the stock_ with Russia.
for the person who has the time
versal military training that will
and the background and the train¬
holders, rather than plowed back
Conclusions
be possible remains to be seen.
jnto the business. One of the iming to distinguish between good
I conclude these observations on
and medium and poor stocks. The
Or.e of the most important de- portant
things
that
must
be
this defense economy by pointing
small saver can not ordinarily af¬
cisions to be made, I think, in con- guarded against is preventing this
out two problems: One is that ris¬
ford
the help of an investment
nection
with universal
military defense economy from having the
ing prices will create the problem counsellor.
Perhaps until the gov¬
training, will be how to prevent same effects upon capital formaof seeing that everyone gets his
ernment
this training from reducing, in the tion that the Second World War
brings out a
suitable
fair share of inflation. I think ii
short run, our capacity to turn out had. Before the Second World War,
savings bond, the best solution for
is plain that the American people
the small saver is to put a large
engineers, biologists and bacteri- in the years 1939, 1940 and 1941,
prefer a moderate amount of in¬
part of his funds into the secu¬
ologists,
and
doctors,
chemists, before we became real participants
flation to the controls that would rities of
well-managed investment
physicists,
agronomists,
and
a in the Second World War, 8% of
be necessary to prevent it, and l
trusts. Certainly, the prospect that
great many other types of scieu- the gross national product went
am
quite frank to say that I am the
price level will be a rising one
tists,
whose
services
will
be into private expenditures on plant
one of them.
I don't see how you
during this defense
economy
needed more than ever to help and equipment. That does not incan
prevent a moderate amount makes it
quite pertinent to ex¬
develop
substitutes
at
points elude any private expenditures on
of
inflation
without
slapping
amine more closely than ever be¬
where there are shortages, and to the housing. It does include pridown very complicated
controls fore the
suitability of investment
help us keep our capacity to pro- vate expenditures on plant and
upon wage fixing, for example.
trust
securities
for
the
small
duce going rapidly enough to meet equipment in agriculture as well
defense
great increase in
despite the fact that
increase
L
this
of
characteristic
ninth
A
de¬
war,
in
that
about
say
..
„
been
has
to
moment.
a
Expanding Technological Research
very
great
reduced
proportion
taxes
before
and
taxes
matter of fact, a
a
higher
before
income
(831)
The Commercial and financial Chronicle
.
South
209
bers
of
La
the
Salle Street, mem¬
New
York
and
Mid¬
west Stock Exchanges.
With Robert Showers
(Special to The Financial Chronicle)
years,
product
that
we
Inflation and the Investor
increasing and improving
CHICAGO,
111. —Edward
J.
Hennessey has joined the staff of
Robert Showers, 10 South La Salle
Street.
And the other problem that this
higher personal stance, the time that men are plant to 13.6%. Now, in the last
inflation which the country evi¬
income taxes on the quantity of ready to practice medicine, or so couple of years, it was not quite
that it will not hold back by one so high.
In 1949, it was 10.7%, dently prefers as a lesser evil to
savings available for investment
these other evils, the other prob¬
in public utilities and in manu¬ year the time within which men but the average for the four-year
are ready to go out as trained enperiod was 13.6%. That's a little lem is an investment problem for
facturing and in railroads and in
the
small
savings. If you put
high by normal standards.
oil companies, and so on, the lim¬ gineers.
Technological change will be
In 1929 which was not far above money in a savings bank, or if
iting effect of taxes will be offset
rapid, and probably a little more normal, perhaps a little bit, 10'/2% you put money in a postal savings
by the effective shortages.
rapid than ever.
That is one of 0f ^ gr0S3 national product went deposit, you are making a bet
that the price level will not rise.
No Great Change
the good things about a high tax. into
ivate
expenditures
on
So the effective
I
don't
be
the
a
tax
corporate inother
among
means
that the
down, will
great change and that
things that the government is fx-
individual savings,
un-
in
saying
nancing
change, whether up or
not
high
a
course,
come
It seems one is jus¬
simply
tified
what the net re¬
know
will be.
sult
Of
volume of
a
large part of the
very
doing research, since
search is a deductible expense
cost
of
re-
der the
corporate income tax; and
personal savings available for
another good feature of a high
uses, will not be very
different from what it has been. corporate income tax is that it encourages more rapid replacement
of
non-house
An
eighth
characteristic of the
defense economy is
that corporate
c
of
replacement
' ?ince a
the old equipment is scrapped,
profits after dividends will be less that
than during the last two years,
gives
than in 1947 or before. exP?.^;
Will the volume of investmentNow, in 1948, slightly more than
seeking funds be adequate.
Per$11 billion of corporate profits was
available
for
reinvestment,
haps it
after
an
is
little early to underto that question,
a
answer
PORTLAND,
Me.—Alphy
Inc., Chapman Bldg.
With Mannheimer Co.
the
wrong
client
While
tax.
js
about
may
which
coming even close to 12% by
are
kind of excess profits
and
an excess profits tax
the
worst
kind
of
or
in
fixed
the
when
bonds
tax
have
dollar
is
client
adding
to
his
terms
buying
savings
one
account,
coulcl normally have, because
or
Your
s
J
large as they were
in 1949, during
Dividends
the next several years.
will be
a
little bit higher; instead
of around $11
billion of corporate
quate,. I
have
things:
suggested
two 0f the, national misfortune,
some
that
One,
the
volume
of
per-
sonal savings available for investment
in
industry will not be great-
profits being available for rein¬ ly changed, up or down. I have
vestment, it is my guess that the suggested
that
the
volume
of
figure would not be more than plowed back earnings in corporaaround $9 billion. Of course, that tions will be down moderately. I
is
just
a
rough kind of a
very
*
guess.
In 1947,
lion.
was
the figure was $7.1 bil¬
1939, and it
billion. In 1940,
You go back to
only half a
$2.3 billion. So, $9 billion would
be fairly large. I'm not sure that
it will be large
think
there
concern
is
over
volume
real
reason
to
feel
the adequacy of the
of -investment-seeking
funds.
,
,♦
tr.
kind
of
excess
profits
of
a
the
problem
may
be
to
home.
»
fhat is
the way the profit system | the small saver
is supposed to
work.
High profits
signal that supplies are riot
ai*e a
would
adequate to meet the demand and
expect the shortage of
tion
buy
temporary excess profits tax—
enough. I will have investment-seeking funds to deter if the profit system works
so
tax
But, of course, real,
estate is not a particularly liquid
js probably good for business, as
asset, and if a man is not sure
wen as for the rest of the country,
of holding on to his job, if he fig¬
gut
the points where
profits
ures he may have to
be moving
are
very
large are usually the
to
another
community
before
points where industrial capacity
neecjs most to be expanded. Now, many years, buying a home is not
a satisfactory solution.
if you > think about that for just
The
government would help
half a second you will see that
—a
Curtailment of Dividends
I
F.
Cyr and Armand A. LeBlanc arc
now
with King Merritt & Co.,
responsibility.
His
some liabilities
heavy
very
little bit. We could prevent
a
our
his postal savings ac¬
count, obviously these traditional
but certainly it is not too early to jt
penalizes the pursuit of profits,
outlets for the small savings are
ask it, and certainly it is not too j
suppose, nevertheless, in a pewere
left after the payment of
early to attempt to answer it, to rjod ()f great national calamity it not suitable when the prospect is
dividends.
for a rising price level.
give at least a piecemeal answer, js noj.. g00(j
for business to be
I don't think corporate profits an answer which
For
Now, what can he do?
may be mademaking a windfall of profits out
before dividends will be quite as
many small savers, the best solu¬
take
and in 1949,
$11.2 billion of corporate profits
payment of dividends,
King Merritt
(Special to The Financial Chronicle)
(Special to The Financial Chronicle)
plant and equipment.
Ten and Now, we ought to get pretty good
odds to make that kind of bet
ST. PAUL, Minn.—Louis Klima
one_half percent.
Well, certainly
It is not an attractive bet. and Richard P. Egan have become
we
should keep spending during today.
If you put money into a govern¬ associated
with
Mannheimerproduction contest with Rusment savings bond, you are mak¬
Egan, Inc., First National Bank
sia j should sayj at least 12% of
ing the same kind of a bet.
I Bldg.
•
V
Qur
gross
national product, on
think that an investment coun¬
capital replacement and increase,
sellor who advises a client to put
Well, obviously, we shall not have
money in the savings bank or in
j.00 iarge a quantity of investmentthe postal savings, or into any
seeking funds to do that if perkind of bonds, whether govern¬
sonal savings remain about the ment or private, he is assuming a
same
and
if
corporate
savings
the concern deductible drop
but larger
Two With
as
it
if it were to bring
savings bond payable in a
fixed amount of purchasing power,
out
a
rather
dollars.
for
the
than
a
fixed
number of
ethical
I do not think it is
government
to
approach
RED
CROSS
_
must carry on]
32
(832)
The Commercial and Financial Chronicle
With E F. Hutton & Co.
Continued from
level
<Special to The Financial Chronicle)
SAN
liam
E.
FRANCISCO, Calif.—Wil¬
DeWitt, Jr., has become
with
associated
Co.,
E.
F.
160 Montgomery Street. He
formerly with Walston, Hoff¬
was
Witter
& Goodwin and Dean
man
The State of Trade and
& Co.
the
strike.
coal
The
drop
The
loss of about
production
represents
136 and compared
commercial service
casualties than
S.
Richard
with
associated
Morrow,
Inc., Philadel¬
Biyth & Co.,
phia, was drowned in a heavy surf
at Duxbury,
Mass., near Boston.
Mr. Morrow had been with Biyth
&
in
going
Philadelphia
the
to
office.
(Special
is
now
Jackson
Webber,
Garfield
North
—
&
Curtis,
50
Avenue.
The
LOS
ANGELES,
L
ago,
or
Calif.—Albert
joined the staff
Co., Inc., 210 West
Street, members of the
Seventh
Stock
Angeles
of 6.5
rise
a
This
week's
400 tons
San
is
now
&
McNear
with
nected
Russ
con¬
Willard,
of the
Francisco Stock Exchange.
members
Building,
With King
Merritt Co.
(Special to The Financial Chronicle)
FRANCISCO, Calif.—
SAN
Quentin
has been
Merritt
Babcock
W.
added to the staff of King
& Co.,
Inc., Russ Building.
With Paul C.
"(Special
SAN
to The
increase
of
First
Financial
Chronicle)
dropped
894,111 in July, 1949.
to
&
Co.,
Cooper
Tuliy
Allan Blair Officers
—
Clifford
A.
appointed VicePresident
and
Secretary
and
Henry E. Reichart Vice-President
of Allan
Blair & Company,
39
111.
Gueutal has been
La
to The
Co.
Financial Chronicle)
INDIANAPOLIS, Ind. — Robert
J. Myers is now with Raffensper¬
ger, Hughes & Co., Inc., 20 North
Meridian
Street,
of
up
141,142
IV2
other New
York
Chase
&
to check credit
The
in three
members
of the
union
obtained
for
its
members
a
to General
go
Motors workers
on
to
call
1%%
loans
secured
following
the rediscount
banks
Midwest Stock Exchange.
which
rate
have
the
to
1%%
increased
from
their
1%%.
rates
Opens
BROOKLYN, N. Y. —Mordecai
Cohen will engage in a securities
business from
offices at 16 Court
energy
6,345,503,000
kwh.,
distributed
Benjamin
Grody,
of
Stanley
& Co., New York City, died
Pelz
on
£§•
to
the
Edison
Electric
NEW
on
the corresponding
of 11.9%.
as of Aug. 22.
This compares
date a year ago, or an increase
a
new
high since Sept. 28,
The index represents the sum total of the
price per pound of
31 foods in general use. It is
not a cost-of-living index.
<
!
With State Bond & Mfg.
•.(Special
last^week to stand at $6.56
with $5.8-3
,
to The Financial Chronicle)
ULM,
Commercial
State Board & Mortgage Co., 26
North Minnesota Street.
Vz
week
Dun
ended
&
and
Aug.
businesses failing
many
in
operation.
In
industrial
24 from
Bradstreet, Inc.
failures
lOS^in
While
the
declined
to
176
June, 1950, the index
preceding week,
casualties
remained
at
the
reported
the
was
'
,
July represented
concerns which
began
commodity
price
index,
moderately this
This compared with 278.80
corresponding date
showed
little
net
a
compiled
by
week
to
week
earlier, and
a
close
at
ago.
year
change for
the
availability
of
movement
corn
was
of their storage
fairly large with holders
freely.
more
Demand for refined and
season.
raw
sugar
continued good
upward
close, reversing
purl#
meats
downward
a
trend
of
three
weeks.
With
showing further strength, prices for live hogs
substantial
advances
this
week.
Sheep and lamb prices
aided by increased shipper demand from
one,
included increased mill and commission
house
able crop news and a
buying, less favor¬
tightening supply situation. Reported sales
in the ten spot markets last week
totaled 337,100
354,900 the previous week and 95,800 in the
bales, as against
corresponding week
a
year
Sales
ago.
1949-loan
cotton
of
1948
were
pooled
reported
cotton
as
and
repossessions
continuing
at
good
a
Domestic mill consumption of
cotton, according
the Census, totaled
of
rate.
to the Bureau of
8,870,000 during the 1949-1950 season, as com¬
with 7,795,000 bales consumed
during the previous season,
and 9,354,000 two years
ago.
pared
for
Dip
last
week, Dun & Bradstreet
stated: Despite the prevalence of favorable
shopping weather over
many parts of the nation, consumer purchasing in the week ended
this Wednesday
<
dipped slightly from its former high level. Aggre¬
gate retail dollar volume continued to be
moderately above the
level for the
corresponding week a year ago.
Last week's
increased
interest
in apparel
continued
into this
same
was
a
slight drop in the buying of food in
of the
many
nation's stores this week.
The
sales volume of
house-furnishings generally decreased
week, partially reflecting the over-selling of the past few
this
weeks.
Total retail dollar volume
in the week ended last
Wednesday
estimated to be from 5% to 9% above a
year ago.
Regional
estimates varied from last year's level by these
percentages: New
was
England,
Midwest
and Northwest
+4 to +8; East, South and
+5 to +9; and Southwest +7 to + 11.
According to the Federal Reserve Board's index, department
store sales in New York City for the
weekly period to Aug. 19,
1950, advanced 7% from the like period of last year.
In the
Pacific Coast
preceding
of
week
crease
a
week
1949.
of 22%
rise
a
For
was
of
the
29%
four
was
weeks
registered
ended
from
the
19,
1950,
Aug.
similar
an
in¬
noted and for the year to date volume showed
decrease of 1%.
Department
^ from
the
>
store
sales
Federal 'Reserve
19, 1950,
increase
in
rose
July, 1949,
The cotton market
strengthened as the week progressed, clos¬
ing about 30 points higher than a week ago.
Supporting influences
Aug.
Weekly Business Failures Continue Downward
Minn. —William
Krell, Jr., has joined the staff of
as
34.6 and in
advanced
the
on
prices
There
by the electric
years ago.
The current level
represents
1948, when the index registered $6.70.
Aug. 27.
which
week.
It was 24,327,000 kwh. lower than the
figure reported for the
previous week, 822,187,000 kwh., or 14.9% above the total
output
for the week ended
Aug. 27, 1949, and 867,762,000 kwh. in excess
of the output reported for the
corresponding period two
cents
was
the East.
week ended Aug. 26, was esti¬
according
in
Failure Decline
Consumer Sales
After holding
unchanged for three weeks, the wholesale food
price index, compiled by Dun &
Bradstreet, Inc., advanced three
Benjamin Grody
and
appeared
decline
to
concerns
Summarizing trade volume
Wholesale Food Price Index Scores Moderate
Advance
Street,
10,000
developed'» stronger
Other city banks are
Electric Output Attains Further New
High Record
electrical
the
secret
By stiffening the loaning rates it is hoped
industry for the
Aug. 22,
Country
at
The
money
Institute.
Mordecai Cohen
Business
continued
wholesale
on
fresh
by Stock Exchange
lead of the Federal
revenue freight for the week ended
Aug. 19, 1950,
851,025 cars, according to the Association of American
Railroads, an increase of 14,600 cars over the preceding week.
The week's total represented an increase of
119,810 cars, or
16.4% above the
corresponding week in 1949, but a decrease of
49,638 cars, or 5.5% below the comparable
period in 1948.
at
17,
1949
steady to firmer prices.
Trading in lard was not as active as in recent weeks.
Lard
prices at mid-week went to the highest levels since
December,
1948, reflecting an advance in hog values and a
substantial drop
in stocks of lard
during the first half of August.
As a result of
sharply curtailed receipts, prices for beef steers turned
Loadings of
mated
from
at
Weekly Carloadings Highest Since November, 1948
of
Month
failures
daily
238.54
for the
on
up
power
10
from
a routine
affair, except
baking interests. Cocoa
liquidation prompted by lagging
demand and more favorable war news.
Coffee developed a firmer
tone with active trade
buying lifting prices to new high ground
inflation.
amount
48, in the East North
to
decline
The domestic flour market
continued
for fair amounts
bought by several leading
prices moved lower as a result of
four-
commodities, viz.: corn, $1,064,000,000; wheat, $825,000,000
$701,000,000.
The
17
Bradstreet,
on
offering
cotton
light and
as
space.
in farm price support operations on June 30, or
$259,000,000 less than a month earlier. The corporation had a loss;
of $249,000,000 in
disposing of farm surpluses during the fiscal
1950 year compared with
$254,000,000 in the fiscal 1949 year.
As
of June 30, 1950, three-fourths of the
surplus fund was invested
and
A
the week.
Sales
Chicago Board of Trade totaled 167,478,000 bushels
last week, or a
daily average of 28,000,000 bushels, as compared
with 34,200,000 the
preceding week and 35,000,000 in the same
week last year.
Cash wheat was quite steady with
demand from
mills and elevators limited to the
Commodity Credit Corporation reports that it had $3,538,-
125,000 tied
England
16.
/
Grain
National, Bankers Trust, Guaranty Trust, J. P.
Inc., Chemical Bank & Trust, Central Hanover
Co.
New
from
and
Failures
sharp only in the Middle Atlantic Region,
against 51 last week and 52 last year.
was
volume
totaled
Salle Street.
With Raffensperger
(Special
from
Bank's increase of
with
connected
Spring Street.
South
made
City Bank is the eighth major New York City
the rate
likely to follow suit.
Mitehum, Tully & Co., 650 South
CHICAGO,
the
Bank & Trust and the First National Bank.
Financial Chronicle)
now
with
departments.
collateral
9
nine
failures per
&
281.34
approximately 7,000 skilled workers in the tool, die and mainte¬
raise
33.5
The
The Chrysler Corp. announced it was giving its hourly-rated
a 10-cent
wage increase, with a further boost of five cents
to
year
Dun
that date.
Morgan
LOS ANGELES, Calif.—Paul J.
is
States
previous week's, total of 190,879
the
living wage increase that will
The National
—
Joins Mitehum,
Finney
United
the
Monday the United Auto Workers won a five-year con¬
tract including a wage rise from Packard Motor Car Co. and a
pay increase from Briggs Manufacturing Co.
bank
Central
Weekly Wholesale Commodity Price Index
Slightly Higher
the past week,
and Canada of
Last
include:
(Special to The
in
Reports"
31,304 trucks built in the United States and a total of
5,867 cars and 2,227 trucks built in Canada.
August should be the industry's second highest month, with
an estimated 660,000 cars and
140,000 trucks assembled in United
States plants, Ward's said.
The record high was 720,197 cars and
135,7-31 trucks in June.
nance
Building.
d
production
Automotive
workers
Harold O.
joined the staff of Rob¬
Bowers
D.
ert
Output Declined Last Week
''Ward's
Packard
32, in
Most of the failures in
and
cars
South
operations in the past five years.
(revised) units and 149,469 units a year ago.
Total output for the current week was
Financial Chronicle)
Colo.
Excise taxes increased in July by $1,517,148
180,540 units compared with
to
DENVER,
vehicle
East
Liabilities increased slightly
in-July to $19,538,000. Although
this
liability total was exceeded in July, 1947, and July, 1949, it
was larger than in
any prewar July since 1935.
II retail excise taxes.
to
from
at 31.5.
$29,765,373, reflecting increased buying of luxury items because
any early revision of World War
According
26
the annual failure rate
Corporation and individual
last month from $1,488,-
1950.
the
42 from
to
by Dun's Failure Index
to
$1,330,056,665
to
States,
down
were
years, however, with only three-fifths
as in the
comparable month of 1939.
The casualty rate, as indicated
the Korean War has eliminated
Rudolph & Co., 40-D
With Robert Bowers
Wales has
the
Atlantic
in July,
dropping 4%
to 694, the lowest number
reported in 17 months, Dun & Bradstreet
reports.
The number of failures remained less than in
prewar
capacity, the rate
immediate wage hike and additional four-centsan-hour increases at the end of each year of the contract.
They
would also get on Sept. 1 the same five-cents-an-hour cost-of-
Street.
(Special to The
new
cents-an-hour
Rudolph
JOSE,
with Paul C.
on
income tax collections for July to
first full month's collections since
$10,893,341
represents
taxes
From
Calif. —Don R.
Davis and Charles H. Gorrill are
South
based
1,591,000 tons.
motor
Financial Chronicle)
Kirchen
F.
ago,
Exchange.
FRANCISCO, Calif.—
Charles
A month
Both of the latter lines had more
while the three other groups reported
ago,
Atlantic to
Business
based
With McNear & Willard
SAN
tons of
1,872,800
99.5% and production amounted to 1,919,800 tons; a year ago
on
the smaller capacity then prevailing, it stood at 86.3%
was
Auto
(Special to The
equivalent to
is
rate
castings for the entire industry, compared to 1,747,-
week ago.
a
to
reported 70
points.
operating
6 to 15.
rose
year
Pacific States
five of the
last
week
a
123 from
in
regions, amounting to less than eight in any
area.
Increases were reported in the Middle
Atlantic, East North
Central, East South Central and Mountain States. The rise from
week
this
announced
Institute
to
year ago.
Central, failures declined during the week.
Record
the Korean War started June 25,
Pledger &
Los
Steel
the week beginning Aug. 28, 1950, compared to 90.6%
income
of
and
the
in
94% of the steelmaking capacity for the entire industry will be 97.1% of capacity
$2,263,499,437
Staff
Iron
a
Middle
the South
that the operating rate of steel companies having
and
(Special to The Financial Chronicle)
J. Rubenstein has
American
the
Central
supply shortages in the various products since military de¬
mands will adversely affect supplies and production of certain
important products for the general market, says "Steel" magazine.
An
Joins Pledger
in
Steel buyers, nevertheless, anticipate
uses.
war
In
West South
acute
steel ingots and
Frank H.
affiliated with Paine,
PASADENA, Calif.
Hall
Co.
Financial Chronicle)
to The
million
going into direct
for
With Paine, Webber
22.8
saw
a
concentrated
was
fewer failures than in 1949.
Peak consumption year of World War II
tons or 38%
of total steel production
production potential.
1943
Co., Inc., in New York City be¬
fore
military needs in fiscal 1950-51 will run to
than 4,000,000 tons, about 4% of the nation's 100,000,000-
more
ton
decline
decreased
more
and
Military and related steel requirements will take only a small
proportion of total steel output over remainder of the year.
De¬
no
week's
or
with 149 of this size
manufacturing and
trade; manufacturing casualties dipped 6 to 35,
wholesaling 2 to 16,
retailing 8 to 87.
Construction failures remained at 23 and
190,000 tons.
fense officials forecast
Richard S. Morrow
1949
involving liabilities of $5,000
ures
Industry
&
Hutton
in
as
Thursday, August 31, 1950
...
and were considerably more numerous than in
the comparable week of 1948 when 96
occurred, they were 33%
below the prewar total of 264 in the similar week of
1939.
Fail¬
5
page
.
of
rose
25%
from that of
sales showed
a
a
12%
from
(revised)
year ago.
on
a
country-wide
Board's
the
was
index
like
for
period
recorded
in
basis,
the
of
the
taken
as
week
last
ended
An
year.
previous
week
For the four weeks ended Aug. 19,
1950,
from the
corresponding period a
rise of 26%
ago and for the year to date
registered
ye^r
an
advance of 4%.
>
"
*T
Volume 172
Number 4938
.
.
The Commercial and Financial Chronicle
.
(833) ! 33
Hie
Indications of Current
Business
fcflowintg ttaitktkal tabalfctioKMt
latest week
Activity
week
or
month ended
on
IRON
Indicated
steel
AND
STEEL
operations
capacity).
of
Previous
Month
"Week
Ago
ingots
castings
(net
97.1
SO.6
99.5
86.3
Sept.
tons)
3
1,872,800
1,747.000
1,919,600
Cruet
PETROLEUM
1,591,000
OF
oiJ
and
condensate
output
—
NEW
Crude
(bbls
average
of
42
stills
daily
—
Gasoline
output
output
Gas.
oil,
and
distillate
Residual
fuel
oil
Stocks
at
and
Kerosene
unfinished
(bbls.)
fuel
at
oil
21,319,000
20,305,000
19.554,000
18,195.000
2,265,000
2,121,000
1,848,000
7,380,000
7,687,000
7,166,000
6,042,000
8,311,000
7,787,000
8,056,000
(bbls.)
OF
Revenue
freight
Revenue
freight received
CIVIL
loaded
Aug. 19
108,274,000
108,518,000
108,915,000
107,612,000
24,413,000
23,628,000
22,766,000
25,822,000
Aug. 19
65,107,000
63,053,000
59,434,000
75,312,000
42,008,000
41,810,000
42,424,000
68,157,000
"I
I
at
goods
ENGINEERING
S.
U.
Private
Public
cars)
Aug". 19
_„
connections
(number
CONSTRUCTION
—
cars)II__Aug!
of
ENGINEERING
Private
851,025
847,465
705,661
19
704,085
7
22
municipal
2_I_I
Bituminous
OF
and lignite (tons)
anthracite (tons)
(tons)
I
106,138,000
169,697,000
120,259,000
92,633,000
80,448,000
132,230,000
67,896,000
I"
Aug
22111111-. Aug.'
24
(COMMERCIAL
STREET
24
87,879,000
77,655,000
122,756,000
48,024,000
4,754,000
2,793,000
9,474,000
19,872,000
Hospital
Aug. 19
11,235 000
"10,875.000
11,240,000
Aug. 19
961,000
962 000
855.000
147,000
138.300
Farm
795,000
142,500
9,200
.
RESERVE
7,524,000
steel
gross
*273
303
INDUSTRIAL)
DUN
—
6,245,503
6,369,830
6,390,098
PRICES
(E.
176
186
160
17
recreational
23
21
24
types
12
11
reiinery
Export
tin
Lead
York)
'New
Lead
(St.
Zinc
York)
Miscellaneous
Conservation
All
other
Louis)
St.
(East
22.425c
22.425c
93.000c
103.000c
13.000c
12.000c
at
at
15.125c
13.800c
12.800c
11.800c
14.925c
15.000c
15.000c
15.000c
10.000c
New
17.550c
107.000c
14.000c
—Aug. 23
Au8- 23
.-Aug. 23
at
Louis)
22.425c
D.
S.
PRICES
BOND
—
a
'
A
Railroad
Group.
.
,
Industrials Group
y.
_
East
Aaa
Aa
-
Pa
a
Railroad
Group
Public Utilities
Group
Industrials Group
——
————
—
—-———
————
—,——
—
A"8Aug.
Aug.
Aug.
Aug.
——Aug.
Aug.
116.02
115.43
114.85
120.22
120.84
New
11961
119.00
119.00
115.63
115.63
114.85
107.98
111.62
110.70
109.60
116.80
117.00
116.41
115.82
120.02
119.82
119.00
119.41
York
BUSINESS
2.32
2.34
2.2.3
2.34
2.84
29
29
29
29
29
29
29
2.85
2.88
REPORTER
DRUG
AND
PAINT
AVLRAGE=100
2.64
2.61
2.70
2.70
2.87
2.87
2.31
2.95
3.21
3.23
3.28
3.38
2.67
3.08
2.81
3.13
3.19
2.80
3.07
2.83
2.86
2.65
2.66
2.70
473.5
463.0
449.2
265,558
237,935
227,940
186.039
229,349
224,414
213 031
188,028
101
99
679,065
646,656
310.125
501.212
by dealers (customers'
of
of
shares—Customers'
purchases)—
sales
value
Dollar
28.880
30.715
—Aug. 12
Aug. 12
Au£- 12
—
total
purchases by dealers (customers' sales)—
of orders—Customers' total sales
Number
Customers'
short
sales
Customers'
other
sales
of
Number
—
—
shares—Customers'
19.296
43,206
923,969
864,172
1.255,795
567.437
$41,459,142
$36,852,830
$54,157,514
$21,4o3.938
27,918
25,366
36,140
19,279
269
191
411
198
total
sales
short
Customers'
other
sales
Dollar value
Round-lot sales by
Total
19.001
1.095.740
544 '392
7,395
16,836
7,037
'
791,860
519,702
1,078.904
536,855
$31,198,271
$27,193,488
$42,832,672
$17,485,753
237,540
20),610
279 460
191.590
Aug. 12
237.540
2oT.61~0
279.460
345,750
341,650
455.910
206.550
—Aug, 12
Aug. 12
.
U.
$315,236,164
26,941,736
288,294,425
S.
DEPT.
102,562,255
465,460,849
&
BRADSTREET,
July:
151
Construction
Commercial
77
344
61
61
62
49
719
5,629,000
1,845,000
1,572,000
1,393,000
$19,538,000
—
1,533,000
$18,072,000
$21,804,000
366.7
liabilities
2,754,000
5,154,000
1,495,000
liabilities
$10,183,000
2,569,000
1,619,000
,
$7,244,000
2,640,000
5,251,000
liabilities
service
67
725
$8,533,000
number..—-—
liabilities
Retail
67
363
694
service
liabilities
Wholesale
188
167
73
65
„
number
liabilities
—
*328.8
296.2
PURCHASES OF COMMODITIES-
INC.
BRADSTREET,
&
July
of
100)—Month
(J!)85-l:>3!>=
—
FEDERAL
DISTRICT,
RESERVE
BANK
FED¬
SALES—SECOND
STORE
DEPARTMENT
Sales
Y.
N.
OF
—
1935-1939
OF LABOR—
188
192
274
194
2)8
monthly), unadjusted
dally), unadjusted
Sales (average daily), seasonally adjusted—
Stocks, unadjusted
Stocks, seasonally adjusted
(average
(average
EMPLOYMENT
234
"155
230
"159
242
"227
209
"192
222
"216
♦11,840,000
11,335,000
S. DEPT.
SERIES—Month of
PAYROLLS—U.
AND
LABOR—REVISED
OF
June:
12,072,000
6,598,000
5,474,000
manufacturing (production workers)
Durable
goods
—
Nondurable goods
Employment indexes—
All manufacturing
All
♦6 452,000
6,021,000
*5,388,000
5,314,000
147.4
144.5
138.4
362.2
*348.8
315:7
14,681,000
7,971.000
6,710,000
"14,421,000
13,884,000
7,392,000
265,771
132,367
"266,612
126,255
"172,096
147,960
282,261
25,100
23.588
—
325,217
200,900
27,100
17,700
20.558
2,775
119.5
119.8
indexes—
Payroll
manufacturing
manufac¬
number of*employees in
Estimated
industries—
manufacturing
turing
Durable
1
goods
'
goods
*7,813,000
*6,608,000
6,492,000
Y
STRUCTURAL STEEL (AMERI¬
OF STEEL CONSTRUC¬
FABRICATED
—
$568,023,104
488,454,817
City.
number
INSTITUTE
CAN
Contracts
SERIES
51,523,780
66,580,063
343
Nondurable
dealers—
shares
PRICES NEW
11,383,426
80,624,846
number
TION—Month
WHOLESALE
15,949,526
37,123,541
lY1,530
Aug. 12
—■—
sales
Round-let purchases by
13,793,625
—
States
York
of
Manufacturing
All
sales
Other
of
35,729
727,097
9,653
27,649
dealers—
shares—Total sales
Short
Number
25,175
801,513
Aug. 12
Aug. 12
sales
Number of
Aug. 12
Aug. 12
Aug. 12
Aug. 12
Aug. 12
Customers'
25,681,056
number
Commercial
All
Odd-lot
57,816,490
39,556,473
AVERAGE=l()0—Month of July:
132,9
125.1
*129.3
131.1
COMMISSION:
orders—
Number
83,527,519
$525,578,358
:
FAILURES—DUN
ERAL
TRANSACTIONS FOR THE ODD-LOT ACCOUNT OF ODDLOT
DEALERS
AND
SPECIALISTS ON THE N. Y. STOCK
Number
99,571,771
__
87
STOCK
Otd-lot sales
34,741,205
133,475,938
47,404,159
INC.—Month
Sales
EXCHANGE
54,302,982
51,648,183
339.6
Au8- 25
—
EXCHANGE—SECURITIES
$13,207,159
140,734,615
2.68
PRICE INDEX—1926-36
:
$22,506,004
87,269,536
.
New
RESERVE
OIL,
&
CITIES—Month
44,119,420
2.91
2.61
2.67
Al)g- *9
Au&- 19
Aug. 19
—-—
—
)6
Manufacturing number
DUN
•
Percentage of activity—
Unfiled orders (tons) at
DUN
—
106.21
2.61
g
(tons)
(tons)
Production
78
City
of
Wholesale
ASSOCIATION:
PAPERBOARD
received
INC.—215
1
CONSUMER
Order.*
22
9
114.00
103.88
111.81
Total
Total
NATIONAL
17
*94
—
United
Outside
.Aug. 29
INDEX.
COMMODITY
MOODY'S
20
Centra]
120 84
Aug. 29
A
VALUATION
Central
119.61
—•—--——-Aug. 29
—
——
54
118,101,739
Construction
Bonds
corporate—.—
*53
83,655,230
South
116.22
AVERAGES:
DAILY
BOND YIELD
Government
S
U.
Average
12
256
96
enterprises
Central
Retail
MOODY'S
*10
*250
8
service
development
Atlantic
120.84
on
Au8- 2S
Aug. 29
Aug. 29
Group
Utilities
Public
g"
—Aug. 29
Aug. 29
Aug. 29
——
-
—
—
———-
„
Pacific
corporate
Aaa
Aa
37
*41
IS
54
public
Atlantic
South
109.24
Average
44
103.73
102.14
102.37
102.10
Aug- 29
83
44
275
;
England
Middle
West
AVERAGES:
DAILY
Bonds
Government
12
*92
42
.
facilities
_
and
PERMIT
Mountain
MOODY'S
176
*16
of July:
17.325c
103.000c
*193
45
.
public
BRADSTREET,
at
32
$31,662,778
3.705c
$45.91
22.200c
institutional
water
$21.92
at
(New
and
3.837c
22.200c
*28
95
.
.
$36.83
22.300c
638
30
naval
$46 38
Au8- 23
Au&- 23
Aug. 23
8
*654
198
facilities)
nonresidential
3.837c
QUOTATIONS):
13
693
-
building (other than mili¬
and
$45.61
at
43
229
16
3.837c
$40.25
33
28
42
215
11
a
building
$46.61
$41.58
138
305
45
utilities
naval
Aug. 22
Aug. 22
108
285
222
telegraph
private..
other
Sewer
13
113
296
public
or
All
176
Electrolytic copper—
Etraits
23
23
and
Aug. 22
J.
31
26
30
Industrial
PRICES:
M.
&
33
29
Hospital
Aug. 24
toi )
reiinery
108
24
construction
tary
5,523,316
BRAD-
&
(per gross ton)
Domestic
118
utilities
other
Public
,252
BUILDING
METAL
87
124
garages
buildings
81
30
and
Nonresidential
(per lb.)
(per
iron
Ecrap steel
82
institutional
and
and
Highways
Pig
93
28
86
Railroad
All
282
Aug. 26
.!
Finished
110
32
construction
Public
SYS¬
Aug. 19
INC.
AGE COMPOSITE
72
Educational
24
Military
IRON
78
:
Remaining
INDEX—FEDERAL
AND
273
35
nonresidential
Educational
FAILURES
306
118
Religious
kwb.).
000
17
325
(nonfarm)
restaurants and
Stores,
Other
INSTITUTE:
(in
output
14
Warehouses, office and loft building
$147,684,000
79,788,000
Residential
Electric
*90
Commercial
$252,489,000
AVERAGE=HM>
ELECTRIC
EDISON
659
90
.
-
$250,145,000
.Aug. 19
SALES
*1,030
15
alterations
and
$198,771,000
IIIlAug.
;
STORE
757
1,110
569,694
662,416
Other
TEM—1935-31)
1,481
*1,134
_
Additions
Telephone
DEPARTMENT
$2,119
*1,846
OF
(nonfarm)
Nonhousekeeping
Nonresidential building
MINES):
coal
Pennsylvania
Beehive coke
*$2,500
1,960
1,215
DEPT.
S.
dwelling units
Social
BUREAU
$193,659,000
July (in millions):
building
Aug. 24
S.
$279,442,000
83
of
731,215
129.884
NEWS-
construction
(U.
$334,948,000
construction
Aug. 24
construction
OUTPUT
13,429,000
between
construction
new
Industrial
Federal
COAL
456,000
20,721,000
$2,653
shipped
and
CONSTRUCTION—U.
LABOR—Month
Total
New
construction
Etst£ and
9,289,000
638,000
22,065,000
stored
'
BUILDING
'
RECORD:
Total
from
of
10,472,000
countries
Total
RAILROADS:
(number
44,179,000
9,650,000
9,811,000
credits
exchange
on
foreign
-
(bbls.)
at
AMERICAN
10,658,000
500,000
warehouse
Residential
ASSOCIATION
$116,656,000
66,486,000
—
7,496,000
pipeTines^
at
•
(bbls )
$170,467,000
BANK
31:
1,634,000
Aug. 19
Aug. 19
gasoline
oil, and distillate fuel oil
Residual
Based
Aug. 19
(bbls.)
output
Dollar
5,241.000
Aug. 19
oil
4,774,650
5.757,000
(bbls.)
output
refineries, at bulk terminals, in transit and in
Finished
Gas,
fuel
5,537,500
6,044,000
Aug. 19
I
5,674,750
116,099,000
Aug. 19
(bbls.)
5,707,580
Aug. 19
(bbls.)
average
(bbls.)
Kerosene
Ago
Year
OUT¬
RESERVE
of July
YORK—As
shipments
Domestic
Aug. 19
to
runs
Month
Previous
11,788,000
ACCEPTANCES
.
Domestic
daily
of that date:
$210,624,000
DOLLAR
Exports
INSTITUTE:
gaUons each)
are as
80,160,000
BANKERS
Imports
AMERICAN
either for the
Month
3
STANDING—FEDERAL
and
of quotations,
cases
Age
Sept.
Equivalent to—
Steel
in
or,
Year
Week
INSTITUTE:
(percent
that date,
are
Latest
Latest
AMERICAN
production and other figures for the
ccivcf
Dates shown in first column
month available*.
or
of
July:
(tonnage)—estimated
closed
(tonnage)—estimated
Shipments
5926= lM:
Aug. 22
Farm
163,7
152.7
Aug. 22
products
Grains
*164,9
176 A
175.4
177.0
160.6
Aug. 22
All commodities
166.1
165.5
167.4
175.0
149.1
241.0
20<.4
245.2
Aug. 22
174.4
Aug. 22-
All
commodities other
products
and lighting
than farm
Textile
Fuel
Metals
and
Building
Chemicals
metal
materials
products
allied
♦Revised figure.
—
i
—
1
'-"--155.3
C.M'LG
Aug. 22
•
»
i:
,,
I.
,
'*174.9
215.2
121.6
*147.6 >134.0
1343
Aug. 22
Ulncludes 507,000 barrels of foreign crude runs.
»r
,
.
160.4
224.C
151.7
*154.1
Aug. 22
products
173.8
2o9.4
174.2
255.1
Apgu 22
Aug. 22
materials
and
^nd foods
,
Aug-. 22
239.1
>
259.3
Aug. 22.
Meats
145.0
i -140.7
133.8
l
138.6
WASHERS
SIZE
STANDARD
AND
IRONERS
(AMERICAN
MANUFACTURERS'
LAUNDRY
TION)—Month
of
July:
i
—
HOME
ASSOCIA¬
.
washers (units)
_—,
(units)
——
Factory sales of dryers (units)——
—
sales
Factory
of
Factory sales of
—
ironers
129.6
174.2
.
HOUSEHOLD
173.5
214.3
207.3
18 7.6
121.7
118.6
120.8
168.2
INTERSTATE
Irdex
July
of
COMMERCE
Railway
(1935-39
♦Revised.
COMMISSION—
Employment-At
average
—.
100)—
middle
'
of
-
116.0
34
(834)
The Commercial and Financial Chronicle
•
Securities Now in Registration
Alberta-Canada Oils, Inc.
(Del.)
(9/1)
July 18 filed 1,000,000 snares of common stock (par 50
cents).
Price—$2.50 per share.
Underwriter—Thomas
G. Wylie Co., New York.
Proceeds—For general funds.
Allen Organ Co., Allentown, Pa. (9-1)
July 19 (letter of notification) 1,500 shares of 6%
ferred stock
(par $100) and 750 shares of
(par
Price—At
$100).
ceeds—For expansion of
electronic
products.
Underwriter—None.
par.
and
Pittston
Fire
&
Read
to
drilling
and
Temporarily postponed.
Merrill
Price—At the
offered
Insurance Co., Chicago '
June 28 filed 100,000 shares of capital stock
(par $5) be¬
ing offered to stockholders of record July 25 at rate of
in
common
market
(from $34.50
Underwriters—A. M. Kidder & Co.
Lynch, Pierce, Fenner & Beane.
units
of
$100
Proceeds
To be placed privately.
due
Price—$150 per unit. Underwriter—None. Pro¬
unpaid construction costs and to repay 6%
90-day notes given to directors; the balance for working
capital. Business—Operating horse racing plant.
ceeds—For
Proceeds—For general corporate
purposes.
Business—Casualty insurance. Statement ef¬
fective July 26.
par.
Central
Maine
Power Co.
Aug. 23 filed 260,000 shares of
American Natural Gas
Co., New York
Aug. 4 filed 334,934 shares of common stock (no par), of
which 304,486 shares are offered to common stockholders
of record Aug. 24 on basis of one new share for each
be
10
stock
held, with
Underwriter—To
oversubscription privi¬
an
named
be
in
amendment,
an
along with offering price. Five months ago an offering
of 454,457 shares of common stock to common stockhold¬
underwritten
was
by a group headed by Morgan
Price—Expected to be not less than $33
Proceeds—For construction. Offering—Post¬
share.
per
poned.
Continental
Refrigeration Corp., N. Y.
(letter of notification) $250,000 of 6%
July 28
dated June
100
(par $10).
Underwriter—To be determined by competitive bidding.
Underwriter—National
vestors Service, New York.
incurred in
and
tent
5-year
1950 in multiples of $1,000.
1,
interest.
and
In¬
Proceeds—To pay expenses
prosecuting infringement actions under pa¬
commercialization of patent. Office—50
for
Broadway, New York, N. Y.
•
Copper Canyon Mining Co., N. Y.
Aug. 25
stock
500,000 shares of capital
Price—15 cents per share.
Under-;
(par 10 cents).
Proceeds—To
increase
equipment and working capital.
new
(9/5)
(letter of notification)
writer—None.
(9/19)
common
Co., Jackson, Mich.
shares of common stock (no par)
present holders at the rate of one .new
share for each
lege.
Power
filed 499,903
offered
Price—At
and
stock.
share for each three held; rights will expire on
^Consumers
income notes
(pq£ $5) to be
lf| shares of
debentures
<
working capital.
ers
Inc., Littleton, Colo.
Aug. 14 filed $320,000 of 6% sinking fund debentures
1965 and 32,000 shares of common stock
Motorists
Pasadena,
Stanley & Co.
Centennial Turf Club
the selling stockholder.
Price—At
(par $100).
$35 per share).
and
Underwriter—H. M. Byllesby & Co.,
Proceeds—To Grover Hermann, President
American
new
Proceeds—For geological
—To two selling stockholders.
Price—At market.
Sept. 25.
Inc.
Capital Transit Co., Washington, D. C.
Aug. 10 (letter of notification) 2,900 shares of
•
one
Co.
&
stock
of company,
Ltd.
Engineering Corp.,
ueuer of notification) 1,000 shares of common
stock (par $1) to be issued to three persons upon exercise
of stock options.
Price—$5 per share.
Proceeds—For
June 23
Superior Oil of California,
operations in Canada.
American-Marietta Co., Chicago, III.
Aug. 25 (letter of notification) 6,000 shares of common
stock (par $2), to be sold to underwriter at
$16 per share.
ADDITIONS
INDICATES
California
Office—2343
capital.
June 27 filed 2,150,000 shares of common stock (par $1).
Price—To be filed by amendment. Underwriter—Dillon,
week.
Chicago, 111.
working
com¬
Underwriter
snare).
per
Consolidated
to
Canadian
Streets,
Casualty Co., Orlando, Fla.
July 21 (letter of notification) 11,100 shares of common
stock (par $10).
Price—$27 per share. Underwriter—
Guardian Credit Corp., Orlando. Proceeds—For
working
capital. Office—American Bldg., Orlando, Fla. Expected
this
($1
par
Proceeds—For
Guardian Building, Detroit 26, Mich.
plant and development of other
Office—8th
Price—At
stock.
mon
—None.
Pro¬
Thursday, August 31, 1950
.
Aug; 23
Brewery Enterprises, Inc., Detroit, Mich.
Aug 10 (letter of notification) 150,000 shares of
Allentown, Pa.
American
•
stockholder.
pre¬
.
SINCE PREVIOUS ISSUK
Underwriter—First California Corp., San Francisco, Cal.
Proceeds—To Virgil
D. Dardi, President, the selling
stock
common
.
capacity and for
Office—25 Broad
St., New York 4, N. Y.
10 shares held
(with an over-subscription privilege);
rights to expire Sept. 14. Price—$22 per share. Under¬
Probable bidders: Blyth & Co., Inc., and Kidder,
Peabody^^^g^ Finance Services, Inc., Akron, O.
& Co. (jointly); First Boston Corp. and Coffin &
Burr,
Aug. 4 (letter of notification) $300,000 of 2% to 4% cer¬
Inc. (jointly); Harriman Ripley & Co., Inc.
Proceeds—
tificates of investment. Price—$50 and up per unit. UnTo go to New England Public Service Co., the
selling
derwriter—None. Proceeds—For working capital. Office
writer—None.
notes.
Proceeds—To
increase
investments
stockholder, who will
in
proceeds to pay its outstanding
use
stock of
Michigan Consolidated Gas Co. and Milwaukee
Gas Light Co. Statement effective Aug. 24.
Central
& Gas
one
Neb.
Co., the parent, of record Aug. 11, at the rate of
share
new
rights
for
each
13
shares
of
Central
Electric
stock
common
held, with an overscription privilege;
Sept. 20.
Price—$10 per share.
If any
expire
balance is
publicly offered terms will be filed by amend¬
Dealer-Managers—Paine, Webber, Jackson & Cur¬
tis and Stone & Webster Securities
Corp., New York.
Proceeds—To pay unsecured note held by International
Telephone & Telegraph Co. Statement effective Aug. 22.
ment.
Television, Inc., North Little
Rock, Ark.
June
Lincoln,
16
(letter of notification) 301,686 shares of com¬
(par 10 cents).
Price—75 cents per share.
Underwriters—Gearhart, Kinnard & Otis, New York
City. Proceeds—For additional working capital. Office
Chase Candy Co., St. Louis, Mo.
Aug. 28 filed 147,861 shares of common stock
—Fifth and Cornish Streets, No. Little
Rock, Ark.
to
mon
stock
Arkansas
Power
&
•
two
share, with
a
June
$4.95 dividend from Lehman
common
expires
Sept.
15.
additions
Brothers.
State¬
Aug. 8.
Bank Building &
Equipment Corp. of America.
Aug. 28 (letter of notification) 1,000 shares of common
.stock (par $3).
Price—To net company $8 per share.
ratios:
Blair
Underwriter—None.
and
1%
share;
Underwriter—Scherck, Richter Co., St. Louis, Mo.
Streets, St. Louis 4, Mo.
conversion
Pro¬
Office—9th and Sidney
share
15,000
shares
(approximately $2.75
of
capital
per
to
shares for each
two
and
Franklin
Holdings Corp.
(letter of notification)
stock. Price—At market
stock.
Proceeds—For
dial
shares
one
for
share
Simon.
operations.
4^%
($100
plant
Office—
share).
Oppenheim, Collins
each
for
Offer
Franklin
each
expires
&
Co.,
two
on
Simon
preferred
shares
common
Sept.
common
18.
New York.
of
Dealer-
Statement
Cleveland Electric Illuminating Co. (9/19)
Aug. 22 filed $25,000,000 first mortgage bonds due Sept.
1 1985. Underwriter—To be determined
by competitive
bidding. Probable bidders: Halsey, Stuart & Co. Inc.;
First Boston Corp.; Blyth & Co.,
Inc.; White, Weld &
Co.; Glore, Forgan & Co. and W. C. Langley & Co.
(jointly); Dillon, Read & Co. Inc. Proceeds—To repay
$8,000,000
bank
loans
and
for
rnnstru^'on
n^o^ra'
land, Ohio.
Coca-Cola Bottling Co. of St. Louis.
July 27 (letter of notification) 4,000 shares of common
stock (par $1), to be offered to
emoloyees. Prir*—$*>5
per share.
Proceeds—To benefit employees for services.
New York.
Boston
Philadelphia
Pittsburgh
San Francisco
Chicago
Cleveland
Office—2930 N. Market St., St.
Louis, Mo.
Columbian Enameling &
Stamping Co./'
(letter of notification! 2.°85 cV,ares of ;
Aug. 3
Private IVires
to
all
offices
stock.
Price—$25
New York.
J '
common
share. Underwriter—Cohu & Co.,
Proceeds—To selling stockholders.
per
effective Aug. 22.
Crown Drug Co., Kansas City, Mo.
July 31 (letter of notification) $300,000 of 4V2% convert¬
ible debenture notes (in denominations of $60, $100, $500
and $1,000) to common stockholders. Price—At par. Un¬
derwriters
Roger W. Babson, Wellesley Hills, Mass.;
—
H. J.
Witschner, Kansas City, Mo.; and Statistics Organ¬
ization, Inc., Babson Park, Mass. Proceeds — To retire
short term banking debt and for working capital.
•
Daily Compass Publishing Corp., N. Y. City
/yig. 21 (letter of notification) 30,000 shares of class C
non-voting
common
stock. Price—At
Underwriter—None.
par
($10
per
Proceeds—For promotional
velopmental activities and for working capital.
164 Duane
share).
de¬
Office—
St., New York 13, N. Y.
•
Delaware Power & Light Co.
(9/26)
Aug. 29 filed $12,000,000 of first mortgage and collateral
trust bonds due Sept. 1, 1980.
Underwriter—To b** de¬
terminated by competitive bidding.
Probable bidders:
Halsey, Stuart & Co. Inc.; Kuhn, Loeb & Co. and Salomon
^ros. & Hutzler (jointly); First Boston Corp.; Union Se¬
curities Corp.; Lehman
Brothers; Morgan Stanley & Co.;
White, Weld & Co. and Shields & Co. (jointly); W. C.
fiangley & Co. Proceeds—For construction
program.
Detroit Hardware Manufacturing Co.
4-Ug. 4 (letter of notification) 100,000 shares of common
$ock; (nar $1).
Price—$3 per share.
Underwriter—
(J, Q; McDonald & Co., Detroit.
Proceeds—To expand
facilities and for working
capital.
Office—1320 Mt.
Ejlliq^t Avenue, Detroit,
•V
Mich.
Dow Chemical Co.
(9/6-7)
Aug^'24 filed 45,000 shares of common stock (par $15).
Pfi<#—To be filed by amendment. Underwriter—Smith,:
B^iliey
& Co., New York.
Proceeds—To the estate of the
lqtejRuth D. Doan.
f JjDuquesne Light Co., Pittsburgh, Pa.
(9/12)
A"®* 17 filed 150,000 shares of preferred stock (par $50).
Underwriters—To be determined by competitive bidding.
Prdpable bidders: Kuhn, Loeb & Co. and Smith, Barney
"
Y°- (jointly); First Boston Corp.; Kidder Peabody &
^Merrill Lynch. Pierce, Fenner & Beane ^nd White,
& Co. (jointly); Lehman Brothers.
Proceeds—To
|nce construction program and to repay bank loans.
^Equipment
Finance Corp., Chicago, III.
'if 7 filed 10,000 shares of 4% cumulative preferred
to
offered
be
aration
and
to
officers
of Curtis
pai||($100 Per share).
^ojfacquire equipment
and employees of this
Candy Co., parent. Price—At
Underwriter—None.
Proceeds—
and real estate for its parent.
iFedders-Quigan Corp.
*
Bids—Expected to be opened at noon (EDT) on Sept. 19
at company's
offices, Room 710, 75 Public Square, Clevei
Akron, O.
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 dev#»ionmenfof tonnage and mining and shipment of ore.
Statement
•
St., Decatur, Ind.
Manager—W. E. Hutton
effective Aug. 16.
Aug. 8
share of class B
one
City Stores Co.
July 17 filed 149,317 shares of common stock (par $5)
offered in exchange for common stock
(par $10) of Oppenheim, Collins & Co., Inc., and for the 4l/z% convert¬
ible preferred stock (par $50) and common stock
(par
$1) of Franklin Simon & Co., Inc., at the following
•
ceeds—For corporate purposes.
Credit
240 W. Monroe
Dealer-Managers—
Lehman
and
publicly
be
Corp., Washington, D. C.
(letter of notification) 3,000 shares of class A
stock (par $12.50) and 1,000 shares of class B
stock (par 25 cents), to be sold in units of three
share).
per
Emanuel, Deetjen & Co.
share for each
Citizens Telephone Co.,
Decatur, Ind.
April 27 (letter of notification) 3,000 shares of
preferred stock, non-convertible. Price—At par
July 14 filed 1,500,000 shares of common stock
(par $3)
offered in exchange for shares of Bendix
Home Appli¬
ances, Inc., at the rate of two Avco shares for each Ben¬
ment effective
than
Price—$44.50 per unit. Underwriter—Emory S. Warren
& Co., Washington, D. C. Proceeds—For
general funds.
Office—1707 Eye St., N. W.,
Washington, D. C.
Manufacturing Corp., N. Y. City
Offer
one
Unsubscribed shares to
shares of class A stock and
Boulder, Tulsa, Okla.
«
2
common
reached.
share.
the basis of
on
(par $1)
other
Price—To be filed by amendment. Underwriter
Citizens
Associated Natural Gas Co.,
Tulsa, Okla.
March 14 (letter of
notification) 2,500 shares of common
stock at $100 per share.
No underwriter. Proceeds to
build a natural gas transmission line
Office—105 N.
dix
stockholders
Co., Inc., Chicago, 111., who had in J^ne,
1949, purchased 200,000 shares at $2.50 per share. Pro¬
selling stockholder.
Brothers, Equitable Securities Corp. and White, Weld &
(jointly). Statement effective June 12. No further
Avco
common
ceeds—To
Co.
decision
to
Co., Inc.,
shares^ held.
offered.
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
per
first
—F. S. Yantis &
ferred
$100,003
offered
F. S. Yantis &
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¬
of
be
Main Street,
Cristina
Aug. 2 filed 94,035 shares of common stock (par $10)
being offered to common stockholders of Central Electric
American Oil Producers, Inc. (9/5-6)
Aug. 8 (letter of notification) 290,000 shares of common
stock (par one cent).
Price—$1 per share. Underwriter
—S. W. Gordon Co., Brooklyn, N. Y.
Proceeds—For
drilling well, equipment and working capital.
Office—
5 Beekman Street, New York
7, N. Y.
American Radio &
Telephone Co.,
—316 South
21 filed
t
103.402
shares of series A cumulative con-
j[ible preferred stock (par $50) to be offered to
stockholders
on
12 shares held.
with
dividend
basis
of
one
preferred
com-
share
for
Price—To be filed by amendment,
rate.
Underwriter—Smith, Barney
New York. Proceeds—To pay promissory note,
jmplete purchase of a new plant at El Monte. Calif..
,
wijfor additional working capital. Offering postponed.
h Fleetwood-Airflow, Inc., Wilkes-Barre, Pa.
9c(letter of notification) 8,965 shares of common
to<9feri(par 50 cents). Price—At market. Underwriter—
[oWSrd O'Connor, 302 Cliff Avenue, Pelham, N. Y.
oeccds—To selling stockholder.
Volume 172
Number 4938,
*
The Commercial and financial Chronicle
.
(835)
Florala
(Ala.) Telephone Co.
(letter of notification) 1,200 shares of 4%
June 29
*
*
lative
preferred
stock.
-Underwriter—None.
«ize
Price—At
Loven 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., Los 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.
cumu-
($25 per
par
share)
NEW ISSUE CALENDAR
Proceeds—To extend and modern-
plant, lines and other- telephone facilities.
General
Plywood Corp., Louisville,
September 1, 1950
Ky.
Alberta-Canada
July 17 (letter of notification) 101,500 shares of common
stock (par 50 cents). Price—$2.11 per share. Underwriter
Allen
Oils, Inc.
_
Common
__
Organ Co.
Pfd.
&
Com.
—None. Proceeds—For
working capital. Office—334 East
Broadway, Louisville, Ky.
General Radiant Heater
,
May
6 filed 17u,U00 snares 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
.
,
September 5, 1950
American Oil
Co., Inc.
June
filed
30
stock
Shoe
of
to be offered
Dow
Chemical
Tobin
common
share-for-share
a
exchange for outstanding preferred stock of W. L
Douglas Shoe Co. No underwriter. Statement effective
July 25.
,
'
stockholders of record Aue. 22
common
one
new
share for each four shares held;
Detinning
Tennessee
11:30
Granville
-
Minos
Ltd.,
Corp.,
11,
Common
_
1950
Co.
September 19,
Central
Maine
Cleveland
New
Power
Electric
Co.__
.Common
1950
Illuminating
Co.
Bonds
——
Hampshire Electric Co.
Bonds
_
-
filed
16
(par
None.
100,000
50c).
Proceeds—To
working capital.
<r
shares of common
Price—35c
buy
per
mining
September
machinery
and
foi
.
Statement effective May 10.,
Pennsylvania RR.
11:30
..
-'"***?
***"
'
'
'
'
;
Bedford
Gas
-Aug.
18
1970
Hooper,
preferred
stock.
Underwriter—None.
Oilice—316
Price—At
Proceeds—To
Chestnut Street,
per
construct
.
.
-
Indiana
Telephone
of
Corp.,
Rochester
San Francisco,
stock
$5).
*
Finance
Corp., Dubuque, Iowa notification) 4,000 shares of common
(par 55) and 2,000 shares of B common stock (par
14
(letter of
Price—$25 per share.
—To increase working
Ave., Dubuque, la.
Office
—
1157
Southern Co.
Kauai
:
.
,
23
Engineering
Central
letter
Works,
Ltd.,
Lihue,
Hawaii
of
notification) 98,000 shares of common
stock
Price—$1.10 per share.
(par $1).
Underwriter—Ross & Co^ Box 2665, Honolulu, T. H. Proceeds
—For working capital. Co.'s Address—Box 1589, Lihue.
i
T.H
^
<
.
.
,
-
Kaye-Halbert Corp., Culver City, Calif.
VJuly 28 filed 100,000 shares of class A common stock
(par'Sl).
man
-
<
•
;
(Walter R.)
Common
Pfd. &
Proceeds—To assist in acquisition of 1216 shares
proposed new plant to be located east of the Rocky
Business—Manufacturer of gas and electric
a
Mountains.
water and space
—
Common
__
Preferred
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
—
_
___
Logan Home Telephone Co., Logan,
Ohio
(letter of notification $50,000 of 20-year 3x/2%
first mortgage bonds, series A, due
1969.
Price—At
102.17.
Underwriter—The Ohio Co., Columbus, Ohio.
Proceeds—To
pay
for installation of automatic ma¬
Aug. 25
chinery.
Power
&
a
$4.80 dividend; Lehman Brothers, $100,551 with
$4.85 div.; W. C. Langiey & Co. and First Boston Corp.
(jointly), $100.30 with a $4.90 dividend; and Blyth & Co.,
Inc., Equitable Securities Corp., Shields & Co., White,
with
with
Light Co.
heaters.
a
Weld & Co. and
Louisiana
9,000 shares of common
share). Underwriter—None.
Main
vOffice
St., Whitesboro, N. Y.
Kirk Uranium
Corp., Denver, Colo.
Aug. 24 (letter of notification) 200,000 shares of common
stock.
Price—10 cents per share.
Underwriter—None.
Proceeds—For mining properties and development.
Of¬
fice—405
Interstate Trust Bldg.,
Leigh Foods, Inc.
Denver, Colo.
*
(N.
Y.)
I
June 30 (letter of notification) 300,000 shares of
capital
stock (par 10 cents). Price—$1 per share. Underwriter
*
Proceeds—For working capital and general cor-
*
porate purposes.
New York.
Office—630 Fifth Avenue, New York 20,
v
'
Hawthorne, Calif.
Appliance Corp.,
Common
Co., Inc.__
United States Plywood Corp.-
•
Mission
in
Com.
a
Kidder, Peabody & Co. (jointly), $100.19
Statement effective June 12. No
$4.90 dividend.
further decision reached.
May 23 filed 90,000 shares of preferred stock (par $100).
Proceeds—To be used to
redeem, at $110 per shart plus
the 59,422 shares of outstanding $6
preferred stock, and for construction and other purposes.
•
Missouri Utilities Co., Cape
Girardeau, Mo.
Bids—Received
(letter of notification) 1,500 shares of 5% pre¬
ferred stock (par $100). Price—$102 per share. Under¬
writer—Wachob-Bender Corp., Omaha, Neb. Proceeds—
19.
For construction and improvement
but
Union
accruals,
by company up to noon (EDT) on June
rejected.
Three bids were made as follows:
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.
Langiey & Co. and First Boston Corp. (jointly), $100.30
with
a
further
Aug. 24
Mt. Carmel
Securities
$5.80 dividend.
decision
Statement effective June 12.
No
(III.)
of property.
Public Utility Co.
July 24 (letter of notification) 3,000 shares of 4% pre¬
ferred stock being offered to common stockholders of
record
July 31 in ratio of one preferred for each six
held; rights to expire Aug. 30. Price — At par
common
($100
per
share).
Underwriter—None. Proceeds—To re¬
facilities. Office — 316
tire short-term notes and expand
reached.
CONFIDENTIAL
SERVICE
SINCE
mo
PRINTING
m
CO.; Inc
mew
%/
Illinois.
Electric Co. (9/19)
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, Peabody & Co., and White, Weld & Co. (jointly). Proceeds
—To retire (a) $1,880,000 first mortgage bonds, series A
and B, due 1963, and (b) $1,250,000 of bank loans due
Dec. 31, 1952; and the balance for construction purposes.
Bids—Expected to be invited around Sept. 7 and opened
New
(letter of notification)
per
Inc.
Co.,
of
(letter
July 24 filed 50,000 shares of 6% cumulative convertible
preferred stock. Price—At par ($20 per share). Under¬
writer—Lester & Co., Los Angeles, Calif. Proceeds—To
retire bank loans and install machinery and equipment
Common
__
_
Transvision, Inc.
Common
r~
Proceeds—To reduce certain current obligations.
—None.
6>
Market St., Mt. Carmel,
Inc., Whitesboro, N. Y.
stock. Price—At par ($1
•
*
per share. Underwriter—Sills,..FairInc., Chicago, 111. Proceeds—For working
Kerk Guild,
—30-40
*
Co., Inc.__
_
capital.'
Aug. 25
.
Price—$5
& Harris.
—
Common
Standard Coil Products
dividend
June
Miller
Common
__
Telephone Corp
Underwriter—None. Proceeds
capital.
Underwriter—Albert McGann Securi¬
South Bend, Ind.
Proceeds—To selling
(par $2).
Co., Inc.,
of company's common stock.
3,000
Indianapolis, Ind. Proceeds—For renewals, replacements
improvements to property and for working capital.
Interstate
_
Safeway Stores, Inc
and
June
ties
notification) 1,000 shares of 8%
stock afpar ($100 per share). Un¬
derwriter—George D. B. Bonbright & Co., Binghamton,
California, Ltd.-Common
Middlesex Water Co._
factory.
'
'
■
March
Indianapolis,
notification)
Miles Laboratories, inc. Elkhart, Indiana
Aug. 14 (letter of identification) 5,000 shares of common
Bonds
(EST)
_
_
General Radiant Heater
share).
Ind.
shares of 4.80%
cumulative preferred stock, 1950 series.
Price—At par
($100 per share).
Underwriter—City Securities Corp.,
(letter
14
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.
1950
_
Fedders-Quigan Corp.
Aug. 8 uetter of notification) 10,000 shares of common
stock. Price—At market (about $1.40 per share). Underwriter—E. F. Hutton & Co., San Francisco.
Proceeds—
To a selling stockholder.
Aug.
Indefinitely postponed.
Miles
N. Y.
California
.
9,
Consumers Power Co._
($100
Underwriter—Clark, Dodge &
for additional working
'
/
Proceeds—To pay notes and
stock
_-Debentures
OFFERINGS TEMPORARILY POSTPONED
Conneaut, Ohio.
Maryland Mines Corp.,
Notes
1950
of 'America
Canadian Superior Oil of
Proceeds—To retire
par
5,200 shares of common
stockholders at $50 per share
common
cumulative preferred
Horton-Wilbert Vault, Inc., Conneaut, Ohio
Aug. 24 (leaer of notification) 500 shares of 7% cumula¬
Idaho
4,
1950
Light Co
Neb.
•
-
Corp.
October
(letter of notification) $30,000 of 3%% bonds
Price—In excess of 102%.-. Underwriter—
Corp., Omaha, Neb.
temporary loans.
tive
Edison
Utah Power & Light Co. noon
Wachob Bender
'
j
&
to
one-for-five basis.
a
Newark, N. J.
(letter of notification)
stockholders.
.
Hooper Telephone Co.,
-
Vanadium
Feb. 9
stock offered
June 23
—
,
October
Hammond Instrument Co., Chicago
Aug. 24 (letter of notification) 2,500 shares of common
stock (par $1). Price—$24 per share. Underwriter—Paul
H. Davis & Co., Chicago, 111. Proceeds—To selling stock¬
•
Middle States Telephone Co.
Aug. 23 (letter of notification) 410 shares of common
stock.
Price—$14 per share. Underwriter—None. Pro¬
ceeds—To Central Telephone Co., the selling stockholder.
Co.
(EDT)__Equip. Trust Clfs.
noon
September 27,
New
and 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.)
capital.
(EDT)J_—
a.m.
'
•
_
1950
Virginia Electric & Power Co.
Graybar Electric Co., Inc., New York
Aug. 23 filed 72,000 shares; of common stock, to be of¬
fered for subscription by employees.
Price—At par ($20
per share).
Underwriter—None.
Proceeds—For work¬
ing capital.
'
holder.
12,
Duquesne Light Co.____
Underwriter—
Co.
on
non-assessablt
share.
Inc.
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
Middlesex Water Co.,
Bonds
■
Feb.
Jr., Vice-President and General
Manager, the selling stockholder.
1950
Delaware Power & Light Co
.
Canada
stock
—To Ernest B. Merry,
Common
_
_
(EDT)
noon
Bonds
_
(EDT)
September 26,
Columbia.
_
(EDT)
.
..
_
Utah Power & Light Co. noon
rights;will
British
_
Gas Transmission
a.m.
on
Merrill
_
'
basis
on
Underwriter—Johnson, Lane, Space & Co., Inc. Proceeds
Debentures
Co.
Proceeds—For working capital.
Merry Brothers Brick & Tile Co., Augusta, Ga.
June 15 (letter of notification) 1,250 shares of 5% cumu¬
lative preferred stock. Price—At par ($100 per share).
___
_
Co., Cleveland, O.
Common
Middle South Utilities,
Sept. 5. Price—$35 per share. Underwriter—
Lynch, Pierce, Fenner & Beane, New York^. ^Pro¬
Statement effec¬
expire
ceeds—For general corporate purposes.
tive Aug. 22.
_
September
stock
Granite City (III.)
Steel Co.
July 31 filed 99,446 shs. of common stock (no par); being
of
Price—To be filed by amendment. Underwriter—Otis &
Common
_
September 7, 1950
(par $1) and 220,000 shares of class B
common stock (par $1).
Price—$1.10 per snare for both
issues.
Underwriter—R. J. Edwards, Inc., Oklahama
City.
Proceeds—To expand chain stores.
,i"
offered
_
Office—9700 Oakland Ave.,
Detroit, Mich.
•
Meek (John) Industries, Inc., Plymouth, Ind.
Aug. 28 filed 150,000 shares of common stock (par $1).
Plantation Pipe Line Co
Gosselin Stores Co., Inc., Oklahoma
City,^Okla.
Aug. 15 (letter of notification) 27,000 shares of class A
.
Co.
Packing Co., Inc.
Vulcan
common
Co.__
basis
in
,
Mining
Northwestern Public Service Co
32,885 shares of
on
Canyon
Common
_
September 6, 1950
Corp., Nashville, Tenn.
maximum
a
(par $1)
Copper
,
•
McDonald (H. A.) Creamery Co., Detroit, Mich.
Aug. 21 (letter of notification) 14,685 shares of class "B"
stock.
Price—$4 per share. Underwriter—None.
Pro¬
ceeds—For working capital.
Producers, Inc
35
on
Sept.
•
New
w
Aug. 24
Hampshire
19.
Orleans
"
.
,
Public
Service
(letter of notification)
Inc.
7.754 shares of common
(no par) to be offered to stockholders (other
Middle South Utilities, Inc., parent)
at rate of
stock
Continued
on
than
0.168
page
36
36
The Commercial and Financial Chronicle
(836)
,
Continued from page 35
share for each
share
derwriter—None.
>
held.
V
;
-"•v*,*
>
.
Price—$25
per
share.
i
Un¬
stock,
Proceeds—To finance plant additions.
Rochester
June 29 filed
Northern
Illinois
a
Vice-President of
&
Public
Co.
each 10 held.
(N. Y.)
j
Proceeds
(letter of notification) 1,100 shares of common
held in treasury.
Price—50 cents per share.
Underwriter—None.
To
Proceeds—Toward
and
Schoyer.
be
offered
through Preston,
repayment of
•
bank loans.
stock.
Price—At par
None.
•
($100 per share).
Underwriter—
Pacific Power & Light Co.
at
Parke 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.
of
t
of 5%% de¬
(in denominations of $500
share
.
certificates,
$400
Underwriter—Robert
each;
D.
Proceeds—For working capital.
Pheoll
for
Bowers
(no- par).
stock, $1 pert
& Co., Denver.
iw K
*
Manufacturing Ce., Chicago, III;
•
Aug. 23 filed 112,500 shares of common stock (par $4). j
Price—To be filed by amendment.
Underwriter—Blunt, \
Ellis
&
Proceeds—To four selling
Stockholders, part of which will be used to pay debt of;
some of shareholders
to company.
Expected about the-1
Plantation
Pipe Line Co. (9/7)
'Aug. 10 filed* $40,000,000 of 20-year sinking fund deben¬
tures due 1970.
Underwriter—Morgan Stanley & Co.
Price—To be filed by amendment.
Proceeds—For con¬
struction of pipe line and other corporate
purposes.
■
Power
Petroleum
Ltd., Toronto Canada
April 25, 1949/ filed 1,150,000 shares ($1 par) common
of which 1,000,000 on behalf of
company and 150,000 by
-New York Co., Ltd.
Price—50 cents per share
Under¬
writers—S. G. Cranwell & Co., New York.
administration expenses and
For
drilling.
Proceeds—
Statement
effective June 27, 1949.
Public
of
$7,000,000 of convertible debentures, due
100,000 shares of cumulative preferred stock
(par j$100). * Debenture financing reported
abandoned,
with Colorado P. U. Commission
approving private place¬
ment of $10,000,000 4.20%
preferred stock. Proceeds—
For'construction.
>.
V
;
.u •
'
»
•
stock,(par one cent). Price—25 cents per share. Under¬
writer—}tfone,, Proceeds—-For working capital to be used
in the
manufacture and sale of? tractors. Office—301 In¬
surance Bldg., Seattle,
Was!}.
*
*.
-Quaker City Fire & Marine Insurance Co.
(letter of notification) 10,000 shares of capital
stock (par $20) to be offered on a
one-for-four basis to
Aug. 2
of
record
Oct.
20, 1950, with the rights
Price—$25 per share.
Under¬
expiring Dec. 4, 1950.
writer—Unsubscribed shares to be offered
publicly
through Burton, Cluett and Dana, 120 Broadway. New
York, N. ,Y.
Proceeds—For working capital.
Office—
226 Walnut Street,
Philadelphia 6, Pa.
r;
t
J
;•
.
;
•1
,
•
i i•
-
!'..'•)•!'S
■'
' '
,
Resort Airlines, Inc.,
Pinehurst, N. C.
June 19 (letter of
notification) 13,547 shares of common
capital stock. Price—At par ($1 per
share). Underwriter
—None. Proceeds—For
working capital.
-
preferred
-
•
Transcon Lines, Los Angeles, Calif.
Aug. 24 filed voting trust certificates to be issued far
13,040 shares of common stock (par $10). The voting
trust agreement will expire in April, 1967.
Business—
Operator of truck lines. Formerly known as Cain's Truck
Lines.
Transvision,
June
Inc.
13 filed 300,000 shares-of common
stock 'oar $1).
per
share.
Underwriter—Blair F. Claybaugh & Co., New York.
Proceeds—To increase worKing capital and repay loans from RFC and Croydon
Syndicate, Inc.
Offering—Postponed until after Labor
Day.
Statement effective Aug. 21.
one
share
new
preferred stock
stock (par $5).
common
to
common
for
each
10
stockholders
shares held.
needed
not
for
the
exchange and
Unexcelled
Aug.
Stneca Oil 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
—To acquire, properties and for working capital..
>-•
Simmel-Mosorvoy Television Production*,
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
plete films in progress and for general corporate
Office—321
poses.
So.
Beverly
Drive,
Beverly
com¬
pur¬
Hills,
Chemical Corp.
(letter of notification) 52,097 shares of capital
be offered to stockholders of record Aug. 21
14
stock
to
basis of one new for each five shares held; rights to
expire in 30 days. Unsubscribed shares to be offered to
employees and others.
Price—At par ($5 per share).
Underwriter—None. Proceeds^—For expansion and work¬
on
30,225
preferred stock.
United States Plywood Corp.,
Co., Atlanta, Ga.
June 23 filed 1,000,000 shares of common stock
(par $5).
Underwriters—To be determined by competitive bidding
Probable
bidders
Morgan
Stanley & Co., Kidder,
Peabody & Co. and Merrill Lynch, Pierce, Fenner &
Beane (jointly); Blyth &
Co., Inc. and Bear, Stearns &
Co. (jointly); Lehman Brothers; Union Securities Corp.
are:
and
Equitable Securities Corp. (jointly); Harriman Rip¬
ley & Co., Inc. Proceeds—To purchase shares of subsid¬
financing
new
construc¬
Temporarily postponed.
Southwest
June 26
Natural
Gas
Co., Shreveport, La.
(letter of notification)
13,500 shares of common
by Ronald M. Craigmyle, at market
(about $7.37V2 per share) through Craigmyle, Pinney &
Co., New York City.
stock
to
be
sold
Standard Coil
Products
Co., Inc.
filed 367,500 shales of
Price—$15.25
per
share.
common
J
stock
Underwriter—F.
(par $1).
Eberstadt
Co. Inc.
Proceeds—To three selling stockholders.
ing—Postponed until after Labor Day.
*
•
&
Offer¬
Stator Co.,
Cambridge, Mass.
;
(letter of notification) 39,100 shares of capital
Price—At par ($1 per share). Underwriter—None.
-
June 19 filed 60,000
shares of series B cumulative con¬
stock (par $100). Underwriter—East¬
man, Dillon & Co., New York.
Price—To be filed by
amendment along with dividend rate. Proceeds—To in¬
vertible preferred
working capital and for other corporate purposes^
including the erection of a new plant at Anderson, CaliC
crease
Temporarily postponed.
Utah
Power & Light Co.
(10/9)
v
bonds due 1980.
by competitive bidding.
2 filed $8,000,000 first mortgage
Aug.
Underwriters—To be determined
Probable
bidders:
Stuart & Co. Inc.; Lehman
(jointly); Union Secur¬
Barney & Co. (jointly); First Bos¬
ton Corp. and Blyth & Co., Inc.; Harriman Ripley & Co.,
Inc.; Kidder, Peabody & Co.; White, Weld & Co.; Salo¬
Halsey,
Brothers and Bear, Stearns & Co.
ities Corp. and Smith,
gram.
on
& Hutzler.
Bros.
mon
Proceeds—For construction
pro¬
Bids—Expected to be received up to noon (EST)
Oct. 9.
Utah
Southern
Office—350 Fifth Avenue, New York, N. Y.
ing capital.
I
Calif.
Aug. 11
Co., Inc., Seattle, Wash.
.Aug. 24( (letter of notification) 400,000 shares of common
stockholders
of
offered
•prepayment of $20,000,000 in bank loans.
Offering—
Temporarily postponed until after Labor Day.
,
ifliim! Manufacturing
Cooley & Co., Inc., Albany, N .Y.; Johnston, Lemon &
Washington, D. C.; Coburn & Middlebrook, Inc.,
Hartford, Conn.; Sage, Rutty & Co., Inc., Rochester, N. Y.;
and Mead, Miller & Co., Baltimore, Md.
Proceeds—For
working capital.
Co.,
writer—Merrill Lynch, Pierce, Fenner & Beane will offer
the unsubscribed common shares as well as 85,114 shares
Colorado
1960, and
,
rate
be
iaries in order to assist them in
Co.
B.
the
tion.
Service
Exchange Agent—The National Bank of Commerce
Houston, Tex.
•
Tobin Packing Co., Inc., Rochester, N. Y. (9/6)'
Aug. 28 (letter of notification) 34,000 shares of common
stock (par $3).
Price—$8.75 per share.
Underwriters—
Cohu & Co. and Hayden, Stone & Co., New York; George
&
preferred 205,661 shares will be offered in
exchange for 186,965 shares of outstanding 5% preferred
stock, along with an unspecified cash payment. Under¬
June 26 filed
"
the
Simmons/ Chicago.
middle of September.
of
common
Any old preferred not exchanged
wiU be redeemed on Oct. L
Price—To be filed by
amendment, along with the dividend rate on the new
preferred. Proceeds—To redeem the unexchanged 5%
stock, make cash payments on exchange, and toward the
Perlite Mines Co., Denver, Colo.
Aug. .10' (letter of notification) $150,000
stock
will
common
new
Office—Parks Met¬
ropolitan Airport, East St. Louis, 111.
common
Sterling Oil & Gas Co., and for 10-year subscription
purchase 133,333 shares of Sterling common
The rate of exchange is to be supplied by amend¬
ment.
shares which will be created by converting that many of
the old 5% shares brought in under the exchange into
Proceeds—For operating purposes.
of
•
stock (par $5) to
common
warrants to
Underwriter-
share.
per
Fenner
(par $100) and 257,064 shares of
—
30,000 shares
Pierce,
June 8 filed 321,000 shares of cumulative
Ltd., Toronto, Canada
July 20; 1948 filed 1,983,295 shares of common stock (par :
$1). Underwriters may be brokers. Price—45 cents pei 1
•hare.
Proceeds
Mainly for development. Statement ?
effective April 10,1950.
Price—For
Price—$22
$5).
Lynch,
Tennessee Gas Transmission Co., Houston, Tex*
of
Royal Television & Electronics, Inc.,
Washington, D. C.
June 22 (letter of notification) 600,000 shares of common
stock (par 10 cents). Price—50 cents per share. Under¬
writer—None. Proceeds—To buy television set compo¬
nents. Office—714 Fifth St., N. W., Washington, D. C.
Of
each)
(par
by
bidders—Halsey, Stuart
stock.
Christensen, Inc., Denver, Col. Proceeds—For new ma¬
chinery, equipment and working capital. May be placed
semi-privately.
The
Pan American Gold
benture certificates due 1955
line
pipe
determined
be issued in exchange for 80,000 shares of common stock
Safeway Stores, Inc.
arrangements to be supplied by amendment.
and
Probable
be
Price—$2.75
Aug. 30 filed 1,750,000 shares of common stock (no par),
representing all of the outstanding shares of the company
to be sold by a group of 16 stockholders headed by A. C.
Allyn & Co., Inc. and Bear, Stearns & Co. Marketing
k
Underwriters—To
•
Aug. 15
Proceeds—To modernize plant.
(9/11)
mortgage
Inc.; Stone & Webster Securiites Corp. and White,
& Co. (jointly); Kuhn, Loeb & Co. and A. C.
Proceeds—To pay off $35,000,000
of short-term notes and for expansion.
Bids—Expected
to be received up to 11:30 a.m. (EDT) on Sept.
11.
Ryerson & Haynes, Inc., Jackson, Mich.
(letter of notification) 5,000 shares of common
stock (par $1). Price—$13.87Y2 per share. Underwriter
-McDonald-Moore & Co., Detroit.
Proceeds—To go to
two selling stockholders.
Office—2307 East Ganson St.,
Jackson, Mich.
Orchards Telephone Co., Orchards, Wash.
March 16 (letter of notification) 500 shares of common
Co.
first
of
Weld
Beane, Chicago, 111.
Proceeds—For benefit of Grace Y. Roper, a stockholder.
now
Watt
Transmission
Aug. 28 filed 100,000 shares of
Merrill
Ohio Oil & Gas Co.
stock
1970.
Allyn & Co. (jointly).
common
stock
writer—A. M. Kidder & Co., 1 Wall St., New York, N. Y.
Proceeds—To selling stockholder.
Thursday, August 31, 1950
& Co.
Roper (George D.) Corp., Rockford, III.
Aug. 3 (letter of notification) 4,500 shares of
Pharmacal Co.
Aug. 28 (letter of notification) 3,890 shares of common
stock (par $2.50).
Price—At market price (about $13.50
per share) on the New York Stock Exchange.
Under¬
May 5
Gas
$40,000,000
competitive bidding.
stockholders at rate of one new
Price—To be filed by amend¬
Underwriter—The First Boston Corp., New York.
sinking fund debentures, due 1960, and 15,000 shares
stock (par $10), to be sold separately or in
units of one $1,000 debenture and 100 shares of stock.
Price—Separately, at par, and in units, at $2,000 each.
Underwriters—Boettcher & Co. and Peters, Writer &
Underwriter—A. C. Allyn and Co., Inc.,
Price—To be filed by amendment.
—For construction expenditures.
Norwich
filed
due
ible
(9/6)
New York.
•
10
bonds
of
June 9 filed 49,200 shares of common stock (par $3) to
be offered to present stockholders at rate of one share
or
Aug.
Rocky Mountain Textile Mills, Inc.
July 11 (letter of notification) $150,000 of 5% convert¬
Underwriter—Faroll
Service
Tennessee
Telephone Corp.
Y.)
Proceeds—For general corporate purposes, including con¬
struction and repayment of a loan. Offering postponed.
Co., Rogers & Tracy and Shields & Co., Chicago.
Northwestern
(N.
125,000 shares of common stock (par $10)
ment.
Statement ef-
Corp., Chicago
May 10 (letter 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,
company.
to
Underwriter—
for plant improvements and
share).
per
share for each four held.
Coal
the
pay
then
stockholders and
to
($1
par
.
,
to be offered to present
share. No underwriter. Proceeds to be used to ex¬
«
first
offered
Proceeds—To
None.
C.
To
only sufficient shares to raise $1,000,000 at $5,000
plore and develop oil and mineral leases.
lective May 22.
be
Price—At
,
Television Equipment Corp., New York
—
Aug. 16 (letter of notification) 76,500 shares of common
stock (par 5 cents).
Price—25 cents per share.
Under¬
writer—None.
Proceeds—To John B. Milliken, Presi¬
dent, the selling stockholder.
Office—238 William St.,
New York, N. Y.
expansion.
Morliita Oil Development Co., Washington, D.
March 28 filed 600 shares of capital stock (no par.)
per
to
public.
Office—317 Baronne Street, New Orleans 9, La.
offer
:
Rhinelander (Wis.). Telephone Co,
'
Aug. 16 (letter of notification) 100,000 shares of common
.
Power
&
Light Co.
(9/11)
Aug. 2 filed 166,604 shares of common stock (no par) to
be offered to
basis of
common
stockholders of record Sent. 12
on
share for each eight
shares held; rights
will expire on Oct. 4.
Underwriters—To be determined
by competitive bidding. Probable bidders: Blyth & Co.,
Inc.; Union Securities Corp. and Smith, Barney & Co.
(jointly); Lehman Brothers; W. C. Langley & Co. and
Glore, Forgan & Co. (jointly); Kidder, Peabody & Co.
and Merrill Lynch, Pierce, Fenner & Beane (jointly).
Proceeds—For construction program. Bids—Expected to
be received up to noon (EDT) on Sept. 11.
one
new
Vieh Co., Columbus, Ohio
m {
I
May 8 (letter of notification) 19,500 shares of common
stock at $10 per share. Underwriter—The Ohio Co
Pro¬
ceeds—To
for
buy the assets of Brodhead-Garrett Co. and
working capital.
*
,
r.n: " •
Virginia Electric & Power Co. (9/12) [ \
9 filed $20,000,000 first and refunding mbrtgaga
bonds, series H, due Sept. 1,1980. Underwriter—To be de¬
termined by competitive bidding. Probable bidders: Hal¬
sey, Stuart & Co. Inc.; Union Securities Corp.;' Kuhn,
Aug.
Loeb &
Co.; White, Weld & Co.; Stone & Webster Secu¬
Corp.; Salomon Bros. & Hutzler; First Boston Corp.
Aug. 23
rities
stock.
Proceeds—To pay $8 000,000 of bank loans and for- con¬
struction program.
Bids—Must be received up to 11:30
Proceeds—For working capital,
to-maintain foreign pa¬
tents and develop and patent new
—1430 Massachusetts Ave.,
inventions, etc.
Office
Cambridge, Mass.
Sudore Gold
Mines
Ltd.,
common
stock.
Sylvan Products, Inc*, Centralia,Wash.
Aug.* 17 (letter of notification) 6,000 shares of
Underwriter
mill.
—
stock.
Price
;o
'K
6%4]6timtt-
Price—At'par ($25
Norie. Proceeds
—
per
To establish
Address—Box 449; Centralia,
Wash.;;
Sept. 12.
r
>
' •♦•:•••»
Detinning Co. (9/7)
Aug. 15 filed 120,000 shares of common stock (par $10).
—$1 per share (U. S. funds). Underwriter—None. Pro¬
ceeds—Funds will be applied to the purchase of equip¬
ment, road construction, exploration and /development
lative preferred
on
Vulcan
Toronto, Canada
June 6, 1949, filed 375,000 shares of
(EDT)
a.m.
share).
plywood
f>
1
' ;
.
,
Price—To be filed by amendment.
man,
Continental
;<
Underwriter—Gold¬
Sachs & Co. and Lehman Brothers.
Can
Proceeds—To
Co., Inc., the selling stockholder.
West
Disinfecting Co.
/
|
^
1
'*2$ (letter of notification) 3,000 shares of common
IcTpar 50 cents). Pri^e—At market (about $10 per
shir^Jv Underwriter—Coffin
& Burr, Inc., New York,
Priiceetls-—'To selling stockholder.. Office—42-13
Street, Long Island City, N. Y.
*
West
.'
Number 4938
.Volume 172
Western Carolina
...
The Commercial and Financial Chronicle
Consolidated Lobster Co.,
Telephone Co., Franklin, N. C.
June 22
Western Uranium Cobalt
•
Long Island Lighting Co.
K
Aug. 29 company asked SEC authority to issue $20,000,000 first mortgage bonds, series H, due Sept. 1,
1980,
and requested exemption from competitive
bidding, planning to place the issue privately. Proceeds would be used
to repay bank loans and to reimburse
treasury for con¬
struction expenditures.
Inc.
Aug. 11 it
was stated that company plans to offer addi¬
tional capital stock (no par) for subscription by stock¬
holders. At April 30, 1950 there were outstanding 34,-
(letter of notification) 1,406 shares of capital
stock to be offered to stockholders at rate of one share
for each two shares held. Price—At par ($50 per share).
Underwriter—None. Proceeds—To pay bank loans.
393 shares out of
Mines, Ltd.,
47,000 shares authorized.
Eastern Utilities Associates
Vancouver* B. C., Canada
-Feb. 28 filed 800,000 shares of common capital stock
May 23 it was ^announced that under
a plan filed witn
will be formed to acquire the
assets of Eastern, and of the Brockton Edison Co., Fall
River Electric JLight Co. and Montaup Electric Co. and
the SEC a
(par $1). Price—35 cents per share. Underwriter—None
Proceeds—Exploration and development work. State¬
ment effective May 23.
will
new.
issue
sell
and
Lorillard
company
$22,000,000
of
first
and
mortgage
Aetna Finance Co.
.later
was^
this
Traditional
year.
El 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
.
reported company
may
do
financing
some
underwriter:
Goldman,
Sachs & Co.
Mutual Life Insurance Co. Previous
ten by
Alabama. Power Co.
Aug. 22 it
was
announced company has filed with Ala¬
an application covering an issue
•
bama P. S. Commission
bidders:
Morgan Stanley & Co.; Blyth & Co., Inc.; Union
Securities Corp. (jointly) ;
First Boston Corp.
Proceeds—For construction program.
Securities Corp. and Equitable
-
7AmericanInvestment-Co. of Illinois
Stockholders
Fort Worth* Tex. \7"
July 31 it was rumored that a registration statement will
be filed covering $10,500,000 of preferred and common
Anton Oil Corp.,
•
^Aiig. 28 it
October
v:"-Il;^'j"•'
7
Associated
was
Telephone Co., Ltd.
thorized
of first
mortgage
series
Gas Co.
Sept. 19 will vote
stock
by
increasing the au¬
shares of 3,800,000
in the
time
7:
Co.
near
futuer through F. Eberstadt &
7
{
'
.
,
■'
:
-
•
7:
'
:
.
,
Emerson Itadio & 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
:
.
Market
Basket, Los Angeles, Caljf.
it plans sale* of 4,452 idham?
but unissued, preferred stock, aeries
(par $15) and- an additional 30,000 shares of preferred
stock, (par $15) to be -authorized. Further details
May 25
-
available.
Aug. 21 it
pected
Brothers; Paine, Webber, Jackson & Curtis and Stone &
Webster Securities Corp. (jointly); White, Weld & Co.
Corp.
and
Proceeds—For construction program.
7
Associates Investment Co., South Bend, Ind.
July 26* . it was announced stockholders will vote Aug.
29 on authorizing an issue of 200,000 shares of preferred
100,000 shares
issue
as
4% % preferred, series A. May be placed privately, Tra¬
ditional underwriters: F. S. Moseley & Co.; Glore, For-
& Co.;and MerrillLynch, Pierce, Fenner & Beane.
gan
•
BtgWest Oil* GasCo. (Texas)
Aug. 267it was reported this company plans early registratidn of $1,750,000 5% sinking funddebentures due
1965. Ubderwriter-^H. M. Byllesby & Co., Chicago, 111.
Proceeds—For development.
7'
77
..7.%-;
•
-Cd.'-
7'.>.7-
V'
^
.
8c Goodwin.
L,-. Central
States Electric Corp.
was announced that under an amended plan
reorganization it is proposed to issue to holders of all
classes qf 6% preferred stock for each old share the right
to buy a: unit consisting of eight shares of new common
stock and $14.principal amount of new A%% income de¬
bentures for a package price of $18. The common stock,
of
except ior approximately 4,600,000 shares held by Harri¬
son Williams and associates, would be offered the right
five
common
shares held.
share and $1.75 of new
price of $2.25 for each
The issue of
new
banking group headed by Hemphill Noyes,
The
.
First
Boston
77.77; 7
Florida Power Corp.
Florida Power -Corp.
ner
&
Beane
(jointly); Lehman Brothers.
For construction program and
writers
for -Bonds-^To be ♦determined ~»by competitive
bidding. Probable bidders: Halsey, Stuart & 'Go. Infc;
White, Weld
Co. and Lehman Brolshers (4oi»tjbF);
Smith, Barney & Co. and Blyth & Go.f Inc* (jointly)»INeeedfir^Te ,pay off short-term -bank toans ondTiir .new
construction costs. The additional common Stodk will fee
sold to American Natural Gas Go., -parent. Expectedilble
Proceeds—
to repay bank loans.
Florida Power-* Light Co.
Fallv
June 9 stockholders approved creation
of .50,000 share*
cumulative preferred stock«(par $100). These
shares -are soon expected to be offered to finance part of
construction program which is expected to require ap¬
proximately $25,000,000 new capital through 1052.
and
the
was
withdrawn.
•
Graham.
Parsons & Co., Shields & Co., Blair, Rollins -& Co., Drexel
sale
of
common
stock.
Previous
was
more
stock.
Cleveland Electric
Illuminating Co.
Aug. 1 -it was reported that company this fall may issue
and sell: an issue of preferred stock, of which 495,011
shares of
no
par
value
are
presently available, stock¬
having increased the authorized
amount to 750,000 shares from 500,000 shares. The pro¬
ceeds are to be used for construction program. Probable
underwriter: Dillon, Read & Co. Inc. if negotiated sale.
holders
on
April 25
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. ^f
Which $16,000,000 are now outstanding^ It is anticipated
;
announced that registration statement is
following proposed 7%-for-1 split up. Stock¬
meeting, scheduled: for Aug. 16, was postponed
indefinitely. Underwriter — A. G. Becker & Co., Inc.,
Chicago, 111.
7
holders
•
Hollingsworth & Whitney Co., Boston, Mass.
-
expansion program. Probable underwriters: Paine,
$257,000,000 will be needed for the. constructioq.prothe next four years. Probable bidderfLHalsey; Stuart & Co. Inc.; Morgan Stanley & Co.; First
Boston Corp.
that
gram over
Houston Lighting & Power Co.
April 14, S. R. Bertron, President, estimated construction
expenditures for 1950 between $19,000,000 and $20,000,000.
This estimate may be raised to accommodate increased
demands on the system. If this is the case, more
financing will be necessary, he added.
This may be
done
through additional common or preferred stock
financing.
power
La
of
long-tejmn, bonds and, not less than $600,000 additional
siockV Proceeds wili be used to repay, $1,300,000
bank .'loans, due in September, 1951, and the remaining
coaimon
$300,000 will go to .Central ..Telephone Co., parent, to re¬
temporary advances for construction. - .Probable un¬
derwriter: Paine, Webber Jackson & Curtis.
pay
it
was
-
Milwaukee Gas Light Co.
Aug. 22 company applied to SEC for authority to issue
$3^00,000 promissory notes to banks to mature April 27,
1951, the proceeds to be used for construction.purposes.
The permanent financing program is expected lobe con¬
summated prior to October, 1950 and will involve :<the re¬
financing of $13,334,000 first mortgage *AVs% bonds due
1967, $2,000,000 of 7% preferred stock and bank loans
(about $8,500,000) through the issuance of $27,000:000 of
bonds, and $6,000,000 of preferred stock (to be offered
publicly and $3,000,000 of common stock to common
stockholders.
(American Natural Gas Co. now owns
97.7% of presently outstanding common stock.)-Probable
bidders for bonds: Halsey, Stuart -& Co. Inc.; Glore, For¬
•
-
Crosse Telephone Co.
■!■
Aipwrhjaneiri7®naiie-
Registration expected mid-September.
plan sale of first mortgage
$3,200,000 construction pro¬
Probable underwriter: The First Boston
June 6, company announced that it has advised the Wis¬
consin Pr Si Commission that it expects to sell $1,000,000
r,
& Co., and Lehman Brothers (jointly); Kidder, Pea¬
body & Co.; Harriman Ripley & Co.; Smith, 'Barney &
Co., Kuhn, Loeb & Co. and Blyth -& Co;, Inc. (jointly).
Iowa Southern Utilities Co.
for 1950.
.
gan
26 company said to
bonds to finance part of its
Corp.
f
.:
-
Previous^debt financing was placed privately. 77
Lindsay.
Aug. 15, it was reported that the company plans to issue
and sell $5,800,000 of new bonds and use the proceeds
gram
■
announced that this newly-organized
and sell publicly :$2,HOODOO of com¬
privately with institutional investor*
$6,900,000 of 20-year 3% % first mortgage ^bondSj ^the
proceeds to be used in connection with #ie-acquisitkm
of the gas distribution propertiesof Arkansas- Power A;
Light Co. Initially it is planned to sell $800^000 stock and
$1,500,000 of bonds. Underwriter for Stock~Ef|«3itable
Securities Corp., T. J. Baney & Sons and Worneldorff Ac
stockholders
April
,-s
company may issue
mon stock and place
Inc., and associates.
Chenango A Unadilla Telephone Co.
July 17, company applied to New York P. S. Commission
for authority to issue $1,000,000 of mortgage bonds, $357,OOO! of preferred stock and $300,000 of common stock.
c
than $20^)60^600 from banks.
July 31
appli¬
expected to be filed shortly covering not less than 25%
and not exceeding 33%% of the stock held by principal
for its
.
MidSouthGasCo.
Webber, Jackson & Curtis and Harriman Ripley & Co.,
& Co. and Sterling Grace Co.
,
,
ing program provides for the elimination Of these bank
loans prior to their maturity, July 1,1951y and sirrii pro¬
gram will include the issuance-and sale of $32*000,WW
additional' bonds and $3,000,000 -of- additional '•common
Holeproof Hosiery Co.
June 22 it
-
Mictugan-Wiscensiw Bipe Llne-. -Ce.7r .17.
July 25 company received SEC authority ^0 -borrow net
Georgia Natural Gas Co., Albany, Ga.
Aug. 2 filed new application with FPC for authority to
construct a 335-mile pipeline system in Georgia and
Florida to cost about $5,100,000, which would be fi¬
nanced through issuance of first mortgage pipe-line
cation
;■
Michigan Consolidated Gas Co.
7
Aug. 7 it was -announced company > contemplates per¬
manent financing will be consummated ^before -maturity
(Feb. 20,1951) of proposed $25,000,000 bank loans whidt
will include, during 1950, $2O;OOO;0OO »of first mortgage
bonds and $6,000;000 -of common stock, .amLithe sale, in
1951, of about' $10,000,000- of preferred ;$totk:'^Ur>der-.
Aug. 21 it was announced stockholders will vote Oct. 2
on approving a new series of 40,000 authorized
shares
of preferred stock (par $100).
Underwriter—To be de¬
termined by competitive bidding.
Probable bidders;
Kidder, Peabody & Co. and Merrill Lynch, Pierce, Fen¬
stock and
debentures would be underwritten by Darien Corp. and
a
Underwriter—Probably
bonds
-
'March 1 it
to buy a unit of one new common
income debentures for a package
...
of $4.50
Aug. 8j Albert Cage, President, announced that company
^studying plans for financing and constructing a steam
7plant of Substantial size at the earliest possible date. The
7 following -bid, on $2,000,000 bonds last June:,, Halsey,
Stuart s Co. Inc. and Kidder, Peabody & Co.
Common
stpck financing in May was underwritten by William R.
Staats Co., Pacific Co. of California and Walston, Hoff¬
man
reported that early registration is ex¬
of $7,000,000 bonds and 50,000. shares of com¬
was
stock.
mon
,'.'.7,
,
Michigan Bumper Corp., Grand Rapids* Wtilcft. \
July 20 stockholders voted to increase ^authorized cobsmon stock (par $1) from 250;000 shares to
500^000 ^LarM^
with-holders-of -present -outstanding stock-to fiaveuto' pre¬
emptive rights.
7 v
July 31 the company was said to be considering new
financing in the form of bonds, preferred stock and
common stock, the proceeds to be used to continue its
construction program.
Previous financing handled by
Kidder, Peabody & Co.
7
7
Kidder/ Peabody & Co. (jointly); Equitable Secu¬
rities Corp, and Harris, Hall & Co.
(Inc.) (jointly).
stock of which it is intended to
company announced
of authorized
Empire District Electric Co.
G.
Probable^bidders: Halsey, Stuart & Co. Inc.; Kuhn, Loeb
&Co-and Salomon Bros. & Hutzler (jointly); Lehman
-
*
Traditional underwriter: F. Eberstadt & Co.
Underwriters^r-To be determined by competitive bidding.
*
Macy (R. H.) & Co.
■
'7^-~.7.
May 8 it was reported that company is considering Issu¬
ance of $10,000,000 of new
securities, either ^debentmecj
or preferred stock. 'Traditional underwriters —
Brothers; Goldman, Sachs & Go.
Elliott Co.
May 26 it was reported that between 47,000 and 48,000
shares of this company's common stock may be offered
some
*
Loyal Automobile Insurance Co., Los Angeles
Aug. 14 company applied to California State Insurance
Department for authority to issue a total of 100,000 shares
of capital stock (par $l),*of which 50,000 shares -are to
be offered to California stockholders at $2.50 per share,
less a 10% discount if fights are exercised within 60days. The remaining 50,000 shares are to be offered to
bona fide California residents at $3 per share.
on
500,000
Louisville Gas «* Electric Co.
7
needed.
bonds,
on
common
shares.
reported the company plans to sell in
$6,000,000
financing underwrit¬
White, Weld & Co. and Stone & Webster Securities Corp.
>
May. 24 announced company is planning to file shortly
a registration statement covering 160,000 shares of prior
preferred stock (par $50). Price—To be filed by amend¬
ment Underwriters—Glore, Forgan & Co.; Kidder, Peabody & Co^ and Alex. Brown & Sons, and others,: Pro*.
ceeds—For additional working capital.
7
-stock.'-
•
White, Weld & Co.
El Paso Natural
Co.
Aug. 29, SEC was notified that Standard Gas & Electric
Co. plans to sell its holdings of 137,357 shares ^Of com¬
mon stock (no par) of Louisville Gas& Electric
Co., and
use the proceeds to retire $2,250,000 of bank notes.
Aug. 25 it was announced that company plans to issue
between 225,000 and 250,000 additional shares of commoh
stock (par $3), probably through rights to common stock¬
holders, in order to raise about $5,000,000. The proceeds
are to be used for expansion.
Traditional underwriters:
of $10,000,000 preferred stock (par $100).
Underwriter
—To be determined by competitive bidding.
Probable
(P.)
-
April 4, Herbert 7A. Kent, President, said: fit may be
necessary to do some financing" before Aug. 1, 1951 hi
redeem $6,195,450 of 5% bonds due on that>date audi
for additional working capital. to meet -expanded sales
volume. He added that company plans to pay off Ha
bank loans in full by July; 1950. These loans now amount
to $12,000,000. Traditional underwriters: Lehman Bros,
and Smith, Barney & Co.
collateral trust bonds and $8,500,000 of preferred stock.
June 3 it
37
(837)
!
Montana Power Co.
Aug. 22 it was reported company plans to sell in 1950
and 1951 approximately $22,000,000 of new securities,
with part of financing expected irx October or "November.
Underwriters—To be determined by. competitive bidding.
Probable bidders for bonds: Halsey, Stuart & Co, Inc.;
Blyth & Co., Inc.; Union Securities Corp.; Merrill Lynch,
Pierce, Fenner & Beane;fSmith, Barney? & ;Cd;|: 'First
Boston Corp.; Lehirnan Brothers^ Proceeds-^For expan¬
sion and extension of. gas and electric properties.
^;
Continued,
on
page
38
The Commercial and Financial Chronicle
annually April 1, 1951 to April 1, 1965. Probable bidders:
Halsey, Stuart & Co. Inc.; Harriman Ripley & Co., Inc.
and
Lehman
Brothers
(jointly); Salomon Bros.
&
Continued jrom page 37
of Utah
Mountain Fuel Supply Co.
new firm
June 6 company announced plans to create a
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
Boston Corp. Expected this Fall.
Mountain States Power Co.
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 &
000,000 initially and the balance later
May 5 it
construction
later this year, with probably some common stock to be
underwritten by Drexel & Co.
Bond financing would
stock
be
competitive, and preferred
negotiated or competitive.
Plantation
July 6, it
of
would
be
Southern
June
either
21
program
8
is
estimated
to
cost
Probable bidders: Halsey,
Blyth & Co., Inc. and Kidder, Peabody
First Boston Corp.
Utah
SEC
which
1950-195L
Power
authorized
Co.
trustee
of
Washington
Gas
&
Electric Co. to undertake negotiations with "all interested
Pipe Line Co.
reported that this company, an affiliate
Co.
(New Jersey), is contemplating,
was
for
Stuart & Co. inc.;
& Co.
(jointly);
said that there will be additional financing
was
June
borrowings of up to $20,000,000 to mature July 1, 1951, the proceeds to be used
$32,520,000
Philadelphia Electric Co.
On
on.
SEC approved temporary bank
for
Hutzler.
Thursday, August 31, 1950
parties" for the sale of its common stock interest (62,910
shares) in Southern Utah Power Co. for not less than a
$550,000 base price, plus adjustments.
< ;1:*
Oil
Standard
Southwestern Public Service Co.
to be placed
Beane.
New Bedford Gas & Edison
(9/27)
Light Co.
Aug. 9 company applied to SEC for authority to issue
and sell 10,631 additional shares of common stock (par
$25) and $3,750,000 of 25-year notes, series B, due 1975,
bidding, with probable bidders
financing of about $50,000,000, part of which is expected
privately and the balance sold to the public.
Underwriter—May be Morgan Stanley & Co. Proceeds—
To be used to build new pippe line, with construction to
begin early next year and completion scheduled for
Aug. 1 it was announced by Herbert L. Nichols, Chair¬
man, that the company expects to raise between $17,-^
500,000 and $18,000,000 through the sale of securities
during the fiscal year beginning Sept. 1, 1950. This may
early 1952.
include
including Halsey, Stuart & Co. Inc.; Coffin & Burr and
F. S. Moseley & Co. (jointly); Kidder, Peabody & Co.;
Harriman Ripley & Co., Inc.; First Boston Corp.; Whiting,
Weeks & Stubbs. The common stock is to be offered for
subscription by common stockholders at $67.50 per share,
Electric Association, parent,
unsubscribed shares. Proceeds from stock sale
will reimburse Plant Replacement Fund Assets for con¬
struction expenditures, while proceeds from sale of notes
will repay a like amount of bank loans.
with New England Gas and
taking
any
New England
V
50,000
bidders:
Kuhn, Loeb & Co. and Lehman Brothers (jointly); First
Tide Water Power Co.
Reading Co.
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
in part, cost of new construction estimated to total
$55,800,000 in the next three years.
Probable bidders
for bonds and preferred: Blyth & Co., Inc., and Smith,
pay,
Barney & Co. (jointly); First Boston Corp. and Glore,
Forgan & Co. (jointly); Harriman Ripley & Co. Inc.
Probable bidders for bonds only- Halsey, Stuart & Co.
Inc.
Niagara
Power Corp.
Mohawk
issue
an
Jan. 19 announced that construction program will neces¬
sitate in 1950 not more than $25,000,000 of additional debt
equity financing, including short-term bank loans.
Halsey, Stuart & Co. Inc.;
Morgan Stanley & Co.; The First Boston Corp.; Kuhn,
or
Probable bidders for bonds:
May 4 stockholders have approved an increase in the
authorized common stock to 1,000,000 shares from
500,000
shares.
It was understood that 125,000 shares
may be
that company may in near
equipment trust certificates,
reported
was
sell
of
Probable
bidders: Halsey, Stuart & Co., Inc.;
Hutzler; Harris, Hall & Co. (Inc.).
Salomon Bros. &
sold.
Traditional underwriters:
W.
Langley & Co.
9 stockholders
stock from
has
the authorized
increased
at this time.
issuing
The corporation
of the additional shares
any
Traditional underwriters: Lehman Brothers
and Reynolds &
Co.
with
Mills,
Union Securities Corp.;
(Ont.)y Canada
July 25 the Board of Control authorized the sale in the
United States of $15,000,000 debentures to provide funds
for construction of Toronto's subway. The
proposal pro¬
vides for borrowing at an average interest rate of 2.84%.
The new debentures were placed
privately last week
common
1,500,000 to 2,500,000 shares.
intention of
no
C.
Toronto
Reynolds Metals Co.
Aug.
Roosevelt
reported company expects to sell $14,-
was
it
31
series T.
New York State Electric & Gas Corp.
May 24 it
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.
Boston Corp.
future
shares of preferred stock.
Probable
(1) For bonds—Halsey, 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
April 17 stockholders approved the issuance of $90,000,000 new bonds for the purpose of refunding $50,0003Vs% 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);
offered
be
000
July
Power Co.
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 $10,000,006
bonds
Public Service Electric & Gas Co.
bonds
to be placed privately and the balance
publicly as preferred and common stock
with Dillon, Read & Co. Inc. underwriting. The
proceeds
are to pay for construction
costs.
to
the latter at competitive
Inc., Manchester, Conn.
institutional
headed
July 20
company was reported to be negotiating with a
of underwriters for a public stock offering of
about $150,000 of additional capital stock at $1 or $2
per share. There are presently outstanding 1,381 shares
of stock, which are closely held.
by
investors
Dominion
through a banking group
Corp. and Harriman
Securities
Ripley & Co., Inc.
group
San
Diego Gas & Electric Co.
July 31 it
issue
to
United Gas
was
reported that the company's original plan
between
$8,000,000 and $10,000,000 of bonds
October may be changed to
preferred stock, depending upon market conditions. If
Utah
late in September Or early
'
I.
Loeb & Co.
\
'
'
•
>
.
Natural
June 5 it
negotiated, Blyth & Co., Inc. may handle financing. If
competitive, probable bidders are: Blyth & Co., Inc.;,.
Lehman Brothers and Bear, Stearns & Co. (jointly);
First Boston Corp.; White, Weld & Co. and Shields &
Co. (jointly); Merrill Lynch, Pierce, Fenner & Beane;
Union Securities Corp.; Salomon Bros. & Hutzler. Pro-^
ceeds would go toward construction program.
5
;
■
Pipe Line Co.
July 25 filed with FPC for authority to build 1,130 miles
of new lines in Texas, Louisiana and
Mississippi at a
cost of about $110,000,000, including new facilities.
It is
probable that the bulk of this new capital will be raised
through the public sale of new securities.
mile
Schering Corp.
22-inch
pipe line in Utah to cost approximately
Hearings will be held before the Utah
P. S. Commission in August or September, after a
study
of the project.
•
:
''
$25,000,000.
.
Valley Gas Pipe Line Co., Inc., Houston, Tex.
June 27 company
a
•
Gas Co.
announced company plans to build a 325-
was
sought FPC authorization to construct
$144,500,000 pipeline project to carry natural gas from
the
Gulf
Coast
and
off-shore
fields
in
Louisiana
May 4, it
Aug. 15 it
sell
jn
reported that the company is to issue and
was
shares of common
stock (par $10).
Probable underwriter: Glore, Forgan
& Co., New York. The proceeds are to be used for car
rebuilding program.
publicly
not
exceeding
Northern States
40,000
Power Co.
(Minn.)
July 29 it was reported that the company will be in the
market probably this fall with an offering of $17,500,000
new preferred stock.
Probable bidders: Lehman Broth¬
ers
and Riter & Co. (jointly);, Smith, Barney & Co.
Proceeds would be used for
Pacific
Northwest
construction.
new
Pipeline Corp.
of
cost
a
financing
completed.
$174,186,602. Negotiations for major
requirements are now in process of being
Packard-Bell
AUg. 2 it
of
was
Co.
stated that following approval
increase
an
500,000 shares,
in
the
authorized
common
on
Aug. 25
stock
from
$1, to 1,200,000 shares, par 50 cents,
by a two-for-one split-up, the company
may issue additional common stock for the purpose of
raising additional working capital. Traditional under¬
par
to be followed
writer:
•
Cruttenden
Panama
Aug. 18 it
&
reported that $10,500,000 of
new
3% bonds
proceeds, together with treasury bunds, to be used to
retire the 3V4% bonds, series A, due 1994, and 3V2%
bonds, series B, due 1967, and 5% bonds due 1963, of
ing.
a
total of
The
new
small group
cured
by
approximately $15,000,000
3% bonds
are
$430 000
Sierra
to be
paid
by
se-
the
for
Webster
bonds:
to
Halsey, Stuart & Co. Inc.;
Sept. 12 for the purchase from it of $10,005,000 addi¬
series Z, to mature
it
1
Chemical
Works
announced
company will build a new
phosphate plant at Silver Bow, Mont.,
cost $5,000,000.
Financing may be placed privately.
was
furnace
Securities Corp.
Warner-Hudnut, Inc.
South Carolina
Electric & Gas Co.
Juljf.
Aug. 17, S. C. McMeekin, President, said the company
expects to issue and sell later this year $3,000,000 of
new bonds (in addition to private placement of
$3,000,000
of 4.60% cumulative preferred stock, par
$50), the pro¬
ceeds
ders
to
finance
for
bonds:
construction
Probable
program.
Boston
Co.'
stock
Southern
March 3 it
California
as
to
which
R.
(par $1) to the pub¬
Pacific RR.
reported company plans issuance and sale
$22,000,000 mortgage bonds. Probable bidders: HaL
sey,/Stuart & Co. Inc.; Blyth & Co., Inc.; Lehman Bro¬
was
thers and Bear, Stearns & Co. (jointly); Union Securities
Cor|>. and Glore, Forgan & Co. (jointly). Proceeds—To
retire first mortgage 4% bonds and convertible income
an
requested.
Edison Co.
41/2% bonds due 2014, and over $5,000,000 "new money."
reported that company expects to issue
$55,000,000 of bonds. Probable bidders:
was
Expected
about middle
of November.
Boston
Shields & Co.
July«14 it
Proceeds would
be used
refund $30,000,000 3Va% bonds and for construction costs.
to
I
was
reported proposed financing
on a
first
mortgage bonds,
decide to take this in two
Wilcox-Gay-Majestic Corp.
announced that in connection with acqui¬
was
sition by Wilcox-Gay Corp. of Garod Radio Corp. and
1
■
Majestic Radio & Television, Inc., Wilcox-Gay-Majestic
V'!
perma-
basis has been increased from $10,000,000 to
$24,-
000,000
William
of
•
nent
from
nation-wide group of underwriters headed
by F. Eberstadt & Co., Inc.
Corp. and Harris, Hall & Co. (Inc.)
(jointly); Halsey, Stuart & Co. Inc.; Blyth & Co., Inc.;
July 31 it
name
lic through a
"^Western
common
company's
of thte proposed new common stock
July 17 it
exemption from competitive bidding is
in
on
SEQ^covering the sale of approximately 325,000 shares
bid¬
Stuart & Co. Inc.; The First
Lehman Brothers (jointly); Kidder,
June 15 United Corp. proposed, under its amended plan
filed with SEC, to sell its holdings of 154,231.8 shares of
Jersey Gas
change
no action was
proposed recapitalization plan, due to market
conditions. It is planned to file a registration with the
taken
Corp. and
Peabody & Co.; Union Securities Corp.
South
20
Waiter & Co., Inc. was approved, but
Halsey,
Southern Natural Gas Co.
Bids will be received by the company up to noon (EDT)
tional equipment trust certificates,
of.
Traditional underwriter: F. Eberstadt & Co., New York.
&
First
(9/12)
beginning
October.
Victor
,
on
Proceeds will be used for modernization and expansion
of the company's
properties.
Expected
Probable bidders
Stone
The
are
(10/4)
plans
to offer publicly
$5,000,000 of convertible debentures. Underwriting nego¬
tiations are being carried on with Kidder, Peabody &
Co.
company
electric
expected to be placed with a
annually
announced
negotiations for
manently refund $2,200,000 of bank loans by the sale of
debentures and common stock prior to Oct. 31, 1950.
summer
annuity
21
and
Com¬
Aug.
this
are
United States to the Republic.
Pennsylvania RR.
Aug.
Pacific Power Co.
outstand¬
of institutional investors, and
the
Vanadium Corp. of America
Probable bidders: A. G. Becker & Co. (Inc.),
Ladenburg, Thalmann & Co.
(jointly); Merrill Lynch, Pierce, Fenner & Beane; Kid¬
der, Peabody & Co.; F. Eberstadt & Co.; Allen & Co.;
new company to be formed by United
States & Inter¬
national Securities Corp.; Dillon, Read & Co.; F. S. Mose¬
ley & Co.; Riter & Co.
Property.
Union Securities Corp. and
South Jersey Gas Co.
due 1996 would be issued through Lehman Brothers, the
which
registered with the SEC in the near future and offered,
for sale to the highest bidder by the Office of Alien
Co.
(Republic of)
was
pany is now in process of completing
its major financing requirements.
was announced that the company's entire com-:
stock issue (440,000 shares) was expected to be
June 2 company announced it plans to finance and per¬
June 30 company sought FPC authority to build a 2,175
mile pipeline system—from southern Texas to Washing¬
ton—at
Texas to markets in Indiana, Ohio and Michigan.
mon
North American Car Corp.
although company may
pieces, viz: $10,000,000 to $12,-
i-
Cof0 the'new
shades
OtisX-
of
new
company plans public offering of 500,000
Underwriter—Gearhart, Kinnard &
stock.
Proceeds—For
October.
working
capital.
Expected
in
Number 4938
Volume 172
Continued
.
from
The Commercial and Financial Chronicle
.
DIVIDEND NOTICES
8
page
CALUMET AND
NSTA Notes
A
will
I
dividend of
be
cents
twenty
September 21,
paid on
DIVIDEND
65
($0.20) per share
1950, to holders
Jules
will start
Trust
'
•
mailed
be
from
J.
Colony
H.
JOHN
There will be
a
The
Dye Corporation
C.I.T. FINANCIAL CORPORATION
Broadway, New York
61
Chemical &
Allied
Dividend
guests
A
of Fifty Cents
Common Stock
has
quarterly dividend No. 118
($.50) per share on the
of the Company, pay¬
able September 20, 1950, to common
record at the close of
of
•
for the first
John
Toner,
van
Mark
Co.
&
Lucas,
Common
Dividends
&
Eisen
dollar
share
per
Team
Low
^
and
Jerry
o
tt
a
r
.
&
Bachar, J. A. Hogle
van
Co.
Dave
'
Sullivan & Co.
'
Dave
A quarterly
a
of
October 2, 1950, to
(71)
Gerald Peters, Sr.,
*'•
Barton
'
I
.
stockholders-of
Corporation has
this day declared a dividend of $1.00 per share,
payable September 9, 1950, to stockholders of
record at the close of business on August 18,1950.
Treasurer
Transfer books will not be closed. Checks pre-
A. L. WILLIAMS, Vice
Board
Irving Trust
Green sburg,
A
and
value of $50 per share, pay¬
September 29, 1950, to
stockholders of record at the
close of business on September
tal
Joins
ORLANDO,
is
—
James
Alleman, Inc., Florida
Now York 4, N. Y.
At
meeting of Directors
a
payable
1950
25,
of
to
record
the close of business
September 11,1950.
The
transfer books
not be
will
closed.
September 5, 1950.
H. STEFFLER
Secretary & Treasurer
^
1950.
23,
held August
it was decided to pay
September 29th half yearly dividend of
2Vz% (less tax) on issued S% Prefer¬
ence
Stock and Interim Dividend of One
Shilling for each One Pound of Ordinary
22, 1950 in London
on
y
137
138
138
139
NOTICE
METALS
Coupon No. 94 must be used for divi¬
on 5%
Preference Stock and Coupon
No. 208 must be used
for dividend on
Thomaston
National
Thomaston, in the State
closing
J.
P.
I.
ROBERTS,
Liquidating Agent.
Dated
August
18,
1950.
m€TflU
AH
Reynolds Metals Building
Richmond 19, Virginia
received in London on or
transfers
29th
August
will
be in
decided
Also
yearly dividend of 3% (less tax) on
issued 6% Preference Stock. All transfers
received in London on or before October
6th wiH be in time for payment of dividents to transferees.
of
who
may
Article XIII
(1)
be entitled by
of the Double
Treaty
between
the
United
States and the United Kingdom, to a tax
credit under Section 131
of the United
Internal
of
New
to
York
particulars
Income
Revenue
Code
can
by
Guaranty Trust Company
obtain certificates giving
rates of United Kingdom
appropriate to all the above
dividends.
of
Tax
mentioned
BRITISH-AMERICAN
TOBACCO COMPANY, Limited
August 22, 1949
13A%, amounting to
$1.75 per share, on account
current
PREFERRED DIVIDEND
time for
of dividends to transferees.
to pay on
October 31st
payment
€©w« Due
COMPANY
A dividend of
Ordinary Stock.
application
Bank, located
of Connecticut,
creditors of the
' hereby
notified
to
present claims for
payment f to the
undersigned at said Bank.
The
REYNOLDS
dend
States
1
RfYHOLDl
Stock free of income tax.
half
139
LIQUIDATION
Bank Bldg.
Company, par
October 2, 1950, to
stockholders of record at the close
WALTER
its affairs.
All
Association
are
therefore
Fla.
stockholders
STEPHEN G. KENT, Secretary
129
—
—
with Leedy, Wheeler &
September
at
have
Stock
the capi¬
the
on
declared,
dividend
August
Writer & Christensen
Alff, Denver National Bank
—
Leedy, Wheeler
this
of
of business
■
Nehez
stock
on
share
per
dividend ol
share
Common
$10., payable
Treasurer
Broadway
share
of 20 cents per
35c
extra
per
been
day declared a quarterly
of
an
15c
has this
The Board of Directors
C. EARLE MORAN
Secretary and
regular quarterly divi¬
dend
August 24, 1950
Po.
STOCK
COMMON
York
One Wsll Street, New
5, 1950.
139
at
CONTROLS COMPANY
Company
Mining Com¬
able
25
& Christensen
Investment Co.__—
Is
SANDERS,
Treasurer
N. Y.
August 25, 1950
par
before
Bldg.
H, F.
New York 6,
of
Directors
of
Taxation
C. Pierce
September 8, 1950.
R0BERTSHAW- FULTON
has today declared a divi¬
Cents (504) per
share on its capital stock of the
Stockholders
Bank
Stock,
share on the Common
pany
virtue
W. Toole,
Pres. & Treasurer
NO. 169
August 24. 1950.
Dodge, J. A. Hogle & Co.
Writer & Christensen
Clark
Jr., is now with Clyde
Corp., Barnett National
per
payable October 2, 1950, to stock¬
holders of record at the close of
business
Co'
Peters, Writer & Christensen—
Fla.
dividend of 77yh$
day declared a
f)ared on IBMwill be mailed. Card AccountMachines Electric Punched
•
137
With Clyde C. Pierce
Directors has this"
The Board of
Quarterly Dividend
The Board of Directors of this
dend of Fifty
Newlin
JACKSONVILLE,
DIVIDEND
The 142nd Consecutive
'v
rec¬
business September
DIVIDEND
Jerry Ryan, Peters,
John
SOUTH
Treas.
590 Madison Ave., New York 22
Net Score
George Writer, Peters, Writer
Frank Tettemer, J. K. Mullen
&
MACHINES CORPORATION
payable in cash on
&
Gerald Peters, Jr.
;
MIDDLE
LEVENE,
UTILITIES,
IBM
Checks will be mailed.
The
Writer & Christensen___—_
Clifton Nourse, Peters,
of
1950.
American
The
Bosworth,
Bosworth, Sullivan & Co
Jack Ormsby, Peters,
S.
close
15,
ng
Longwell, Boettcher & Co.
Elmer
the
at
September
Inc.
dividend of 1^% ($1.50
Stock
Tobacco Company,
First National Bank
John Toner,
record
on
INTERNATIONAL BUSINESS
has been declared upon the
share)
Preferred
Dodge, J. A. Hogle & Co.
Neil King,
of
AnacondA
Jack Fuller, Boettcher & Co
,
share
184th Preferred Dividend
Net 2nd
Co.
Bank
Treasurer y
NewYork3,N.Y.
Ill Fifth Avenue
(64)
'
Team
Jerry Bachar, J. A. Hogle &
Glen Clark, Colorado State
LEONARD
N.
V
August 28, 1950.
Calcutta Team Play were:
Results of Annual
per
Secy.
Booby Prize (High Gross)
Fred Blume (124)
Bosworth,
Buchenau,
Harry
«
1950.
EMERY
Dollars
Two
of
($2.50)
Cents
J.
Jack Fuller, Boettcher & Co
HoIe-in-One
dividend
a
Fifty
business
(137)
;
.
Most Birdies and
&
5
the
holders
John Toner, Bosworth, Sulli-
■
York
New
Capital Stock outstanding,
payable September 29, 1950, to stock¬
(137)
Bank (129)
r
declared
on
Neil King, First National Bank
State
Street,
The Board of Directors has this day
Secretary
August 24, 1950
Wall
October 13,
record
payable
1950 to stockholders of
September 7,
106
SUNDBERG
A.
CARL
Anaconda Copper
Colorado
clared
SUGAR COMPANY
books will not be closed.
per
capital stock of
Company have been de¬
this
FRANCISCO
THE
dollar
one
the
on
Colorado
Kulgren,
Buchenau,
Harry
1st
Clark,
share
on
of record at the close of
8, 1950. Transfer
of
dividend
cents
June 27, 1950
Sullivan & Co.
Glen
five
payable October 1, 1950 to holders
business on September
declared
share and an extra
cents per
101
seventy
the Preferred Stock and
of twenty five cents (25<() per share on the
Common Stock of this Company have been
($1.75)
Individual Low Gross 2nd
(69)
Low Net
Dividend No.
one
seventy-five
of
dividend
205
NO.
DIVIDEND
A
No. 169
Co. (64)
Elwood
Individual Low Gross 1st
Bob Baker
of
UNITED FRUIT COMPANY
Bosworth,
T
HAUTAU, Treasurer
COMPANY
August 29, 1950
Sullivan & Co. (64)
Jerry Bachar, J. A. Hogle
(63)
r
will not close. Checks
New York 8, N. Y.
ma|
Harry L. Hilyard,
Buchenau,
Harry
Bosworth, Sulli-
Lucas,
'
Preferred Dividend
8, 1950.
State Bank
Team
30 (lard) Street
Individual Low Net 2nd
Waeckerle, Kansas City (63)
:
AMERICAN LOCOMOTIVE
Results
Golf Tournament
Treasurer
1
be mailed.
FRED W.
ord at the close of
Net 1st
1950, to stockholders of
September 11,
1,
1950. The transfer books
J. H. MICHAELI,
August 22, 1950
CORPORATION,
FINANCIAL
T.
$12.50 per share, pay¬
to holders of record
September 12,1950.
1950,
August 24, 1950.
place low net.
Low
Individual
dividend of 25* per share on the
a
outstanding Capital Stock of the Company
cash
the Common Stock of
on
record at the close of business
will
held at the
guests were:
Don Sloan, Donald C. Sloan & Co., Portland, Ore., as representa¬
tive of the National Security Traders Association; Jack Hecht,
Dempsey-Tegeler Co., Los Angeles, and Jack Egan, First California Co., San Francisco, who represented the West Coast.
Chicago had the best turnout with:
Fred Carpenter, John
Nuveen & Co.; Frank C. Carr, John Nuveen & Co.; Paul Fairchild, First Boston Corp.; Edde K. Hays, Central Republic Co.;
Art Kirtley, First Boston Corp.; Julian Meyer, Salomon Brothers
& Hutzler; Clifton Nourse, Illinois Co.; Jack Parker, Lord, Abbett
& Co.; Edward H. Welch, Sincere & Co.; George B. Wendt, First
National Bank of Chicago; Ed Stephenson, Chase National Bank,
representing the "Windy City."
;
No party is complete without Texans, and William G. Hobbs,
Russ & Co., San Antonio; Louis J. Kocurek, Rauscher, Pierce &
Co., San Antonio, and Harold S. Stewart, Harold S. Stewart & Co.,
El Paso, had the eyes of Colorado upon them.
Other out-of-town guests included: Harry Beecroft, Beecroft,
Cole & Co., Topeka, Kan.; Hank Dahlberg, Dahlberg & Co., Phoe¬
nix, Ariz.; Homer G. Kaupp, Juran & Moody, St. Paul, Minn.;
Mark A. Lucas, Jr., Lucas, Eisen & Waeckerle Co., Kansas City,
Mo.; Sidney J. Mohr, Jr., Thornton, Mohr & Co., Montgomery, Ala.;
Arthur P. Quinn, Quinn & Co., Albuquerque, N. M.; Duane T.
Smith, Smith Investment Co., Wichita, Kan.
The annual Sweepstake Prize went to Wichita, Kan., this year
with Chicago in second and third places.
John Toner of Bosworth, Sullivan & Co., and Mark Lucas of
Lucas, Eisen & Waeckerle Co., were in the golf finals, having tied
.
I.
and the Rocky Moun¬
Group of the Investment Bankers Association
Park Hill Country Club on Aug. ? 18.
Among the
;
declared
been
payable October
1950.
tain
;
NO. 213
of Directors has de¬
at the close of business
quarterly dividend of $1.00 per share in
C.
the
of
highlight
the
were
clared
able October 2,
b
has declared
stockholders
Common Stock
on
Dy$ Corporation
W. C. KING, Secretary
out-of-town
Board
of the par value of
August 29, 1950
business September 8,
Twenty-six
LIGHTING COMPANY, INC.
DIVIDEND
Allied Chemical 8L
6.
Annual Frolic of the Bond Club of Denver
BACH, Treasurer.
H.
E.
THE SAFETY CAR HEATING
BOND CLUB OF DENVER
•
ha3
beer,
declared
payable
on
September 25, 1950, to holders of record of such
shares at the close of business on September 11.
Corporation
HAMILTON, Secretary.
AND
Daniel
meeting of all Captains at the office of
Co. at 4:30 p.m. oh Sept.
F. Rice &
.
W.
1950.
August 22,
Secretary
ELLIOTT,
Agent.
Disbursing
Dividend
pany,
STATIONERY
Si
hereby given that a dividend at
the rate of $.59 per share on the Issued and
outstanding shares without par value of the
Common Stock of Western Tablet St, Stationery
Is
Notice
Bean,
ing Committee.
;
Old
the
share of
per
$12.50 par value Capital Stock, payable Septem¬
15, 1950 to stockholders of record Septem¬
ber 5, 1950.
Checks will be mailed by Irving Trust Com¬
ber
Boston, Mass.
Company,
has declared dividend
BOSTON, MASS., August 24, 1950
Singer, Bean & Mackie; Richard H. Goodman,
Shields & Co.; Thomas Greenberg, C. E. Unterberg & Co.; Arthur
Burian, Daniel F. Rice & Co.; Walter Mewing, D'Assern & Co.;
S. I. Murphy; Wilbur Krisam, Geyer & Co., Inc.; Lewis H. Serlen,
Josephthal & Co.; George Leone, Leone & Pollack; John Sullivan,
Merrill Lynch, Pierce, Fenner & Beane; William Kumm, Dunne
& Co.; or Herman D. Meyer, Gruntal & Co., Chairman of the Bowl¬
•
will
Checks
Traders Association of
New York on Sept.
p.m. to 8 p.m., at the City Hall
Bowling Center. All STANY members interested may contact any
one of the
following captains:
Security
for the
7 at 5:30
Bowling
TABLET
CORPORATION
877
No.
Directors
No. 877 of seventy-five cents ($.75)
the outstanding Capital Stock of the Calumet
and
Hecla
Consolidated
Copper
Company of
rcord at the close of business September 5, 1950.
of
SECURITY TRADERS ASSOCIATION OF NEW YORK
Board of
The
WESTERN
COMPANY
MINING
HOMESTAKE
COMPANY
DIVIDEND NO.
DIVIDEND NOTICES
DIVIDEND NOTICES
HECLA CONSOLIDATED
COPPER
•
39
(839)
The
regular dividend of one
dollar
and
one - half
cents
($1,375) a share on the outstanding
5 Vi%
cumulative convertible pre¬
ferred stock has been declared for the
thirty
seven
-
quarter ending
September 30, 19S0,
payable October 2, 1950, to holders
of record at the close of business
A dividend of
a
share
stock
on
record
at
declared
payable
1950, to holders of
18,
September
tember 8,
twenty-five cents (25^)
the outstanding common
been
has
the close of business
Sep¬
1950.
will
be
the Manhattan
mailed
by
Bank of
Company.
ALLYN DILLARD, Secretary
Dated, August 24, 1950
1950, has been
payable October
15,1950
preferred stock
of the Company to holders of pre¬
ferred stock of record at the close
of business on October 2, 1950.
on
the outstanding
A dividend of
1950,
on
50^
per
the outstanding common
value of $1.00 per
ers
share has
payable October 15,
stock of the Company,
of common
the close of
The transfer books will not be closed.
Checks
declared
been declared
September 20, 1950.
of the
quarterly dividend period
ending October 31,
COMMON DIVIDEND
of the par
share, to hold¬
stock of record at
business on October
2, 1950.
August 30,
1950
D. H.
COLLINS
„
.
Secretary
40
The Commercial and Financial Chronicle
(840)
.
.
Thursday, August 31, 1950
.
enacted at this session is reported
BUSINESS BUZZ
to
depend entirely upon whether
the
Administration
from its attempt to
on.
retreat
tingent liability to every govern¬
ment supply contract, whether to
•
•
will
apply this con¬
new price-difficult item of war
material, to a loaf of bread or a
pool of thread. If the Administra¬
a
A
Behind-the-Scow Interpretation*
J[
y/n ■
jTLIIU
Iran the Nation's Capital
JL UU>
tion
limits the scope of its bill,
legislation may be passed,
though time is getting short.
the
WASfflNGTON, D. C. — From
angle you look at it,
the Federal Budget is going to be¬
come one of the unhappiest issues
of the 1951 session of Congress
even if this country does not be¬
whatever
involved before then in to¬
come
deficit, however, it is likely to be
(This column is intended to
the smallest deficit in the future
flect the "behind the scene" inter¬
pretation from the nation's Capital
the
and may or may not coincide with
the "Chronicle'si" own views.)
of "short of all-out war"
preparations and the outlook, as
see
fiscally-minded at the Capitol
it is nothing more or less than
the selection of three alternatives:
With Westheimer Co.
(1) A drastic reduction in the
existing aid and subsidy programs
now
entrenched in the political
fabric. (2) Such onerous taxation
for,
expenditures totaling just
as the country never before con¬
about $60 billion in the current
templated. (3) Deficits of a
fiscal year. The official forecast of
minimum of $15 billion annually
revenues for the current year is
but probably much larger, prob¬
for $37.3 billion, to which some¬
ably exceeding $30 billions.
thing less than $5 billion will be
For if the inertia of getting the
brought in by the quickie tax bill,
military back to letting contracts
or a total on the receipt side of
and
industry to retooling and
$42 billion.
This
leaves
superficially the producing war implements results
in a fortuitous happenstance of a
prospect of a deficit of $18 billion
deficit for the current year of
for the current year.
All in all,
only $10 billion, the result will
however, the deficit will not be
tal
war.
(Special to The Financial Chronicle)
In
all, Congress has appropri¬
ated for or authorized contracting
this year, it is thought,
for the very good reason that the
enhanced arms procurement pro¬
that large
will not get a full head of
gram
The
months.
several
for
steam
subsistence allowances, and
transportation of the enlarged mil¬
itary establishment, of course, will
increase in direct proportion to
pay,
will
be
in
purely military procurement,
there will be little lag in the civil
there
While
be
far different
lag
a
in
succeeding fiscal
billion
the
next
Westheimer
&
Co., 326 Walnut
Street, members of the New York
and
CLEVELAND, Ohio—Charles D.
Gentsch is with Bache &
was
Co.
$10
years.
With Merrill Turben
(Special to The
Black
bers
the
office—remember, I'used to be
about
the
country's standards of living.
almost
of the latest things, such as
some
subsistence allowances for depen¬
dents
of
service men, haven't
are
that
the
(D., Tex.)
has announced
Administration
the
wheels
motion
in
has
set
draft
to
a
In
$60 billion of ap¬
however,
assumes
has really knocked
side of the ex¬
propriations,
that Congress
down the civilian
penditure picture by a total of
nearly $2.3 billion.
Of this, $550
million is in the form of an in¬
definite mandate to the President
achieve just that much
to
1
'
econ¬
omy.
A great proportion of the
$1,750 million of specific Congres¬
sional cuts under Budget requests
are of doubtful value—unless the
White House develops a real will
and intention of economizing.
So in the net, the prospect that
over
$35
expenditures.
The
most
that
those steeped in
tax
matters at the Capitol think
really be garnered from next
year's tax bill is $7. billion. Sen¬
can
ator
Walter
Chairman
F.
of
Committee,
George (D., Ga.),
the
has
Senate
Finance
publicly
placed
probably rests upon the in¬
ability of the military to let con¬
tracts soon
enough and fast
enough to use the money appro¬
priated.
It is just
random guess, but it
surprising if outpay¬
ments—within the scope of pres¬
ent
a
be
would
programs—exceeded a figure
this, year of, say, $55 billion.
Revenues,
have
er
a
on
other
the
hand,
tendency to rise much fast¬
than expected in an inflation¬
ary
epoch, to which this govern¬
ment
has
mate
now
committed
the
Hence the January esti¬
country.
$37.3
of
the
(without
billion of receipts
quickie bill)
is
in
all probability too low, how much
no one can
make much of
a guess
at this early stage. With receipts
from the interim tax bill it is
within
realm
of
possibility
that the actual deficit for the cur¬
rent
from
f
$T'" '■
i
i
the
year
(and
additional
next
year,
will
be
some
tax
retroactive
added),
that
collections
legislation
to Jan. 1
the fiscal
pietnro.on next June 30 could turn
out to be somewhere above $10
billion.
Appallingly large
as
$
is such
a
for
new
many
of
fruit
for
and
farmer
non-profit
Senator
or
Thomas
(D.
casual look
a
says
he is just too busy. Thomas
was
defeated
for
incomes.
Some $4 billion might be raised
by corporation income tax boosts,
involving a "form of" or some¬
thing which would be analogous
to
an
profits tax.
Some
$500 million could be
raised by further "loophole" clos¬
ing. Incidentally, informed mem¬
excess
bers assert that taxation of coop¬
eratives not only would be neces¬
sary
achieve
to
of
ment
bloody well
into
the
such
but
revenue,
tax
incre¬
an
that
they
to
really sail
exemption of the
mean
by
*
This adds up to $7. billion, and
reduces
the
prospective
longrange annual
the
estate
in the Senate
so
Ex¬
committee
Rep.
*
has
Mike
Mon-
U. S.
and
*
made
tentative
a
reducing below 2%
the interest paid on postal sav¬
ings deposits.
The subcommittee
reported out a bill providing for
credit, real estate,
credit,
and
"any"
consumer
This section
conference
political
so
reduced
remove
control
business
of
affected.
of the House Committee, who first
'is
is
is
1
in
amendment
the
House.
Committee's
trols bills
version
came
Banking
of
the
con¬
out, it carried
an
istration
bill
and
stronger authorization to the
President
than
the House bill,
was
contained
the
ence
a
consciousness
broad
the members
House
bill,
was
were
this
that
angle.
Most of
unaware
particularly
of its
defining
in
is
war
WE SUGGEST
RIVERSIDE CEMENT GO.
CUSS B (eofflMM) STOCK
A leading producer of cement
in
fast-growing Southern
California.
Analysis of this Company and
a
review of the Cement Indus¬
try available on request.
Selling about
$8.25
the
Senate.
contract
Investment Securities
is
Whether there is to be
by
For
Largo Appreciation Potential
LERNER & CO.
credit, not merely consumer and
The
new
implications,
real estate credit.
1919
Exchange PL, N. Y. 5
HA. 2-8780
Teletype N. Y. 1-1397
"slipped in" to
during the course of its
in
to regulate "any"
ESTABLISHED
40
was
one revealing just how and by
whom. Wolcott is believed to have
been able to get across in confer¬
was
even
m.s.wkn&co.
The
to control "any" credit
no
Senate
.
Scophony-Baird Ltd.
sought unsuccessfully to kill this
power
consideration in both committees,
-
Finishing
this
of
the
not
are
been added to the
Cinema Television B
primarily to the
persistence of Rep. Jesse P. Wolcott, ranking Republican member
vided
deposits
P.
and George
due
was
written somewhere in the Admin¬
the
Leonard
Video Corp. of America
in
the threat
elimination
The
threat
was
to
as
reduction to 1% in steps of % of
1%
at 6-month intervals,
pro¬
When
—
Government Employees Corp.
bill, how¬
credit.
of
toward
existing
Col.
The Senate bill would have
a
general
renegotiation
HAnover 2-0050
Teletype—NY 1-971
18 Post Office Square, Boston >
Mast
Tel. HUbberd 2-1990
law
Jack & Heintz
FOREIGN SECURITIES
general sales tax,..the existence of
permanent
might be avoided.
annual
transactions
a
on
Placer
Development
Tracerlab, Inc.
Otherwise the
alternative, say these legis¬
lative observers, is a stiff general
pyramids
All Issues
deficits
only
Federal
Aerovox Corp.
Bausch Machine Tool
Firm Trading Markets
drastic
jettisoning of some
veterans, farm and social
security benefits and perhaps a
sold,
real
deficits to something
the
large
Stock
Television Equipment Corp.
Trad Television
credit.
construction
Democratic
in the neighborhood of $30 billion.
of
&
mem¬
next year,
co-ops
With
Not
ever.
loans.
step
be
C.
650 17th Street.
of the Presi¬
power
control
to
trol
give this scheme
in his committee. Senator Thomas
Although it won't get by the
Senate, a House Post Office sub¬
might
Midwest
Sery have
specifically authorized the Presi¬
dent in separate sections to con¬
simply on the largest rates which
it is thought could be feasibly im¬
posed under existing conventional
types of tax laws, and breaks
billions
dent
Okla.), the Chairman of the Sen¬
Agriculture Committee, will
roney.
$2.5
N.
a
not
ate
$7 billion. The maximum is based
Some
Reid
Turben
staff of Investment Service Corp.,
possibility, however, the
the
House
language was
worded, that it was intended to
was
organizations.
Elmer
nomination
down this way:
real estate credit, but "any"
credit; i.e., business credit. There
and
consumer
000
insuring
the amount between $6 billion and
obtained by a combination of both
Treasury outpayments during the
current fiscal year will be less ' lowering the exemptions and rais¬
ing the rates of tax on personal
than the $60 billion Congress pro-
vided
find
cooperatives
other
The total of
additional $10 billion.
to
money
amplify the
kets
an
rush
$100,000,vegetable mar¬
and
of
This would raise to well
the
spend
•
tfi
"any" credit as a separate sec¬
tion, implied that the President
could regulate not only consumer
bill to make possible the
of the construction of
civilian account.
'■
to
v
in the
way
billion the gap between revenues
gram
reduction
years to come, there is one little
exception. The House passed the
further supplemental defense pro¬
up
the
Eagan, Mayo C. Head
drastic
all
ways
fully in the estimates.
It may be doubted that "Presiden¬
tial economy" will halt the trend
toward higher expenditures on
shown
of
DENVER,
a
>.•
On the other hand, Rep. George
Mahon
—
(Special to The Financial Chronicle)
secretary!"
your
be accounted
staffs
Ohio
Merrill
Inv. Service Adds
"Don't give me that business about
having to work late at
that would have to
Congressional tax
studying separately.
with
change.
for by the more "permanent" tax
bill which the Treasury staff and
adding,
by the week. Then, too,
is
Co., Union Commerce Bldg.,
next
year
the level of
appropriations was not boosted
beyond this year, there would be
a gap of some $25 billion or more
Financial Chronicle)
CLEVELAND,
Civilian expenditures are inexor¬
which Congress has been
Co., Na¬
City East Sixth Bldg.
He
formerly with Cunningham &
tional
side of the Federal establishment.
ably increasing under the perma¬
nent annual outlays and subsidies
Exchanges.
With Bache & Co.
ing years, on top of their "short
of total war" appropriations for
war
and foreign arms and eco¬
nomic aid of $36 to $37 billions.
if
Stock
(Special to The Financial Chronicle)
which is not spent in
or so
Cincinnati
and
The
CINCINNATI, Ohio—Mrs. C.H.
Colman has become affiliated with
this fiscal year will hang over and
be spent in the next and succeed¬
So
the addition of manpower.
re¬
years
tax
everything
CARL MARKS & C.O. INC.
FOREIGN SECURITIES
that
that
tax which would apply at
ev.ery .s*a£e °f production and dis¬
tribution, and which would bring
?
i
+}IU- 1
SPECIALISTS
is
Hill, Thompson & Co., Inc.
Trading Department
50 Broad Street
New York 4, N. Y.
70 wall street, n. y. s
T.L WHitehall. 4-4540;
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